Coverage Pointers - Volume VII, No. 12

12/15/05          Bovis Lend Lease LMB, Inc. v. Royal Surplus Lines Insurance Company

Appellate Division, First Department

Despite the Unexpected Resignation of the Claims Specialist, 36 Days to Disclaim Too Long – Staff Problems Not a Valid Excuse

Measuring from the latest date on which Royal learned of the grounds for disclaimer, Royal's notice of disclaimer issued 36 days thereafter. Royal's explanation for the delay was that on March 10, 2003, the claims specialist advised Royal that he was resigning effective March 21 and would be taking the week of March 17 as vacation. Royal alleges that although it took immediate steps to replace the claims person, his eventual replacement was unable to start work until April 28. Royal points out, however, that when the new claims specialist completed her investigation, requested and received advice from coverage counsel, and issued the disclaimer letter in only 17 days.

 

Royal argues that the situation caused by the unexpected resignation was beyond its control, and that therefore the delay in issuing the notice of disclaimer was reasonable. In support of this argument, Royal cited New York Univ. v First Fin. Ins. Co. (322 F3d 750, 755 [2d Cir 2003]), in which the Federal court found that New York State courts have held notification delays to be reasonable "when an external factor beyond the insurer's control unexpectedly interferes with the insurer's ability to investigate the claim in a timely fashion." It was readily apparent to the Court that Royal's staffing problem was not an external factor beyond its control like a computer system failure or the need to wait for a more convenient time to interview a woman who has just delivered a baby (the facts in the cases cited by the Royal). Indeed, the motion court found that Royal's need to replace its Claims Specialist while it was investigating the Winter claim was "irrelevant" and observed that "[p]laintiffs should not have to wait until their insurer sorts out its employment affairs before receiving timely notice of a disclaimer." Therefore, the Court found the notice of disclaimer was untimely as a matter of law.

 

12/14/05          McIntosh v. New York Foundation for Senior Citizens Guardian Services

Appellate Division, First Department

Lack of Objective Proof of Serious Injury Results in Dismissal

As we know, although a bulging disc may constitute a serious injury, "a plaintiff must still offer some objective evidence of the extent or degree of [her] alleged physical limitations and their duration, resulting from the disc injury" (Arjona v. Calcano, 7 AD3d 279 [2004]). Here, plaintiff failed to provide such evidence. The report of a doctor who treated plaintiff in the near aftermath of the accident was deficient because the reported results of the range of motion tests were not significant or even abnormal. Even if considered, the unsworn report of a chiropractor, based upon a single examination of plaintiff five years after the accident and after a four year gap in treatment, must be regarded as speculative and conclusory on the question of causation, and therefore failed to raise a triable issue.

 

12/13/05          City of New York v. Continental Casualty Company

Appellate Division, First Department

Notice of Lawsuit by Primary Insured Sufficient to Satisfy Requirements of the Additional Insured – Is the Court Imposing a Requirement that the Carrier Must Show Prejudice Before it Can Deny Coverage for Late Notice of Suit?

Under the insurance policy issued in this case, two actions are required of an insured in making a claim. The initial step required that Continental be given notice when an accident occurred. Once this notice requirement is fulfilled, the insured must cooperate with Continental in the investigation, defense or settlement of the case. This includes the requirement to "immediately" send copies of any legal papers received by the insured to Continental. Although Continental's letter disclaiming coverage was premised on the City's failure both to give notice of the claim and to forward the suit papers, it rests its argument only on the failure of the City to timely forward the suit papers. Under the facts of this case, the City, as defendant in a second third-party action, arising from the same accident as the primary action, could properly rely on the notice given by Welsbach, the primary insured. Continental's argument that both provisions of the policy are notice requirements was without basis While it is true that the City adopted a lackadaisical attitude in forwarding the suit papers, its actions fall far short of the standard necessary to sustain Continental's disclaimer. Continental was given timely notice of the occurrence by Welsbach. It also was actively participating in the litigation before Con Edison impleaded the City, and was served with a copy of the complaint against the City by Con Edison when it was originally served. Under these facts, Continental's disclaimer was improper.

 

RED ALERT: The Court compared the suit-notice requirement under the liability policy to the suit-notice requirement when an underinsured motorist (UIM) claim is pending and cited. Matter of Brandon (Nationwide Mut. Ins. Co.) (97 NY2d 491 [2002]).  Readers will remember that the Court of Appeals held in that case, that an insurance carrier must show prejudice, in a UIM situation, if the policyholder fails to notify the carrier that he or she has commenced a third-party action.  Here, the Court has grafted the prejudice-requirement in the UIM situation onto a liability policy requirement of prompt notice!  Watch this space for further developments

 

12/12/05          Atlantic General Contracting, Inc. v. United States Liability Insurance

Appellate Division, Second Department

As New York Law Applies in this Case (as opposed to NJ), Insurer Does Not Need to Prove Prejudice Upon Disclaimer for Untimely Notice of Occurrence

The Court found that New York law, as opposed to New Jersey law, was applicable in this matter since New York had the most significant contacts to the instant dispute.  United States Liability Insurance Group and Mount Vernon Fire Insurance Company established their prima facie entitlement to summary judgment by demonstrating that they did not receive timely notice of the occurrence and properly disclaimed coverage. Although New Jersey law requires that an insurer show "appreciable prejudice" before it disclaims coverage based upon an insured's failure to timely notify it of an occurrence, New York law does not impose such a requirement.

 

12/12/05          Hurley v. First Unum Life Insurance Company
Appellate Division, Second Department

As Long as Valid Grounds for Disclaimer Exists, Unreasonable Request for Examinations of Insured Do Not Impact Propriety of Disclaimer

Under the terms of the policy of disability insurance, the insured was obligated to submit to a medical examination that was reasonably requested by the defendant at any time during the pendency of a claim. The willful failure of the insured to submit to a reasonably requested examination is a legitimate basis for denying the claim, but here it is held that multiple requests for examinations were not reasonable and thus cannot be a proper basis for termination of benefits.  But the Court examines the disclaimer letters of the insurer, and concludes that the defendant ultimately denied the plaintiff's claim on the basis of the lack of sufficient evidence that the plaintiff was disabled within the meaning of the policy. Having elected to terminate the plaintiff's benefits because it found insufficient evidence that the plaintiff was disabled, the defendant had no basis to request a further examination and the plaintiff's subsequent failure to undergo the additional examination was immaterial to the validity of the termination of coverage.

 

12/12/05          Varveris v. Hermitage Insurance Company

Appellate Division, Second Department

Punitive Damages Inappropriate When Conduct Does Not Rise to High Degree of Moral Turpitude

Editors Note: kudos to long-time subscriber, Jeff Gold, Esq., for his success in this one.

Insured commences action against insurer seeking coverage under a homeowner’s policy.  Punitive damages are only available in limited circumstances where it is necessary to deter conduct which may be characterized as "a fraud evincing a high degree of moral turpitude'" or " such wanton dishonesty as to imply a criminal indifference to civil obligations'" directed " at the public generally'".  Here, the insured failed to show any facts or allegations to support her contention that Hermitage's conduct in this case was egregious or fraudulent, or that it evidenced wanton dishonesty so as to imply a criminal indifference to civil obligations directed at the public generally. The Court points out that the case was “simply a private breach of contract dispute between the insurer and its insured with no greater implications.”  In addition, the Court finds that the insured's contention that she is entitled to discovery in order to adduce facts to substantiate her punitive damages claim was nothing more than a "fishing expedition," and thus should not have been countenanced.

 

12/12/05          Joseph v. Layne

Appellate Division, Second Department

Failure to Account for Two Year Gap Between Cessation of Treatment and Exam Earns Dismissal Under Serious Injury

Evidence was sufficient to establish, prima facie, that 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).  The plaintiff's evidence in opposition was insufficient to raise a triable issue of fact. The affirmation of the plaintiff's physician was based upon an examination of the plaintiff that was conducted two years after the cessation of medical treatments, and the plaintiff failed to account for this lapse in time (see Pommells v Perez, 4 NY3d 566).  Moreover, there was no competent medical evidence to support a claim that the plaintiff was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days immediately following the accident as a result of the subject accident.

 

12/9/05            Webster v. Rivera

Appellate Division, First Department

Objective Evidence Restrictions of Movement and Persistent Symptoms Sufficient to Defeat Threshold Motion

Plaintiff was injured in September 2000 when the parked car in which he was sitting was rear-ended by defendants' truck. He treated approximately 40 times over the next five months by a chiropractor who noted marked muscle spasms, difficulty in movement, and positive results in straight-leg raising and other tests. The chiropractor reexamined plaintiff in April 2004, finding carpal tunnel syndrome and a 20% limitation of movement and 20% decrease in flexibility in the cervical and lumbosacral spine, and concluding that the patient still exhibited a "mild partial disability" from what he described as a permanent and serious injury. Defendants' orthopedist examined plaintiff in March 2002 and found no residual spinal problems and no evidence of carpal tunnel syndrome, although he did note diminished tactile sensitivity on the right side of plaintiff's body. Defendants' neurologist examined plaintiff in the same time frame and found no evidence of permanent neurological disability.

 

The Court finds that restrictions of movement quantified by plaintiff's treating doctor with reference to objective tests, as they relate to the history of the accident, were sufficient to defeat summary judgment. Evidence that plaintiff's symptoms persisted, and that continued treatment was not helping, was sufficient to preserve the evaluation of any gap in treatment for the trier of facts.

 

12/8/05            Gonzalez v. Green

Appellate Division, Third Department

Herniations Alone Insufficient For Serious Injury, Must Have Objective Limitations

Here,  plaintiff’s treating physician did not sufficiently detail plaintiff's limitation of motion and muscle spasm, or identify any diagnostic tests or other objective medical basis for his finding that plaintiff's limitation was significant due to spinal herniation.  The magnetic resonance imaging report relied upon by was performed approximately one year after the accident indicated that plaintiff's soft tissue injury was only mild and that there was no nerve root compression or significant compression of the spinal cord; otherwise the physician relied primarily upon plaintiff's subjective complaints of pain. Accordingly, plaintiffs failed to demonstrate, as required, a question of fact regarding whether plaintiff's limitation was more than mild, minor or slight

 

12/8/05            Long Island Lighting Company v. Allianz Underwriters Insurance Company

Appellate Division, First Department

When is an Excess Carrier Entitled to Notice of Occurrence? 

In a 3-2 Decision, Notice by Insured Triggered Upon Reasonable Likelihood of Claim under Excess Policies, Not When Suit is Filed

Editors Note – with a 3-2 vote at the Appellate Division, this case is entitled to Court of Appeals review.

Disclaimer upheld on late notice by the insured to the excess carriers.  The excess carriers asserted that the obligation to give notice of the claim arose when the Long Island Lighting Company was informed by the EPA that it was a potentially responsible party. Long Island, on the other hand, claimed that the notice obligation was triggered only after the municipality winnowed out the list of 37 and commenced a lawsuit against just 15 of those companies.

The majority finds that the insured failed to satisfy its obligation under the subject policies to give notice upon the happening of an occurrence "reasonably likely" to involve the policies. Such occurrence happened not when insured was sued in the underlying action some five weeks before giving defendants notice of the environmental claim, but almost six months earlier, when plaintiff received a letter from the underlying plaintiff's lawyer threatening a lawsuit at the subject site.  The Court rejects the insured’s argument that there was a reasonable possibility that the subject policies, both excess, would not be reached, where the insured offered no evidence that the timing of its notice was the result of a deliberate determination to that effect, and not, as the record suggests, the belief that it was not responsible for the cleanup costs.

 

The dissent finds a question of fact as to whether LILCO demonstrated a reasonable belief that the claims were not of "sufficient magnitude to penetrate through the primary coverage and reach the excess policies."

 

12/8/05            Agard v. Bryant

Appellate Division, First Department

Dismissal on Serious Injury in Light of Failure to Refute Pre-Existing Conditions Raised by Defendant

Defendant met his initial burden by submitting the sworn report of a radiologist who, based on his review of MRI films of plaintiff's left and right knees, opined that both knees were affected by degenerative processes long predating the subject accident, and that there was no evidence of any traumatic injury the accident might have caused. The sworn medical report plaintiff submitted in opposition failed to refute, or even to address, the opinion of defendant's expert that the limitations of plaintiff's knees resulted from a preexisting degenerative condition. Since plaintiff thus failed to rebut defendant's prima facie showing that plaintiff did not sustain a serious injury as the result of the subject accident, defendant is entitled to summary judgment.

 

12/6/05            McNair v. Lee

Appellate Division, First Department

Defense Doctor Needs to Quantify Findings and Compare Plaintiff to Pre-Accident Status in Order to Move Forward on Serious Injury Dismissal Motion
While defendants' physician diagnosed cervical and lumbosacral strain causally related to the accident, he did not indicate whether these conditions had resolved or could be causing plaintiff's claimed pain. He did measure certain ranges of motion of plaintiff's spine and assert that there was no disability, but he did not compare the ranges of motion to the normal until his reply affirmation. Similarly, it was not until his reply that he mentioned the MRI report documenting a herniation at T11-12 impinging on the anterior thecal sac, alleged by plaintiff to be a result of the accident.  Accordingly, the defense did not satisfy the burden of establishing a lack of serious injury so as to require Plaintiff to come up with competing proof.

 

12/5/05            Sault, Inc. v. Hermitage Insurance Company

Appellate Division, Second Department

Notice by Insured One Year after Incident Not Soon As Practicable

Plaintiff owned a hotel where a guest was attacked by an alleged former employee and tenant of the hotel. In a criminal proceeding, the attacker was found not guilty by reason of mental disease or defect. Plaintiff sought a defense and indemnification in the action by the guest against it, and Hermitage declined on the grounds that the plaintiff did not provide it with notice as soon as practicable, and that the policy contained an assault and battery exclusion. The Court finds that the insurer established its entitlement to judgment as a matter of law by presenting proof that plaintiff failed to provide timely notification of the incident, as it did not receive notice until more than one year after the incident occurred (see Travelers Indem. Co. v Worthy, 281 AD2d 411). The plaintiff's contention in response, that it had a good faith belief of nonliability, was insufficient to raise a triable issue of fact as to the timeliness of the notice.

 

Submitted by Jeffrey B. Gold (Gold, Stewart, Kravatz & Stone, LLP)

 

12/5/05            Gallante Properties, Inc. v. Allcity Insurance Company

Appellate Division, Second Department

Disclaimer Proper When Insured Failed to Present Reason for Notice Delay of Several Months 

The insurer established its prima facie entitlement to summary judgment by presenting evidence demonstrating that the insured became aware of the subject incident months after its occurrence, and failed to present a reasonable excuse for the untimely delay in providing notice for nearly five years after becoming aware. In response, the insured failed to raise a triable issue of fact sufficient to defeat summary judgment.

 

12/5/05            New York Central Mutual Fire Insurance Company v. Licata
Appellate Division, Second Department

Accident Report Listing Insurance of Offending Vehicle Prima Facie Proof of Coverage

This was a CPLR article 75 to permanently stay arbitration of a claim for supplemental uninsured motorist benefits.    The petitioner established a prima facie showing of the existence of insurance coverage for the offending vehicle by producing the police accident report which contained an insurance code designation for Encompass Insurance Company indicating coverage for the offending vehicle. The proof submitted by the respondent, namely his attorney's affirmation and various items of correspondence between his attorneys and insurance company representatives, was conclusory and otherwise inadmissible in evidence. Thus, it was insufficient to overcome the petitioner's prima facie showing.

 

12/5/05            Alma v. Samedy

Appellate Division, Second Department

Defendant’s Prima Facie not Met with IME Doctor Finding Restrictions that Matched Plaintiff’s Testimony

The defendants' orthopedist, who examined the plaintiff one year after the accident, reported finding restrictions in the range of motion of the plaintiff's left shoulder. These restrictions were consistent with the magnetic resonance imaging report of a left shoulder impingement, and the plaintiff's deposition testimony concerning her inability to fully use her left shoulder and arm as before. Furthermore, defendants' experts failed to address the plaintiff's claim that she suffered a medically-determined injury which prevented her from performing substantially all of the material acts constituting her usual and customary daily activities for not less than 90 days of the 180 days immediately following the accident.

 

12/5/05            Giraldo v.  Mandanici

Appellate Division, Second Department

Failure of Plaintiff’s Physicians to Address Degenerative Changes as Cause of Plaintiff’s Complaint is Fatal

Defendants' evidence, consisting of the plaintiff's deposition testimony and hospital records, and the affirmed report of the orthopedist who performed an independent medical examination, established that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) despite “some” range of motion restrictions. The plaintiff's evidence in opposition, failed to raise a triable issue of fact as plaintiff's experts failed to address the finding of the defendants' expert attributing the condition of the plaintiff's cervical and lumbar spine to degenerative changes as noted on the radiology report made on the day of the accident. This rendered speculative the plaintiff's expert's opinion that the plaintiff's lumbar and cervical conditions were caused by the motor vehicle accident.

 

12/5/05            McConnell v. Ouedraogo

Appellate Division, Second Department

Unexplained Gap in Treatment and Lack of Objective Testing not Sufficient to Raise Question of Fact as to Serious Injury

In opposition to a serious injury threshold motion, the affirmation of the plaintiff's physician was insufficient to raise a triable issue of fact. There was an unexplained gap in time between the plaintiff's treatment in 1999 and the physician's subsequent examination of the plaintiff in 2004. Although the plaintiff's physician indicated that the plaintiff exhibited limitations in motion at the subsequent examination, the physician failed to indicate the objective medical tests he used in arriving at such determination. Further, the plaintiff's physician's diagnosis and opinion was based upon unsworn magnetic resonance imaging reports not properly before the court

 

 

 

Audrey’s Angle on No-Fault

 

In this feature to the newsletter, we highlight recent no-fault arbitration awards.   The compilation and publication of these awards is not at the same level as traditional reported case law.  There is no single source to conduct comprehensive research in the area.  This feature seeks out notable current awards and judicial determinations and provides them to our subscribers.

 

We encourage the submission of no-fault awards, including Master Arbitration awards that address interesting issues.  These can be submitted to Audrey Seeley at [email protected].   With all submissions, we ask that you forward a redacted version of the award omitting the parties’ names and that the document be in PDF format.  For copies of these decisions, contact Audrey.

 

12/12/05          In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Jackie Gallers, Esq.

Insurer’s Denial Of No-Fault Benefits Based Upon Failure to Appear For First IME, And Insurer Failed To Reschedule, Upheld As Eligible Injured Person Was Incarcerated.

Here is the Angle:      The insurer’s denial of no-fault benefits based upon the eligible injured person’s failure to appear for a first IME, which was not rescheduled, was upheld.  We know that the insurer usually has to provide the eligible injured person with a second chance to cure the default.  However, in this case, the eligible injured person’s counsel informed the insurer, on the date of the IME, that the eligible injured person was incarcerated, where he would remain for two years. 

 

The Analysis:              The Applicant in this no-fault arbitration sought reimbursement for durable medical equipment provided to the eligible injured person (“EIP”) as a result of a May 11, 2005, motor vehicle accident.  The insurer denied the claim based upon the EIP’s failure to appear for an IME. 

 

Arbitrator Gallers initially noted that she seriously questioned the veracity of the EIP’s claim and injuries allegedly sustained.  Further, the insurer’s denial was appropriate based upon the circumstances and evidence presented.

 

The insurer attempted to obtain a statement from the EIP which apparently the EIP’s counsel would not permit, after the named insured questioned the veracity of the claim.  Thereafter, the insurer sent out IME notices to the EIP.  On July 11, 2005, the date of the noticed IMEs, the EIP’s counsel contacted the insurer and advised that the EIP was arrested and would be incarcerated for approximately two years.  Thus, the EIP could not attend the noticed IMEs.

 

Arbitrator Gallers found that the insurer has a right to conduct the IME to verify the alleged injuries.  The EIPs inability to submit the IMEs severely prejudiced the insurer’s right to verification.  Moreover, in this case, since the EIP assigned his rights to the Applicant, the Applicant has no greater rights than the EIP.  Therefore, any breach of a policy condition by the EIP is imputed upon the Applicant.

 

The insurer did not attempt to reschedule the IME after receiving notification from the EIP’s counsel that he could not attend due to his incarceration.  However, Arbitrator Gallers found that this was not fatal to the insurer’s denial of claim.  Rather, under the circumstances the denial was appropriate.

 

12/8/05            In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq.

An Insurer’s Blanket Denial of No-Fault Benefits Does Not Excuse Applicant from Timely Submitting Subsequent Bills.

Here is the Angle:      We have routinely heard in no-fault arbitrations, the argument from Applicant’s counsel that they have no obligation, once a blanket denial of no-fault benefits is issued, to submit future medical bills to the insurer.  Arbitrator McCorry, who is located in the Buffalo area, held that the Applicant must still timely submit bills even if a blanket denial is issued for no-fault benefits.  He also reminds insurers of their reciprocal duty to timely issue a denial of claim even if a blanket denial of no-fault benefits has been issued.

 

The Analysis:              Arbitrator McCorry denied, without prejudice, Applicant’s arbitration demand for medical expenses due to the “morass of confusion” by the evidence submitted.  The decision does reveal that the Applicant argued that he may have submitted his medical expenses to his private health insurer or to the Respondent for payment after the Respondent issued a blanket denial of no-fault benefits.  Arbitrator McCorry noted that proof of submission of the medical expenses to the private health insurer does not prove the claim for reimbursement of the medical expenses.

 

Rather, Arbitrator McCorry found that even if the Applicant has received a blanket denial of no-fault benefits from Respondent there is a continuing duty to timely submit the medical expenses to the Respondent.  Likewise, the Respondent, after issuing a blanket denial of no-fault benefits, has a continuing duty to timely deny the medical expense submitted for payment.

 

12/5/05            In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq.

Insurer’s Failure To Properly Word Denial Of Claim For No-Fault Benefits On A Valid Late Notice Of Accident Defense Is Fatal – Over $7,000 In Medical Expenses Awarded To Applicant.

Here is the Angle:      The hard lesson learned from this arbitration is that if an insurer is going to issue a denial of no-fault benefits based upon the applicant’s failure to timely provide notice of the accident or claim make sure that the denial contains the requisite language, pursuant to Insurance Regulation §65-3.3(e), that the late notice will be excused if the applicant can provide a reasonable justification for the failure to provide timely notice. 

 

The Analysis: The Applicant sought $7,936.06 in medical expenses as a result of a January 25, 2004, motor vehicle accident.  Applicant’s counsel did not provide the insurer with notice of the accident until around March 25, 2004.  Arbitrator McCorry notes that Applicant’s submission clearly reveals that the Applicant provided late notice of the accident.  The Insurance Regulation provides that the Applicant has 30-days to provide notice of the accident to the insurer.

 

Unfortunately, Arbitrator McCorry found that the first denial the insurer issued was not failure to provide timely notice of the accident within 30-days, it was for failure to timely submit a medical bill within 45-days from the date of service.

 

Then, the denial of the medical bill based upon violation of the 45-day rule, only stated “Your entire claim is hereby denied bill was not submitted within 45 day.”  Arbitrator McCorry further noted that Insurance Regulation §65-3.3(e) provides:

 

(e) When an insurer denies a claim based on the failure to provide timely written notice of claim or timely submission of proof of claim by the applicant, such denial must advise the applicant that late notice will be excused where applicant can provide reasonable justification of the failure to give timely notice.

 

(Emphasis added).

Arbitrator McCorry found in Applicant’s favor as the insurer’s denials were defective and inappropriate due to not only failure to have the mandated language but also the incorrect basis for the denial.

 

We parenthetically note that Applicant submitted documentation to support the medical expenses thereby establishing medical necessity and no documentation to contradict Applicant’s evidence was apparently submitted.

 

Across Borders

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

12/12/05          A.W. Chesterton Company v. Massachusetts Insurers Insolvency Fund
Massachusetts Supreme Judicial Court

Massachusetts Supreme Judicial Court Examines Issues Regarding Laches, Misrepresentation, And an Insurer’s Obligation to Defend and Indemnify as Respects the Massachusetts Insurers Insolvency Fund.
This case concerns the liability of the Massachusetts Insurers Insolvency Fund on excess indemnity policies issued by Midland Insurance Company to A.W. Chesterton Company covering asbestos-related liability claims involving Chesterton products. The court held that the Fund is not barred by laches in raising the issue of misrepresentation by Chesterton in its applications for four Midland policies; Chesterton had not made misrepresentations in its applications for three of the Midland policies, but had made misrepresentations on the application for the fourth policy that voided the policy; the trigger of coverage on the valid Midland policies is exposure or inhalation of asbestos, and not bodily injury, during the policy period; the Fund has no obligation to indemnify Chesterton until the limits of all solvent excess coverage providing for indemnification have been exhausted; and applicable law does not require that Chesterton exhaust all "ultimate net loss" coverages before the Fund is obligated to defend Chesterton.

 

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

12/6/05            Tuscarora Wayne Mutual Ins. Co. v. Kadlubosky
Superior Court of Pennsylvania

When there is no causal connection between an insured’s ownership, maintenance, or use of his insured property and the escape of and subsequent attack by two dogs from a different property that is not covered under the policy, an insurer’s duty to defend and indemnify does not extend to the dog bite incident that occurs at the location not covered under the policy.
The action arose out of a dog bite incident in which the plaintiff claimed that defendant failed to properly restrain two Rottweiler dogs that attacked and injured her minor child on a sidewalk/roadway near their home. The dogs escaped from defendant’s business location, where he used the dogs for security protection. The court examined whether defendant’s insurer had a duty to defend or indemnify the defendant for the dog bite incident under an insurance policy that was issued for his residence, not his business location. The court held that there was no causal connection between the defendant’s ownership, maintenance, or use of the insured property, a tenant occupied dwelling, and the escape of the two dogs from his business location, a property not covered under the insurance policy, and the subsequent attack on the plaintiff. Therefore, the insurer had no duty to defend and indemnify the defendant in the underlying action.

 

Submitted by: Submitted by Richard D. Chappuis and Elisabeth Kraft Cortez (Voorhies & Labbe’).

12/6/05            Castillo Jr. v. Capitol Indemnity Corp.
Michigan Court of Appeals

“Business Pursuits” And “Water Activities” Exclusions in Homeowners Policy Excluded Coverage for Accidental Drowning Death of Child in the Insureds’ Care.
The insureds ran a day care at their home. A child in their care drowned in their pool. The insureds sought coverage for liability arising from the child’s death. The court held that the “business pursuits” and “water activities” exclusions in the policy excluded coverage.

 

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

12/2/05            Kimminau v. Uribe Refuse Service
Nebraska Supreme Court

Pursuant to Neb. Rev. Stat. § 48-120(8), the Worker’s Compensation Court shall order an employer to directly reimburse a claimant’s health insurance carrier for medical and hospital expenses paid by the insurer on the claimant’s behalf.
The plaintiff was employed as a garbage hauler by Uribe Refuse Service for 10 years before suffering a repetitive trauma injury to his left shoulder that resulted with a 20-percent impairment to his left upper extremity. His employer was directed by the Workers’ Compensation Court to pay medical expenses incurred in the treatment of the injury and to provide future medical care for the injury. The court examined the Worker’s Compensation Court’s power to order the employer to directly reimburse the plaintiff’s health insurance carrier. The court resolved the conflict between Neb. Rev. Stat. § 48-120(8) and Dawes v. Wittrock Sandblasting & Painting, 266 Neb. 526, 667 N.W.2d 167 (2003), holding that the statute was controlling authority in the case and mandated that the Worker’s Compensation Court order the employer to directly reimburse the plaintiff’s health insurance carrier for medical and hospital expenses paid by the insurer on the plaintiff’s behalf.

 

Submitted by: Submitted by Richard D. Chappuis and Elisabeth Kraft Cortez (Voorhies & Labbe’)

 

McNair v. Lee

 

Muller & Muller, Glens Falls (Robert J. Muller of counsel), for appellants.
DeAngelis & Hafiz, Mount Vernon (Talay Hafiz of counsel), for respondent.

Order, Supreme Court, Bronx County (Mark Friedlander, J.), entered January 21, 2005, which denied defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Defendants failed to satisfy their initial burden of making a prima facie showing that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Pommells v Perez, 4 NY3d 566, 574 [2005]). While defendants' physician diagnosed cervical and lumbosacral strain causally related to the accident, he did not indicate whether these conditions had resolved or could be causing plaintiff's claimed pain. He did measure certain ranges of motion of plaintiff's spine and assert that there was no disability, but he did not compare the ranges of motion to the normal until his reply affirmation. Similarly, it was not until his reply that he mentioned the MRI report documenting a herniation at T11-12 impinging on the anterior thecal sac, alleged by plaintiff to be a result of the accident. Matter improperly raised for the first time in a reply should be disregarded (see Ritt v Lenox Hill Hosp., 182 AD2d 560, 562 [1992]). In any event, an issue of fact would exist even if we were to consider the reply papers. Therein, defendants' physician did not deny the existence of the herniation, but claimed that it was not causally related to the accident and could not be a competent producing cause of plaintiff's complaints of pain. This was effectively challenged by plaintiff's treating physician, who performed both a contemporaneous and recent physical examination, on both occasions finding restricted movement in the lumbosacral spine as compared to the normal, and also noting positive straight leg raising tests (see Brown v Achy, 9 AD3d 30 [2004]). Pertinently, plaintiff's physician's most recent findings were either identical to or less restrictive than those found by defendants' physician. She opined that plaintiff sustained a central disc herniation impinging on the anterior thecal sac, confirmed by MRI, as well as thoracic and lumbar sprain/strain and [*2]bilateral peripheral neuropathy, all of which she attributed to the accident and correlated to plaintiff's limitations and complaints.

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

 

Long Island Lighting Company v. Allianz Underwriters Insurance Company

 

Order, Supreme Court, New York County (Ira Gammerman, J.), entered on or about January 8, 2004, which, in a declaratory judgment involving insurance coverage for certain environmental cleanup costs, upon defendants-respondents' motions for partial summary judgment declaring that their policies do not cover losses at the Syosset Landfill site due to plaintiffs' failure to comply with the notice provisions in their respective policies, insofar as appealed from, dismissed plaintiff-appellant's claims for coverage in connection with the Syosset Landfill site, modified, on the law, to declare that defendants-respondents are not obligated to defend or indemnify plaintiffs in connection with the Syosset Landfill site, and otherwise affirmed, without costs.

Plaintiff failed to satisfy its obligation under the subject policies to give notice upon the happening of an occurrence "reasonably likely" to involve the policies. Such occurrence happened not when plaintiff was sued in the underlying action some five weeks before giving defendants notice of the Syosset claim, but almost six months earlier, when plaintiff received a letter from the underlying plaintiff's lawyer threatening a lawsuit over the Syosset site (see Christiania Gen. Ins. Corp. v Great Am. Ins. Co., 979 F2d 268, 276 [2d Cir 1992]). We reject plaintiff's argument that there was a reasonable possibility that the subject policies, both excess, would not be reached by the Syosset claim, where plaintiff offers no evidence that the timing of [*2]its notice was the result of a deliberate determination to that effect, and not, as the record suggests, the belief that it was not responsible for the Syosset cleanup costs. Nor does it avail plaintiff to argue that defendants were not prejudiced by
the late notice (see Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742 [2005]; Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimmons Corp., 31 NY2d 436, 440 [1972]; see also Matter of Brandon [Nationwide Mut. Ins. Co.], 97 NY2d 491, 496, n3 [2002]).

All concur except Ellerin and Catterson, JJ. who dissent in a memorandum by Catterson, J. as follows:

CATTERSON, J. (dissenting)

Because I believe genuine issues of material fact exist, I respectfully dissent. Specifically, I believe the motion court improperly determined, as a matter of law, that notice to excess insurers Century Indemnity Company (hereinafter referred to as "Century") and General Reinsurance Corporation (hereinafter referred to as "General Re") was triggered by plaintiff's receipt of a form letter sent by the Town of Oyster Bay (hereinafter referred to as "Town") to 37 Long Island companies in September 1993.

Initially, both excess insurer defendants asserted that the obligation to give notice arose in 1990 when the Long Island Lighting Company (hereinafter referred to as "LILCO") was informed by the Environmental Protection Agency (hereinafter referred to as "EPA") that it was a potentially responsible party. LILCO, on the other hand, claimed that the notice obligation was triggered only after the Town winnowed out the list of 37 and commenced a lawsuit against just 15 of those companies.

Factual issues, therefore, remain as to what LILCO reasonably believed regarding its liability after receipt of the 1993 letter. Factual issues also exist as to when LILCO reasonably believed that the Town's claim would implicate the excess policies. For these reasons I cannot agree that as a matter of law LILCO failed to comply with the subject notice provisions.

The underlying lawsuit in this declaratory judgment action involves the accumulation of hazardous waste at the Syosset landfill operated by the Town from 1933 to 1975. LILCO and its successor in interest, Keyspan Corporation, used the landfill from 1954 until 1975, when the landfill was closed by the Nassau County Department of Health.

On February 2, 1989, EPA advised LILCO in writing that it had "documented the release of hazardous substances at the Syosset landfill site," and requested information from LILCO "[t]o ascertain the nature of the materials you generated, treated, transported and/or disposed of." By a letter dated March 3, 1989, LILCO advised the EPA that between the years 1954 and 1975, the only material it was aware it had deposited at the landfill was "construction and demolition waste."

EPA and LILCO continued corresponding until August 3, 1990, when the EPA sent LILCO a copy of the "Superfund Proposed Plan for the Syosset Landfill Superfund Site." The proposal listed plans with varying costs for the clean-up, with a cost of $26.2 million dollars for [*3]the plan favored by the EPA.

Approximately three years later, on September 3, 1993,
the Town sent a letter to LILCO asserting that LILCO, along with others, was liable under federal and state statutes for all or a portion of the costs of the clean-up which was ongoing ^[FN1]. Attached to the letter was a list of 37 other Long Island companies, which the Town described as "parties [also] receiving notice of the Town's claim."

On February 18, 1994, the Town commenced a lawsuit in the United States District Court for the Eastern District of New York against just 15 of those companies, including LILCO, seeking, inter alia, a declaration that the defendants were obligated to pay for clean-up and removal costs at the landfill. On March 25, 1994, LILCO informed its various insurers, including the defendants Century and General about the lawsuit.

Century and its predecessor companies had issued eight excess liability policies to LILCO during the period between 1957 and 1966. The self-insured retention varied from $25,000 in the 1957 policy to $100,000 in the 1962-1966 policies. General Re issued four upper-layer excess policies to LILCO from 1954 to 1966.

In the letter of March 25, 1994, LILCO requested of Century and General Re, as it did of its other insurers, that they provide defense costs and indemnification. LILCO informed all the carriers that it had retained attorneys to defend it in a lawsuit where a finding against any or all of the defendants raised the possibility of joint and several liability. Subsequently, LILCO brought this declaratory judgment action against all the insurers who failed to respond positively.

Several defendant carriers, other than Century and General Re, moved to dismiss the complaints. The motion court dismissed them, concluding that because the coverage provided by the primary carriers and the self-insured retention would not be exceeded to reach the coverage provided by these carriers, the claims against these carriers were not justiciable. The complaints against other carriers were dismissed for other reasons, including bankruptcy.

In June and July 2000, Century and General Re moved and cross-moved for partial summary judgment. Both asserted that LILCO's obligation to give notice arose in 1990, upon being advised by the EPA that LILCO was identified as a potentially responsible party. LILCO claimed that it did not appear "reasonably likely" that it faced liability until the Town commenced its lawsuit against multiple defendants including LILCO in February 1994 and that, therefore, its notice to both insurers was timely. More significantly, LILCO argued that the allocation of losses among the various insurers over the life of the landfill was a relevant inquiry because such inquiry would demonstrate which of the excess policies were implicated, and thus when the notice to those excess insurers would have been necessary.

New York law unfortunately provides that because "notice provisions in insurance policies afford the insurer an opportunity to protect itself [ ] [a]bsent a valid excuse, a failure to satisfy the notice requirement vitiates the policy, and the insurer need not show prejudice before it can assert the defense of noncompliance." Security Mutual Insurance Co. v. Acker-[*4]Fitzsimmons Corp., 31 N.Y.2d 436, 440, 340 N.Y.2d 902, 905, 293 N.E.2d 76, 78 (1972)^[FN2]. The motion court's determination that LILCO failed to comply with the notice provisions was made on the basis that, after receipt of the 1993 letter, LILCO should have gleaned that there was a "reasonable possibility" of the policies' involvement. The court held that, as of that date, "LILCO knew that the Town of Oyster Bay would hold it responsible for the materials disposed of at the landfill, and that this potential liability could be as much as $26.2 million."

The relevant factual inquiry here is the reasonableness of LILCO's beliefs about its liability at the time of the letter. In particular, questions arise as to whether it was reasonable for LILCO to believe, after receipt of the 1993 letter, that it would be liable, and if so whether LILCO believed that the Town's claim would implicate the excess policies.

The well-settled law of this jurisdiction is that an insured's delay or failure to give timely notice may be excused where the insured has a reasonable belief that it would not be liable. Paramount Ins. Co., v. Rosedale Gardens Inc., 293 A.D.2d 235, 239, 743 N.Y.S.2d 59, 62 (2002). At issue is not whether an insured believes that he or she will ultimately be found liable but whether he or she has a reasonable basis for a belief that no claim will be asserted against him or her. SSBSS Realty v. Pub. Serv. Mut. Ins. Co., 253 A.D.2d 583, 584, 677 N.Y.S.2d 136, 138 [1998]).

In this case, LILCO asserts that the 1993 letter was sent after a three-year period of silence on the issue of the landfill; that there was no communication between EPA, the Town and LILCO during that period; and that the letter reiterated the Town's belief that LILCO had arranged for the disposal of hazardous substances at the site but the Town offered no factual basis for that claim or any additional facts whatsoever. LILCO contends that the letter appeared to be no more than a form letter that was also sent to 37 other Long Island companies more than half of which were subsequently not named as defendants in the lawsuit commenced by the Town. Thus, LILCO maintains that a question of fact exists as to whether it was reasonable for it to believe that no claim would be asserted against it.

Further, LILCO argues that the defendants fail to distinguish between notice obligations under primary policies and those under excess policies. It argues that the issue is whether it appeared likely, before the commencement of the lawsuit, that the company would face sufficient liability to implicate the excess policies.

The landmark case of American Home Assur. Co. v. Intl. Ins. Co., 90 N.Y.2d 433, 661 N.Y.S.2d 584, 684 N.E.2d 14 (1997), extended the no-prejudice exception to excess insurers, holding that they have the same interests as primary insurers, and that therefore, notice provisions apply equally where they are concerned. The Court noted the difference between primary insurance coverage and excess insurance coverage by observing that the term 'primary' insurance is "used to distinguish the coverage that is immediately triggered upon a defined occurrence from 'excess' insurance, i.e. coverage which is triggered only after the former is exhausted." Id. at [*5]441, 661 N.Y.S.2d at 587, n.2 (emphasis added), citing American Home Assur. Co. v. Republic Ins. Co., 984 F.2d 76, 77 (2d Cir. 1993), cert denied, 508 U.S. 973, 113 S.Ct. 2964, 125 L.Ed.2d 664 (1993). By logical extension, as the plaintiff asserts, the obligation to provide notice to an excess insurer does not arise at the same time as does the obligation to provide notice to a primary insurer, (that is upon the happening of an occurrence or event likely to give rise to a claim), but upon the insured "reasonably concluding" that a covered occurrence is likely to "trigger" the excess
policy. See Olin Corp. v. Am. Re-Insurance Co., 2003 WL 22048230, *2, 2003 U.S. App LEXIS 18209, *5-6 (2d Cir. 2003).

Indeed, the facts of American Home, 90 N.Y.2d 433, supra, support this conclusion. The case involved a fire in which a family of five perished after its gas furnace was improperly installed by the insured, Mobil Gas. Within days of the accident in December 1985, attorneys for Mobil notified its primary insurer, Liberty Mutual, of total culpability and "horrendous damages" which would exceed $5 million. The primary insurance policy provided coverage up to $300,000, but it took more than six weeks before American Home Assurance, the first level excess insurer, was informed of the accident. Nevertheless, there was no disclaimer of coverage by American on the basis of late notice.^[FN3]

Federal courts applying New York law on notice requirements have concluded that "an insured's obligation to notify its excess carriers is slightly different from the obligation to notify its
primary carrier." Green Door Realty Corp. v. TIG Ins. Co., 329 F.3d 282, 288 (2003), citing Olin Corp v. Ins. Co. Of N. Am., 743 F. Supp. 1044 (S.D.N.Y. 1990), affd, 929 F.2d 62 (2d Cir. 1991). In effect, excess and primary insurance policies have "different notice accrual points." Olin Corp. v. Am. Re-Insurance Co., supra, citing American Assur. Co. v. Republic Ins. Co., 984 F.2d at 77.

Thus, in determining whether LILCO's notice to its excess insurers was timely, an additional question of fact exists as to whether LILCO demonstrated a reasonable belief that the claims were not of "sufficient magnitude to penetrate through the primary coverage and reach the excess policies." Olin Corp., v. Am. Re-Insurance, 2003 WL 22048230 at *2, 2003 U.S. App LEXIS 18209 at *7. LILCO claims that relevant to making the assessment as to whether any excess policies would be implicated at all is a calculation based on the spread of the damages over the number of policy years. The trial court rejected the argument although the court itself used the method of spreading the worst-case estimate of damages across the policy years at issue to initially determine which excess insurers would not be reached, and thus who could be dismissed from LILCO's declaratory judgment action. LILCO's assertion that taking the spread into account is absolutely essential to the determination of whether a notice obligation arose upon receipt of the 1993 letter is supported by the observation that when a notice obligation is triggered only by a claim that is reasonably likely to implicate a given policy, the insured must necessarily weigh all the factors that would affect the policy being implicated. In this case, LILCO maintains that a finder of fact could reasonably have concluded that it did not appear [*6]likely that a claim spread among the decades of triggered policies would reach any of the excess policies at issue. Additionally, whether LILCO's belief about the implication of its excess policies was, in fact, based on any such assessment is another question for the finder of fact, and should not have been resolved by the court on summary judgment. Argentina v. Otsego Mut. Fire Ins. Co., 86 N.Y.2d 748, 750, 631 N.Y.S.2d 125, 126, 655 N.E.2d 166, 167 (1995) (whether a good-faith belief exists and whether that belief is reasonable under the circumstances are ordinarily questions for the finder of facts).

For the foregoing reasons I disagree with the majority
decision granting partial summary judgment to the defendants and dismissing the plaintiff's claims for coverage in connection with the underlying lawsuit.

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

ENTERED: DECEMBER 8, 2005

CLERK

Footnotes

Footnote 1:The letter stated in relevant parts: "The Town believes that LILCO arranged for the disposal of hazardous substances at the Site [ ] and, accordingly that LILCO is liable [..] for all or a portion of those costs.[ ] If it is not possible to settle this matter [ ] the Town expects to commence an appropriate action against LILCO and other potentially responsible parties."

Footnote 2:Despite the public policy considerations set out in my plurality opinion to the contrary in Great Canal Realty Corp. v. Seneca Ins. Co., 13 A.D.3d 227, 787 N.Y.S.2d 22 [2004] revd, 5 N.Y.3d 742, 800 N.Y.S.2d 521, 833 N.E.2d 1196 [2005], the Court of Appeals has steadfastly refused to yield ground on this point. See Rekemeyer v. State Farm Mutual, 4 N.Y.3d 468, 796 N.Y.S.2d 13, 828 N.E.2d 970 (2005).

Footnote 3: The disclaimers were made by two second-level excess insurers who were notified by American after a negotiated settlement wiped out the primary insurance as well as American's excess coverage.

 

 

Gonzalez v. Green

Mercure, J.P.

Appeal from an order of the Supreme Court (Williams, J.), entered August 25, 2004 in Saratoga County, which granted defendants' motion for summary judgment dismissing the complaint.

Plaintiff Nissette Gonzalez (hereinafter plaintiff) claims that she suffered serious injuries under Insurance Law § 5102 (d) when defendant Katharine L. Green's vehicle struck the vehicle in which plaintiff was riding. Supreme Court granted defendants' motion for summary judgment dismissing the complaint and this appeal ensued.

We affirm. Defendants met their initial burden of establishing that plaintiff did not sustain a permanent consequential limitation of use of a body organ or member, or significant limitation of use of a body function or system, and that she was not prevented from performing substantially all of her usual and customary daily activities for 90 of the first 180 days following the accident within the meaning of Insurance Law
§ 5102 (d) (see Franchini v Palmieri, 1 NY3d 536, 537 [2003]; Chunn v Carman, 8 AD3d 745, 746 [2004]). Defendants introduced a medical report from a physician who opined, based on his review of plaintiff's medical reports and his examination of plaintiff, that no objective medical findings supported plaintiff's claims of serious injury to her back, left shoulder and neck. In addition, defendants submitted plaintiff's medical records from the first 90 days after the accident [*2]showing that her physicians placed no restrictions on her, instead providing her only with a neck brace and the suggestion that she take "a strong dosage of Motrin." Thus, the burden shifted to plaintiffs to "offer proof in admissible form sufficient to create a material issue of fact" (Franchini v Palmieri, supra at 537).

In response, plaintiffs submitted an affidavit from plaintiff's physician, Raymond Auletta, who began treating her more than six months after the accident, averring that plaintiff had pain, limitation in the range of motion of her neck and shoulder, a muscle spasm on one occasion, a cervical radiculopathy causing weakness in the left biceps, and "a mild focal central disc herniation . . . [that] was impinging upon the cervical spinal cord." Auletta who prescribed oral steroids, injected pain medication and referred plaintiff for a cervical epidural injection opined that plaintiff's injuries were permanent and caused by the motor vehicle accident.

It is settled that "[p]roof of a herniated disc, without additional objective medical evidence establishing that the accident resulted in significant physical limitations, is not alone sufficient to establish a serious injury" (Pommells v Perez, 4 NY3d 566, 574 [2005]). While an expert's qualitative assessment may suffice, that evaluation must "ha[ve] an objective basis and compare[] the plaintiff's limitations to the normal function, purpose and use of the affected body organ, member, function or system" (Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Here, Auletta did not sufficiently detail plaintiff's limitation of motion and muscle spasm, or identify any diagnostic tests or other objective medical basis for his finding that plaintiff's limitation was significant (see Burford v Fabrizio, 8 AD3d 784, 785 [2004]; see also Franchini v Palmieri, supra at 537; Toure v Avis Rent A Car Sys., supra at 357-358). Indeed, the magnetic resonance imaging report relied upon by Auletta performed approximately one year after the accident indicates that plaintiff's soft tissue injury was only mild and that there was no nerve root compression or significant compression of the spinal cord; otherwise Auletta relied primarily upon plaintiff's subjective complaints of pain (see Scheer v Koubek, 70 NY2d 678, 679 [1987]). Accordingly, plaintiffs failed to demonstrate, as required, a question of fact regarding whether plaintiff's limitation was more than mild, minor or slight (see Licari v Elliott, 57 NY2d 230, 236 [1982]; cf. Anderson v Persell, 272 AD2d 733, 734 [2000]). Moreover, even assuming that Auletta's affirmation constitutes objective medical evidence of an injury, he did not treat or diagnose plaintiff until the 180-day statutory limit had passed and plaintiff submitted no other medical evidence demonstrating "that her 'normal activities were substantially curtailed for the requisite period of time'" (Mack v Goodrich, 11 AD3d 846, 848 [2004], quoting Marks v Brown, 3 AD3d 648, 651 [2004]; see Toure v Avis Rent A Car Sys., supra at 357-358; Khan v Hamid, 19 AD3d 460, 462 [2005]). Thus, Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint.

Crew III, Peters, Carpinello and Kane, JJ., concur.

ORDERED that the order is affirmed, with costs.

Sault, Inc. v. Hermitage Insurance Company

Donald J. Feerick, Jr., New City, N.Y., for appellant.
Gold, Stewart, Kravatz & Stone, LLP, Westbury, N.Y. (Jeffrey
B. Gold of counsel), for respondent.

In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying personal injury action entitled Todd v Miele in the Supreme Court, Rockland County, under Index No. 3828/01, the plaintiff appeals from an order of the Supreme Court, Rockland County (O'Rourke, J.), dated December 1, 2003, which denied its motion for summary judgment and granted the defendant's cross motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Rockland County for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying personal injury action entitled Todd v Miele in the Supreme Court, Rockland County, under Index No. 3828/01.

The plaintiff owned a hotel where a guest was attacked by an alleged former employee and tenant of the hotel. In a criminal proceeding, the attacker was found not guilty by reason of mental disease or defect. The plaintiff sought a defense and indemnification in the action by the guest against it, and the defendant insurer declined on the grounds that the plaintiff did not provide it with notice as soon as practicable, and that the policy contained an assault and battery exclusion. The plaintiff commenced this declaratory judgment action against the insurer, which, in turn, successfully moved for summary judgment. This appeal ensued. [*2]

The insurer established its entitlement to judgment as a matter of law by establishing that the plaintiff failed to provide timely notification of the incident, as it did not receive notice until more than one year after the incident occurred (see Travelers Indem. Co. v Worthy, 281 AD2d 411). The plaintiff's contention in response, that it had a good faith belief of nonliability, was insufficient to raise a triable issue of fact as to the timeliness of the notice (see Metropolitan N.Y. Coordinating Council on Jewish Poverty v National Union Ins. Co. of Pittsburgh, Pa., 222 AD2d 420; Security Mut. Ins. Co. Of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441).

The insurer was also entitled to summary judgment on the ground that the assault and battery exclusion applied (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 350).

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Rockland County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying personal injury action entitled Todd v Miele in the Supreme Court, Rockland County, under Index No. 3828/01 (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 317 US 901).
SCHMIDT, J.P., COZIER, RIVERA and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

 

Gallante Properties, Inc. v. Allcity Insurance Company

 

In an action for a judgment declaring that the defendant is obligated to defend and/or indemnify the plaintiff in an underlying personal injury action entitled Persaud v Gallante Props., commenced in the Supreme Court, Queens County, under Index No. 16752/98, the plaintiff appeals from an order and judgment (one paper) of the Supreme Court, Queens County (Grays, J.), entered September 15, 2004, which granted the defendant's motion for summary judgment and declared that the defendant is not obligated to defend and/or indemnify the plaintiff in the underlying action.

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

Compliance with an insurance policy notice provision is a condition precedent to coverage, and the failure to comply vitiates the policy (see White v City of New York, 81 NY2d 955, 957; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440; Lukralle v Durso Supermarkets, 238 AD2d 318, 319). The insured has the burden of demonstrating a reasonable excuse for the delay in providing notice (see White v City of New York, supra at 957; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra at 441; Lukralle v Durso Supermarkets, supra at 319).

The defendant established its prima facie entitlement to summary judgment by presenting evidence demonstrating that the plaintiff became aware of the subject incident months after its occurrence, and failed to present a reasonable excuse for the untimely delay in providing [*2]notice for nearly five years after becoming aware (see White v City of New York, supra; Lukralle v Durso Supermarkets, supra). In response, the plaintiff failed to raise a triable issue of fact sufficient to defeat summary judgment (see Zuckerman v City of New York, 49 NY2d 557, 562). Therefore, the grant of summary judgment was proper.
COZIER, J.P., KRAUSMAN, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

 

New York Central Mutual Fire Insurance Company v. Licata


In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of a claim for supplemental uninsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Kings County (Schack, J.), dated April 26, 2005, which denied the petition and, in effect, dismissed the proceeding.

ORDERED that the order is reversed, on the law, with costs, the petition is reinstated, and the matter is remitted to the Supreme Court, Kings County, for a hearing on the issue of whether the offending vehicle was insured on the date of the accident, and if so, by what carrier, and a new determination of the petition thereafter, and for the purpose of the hearing, Encompass Insurance Company of America, Security Indemnity Insurance Company, Allen J. Rombough, Jr., and Pasquale F. Martino, are joined as parties respondents; and it is further,

ORDERED that the arbitration is temporarily stayed pending the hearing and determination of the petition.

The petitioner's contention that the respondent was not entitled to seek supplemental uninsured motorist (hereinafter SUM) coverage under his policy with the petitioner because the insolvency of Security Indemnity Insurance Company did not render the offending vehicle uninsured is without merit (see Matter of Metropolitan Prop. & Cas. Ins. Co. v Carpentier, 7 AD3d 627, 628; [*2]Matter of American Mfrs. Ins. Co. v Morgan, 296 AD2d 491, 494).

However, the Supreme Court erred in denying the petition. The petitioner established a prima facie showing of the existence of insurance coverage for the offending vehicle by producing the police accident report which contained an insurance code designation for Encompass Insurance Company of America indicating coverage for the offending vehicle (see Matter of Eagle Ins. Co. v Rodriguez, 15 AD3d 399, 400; Matter of Liberty Mut. Ins. Co. v McDonald, 6 AD3d 614, 615). The proof submitted by the respondent, namely his attorney's affirmation and various items of correspondence between his attorneys and insurance company representatives, was conclusory and otherwise inadmissible in evidence. Thus, it was insufficient to overcome the petitioner's prima facie showing (see Matter of Lumbermens Mut. Cas. Co. v Quintero, 305 AD2d 684, 685; Matter of Eagle Ins. Co. v Sadiq, 237 AD2d 605).

Therefore, it was improper for the Supreme Court to deny the petition and to direct arbitration without first determining at a hearing whether or not the offending vehicle was uninsured, and without joining Encompass Insurance Company of America, Security Indemnity Insurance Company, Allen J. Rombough, Jr., and Pasquale F. Martino, as necessary parties. Accordingly, we remit the matter to the Supreme Court, Kings County, for an evidentiary hearing and a new determination on the petition.
CRANE, J.P., MASTRO, RIVERA and SPOLZINO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

 

Alma v. Samedy

 

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Price, J.), dated September 3, 2004, 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.

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' orthopedist, who examined the plaintiff one year after the accident, reported, inter alia, finding restrictions in the range of motion of the plaintiff's left shoulder. These restrictions were consistent with the magnetic resonance imaging report of a left shoulder impingement, and the plaintiff's deposition testimony concerning her inability to fully use her left shoulder and arm as before. Furthermore, the defendants' experts failed to address the plaintiff's claim that she suffered a medically-determined injury which prevented her from performing substantially all of the material acts constituting her usual and customary daily activities for not less than 90 days of the 180 days immediately following the [*2]accident. In light of the defendants' failure to meet their initial burden of establishing entitlement to judgment as a matter of law, we need not consider whether the plaintiff's papers submitted in opposition to the defendants' motion were sufficient to raise a triable issue of fact (see Hanna v Alverado, 16 AD3d 624; Spuhler v Khan, 14 AD3d 693, 694; Coscia v 938 Trading Corp., 283 AD2d 538; Chaplin v Taylor, 273 AD2d 188; Mariaca-Olmos v Mizrhy, 226 AD2d 437, 438).

Accordingly, the Supreme Court erred in granting the defendants' motion for summary judgment dismissing the complaint.
H. MILLER, J.P., CRANE, KRAUSMAN, RIVERA and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Giraldo v.  Mandanici

 

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Underwood, J.), dated July 23, 2004, which granted the motion of the defendants Joseph J. Mandanici and Town of Islip and the separate motion of the defendant Lubin H. Perez 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 affirmed, with costs to the respondents Joseph J. Mandanici and Town of Islip.

Contrary to the plaintiff's arguments, the defendants' evidence, consisting of the plaintiff's deposition testimony and hospital records, and the affirmed report of the orthopedist who performed an independent medical examination, established, prima facie, 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; Luckey v Bauch, 17 AD3d 411; Sims v Megaris, 15 AD3d 468). Even though the orthopedist made no findings as to the range of motion in the plaintiff's cervical spine and found "some" limitation in his lumbar spine, a prima facie case for [*2]summary judgment was made out when he attributed the conditions in the plaintiff's cervical and lumbar spines to degenerative changes.

The plaintiff's evidence in opposition, however, failed to raise a triable issue of fact. As the Supreme Court noted, the plaintiff's experts failed to address the finding of the defendants' expert attributing the condition of the plaintiff's cervical and lumbar spine to degenerative changes as noted on the radiology report made on the day of the accident. This rendered speculative the plaintiff's expert's opinion that the plaintiff's lumbar and cervical conditions were caused by the motor vehicle accident (see Lorthe v Adeyeye, 306 AD2d 252, 253; Ginty v MacNamara, 300 AD2d 624, 625).

Accordingly, the Supreme Court properly granted the motions of the defendants Joseph J. Mandanici and Town of Islip and the separate motion of the defendant Lubin H. Perez 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).
H. MILLER, J.P., CRANE, KRAUSMAN, RIVERA and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

McConnell v. Ouedraogo

 

In an action to recover damages for personal injuries, the defendants BBV II Corp., d/b/a Better Buggy Car Rental, and Stanley C. Johashen appeal from (1) an order of the Supreme Court, Kings County (Schneier, J.), dated April 16, 2004, which denied their motion for summary judgment dismissing the complaint insofar as asserted against them by the plaintiff William Miller on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2) an order of the same court dated January 28, 2005, which denied their motion, in effect, for leave to renew.

ORDERED that the order dated April 16, 2004, is reversed, on the law, the motion for summary judgment is granted, and the complaint insofar as asserted against the defendants BBV II Corp., d/b/a Better Buggy Car Rental, and Stanley C. Jonashen by the plaintiff William Miller is dismissed; and it is further,

ORDERED that the appeal from the order dated January 28, 2005, is dismissed as academic; and it is further,

ORDERED that one bill of costs is awarded to the defendants BBV II Corp., d/b/a [*2]Better Buggy Car Rental, and Stanley C. Jonashen.

The Supreme Court erred in denying the appellants' motion for summary judgment. The appellants made a prima facie showing through the deposition testimony of the plaintiff William Miller (hereinafter the plaintiff) and the affirmed medical report of their expert 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; Batista v Olivo, 17 AD3d 494; Grant v Fofana, 10 AD3d 446). In opposition, the affirmation of the plaintiff's physician was insufficient to raise a triable issue of fact. There was an unexplained gap in time between the plaintiff's treatment in 1999 and the physician's subsequent examination of the plaintiff in 2004 (see Pommells v Perez, 4 NY3d 566). Although the plaintiff's physician indicated that the plaintiff exhibited limitations in motion at the subsequent examination, the physician failed to indicate the objective medical tests he used in arriving at such determination (see Ersop v Variano, 307 AD2d 951; Carroll v Jennings, 264 AD2d 494). Further, the plaintiff's physician's diagnosis and opinion was based upon unsworn magnetic resonance imaging reports not properly before the court (see Friedman v U-Haul Truck Rental, 216 AD2d 266; D'Amato v Mandello, 2 AD3d 482; Williams v Hughes, 256 AD2d 461; Merisca v Alford, 243 AD2d 613).

Moreover, the plaintiff's statement that he was unable to return to work for six months following the accident was not based upon any competent medical evidence supporting his claim that he was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days as a result of the subject accident (see Davis v New York City Tr. Auth., 294 AD2d 531; Sainte-Aime v Ho, 274 AD2d 569; Arshad v Gomer, 268 AD2d 450; DiNunzio v County of Suffolk, 256 AD2d 498, 499).

Accordingly, the appellants were entitled to summary judgment dismissing the complaint insofar as asserted against them by the plaintiff.
COZIER, J.P., LUCIANO, FISHER and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

 

Atlantic General Contracting, Inc. v. United States Liability Insurance Group

Baxter & Smith, P.C., White Plains, N.Y. (Sim R. Shapiro of
counsel), for appellants.
Miranda & Sokoloff, LLP, Mineola, N.Y. (Steven Verveniotis
of counsel), for respondents.

In an action, inter alia, for a judgment declaring that the defendants United States Liability Insurance Group and Mount Vernon Fire Insurance Company are obligated to defend and/or indemnify the plaintiffs in an underlying personal injury action entitled Carreon v A.N.A. Team Corp., et al., pending in the Supreme Court, Queens County, under Index No. 24344/99, the plaintiffs appeal from an order of the Supreme Court, Nassau County (O'Connell, J.), dated July 27, 2004, which granted the motion of the defendants United States Liability Insurance Group and Mount Vernon Fire Insurance Company for summary judgment declaring that they are not so obligated and denied their cross motion for summary judgment in their favor against those defendants.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the defendants United States Liability Insurance Group and Mount Vernon Fire Insurance Company are not obligated to defend and/or indemnify the plaintiffs in the underlying personal injury action.

The Supreme Court properly determined that, under the facts of this case, New York law, as opposed to New Jersey law, is applicable since New York has the most significant contacts [*2]to the instant dispute (see generally Matter of Eagle Ins. Co. v Singletary, 279 AD2d 56, 58-59; Matter of Allstate Ins. Co. v Conigliaro, 248 AD2d 293). New York is the location where the construction work at issue was to be performed, as well as the location of the subject accident and underlying lawsuit.

The defendants United States Liability Insurance Group and Mount Vernon Fire Insurance Company (hereinafter the insurer defendants) established their prima facie entitlement to summary judgment by demonstrating that they did not receive timely notice of the occurrence and properly disclaimed coverage (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d 304; Serravillo v Sterling Ins. Co., 261 AD2d 384).

In response, the plaintiffs failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Although New Jersey law requires that an insurer show "appreciable prejudice" before it disclaims coverage based upon an insured's failure to timely notify it of an occurrence (see Molyneaux v Molyneaux, 230 NJ Super 169, 173; Cooper v Government Empl. Ins. Co., 51 NJ 86), New York law does not impose such a requirement (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra at 440; Blue Ridge Ins. Co. v Jiminez, 7 AD3d 652, 654).

Therefore, the Supreme Court properly granted the motion of the insurer defendants for summary judgment and properly denied the plaintiffs' cross motion for summary judgment.

The plaintiffs' remaining contentions are without merit.

Since this is a declaratory judgment action, the Supreme Court should have directed the entry of a declaration in favor of the insurer defendants (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
SCHMIDT, J.P., COZIER, RIVERA and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

Hurley v. First Unum Life Insurance Company


 

In an action, inter alia, for a judgment declaring that the plaintiff is totally disabled and that the defendant is obligated to pay the plaintiff benefits pursuant to a policy of disability insurance, the plaintiff appeals, as limited by her brief, from so much of a judgment of the Supreme Court, Nassau County (O'Connell, J.), entered March 20, 2003, as, after a nonjury trial, and upon an order of the same court dated March 30, 2001, as amended June 14, 2001, and September 11, 2002, which, among other things, determined that the plaintiff breached her duty of cooperation under the disability insurance policy by refusing to submit to a medical test requested by the defendant, and granted that branch of the defendant's cross motion which was to dismiss the complaint, is in favor of the defendant and against her dismissing the complaint, and the defendant cross-appeals from so much of the same judgment as, upon the order, directed that the dismissal of the complaint be "without prejudice," and directed reimbursement of certain premiums paid by the plaintiff.

ORDERED that the judgment is reversed insofar as appealed from, on the law, that branch of the cross motion which was to dismiss the complaint is denied, the order is vacated, and the matter is remitted to the Supreme Court, Nassau County, for the entry of an amended judgment declaring that the plaintiff is disabled and the defendant is obligated to pay to the plaintiff disability [*2]benefits in accordance with the terms of the subject policy of insurance; and it is further,

ORDERED that the cross appeal is dismissed as academic in light of the determination of the appeal; and it is further,

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

The plaintiff, a dental hygienist, purchased an "own occupation" policy of disability insurance from the defendant, First UNUM Life Insurance Company, in 1991. In or about September 1994 the plaintiff was diagnosed as suffering from carpal tunnel syndrome. She made a claim under the policy and the defendant required that she undergo a medical examination by a physician it selected. The examination included an electromyelograph study (hereinafter EMG), the result of which was negative. After considering the report of its examining physician, which reached the conclusion that the plaintiff was suffering from pronator teres syndrome, either in addition to or rather than carpal tunnel syndrome, the defendant determined that the plaintiff was totally disabled and commenced paying benefits pursuant to the policy. Each month thereafter, the plaintiff duly submitted a statement by her treating physician, Dr. Peter Stein, attesting to the continuation of the condition that resulted in the finding of a disability, as required by the policy, and the defendant paid the benefits due pursuant to the policy.

In early 1997 the defendant's claims examiner reviewed the plaintiff's file and found it questionable that the plaintiff was totally disabled as a result of her work as a dental hygienist, but was able to care for the child to which she had given birth subsequent to the onset of her disability. There was no medical evidence in the file, or produced subsequently, to support the reasonableness of this concern. The claims examiner ordered a medical review of the plaintiff's file and, as a result of that review, a physician employed by the defendant suggested to the plaintiff's physician that the plaintiff undergo an additional EMG. Although the plaintiff's physician initially agreed to that suggestion, and took steps to implement it, he subsequently discussed the matter with the plaintiff and they "decided that it probably wouldn't change anything, repeating EMGs." The plaintiff admitted that she initially agreed to submit to the EMG, but later changed her mind. A progress report by the plaintiff's physician dated May 12, 1997, indicated that "[d]ue to the complexity of her problems and bilateral nerve compressions and the limited guarantee of improvement by surgery, further invasive testing (EMG's) will be deferred at present."

In a telephone conversation on June 3, 1997, the claims examiner advised the plaintiff that in order for benefits to continue she would have to undergo the EMG. The substance of that conversation was confirmed by letter of the same date from the claims examiner to the plaintiff, which stated, in relevant part: "As discussed today, no further benefits can be extended until an EMG test is performed and the results are received and reviewed by this office. Based on all the information in the file and a telephone conversation between Dr. Stein and our medical consultant, we find that there is a lack of significant clinical and objective findings to support the degree of impairment you claim exists."

The plaintiff then obtained an attorney. By letter dated June 17, 1997, to the plaintiff's attorney, the claims examiner stated: "As discussed with Ms. Hurley and yourself, we feel we have a deniable claim at this time. However, we are willing to keep the file open pending the result of an EMG. After your review of the enclosed information, please advise as to whether Ms. Hurley will be having an EMG or not." This was followed by a letter dated July 9, 1997, to the plaintiff's attorney, in which the claims examiner stated: "As previously discussed with yourself and [*3]Ms. Hurley, we have not received any indication that Ms. Hurley will be having an EMG. Therefore, this claim has been closed." The letter then summarized the basis for the defendant's determination:

"As you are aware, we have completed a comprehensive review of all the medical records of Dr. Peter Stein. We then arranged for one of our staff physicians to review Ms. Hurley's medical records and to speak to Dr. Stein regarding Ms. Hurley's condition. Our staff physician and Dr. Stein . . . agreed to strongly suggest to Ms. Hurley that she undergo these studies. Even though we felt we had enough information in this file to close this claim for lack of significant clinical and objective findings to support the degree of impairment Ms. Hurley claims exists, we were willing to keep the file open until the EMG studies were done.

"Since there is insufficient medical information to support Ms. Hurley's claimed inability to work, we are unable to extend further benefits and have closed this claim."

The plaintiff thereafter continued to refuse to undergo the EMG and ultimately instituted this action, inter alia, for a judgment declaring that she is totally disabled and that the defendant is obligated to pay benefits pursuant to the policy of disability insurance. The defendant denied that the plaintiff is totally disabled and defended on the additional ground that the plaintiff failed to submit to the examination, as required by the terms of the policy. Following a nonjury trial, the Supreme Court determined that the plaintiff's failure to submit to the testing constituted a breach of her duty to cooperate under the policy and, inter alia, dismissed the complaint without prejudice on that basis. The Supreme Court declined to address the issue of the plaintiff's disability on the ground that it was not necessary to reach that issue in light of its determination. This appeal and cross-appeal ensued.

Under the terms of the policy of disability insurance at issue here, the plaintiff was obligated to submit to a medical examination that was reasonably requested by the defendant at any time during the pendency of a claim. Since the policy treated each monthly payment as the subject of a separate claim, the plaintiff's claim was "pending" for each such period and the defendant was effectively permitted to require that the plaintiff undergo such an examination on a regular basis, provided that it was reasonable to do so. The willful failure of the insured to submit to a reasonably requested examination is a legitimate basis for denying the claim (see Argento v Aetna Cas. & Sur. Co., 184 AD2d 487, 488; Pizzirusso v Allstate Ins. Co., 143 AD2d 340, 341; Ausch v St. Paul Fire & Mar. Ins. Co., 125 AD2d 43, 50). In this context, however, the requirement that the request be reasonable can refer only to reasonableness in relation to the insurer's determination to honor or deny the claim. Viewed in that light, the defendant's request, under the particular facts of this case, was not reasonable.

Here, the plaintiff was diagnosed as suffering from carpal tunnel syndrome over two years before the claim was closed despite a negative EMG. The plaintiff's treating physician testified, and the physician who conducted the original medical evaluation on behalf of the defendant confirmed, that this was not unusual in light of the relatively high number of false negative results from the test. The plaintiff's treating physician further testified cogently that in light of this fact, a further EMG would not alter his diagnosis or his conclusion that the plaintiff suffered from a disabling condition. The medical evidence submitted by the defendant failed to counter this testimony. As a result, the plaintiff's refusal to undergo the EMG was not inconsistent with her [*4]obligations under the policy.

In any event, even if the defendant had reasonably requested an additional medical examination, the complaint was improperly dismissed on the ground that the plaintiff refused to submit to that examination since the defendant did not deny the claim on that basis (see General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864; Shell v Fireman's Fund Ins. Co., 17 AD3d 444, 446; Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d 595, 596). As the letters from the defendant's claims examiner made clear, while the defendant threatened to discontinue benefits by reason of the plaintiff's failure to undergo the EMG, the defendant ultimately denied the plaintiff's claim on the basis of the lack of sufficient evidence that the plaintiff was disabled within the meaning of the policy. Having elected to terminate the plaintiff's benefits because it found insufficient evidence that the plaintiff was disabled, the defendant had no basis to request a further examination and the plaintiff's subsequent failure to undergo the additional examination was immaterial to the validity of the termination (see Finkelstein v Equitable Life Assur. Soc. of U.S., 256 App Div 593, 596-597, affd 281 NY 690). The Supreme Court erred, therefore, in dismissing the complaint on the ground that the plaintiff failed to undergo the requested examination.

The validity of the defendant's action thus turns on the sufficiency of its finding that the plaintiff was not disabled within the meaning of the policy. Although the Supreme Court did not reach this issue, the scope of our review is sufficiently broad that we may reach the issue nonetheless and render the judgment we find to be warranted (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499; Ausch v St. Paul Fire & Mar. Ins. Co., supra at 46). Upon doing so, we find that the complaint should have been sustained.

In the unique circumstances of this case, the plaintiff made out a prima facie case that the defendant breached the contract of insurance by establishing that the defendant admitted that she was disabled within the meaning of the "own occupation" disability policy by paying her claim for a period of 2 1/2 years, and that there had been no change in her medical condition since that time. The defendant's proof, consisting, essentially, of testimony that without the EMG there was no "objective" proof of the plaintiff's disability, was insufficient to overcome the plaintiff's showing.

The parties' remaining contentions are either without merit or have been rendered academic in light of our determination.

Since this is an action for a declaratory judgment, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that the plaintiff is disabled within the meaning of the policy and that the defendant is obligated to pay to the plaintiff disability benefits in accordance with the terms of the policy of insurance (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
H. MILLER, J.P., ADAMS and SPOLZINO, JJ., concur.
GOLDSTEIN, J., dissents and votes to modify the judgment, on the law and the facts, by adding a provision thereto declaring that the disability insurance policy is cancelled and the parties have no further obligations to each other, and as so modified, to affirm the judgment insofar as appealed and cross-appealed from, with the following memorandum: [*5]

In 1991, the plaintiff purchased the subject disability insurance policy from the defendant, First UNUM Life Insurance Company. The policy provided that as part of the claim process, the insured was obligated to undergo "a medical examination or a personal interview as often as we reasonably request while the claim is pending."

In or about October 1994, the plaintiff claimed disability benefits pursuant to the policy, inter alia, for carpal tunnel syndrome. The defendant paid benefits to the plaintiff from January 1, 1995, until mid-1997 when the plaintiff refused to undergo an electromyelograph (hereinafter EMG) test. In a letter dated July 9, 1997, the defendant's claims examiner stated that "we have not received any indication that Ms. Hurley will be having an EMG. Therefore, this claim has been closed." In addition, the claims examiner's letter stated that there was "lack of significant clinical and objective findings to support the degree of impairment Ms. Hurley claims exists."

The plaintiff commenced the instant action, inter alia, for a judgment declaring that she was disabled and that the defendant was obligated to continue to pay her disability insurance benefits. In its answer, the defendant asserted as a defense that the plaintiff was barred from recovering benefits owing to her refusal to cooperate with the defendant's investigation of her alleged disability.

At a nonjury trial, evidence was adduced that the plaintiff submitted to an EMG test in December 1994, the results of which were within normal range. The results did not change her treating physician's diagnosis of carpal tunnel syndrome. When the defendant asked that the plaintiff submit to another EMG test in 1997, she refused, claiming that the test, which involves the placement of a needle through the skin, was "an invasive procedure," which was "uncomfortable" and not "conclusive." However, she acknowledged that she was not concerned about any risk to her safety from the test.

The Supreme Court concluded that the plaintiff's refusal to submit to the EMG test constituted a breach of her duty to cooperate under the policy. I agree.

The issue of the plaintiff's refusal to submit to an EMG test was raised in the letter of the defendant's claims examiner dated July 9, 1997, which stated that "we have not received any indication that Ms. Hurley will be having an EMG. Therefore, this claim has been closed" and further stated that there were insufficient "clinical and objective findings to support the degree of impairment Ms. Hurley claims exists." The claim was denied on two grounds: (1) failure to submit to the EMG, and (2) insufficient evidence of continued disability. The failure to cooperate was explicitly raised as a defense in the defendant's answer. Therefore, the failure to cooperate was a proper issue before the Supreme Court.

An insurance company is entitled to obtain information promptly to enable it to decide upon its obligations and protect against false claims (see Davis v Allstate Ins. Co., 204 AD2d 592; Argento v Aetna Cas. & Sur. Co., 184 AD2d 487). The plaintiff offered no reasonable excuse for her failure to submit to a second EMG test. She had previously submitted to the test in 1994 without complaint or adverse consequences. At worst, the EMG test, which involves insertion of a needle under the skin, is minimally invasive. Since the defendant asked for the second EMG test over two years after the plaintiff submitted to her first EMG test, her failure to comply violated the provision of the policy which required her to submit to a medical examination "as often as we reasonably request while the claim is pending." Since this is an action for a declaratory judgment, [*6]the Supreme Court should have declared that the insurance policy was cancelled and that the parties had no further rights or obligations under the policy (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901; Coleman v New Amsterdam Cas. Co., 247 NY 271; United States Fidelity & Guar. Co. v von Bargen, 7 AD2d 872, affd 7 NY2d 932).

If I were to reach the merits, I would find that the evidence in the record that the plaintiff is not disabled warrants remittitur to the Supreme Court for further findings of fact. Evidence was submitted that in carpal tunnel syndrome cases there should be a recovery. Therefore updated reports of the claimant's condition are necessary. Further, the defendant submitted evidence that the plaintiff's disability was not continuing. The defendant's expert, Dr. Lawrence Miller, testified that he examined the plaintiff on December 17, 1998, and found "there was nothing wrong with her." Dr. Miller noted that the plaintiff could flex and extend her wrist. He performed a "malingerer's test" which is positive if the patient is feigning a disability. Dr. Miller pushed on two bones without pressing on any nerves, and the plaintiff claimed the pain went into her shoulder which was impossible since "[i]f you are pressing on no nerves at all you are not going to have pain shooting up to the shoulder."

Contrary to the conclusion of the majority, it cannot be said that the defendant's proof was confined to the argument that without the EMG test there was no objective proof of the plaintiff's disability. Clearly, the evidence in the trial record presents issues of fact which warrant further findings of fact by the trial court.

ENTER:

James Edward Pelzer

Clerk of the Court

Varveris v. Hermitage Insurance Company

Gold Stewart Kravatz & Stone, LLP, Westbury, N.Y. (Jeffrey B.
Gold and Cheryl Spinner Kravatz of counsel), for appellant.

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 entitled Paez v Varveris, pending in the Supreme Court, Kings County, under Index No. 18200/98, the defendant appeals from an order of the Supreme Court, Kings County, dated July 2, 2004 (Davis, J.), which denied, with leave to renew upon completion of discovery, its motion pursuant to CPLR 3211(a)(7) to dismiss the fifth cause of action for punitive damages.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, and the fifth cause of action is dismissed.

The plaintiff, Marie Vaveris (hereinafter the insured), was the owner of a house insured by the defendant, Hermitage Insurance Company (hereinafter Hermitage). Richard Paez and Carolina Paez (hereinafter Paez) commenced an action to recover damages for personal injuries against the insured, alleging that they were injured when a portion of the house's ceiling fell on them. Although Hermitage initially undertook to defend the insured, Hermitage disclaimed coverage on the ground of non-cooperation.

Thereafter, the insured commenced a lawsuit against Hermitage seeking, inter alia, a declaration that Hermitage was obligated to defend and indemnify her in the underlying personal injury action. The fifth cause of action sought punitive damages due to Hermitage's "wrongful refusal to defend and indemnify plaintiff." Hermitage moved pursuant to CPLR 3211(a)(7) to dismiss this cause of action for failure to state a cause of action, arguing that it "is not cognizable because it does not allege any purported wrong beyond Hermitage's denial, nor any claimed wrong' whatsoever as against the public generally." The Supreme Court denied the motion with leave to renew upon completion of discovery. We reverse.

Punitive damages are only available in limited circumstances where it is necessary to deter conduct which may be characterized as "a fraud evincing a high degree of moral turpitude'" or " such wanton dishonesty as to imply a criminal indifference to civil obligations'" directed " at the public generally'" (Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 613, quoting Walker v Sheldon, 10 NY2d 401, 404-405; see New York Univ. v Continental Ins. Co., 87 NY2d 308; Logan v Empire Blue Cross & Blue Shield, 275 AD2d 187). Here, the insured failed to show any facts or allegations to support her contention that Hermitage's conduct in this case was egregious or fraudulent, or that it evidenced wanton dishonesty so as to imply a criminal indifference to civil obligations directed at the public generally. This case is, in effect, simply a private breach of contract dispute between the insurer and its insured with no greater implications (see Fulton v Allstate Ins. Co., 14 AD3d 380; Martin v Group Health, 2 AD3d 414). Furthermore, the insured's contention that she is entitled to discovery in order to adduce facts to substantiate her punitive damages claim is nothing more than a "fishing expedition," and thus should not have been countenanced (see Fulton v Allstate Ins. Co., supra; see generally Oak Beach Inn Corp. v Town of Babylon, 239 AD2d 568).

Accordingly, Hermitage was entitled to dismissal of the cause of action for punitive damages.
SCHMIDT, J.P., SANTUCCI, LUCIANO and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

City of New York v. Continental Casualty Company

 

Plaintiff appeals from an order and judgment (one paper) of the Supreme Court, New York County (Leland DeGrasse, J.), entered July 22, 2004, which denied its motion for summary judgment and granted summary judgment to defendant.

SWEENY, J.

In this declaratory judgment action, plaintiff City of New York appeals from a judgment of the Supreme Court, New York County, which denied its motion for summary judgment and granted summary judgment in favor of defendant, Continental Casualty Company, declaring and adjudging that Continental did not owe a duty to defend or indemnify the City in connection with an underlying personal injury lawsuit. For the reasons stated herein, we now reverse, grant plaintiff's motion and make a declaration in its favor.

Plaintiff entered into a contract with Welsbach Electric Corp. to provide labor and materials for the maintenance of illuminated traffic signals in Queens. The contract required Welsbach to obtain automobile liability coverage for all vehicles to be used in connection with the contract, as well as coverage for personal injury and property damage arising from performance of this work. It also required Welsbach to indemnify and hold the City harmless for any loss, damage, injury or death.

Welsbach purchased an insurance policy as required by the contract from defendant, naming the City as an additional insured.

On April 4, 2001, an employee of Welsbach named Kraker, working in a "cherry picker" attached to one of Welsbach's trucks, was injured while repairing a defective light on a utility pole. In November 2001, Kraker and his wife commenced a personal injury action against Con Edison, alleging he was electrocuted due to Con Edison's negligence. In September 2002, Con Edison commenced a third-party action against Welsbach, seeking indemnification or contribution based upon unspecified negligence on Welsbach's part. Continental assumed Welsbach's defense of this action in November 2002.

In December 2002, Con Edison commenced a second third-party action against the City, and sought indemnification by and contribution from the City for allegedly failing to provide Kraker with a safe place to work, as well as the necessary training and safety equipment to perform his work. A copy of this second third-party complaint was served on Continental's counsel who was handling Welsbach's defense.

On April 1, 2003, more than three months after this action was commenced, the City faxed the second third-party complaint to Welsbach, requesting that Welsbach forward it, as well as the City's request for defense and indemnification, to Continental. Although the City contends that Kraker's work arose from and was in connection with performance under the contract, and hence within the coverage of Continental's policy, it never directly forwarded the suit papers or demand to Continental.

By letter dated April 29, 2003, Continental acknowledged receipt, on April 2, 2003, of plaintiff's demand for defense and indemnification. However, it declined coverage on the basis that the City had not given prompt notice of the accident and did not immediately send copies of the suit papers.

The City commenced an action seeking a declaration that Continental is obligated to defend and indemnify it with respect to the second third-party action, as well as to recover the defense costs incurred in defending itself in that action. The City thereafter moved for summary judgment, arguing that since Continental was timely notified of the accident by Welsbach and coverage was provided to Welsbach under the policy, it was entitled to rely upon that timely notice. The City also argued that its failure to immediately forward suit papers to Continental was, at most, a failure to cooperate, not failure to give prompt notification.

Continental did not contest the City's argument that the obligation to give notice rested on Welsbach, the named insured. It rested its disclaimer on the failure of the City to immediately forward the suit papers as required under the policy.

The IAS court denied the City's motion and granted summary judgment to Continental, finding that the City's failure to immediately forward suit papers to Continental absolved the insurer of its coverage obligations. The court did not address the issue of whether the City was required to give notice of the accident to Continental.

Under the insurance policy issued in this case, two actions are required of an insured in making a claim. The initial step requires that Continental be given notice when an accident has occurred. Once this notice requirement is fulfilled, the insured must cooperate with Continental in the investigation, defense or settlement of the case. This includes the requirement to "immediately" send copies of any legal papers received by the insured to Continental. Although Continental's letter disclaiming coverage was premised on the City's failure both to give notice of the claim and to forward the suit papers, it rests its argument only on the failure of the City to timely forward the suit papers.

Welsbach was the named insured, the City being an additional insured. The policy provisions address the duties of an insured under Section IV(A)(2)(a), which essentially require giving Continental "prompt notice" of the accident or loss. Section IV(A)(2)(b) goes on to require the insured "and any other involved insured'" to cooperate with Continental in the investigation and disposition of the claim, including "immediately" sending copies of all legal papers to Continental.

Under the facts of this case, the City, as defendant in a second third-party action, arising from the same accident as the primary action, could properly rely on the notice given by Welsbach, the primary insured. Continental's argument that both provisions of the policy are notice requirements is without basis. The first provision unambiguously requires the insured to give "prompt notice" of the accident or loss, while the following provision sets out a series of duties which clearly refer to cooperation with the insurer's representatives in the investigation and defense of the action.

Well-established rules governing the interpretation of insurance contracts require that policy provisions that are clear and unambiguous be given their plain and ordinary meaning (see United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [1986]). The City's failure to promptly forward to Continental the suit papers must therefore be measured under a failure-to- cooperate standard.

An insurer may disclaim coverage where an insured deliberately fails to cooperate with its insurer as required by the policy (Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771 [2005]). The burden of proving lack of cooperation is a heavy one and rests on the insurer (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168 [1967]). Courts must strictly scrutinize the facts of each case, and will allow a disclaimer on the basis of lack of cooperation only when the insured's actions are deliberate (Matter of New York Cent. Mut. Fire Ins. Co. [Salomon], 11 AD3d 315, 316 [2004]). To meet its burden, an insurer must prove (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that its efforts were reasonably calculated to obtain the insured's cooperation, and (3) that the insured's attitude demonstrated "willful and avowed obstruction" (id. quoting Thrasher, 19 NY2d at 168). Mere inaction by the insured is not a sufficient basis for a disclaimer (see Matter of Empire Mut. Ins. Co. [Stroud], 36 NY2d 719 [1975]).

Continental's reliance on Argo Corp v Greater N.Y. Mut. Ins. Co. (4 NY3d 332 [2005]) is misplaced. In Argo, the insured was notified of a lawsuit against it in February 2000 but did not notify the insurer until May 2001. The Court of Appeals held that this delay was unreasonable as a matter of law and refused to depart from the general rule that an insurer need not show prejudice before disclaiming on late notice of a lawsuit. Significantly, the insurer in Argo was not previously given notice by another insured of the accident which gave rise to the lawsuit in question. In addition, the insured offered no excuse for waiting 14 months after service of the complaint upon the Secretary of State as their agent, 6 months after service of the default motion upon them, more than 3 months after default was entered and until almost after service of the note of issue upon them, before giving its insurer notice.

The facts of this case are more in accord with Matter of Brandon (Nationwide Mut. Ins. Co.) (97 NY2d 491 [2002]). There, the carrier received timely notice of claim but late notice of a lawsuit. The carrier disclaimed on the basis of the late notice of suit. While recognizing that early investigation protects carriers from fraud and serves the insurers' need to set reserves and take an early position in settlement negotiations, the Court of Appeals reasoned that notice of claim served these purposes. The Court concluded that based upon the facts in Brandon, the late notice of legal action should not be given the same preclusive effect as late notice of claim without some showing of prejudice.

While it is true that the City adopted a lackadaisical attitude in forwarding the suit papers, its actions fall far short of the standard necessary to sustain Continental's disclaimer. Continental was given timely notice of the occurrence by Welsbach. It also was actively participating in the litigation before Con Edison impleaded the City, and was served with a copy of the complaint against the City by Con Edison when it was originally served. Under these facts, Continental's disclaimer was improper.

With respect to the City's request for costs and fees incurred by it in the defense of the second third-party action, that issue is remanded to ascertain the amount of those costs and fees.

Accordingly, the order and judgment (one paper) of the Supreme Court, New York County (Leland DeGrasse, J.), entered July 22, 2004, which denied plaintiff's motion for summary judgment and granted summary judgment to defendant, should be reversed, on the law, without costs, plaintiff's motion granted, defendant's cross motion denied, a declaration made in plaintiff's favor, and the matter remanded for further
proceedings in accordance with the opinion herein.

All concur.

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

ENTERED: DECEMBER 13, 2005

CLERK

Bovis Lend Lease LMB, Inc. v. Royal Surplus Lines Insurance Company

 

Defendant appeals from an order of the Supreme Court, New York County (Marilyn Shafer, J.), entered March 1, 2004, which denied its motion for a declaratory judgment and for summary judgment, and from an order, same court and Justice, entered November 16, 2004, which denied defendant's cross motion to renew the prior motion and for a stay and granted plaintiffs' motion for summary judgment and for a declaratory judgment.

ELLERIN, J.

In this insurance coverage case, the main issue before us is whether defendant Royal Surplus Lines Insurance Company complied with the mandate of Insurance Law § 3420(d), which requires that an insurer intending to disclaim liability or deny coverage under a liability policy give prompt written notice of such disclaimer of liability or denial of coverage "to the insured and the injured person or any other claimant." A related issue, although not of dispositive consequence in the instant case, is whether
§ 3420(d) applies vis-a-vis an insurer intending to disclaim liability against another insurer who covers the same insured.

This action has its genesis in an earlier suit brought by Dennis Winter, an employee of nonparty Millennium Masonry, Inc. (Millennium), who was injured on September 14, 2002, when he fell from a height while working on the construction of a new faculty residence for plaintiff The Trustees of Columbia University in the City of New York (Columbia) at 110th Street and Broadway. Plaintiff Bovis Lend Lease LMB, Inc. (Bovis) was the construction manager, pursuant to agreement with Columbia, and had contracted with Millennium for the masonry and brick work on the project. Two commercial general liability insurance policies were in effect at the time of Winter's fall: one issued by plaintiff National Union Fire Insurance Company of Pittsburgh, PA (National Union), to Bovis, naming Columbia as an additional insured, and the other issued by defendant Royal Surplus Lines Insurance Company (Royal) to Millennium, naming Bovis and Columbia as additional insureds. Each policy, written on a standard Insurance Services Offices form, contains the following "Insuring Agreement," in pertinent part:

"We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury' or property damage' to which this insurance applies. We will have the right and duty to defend the insured against any suit' seeking those damages even if the allegations of the suit' are groundless, false or fraudulent. However, we will have no duty to defend the insured against any suit' seeking damages for bodily injury' or property damage' to which this insurance does not apply."

On November 12, 2002, Winter, the injured employee, commenced an action against both Bovis and Columbia alleging negligence and violations of the Labor Law. In March 2003, Bovis and Columbia commenced a third-party action against Millennium. National Union undertook the defense of Bovis and Columbia in the Winter action. By letter dated February 28, 2003, National Union tendered the defense and indemnification of Bovis and Columbia to Royal. Royal acknowledged the claim on March 3, 2003 and advised that it was commencing its investigation. Two and a half months later, by undated letter received by plaintiffs on May 21, 2003, Royal rejected the tender, disclaiming liability based on a "New Residential Work or Products Exclusion" in the Millennium policy. The letter was addressed to Millennium and National Union's claim representative, with copies to counsel for Winter, the injured employee and plaintiff in the underlying action, and to counsel for the insureds Bovis and Columbia. The letter stated that "Royal will not provide a defense or indemnification to Millenium [sic] in connection with the third-party action, nor will Royal provide a defense or indemnification to Bovis or Columbia in connection with the Underlying Action and tender for same is hereby rejected."

Meanwhile, on April 9, 2003, plaintiffs - i.e., National Union and the insureds Bovis and Columbia - had instituted this action for a judgment declaring that Royal was obligated under the policy to fully insure, defend and indemnify Bovis and Columbia in the still-pending personal injury action and to reimburse National Union for its attorneys' fees, costs, disbursements and other expenses incurred in the defense of that action. On August 22, 2003, Royal moved for a judgment declaring that it had no duty to defend or indemnify Bovis or Columbia, based on the above-cited policy exclusion, and for summary judgment dismissing the complaint. Plaintiffs contended in opposition that Royal's disclaimer of liability was untimely under Insurance Law § 3420(d) as a matter of law and therefore ineffective. In reply, Royal argued that § 3420(d) is not available to an insurer to be asserted against another insurer, that, in any event, its disclaimer was timely under the circumstances, and that it had provided a reasonable excuse for any delay. The motion court denied Royal's motion, finding that § 3420(d) applied to notice given by one insurer to another, and that the notice here given by Royal was untimely as a matter of law, thereby precluding consideration of the merits of the exclusion involved.

While we agree with the ultimate result reached by the motion court, we reject the court's holding that Insurance Law
§ 3420(d) applies to notice given by one insurer to another.

Insurance Law § 3420(d) provides:

"If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant."

The statute clearly mandates that an insurer must as soon as is reasonably possible give written notice of disclaimer of liability or denial of coverage for death or bodily injury under a liability policy to "the insured . . . ." Thus, the threshold issue here with respect to the insureds Bovis and Columbia is whether Royal's undated written disclaimer notice was given as soon as reasonably possible. It is uncontroverted that such notice was received on May 21, 2003. In most cases, the timeliness of an insurer's notice of disclaimer "will be a question of fact, dependent on all of the circumstances of a case that make it reasonable, or unreasonable, for an insurer to investigate coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 70 [2003]). However, where the basis for the disclaimer was or should have been readily apparent before the onset of the delay, any explanation by the insurer for its delay will be insufficient as a matter of law, and where the basis was not readily apparent, an unsatisfactory explanation will render the delay unreasonable as a matter of law (id. at 69).

Here, Royal received notice of the claim against third-party defendant Millennium from National Union's claim representative on March 3, 2003, and assigned the claim to Claims Specialist Christopher Corhan. On that date, Mr. Corhan acknowledged receipt of the tender, advised that he was initiating an investigation into the facts of the loss and the coverage issues [*4]presented in the claim, requested a copy of the contract between Bovis and Millennium, and advised that Royal was not accepting or rejecting the claim at that time. The notice of the claim it received on March 3 did not give Royal sufficient notice on its face of any ground on which to disclaim, because it located the incident at "Columbia University Housing and Faculty Residence," with no indication that the project involved new residential property. However, on March 20, 2003, Royal received the Bovis-Millennium contract, which does indicate the nature of the project. Thus, while Royal learned of the grounds for a disclaimer as early as March 20, 2003, it did not give written notice of disclaimer until almost 60 days later, on May 14, 2003, the date on which it alleges the undated letter was issued, although it was not received by plaintiffs until May 21, 2003. Moreover, Royal received its own investigator's report, which included the information that the project was new construction and included residential apartments, on April 8, 2003. Thus, even measuring from the latest date on which Royal learned of the grounds for a disclaimer, i.e., April 8, 2003, Royal's notice of disclaimer was not issued until 36 days later.

Royal's explanation for the delay is that on March 10, 2003, Mr. Corhan had advised Royal that he was resigning effective March 21 and would be taking the week of March 17 as vacation. Royal alleges that although it took immediate steps to replace Mr. Corhan, his eventual replacement, Therese Huber, was unable to start work until April 28. Royal points out, however, that Ms. Huber completed her investigation, requested and received advice from coverage counsel, and issued the disclaimer letter in only 17 days.

Royal argues that the situation caused by Mr. Corhan's unexpected resignation was beyond its control, and that therefore the delay in issuing the notice of disclaimer was reasonable. In support of this argument, Royal cites New York Univ. v First Fin. Ins. Co. (322 F3d 750, 755 [2d Cir 2003]), in which the Federal court found that New York State courts have held notification delays to be reasonable "when an external factor beyond the insurer's control unexpectedly interferes with the insurer's ability to investigate the claim in a timely fashion." Two examples from this Court were cited. In Stabules v Aetna Life & Cas. Co. (226 AD2d 138 [1996]), we held that the failure of the insurer's computer tracking system to discover the insured's notice of claim excused the insurer's delay in notification, and in Norfolk & Dedham Mut. Fire Ins. Co. v Petrizzi (121 AD2d 276 [1986], lv denied 68 NY2d 611 [1986]), we held that the insurer's delay while it waited to interview the insured, who had just given birth, was reasonable.

It is readily apparent that Royal's staffing problem was not an external factor beyond its control like a computer system failure or the need to wait for a more convenient time to interview a woman who has just delivered a baby. Indeed, the motion court found that Royal's need to replace its Claims Specialist while it was investigating the Winter claim was "irrelevant" and observed that "[p]laintiffs should not have to wait until their insurer sorts out its employment affairs before receiving timely notice of a disclaimer."

We find, therefore, that the court properly held that the notice of disclaimer was untimely as a matter of law (see e.g. West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278 [1st Dept 2002], lv denied 98 NY2d 605 [2002] [30 days unreasonable as a matter of law where sole ground on which coverage was disclaimed was insured's delay in notifying insurer of occurrence]; Matter of Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391 [2d Dept 1999] [same for 41-day delay]; Campos v Sarro, 309 AD2d 888 [2d Dept 2003] [39-day delay unreasonable after receipt of sufficient facts to disclaim on basis of homeowner's policy exclusions for injuries sustained in connection with insured's business and by individuals for whom insured was obligated to procure workers' compensation insurance; explanation for delay too vague]; Squires v Marini Bldrs., 293 AD2d 808, 810 [3d Dept 2002], lv denied 99 NY2d 502 [2002] [insurer waited 42 days after receiving plaintiff's complaint, which alleged his employment status, the sole factor in determining whether to deny coverage, and did not assert that it had any reason to doubt the allegations of the complaint]; Matter of Nationwide Mut. Ins. Co. v Steiner (199 AD2d 507 [2d Dept 1993] [unexplained 41-day delay in disclaiming on ground of untimely notice of accident]).

In view of our finding that Royal's notice of disclaimer to Bovis and Columbia was untimely as a matter of law and therefore of no effect, we need not reach the issue of whether the disclaimer was valid as to these parties.

We turn next to the question of the applicability of § 3420(d) to National Union, the other insurer of Bovis and Columbia. In reaching a determination on that issue, we must look to the express language of the statute and its underlying purposes.

A statute must be construed so as to effectuate the intent of the Legislature, and the clearest indicator of the legislative intent is the plain meaning of the language (see Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]). Here, the statute clearly mandates that an insurer must as soon as is reasonably possible give written notice of disclaimer of liability or denial of coverage for death or bodily injury under a liability policy to "the insured and the injured person or any other claimant." Consistent with the purpose of liability insurance, i.e., to provide coverage for liability to third parties, the plain meaning of the quoted language is that an insurer must give prompt written notice of disclaimer of liability or denial of coverage not only to the insured but also to any party that has a claim against the insured arising under the policy (see e.g. Hartford Acc. & Indemn. Co. v J.J. Wicks, Inc., 104 AD2d 289, 293 [1984], appeal dismissed 65 NY2d 691 [1985] [where patient died allegedly because of anesthesia equipment improperly refitted by contractor, contractor's insurer was held obligated to give timely notice of disclaimer to contractor, and to plaintiff in wrongful death action, and to hospital]). The purpose of § 3420(d) is "to protect the insured, the injured person, and any other interested party who has a real stake in the outcome, from being prejudiced by a belated denial of coverage" (Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127 [1999]).

A review of the statutory language itself demonstrates that another insurer does not fall within the specified categories. National Union is certainly not Royal's insured, nor is it an injured person or other party (i.e., claimant) who has a claim against the insured arising under the Royal policy. No extended discussion is necessary for the elementary proposition that an insurer can have no liability claim against its own insured for the risk covered (see Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 471-472 [1986]).

That § 3420(d) was never intended to apply to another insurer is buttressed by a review of the various other provisions of § 3420 and their emphasis on protecting the insured and those who have claims against the insured covered by the liability insurance policy in issue. For example, § 3420(a) requires that policies insuring against liability for injury to person or injury to or destruction of property contain certain standard provisions "or provisions which are equally or more favorable to the insured." Among these are the provision that where a judgment against the insured in an action for damages for injury, loss or damage remains unsatisfied after 30 days from service of the notice of entry on the insured's attorney, or the insured, and the insurer, an action may be maintained against the insurer (subd [a][2]). "[T]he Legislature, recognizing that an injured party, while not privy to the insurance contract, had a genuine interest in it and should be enabled to invoke its protection, enacted [the forerunner of § 3420] to create . . . an independent right of the injured person to proceed directly against the liability insurer" (Lauritano v American Fid. Fire Ins. Co., 3 AD2d 564, 567 [1957], affd 4 NY2d 1028 [1958]).

The language requiring the insurer to give written notice of disclaimer of liability or denial of coverage "as soon as is reasonably possible" "leave[s] no doubt that [the Legislature] intended to expedite the disclaimer process, thus enabling a policyholder to pursue other avenues expeditiously" (First Fin. Ins. Co., 1 NY3d at 68). The Legislature's Budget Report on the bill that ultimately became § 3420(d) (Governor's Bill Jacket, L 1975, ch 775) also evinces the Legislature's intent that
§ 3420(d) not be applied to insurers. The Report stated that "[t]he purpose of the bill is to assist a consumer or claimant in obtaining an expeditious resolution to liability claims by requiring insurance companies to give prompt notification when a claim is being denied." It continued:

"This bill would prevent insurance companies from deliberately engaging in dilatory practices which inhibit the fair and expeditious resolution of liability claims. By expediting the disclaimer or denial process, the consumer is able to pursue, at an earlier point in time, an alternative method of recovering liability damages."

Approval was recommended on the ground that "[i]t is in the interests of protecting the consumer to prevent undue delay in the adjudication of cases involving liability insurance coverage, particularly where settlement fees are necessary to pay medical and legal expenses."

It is clear that the notice requirement of § 3420(d) is designed to protect the insured and the injured person or other claimant against the risk, posed by a delay in learning the insurer's position, of expending energy and resources in an ultimately futile attempt to recover damages from an insurer or forgoing alternative methods for recovering damages until it is too late to pursue them successfully (see Allstate Ins. Co. v Gross, 27 NY2d 263, 267 [1970]; Aetna Cas. & Sur. Co. v Dimino, 40 AD2d 1076 [1972]; Appell v Liberty Mut. Ins. Co., 22 AD2d 906, 907 [1964], affd 17 NY2d 519 [1966]).

Recognizing that these are not risks to which another insurer seeking contribution is subject, courts have held that  § 3420(d) is not applicable to a request for contribution between coinsurers (see Tops Mkts. v Maryland Cas., 267 AD2d 999, 1000 [4th Dept 1999]; accord AIU Ins. Co. v Investors Ins. Co., 17 AD3d 259, 260 [1st Dept 2005]). In AIU, this Court found that "AIU received notice of the accident, conducted an investigation, undertook the defense of the lawsuit and managed the defense on its own for four years. Manifestly, it has not been prejudiced by any late disclaimer by Investors."

The fact that National Union seeks from Royal not contribution but the full defense and indemnity of Bovis and Columbia in the underlying personal injury action does not alter the analysis. National Union's ability to defend and/or indemnify Bovis and Columbia is not affected by a delay in learning of Royal's position. Indeed, National Union apparently has been providing the defense of the underlying action for nearly three years. Whether it seeks contribution or full coverage, National Union is not "within the zone of interest which the statutory requirement of notice to the injured parties seeks to protect" (Batchie v Travelers Ins. Co., 130 AD2d 536, 537 [1987]), and thus we hold that, insofar as plaintiff National Union is concerned, § 3420(d) has no application, and Royal's disclaimer is not untimely.

Upon our finding that Royal's written disclaimer is timely vis-a-vis National Union, the issue of the validity of the disclaimer becomes relevant with respect to any claims National Union may have.

Royal's disclaimer is predicated upon the "New Residential Work or Products Exclusion" endorsement, which provides:

"Designated Work/Products(s): Your work' or your products' in any way associated with new residential property. For the purpose of this endorsement, new residential property' shall include the original construction of apartments, single family and multi-family dwellings, condominiums and townhouses, regardless of when the construction operations take place.

"This insurance does not apply to bodily injury,' property damage,' advertising injury' or personal injury' arising out of any of your work' or your products' shown in the SCHEDULE above."

Royal argues that this exclusion is applicable to the third-party claims against Millennium, because they "clearly arise from the construction of a new faculty residence."

"To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision" (Frontier Insulation Contrs., Inc. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997]). Millennium's policy excludes " Your work' or your products' in any way associated with new residential property [, which] shall include the original construction of apartments, single family and multi-family dwellings, condominiums and townhouses . . . ."

The Bovis-Millennium contract makes it clear that the construction project is a mixed-use [*8]building. The cover page of the contract identifies it as "Columbia University School & Faculty Residence," and the individual contract documents refer to the project as either "Columbia University Faculty Residence and School" or "Columbia University School and Faculty Housing." Royal argues that the exclusion does not require that the new construction be exclusively residential. However, "mixed-use buildings" are not included in the exclusion's list of the types of buildings that constitute residential property. Indeed, only specific single-use dwellings are included in the list, and it certainly is reasonable to interpret the exclusion as inapplicable to mixed-use buildings. Thus, Royal has failed to meet its burden of establishing that the exclusion is subject to no reasonable interpretation other than the one it offers (see Frontier, 91 NY2d at 175), and we therefore find that the exclusion is inapplicable to Millennium's work on the Columbia project.

Finally, with respect to defense costs, we find that the motion court improperly held that Royal must reimburse National Union for all its defense costs, rather than for those incurred from the date on which Royal received National Union's tender of the underlying lawsuit (see Smart Style Indus. v Pennsylvania Gen. Ins. Co., 947 F Supp 102, 103 [SD NY 1996]). Royal's Claims Specialist acknowledged receipt of National Union's tender by letter dated March 3, 2003. Thus, Royal is obligated to
reimburse National Union for defense costs incurred only from March 3, 2003.

Accordingly, the order of the Supreme Court, New York County (Marilyn Shafer, J.), entered March 1, 2004, which denied defendant's motion for a declaratory judgment and for summary judgment, should be modified, on the law, to the extent of declaring that defendant is obligated to defend and indemnify plaintiffs Bovis and Columbia as additional insureds under the liability policy issued to nonparty Millennium Masonry, Inc., and otherwise affirmed, without costs. Order, same court and Justice, entered November 16, 2004, which denied defendant's cross motion to renew the prior motion and for a stay and granted plaintiffs' motion for summary judgment and for a declaratory judgment, should be modified, on the law, to the extent of declaring that defendant Royal is obligated to reimburse plaintiff National Union for its defense costs incurred from March 3, 2003, and otherwise affirmed, without costs.

All concur.

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

 

Joseph v. Layne

 

In an action to recover damages for personal injuries, the defendants David Anthony Nelms, Penske Truck Leasing Corporation, and Songbird Express appeal from an order of the Supreme Court, Kings County (Harkavy, J.), dated January 12, 2005, which denied their motion 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 costs to the appellants payable by the plaintiff, the appellants' motion is granted, upon searching the record, the motion of the defendant Richardo Layne for summary judgment dismissing the complaint insofar as asserted against him is granted, so much of the order dated January 12, 2005, as denied the motion of the defendant Richardo Layne is vacated, and the complaint is dismissed.

Contrary to the plaintiff's arguments, the evidence was sufficient to establish, prima facie, 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; Luckey v [*2]Bauch, 17 AD3d 411; Sims v Megaris, 15 AD3d 468, lv denied 5 NY3d 703; Check v Gacevk, 14 AD3d 586; Paul v Trerotola, 11 AD3d 441; Mastaccioula v Sciarra, 11 AD3d 434, 435). The plaintiff's evidence in opposition was insufficient to raise a triable issue of fact. The affirmation of the plaintiff's physician was based upon an examination of the plaintiff that was conducted two years after the cessation of medical treatments, and the plaintiff failed to account for this lapse in time (see Pommells v Perez, 4 NY3d 566; Puerto v Omholt, 17 AD3d 650, 651; Guzman v New York City Tr. Auth., 15 AD3d 541, 542; Smith v Askew, 264 AD2d 834). Moreover, there was no competent medical evidence to support a claim that the plaintiff was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days immediately following the accident as a result of the subject accident (see Sainte-Aime v Ho, 274 AD2d 569; see also Davis v New York City Tr. Auth., 294 AD2d 531; Arshad v Gomer, 268 AD2d 450).

Although the defendant Richardo Layne did not appeal from the denial of his motion for summary judgment dismissing the complaint insofar as asserted against him on the ground of a lack of serious injury, in light of the foregoing, upon searching the record, we award summary judgment to him as well (see CPLR 3212[b]; Kassim v City of New York, 298 AD2d 431, 432; Hernandez v Linhart, 290 AD2d 534, 535; Dinkle v Lagala, 246 AD2d 624, 625; cf. Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 110-111; Jason v Danar, 1 AD3d 398, 399).
H. MILLER, J.P., CRANE, KRAUSMAN, RIVERA and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Agard v. Bryant

Kral, Clerkin, Redmond, Ryan, Perry & Girvan, LLP,
Smithtown (James V. Derenze of counsel), for appellant.
Spiegel & Barbato, LLP, Bronx (Lucille M. Barbato of counsel),
for respondent.

Order, Supreme Court, Bronx County (Patricia Anne Williams, J.), entered September 22, 2004, which denied defendant's motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment in favor of defendant dismissing the complaint.

In moving for summary judgment dismissing the complaint, defendant was required to come forward with competent medical evidence negating plaintiff's claim that the subject accident caused her serious injury within the meaning of Insurance Law
§ 5102(d). Defendant met this initial burden by submitting, inter alia, the sworn report of a radiologist who, based on his review of MRI films of plaintiff's left and right knees, opined that both knees were affected by degenerative processes long predating the subject accident, and that there was no evidence of any traumatic injury the accident might have caused. The sworn medical report plaintiff submitted in opposition failed to refute, or even to address, the opinion of defendant's expert that the limitations of plaintiff's knees resulted from a preexisting degenerative condition. Since plaintiff thus failed to rebut defendant's prima facie showing that plaintiff did not sustain a serious injury as the result of the subject accident, defendant is entitled to summary judgment (see Pommells v Perez, 4 NY3d 566, 574-575, 579-580 [2005]; Montgomery v Pena, 19 AD3d 288, 290 [2005]).

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

ENTERED: DECEMBER 8, 2005

CLERK

 

 

McIntosh v. New York Foundation for Senior Citizens Guardian Services, Inc.

 

Defendant Sheri Bruder, as Executrix of the Estate of Norma R. Herbin, appeals from an order of the Civil Court, Bronx County (Nelida Malave, J.), entered February 4, 2005, which denied her motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious a "serious injury" (Insurance Law §5102[d]).

 

PER CURIAM:

Order (Nelida Malave, J.), entered February 4, 2005 reversed, without costs, defendant Bruder's motion for summary judgment granted, and on a search of the record, defendant New York Foundation for Senior Citizens Guardian Services, Inc.'s cross motion for summary judgment granted. The Clerk is directed to enter judgment in favor of the aforesaid defendants dismissing the complaint and all cross-claims against them.

Defendants' medical affirmations, detailing the objective tests performed and finding that plaintiff had full range of motion in her cervical spine and had recovered from sprain/strain type injuries to her neck sustained in the vehicular accident, which caused her to miss only two days of work, satisfied their burden of establishing prima facie that plaintiff did [*2]not suffer a serious injury (see Nagbe v. Minigreen Hacking Group, ___ AD3d ___, 802 NYS2d 416 {22 AD3d 326} [2005]; Thompson v. Abbasi, 15 AD3d 95 [2005]; Copeland v. Kasalica, 6 AD3d 253 [2004]).

The burden shifted to plaintiff to come forward with admissible evidence to raise a triable issue that she did in fact suffered a serious injury (Insurance Law §5102[d]). Although a bulging disc may constitute a serious injury, "a plaintiff must still offer some objective evidence of the extent or degree of [her] alleged physical limitations and their duration, resulting from the disc injury" (Arjona v. Calcano, 7 AD3d 279 [2004]). Plaintiff failed to provide such evidence. The report of a doctor who treated plaintiff in the near aftermath of the accident is deficient because the reported results of the range of motion tests were not significant or even abnormal. Even if considered, the unsworn report of a chiropractor, based upon a single examination of plaintiff five years after the accident and after a four year gap in treatment, must be regarded as speculative and conclusory on the question of causation, and therefore failed to raise a triable issue (see Thompson v. Abbasi, supra ; Shinn v. Catanzaro, 1 AD3d 195 [2003]; see also Agramonte v. Marvin, ___Ad3d___, 802 NYS2d 420 [2005]).

Although defendant New York Foundation for Senior Citizens Guardian Services, Inc. did not file a notice of appeal from the denial of its cross motion for summary judgment, this Court may search the record and grant summary judgment to the non-appealing party (Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 110-12 [1984]).

This constitutes the decision and order of the court.
Decision Date: December 14, 2005

 

Webster v. Rivera

 

Defendants appeal from an order of the Civil Court, Bronx County (Francis M. Alessandro, J.), entered July 8, 2004, which denied their motion for summary judgment dismissing the complaint.

 

PER CURIAM:

Order (Francis M. Alessandro, J.), entered July 8, 2004, affirmed, with $10 costs.

Plaintiff was injured in September 2000 when the parked car in which he was sitting was rear-ended by defendants' truck. He was treated approximately 40 times over the next five months by a chiropractor who noted marked muscle spasms, difficulty in movement, and positive results in straight-leg raising and other tests. The chiropractor reexamined plaintiff in April 2004, finding carpal tunnel syndrome and a 20% limitation of movement and 20% decrease in flexibility in the cervical and lumbosacral spine, and concluding that the patient still exhibited a "mild partial disability" from what he described as a permanent and serious injury. Defendants' orthopedist examined plaintiff in March 2002 and found no residual spinal problems and no evidence of carpal tunnel syndrome, although he did note hypesthesia (diminished tactile sensitivity) on the right side of plaintiff's body. Defendants' neurologist examined plaintiff in the same time frame and found no evidence of permanent neurological disability.

Although the elusive standard of "serious injury" is not easily resolved (see Brown v Achy, 9 AD3d 30 [2004]), restrictions of movement quantified by plaintiff's treating doctor with reference to objective tests, as they relate to the history of the accident, are sufficient to defeat summary judgment on this question (Brooks v Zises, 16 AD3d 221 [2005]). Evidence that plaintiff's symptoms persisted, and that continued treatment was not helping, was sufficient to preserve the evaluation of any gap in treatment for the trier of facts (Akamnonu v Rodriguez, 12 [*2]AD3d 187 [2004]).

This constitutes the decision and order of the Court.
Decision Date: December 09, 2005