Coverage Pointers - Volume VII, No. 20

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Dear Coverage Pointers Subscribers:

Attached is this week's issue of Coverage Pointers, Hurwitz & Fine's bi-weekly pleasurable answer to that pervasively annoying question: "Do I only receive spam in my e-mail box?"

Slight Format Change: I mentioned in a recent note, since recent Court of Appeals cases made it possible, again, to successfully move for summary judgment in No-Fault serious injury cases, the floodgates have opened. The appellate courts are issuing a boatload of "threshold" decisions and we have interspersed them in our publication. One of our good readers suggested that we bunch these cases together because there are some who don't care much about automobile insurance (and another reader suggested that be bunched together so the auto insurer claims reps can read and compare these decisions so that they can assess patterns). For both reader, we have done so, and starting this issue, right before Audrey's Angles on No Fault you'll find The Serious (Injury) Side of New York No-Fault where you can read (or avoid reading) the plethora of decisions on No Fault serious injury threshold appeals. Now the title of the section isn't particularly humorous, but a later contest might be held to better name the section.

New Court Rule Instituting Settlement Conferences in Fourth Department Appeals: On April 3, the Appellate Division, Fourth Department (the middle-level appellate court handling appeals in the central and western part of New York State) adopted a new court rule which goes into effect in early May requiring appellate settlement conferences in virtually all civil appeals. This is a totally new approach under our state court appellate rules in this part of the state, and mirrors the conferences that are common in the Second Circuit Court of Appeals. This rule institutes a significant difference in filing requirements for appeals in the Fourth Department, and a failure to comply with this new rule can lead to an appeal being dismissed. We summarize the changes in this week's issue.

Thanks for the Feedback: I can't tell you how pleased we are by the gracious comments we receive from our newsletter's readers. It's like you're all members of an insurance cult and I know there aren't many of those because www.insurancecult.com is available for anyone who wishes to register that domain.

Traveling Road Show: This week's travel took me to the ever-lovely Mohegan Sun in the great state of Connecticut where I co-presented, with my friend and colleague Rich Traub, an hour-long program on Preparing Claims Witnesses for Effective Deposition and Trial Testimony. Thanks to John Carroll and the great folks at General Star for wonderful hospitality and a great clam and lobster feast.

Educational Programming: Our offer of educational programming was so well received and five programs are already scheduled for the next three or four months. Interesting, the most popular training programs requested were melded programs, which can best be titled:

· The Interrelationship of Contractual Indemnity Claims and Additional Insured Obligations;

· The New York Disclaimer Letter and the Myth of the Reservation of Rights; and

· Use of the Internet for Claims Handling

If you are interested in a Spring Training program at your shop, or at a local, regional or national claims meeting, we'd be glad to create one for you, based on your book of business.

This Week's Issue: This week's Coverage Pointers offers you a couple of interesting late notice cases, one involving cross-border traffic and choice of law and a very interesting decision relating to an insured who stood by quietly while his coverage was lost in a declaratory judgment action. We offer some strategic advice on DJ actions and proper parties to be named.

Keep those cards and letters coming in, because we do love to hear from you.

Dan
Dan D. Kohane
[email protected]

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4/4/06 Robinson v. East Medical Center

New York Court of Appeals

Labor Law Case Dismissed Where Plaintiff’s Use of a Ladder too Short for the Task Was Sole Proximate Cause of Injuries Sustained on Construction Site

The plaintiff was working alone using a six-foot ladder to install rods in a hallway. Thereafter, he moved into an office suite where the steel beams were at a height of twelve to thirteen feet from the floor, which was higher than in the hallway. Plaintiff, who was five feet, nine inches tall, was standing on the top cap of the six-foot ladder, using a wrench to tighten a clamp with his right hand and holding onto a rod with his left hand. When the wrench slipped, he lost his balance and the ladder moved. He dropped about two feet, caught the tipping ladder under its uppermost step with his left foot and straightened it into an upright position, jerking or "twist[ing] up" his back in the process. Plaintiff sued the owner of the premises and the general contractor, alleging violations of Labor Law §§ 240(1), 200(1) and 241(6). The owner cross-claimed against the contractor for indemnity; and the contractor brought a third-party action against Burns Brothers for indemnity and/or contribution. The Court holds that the plaintiff’s negligence was the sole proximate cause of the accident as he chose to use a six-foot ladder that he knew was too short for the work to be accomplished and then stood on the ladder's top step in order to reach the work. The Court cites its recent case in Montgomery v Federal Express Corp. 4 NY3d 805 (2005) (plaintiff was sole proximate cause as ladders were readily available but plaintiff chose to use a bucket instead) and finds that the plaintiff knew where the tools were kept on the job site and on previous occasions had waited for a ladder of appropriate height to come available.

3/30/06 Frank v. Meadowlakes Development Corporation

New York Court of Appeals

CPLR Article 16 Limits Non-Economic Losses That Can Be Recovered When Liability is Less than 50%

The issue here is whether a tortfeasor whose liability is determined to be 50% or less can be found 100% responsible for non-economic loss despite CPLR Article 16. The Court of Appeals reverses the Lower Court and holds that a third-party defendant found to have only one-ninth of the total fault should be responsible for that same percentage of non-economic loss. Article 16 should be read as a savings provision that ensures the courts do not alter or limit the right of indemnification, but this does not entitle a party to 100% recovery. Therefore, in this case, the third party defendant was responsible for all economic loss and one ninth of non-economic loss.

Note: Appellate Division Fourth Department Institutes a Civil Appeals Settlement Program

For Notices of Appeal filed on or after May 1, 2006, the Fourth Department will require the filing of a precalendar statement at the time of the filing of the Notice of Appeal (except appeals arising from CPLR Article 70 and 78, the Election Law, the Family Court Act and Section 168-n of the Correction Law). Failure to follow the requirement could result in dismissal of the appeal. Selected appeals will be required to attend a settlement conference before a Judicial Hearing Officer. The Notice to the Bar and full text of the Rule can be found at the Fourth Department’s web site: http://www.nycourts.gov/ad4/

4/4/06 New York and Presbyterian Hospital v. Auto One Insurance Company

Appellate Division, Second Department

Reasonable Excuse for Delay in Service of Insurer’s Answer

In an action to recover no-fault insurance benefits, Court affirms the Lower Court and finds that defendant demonstrated both a reasonable excuse for its brief delay in serving an answer, and potentially meritorious defenses. Furthermore, the Court indicates that there is a strong public policy in favor of resolving cases on the merits, and the default was not willful, nor was there a showing of prejudice to the plaintiffs.

4/4/06 Paul Developers v. Maryland Casualty Insurance Company

Appellate Division, Second Department

Eight Month Delay to Notify Carrier is Deemed Late Notice of Claim as Matter of Law – Notice Given to Broker is NOT Notice to Carrier

An action declaring Maryland Casualty, Zurich and the Assurance Company of America obligated to defend and indemnify the plaintiffs in an underlying action. On June 11, 2001, Garcia was injured when he was struck by windblown plywood while performing construction work at the plaintiffs' job site. By letter dated November 30, 2001, Siben & Siben, Garcia's attorneys, sent written notification of Garcia's claim to the plaintiffs Paul Developers, LLC, and Foxridge Associates, LLC. On August 9, 2002, the plaintiffs faxed a copy of the complaint in the underlying action to Assurance's claims adjuster. By letter dated August 12, 2002 and the insurer timely disclaimed coverage based upon late notice. The Court holds that the fact that the plaintiffs may have provided timely notice to their own broker is of no consequence. Notice to a broker cannot be treated as notice to the insurer since the broker is normally deemed to be the agent of the insured and not the carrier. Therefore, Zurich established entitlement to judgment as a matter of law by demonstrating that the plaintiffs received notice of the underlying claim on or about November 30, 2001, yet failed to give notice to them until August 2002, over eight months later.

4/4/06 Schoenig v. North Sea Insurance Company

Appellate Division, Second Department

Twenty-one (21) Day Delay to Disclaim Not Untimely

An action for a judgment declaring that the defendant North Sea Insurance Company is obligated to defend and indemnify the plaintiff, Steven P. Schoenig, in an underlying personal injury action. The defendant North Sea established its prima facie entitlement to judgment as a matter of law by demonstrating that it disclaimed coverage 21 days after it became aware that the plaintiff had breached the notice provision of the subject policy by failing to promptly notify North Sea once there was a reasonable possibility of the policy's involvement. This delay in disclaiming coverage was reasonable under the circumstances of this case.

3/30/06 Sabatino v. Capco Trading Inc.

Appellate Division, Third Department

Only One Bite of the Apple for Insured: Where Liability Insurance Carrier Doesn’t Raise Injured Party’s Lack of Standing to Sue for Declaratory Relief Before Judgment is Entered Against Insured, it Waives That Defense and Insured Who is Sued in that Declaratory Judgment Action is Bound by Result

Injured Plaintiffs commenced an action for personal injuries arising from a motor vehicle accident. Subsequently, they also commenced a separate declaratory judgment action against their insurance agents and Eagle Insurance, seeking to establish that a special relationship existed between defendants and the insurance agents and, if no policy of insurance was in effect, it was due to the negligence of the agents and/or because the Eagle policy was in full force and effect at the time of the accident.

The insurance agents moved to dismiss on the basis that they owed no duty to plaintiffs and Eagle also moved to dismiss on the grounds that it had validly canceled the policy. Although named as parties, the insureds in the primary action took no part in those proceedings. By bench decision dated June 27, 2003, Supreme Court granted the motions and dismissed plaintiffs' declaratory judgment complaint. The order confirming this decision was entered July 2, 2003, "with prejudice and on the merits."

On July 1, 2003, the insureds served a third-party complaint against the insurance agents and Eagle (third-party defendants). Eagle moved to dismiss the third-party complaint arguing that it already received a favorable determination on coverage in the action brought by the injured party. The insured argued that it didn’t really take part in that action and, in any event, the injured party didn’t have a right to bring that earlier action.

The Appellate Division finds the insured is bound by the decision and has no coverage. It was named in the injured party’s DJ action and could have argued in favor of coverage. Having not done so, and having not objected to the standing of the injured party to bring that lawsuit, the insured is bound by the result. Carriers and insureds are reminded that under recent Court of Appeals decisions, an injured party may not bring a declaratory judgment action to test an insurer’s disclaimer. That party’s remedy is to take judgment against the insured and THEN sue the carrier.

3/28/06 King v. Car Rentals, Inc.

Appellate Division, Second Department

In Cross-Border Case Involving Several Different Jurisdictions, NY Courts apply New Jersey Law and Vehicle Owner is Not Held Vicariously Responsible Under Vehicle & Traffic Law

In cross border case, Court decides on law to be applied based on dominant contacts

Te issue presented on this appeal is what law applies to the plaintiff's New York action to recover damages for his personal injuries. Here are the facts:

Ali rented an automobile in New Jersey from defendant Car Rentals, a New Jersey corporation that did business solely in New Jersey as a licensee of defendant Avis. Avis is a Delaware corporation that has substantial business activity in New York. Ali had just moved out of his sister's apartment in Manhattan, where he had been living for six months after graduating from New York University (hereinafter NYU) while waiting for a job to start in Manhattan. In the meantime, he moved into his parents' home in Metuchen, New Jersey. Ali's intent, as unequivocally expressed in his deposition testimony, was to move back to New York City after training, in Chicago, for his new employment in Manhattan.

Ali then drove to Connecticut, where he picked up the plaintiff. The plaintiff was employed in Connecticut, but resided in both Kings Park, New York, and Hamden, Connecticut. The two drove to Canada for the New Year's weekend. On the return trip, outside of Montreal, in the Province of Quebec, Canada, the vehicle left the roadway and turned over in a ditch, allegedly injuring the plaintiff.

The fight was over the responsibility of the owner, because NY and NJ have different rules. New York law provides that a plaintiff who is seriously injured in an automobile accident may recover damages pain and suffering against the owner of the car, because of the provisions of Vehicle & Traffic Law § 388) which makes an owner vicariously liable. In New Jersey law, the vehicle owner is vicariously liable only if the driver was the employee or agent of the owner.

The Court considers the choice of law options and considered a number of factors:

  • The plaintiff is unquestionably a resident of New York and carried a NY license;
  • Ali was only living temporarily in NJ, but intended to return to NY;
  • Neither party had interest in Quebec and Quebec had no interest in accident involving two non-Canadians;
  • Car Rentals, the liable party, was a New Jersey business and the car was rented in New Jersey

The Court concludes that despite NY’s interest in protecting its residents, New Jersey’s law will apply. NY is unique in holding owners vicariously liable and despite the strength of that rule, that policy must yield to New Jersey's countervailing interest in protecting its domiciliary, the vehicle owner, from vicarious liability that it deems to be unwarranted.

3/28/06 New York Central Mutual Fire Insurance Company v. Reinhardt
Appellate Division, Second Department
Improper Disclaimer on UM Claim where Carrier Failed to Establish Prejudice from Late Notice
This was a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for underinsured motorist benefits. Reinhardt was injured in an automobile accident in August 2002. The next month, she notified New York Central of the accident and advised it of a possible uninsured/underinsured motorists claim. In February 2003 she sued the tortfeasor. In April 2004 she proceeded to arbitration with the tortfeasor's insurance company and discontinued her lawsuit. The court holds that although Reinhardt did not comply with the SUM endorsement requirement that she "immediately" forward the summons and complaint in her lawsuit against the tortfeasor to New York Central, the carrier was required to show prejudice resulting from the 10-month delay. There was no evidence that New York Central acted to protect its rights within the time frame provided in the endorsement. Instead, New York Central disclaimed coverage. Because Reinhardt did not violate the SUM endorsement requirements when she discontinued her action against the tortfeasor and participated in binding arbitration, and because New York Central did not establish prejudice from the untimely forwarding of the summons and complaint, New York Central's disclaimer was unjustified. Furthermore, New York Central's seven-month delay in disclaiming coverage for the late forwarding of process was unreasonable as a matter of law. The court remits the matter for a framed-issue hearing on whether Reinhardt was barred by collateral estoppel from seeking additional recovery under the SUM endorsement. The arbitration agreement provided that the maximum amount of the award would be $25,000, the limit of the tortfeasor's policy, but it also provided that this limitation would be confidential and would not be revealed to the appointed arbitrator "before, during or after the hearing." The arbitrator awarded exactly the maximum amount permitted. Under these circumstances, it was unclear whether Reinhardt sought to establish damages of a greater amount or withheld proof of the full extent of her injuries in light of the arbitrator's limited authority.

The Serious (Injury) Side of New York No-Fault

4/4/06 Finch v. Whalen

Appellate Division, Second Department

Jury Determination of No Serious Injury Affirmed

Here, the jury returned a verdict finding that the accident was a proximate cause in "bringing about the injury" of the appellant, but that her injuries did not satisfy any of the definitions of serious injury set forth in Insurance Law § 5102(d). The ambulance report indicated that plaintiff was able to move all four extremities without pain and the hospital records stated that she "moved all extremities freely." A MRI revealed a torn biceps tendon. At the trial, the appellant's surgeon testified that if she had injured her biceps tendon in the accident, she would have experienced pain. Based upon the ambulance report and his examination of the appellant, the defendant's expert stated that it was "[h]ighly unlikely that an acute rupture of the biceps tendon had taken place" and her diagnosis of "supraspinatus tendonosis" related to a longstanding inflammation in the tendons. The defendant's expert further noted that the appellant suffered from a narrowing of the coracohumeral interval in the left shoulder which is a degenerative condition. The Court finds that the testimony of the defendant's expert and the absence of any evidence of shoulder pain or restriction on the day of the accident provided a basis for the jury's determination of no serious injury.

4/4/06 Sullivan v. Dawes

Appellate Division, Second Department

Defendants failed to make Prima Facie Case on Serious Injury Motion

Lower Court properly denied a 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). Appellate Division affirms holding that the orthopedist's affirmation upon which the defendants' motion for summary judgment was predicated assigned a numerical value to the range of motion of the plaintiff's lumbar spine, but failed to compare his findings against the normal range of motion.

4/4/06 Tolstocheev v. Bajrovic

Appellate Division, Second Department
Failure to Set Forth Objective Tests Fatal to Serious Injury Motion

Defendant failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendant's examining neurologist and orthopedist both failed to set forth the objective tests used to determine that the plaintiff did not have any range of motion restrictions.

4/4/06 Ranzie v. Abdul-Massih

Appellate Division, Second Department

Court Dismisses Complaint in Light of Inadequate Expert Proof

Appellate Division reverses the Lower Court and dismisses plaintiff’s complaint on the grounds that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The plaintiff's reliance on the affirmations of his doctors was misplaced since those physicians never stated that any of the injuries observed, as related to the plaintiff's left ankle, were causally related to the subject accident. Moreover, the reports incorporated by reference into the respective affirmations of said physicians were not based on recent examinations of the plaintiff. The plaintiff's medical records, at best, merely recorded the plaintiff's subjective complaints of pain, which are insufficient, on their own, to raise a triable issue of fact as to whether she sustained a serious injury. Moreover, the reports incorporated by reference into the respective affirmations of said physicians were not based on recent examinations of the plaintiff.

4/4/06 Aponte v. Tusa

Appellate Division, Second Department

Proof of Full Range of Motion with no Evidence of the Contrary Earns Dismissal on Serious Injury

The admissible proof submitted by the defendant, showing that the plaintiff had full range of motion and suffered from no disability causally related to the automobile accident about one week after the automobile accident, was sufficient to establish a prima facie case that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), despite a magnetic resonance imaging report showing a bulging disc. The plaintiff failed to present any evidence to rebut this evidence.

3/30/06 Garner v. Tong

Appellate Division, First Department

Quantitative Measurements Sufficient Evidence of Serious Injury

Plaintiff established a serious injury as defined in Insurance Law § 5102(d), inasmuch as it was based on quantitative measurements such as the use of an inclinometer to measure range of motion and straight leg testing, and objective medical evidence such as a sworn MRI report. The tests showed a 20% limitation in the cervical range and a 25% limitation in the lumbar range. Plaintiff established, through his own affidavit and his expert's statement, that the injury prevented him from working for six months following the accident. The expert adequately explained that plaintiff thereafter reduced the frequency of his treatment only because it was not offering him any further benefit.

3/28/06 Vazquez v. Basso

Appellate Division, Second Department

Defendant’s Fail to Provide Objective Proof of No Serious Injury

Defendants' examining orthopedist merely stated in his affirmed medical report that upon physical examination, the plaintiff "had full range of motion of all segments of the spine extending from the cervical to [the] lumbosacral region," without setting forth the objective medical testing performed to support his conclusion. Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law in the first instance, it is unnecessary to reach the question of whether the plaintiff's papers were sufficient to raise a triable issue of fact as to the serious injury threshold.

3/27/06 Jackson v. Gross

Appellate Division, Second Department

Jury Verdict Finding Serious Injury Upheld with Testimony Regarding Motion and Strength Loss as a Result of Herniation

The injured plaintiff established that she sustained a serious injury pursuant to Insurance Law § 5102 (d), namely a significant limitation of a body organ, function or system. Plaintiff's treating physician stated that when he first examined her two weeks after the accident she had a 30 to 40 percent reduction in movement, particularly her neck. He stated that there was a loss of strength in the shoulder muscle in the left side and in both hands, and there was also loss of sensation in the left arm. He sent her for an MRI which revealed a herniated disc at C6-C7. He saw her several more times and her condition had not significantly improved. The nature of plaintiff's injuries warranted the jury's award of $85,000 for past pain and suffering.

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.

4/5/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Michael Resko, Esq. (New York County)

Insurer Issued Untimely Denial, BUT Applicant Failed To Establish Prima Facie Case Entitlement To Claimed Benefits.

Here is the Angle: The counseling point to insurers here is that even if an untimely denial is issued, attention should be turned to Applicant’s evidence submission to ascertain if a prima facie case entitlement to the claimed benefits has been demonstrated. The focus is not only on medical necessity in claims for medical services! This arbitration award provides a thoughtful and well-reasoned explanation of what Applicant’s burden is, in the first instance, to establish entitlement to the claimed benefits. While we hear many arguments that Applicant failed to meet its prima facie case of medical necessity, Arbitrator Resko points out that medical necessity is only a part of what constitutes a prima facie case. The fact that an insurer issued an untimely denial precludes the insurer from arguing lack of medical necessity to defeat the claim. However, the insurer is not precluded from arguing that the Applicant failed to establish a prima facie case of entitlement to the claimed benefit. Arbitrator Resko points out that the Applicant can meet its burden in one of three ways:

1. Submit the official NF3;

2. Submit an unofficial form equivalent to the NF3 (the form must have all of the same information as on an NF3); or

3. Other competent evidence to demonstrate medical necessity, causal relationship, and the applicant’s legal capacity to make the claim for services rendered, if applicable.

The Analysis: The central issue in this no-fault arbitration was whether the Applicant established a prima facie entitlement to claimed benefits. The Applicant sought payment of medical expenses, in the amount of $2,906.95, for an initial TMJ evaluation, panoramic x-ray, transcranial TMJ x-ray, an orthotic appliance, orthotic training, and 25 physical therapy sessions.

We note that Arbitrator Resko found the Respondent’s denials as untimely, but found that Applicant failed to establish a prima facie case for certain medical bills yet awarded $412.69 to Applicant for the x-rays.

Arbitrator Resko provided a thoughtful and well-reasoned analysis of what constitutes a prima facie case entitlement to claimed benefits. We emphasize that Arbitrator Resko finds that an Applicant must demonstrate a prima facie case entitlement to claimed benefits NOT a prima facie case of medical necessity. Arbitrator Resko relies upon an opinion from the Office of General Counsel of the Insurance Department, which many arbitrators have embraced, to explain that even if an insurer’s statutory defense is precluded due to a late denial of claim, the applicant must still prove a prima facie case entitlement to the claimed benefits. More importantly, the Superintendent of Insurance declined to establish a uniform standard of what evidence an Applicant must submit to establish a prima facie case due to diverse number of factual circumstances and leaves that issue for the trier of fact:

What constitutes sufficient evidence in each case is a question of fact to be determined by the trier of fact in each individual instance. Given the number of differences inherent in the vast myriad of factual circumstances within the No-Fault universe, the Superintendent has chosen not to establish a single standard in the No-Fault regulation which specifies what type or what amount of documentation or testimony is necessary for the claimant to meet that burden. Rather, the Superintendent has recognized that discretion that must be accorded to the finder of fact, in arbitration or court, to make that determination….

To that extent, the determination whether a provider demonstrated a prima facie entitled to disputed benefits must be made in terms of the claims submission and adjustment process. Arbitrator Resko found that the process includes a presumption of medical necessity, therefore, whether medical necessity is demonstrated is only one component of a prima facie case entitlement to the claimed benefits. Arbitrator Resko explains:

…when a provider submits a claim, the carrier must timely (1) pay; or (2) deny; or (3) request additional verification to “test” the medical necessity of the claimed services. In scenarios (1) and (2), the carrier determines that it has enough information to decide whether the claimed services are medically necessary. In scenario (3), the carrier determines that it needs additional information to decide medical necessity.

However, if the carrier does nothing, or fails to timely (2) deny; or (3) request additional verification, the claim is considered overdue, and under Presbyterian, the carrier is precluded from arguing that the services were not medically necessary. It is the carrier’s burden to challenge or “test” the medical necessity of the claimed services; under the claims submissions procedures set forth in the Regulations and Presbyterian, medical necessity is presumed unless and until the carrier meets this burden.

In addition to medical necessity, there are other elements that comprise what the courts have termed ‘a facially valid claim,’ and ‘complete proof of claim.’ All of the elements required of a ‘facially valid’ and/or ‘complete proof of claim’ are set forth in the prescribed form NF3.

(internal citations omitted).

Accordingly, when an insurer is precluded from asserting its statutory defense of medical necessity, the medical provider’s timely submission of an NF3 or the equivalent thereof establishes a prima facie case entitlement to the claimed benefits. Moreover, the following elements of an NF3 provide the requisite information for establishing a prima facie case:

1. Field 5 – Diagnosis and Concurrent Conditions

2. Field 9 – Is Condition Solely a Result of this Automobile Accident?

3. Field 10 – Is Condition Due to Injury Arising Out of Patient’s Employment?

4. Provider executed form containing “fraud language.”

5. If applicable, provider identifies the relationship between the individual provider and the corporate entity and ownership of the corporate entity.

With respect to number 4, the execution of the form containing “fraud language” affirms that the medical provider, in her medical opinion, that the claimed services are medically necessary. With respect to number 5, this information is necessary to establish that a corporate provider seeking payment is entitled to receive payment for the claimed services.

Arbitrator Resko acknowledges that the Regulations permit submission of unofficial forms but the form submitted must contain substantially all the information required on the official counterpart. However, in a prima facie context, a claim form other than the official NF3 must contain all of the same information in the NF3 OR the requisite information must be within additional documentation submitted in support of the claim. Also, the forms must be properly executed.

In the case where the medical provider fails to submit a claim on an NF3 form, or its unofficial equivalent, then the medical provider must submit other competent evidence to establish:

1. medical necessity,

2. causal relationship, and

3. the entity’s legal capacity to make the claim for services rendered, if applicable.

It should be noted that a significant limitation to this rule is that there are certain providers, i.e., radiologist and medical supply distributors, who cannot determine medical necessity for the services or supplies provided to the eligible injured person. In those cases, an NF3 alone is insufficient to establish a prima facie case entitlement to the claimed benefit.

Arbitrator Resko in this case found that none of the submitted claims for benefits were on properly executed, completed NF3 forms. However, Applicant submitted a narrative report from an initial examination for TMJ with incorporation of the x-ray findings. This was sufficient to meet Applicant’s burden. On the other hand, Applicant submitted a report of a follow-up examination which was silent as to any of the services for which Applicant made a claim. Further, there was no indication in any reports Applicant submitted as to the dispensing, receipt, or training of an orthotic appliance. Thus, Applicant failed to meet its burden. Finally, Applicant failed to submit any treatment notes, office notes, or a sign-in sheet that corresponded with any of the 25 claimed physical therapy treatments. Accordingly, Applicant failed to meet its burden.

3/27/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq. (Erie County)

Applicant’s Thoracic Spine Surgery 8 Years Post Accident Not Causally Related To the Accident.

Here is the Angle: The multiple IME reports and a treating physician’s note that there was no apparent thoracic spine disc herniation was more persuasive that one treating physician’s reliance upon a thoracic spine MRI taken over one year prior to recommend and perform thoracic spine surgery.

The Analysis: Applicant sought arbitration as to whether her surgery performed eights year after her motor vehicle accident was causally related and medically necessary.

Applicant was involved in an October 15, 1994, motor vehicle accident where after she received treatment for neck, back, hand, and wrist pain, as well as dizziness and tinnitus. Afterward, Applicant came under the care of Drs. Lewis, Dehan, and Angli.

We note that Applicant had a history of two previous accidents with unspecified injuries. One of the previous accidents occurred during the same year as the motor vehicle accident at issue here. The Respondent sent Applicant for multiple independent medical and chiropractic examinations. Mark Rosen, D.C. conducted a March 1995, examination and concluded that Applicant sustained cervical, thoracic, and lumbopelvic strain/sprain. He recommended a 12-week course of chiropractic care, once a week. On January 10, 1996, Louis Marconi, D.C. examined Applicant and found she had full range of motion in her cervical spine. Also, Applicant had a normal neurological examination of the upper extremities. Applicant had no spasm in the lumbar spine region. Mr. Marconi opined that Applicant had ongoing “mild lumbar residuals.” He further opined that Applicant reached her pre-accident status and no further chiropractic care was necessary.

Applicant’s treating chiropractor referred her to Dr. Lewis in March 2002 for a neurosurgical consultation. Dr. Lewis, upon review of a January 2001, thoracic spine MRI stated Applicant had a large disc herniation at T10/11 resulting in chronic disabling pain. Dr. Lewis recommended thoracic microdiscectomy, which was performed on June 18, 2002. Dr. Lewis’ January 15, 2003, report indicated that the surgery was related to Applicant’s injuries in the October 15, 1994, motor vehicle accident and not related to any underlying condition.

Applicant underwent another IME with Dr. White. In Dr. White’s report he stated the Applicant was 5’2” and weighed 260 pounds. A review of the medical records revealed a normal lumbar spine x-ray on the date of the motor vehicle accident. A March 23, 1995, lumbar spine MRI revealed mild L4/5 disc degeneration with a mild left central bulge. Further, Dr. White commented that Applicant’s treating physician commented that a prior thoracic spine CT study did not demonstrate a significant disc herniation or spinal cord compression. It should be noted that Applicant’s treating physician admitted he did not see the thoracic spine MRI. Dr. White opined that he was not convinced that Applicant sustained any significant injury to her spine as a result of the motor vehicle accident. He further concluded that the thoracic spine surgery was not related to the motor vehicle accident as Applicant had long standing degenerative thoracic spine changes.

Arbitrator McCorry found the independent examiner’s findings and conclusions more persuasive and denied the claim in its entirety.

3/27/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq. (Erie County)

Applicant’s Chiropractic Care Rendered for 7 Years Post Accident Not Medically Necessary.

Here is the Angle: Applicant’s chiropractic care that was provided for 7 years after the accident with no evidence of improvement was not medically necessary.

The Analysis: The Applicant was allegedly injured in an October 16, 1998, motor vehicle accident. She underwent chiropractic treatment with Kevin Cichocki, D.C. for 7 years after the motor vehicle accident complaining of neck, head, and arm pain. Applicant underwent a cervical spine MRI which revealed changes consistent with disc herniations at C4/5 and C5/6.

The Applicant testified at the hearing that she received chiropractic care three times a week for numerous years and was charged $6,601.95.

The Respondent denied Applicant chiropractic care as of May 15, 2001, based upon a chiropractic IME performed by Louis Marconi, D.C. Mr. Marconi stated that the Applicant emphatically stated that after two and a half years of chiropractic care she experienced no improvement in her condition. This statement is also supported by Mr. Cichocki’s SOAP notes wherein the Applicant’s pain remained unchanged, worse, or more or less the same.

In January 2004, Mr. Cichocki acknowledged Applicant’s condition remained unchanged yet assessed that she was progressing as expected.

Arbitrator McCorry noted that even though chiropractic care was denied that the Respondent continued to pay for other non-chiropractic treatment.

Ultimately, Arbitrator McCorry found Mr. Marconi’s opinion more persuasive than Mr. Cichocki’s and denied Applicant’s claim in the entirety.

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.


3/31/06 Harbor Specialty Ins. v. Schwartz

District Court of Appeal of Florida, Second District

Insurer Did Not Have a Direct and Immediate Interest in the Cause of Action that Would Justify Intervention
A claimant settled a personal injury action for the policy limits of $10,000 in full release of the insured and the insurer. Notwithstanding the settlement and release, the claimant later filed a lawsuit against the insured and obtained a $35 million jury verdict. A Court of Appeal affirmed the trial court’s denial of the insurer’s post judgment motion for leave to intervene in the action, because the insurer did not have a direct and immediate interest in the cause of action that would justify intervention. The court reasoned that the insurer had no subrogation right to any amount of the jury verdict, nor did it have any liability for the verdict because it had already paid out its policy limits on behalf of the insured. The intervention was not permissible because the insurer’s interest was nothing more than a contingent interest that could have an effect on its future obligations to pay monies to the claimant pending the outcome of other litigation, such as a bad faith action initiated by the claimant on behalf of the insured as a result of the final judgment.

Submitted by: Bruce D. Celebrezze & Helen H. Chen (Sedgwick, Detert, Moran & Arnold LLP


3/29/06 American Reliable Insurance v. Boris Navatil

Fifth Circuit Court of Appeals

Client Has A Duty to Mitigate Damages Caused by Attorney’s Malpractice
This is an appeal from District Court in Louisiana applying Louisiana law. In this case the insurer sued their attorney from the underlying lawsuit for malpractice. Instead of an appeal, the insurer fired its lawyer and settled the claim. The district court granted the lawyer's motion and dismissed the malpractice claim with prejudice. The district court held that the insurer's failure to appeal the jury verdict before voluntarily settling the state court case barred the insurer's malpractice suit. The Fifth Circuit reversed the ruling and held that the insurer could sue for malpractice even if it decided not to appeal. Of note, the Fifth Circuit stated that although as a general principle, a client has a duty to mitigate damages caused by its attorney's malpractice, such a duty cannot require the client to undertake measures that are unreasonable, impractical, or disproportionately expensive given the circumstances.

Submitted by: Bob Shults


3/28/06 Lundell v. Merced Mut. Ins. Co.

California Court of Appeal, Fifth Appellate District

Undisputed Evidence Failed to Show that the Complaint Did Not Seek Recovery for Property Damage Caused by an Occurrence
Insureds were sued by the renters of a dairy for breaching a term of the lease agreement by which the insureds had agreed to have the dairy facility ready for “Grade A” approval upon the renters’ initial occupation of the premises. The insurer, which issued an “HO-3” homeowner’s insurance policy, refused the tender of defense. The trial court granted summary judgment to the insurer, finding that the underlying complaint did not seek bodily injury or property damage caused by an occurrence as required by the policy. The Court of Appeal reversed the trial court’s summary judgment and held that the undisputed evidence presented by the insurer failed to that the underlying complaint did not seek recovery for property damage caused by an occurrence. The court noted, among others, that the insurer ignored the allegation in the underlying complaint that the claimants were deprived of “property.”

Submitted by: Bruce D. Celebrezze & Helen H. Chen (Sedgwick, Detert, Moran & Arnold LLP)


3/27/06 Park University Enterprises v. American Cas. Co. of Reading

Tenth Circuit Court of Appeals

Duty to Defend a Complaint Alleging Unsolicited Fax Advertisement
An insured was sued for allegedly faxing unsolicited advertisements to a class of plaintiffs in violation of the Telephone Consumer Protection Act (“TCPA”). The Tenth Circuit held that an insurer had a duty to defend the underlying complaint under the property damage and the advertising injury provisions of a CGL policy. The court held that the fax recipient’s alleged injury from loss of use of property was potentially caused by an occurrence because the insured believed it was transmitting a fax to a recipient who wished to receive it. The court further held that the allegedly unsolicited fax advertisements involved “publications” of material that violated right of “privacy.” By allegedly faxing advertisements to the class of plaintiffs in violation of TCPA, the insured effectively published material by communicating information generally and undermining the recipients’ rights to be left alone.

Submitted by: Bruce D. Celebrezze & Helen H. Chen (Sedgwick, Detert, Moran & Arnold LLP)

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A.B. Medical Services PLLC, v. Allstate Insurance Company

Appeal from an order of the Civil Court of the City of New York, Kings County (Ellen M. Spodek, J.), entered January 3, 2005. The order, insofar as appealed from as limited by plaintiffs' brief, denied plaintiffs' motion for summary judgment.

Order, insofar as appealed from, reversed without costs, plaintiffs' motion for summary judgment granted and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney's fees.

In this action to recover first-party no-fault benefits for medical services rendered to their assignor, plaintiff health care providers established a prima facie entitlement to summary judgment by proof that they submitted the statutory claim forms, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Consequently, the burden shifted to defendant to raise a triable issue of fact. [*2]

Defendant argued that it properly denied the claims based on the failure of plaintiffs' assignor to appear for examinations under oath (EUOs). The revised insurance regulations, effective on April 5, 2002, which are applicable herein, include EUOs in the Mandatory Personal Injury Protection Endorsement, providing that an eligible injured person submit to EUOs "as may reasonably be required" (11 NYCRR 65-1.1 [d]). However, in order to assert the defense of failure to appear for scheduled EUOs, the "insurer must include the revised prescribed endorsement with new or renewal policies issued on or after April 5, 2002, and the claim rules are to be governed by the policy endorsement in effect" (S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists]; see also Capio Med., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 129[A], 2005 NY Slip Op 50526[U] [App Term, 2d & 11th Jud Dists]; Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56 [App Term, 2d & 11th Jud Dists 2004]). In the instant case, defendant's submissions failed to establish in the first instance that the insurance policy contained an endorsement authorizing EUOs. Therefore, the failure of plaintiffs' assignor to appear for EUOs cannot constitute grounds for denial of no-fault benefits (see Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56, supra; S&M Supply Inc. v Lancer Ins. Co., 4 Misc 3d 131[A], 2004 NY Slip Op 50695[U] [App Term, 9th & 10th Jud Dists]). An insurer's defense that the collision was in furtherance of an insurance fraud scheme is not subject to the 30-day preclusion rule (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]), and is non-waivable. In support of its defense of fraud, defendant submitted the affirmation of its attorney who alleged that the matter was referred to the Special Investigative Unit because plaintiffs' assignor was purportedly not in the insured vehicle at the time of the accident and was seen by the adverse driver arriving at the scene following the accident. However, the defendant's attorney lacked personal knowledge of the investigation and the circumstances giving rise to the investigation (see Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]). Moreover, the unsworn letter by the adverse driver, attached to the attorney's affirmation, did not constitute competent proof in admissible form (Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., 9 Misc 3d 97 [App Term, 9th & 10th Jud Dists 2005]; S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U], supra), and defendant failed to proffer an acceptable excuse for failure to tender such proof in admissible form (see Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979]; Allstate Ins. Co. v Keil, 268 AD2d 545 [2000]). The affidavit of defendant's claims representative merely set forth conclusory allegations of fraud. Thus, defendant's submissions are insufficient to raise triable issues of fact pertaining to its defense of fraud. [*3]

Accordingly, plaintiffs' motion for summary judgment is granted and the matter is remanded to the court below for the calculation of statutory interest and an assessment of attorney's fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.

Pesce, P.J., and Rios, J., concur.

Golia, J., dissents in a separate memorandum.

Golia, J., dissents and votes to affirm the order denying plaintiff's motion for summary judgment.

I agree that the defendant failed to submit sufficient proof to establish that the demands for an examination under oath (EUO) of the assignor were properly mailed. However, I strongly disagree with the majority in requiring the defendant to produce a copy of the underlying contract to establish the existence of the endorsement requiring the "assignor" to submit to an EUO.

The regulations do not require such production and neither the plaintiff nor the assignor raised the issue by denying the existence of such endorsement. I do not believe this Court should create an additional burden for the defendant that is not required by the statute or the regulation and I would therefore adhere to my earlier dissent in A.B. Med. Servs. PLLC v Allstate Ins. Co. (No. 2004-830 K C [App Term 2d & 11th Jud Dists, July 7, 2005]).

My dissent in this case is, however, much more direct.

It is abundantly clear to me that defendant has presented a "founded belief that the alleged injur[ies] do[] not arise out of an insured incident" (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). The belief is founded upon a detailed statement taken of the driver of the "offending" vehicle who stated that although he was involved in the accident and remained at the scene for 2 hours, he "did not observe any passengers inside the vehicle."

Inasmuch as the underlying eligibility for this claim is predicated upon the assignor being a passenger in the insured vehicle, the statement by the other driver, if true, would establish that the alleged injuries do not arise out of this incident.

The only real issue concerning the sufficiency of this statement is the fact that it is unsworn and which my colleagues hold inadmissable as evidence. However, there is a long line of cases that stand for the proposition that even though a statement may be inadmissable and subject to objection, it may be used for the purpose of defeating a summary judgment motion (see Phillips v Kantor & Co., 31 NY2d 307 [1972]; Narvaez v NYRAC, 290 AD2d 400 [2003]).

This is especially true when the witness in question is presumably available to testify (Levbarg v City of New York, 282 AD2d 239 [2001]).
Decision Date: March 27, 2006

A.B. Medical Services v. Commercial Mutual Insurance Co., Respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Eileen Nadelson, J.), entered December 29, 2004. The order, insofar as appealed from, denied plaintiffs' motion for partial summary judgment seeking to recover the sum of $5,427.09.

Order, insofar as appealed from, affirmed without costs.

In this action to recover first-party no-fault benefits for medical services rendered to their assignors, plaintiffs moved for partial summary judgment in the sum of $5,460.79. On appeal, plaintiffs have limited their claim to the sum of $5,427.09. Plaintiffs established a prima facie entitlement to summary judgment by proof that they submitted the claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]).

In opposition to plaintiffs' motion, defendant argued that the claims were properly and timely denied on the ground of lack of medical necessity based on peer review reports. For the reasons set forth herein, this defense is unavailing to defendant. We note initially that the record [*2]does not contain denial of claim forms submitted by A.B. Medical Services PLLC (A.B. Medical) in the respective sums of $71.40, $218.35 and $71.06. Having failed to pay or deny these claims within the 30-day statutory period (11 NYCRR 65-3.8 [c]), defendant is precluded from raising most defenses with respect to said claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

It is uncontroverted on the record that the remaining claims were timely denied. However, a "timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law" (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d & 11th Jud Dists 2004]; see also Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2004]). The claims by A. B. Medical in the sum of $1,144.65 ($182.37, $71.06 and $891.22) were denied for lack of medical necessity based on an annexed peer review which failed to state the factual basis and medical rationale for the recommended denial of said claims. A.B. Medical's claim for $1,573.24 was denied on the ground of lack of medical necessity based on a peer review report which disallowed reimbursement of no-fault benefits due to the lack of sufficient information, including prior medical examinations, which the record indicates were available. In the absence of a showing by defendant that it attempted to procure these reports through verification requests for the purpose of conducting the peer review, defendant is precluded from asserting the defense of lack of medical necessity as to this claim (see 11 NYCRR 65-3.5 [b]; 65-3.6 [b]; A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6 Misc 3d 133[A], 2005 NY Slip Op 50114[U] [App Term, 2d & 11th Jud Dists]; Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 9th & 10th Jud Dists 2004]).

The remaining claims were denied for failure to establish medical necessity based on "peer review[s]." Although defendant was not required to attach to its denial of claim forms the peer reviews upon which the denials were purportedly based (see 11 NYCRR 65-3.8 [b] [4]; A.B. Med. Servs. PLLC v Nationwide Mut. Ins. Co., 7 Misc 3d 132[A], 2005 NY Slip Op 50605[U] [App Term, 2d & 11th Jud Dists]), the defendant's denial of claim forms fail to set forth with sufficient particularity the factual basis and medical rationale for its denials based on lack of medical necessity, and it is therefore precluded from asserting said defense (see Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, supra).

In opposition to plaintiffs' motion, defendant also asserted the defense that plaintiffs' assignor was involved in a fraudulent scheme to procure the subject insurance policy in order to pay reduced insurance premiums, and that consequently, plaintiffs providers were not eligible to recover assigned no-fault benefits. Vehicle and Traffic Law § 313 provides in pertinent part: "(1) (a) No contract of insurance . . . shall be terminated by cancellation by the insurer until . . . after mailing to the named insured . . . a notice of termination by regular mail . . . ." Vehicle and Traffic Law § 313 "supplants an insurance carrier's common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively" (Matter of Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769 [1987]; see also Matter of Cruz v New Millennium Constr. & Restoration Corp., 17 AD3d 19 [2005]; Matter of Metlife Auto & Home v [*3]Agudelo, 8 AD3d 571 [2004]; Matter of Integon Ins. Co. v Goldson, 300 AD2d 396 [2002]; Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293 [2000]). The statute "places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured's negligence" (Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d at 298). There has been no allegation that defendant effectively cancelled the subject insurance policy pursuant to section 313.

However, case law has made clear that whereas the policy may not be retroactively cancelled, thereby protecting "innocent third parties who may be injured due to the insured's negligence" (id.), in "an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured's misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured" (id. at 298-299). The issue presented here is whether, assuming the insurance policy was fraudulently procured, plaintiff health care provider is an "innocent" third party which case law protects and, thus, as assignee of the insured who allegedly perpetrated the fraud, acquires greater rights than had by the assignor. We hold that only innocent third-parties who are injured are protected (id. at 298), and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured's no-fault benefits. Contrary to plaintiffs' contention, the defense of fraudulent procurement of an insurance policy, which is non-waivable and hence exempt from the 30-day preclusion rule, may be asserted as against plaintiffs-providers in this action seeking to recover assigned no-fault benefits (cf. Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 751-752 [2002]). Upon our review of the record, we find that defendant's submissions in support of its defense were sufficient to raise issues of fact as to whether the insurance policy was fraudulently procured. Therefore, plaintiffs' motion for partial summary judgment was properly denied. To the extent that Ocean Diagnostic Imaging P.C. v Commerce Ins. Co. (7 Misc 3d 133[A], 2005 NY Slip Op 50642[U] [App Term 2d & 11th Jud Dists]) may be inconsistent with the determination herein, the dicta set forth therein should not be followed (see Ocean Diagnostic Imaging, P.C. v Nationwide Mut. Ins. Co., No.

Pesce, P.J., and Rios, J., concur.

Golia, J., concurs in a separate memorandum.
=


SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT: PESCE, P.J., GOLIA and RIOS, JJ.
A.B. MEDICAL SERVICES PLLC
D.A.V. CHIROPRACTIC P.C.
LVOV ACUPUNCTURE P.C.
a/a/o Yevgenya Ioffe,

Appellants,

-against-
COMMERCIAL MUTUAL INSURANCE CO.,

Respondent.

Golia, J., concurs with the result only, in the following memorandum:

While I agree with the ultimate disposition in the decision reached by the majority, I wish to emphasize that I disagree with certain propositions of law set forth in cases cited therein which are inconsistent with my prior expressed positions and generally contrary to my views.
Decision Date: March 27, 2006

Frank v. Meadowlakes Development Corporation




David B. Hamm, for third-party appellant.
John Wallace, for third-party respondent.




G.B. SMITH, J.:

The issue here is whether a tortfeasor whose liability is determined to be 50% or less can be found responsible for total indemnification of non-economic loss despite CPLR [*2]article 16 [FN1]. We hold that a third-party defendant found to have only one-ninth of the tortfeasors' total fault should be responsible for one-ninth of the non-economic loss. The order of the Appellate Division should, therefore, be reversed and remitted to Supreme Court for further proceedings to calculate the portion of the settlement properly allocated to non-economic loss.
On April 12, 1991, Stephen Frank was working at a building site in Clarence, New York, on property owned by the Meadowlakes Development Corporation. Frank was attempting to carry a large bag of double insulation over his right shoulder up a staircase on the property. The left side of the staircase had no railing and Frank lost his balance and fell. As a result of the fall, Frank received several serious permanent injuries to his back and spine. Frank and his wife commenced an action for personal injury and loss of consortium against Meadowlakes and the general contractor, D.J.H. Enterprises Inc. Meadowlakes, in turn, filed a related third-party action for indemnification against Home Insulation and Supply, Inc., Frank's employer. After a bifurcated trial, the jury apportioned fault in the amount of 10% to Frank, 10% to Home and 80% to D.J.H. The court also directed a verdict against Meadowlakes and D.J.H. based upon a violation of Labor Law § 240(1).

On January 17, 2003, the Franks settled with D.J.H. for $300,000. On January 24, 2003, the Franks settled with Meadowlakes for $1,424,000. Supreme Court then granted Meadowlakes' motion for common-law indemnification against Home in the sum of $1,552,160, which included interest on the Franks settlement, accruing from January 31, 2003 until February 12, 2004.

Home appealed this judgment, arguing that Supreme Court erred (1) in denying its motion for a directed verdict to dismiss the third-party complaint against it because Home was not negligent and, thus, the jury's 10% allocation of fault to Home should not stand, and (2)in granting Meadowlakes complete indemnification against Home, even if the 10% of fault remained undisturbed, because it should be liable only for its proportionate share of negligence.

The Appellate Division held that Supreme Court properly denied the motion for a directed verdict dismissing the third-party complaint because Home's contention that there was no basis to allocate fault was without merit. The court also disagreed with Home's argument that it should not be required to indemnify Meadowlakes for 100% of the settlement. The court reasoned: [*3]

"It is well settled that 'an owner or general contractor who is held strictly liable under Labor Law § 240 (1) is entitled to full indemnification from the party actually responsible for the incident' (Gillmore v Duke/Fluor Daniel, 221 AD2d 938, 939, 634 NYS2d 588). The principles of common-law indemnification allow the party held vicariously liable to shift the entire burden of the loss to the actual wrongdoer (citations omitted). Contrary to Home's contention, 'CPLR article 16 does not limit the owner's right of indemnification' because of the savings provision for indemnification claims set forth in CPLR 1602 (2) (ii) (Salamone v Wincaf Props., 9 AD3d 127, 129, 777 NYS2d 37, lv dismissed 4 NY3d 794, 828 NE2d 84, 795 NYS2d 168)" (20 AD3d 874, 875-876 [2005]).


Two Justices dissented, concluding that Home's liability should be limited to its proportionate share of fault. The Justices reasoned:

"Application here of the rule of joint and several liability results in precisely the 'evil' intended to be 'suppressed' by the enactment of article 16 (McKinney's Cons Laws of NY, Book 1, Statutes § 95)[,] a party whose equitable share of the fault has been adjudged to be but 10% liable is instead held liable for 100% of that loss. That is just the result that the Legislature sought to avoid by the enactment of article 16" (id. at 881).

We agree with the Appellate Division that there was sufficient evidence in the record to support the jury's determination. Therefore the motion for a directed verdict was properly denied. We disagree, however, with the majority's reasoning concerning complete indemnification. Although CPLR article 16 does not limit the right to indemnification, it does limit the amount that can be recovered when liability is 50% or less.

"A statute or legislative act is to be construed as a whole, and all parts of an act are to be read and construed together to determine the legislative intent" (McKinney's Cons Laws of NY, Book 1, Statutes, § 97). "Statutes will not be construed as to render them ineffective" (McKinney's Cons Laws of NY, Book 1, Statutes, § 144). CPLR 1602 (1) provides, in part, that article 16 "shall apply to any claim for contribution or indemnification." CPLR 1602 (2)(ii) states, "The limitations set forth in this article shall not be construed to impair, alter, limit, modify, enlarge, abrogate or restrict . . . any immunity or right of indemnification available to or conferred upon any defendant for any negligent or wrongful act or omission."

In Salamone v Wincaf Props. (9 AD3d 127 [1st Dept 2004]), the First Department addressed a substantially similar issue of whether a vicariously liable owner was limited in the [*4]amount of indemnification he could recover from a party whose proportionate share of fault was 50% or less. The court found the savings provision in CPLR 1602 (2)(ii) did not limit an owner's right of indemnification against the partially liable party. The owner argued that CPLR 1602 (2)(ii) prevented its common-law right of indemnification from being limited or abrogated by CPLR article 16. The court determined that the "plain meaning of the highlighted statutory language (quoting a portion of CPLR 1602 [2][ii]) appears to be that [the owner's] common-law right of indemnification against [defendant] should operate just as it would have operated had CPLR article 16 never been enacted" (id. at 135). It further reasoned that "[c]onstruing CPLR 1602 (2) (ii) to leave indemnification claims unaffected by the limitations of CPLR article 16 serves to shift liability from non-culpable to culpable parties, consistent with the general intent of the article as a whole, and, presumably, the specific intent behind CPLR 1602 (2)(ii)" (id. at 138). The Salamone court saw an inconsistency between the opening clause of CPLR 1602 (1) and CPLR 1602 (2)(ii). The court viewed CPLR 1602 (2)(ii) as the Legislature's paramount intention and CPLR 1602 (1) as a subordinate provision which furthered article 16's purpose in no discernable way. The Salamone court and the Appellate Division here concluded that there was an irreconcilable conflict between CPLR 1602 (1) and 1602 (2)(ii).

"The legislative intent is to be ascertained from the words and language used, and the statutory language is generally construed according to its natural and most obvious sense, without resorting to an artificial or forced construction" (McKinney's Cons Laws of NY, Book 1, Statutes, § 94). It is clear that the Legislature wanted article 16's protections to apply to indemnification actions (see CPLR 1602 [1]). The purpose of article 16 was to place the risk of a principally-at-fault but impecunious defendant on those seeking recovery and not on a low-fault, deep pocket defendant (see Rangolan v County of Nassau, 96 NY2d 42, 48 [2001] ["To construe 1602 (2)(iv) as an exception to apportionment would defeat the legislative goal of benefitting low-fault, deep pocket" defendants . . .']; Insuring Our Future, Report of the Governor's Advisory Commission on Liability Insurance, at 131 [Apr. 7, 1986]. "[I]t is fundamentally unfair to require a defendant to pay a greater share of an award than corresponds to that defendant's adjudged share of the fault that caused the injury"]). The Salamone decision ignores the Legislature's intent in enacting article 16 in response to the rising costs of liability insurance "to assure that no defendant who is assigned a minor degree of fault can be forced to pay an amount grossly out of proportion to that assignment" (Insuring Our Future, Report of Governor's Advisory Commission on Liability Insurance, at 132).

In our view, there is no irreconcilable conflict between CPLR 1602 (1) and 1602 (2) (ii). In Rangolan v County of Nassau, 96 NY2d 42 (2001), this Court held that CPLR 1602(2)(iv) did not preclude apportionment when a defendant's liability arose from a non-[*5]delegable duty because the subsection was a savings provision and not an exception. We stated that CPLR 1602(2)(iv) "ensures that a defendant is liable to the same extent as its delegate or employee, and that CPLR article 16 is not construed to alter this liability" (id. at 47). CPLR 1602(2)(ii) is, likewise, a savings provision intended to ensure the courts do not read article 16 as altering or limiting the pre-existing right of indemnification. This does not, however, entitle a party to 100% recovery. Therefore, though Meadowlakes retained its right to indemnification, Home, as a party found 10% liable, was limited to its proportionate share with respect to non-economic damages. To calculate Home's share, we divide indemnity among potential indemnitors and exclude Frank's 10% share of fault since he cannot be an indemnitor (see 4 Weinstein-Korn-Miller, NY Civ Prac § 1601.01). Home's total indemnity to Meadowlakes will, therefore, be all economic loss and one ninth of non-economic loss encompassed within the settlement, with interest.

Defendant's remaining arguments are without merit.

Accordingly, the order of the Appellate Division should be modified, without costs, by remitting to Supreme Court for further proceedings in accordance with this opinion and, as so modified, affirmed.
* * * * * * * * * * * * * * * * *
Order modified, without costs, by remitting to Supreme Court, Erie County, for further proceedings in accordance with the opinion herein, and, as so modified, affirmed. Opinion by Judge G.B. Smith. Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.
Decided March 30, 2006

Footnotes



Footnote 1:This action was commenced in 1992, before the 1996 amendment to Workers' Compensation Law § 11, and thus Meadowlakes' right to indemnification is not affected by the amendment.


Garner v. Tong


Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Michael I. Josephs of counsel), for appellant.
Law Office of Eric H. Green, New York (Marc Gertler of
counsel), for respondent.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered August 4, 2005, which denied defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Plaintiff's medical expert's affidavit, in this personal injury automobile accident case, sufficiently established a serious injury as defined in Insurance Law § 5102(d), inasmuch as it was based on quantitative measurements such as the use of an inclinometer to measure range of motion and straight leg testing, and objective medical evidence such as a sworn MRI report (Toure v Avis Rent A Car Sys., 98 NY2d 345 [2002]; Brown v Achy, 9 AD3d 30 [2004]). The tests showed a 20% limitation in the cervical range and a 25% limitation in the lumbar range. Plaintiff established, through his own affidavit and his expert's statement, that the injury prevented him from working for six months following the accident. The expert adequately explained that plaintiff thereafter reduced the frequency of his treatment only because it was not offering him any further benefit.

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

ENTERED: MARCH 30, 2006

Jackson v. Gross

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Delores J. Thomas, J.), entered on June 28, 2004. The judgment, upon a jury verdict, awarded plaintiff Margaret J. Jackson the principal sum of $85,000.

Judgment affirmed without costs.

At the outset, we note that defendants' appeal was timely taken. Since the notice of entry served by plaintiff indicated an erroneous date for the judgment's entry,
the time to take the appeal never commenced to run (see CPLR 5513 [a]; Nagin v Long Is. Savings Bank, 94 AD2d 710 [1983]).

Upon a review of the record, we are of the opinion that the evidence at trial supported the jury's finding that plaintiff Margaret J. Jackson suffered a serious injury in the automobile accident. The injured plaintiff established that she sustained a serious injury pursuant to Insurance Law § 5102 (d), namely a significant limitation of a body organ, function or system. Plaintiff's treating physician stated that when he first examined her two weeks after the accident she had a 30 to 40 percent reduction in movement, particularly her neck. He stated that there was a loss of strength in the shoulder muscle in the left side and in both hands, and there was also loss [*2]of sensation in the left arm. He sent her for an MRI which revealed a herniated disc at C6-C7. He saw her several more times and her condition had not significantly improved.
Moreover, the nature of plaintiff's injuries warranted the jury's award of $85,000 for past pain and suffering. Since the award did not deviate materially from what would be reasonable compensation (see CPLR 5501 [c]), the judgment should be affirmed.

Pesce, P.J., Weston Patterson and Rios, JJ., concur.
Decision Date: March 27, 2006

King v. Car Rentals, Inc.

APPEAL by the plaintiff, in an action to recover damages for personal injuries, from an order of the Supreme Court (Elizabeth Hazlitt Emerson, J.), dated March 12, 2003, and entered in Suffolk County, which denied his motion for summary judgment on the issue of liability and granted the cross motion of the defendants Car Rentals, Inc., and Avis Rent A Car, and the separate cross motion of the defendant Syed Ali, for summary judgment dismissing the complaint insofar as asserted against them.


SPOLZINO, J.On December 28, 1998, the defendant Syed Ali rented an automobile in Piscataway, New Jersey, from the defendant Car Rentals, Inc. (hereinafter Car Rentals), a New Jersey corporation that does business solely in New Jersey as a licensee of the defendant Avis Rent A Car (hereinafter Avis). Avis is a Delaware corporation that has substantial business activity in New York. Ali had just moved out of his sister's apartment in Manhattan, where he had been living for six months after graduating from New York University (hereinafter NYU) while waiting for his employment to commence, in Manhattan, in January 1999. He moved into his parents' home in Metuchen, New Jersey, where he had grown up. Ali's intent, as unequivocally expressed in his deposition testimony, was to move back to New York City after training, in [*2]Chicago, for his new employment in Manhattan. In fact, he returned to live in Manhattan in April 1999, four months after the subject accident and two months after he returned from his training.

Ali drove to Connecticut, where he picked up the plaintiff, whom he had met while both were students at NYU. The plaintiff, who was employed at the time as a teacher at a Connecticut private school, resided in both Kings Park, New York, and Hamden, Connecticut. The two drove to Canada for the New Year's weekend. On the return trip, on January 3, 1999, while traveling south on Route 133 in the City of St. Pierre de Veronne, outside of Montreal, in the Province of Quebec, Canada, the vehicle left the roadway and turned over in a ditch, allegedly injuring the plaintiff.

The issue presented on this appeal is what law applies to the plaintiff's New York action to recover damages for his personal injuries. New York law provides that a plaintiff who is seriously injured in an automobile accident may recover damages for non-economic loss (see Insurance Law § 5104[a]) and that the owner of a vehicle used or operated in New York that was the cause of the plaintiff's injuries is vicariously liable for such damages (see Vehicle & Traffic Law § 388)[FN1]. Under New Jersey law, non-economic loss may be recovered in circumstances similar, although not identical, to those in which such damages may be recovered in New York (see NJSA 39:6A-8; DiProspero v Penn, 183 NJ 477, 481, 488-489, 874 A2d 1039, 1041-1042, 1046)[FN2], but the vehicle owner is vicariously liable only if the driver was the employee or agent of the owner (see Haggerty v Cedeno, 279 NJ Super 607, 609, 653 A2d 1166, 1167). The Quebec Automobile Insurance Act provides for vicarious liability of the vehicle owner (see Quebec Rev Stats ch A-25, § 108), but does not permit recovery of non-economic damages (see Quebec Rev Stats ch A-25, § 83.57; Bodea v TransNat Express, 286 AD2d 5, 8; LaForge v Normandin, 158 AD2d 990; Thomas v Hanmer, 109 AD2d 80, 81; Jean v Francois, 168 Misc 2d 48, 49-50). In order to resolve this issue, we must first address the domiciles of the parties and the scope of New York's vicarious liability law and then balance the parties' contacts with Quebec, New York, and New Jersey and the respective interests of those jurisdictions in the application of their law to this controversy.

After the plaintiff moved for summary judgment on the issue of liability, Car Rentals and Avis cross-moved for summary judgment dismissing the complaint insofar as asserted against them on the ground that New Jersey law applies and does not permit the plaintiff's vicarious liability claim against them. Ali then cross-moved for summary judgment dismissing the complaint insofar as asserted against him on the ground that the law of Quebec applies and bars the plaintiff's claim for non-economic damages. The Supreme Court held that Quebec law applies and granted Ali's [*3]cross motion, denying the plaintiff's motion as academic. The order also, effectively, denied as academic the cross motion of Car Rentals and Avis, at least to the extent that the motion sought the application of New Jersey law.

Since Babcock v Jackson (12 NY2d 473), New York has been committed to addressing choice of law issues through a "center of gravity" or "grouping of contacts" approach, under which "[j]ustice, fairness and the best practical result' [citation omitted] may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation" (id. at 481). Babcock, like this case, involved a weekend trip to Canada, in that case the Province of Ontario, that ended with a one-car accident in that locale, injuring a New York resident. Rejecting the strict rule of lex loci delicti, which had theretofore prevailed, the court declined to apply Ontario's guest statute, which precluded recovery by a passenger against the vehicle's driver and, instead, applied New York law, reasoning that "it is New York, the place where the parties resided, where their guest-host relationship arose and where the trip began and was to end, rather than Ontario, the place of the fortuitous occurrence of the accident, which has the dominant contacts and the superior claim for application of its law" (Babcock v Jackson, supra at 483).

The Supreme Court applied Quebec law to the controversy here, based upon what it perceived to be a requirement that the choice of law rules enunciated by the Court of Appeals subsequent to Babcock, in Neumeier v Kuehner (31 NY2d 121), be strictly applied. The Neumeier rules, originally articulated by Chief Judge Fuld, the author of Babcock, in his concurrence in Tooker v Lopez (24 NY2d 569, 583), were intended to provide a "set of basic principles" developed "in order to assure a greater degree of predictability and uniformity" (Neumeier v Kuehner, supra at 127) than had been available since New York's choice of law firmament had been shattered by Babcock.

Although Tooker and Neumeier were both guest statute cases, their principles have since been extended beyond that context and now govern the choice among conflicting "loss allocating rules" (Padula v Lilarn Props. Corp., 84 NY2d 519, 522; see Cooney v Osgood Mach., 81 NY2d 66, 73; see Schultz v Boy Scouts of Am., 65 NY2d 189, 199). "Loss allocating rules" are laws that "prohibit, assign or limit liability after the tort occurs" (Padula v Lilarn Props. Corp., supra at 522). A restriction on the nature of damages that may be recovered is a "loss allocating rule" (Bodea v TransNat Express, supra at 9; see Mensah v Moxley, 235 AD2d 910, 911), as is a law that governs vicarious liability (see Schultz v Boy Scouts of Am., supra at 198; Janssen v Ryder Truck Rental, 246 AD2d 364; Aboud v Budget Rent A Car Corp., 29 F Supp 2d 178 [SD NY]; Heisler v Toyota Motor Credit Corp., 884 F Supp 128, 131 [SD NY]).

The Supreme Court viewed this matter as being controlled by the third Neumeier rule. The first Neumeier rule was rejected on the basis of the Supreme Court's finding that the plaintiff was a domiciliary of New York and Ali was a domiciliary of New Jersey at the time of the accident and because the vehicle was registered in New Jersey. The Supreme Court refused to apply the second Neumeier rule because none of the parties resided in Quebec, where the accident occurred. Applying the third Neumeier rule, the Supreme Court found no reason to deviate from the default the jurisdiction where the accident occurred and on that basis applied Quebec law, dismissing the complaint pursuant to Quebec's prohibition on recovery of non-economic damages.

Although the Supreme Court correctly held that the determination in this case was governed by the third Neumeier rule, it erred in concluding that Quebec law should apply. Contrary to the Supreme Court's determination, Ali's temporary relocation to his childhood home did not make that residence his domicile in the face of clear evidence of his intent to continue to live in New York. Nevertheless, Car Rentals' domicile in New Jersey precludes the application of the first Neumeier rule. The third Neumeier rule, while applicable, is not absolute, requiring that the default, the law of the jurisdiction in which the accident occurred, yield where to do so "will advance the [*4]relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants" (Neumeier v Kuehner, supra at 128). We conclude that Quebec's limited contacts with the parties require that its law yield here, and, after considering the respective interests of New York and New Jersey, hold that the law of New Jersey shall govern this controversy.

The plaintiff is unquestionably a domiciliary of the State of New York. His deposition testimony, that he was born in New York and resided there, in his mother's home in Kings Park, until September 2001, was undisputed. At the time of the accident he had a New York driver's license. While it is true that Ali picked him up in Connecticut for the trip and was returning him to Connecticut when the accident occurred, the plaintiff's residence in Hamden, Connecticut, where he had been employed since September 1998 as a teacher, does not require a different conclusion.

Residence means living in a particular place; domicile means "living in that locality with intent to make it a fixed and permanent home" (Matter of Newcomb, 192 NY 238, 250) or, as it has more recently been put, "one's principal and permanent place of residence where one always intends to return to from wherever one may be temporarily located" (Laufer v Hauge, 140 AD2d 671, 672; see SCPA 103[15]; Rosenzweig v Glen's Truck Serv., 136 AD2d 689). A party may thus have more than one residence, but only one domicile (see Kleinrock v Nantex Mfg. Co., 201 App Div 236, 237). Measured against this standard, the plaintiff's deposition testimony was sufficient to establish his New York domicile. There is nothing in the record to establish to the contrary that his Connecticut residence had become his domicile.

Determining Ali's domicile is not as simple. Ali grew up in Metuchen, New Jersey, and resided there, in his parents' home, until he left to attend NYU, in Manhattan, in November 1994. There is no dispute that Ali was again living at his parents' New Jersey home at the time of the accident, having moved to that residence some time in December 1998, within a month before the accident. It is also undisputed that at that time Ali had the same New Jersey driver's license that he had had since he was first licensed to drive, which listed his parents' home as his address, and that he was registered to vote at that address, as he had been since he was 18 years of age.

Nevertheless, despite his New Jersey residence at the time of the accident, the facts here establish that Ali was a New York domiciliary at that time. Ali's original domicile was in New Jersey and his residence in New York as a student was not sufficient to change that (see Matter of Seitelman v Lavine, 36 NY2d 165, 171; Ledwith v Sears, Roebuck and Co., 231 AD2d 17, 22; Porcello v Brackett, 85 AD2d 917, affd 57 NY2d 962, 964). Nevertheless, the fact that Ali resided in New York initially as a student does not preclude finding a change of domicile on the basis of other facts (see Matter of Goodman, 146 NY 284, 287).

Ali's student residency in New York is not the whole story. Rather than return to New Jersey after graduation, he continued to live and work in New York. Immediately after his graduation from NYU in June 1998, while waiting for his employment with a Manhattan company to commence in January 1999, Ali worked for a temporary employment agency at several locations in Manhattan. During that period, Ali resided with his sister in an apartment on 26th Street in Manhattan, sharing rent and other expenses.

When he did leave New York, moreover, a few weeks before the accident, he did so not with an intent to live permanently in New Jersey, but intending to return to New York to live in a few months, once his training was concluded and his employment had begun in New York. In fact, he planned that upon his return from the employment training in Chicago that he was to commence in January 1999, he would return to Manhattan to find a place to live. In April 1999, three months after the accident, and one month after his employment training had concluded, Ali moved to an apartment in Manhattan. Critically, he testified at his examination before trial that his move to his [*5]parents' home was temporary.

The dispositive issue with respect to Ali's domicile is his intent (see Matter of Newcomb, supra). Ali's intent to remain in New York was apparent, both from his testimony and from his action in moving back to New York once he returned from training (see Matter of Brunner, 41 NY2d 917, 918). It was his move to New Jersey that was temporary. Thus, despite his New Jersey residence at the time of the accident and his other New Jersey connections, Ali was a New York domiciliary at the time of the accident.

A finding that Ali is a New York domiciliary, however, does not resolve the matter, since Ali's domicile is not the only factor on the New Jersey side of the choice of law equation. There are other parties to this action whose domiciles cannot be ignored (see Roach v McGuire & Bennett, 146 AD2d 89, 92). The vehicle's owner, Car Rentals, is a New Jersey corporation that does business in New Jersey as Avis Rent A Car, pursuant to a license with Avis. Avis, while a Delaware corporation, has its principal place of business in New York (see DeTellis v Avis Rent A Car Sys., 273 AD2d 268, 269) and is, therefore, a New York domiciliary (see Weisberg v Layne-New York Co., 132 AD2d 550, 551-552). Nevertheless, Avis has a presence in New Jersey, through its licensee, Car Rentals. In addition, the vehicle involved in the accident here was registered, insured, and rented in New Jersey. These facts bear on the choice of law as well (see Schultz v Boy Scouts of Am., supra at 197; Cunningham v McNair, 48 AD2d 546, 549; Diehl v Ogorewac, 836 F Supp 88, 93-94 [ED NY]; Buglioli v Enterprise Rent-A-Car, 811 F Supp 105, affd 999 F2d 536; White v Smith, 398 F Supp 130).

New Jersey's involvement in this matter is not, moreover, accidental. The record here reflects that the plaintiff and Ali made a conscious decision to rent a vehicle in New Jersey because, as the plaintiff testified in his deposition, it was less expensive to do so. Had the plaintiff and Ali thought about it, it might have occurred to them that the absence of potential vicarious liability under New Jersey law may have played a role in that cost differential. While they surely did not contemplate, as they planned their weekend trip, the vagaries of choice of law in the event of an accident, had they considered such issues at all, they would surely have anticipated that New Jersey law would apply to the liability of the New Jersey owner and lessor of the vehicle they rented. The parties' expectations, while not controlling (see Tooker v Lopez, supra at 577; Miller v Miller, 22 NY2d 12, 20), are certainly relevant (see Cooney v Osgood Mach., supra at 77-78).

Applying the Neumeier rules to the situation here thus presents a difficulty not contemplated by the Court of Appeals in that case multiple parties with different domiciles. The Court of Appeals addressed this problem in Schultz v Boy Scouts of Am. (supra), applying separate choice of law analyses, and, consequently, different Neumeier rules, to the liability of each defendant. The situation presented in Schultz, however, is not analogous. There, although the plaintiff was injured by a single tortfeasor, the liability of the two defendants in issue was predicated not merely on their vicarious responsibility for the acts of the tortfeasor, but on their own separate, allegedly negligent, acts of hiring the tortfeasor. Here, by contrast, there is no claim of negligence on the part of any party other than the defendant-driver. If Car Rentals and Avis are liable at all, they are liable solely vicariously. Because the liability of all of the defendants here is thus interrelated, the application of the laws of different jurisdictions to the several defendants may lead to unanticipated complications as potentially inconsistent law is applied and, therefore, must be rejected.

Since the plaintiff, as well as Ali and Avis, are New York domiciliaries and Car Rentals is a New Jersey domiciliary, the choice of law is determined under the third Neumeier rule, which requires the application of the law of the Province of Quebec, the lex loci delicti, unless it can [*6]be shown that displacing that normally applicable rule " will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants'" (Schultz v Boy Scouts of Am., supra at 201, quoting Neumeier v Kuehner, supra at 128).

Here, the "relevant substantive law purposes" are in conflict in two respects. As noted initially, New York law and New Jersey law permit the recovery of non-economic damages by a seriously-injured plaintiff; Quebec law does not (compare Insurance Law § 5104[a] and NJSA 39:6A-8 with Quebec Rev Stats ch A 25, § 83.57). Both Quebec and New York, however, impose vicarious liability on the vehicle owner, while New Jersey does not, at least in the circumstances presented here (compare Vehicle & Traffic Law § 388 and Haggerty v Cedeno, 279 NJ Super at 609, 653 AD2d at 1167, supra, with Quebec Rev Stats ch A-25, § 108). Determining what "will advance" these purposes without "impairing the smooth working of the multi-state system or producing great uncertainty for litigants" requires that we "evaluate the relative interests of jurisdictions with conflicting laws and, if neither can be accommodated without substantially impairing the other, finding some other sound basis for resolving the impasse" (Cooney v Osgood Mach., supra at 75).

This analysis precludes the application of Quebec's ban on the recovery of non-economic damages here. Other than the occurrence of the accident in Quebec, there are no relevant contacts between this controversy and that jurisdiction. There is no claim that any party to this action resides in Quebec or that any Quebec resident, or even Canadian citizen, not a party to this action, was involved in the accident. There is no claim that this action has any contact with the Province of Quebec other than the fact that this accident occurred there. The plaintiff and Ali simply went to Quebec for the weekend. It is virtually certain that before departing neither of them contemplated the limited recovery that might be available to them under the law of that jurisdiction in the event of a mishap. Simply put, nothing could be more "adventitious" than the fact that the accident occurred in Quebec.

The Province of Quebec, moreover, has no interest in the application to this controversy of its proscription on the recovery of non-economic damages. Quebec's restriction on recovery arises out of its comprehensive automobile injury compensation scheme, a part of its national health insurance program, under which every Quebec driver receives compensation for lost income and medical expenses, as well as up to $20,000 (in Canadian dollars) for injury, disfigurement, suffering, and loss of enjoyment (see Quebec Rev Stats ch A-25, §§ 19, 44, 45). Since Quebec is not paying any benefits pursuant to its compensation scheme with respect to this accident, it has no interest in applying these restrictions to this controversy (see Janssen v Ryder Truck Rental, 246 AD2d 364; Thomas v Hanmer, 109 AD2d 80).

Once the application of Quebec's law on damages is rejected, the choice of law question with respect to that issue is simple. Since New York law and New Jersey law both permit recovery of non-economic damages in cases of serious injury, there is no conflict with respect to recovery for non-economic loss and, consequently, no choice of law issue to be decided with respect thereto (see Elson v Defren, 283 AD2d 109, 114-115; see also Diehl v Ogorewac, supra at 93).

The issue of vicarious liability is more complicated. The conflict with respect to this issue is between the law of New York, which imposes vicarious liability on the owners of all vehicles that are operated in the State of New York, and the law of both Quebec and New Jersey, neither of which would, in the circumstances presented here, impose liability on Car Rentals or Avis. Before reaching the choice of law question, however, it is necessary to determine whether New York's vicarious liability statute even applies to this Quebec accident in a New Jersey vehicle. If it does not, there is no conflict to be resolved with respect to vicarious liability.

New York's vicarious liability statute, Vehicle and Traffic Law § 388(1), provides that "[e]very owner of a vehicle used or operated in this state shall be liable and responsible for death [*7]or injuries . . . resulting from negligence in the use or operation of such vehicle . . . by any person using or operating the same with the permission, express or implied, of such owner." The effect of this provision is not limited to accidents occurring in New York (see Cunningham v McNair, supra at 549). Rather, although "the vicarious liability imposed by section 388(1) does not extend to owners of vehicles that have never been registered, used, operated or intended for use within this State" (Fried v Seippel, 80 NY2d 32, 40; see Ashkenazi v Hertz Rent A Car, 18 AD3d 584; Darby v Avis Rent A Car Sys., 289 AD2d 191, 192; Klippel v U-Haul Co. of Northeastern Michigan, 759 F2d 1176, 1180 [4th Cir]), its obligations apply to any vehicle that is driven in New York (see Matter of Sentry Ins. Co., 36 NY2d 291, 295; Farber v Smolack, 20 NY2d 198, 203-204; Cunningham v McNair, supra at 549; Budget Rent-A-Car Sys. v Chappell, 407 F3d 166, 170-174 [3d Cir], cert denied 126 S Ct 567; Johnson v Hertz Corp., 315 F Supp 302, 304 [SD NY]).

Under Fried and Farber, the law in New York is thus that prior use of a vehicle to any degree within the state is sufficient to establish the applicability of Vehicle and Traffic Law § 388 (see Budget Rent-A-Car Sys. v Chappell, supra at 170-174). In those cases where the application of section 388 has been rejected, the vehicle has never been driven in New York (see Fried v Seippel, supra; Darby v Avis Rent A Car Sys., supra; Ashkenazi v Hertz Rent A Car, supra; Coleman v Alamo-Rent-A-Car, 242 AD2d 256; Klippel v U-Haul Co. of Northeastern Michigan, supra). Where the vehicle is registered in New York or there has been some operation in this state, the application of the statute has been upheld (see Farber v Smolack, supra; Cunningham v McNair, supra; Budget Rent-A-Car Sys. v Chappell, supra; Heisler v Toyota Motor Credit Corp., supra; Johnson v Hertz Corp., supra).

Here, the vehicle in which the plaintiff was injured was registered, insured, and rented in New Jersey. While there is no direct evidence in the record to establish whether it was "used or operated" in New York, geographical realities cannot be ignored. There is no other practical way to drive from New Jersey, where the vehicle was rented by Ali, to Connecticut, where Ali picked up the plaintiff. Thus, although the issue is not free from doubt, it appears that Vehicle and Traffic Law § 388 is implicated here. The question, then, returns to whether under the applicable choice of law rules that provision governs the result.

Unlike the situation presented with respect to Quebec's ban on non-economic damages, it does not appear that Quebec's law with respect to vicarious liability is an integral part of any larger governmental policy that would have no application to foreign domiciliaries. Since none of the parties are domiciled in Quebec, and the vehicle was not registered, insured, or rented in Quebec, however, Quebec's interest in enforcing its rule in these circumstances is limited. Moreover, under New York's choice of law regime, rules regarding vicarious liability are viewed as "loss-allocating," rather than "conduct-regulating" (Schultz v Boy Scouts of Am., supra at 198; see Janssen v Ryder Truck Rental, supra; Aboud v Budget Rent A Car Corp., supra; Heisler v Toyota Motor Credit Corp., supra at 131). In this context, therefore, it would be inappropriate to place any significance on Quebec's interest in the enforcement of this rule for the purpose of regulating conduct. Thus, although Quebec's interest in the application of its vicarious liability rule here is not non-existent, it cannot be said to be substantial.

New York, by contrast, has a strong interest in requiring financial security with respect to vehicles that are subject to New York law (see Tooker v Lopez, supra at 576-577; Vasquez v Christian Herald Assn., 186 AD2d 467, 468). The policy is longstanding. Although New York originally adhered to the common-law rule that allows for vicarious liability only for the acts of agents or employees, which is still the law of New Jersey, that law was changed by statute in 1924 (see former Highway Law § 282-e, then Vehicle and Traffic Law former § 59, now Vehicle and Traffic Law § 388[1]). The intent of the New York State Legislature in adopting this provision was "to assure injured plaintiffs that there will be a financially responsible party to provide compensation [*8]for negligent driving" (Tikhonova v Ford Motor Co., 4 NY3d 621, 624; see Continental Auto Lease Corp. v Campbell, 19 NY2d 350, 352; Morris v Snappy Car Rental, 84 NY2d 21, 27; Plath v Justus, 28 NY2d 16, 20). The importance that the Legislature attached to this policy is apparent both from the stated legislative purpose (see Vehicle and Traffic Law § 310[2]) and the fact that the vehicle owner is prohibited from contracting away its vicarious liability (see Motor Vehicle Acc. Ind. Corp. v Continental Nat. Amer. Group, Co., 35 NY2d 260, 264-265; Davis v Hall, 233 AD2d 906, 907).

New Jersey takes a different approach to the vicarious liability of vehicle owners, adhering to the common-law rule that a vehicle owner is vicariously liable for the negligence of the operator only where there is an agency relationship upon which that liability can be predicated. "New Jersey's common law rule regarding owner liability * * * is designed to shield an owner from liability in cases in which the owner has not been negligent and in which the culpable driver is not related to the owner in a way that will justify the imposition of vicarious liability under traditional principles of the law of agency or master servant. That shield is consistent with the principle that tort liability in the context of automobile-related personal injuries is based on fault" (Haggerty v Cedeno, 279 NJ Super at 611-612, 653 A2d at 1169, supra). That is, in fact, the approach taken by most of the nation (see Rocj and Stendahl, Vicarious Liability of Motor Vehicle Lessors, 59 Bus Law 1161, 1164 [2004]). It is New York that is unique in imposing such unqualified liability on the vehicle owner (see Steinberg, Vicarious Liability of Motor Vehicle Owners under V&TL § 388 is Extensively Litigated, 70 NY St BJ 36 [Dec. 1998]).

New Jersey's interest in the application of its law here is premised upon the fact that the vehicle involved in the accident is owned by its domiciliary, Car Rentals, and is registered, insured, and rented in New Jersey (see Haggerty v Cedeno, supra). New Jersey clearly has a legitimate and substantial interest in protecting its domiciliary from what it regards as an unwarranted extension of vicarious liability (see Klippel v U-Haul Co. of Northeastern Michigan, supra at 1182; Aboud v Budget Rent A Car Corp., supra at 182). Although New Jersey courts have deferred to the application of New York's vicarious liability statute in cases involving rental vehicles (see Li Fu v Hong Fu, 160 NJ 108, 133, 733 A2d 1133, 1146-1147; Haggerty v Cedeno, 279 NJ Super at 609, 653 A2d at 1167), the situations in which they have done so did not involve the potential liability of a New Jersey domiciliary.

As noted above, the applicable Neumeier principle requires that we disregard the law of the jurisdiction where the accident occurred where doing so "will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants" (Neumeier, supra at 128). The intent of the rule is to further, on some "sound basis" (Cooney v Osgood Mach., supra at 75), the application of the "the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation" (Babcock v Jackson, supra at 481).

For the reasons that have been discussed, there is a "sound basis" for rejecting the application of the law of Quebec here. The parties have no contacts with that jurisdiction, other than the purely adventitious fact that the accident occurred there, and Quebec has no interest in the application of its law to this dispute. Although New York claims more contacts with the parties than does Quebec, including the domicile of both the plaintiff and the defendant-driver, New Jersey is, nonetheless, the domicile of Car Rentals, the party whose liability is primarily in issue here,[FN3] as well [*9]as the jurisdiction in which the vehicle was rented and with which the defendant-driver Ali, although domiciled elsewhere, has significant contacts.

In these circumstances, the New Jersey contacts predominate. Moreover, in a situation as closely balanced as this, New York's unique vicarious liability policy cannot be preferred to the more limited policy adopted by New Jersey and most of the rest of the nation "without impairing the smooth working of the multistate system" (Neumeier, supra at 128). Thus, despite the strength of New York's policy in favor of protecting New York accident victims, that policy must yield to New Jersey's countervailing interest in protecting its domiciliary, the vehicle owner, from vicarious liability that it deems to be unwarranted. The result consistent with Babcock, Neumeier, and Cooney is, therefore, the application of New Jersey law.

Accordingly, the cross motion of Car Rentals and Avis dismissing the complaint insofar as asserted against them was thus properly granted on the ground that no vicarious liability applies under the law of New Jersey. Ali's motion, however, which was granted on the basis of the application of Quebec law prohibiting the recovery of non-economic damages, should have been denied, since New Jersey law imposes no such prohibition.

The plaintiff's motion for summary judgment on the issue of liability should nevertheless be denied on the merits. The plaintiff was injured when the vehicle driven by Ali, in which the plaintiff was riding, left the roadway. The plaintiff and Ali both testified at their examinations before trial that the vehicle was traveling between 30 and 40 miles per hour, and the plaintiff admitted that Ali was not driving in an erratic manner. Ali testified that his headlights and windshield wipers were on at the time of the accident and that he had both hands on the steering wheel when, immediately before the accident, he "tapped" on the brakes to slow the vehicle down. The plaintiff testified, by contrast, that Ali "slammed" on the brakes.

On this record, the plaintiff failed to establish his prima facie entitlement to judgment as a matter of law, as he was required to do in order to prevail on his motion for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320). "Evidence of skidding out of control is only prima facie evidence of negligence on the part of the driver, it does not mandate a finding of negligence. Such evidence, together with the explanation given by the driver, presents factual questions for determination by the jury" (Copeman v Moran, 236 AD2d 507, 508; see Donitz v Mui, 247 AD2d 508; Zimmerman v Spaziante, 143 AD2d 745; Vadala v Carroll, 91 AD2d 865, affd 59 NY2d 751).

Accordingly, the order is modified, on the law, by deleting the provision thereof granting Ali's cross motion for summary judgment dismissing the complaint insofar as asserted against him and substituting therefor a provision denying that cross motion; as so modified, the order is affirmed, and the complaint is reinstated insofar as asserted against Ali.
PRUDENTI, P.J., MILLER and LIFSON, JJ., concur. [*10]

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the cross motion of the defendant Syed Ali for summary judgment dismissing the complaint insofar as asserted against him and substituting therefor a provision denying that cross motion; as so modified, the order is affirmed, with one bill of costs to the defendants Car Rentals, Inc., and Avis Rent A Car payable by the plaintiff and one bill of costs to the plaintiff payable by the defendant Sayed Ali, and the complaint is reinstated insofar as asserted against the defendant Syed Ali.

ENTER:

James Edward Pelzer

Clerk of the Court

Footnotes



Footnote 1:The limitations on such liability imposed by 49 USC § 30106 are not applicable here since the "harm that is the subject of the action" occurred before August 10, 2005 (see 49 USC § 30106[c]).

Footnote 2:Although recovery of non-economic damages is permitted by both New York law and New Jersey law in the case of "serious injury," the states' respective definitions of "serious injury" are not identical. Under New Jersey law, recovery is limited to six categories of serious injuries, defined as "death; dismemberment; significant disfigurement or significant scarring; displaced fractures; loss of a fetus; or a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement. An injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment" (NJSA 39:6A-8[a]), unless an insured opts for broader coverage. The plaintiff's injuries, as alleged in his bills of particulars, consist of "[l]eft distal third humeral shaft holstein-lewis (spiral) fracture" and "[l]eft humerus open reduction and internal fixation." Such injuries would constitute a "serious injury" in New York (see Insurance Law § 5102[d]; Lesane v Tejada, 15 AD3d 358). There is nothing in the record from which it could be concluded that the same result would be had in New Jersey.

Footnote 3:Once the law of Quebec is rejected, Ali's liability is not affected by the choice between New York law and New Jersey law since, unlike Quebec, neither jurisdiction precludes the recovery of non-economic damages, which was the basis of Ali's cross motion for summary judgment dismissing the complaint. Although Avis's argument for summary judgment was predicated on the absence of vicarious liability under New Jersey law, and the presence of Avis in this litigation has some bearing on the choice of law issues, its impact is minimal since even if New York law were to be applied, Avis would nonetheless be entitled to summary judgment dismissing the complaint insofar as asserted against it. The potential liability of Avis is predicated solely upon its status as the licensor of Car Rentals, the vehicle owner. Vehicle and Traffic Law § 388, however, does not impose liability on the licensor of the vehicle owner (see Ashkenazi v Hertz Rent A Car, 18 AD3d 584). Despite the plaintiff's attempts to argue that some other entity is involved, on the basis of the rental agreement, which makes no mention of Car Rentals and identifies "S N M Rentals" as the "Avis System Licensee," there is no dispute that Car Rentals owns the vehicle that was involved in the accident and that Avis's connection to this matter is solely the result of its status as Car Rentals' licensor.

New York Central Mutual Fire Insurance Company v. Reinhardt



Michael E. Pressman, New York, N.Y. (Tod S. Fichtelberg of
counsel), for appellant.
Rubin & Licatesi, P.C., Garden City, N.Y. (Jason Firestein of
counsel), for respondent.

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for underinsured motorist benefits, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Bucaria, J.), dated December 15, 2004, as denied that branch of its petition which was to permanently stay arbitration.

ORDERED that the order is reversed insofar as appealed from, on the law, without costs or disbursements, and the matter is remitted to the Supreme Court, Nassau County, for a framed-issue hearing and a new determination thereafter.

Jenna Reinhardt was injured in an automobile accident in August 2002. The next month, she notified her insurance company, New York Central Mutual Fire Insurance Company (hereinafter New York Central) of the accident and advised it of a possible uninsured/underinsured motorists claim. In February 2003 she sued the tortfeasor. In April 2004 she proceeded to arbitration with the tortfeasor's insurance company and discontinued her lawsuit.

After the arbitration, at which she was awarded $25,000, the limit of the tortfeasor's policy, she advised New York Central of the award and offered it an opportunity to pay her the award directly and thereby protect its subrogation rights. New York Central did not respond and instead disclaimed coverage because of Reinhardt's alleged violations of various policy conditions over the course of the matter. Reinhardt informed New York Central of her intention to seek arbitration of [*2]her right to benefits under the Supplemental Uninsured/Underinsured Motorists (hereinafter SUM) endorsement, and New York Central petitioned for a permanent stay of the arbitration under CPLR 7503(c).

Reinhardt did not comply with the SUM endorsement requirement that she "immediately" forward the summons and complaint in her lawsuit against the tortfeasor to New York Central. Nonetheless, New York Central was required to show prejudice resulting from the 10-month delay (see Matter of Brandon [Nationwide Mut. Ins. Co.], 97 NY2d 491, 496; State Farm Mut. Auto. Ins. Co. v Sparacio, 297 AD2d 284, 285). The Supreme Court properly found that New York Central failed to show prejudice.

Reinhardt did not violate the conditions of the policy when she discontinued her action against the tortfeasor and participated in binding arbitration. After the arbitrator issued his award against the tortfeasor, Reinhardt, in accordance with the SUM endorsement requirements, notified New York Central. There is no evidence in this record that New York Central acted to protect its rights within the time frame provided in the endorsement and in the letter notifying it of the arbitrator's award against the tortfeasor. Instead, New York Central disclaimed coverage. Because Reinhardt did not violate the SUM endorsement requirements when she discontinued her action against the tortfeasor and participated in binding arbitration, and because New York Central did not establish prejudice from the untimely forwarding of the summons and complaint, New York Central's disclaimer was unjustified. In any event, New York Central's seven-month delay in disclaiming coverage for the late forwarding of process was unreasonable as a matter of law (see Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439, 440; Matter of American Express Prop. Cas. Co. v Vinci, 18 AD3d 655).

Nevertheless, we remit the matter for a framed-issue hearing on whether Reinhardt is barred by collateral estoppel from seeking additional recovery under the SUM endorsement. The arbitration agreement provided that the maximum amount of the award would be $25,000, the limit of the tortfeasor's policy, but it also provided that this limitation would be confidential and would not be revealed to the appointed arbitrator "before, during or after the hearing." The arbitrator awarded exactly the maximum amount permitted. Under these circumstances, it is unclear whether Reinhardt sought to establish damages of a greater amount or withheld proof of the full extent of her injuries in light of the arbitrator's limited authority. It is also unclear whether, despite the agreement to keep the arbitrator in the dark about the so-called high/low agreement limiting recovery to $25,000, the arbitrator nonetheless was aware of it and conformed the award to this limitation.

We note that the arbitration award against the tortfeasor may be entitled to preclusive effect as to the amount of Reinhardt's damages even if that award was not confirmed and reduced to judgment (see Matter of Aetna Cas. & Sur. Co. v Bonilla, 219 AD2d 708, 709; Hilowitz v Hilowitz, 85 AD2d 621). Moreover, the issue of whether to grant preclusive effect to a particular arbitration award in a later arbitration is for the court, not the arbitrator (see Rembrandt Ind. v Hodges Int., 38 NY2d 502, 504; Dimacopoulos v Consort Dev. Corp., 158 AD2d 658, 659; see e.g. Matter of American Honda Motor Co. v Dennis, 259 AD2d 613).
CRANE, J.P., KRAUSMAN, RIVERA and DILLON, JJ., concur. [*3]

ENTER:

James Edward Pelzer

Vazquez v. Basso



Longo & D'Apice, Brooklyn, N.Y. (Mark A. Longo and
Michelle B. Kanter of counsel), for appellant.
James G. Bilello & Associates, Westbury, N.Y. (Patricia
McDonagh of counsel), for
respondents.

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Johnson, J.), dated February 7, 2005, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants failed to establish their prima facie burden of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants' examining orthopedist merely stated in his affirmed medical report that upon physical examination, the plaintiff "had full range of motion of all segments of the spine extending from the cervical to [the] lumbosacral region," without setting forth the objective medical testing performed to support his conclusion (see Nembhard v Delatorre, 16 AD3d 390; Black v Robinson, 305 AD2d 438; Gamberg v Romeo, 289 AD2d 525; Junco v Ranzi, 288 AD2d 440). Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law in the first instance, it is unnecessary to reach the question of whether the plaintiff's papers were sufficient to [*2]raise a triable issue of fact (see Facci v Kaminsky, 18 AD3d 806; Rich-Wing v Baboolal, 18 AD3d 726; Nembhard v Delatorre, supra; Lesane v Tejada, 15 AD3d 358; Hennessy v Verizon N.Y., 8 AD3d 619; Coscia v 938 Trading Corp., 283 AD2d 538).
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Williams v. Burkett

Defendant appeals from an order of the Civil Court, Bronx County (Raul Cruz, J.), entered February 23, 2004, which denied his motion for summary judgment dismissing the complaint, and from an order (same court and Judge), entered August 3, 2004, which, to the extent appealed from as limited by the briefs, upon reargument, adhered to the prior decision.

PER CURIAM:

Order (Raul Cruz, J.), entered August 3, 2004, reversed, without costs, and defendant's motion for summary judgment dismissing the complaint is granted. The Clerk is directed to enter judgment accordingly. Appeal from order (Raul Cruz, J.), entered February 23, 2004, dismissed, without costs, as superseded by the appeal from the order of August 3, 2004.

Defendant met his burden of presenting objective medical evidence that the injured plaintiff had not suffered a serious injury as defined in Insurance Law §5102(d)(see Newton v. Drayton, 305 AD2d 303 [2003]; McNair v. Ofori, 198 AD2d 47 [1993]).

Plaintiff failed to come forward with objective, probative evidence to raise an issue of fact as to whether she sustained a serious injury in the 2000 motor vehicle accident. The record demonstrates that plaintiff, at most, suffered minor injuries, missed one week of work and, after a short course of physical therapy, complained of only intermittent pain and sought no further treatment until the underlying summary judgment motion was filed in 2003. Although plaintiff was examined shortly after the accident and found to have limitations, her treating doctor failed to quantify any such limitations (see Toulson v. Pae, 13 AD3d 317 [2004]). The first quantification of restriction by plaintiff's doctor took place at an examination three years after the accident. Given the absence of admissible, contemporaneous evidence of serious injury, plaintiff's proffered conclusions are insufficient (see Petinrin v. Levering, 17 AD3d 173 [2005]).

This constitutes the decision and order of the court.
Decision Date: March 24, 2006

Aponte v. Tusa






Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum] of counsel), appellant pro se.
Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of
counsel), for respondent.

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Queens County (Hart, J.), dated May 12, 2005, which denied his 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 granted, and the complaint is dismissed.

The admissible proof submitted by the defendant, showing that the plaintiff had full range of motion and suffered from no disability causally related to the automobile accident about one week after the automobile accident, was sufficient to establish a prima facie case that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), despite a magnetic resonance imaging report showing a bulging disc (see Kearse v New York City Tr. Auth., 16 AD3d 45).

In opposition to the motion, the plaintiff failed to adequately explain the almost seven-year gap in her medical treatment (see Batista v Olivo, 17 AD3d 494). Moreover, the plaintiff failed to raise a triable issue of fact as to her alleged inability to perform substantially all of her daily activities for not less than 90 of the first 180 days following the accident as a result of the accident [*2](see Sainte-Aime v Ho, 274 AD2d 569).
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Finch v. Whalen



Shayne, Dachs, Stanisci, Corker & Sauer, Mineola, N.Y.
(Jonathan A. Dachs of counsel), for appellant.
Burke, Lipton, Puleo, McCarthy & Gordon, White
Plains, N.Y. (Kevin T. D'Arcy of
counsel), for respondent.

In an action to recover damages for personal injuries, etc., the plaintiff Maudlyn Curry appeals from a judgment of the Supreme Court, Westchester County (Bellantoni, J.), entered August 11, 2004, which, after a jury trial solely on the issue of damages, is in favor of the defendant and against her dismissing the complaint.

ORDERED that the judgment is affirmed, with costs.

On May 2, 2000, the appellant, age 72, was a passenger in a stopped vehicle which was struck in the rear by the defendant's vehicle. In the instant action, the appellant claimed that as a result of the accident she sustained serious injuries within the meaning of Insurance Law § 5102(d). After trial, the jury returned a verdict finding that the accident was a proximate cause in "bringing about the injury" of the appellant, but that her injuries did not satisfy any of the definitions of serious injury set forth in Insurance Law § 5102(d).

On appeal, the appellant contends that the jury's finding that the injury to her left shoulder did not satisfy the definitions of serious injury was contrary to the weight of the credible evidence. We disagree. [*2]

On the day of the accident, the appellant was taken by ambulance to the hospital and was released the same day. The ambulance report indicated that she was able to move all four extremities without pain and the hospital records stated that she "moved all extremities freely."

In September 2000 a magnetic resonance imaging test revealed a torn biceps tendon. At the trial, the appellant's surgeon testified that if she had injured her biceps tendon in the accident, she would have experienced pain. Based upon the ambulance report and his examination of the appellant, the defendant's expert stated that it was "[h]ighly unlikely that an acute rupture of the biceps tendon had taken place" and her diagnosis of "supraspinatus tendonosis" related to a longstanding inflammation in the tendons. The defendant's expert further noted that the appellant suffered from a narrowing of the coracohumeral interval in the left shoulder which is a degenerative condition.

"[T]he standard for determining whether a jury verdict is against the weight of the evidence is whether the evidence so preponderated in favor of the movant that the verdict could not have been reached on any fair interpretation of the evidence" (Harris v Marlow, 18 AD3d 608, 609, quoting Torres v Esaian, 5 AD3d 670, 671). In the instant case, the testimony of the defendant's expert and the absence of any evidence of shoulder pain or restriction on the day of the accident provided a basis for the jury's determination. It cannot be said that the jury's determination was contrary to any fair interpretation of the evidence.
GOLDSTEIN, J.P., LUCIANO, RIVERA and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

New York and Presbyterian Hospital v. Auto One Insurance Company


Joseph Henig, P.C., Bellmore, N.Y., for appellants.
Jeena R. Belil, Melville, N.Y. (Tina B. Davidson of counsel),
for respondent.

In an action to recover no-fault insurance benefits under certain insurance contracts, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Dunne, J.), dated August 18, 2005, which granted the defendant's motion to vacate a judgment entered April 1, 2005, upon its failure to appear or answer, awarding the plaintiffs the principal sum of $28,060.13, and for an extension of time to answer pursuant to CPLR 3012(d), and granted the defendant's separate motion to quash an information subpoena.

ORDERED that the order is affirmed, with costs.

The Supreme Court providently exercised its discretion in granting the defendant's motion to vacate its default in answering and for an extension of time to answer pursuant to CPLR 3012(d). The defendant demonstrated both a reasonable excuse for its brief delay in serving an answer, and potentially meritorious defenses. Furthermore, there is a strong public policy in favor of resolving cases on the merits, and the default was not willful, nor was there a showing of prejudice to the plaintiffs (see Harcztark v Drive Variety, 21 AD3d 876; Bunch v Dollar Budget, 12 AD3d 391; Orwell Bldg. Corp. v Bessaha, 5 AD3d 573; Sippin v Gallardo, 287 AD2d 703).

The defendant's motion to quash the information subpoena was properly granted (see CPLR 2304). [*2]
FLORIO, J.P., SANTUCCI, MASTRO and RIVERA, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Paul Developers v. Maryland Casualty Insurance Company


Melito & Adolfsen, P.C., New York, N.Y. (Ignatius John Melito
and Tania A. Gondiosa of counsel), for appellants.
Koenig & Samberg, Mineola, N.Y. (Arnold Koenig of
counsel), for respondents.

In an action, inter alia, in effect, for a judgment declaring that the defendants Maryland Casualty Insurance Company, Zurich Group of Insurance Companies, and Assurance Company of America are obligated to defend and indemnify the plaintiffs in an action entitled Garcia v Paul Developers, LLC, pending in the Supreme Court, Suffolk County, under Index No. 17704/02, the defendants Maryland Casualty Insurance Company, Zurich Group of Insurance Companies, and Assurance Company of America appeal from (1) so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated May 5, 2004, as denied their cross motion for summary judgment declaring that they are not obligated to defend and indemnify the plaintiffs in the underlying action, and (2) an order of the same court dated February 15, 2005, which denied their motion for leave to renew and/or reargue the prior cross motion for summary judgment.

ORDERED that the order dated May 5, 2004, is reversed insofar as appealed from, on the law, the cross motion is granted, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendants Maryland Casualty Insurance Company, Zurich Group of Insurance Companies, and Assurance Company of America are not obligated to defend or indemnify the plaintiffs in the underlying action; and it is further, [*2]

ORDERED that the appeal from the order dated February 15, 2005, is dismissed; and it is further,

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

The defendant Assurance Company of America (hereinafter Assurance) issued a general liability insurance policy to the plaintiff Emmy Homes, LLC, naming the plaintiffs Paul Developers, LLC, and Foxridge Associates, LLC, as additional insureds. The policy, procured by the plaintiffs' insurance broker, the defendant Borg & Borg, Inc., obligated the plaintiffs to notify Assurance "as soon as practicable of an occurrence' . . . which may result in a claim."

During the policy period, on June 11, 2001, Santos Garcia was injured when he was struck by windblown plywood while performing construction work at the plaintiffs' job site. By letter dated November 30, 2001, Siben & Siben, LLP (hereinafter Siben & Siben), Garcia's attorneys, sent written notification of Garcia's claim to the plaintiffs Paul Developers, LLC, and Foxridge Associates, LLC. On August 9, 2002, the plaintiffs faxed a copy of the complaint in the underlying action to Assurance's claims adjuster. By letter dated August 12, 2002, the insurer disclaimed coverage based upon late notice; the letter noted that "[o]ur file reveals that your company received notice of this loss pursuant to a letter of representation from Siben and Siben dated 11/30/01. Assurance Company of America received first notice of this loss on 8/6/02."

The plaintiffs subsequently commenced the instant action, inter alia, in effect, for a judgment declaring that the defendants Maryland Casualty Insurance Company, Zurich Group of Insurance Companies, and Assurance (hereinafter collectively Zurich) were obligated to defend and indemnify them in the underlying action. Zurich cross-moved for summary judgment, arguing that the plaintiffs failed to comply with the notice provision of the insurance policy. The Supreme Court denied the cross motion on the ground that a triable issue of fact existed as to when Zurich received notice of the Siben & Siben letter dated November 30, 2001. We reverse.

"Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances" (Eagle Ins. Co. v Zuckerman, 301 AD2d 493, 495; see Merchants Mut. Ins. Co. v Hoffman, 56 NY2d 799, 801-802). "Providing an insurer with timely notice of a potential claim is a condition precedent, and thus [a]bsent a valid excuse, a failure to satisfy the notice requirement vitiates the policy'" (Sayed v Macari, 296 AD2d 396, 397, quoting Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440). " Where there is no excuse or mitigating factor, the issue [of reasonableness] poses a legal question for the court,' rather than an issue for the trier of fact" (SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584, quoting Hartford Acc. & Indem. Co. v CNA Ins. Cos., 99 AD2d 310, 313).

Zurich established, prima facie, entitlement to judgment as a matter of law by demonstrating that the plaintiffs received notice of the underlying claim on or about November 30, 2001, yet failed to give notice to them until August 2002, over eight months later (see Pile Found. Constr. Co. v Investors Ins. Co. of Am., 2 AD3d 611, 612; see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324).

In opposition, the plaintiffs failed to raise a triable issue of fact as to whether Zurich received notice of the underlying claim prior to August 2002 (see Viggiano v Encompass Ins. [*3]Company/Fireman's Ins. Co. of Newark, N.J., 6 AD3d 695, 696; Sayed v Macari, supra at 397). The fact that the plaintiffs may have provided timely notice to their own broker is of no consequence. Notice to a broker cannot be treated as notice to the insurer since the broker is normally deemed to be the agent of the insured and not the carrier (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra at 442; Matter of First Cent. Ins. Co., 3 AD3d 494; Bennion v Allstate Ins. Co., 284 AD2d 924; Serravillo v Sterling Ins. Co., 261 AD2d 384, 385; Shaw Temple A.M.E. Zion Church v Mount Vernon Fire Ins. Co., 199 AD2d 374, 376).

Under these circumstances, the over eight-month delay was unreasonable as a matter of law and justified Zurich's disclaimer (see DiGuglielmo v Travelers Prop. Cas., 6 AD3d 344, 346; Sayed v Macari, supra; Safer v Government Empls. Ins. Co., 254 AD2d 344, 345). Accordingly, the Supreme Court erred in denying Zurich's cross motion for summary judgment.

Zurich's appeal from so much of the order dated May 5, 2004, as denied that branch of Zurich's motion which was for leave to renew must be dismissed as academic, in light of our determination granting Zurich's cross motion, and we dismiss Zurich's appeal from so much of the order dated May 5, 2004, as denied reargument on the ground that no appeal lies from an order denying reargument.

Since this action seeks, in effect, a declaratory judgment, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring that Zurich is not obligated to defend or indemnify the plaintiffs in the underlying action (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
FLORIO, J.P., KRAUSMAN, GOLDSTEIN and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Ranzie v. Abdul-Massih


Norman Volk & Associates, P.C., New York, N.Y. (Holly E. Peck
of counsel), for appellants.
Abbott Bushlow & Schechner, LLP, Ridgewood, N.Y. (Richard
Schechner of counsel), for respondent.

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Harkavy, J.), dated February 23, 2005, which denied their 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) and granted the plaintiff's cross motion for summary judgment on the issue of liability.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, the cross motion is denied as academic, and the complaint is dismissed.

By submitting a copy of the plaintiff's deposition testimony and the affirmed medical report of their examining orthopedic surgeon, the defendants made 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). Contrary to the Supreme Court's determination, in opposition, the plaintiff failed to raise a triable issue of fact in this regard. The plaintiff's reliance on the affirmations of Dr. Matthew Yovino and Dr. Sounder Eswar, with annexed reports, was misplaced since those physicians never stated that any of the injuries observed, as related to the plaintiff's left ankle, were causally related to the subject accident (see Sherin v Roda, 14 AD3d 604, 606; Verrelli v Tronolone, 230 AD2d 789). Moreover, the reports incorporated by [*2]reference into the respective affirmations of said physicians were not based on recent examinations of the plaintiff (see Young v Gonzalez, 19 AD3d 408, 409; Constantinou v Surinder, 8 AD3d 323; Varghese v Ehret, 305 AD2d 402; Kauderer v Penta, 261 AD2d 365, 366). The plaintiff's medical records from St. John's Hospital and Queens-Long Island Medical Group, at best, merely recorded the plaintiff's subjective complaints of pain, which are insufficient, on their own, to raise a triable issue of fact as to whether she sustained a serious injury (see Kinchler v Cruz, 22 AD3d 808; Cennamo v Themistokleous, 22 AD3d 700, 701; Nelson v Amicizia, 21 AD3d 1015, 1016). The affirmation and annexed reports of Dr. Thomas Scilaris, the plaintiff's examining orthopedic surgeon, were also insufficient to raise a triable issue of fact. Although Scilaris, in recent examinations of the plaintiff, observed limitations in range of motion of the plaintiff's left ankle, the plaintiff failed to provide any medical proof that was contemporaneous with the subject accident which showed range of motion limitations in her left ankle (see Suk Ching Yeung v Rojas, 18 AD3d 863, 864; Nemchyonok v Peng Liu Ying, 2 AD3d 421; Ifrach v Neiman, 306 AD2d 380). The magnetic resonance imaging report of the plaintiff's left ankle, which was made one and one-half years after the subject accident, while properly relied upon by the plaintiff, did not raise a triable issue of fact as to whether the plaintiff sustained a serious injury to her left ankle since that report stated that the plaintiff did not suffer from a partial or complete tear of the left Achilles tendon.

Additionally, the plaintiff failed to raise a triable issue of fact as to whether an injury to her left ankle prevented her from performing substantially all of her usual activities for at least 90 of the first 180 days following the subject accident as a result of the accident (see Davis v New York City Tr. Auth., 294 AD2d 531; Sainte-Aime v Ho, 274 AD2d 569, 570; Arshad v Gomer, 268 AD2d 450). Accordingly, the defendants were entitled to summary judgment dismissing the complaint.

In light of our determination, the plaintiff's cross motion for summary judgment on the issue of liability is denied as academic.
SCHMIDT, J.P., CRANE, KRAUSMAN, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Sabatino v. Capco Trading Inc.



Mugglin, J.

Appeal from an order of the Supreme Court (Ryan, J.), entered September 10, 2004 in Clinton County, which granted third-party defendants' motions for summary judgment dismissing the third-party complaint.

Plaintiffs commenced this action for personal injuries suffered when their vehicle ran into the rear of a John Deere pay loader owned by defendant Capco Trading, Inc. and operated by [*2]its sole shareholder, officer and employee, defendant Robert L. Bourgeois. Plaintiffs then commenced a separate declaratory judgment action against defendants and John Geno, Howard Crary and Howard Crary Associates (hereinafter the insurance agents) and Eagle Insurance, essentially seeking to establish that a special relationship existed between defendants and the insurance agents and, if no policy of insurance was in effect, it was due to the negligence of the insurance agents and/or because a certain policy of insurance, through Eagle, was in full force and effect at the time of the accident. The insurance agents moved to dismiss the declaratory judgment action on the basis that they owed no duty to plaintiffs and Eagle also moved to dismiss, asserting that it had validly canceled the policy. Although named as parties, defendants took no part in these proceedings. By bench decision dated June 27, 2003, Supreme Court granted the motions and dismissed plaintiffs' declaratory judgment complaint. The order confirming this decision was entered July 2, 2003, "with prejudice and on the merits."

On July 1, 2003, defendants, using the language contained in the declaratory judgment complaint, served a third-party complaint against the insurance agents and Eagle (hereinafter collectively referred to as third-party defendants). Third-party defendants then moved to dismiss the third-party complaint and Supreme Court, finding that res judicata and collateral estoppel applied with preclusive effect, granted the motions and dismissed the third-party complaint. Defendants appeal and, with respect to the issues of res judicata and collateral estoppel, make three arguments.

First, defendants argue that since both res judicata and collateral estoppel do not apply unless a final judgment has been entered in the prior action, their third-party complaint, having been served one day before the final judgment was entered, is not barred by these principles. We are unpersuaded. "The purpose of this rule is to assure finality, however, and if finality is clear, the source of it should be secondary" (Siegel, NY Prac § 444, at 751 [4th ed]). As Supreme Court's decision was rendered June 27, 2003, finality of the issue was clear on that date and all that remained was the ministerial act of entering judgment based on the decision.

Next, defendants argue that although they were named as parties to the declaratory judgment action, no relief was sought against them as the action seeks only declaratory relief as against the insurance agents and the insurance company. The issue of coverage, however, was crucial not only to plaintiffs but to defendants and defendants may not now rely on their default on the motions to protect them. The doctrines of res judicata and collateral estoppel apply so long as a party was given a full and fair opportunity to be heard (see D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664 [1990]). Indeed, defendants are necessary parties to any declaratory judgment action which seeks to determine whether coverage exists (see Wrobel v LaWare, 229 AD2d 861, 861-862 [1996]).

Third, defendants argue that since plaintiffs lacked standing to bring the declaratory judgment action, Supreme Court lacked jurisdiction to render a decision therein. While the argument raised has merit, since a stranger to an insurance policy may not bring an action for a declaratory judgment concerning the extent of an insurer's duty to defend (see Lang v Hanover Ins. Co., 3 NY3d 350, 353-355 [2004]), and because Insurance Law § 3420 (b) (1) allows a plaintiff to sue the insurance company only after entry of judgment which has remained unsatisfied for more than 30 days, the issue of plaintiffs' lack of standing was not raised in Supreme Court either by pleading or on the motions. Lack of standing is a waivable defense (see Pataki v New York State Assembly, 4 NY3d 75, 88 [2004]). As it was waived in Supreme [*3]Court, it cannot now be raised as a grounds for reversal.

As a result of this determination, we need not address defendants' further assertions that issues of fact remain concerning the negligence of the insurance agents or the proper cancellation of the policy by Eagle.

Spain, J.P., Carpinello, Rose and Lahtinen, JJ., concur.

ORDERED that the order is affirmed, with one bill of costs.

Schoenig v. North Sea Insurance Company


Shayne, Dachs, Stanisci, Corker & Sauer, Mineola, N.Y. (Norman
H. Dachs and Jonathan Dachs of counsel), for appellant.
Schondebare & Brown, LLP, Ronkonkoma, N.Y. (Dennis M.
Brown of counsel), for plaintiff-
respondent.

In an action for a judgment declaring that the defendant North Sea Insurance Company is obligated to defend and indemnify the plaintiff, Steven P. Schoenig, in an underlying personal injury action entitled Chisholm v Van Dood, pending in the Supreme Court, Suffolk County, under Index No. 29191/02, the defendant North Sea Insurance Company appeals from an order of the Supreme Court, Suffolk County (Tanenbaum, J.), entered January 14, 2005, which denied its motion for summary judgment, and granted the plaintiff's cross motion, inter alia, for summary judgment declaring that it was obligated to defend and indemnify the plaintiff, Steven P. Schoenig, in the underlying personal injury action.

ORDERED that the order is reversed, on the law, with costs payable by the plaintiff, the motion is granted, the cross motion is denied, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendant North Sea Insurance Company is not obligated to defend and indemnify the plaintiff, Steven P. Schoenig, in the underlying personal injury action entitled Chisholm v Van Dood, pending in the Supreme Court, Suffolk County, under Index No. 29191/02.

Insurance Law § 3420(d) requires an insurer to provide a written disclaimer "as soon [*2]as is reasonably possible." The reasonableness of the delay is measured from the time when the insurer "has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66). The insurer bears the burden of justifying any delay (id. at 69). "While Insurance Law § 3420(d) speaks only of giving notice as soon as is reasonably possible,' investigation into issues affecting an insurer's decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer" (id. [citations omitted]).

The defendant North Sea Insurance Company (hereinafter North Sea) established its prima facie entitlement to judgment as a matter of law by demonstrating that it disclaimed coverage 21 days after it became aware that the plaintiff had breached the notice provision of the subject policy by failing to promptly notify North Sea once there was a reasonable possibility of the policy's involvement (see Figueroa v Utica Natl. Ins. Group, 16 AD3d 616, 616-617; Rondale Bldg. Corp. v Nationwide Prop. & Cas. Ins. Co., 1 AD3d 584, 585). This delay in disclaiming coverage was reasonable under the circumstances of this case.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendant North Sea Insurance Company is not obligated to defend and indemnify the plaintiff, Steven P. Schoenig, in the underlying personal injury action entitled Chisolm v Van Dood, pending in the Supreme Court, Suffolk County, under Index No. 29191/02 (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
SCHMIDT, J.P., ADAMS, SANTUCCI and SKELOS, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Sullivan v. Dawes


Blane Magee, Rockville Centre, N.Y., for appellants.
Pecoraro & Schiesel, New York, N.Y. (Steven Schiesel of
counsel), for respondent.

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Schneier, J.), dated April 15, 2005, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The orthopedist's affirmation upon which the defendants' motion for summary judgment was predicated assigned a numerical value to the range of motion of the plaintiff's lumbar spine, but failed to compare his findings against the normal range of motion. Accordingly, the defendants failed to make a prima facie showing of entitlement to judgment on the issue of whether the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) (see Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Kennedy v Brown, 23 AD3d 625, 626), and the Supreme Court properly denied the defendants' motion (see Boone v New York City Tr. Auth., 263 AD2d 463; see generally Toure v Avis Rent A Car Sys., 98 NY2d 345; cf. Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50; Meely v 4 G's Truck Renting Co., Inc., 16 AD3d 26, 29-30).
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Tolstocheev v. Bajrovic


Kelly, Rode & Kelly, LLP, Mineola, N.Y. (Eric B. Betron of
counsel), for appellant.
Dominick W. Lavelle, Mineola, N.Y. (Susan R. Nudelman of
counsel), for respondent.

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Jacobson, J.), dated January 14, 2005, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

Contrary to the defendant's contention, the Supreme Court properly denied his motion for summary judgment dismissing the complaint on the ground that he failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendant's examining neurologist and orthopedist both failed to set forth the objective tests used to determine that the plaintiff did not have any range of motion restrictions (see Nembhard v Delatorre, 16 AD3d 390, 391; Black v Robinson, 305 AD2d 438; Gamberg v Romeo, 289 AD2d 525; Junco v Ranzi, 288 AD2d 440). Since the defendant failed to establish his initial burden on the motion, it is unnecessary to consider whether the plaintiff's papers were sufficient to raise a triable issue of fact (see Facci v Kaminsky, 18 AD3d 806, 807; Rich-Wing v Baboolal, 18 AD3d 726, 727; Nembhard v Delatorre, supra; Lesane v Tejada, 15 AD3d 358).
SCHMIDT, J.P., CRANE, KRAUSMAN, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Robinson v. East Medical Center





Timothy J. Fennell, for appellant.
Daniel P. Fletcher, for third-party respondent.


READ, J.: [*2]

Plaintiff Douglas W. Robinson, a journeyman plumber, was injured on June 23, 1998 while working for Burns Brothers Contractors, Inc. at the construction site for a new medical condominium complex in Fayetteville, New York. Burns Brothers was a plumbing subcontractor on the project.

Plaintiff arrived at the job site at 7:00 AM that day, intending to continue to install pipe hanger systems, a task that he had been carrying out for about two weeks, using a six-foot wooden stepladder. In order to perform this work, plaintiff would cut rods to the desired length; mount the ladder to screw the rods into top beam clamps attached to overhead structural steel beams and tighten the clamps; and subsequently hang pipes from the rods. Burns Brothers stored its six- and eight-foot ladders, as well as other tools and blueprints, in a designated room on the first floor in the garage area at the construction site. Workers also cached ladders overnight at gathering points near their work locations so as to reduce trips to and from the central storage room.

Working alone and using a six-foot ladder, plaintiff installed rods in a hallway until roughly 9:00 AM. After a ten-minute break sometime between 9:00 AM and 9:30 AM, he moved into an office suite where the steel beams were at a height of twelve to thirteen feet from the floor, which was higher than in the hallway. Plaintiff, who is five feet, nine inches tall, was standing on the top cap of the six-foot ladder, using a wrench to tighten a clamp with his right hand and holding onto a rod with his left hand. When the wrench slipped, he lost his balance and the ladder moved. He held fast to the rod as he dropped about two feet, caught the tipping ladder under its uppermost step with his left foot and straightened it into an upright position, jerking or "twist[ing] up" his back in the process. Plaintiff descended the ladder, and spent the balance of the workday — from about 10:00 AM when the accident occurred until 3:30 PM — performing various tasks. He did not immediately seek out his foreman to report what had happened, but rather told him when they later "crossed paths," perhaps at the noontime lunch break.

According to plaintiff, there was a box of "community tools" set up in front of the building, and he and other workers would congregate at this location at the beginning of the workday. Some time between 7:00 AM and 8:00 AM on June 23rd, he saw his foreman there and told him "by the way, I'm going to need an 8-foot ladder." Plaintiff testified that the foreman replied, "I'll see if I can get you one." Plaintiff acknowledges that the foreman did not instruct him to finish installing pipe in the office suite before completing other work; that he knew there were eight-foot ladders on the job site and "knew what part of the garage [the eight-foot ladders] were in"; and that, prior to ascending the six-foot ladder in the office suite, he did not look in the garage for an eight-foot ladder, or follow up his request to the foreman, or seek out fellow workers who might have been using an eight-foot ladder to ask for the ladder when they were [*3]finished with it, as he had on prior occasions. When asked whether he had ever before gone to his foreman to request ladders or other tools, plaintiff replied "I don't think I ever asked him for anything. I knew where the tools are located. It's a practice of help yourself," and "[y]ou just grab a ladder and do the job."

On June 21, 2001, plaintiff sued the owner of the medical complex and the general contractor, alleging violations of Labor Law §§ 240(1), 200(1) and 241(6). The owner cross-claimed against the contractor for indemnity; and the contractor brought a third-party action against Burns Brothers for indemnity and/or contribution.

Plaintiff moved for partial summary judgment on liability under Labor Law § 240(1), arguing that because his foreman did not deliver an eight-foot ladder to him, he "was forced to complete his work with an unsafe six[-]foot ladder." Plaintiff does not suggest that the six-foot ladder was defective, only that it was not tall enough for the particular task that he was carrying out when he was injured. Defendants opposed plaintiff's motion and cross-moved for summary judgment on all the Labor Law causes of action. As relevant here, Burns Brothers moved to dismiss the cause of action under Labor Law § 240(1) exclusively on the ground that plaintiff's own actions were the sole proximate cause of his accident. Specifically, "[p]laintiff knew he needed a taller ladder" and "there were taller ladders on the job site," but he "failed . . . to wait for one to be provided and failed to take any steps to secure a taller ladder other than allegedly to ask for one shortly before the accident" and instead, "stood on the top of the six[-]foot ladder."

Supreme Court granted plaintiff partial summary judgment on liability under Labor Law § 240(1), and dismissed his causes of action under Labor Law §§ 200 and 241(6). The Appellate Division subsequently reversed Supreme Court and dismissed the complaint in its entirety, with two Justices dissenting [FN1]. We now affirm.

Where a "plaintiff's actions [are] the sole proximate cause of his injuries, . . . liability under Labor Law § 240(1) [does] not attach" (Weininger v Hagedorn & Co., 91 NY2d 958, 960 [1998]; see also Cahill v Triborough Bridge & Tunnel Auth., 4 NY3d 35 [2004]; Blake v Neighborhood Hous. Servs. of N.Y. City, 1 NY3d 280 [2003]). Instead, the owner or [*4]contractor must breach the statutory duty under section 240(1) to provide a worker with adequate safety devices, and this breach must proximately cause the worker's injuries. These prerequisites do not exist if adequate safety devices are available at the job site, but the worker either does not use or misuses them.

In Montgomery v Federal Express Corp. (4 NY3d 805 [2005]), the plaintiff and another worker were assigned a task to be performed in an elevator "motor room," which was located four feet above the roof level of a building. Arriving on the roof, they discovered that the stairs from the roof to the motor room had been removed. Ladders were available at the job site, albeit not in the immediate vicinity. Rather than fetch a ladder, however, the workers climbed to the motor room by standing on an overturned bucket. The plaintiff exited the motor room by jumping to the roof, and injured his knee when he landed. Citing Blake, we noted that "since ladders were readily available, plaintiff's normal and logical response should have been to go get one. Plaintiff's choice to use a bucket to get up, and then to jump down, was the sole cause of his injury, and he is therefore not entitled to recover under Labor Law § 240(1)" (Montgomery, 4 NY3d at 806 [quotation marks omitted]).

Similarly, plaintiff knew that he needed an eight-foot ladder in order to screw the rods into the clamps once he left the hallway and entered the office suite. He acknowledges that there were eight-foot ladders on the job site, that he knew where they were stored, and that he routinely helped himself to whatever tools he needed rather than requesting them from the foreman. While intimating that all the eight-foot ladders may have been in use at the time of his accident, plaintiff also conceded that his foreman had not directed him to finish the piping in the office suite before undertaking other tasks, and testified that there was sufficient other work to occupy him for the rest of the workday. He also testified that on prior occasions he had waited for a ladder to be freed up by other workers. He claims to have asked his foreman for an eight-foot ladder only an hour or two before he started to install the rods in the office suite. Yet he proceeded to stand on the top cap of a six-foot ladder, which he knew was not tall enough for this task, without talking to the foreman again, or looking for an eight-foot ladder beyond his immediate work location. In short, there were adequate safety devices — eight-foot ladders — available for plaintiff's use at the job site. Plaintiff's own negligent actions — choosing to use a six-foot ladder that he knew was too short for the work to be accomplished and then standing on the ladder's top cap in order to reach the work — were, as a matter of law, the sole proximate cause of his injuries.

Accordingly, the order of the Appellate Division should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Read. Chief Judge Kaye and Judges G.B. Smith, [*5]Ciparick, Rosenblatt, Graffeo and R.S. Smith concur.
Decided April 4, 2006

Footnotes



Footnote 1:The majority in the Appellate Division concluded that plaintiff did not fall "from or at a height," but rather avoided a fall and therefore "did not meet his initial burden of demonstrating his entitlement to recovery under [Labor Law § 240(1)] as a matter of law" (17 AD3d 1027, 1028 [4th Dept [2005]). We need not and do not reach this issue.


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