Coverage Pointers - Volume VII, No. 21

Dear Coverage Pointers Subscribers:

We're delighted, as always, to bring you another fun-filled edition of Coverage Pointers, Hurwitz & Fine's bi-weekly newsletter. As we approach the end of our seventh year of publication, we thank you for your generous feedback and kind comments.

As a reminder, we are still scheduling our Spring Training educational programs for insurers, and we have and will travel anywhere you need us to be to help your claims staff develop a proactive approach to insurance coverage or tort issues. We've completed two programs this season already, have three more scheduled. We practice throughout New York and are often consulted by carriers and law firms from across the country. So, don't hesitate to ask us to come out to your offices. Suggested topics include:

1. Primary and Excess Insurance - Rights & Responsibilities

2. SUM Claims Handling

3. Preventing Bad Faith Claims - First Party Cases

4. Preventing Bad Faith Claims - Liability Cases

5. Late Notice - How to Handle

6. The Cooperation Clause - How to Handle

7. NY Disclaimer Letter - Nuts & Bolts: How to Create and Write and Send a Disclaimer Letter, and How Not To. (The Reservation of Right Letter Myth)

8. No- Fault Arbitrations and Appeals: Mock Arbitrations, Preserving the Record, Taking an Appeal

9. No Fault Regs - Knowledge is Power

10. An Auto Liability Policy Primer

11. A CGL Policy Primer

12. A Homeowners Liability Policy Primer

13. EUO's Under First Party Policies

14. How to Resolve Coverage Disputes: DJ Actions, Insurance Law Section 3420 Direct Actions (Choice, Strategy and Timing)

15. Insured Selected Counsel: When is it Necessary and How to Avoid it?

16. Mediation and the Role of the Mediator

17. ADR and How to Get to "Yes".

18. The Internet as a Tool for the Claims Representative

19. Construction Cases - The Interplay Between Indemnity Agreements and Insurance Policies

20. Other Insurance, Additional Insureds and Priority of Coverage

This week's issue brings you an array of interesting cases and counseling points.

APIP COVERAGE - Protecting Subrogation Rights

An increasing number of insureds purchase Additional Personal Injury Protection benefits coverage and those benefits are being used more frequently. Why? Many who miss work as a result of an auto accident lose more than $2000 in wages and can reach APIP coverage for amounts in excess of $2000/month. In addition, often the $50,000 overall PIP limit is exceeded and payments are made out of APIP for hundreds or thousands of dollars. Accordingly, auto insurers are regularly paying out APIP benefits to or on behalf of their insureds. When they do so, the insurers have a subrogation right, and are allowed to be reimbursed for the APIP benefits from the defendants, and out of verdicts and settlements. An Appellate Division decision in this week's issue reminds those insurers that it is critical to place the insured and the defendant and its carrier on notice of those subrogation rights, lest they be forfeited. That's State Farm Mutual Automobile Insurance Company v. Hertz Corporation.

 

ADDITIONAL INSUREDS IN CONSTRUCTION CASES

In the last two weeks, I've received at least eight phone calls or files relating to everyone's favorite topic, the interrelationship between "additional insured" provisions and indemnity agreements in the construction field. Take a look at yet another case from the Appellate Division in this week's issue, Travelers Indemnity Company v. Commerce & Industry Company where the court (in our humble opinion) gave proper weight to an "other insurance" clause that spoke specifically to the primacy of a policy where "additional insured" status was required by contract.

HOW DO YOU PROVE THE NEGATIVE?

In an application to stay an Uninsured Motorist arbitration, Travelers argued that there was some proof that the offending vehicle was insured. The decision isn't clear what proof was offered, but it was likely a (potentially fraudulent) filing with the Department of Motor Vehicles. The carrier charged with having coverage, presented proof of an exhaustive search of its records and demonstrated that it never issued a policy to the owner of the car. In Travelers Indemnity Company v. Machado, the court found that proof sufficient to prove no coverage and distanced itself from earlier cases suggesting that the carrier had to actually find the owner and drag him or in to testify in order to prove a lack of coverage.

You'll also find the usual array of "serious injury" cases for those who can't get enough of them.

Anyway - keeps those cards and letters coming in and we'll see you in a couple of weeks.

Dan
Dan D. Kohane
[email protected]

4/20/06 Allstate Insurance Company v. Rico

Appellate Division, First Department

UM Disclaimer Effective Where Proof Submitted of Insured’s Misrepresentations

In this uninsured motorist claim, the Appellate Division upholds the Lower Court finding that the disclaimer of Metropolitan based on its insured's lack of cooperation was effective. Here, the evidence showed that the insured and her husband made repeated misrepresentations to Metropolitan designed to hide the circumstance that the driver of the insured's vehicle at the time of the subject accident was the insured's husband, who was not then licensed to drive. Inasmuch as the identity of the driver of the vehicle could not be ascertained by Metropolitan for two years after the disclaimer, the failure to serve the driver with a separate disclaimer did not render the disclaimer ineffective.

4/18/06 State Farm Mutual Automobile Insurance Company v. Hertz Corporation

Appellate Division, Second Department

Lack of Notice of APIP Subrogation Rights Results in Waiver

State Farm paid Bradley approximately $35,000 pursuant to a provision of its policy allowing additional personal injury protection benefits (APIP) for injuries sustained in a MVA involving Weinreb. There was no evidence that State Farm notified Weinreb's insurance carrier of that payment or of State Farm’s right of subrogation. Neither was there evidence of any claim ever made by State Farm against Weinreb for subrogation. State Farm commenced this action against the defendants, owner of the Bradley vehicle, to recover the APIP payment. The defendants then brought a third-party action against Weinreb for indemnification. Weinreb moved to dismiss on the ground of release. State Farm cross moved on the release that Bradley gave Weinreb asserting that the general release was not a bar to its claim because, at the time the release was executed, Weinreb knew or possessed information which would have given him knowledge of State Farm’s subrogation rights.

State Farm's argued that Weinreb was aware of its status as the automobile insurance carrier for the other party to the accident, and, therefore, had constructive notice of its subrogation rights at the time he accepted the release. The Supreme Court agreed and denied Weinreb's motion to dismiss the third-party complaint. The Appellate Division reverses.

The Court holds that State Farm’s right of subrogation only arose upon payment of the claim for APIP benefits. State Farm established that the general release, executed in connection with the underlying personal injury action, was intended to cover the subject matter of the action. There was no evidence that at the time State Farm’s insured reached settlement with Weinreb and signed the general release that Weinreb was aware of the plaintiff's payment of APIP benefits, or of any claim against Weinreb for such payment. So, the release did not bar the subrogation claim. Therefore, the Lower Court should have granted Weinreb's motion to dismiss the third-party complaint.

Practice Pointer: When a carrier makes an APIP payment, the carrier should notify defendant’s counsel, defendant’s carrier and plaintiff’s counsel of its subrogation rights to those payments so that its subrogation rights are preserved.

4/18/06 Lancer Insurance Company v. Robayo

Appellate Division, Second Department

Carrier for Rental Car is Primary as to Renter’s Policy

CPLR article 75 to permanently stay arbitration of uninsured motorist claims. Robayos were allegedly injured in a motor vehicle accident involving a hit-and-run driver. At the time of the accident, Pampara was operating a vehicle he had rented from Budget. Lancer insured the rented vehicle through a "Business Auto" insurance policy issued to Budget. Pampara was using the rental as a temporary substitute for his own vehicle, which was insured by State Farm Mutual. The Court finds that State Farm's policy provision stating it was excess over similar insurance was applicable. But the "other insurance" provision in Lancer's uninsured motorist endorsement provided that:

With respect to bodily injury to an insured while occupying a motor vehicle not owned by the named insured, the coverage under this UM endorsement shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such motor vehicle as primary insurance, and this UM endorsement shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Since Lancer's named insured, Budget, owned the rental vehicle involved in the accident, the Lancer excess provision did not apply. Thus, Lancer's policy constituted primary insurance for all coverage.

4/13/06 Herman v. Serio

Appellate Division, Third Department

Revocation of Insurance License Upheld in Light of Securities Misconduct

CPLR article 78 proceeding to review a determination of the Superintendent of Insurance that revoked the petitioner's insurance license. While conceding his past errors, petitioner contended that evidence of his misconduct in the securities industry failed to demonstrate that he is untrustworthy to act as an insurance agent. The Court disagrees and holds that the Superintendent has wide discretion and the Court will defer to his special expertise unless the resulting decision is irrational or runs counter to statutory language.

4/13/06 Travelers Indemnity Company v. Commerce & Industry Company

Appellate Division, Third Department

What’s the Number One Issue about which we’ve Received Questions Lately? By Far, Coverage for the “Additional Insured” in Construction Cases.

Named Additional Insured Entitled to Coverage as the Accident to Subcontractor’s Employee Occurred with Respect to the Operations of the General Contractor

Finch Pruyn (Finch) owned a paper mill. Finch enters into a contract with GL&V with GL&F retained to "fabricate, deliver & install" a replacement drum. As part of that contract, GL&V was required to procure a certificate of insurance naming Finch as an additional insured under its policy, but only with respect to the "operations" of GL&V.

GL&V thereafter subcontracted with defendant Pinchook to provide the "labor, equipment, supervision, and insurance" to remove the old washer and install a new one. Pinchook determined that to remove the existing washer, it was necessary to raise a venting hood that hung over the old washer. While securing the hood for its removal, defendant Frederick Fish, a Pinchook employee, fell and was injured.

The employee of a subcontractor injured.

Fish commenced an action against Finch and GL&V, seeking damages based on negligence and various sections of the Labor Law. After GL&V impled Pinchook, the parties cross-moved for summary judgment. The Court granted Fish's motion for summary judgment with respect to his Labor Law § 240 (1) claim and granted Pinchook's cross motion for dismissal regarding the third-party complaint against it, which sought indemnification and damages for breach of contract.

Finch was insured by Travelers. Travelers commenced a DJ action against its contractor, GL&V and its insurer Commerce & Industry Insurance Company of Canada as well as a DJ action against the subcontractor, Pinchook, and Pinchook's insurer, Peerless Insurance Company, seeking a declaration that Commerce, GL&V and/or Peerless must defend and indemnify Finch in the underlying action.

The Appellate Division held that:

· As GL&V agreed to "fabricate, deliver and install" the drum" which included removal of the old drum, the accident arose out of the GL&V operations and that GL&V's "operations" would include replacement of the existing washer. As this was the activity in which Fish was engaged when he was injured, Fish's injury surely occurred in connection with the work that GL&V subcontracted for after being hired by Finch to "fabricate, deliver and install" the replacement drum.

· Accordingly, Finch was an additional insured under the GL&V policy with Commerce.

· With respect to the question of primacy of coverage, the Court examined the other insurance clauses. The Commerce's policy declared that” [t]he insurance afforded by this policy is primary insurance, except when stated to apply in excess of or contingent upon the absence of other insurance." The Travelers' policy contained an endorsement that placed it in an excess position over any contractor's insurance that was provided to an additional insured. It stated that it will provide coverage "excess over any of the other insurance, whether primary, excess, contingent or on any other basis" ... [t]hat is valid and collectible insurance available to you if you are added as an additional insured under any other policy." It thereafter states that "[w]hen this insurance is excess, we will have no duty . . . to defend any claim or 'suit' that any other insurer has a duty to defend."

· Since Finch was named as an additional insured under the GL&V policy, the Court held that the Commerce policy was primary. With a duty to defend broader than a duty to indemnify, and it being clear that Finch cannot seek contractual indemnification for its own negligence the Court found found that Commerce has a duty to defend Finch since the allegations in the complaint, liberally construed, demonstrate that they fall within the embrace of the policy.

In a footnote, the Court made it clear that the term "operations" was broadly defined.

The claim against Peerless was dismissed because, Commerce didn't bring a cross claim against Peerless and the underlying cross-claim against the Peerless insured, Pinchook had been dismissed.

4/11/06 Edelman v. O'Toole-Ewald Art Associates, Inc

Appellate Division, First Department

No Fraud as to Appraiser Hired by Carrier and no Fiduciary Duty to Insured Absent a Special Relationship

This was an action by an art collector against appraisers hired by his property insurer to evaluate damage to one of his paintings while on loan. The Court finds that the art collector failed to demonstrate the requisite elements of his claims for appraiser malpractice, fraud and breach of fiduciary duty. The Court reminds us that normally insurance companies do not owe a fiduciary duty to their insureds, absent a showing of some special relationship. No such duty existed here, where the appraiser was hired to render reports directly to the insurer, without any linkage to the insured.

4/11/06 Equinox Management Group, Inc. v. The Guardian Life Insurance Company

Appellate Division, First Department

Defamation Action Alleging Underwriting Unauthorized Risks Survives Motion to Dismiss

Plaintiff entered into an underwriting agreement in 1999 with Guardian to operate a reinsurance business and manage an underwriting pool denominated a Catastrophic Accident Target Reinsurance Facility (CAT facility). Three years later, Starr, a Guardian officer, wrote a letter to CAT facility retrocessionaires (reinsurers own reinsurers), informing them that Guardian had audited the facility and determined that plaintiff had underwritten unauthorized risks. The Court holds that the legal question for the court on a motion to dismiss is whether the contested statements are reasonably susceptible of a defamatory connotation. Given the state of the record, the Lower Court wrongly concluded that Starr's first letter contained truthful, non-defamatory allegations about plaintiff. If, as plaintiff contends, such statements were inaccurate, they would constitute libel per se since they would tend to injure plaintiff by suggesting that it was violating the terms of the CAT facility agreement by underwriting unauthorized risks.

4/11/06 Lincoln Life and Annuity Company of New York v. Caswell

Appellate Division, First Department

A Revised Will that Changes a Beneficiary in a Life Insurance Policy does not Comply with the Provisions of the Policy and thus is Ineffective.

This case dealt with whether a will or a prior beneficiary designation made in accordance with the terms of the life insurance policy controls that gets the insurance proceeds. The Court holds that the will’s disposition of the policy proceeds did not constitute "substantial compliance" with the policy and, therefore, could not be given effect over the policy's beneficiary designation. Although the will may constitute some evidence of the insured's subjective intentions, the making of the will plainly was not an attempt to comply with the simple change-of-beneficiary procedure set forth in the policy. So far as the record shows, in the 15 years the insured lived after effecting the October 1987 change of beneficiary, she did nothing at all that could be characterized as an attempt to comply with the policy procedure- simply send the insurer a signed request. This was a procedure the insured herself had followed twice before she executed her will.

4/11/06 Travelers Indemnity Company v. Machado

Appellate Division, Second Department

Exhaustive Search of Records Sufficient to Show Absence of Insurance on Offending Vehicle – Not Necessary to Find Owner to Verify It

In this CPLR article 75 proceeding, Travelers commenced a proceeding to permanently stay arbitration of an uninsured motorist claim, arguing that the offending vehicle was covered by an automobile insurance liability policy. A framed-issue hearing was held at which testimony was presented by carrier’s underwriter who detailed the name, address, and vehicle searches she conducted to determine if the offending vehicle was insured at the time of the accident. Computer printouts corroborating the search results were also admitted into evidence. The Court held this was evidence of an exhaustive search of the records disclosing that no policy of insurance was ever issued to the offending vehicle and was sufficient to rebut the petitioner's prima facie showing of coverage.

4/11/06 New York and Presbyterian Hospital v. Allstate Insurance Company

Appellate Division, Second Department

Insurer Meets Burden that Policy Limits Exhausted

The insurer made a prima facie showing that it had exhausted the policy's coverage limits before it became obligated to pay the hospital's claim and that such payments were made in compliance with 11 NYCRR 65.15., The insurer submitted affidavits of its claims representatives, that the "denial of claim" forms sent to the medical providers and its payment log listing all payments made to other providers under the subject policy. In opposition, the hospital failed to raise a triable issue of fact.

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

4/20/06 Vasquez v. Reluzco

Appellate Division, First Department

With No Evidence of Objective Testing, Plaintiff Cannot Avoid Dismissal

Plaintiffs failed to meet their consequent burden to demonstrate they had sustained serious injuries as defined in the statute. Plaintiff’s medical submissions, while setting forth numerical ranges of motion of plaintiffs' cervical and lumbosacral spines were deficient in failing to specify what objective tests, if any, their doctor performed to get such measurements, or what the normal range of motion should be. The submissions also lacked objective findings of either a specific percentage of the loss of range of motion or a sufficient description of the qualitative nature of plaintiffs' limitations based on the normal function, purpose and use of the body part.

4/18/06 Faulkner v. Steinman

Appellate Division, Second Department

Again, Failure to Put Forward Objective Testing (or Rebuttal of Defendant’s Expert)

Plaintiffs again fail to meet their consequent burden. The affidavit of the plaintiff's treating chiropractor, which was premised on a recent examination of the plaintiff, specified the degrees of the range of motion in the plaintiff's cervical spine but did so without comparing those findings to the normal range of motion. The affidavit of the plaintiff's chiropractor failed to address the finding of the defendant's orthopedist, which attributed the condition of the plaintiff's cervical spine to degenerative changes. This rendered speculative the opinion of the plaintiff's chiropractor that the plaintiff's cervical conditions were caused by the subject accident.

4/18/06 Ilardo v. New York City Transit Authority

Appellate Division, Second Department

Works Both Ways: Defendant Needs to Put Forward Objective Tests as Well

Defendants failed to make a prima facie showing that the appellant did not sustain a serious injury through the affirmation of the defendants' examining orthopedist. He failed to set forth the objective tests he performed in concluding that the plaintiff had a normal range of motion. Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law, the Court need not address the sufficiency of the plaintiff’s opposition papers.

4/18/06 Yashayev v. Rodriguez

Appellate Division, Second Department

Defendants Miss the Mark on Comparing the Alleged Injury to Normal Motion

And here defendants again failed to make a prima facie showing. The orthopedist who examined the plaintiff Yashayev noted in his report that he had "decreased" flexion of the lumbar spine to 70 degrees, but did not compare that finding to what is normal. Absent such comparative quantification, the court could not conclude that the decreased lumbar flexion is "mild, minor or slight" so as to be considered insignificant within the meaning of the no-fault statute.

As to plaintiff Iskiyayev, defendants relied upon the affirmed medical report of an orthopedist who examined him. The doctor's findings, which were quantified as to cervical and lumbar ranges of motion, were not compared to what was normal.

4/18/06 Kasim v. Defretias

Appellate Division, Second Department

Resumption of Military Service and Weight Lifting Proof of No Serious Injury

Deposition testimony showed that the plaintiff resumed his duties in the military service of the United States without any impairments and limitations, and that plaintiff engaged in a rigorous weight-lifting regimen without any impairment or limitation of motion. Coupled with medical proof submitted by the defendants, plaintiff had a full range of motion and was sufficient to establish, prima facie, that the plaintiffs did not sustain any permanent injury or a "significant limitation of use of a body function or system".

4/18/06 Guy St. Pierre v. Fevrier

Appellate Division, Second Department

Proof of Bulging Disc Not Proof of Serious Injury: Need that Objective Evidence of Limitations

The existence of a bulging disc is not evidence of serious injury "in the absence of objective evidence of the extent of alleged physical limitations resulting from the disc injury” Here, the affirmed report of the defendant's examining physician established that the plaintiff did not sustain physical limitations from the bulging discs. The plaintiff did not submit opposition papers to rebut the defendant's prima facie showing of the absence of a serious injury.

4/18/06 Pimentel v. Mesa

Appellate Division, Second Department

Three Year Gap between Last Medical Treatment and Plaintiff’s Examination to Rebut Serious Injury Motion Insufficient to Avoid Dismissal

Defendant made a prima facie showing that neither plaintiff sustained a serious injury. In opposition, plaintiffs failed to raise a triable issue of fact with affirmed medical reports of the plaintiffs' examining physician that the Court finds insufficient to raise a triable issue of fact. The examinations occurred approximately three years after the plaintiffs' last medical treatments, a gap in time which was not satisfactorily explained either by his reports or the plaintiffs' other submissions.

4/11/06 Tudisco v. James

Appellate Division, Second Department

Plaintiff Fails to Rebut Prima Facie Case of Defendant on Serious Injury with Old and Incomplete Physician Exam Reports

Defendant made a prima facie showing that plaintiff did not sustain a serious injury through the submissions including her own deposition testimony and the affirmed medical reports of the defendant's examining physicians. The plaintiffs thus were required to come forward with objective medical evidence, based upon a recent examination, to verify the injured plaintiff's subjective complaints of pain and limitation of movement. Neither the report of the injured plaintiff's chiropractor nor the report of her neurologist was sufficient to sustain this burden, since both reports were based upon examinations conducted over one year before the defendant moved for summary judgment. Although the plaintiffs also submitted the affirmed report of a physician who examined the injured plaintiff more recently, that physician did not indicate that the injured plaintiff had sustained a fall and injured her neck approximately three months after the subject accident, and did not address the fact that the magnetic resonance imaging test upon which he relied showed degenerative changes in her cervical spine. Under these circumstances, his conclusion that the injured plaintiff's injuries were causally related to the subject accident was speculative.

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.

4/15/06 In the Matter of the Arbitration between the Applicant and Respondent

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

Pro Se Medical Provider’s Untimely Submission of Bill To Insurer And Failure To Provide Additional Proof To Support Excuse As To Why Bill Untimely Submitted Fatal To Claim.

Here is the Angle: The pro se medical provider did not submit his surgical bill in a timely manner to the insurer as the hospital where the surgery was performed delayed in providing copies of the records. The Arbitrator provided the Applicant with additional time to submit further argument or evidence to support the reason why he was unable to timely submit the bill. Unfortunately for the Applicant no such additional evidence or argument was presented which was fatal to his claim.

The Analysis: The issue in this arbitration was whether the insurer issued a timely denial on the basis that the Applicant violated the 45-day rule. Arbitrator McCorry found in favor of the Respondent.

On October 26, 2004, the pro se Applicant, Dr. Terrance Daino, an orthopedic surgeon, performed arthroscopic labral repair surgery on the eligible injured person. On January 20, 2005, Dr. Daino prepared a bill for the services rendered. The insurer received the bill on January 28, 2005, and denied it on the ground that the bill was not submitted within 45-days from the date the service was rendered in violation of 11 NYCRR §65-1.1(d). Applicant’s explanation for the untimely submission of the bill was that the hospital, where the surgery was performed, delayed in providing copies of the reports. Applicant was thereafter provided additional time to provide documentation to support the delay or further argument as to why the bill should be paid but Arbitrator McCorry received nothing. Accordingly, an award was rendered in favor of the insurer.

4/14/06 In the Matter of the Arbitration between the Applicant and Respondent

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

Insurer’s IME Physician’s Opinion Support’s Claim For Lost Wages; Insurer Cannot Deny Claim Based On Violation of 180 day Rule Because Outstanding Verification Request Has Not Been Received Within 180 days.

Here is the Angle: An insurer cannot validly deny a medical expense claim on the basis that the provider failed to respond to the verification request within 180 days from the date verification was requested. Rather, the claim remains open until verification is received. Once verification is received the insurer has 30 days from the date of receipt of the verification to deny the claim.

The Analysis: Applicant sought $31,423.09 in medical expenses and lost wages as a result of an August 29, 2001, motor vehicle accident. Applicant testified that after the accident she was transported by ambulance to the emergency room with complaints of neck, back, and right knee pain. On September 5, 2001, Applicant began a course of chiropractic care with Scott Croce, D.C. On September 11, 2001, she underwent a cervical and lumbar MRI which revealed disc herniations from C3-T1 and L4-S1. On March 27, 2002, Applicant treated with Dr. Graham Huckell, an orthopedic surgeon, for her right knee complaints, who diagnosed her with right knee internal derangement. Applicant underwent an MRI of the right knee which demonstrated a torn lateral meniscus and a chondromalacia patella. On October 15, 2002, Applicant underwent right knee arthroscopic surgery.

Applicant argued that the insurer’s IME physician, Dr. John Ring, acknowledged that surgery could be considered for her right wrist, cervical spine, and right knee. Accordingly, orthopedic care cannot be denied as the insurer’s September 9, 2003, states. Furthermore, Applicant argued, in support of her lost wage claim, that Dr. Ring’s opinion that she could return to her job as a shirt presser with the restrictions of no repetitive use of her hands and no lifting of more than 25 pounds was inappropriate due to the nature of her work.

Of interest in this award, is a bill for certain service dates from Sisters Hospital where the right knee surgery was performed that were denied based upon the providers failure to return the insurer’s verification request within 180 days of the request. Arbitrator McCorry held:

I do not find authority in the regulations for a denial setting forth a time limit for the submission of verification. Once a request for verification is made it does not have to be denied until 30 days after verification is received. A claim remains open until verification is received. I find that the 180 day requirement for submission of written notice of the happening of the accident does not apply to a request for verification.

Also of interest, was the denial of a medical bill from Dr. William Belles who treated Applicant for an injury that arose as a result of the insertion of tube in her throat to assist her breathing during the knee surgery. Arbitrator McCorry denied this bill on the basis of unspecified case law which provided that in order for bills to be covered the injury for which treatment is rendered must have directly resulted from the accident. In this case, the Applicant never claimed injury to her throat as a result of the accident. Rather, it appeared the injury resulted from her knee surgery.

In addition, Arbitrator McCorry denied payment for services rendered at Millard Fillmore Hospital for sleep apnea. Applicant treated for this condition three years after the motor vehicle accident. Moreover, Applicant did not submit any evidence that documented her sleep apnea was attributed to the accident.

Finally, Arbitrator McCorry did award, in addition to some medical expenses, lost wages. Arbitrator McCorry found that according to Applicant’s testimony her only occupation for the last 8-9 years was a shirt presser at a laundry factory. Her work involved repetitive use of her hands and on occasion lifting in excess of 25 pounds. Applicant could no longer perform this job after the accident. According to the insurer’s IME report, Dr. Ring found that Applicant had a right shoulder labram tear, right knee medical and lateral menisci tears, cervical and low back strain, as well as right wrist ligament tears with a carpel tunnel component. All of these injuries Dr. Ring attributed to the accident. Accordingly, Arbitrator McCorry found that the medical documentation supported Applicant’s lost wage claim for a one- year period.

February 2006 Opinion from Office of General Counsel to New York State Department of Insurance

Any Medical Benefits Paid To Eligible Injured Person Within A Six Month Period From Accident Triggers Insurer’s Duty To Issue Explanation of Benefits.

The question presented was whether medical health care had to last for a six-month period from the date of the accident to trigger the insurer’s duty to issue an explanation of benefits. The answer was no.

11 NYCRR §65-3.17 provides:

At least for every six month period during which any benefits are paid, the insurer shall forward an Explanation of Benefits (EOB) to the eligible insured person and such person’s attorney. The first six month period shall commence on the date of the accident and the EOB shall be mailed within 60 days of the conclusion of the period selected by the insurer. Such EOB shall include, at a minimum, the name of the payee, a description of the service or benefit claimed and the amount paid. It shall also include the Fraud Warning Statement prescribed on the Application for Motor Vehicle No-Fault Benefits (NYS Form N-F2) contained in Appendix 13 and the name, address and telephone number of the insurer representative to who questions should be directed.

According to the regulation, any benefit paid within the first six-months of the accident, as well as in subsequent six-month periods, triggers the insurer to issue an explanation of benefits. Therefore, if the eligible injured person received medical health care benefits for three months after the accident the insurer’s duty to issue an explanation of benefits is triggered as there were benefits paid within the first six-months from the date of the accident.

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.

4/14/06 Mid-Century Co. v. Sup.Ct.
California Court of Appeal

California Insureds Get A Second Bite At The Apple For Damages Incurred In Northridge Earthquake
Section 340.9 of the Code of Civil Procedure allows otherwise time barred Northridge earthquake claims against insurers to go forward by extending the statute of limitations for certain lawsuits arising from that earthquake until December 31, 2001. The California Court of Appeal held that although section 340.9 does not apply to any claim that has been “litigated to finality” in any court of competent jurisdiction prior to the effective date of the section, the sustaining of a demurrer without leave to amend on the sole basis of a statute of limitations bar, is not a claim that has been litigated to finality. The insured sustained property damage in the Northridge earthquake, but failed to file suit within the one year statute of limitations. The court sustained the insurer’s demurrer on grounds that his claim was barred by the then statute of limitations. Following the enactment of section 340.9, the insured re-filed his claim against the insurer. The court of appeal held that his claim had not been determined on the merits, thus was not “litigated to finality” and could go forward under section 340.9.

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

4/13/06 Crisler v. Unum Life Ins. Co.
Arkansas Supreme Court

Arkansas Makes No Distinction between Accident Means and Accidental Results in Construing Accidental Death Policies
The Arkansas Supreme Court held death resulting from injection of a prescription drug, which had previously been innocuous, was accidental under terms of accidental death policy. Unum Life Insurance Company issued an accidental death policy which covered “accidental bodily injury.” The insured had been suffering flu-like symptoms for which her doctor had, on at least two prior occasions, injected her with an antibiotic. However, the third time she was injected; she had an anaphylactic reaction, lapsed into a coma, and died. The court held that although some jurisdictions distinguished between accidental means and accidental results in determining whether to allow recovery, Arkansas did not make such a distinction. Thus, although the injection was intentional, because death was accidental as “something happening by chance, unexpectedly taking place, not according to the usual course of things, or not expected,” it was a covered loss.

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

4/13/06 Farmers Ins. Co. v. Snowden

Arkansas Supreme Court

Arkansas Certifies Class Based On Claim To Recover Diminished Vehicle Value
The trial court certified a class, and the supreme court affirmed, based on plaintiff’s suit individually and on behalf of all persons similar situated alleging that Farmers breached its insurance contracts with insureds by failing to compensate for the diminished value of their vehicles. Plaintiff was involved in a motor vehicle accident resulting in damage to his car, which was insured by Farmers. Farmers paid for the car to be repaired. However, Farmers denied plaintiff’s request to be compensated for the “depreciation loss” sustained by the car, as it had low mileage at the time of the accident. The Arkansas Supreme Court found that the certified class was susceptible to definition, and the requirements of commonality, predominance, and superiority were satisfied.

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

4/12/06 Travelers Property Casualty Co. v. Liberty Mutual

Fourth Circuit Court of Appeals

Property Management Company Considered Additional Insured Under Property Owner's Insurance Policy

On May 28, 1994, in Los Angeles, Steve Fallen fell down a damaged stairwell in a residential duplex owned by State Street Bank, seriously injuring himself. He filed suit in California state court against both State Street Bank and Ryland, which State Street had retained to manage the property, alleging that the defendants negligently failed to repair the stairway and to warn of its dangerous condition. Ryland commenced this action against Travelers Indemnity Company of Illinois, its insurer, and against Liberty Mutual Insurance Company, State Street’s insurer, to provide it the costs of defending the underlying action in Los Angeles. Travelers thereafter agreed to provide a defense and filed a cross-claim against Liberty Mutual for contribution to the costs because, it claimed, Ryland was an "additional insured" under the policy Liberty Mutual issued to State Street. The district court, ruling on the insurance companies’ cross motions for summary judgment, entered judgment in favor of Liberty Mutual, concluding that Ryland was not an additional insured under Liberty Mutual’s policy. The court also concluded that because the management contract between Ryland and State Street provided that Ryland would indemnify State Street for liability arising from Ryland’s activities, State Street "has not undertaken any obligation to insure Ryland’s actions" and Liberty Mutual would thereby have no responsibility. Because Ryland concededly managed the duplex for State Street, the Court of Appeals concluded that it was a "real estate manager" and therefore an additional insured under the terms of Liberty Mutual’s policy. Accordingly, the Court reversed the district court, rejecting its argument that the contract between Ryland and State Street somehow abrogated Liberty Mutual’s independent contractual obligation to provide coverage to Ryland.

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

4/12/06 Giddens v. The Equitable Life Assurance Society of the United States
Eleventh Circuit Court of Appeals

Disability Insurance Policy Requires Only That Insured Be Unable to Perform the Majority (Not All) of His Material Duties to Support a Finding that the Insured Could Not Engage in His Regular Occupation
In 1986 and 1988, Equitable issued two disability income insurance policies to Giddens. The Policies did not require Giddens to be disabled from any occupation but only from his “regular occupation.” Specifically, the Policies defined the term “your regular occupation” as “the occupation (or occupations, if more than one) in which you are regularly engaged for gain or profit at the time you become disabled.” Giddens practiced general dentistry from 1983 until 1994 in Hawkinsville, Georgia. In 1994, he sold his practice to another dentist and cancelled his dental malpractice liability insurance policies. According to Giddens, it was his intention to open another dental office in Macon, Georgia in a building he had previously acquired. However, Giddens became ill in 1994, and his health did not permit him to open the practice in Macon. Nevertheless, he remained a licensed dentist until December 31, 1999, and continued to subscribe to certain professional journals in the field of dentistry. While practicing dentistry and following the sale of his dental practice, Giddens also engaged for profit in real estate development and investment. Giddens and his wife owned two companies, Giddens Construction Co., Inc. and Oak Land & Development Inc., through which Giddens participated in the development of real estate. Giddens made a disability claim under his insurance policy with Equitable, and Equitable paid $60,790.98 under a reservation of rights. Upon discovering that Giddens had not actively practiced dentistry for four years before he became disabled and that his real estate pursuit was essentially “passive” in nature, Equitable terminated the payment of benefits to Giddens. In June 2002, Giddens filed suit in state court seeking benefits under the Policies, plus interest and enhanced damages for bad faith failure to pay pursuant to O.C.G.A. § 33-4-6. Equitable filed a counterclaim seeking recovery of the $60,790.98 paid to Giddens under a reservation of rights. Equitable removed the case to federal court. The Court of Appeals concluded that Giddens was not “regularly” engaged in dentistry at the time he became disabled, even if he intended to return to dentistry at some point if his health permitted. With respect to Gidden's real estate profession, the Court found that he regularly engaged in the real estate profession at the time he became disabled and that he was unable to perform most or the majority (but not all) of the material duties and thus could not engage in his regular occupation. Therefore, the Court held that Gidden was totally disabled from his regular occupation and entitled to receive benefits from Equitable.

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

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Edelman v. O'Toole-Ewald Art Associates, Inc

Stewart Occhipinti, LLP, New York (Charles A. Stewart, III, of
counsel), for appellant.
Sedgwick, Detert, Moran & Arnold, LLP, New York
(Christopher J. Losquadro of counsel), for respondents.

Order, Supreme Court, New York County (Carol Edmead, J.), entered May 16, 2005, which granted defendants' motion for summary judgment dismissing the amended complaint and denied plaintiff's cross motion for partial summary judgment on the issue of liability, unanimously affirmed, without costs.

In this action by an art collector against appraisers hired by his property insurer to evaluate damage to one of his paintings while on loan, plaintiff failed to demonstrate the requisite elements of his claims for appraiser malpractice, fraud and breach of fiduciary duty. Normally, insurance companies do not owe a fiduciary duty to their insureds, absent a showing of
some special relationship (see Murphy v Kuhn, 90 NY2d 266 [1997]). Such a duty would be even more tenuous here, where the appraiser was hired to render reports directly to the insurer, without any linkage to the insured.

Plaintiff was unable to establish his reliance on the alleged misrepresentations made by defendants (Parrott v Coopers & Lybrand, 95 NY2d 479 [2000]; LaSalle Natl. Bank v Ernst & Young, 285 AD2d 101 [2001]), or that he suffered any detriment or injury thereby (Laub v Faessel, 297 AD2d 28, 30-31 [2002]). Similarly, he failed to demonstrate, for purposes of General Business Law § 349, that he suffered "actual" or pecuniary harm (Small v Lorillard Tobacco Co., 94 NY2d 43, 56 [1999]), or that the alleged deceptive business practices were [*2]aimed at the consumer public at large (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20 [1995]).

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

ENTERED: APRIL 11, 2006

CLERK

Equinox Management Group, Inc. v. The Guardian Life Insurance Company

Calinoff & Katz LLP, New York (Dorothy H. Riggio of
counsel), for appellant-respondent.
Satterlee Stephens Burke & Burke LLP, New York (Robert M.
Callagy of counsel), for respondents-appellants.

Order, Supreme Court, New York County (Emily Jane Goodman, J.), entered January 5, 2005, which, to the extent appealed and cross-appealed as limited by the briefs, denied the motion to dismiss the third, fifth, sixth and eighth causes of action and dismissed the claim for punitive damages, unanimously modified, on the law, to dismiss the sixth and eighth causes of action, and otherwise affirmed, without costs.

Plaintiff is an underwriting manager that has been engaged in operating reinsurance pools since 1994. Plaintiff entered into an underwriting agreement in 1999 with defendant Guardian to operate a reinsurance business and manage an underwriting pool denominated a Catastrophic Accident Target Reinsurance Facility (CAT facility). Three years later, defendant Starr, a Guardian officer, wrote a letter to CAT facility retrocessionaires, informing them that Guardian had audited the facility and determined that plaintiff had underwritten unauthorized risks. Four months later, Starr sent another letter, which retracted the earlier charge and stated that Guardian was now satisfied that plaintiff had the authority Starr had earlier denied. The instant action, alleging 12 causes of action and seeking damages resulting from a claimed loss of $25 million, ensued. Defendants moved to dismiss the entire complaint on the ground that it failed to state a cause of action. The IAS court's refusal to dismiss the tenth cause of action and its dismissal of the first, second, seventh, eleventh and twelfth causes of action is not now challenged on appeal.

The third and fifth causes of action are based on Starr's allegedly defamatory letter, seeking damages for defamation and disparagement of business reputation. While the IAS court reasoned that Starr's letter contained truthful statements that plaintiff lacked the authority to write certain business, the record evidence indicates that plaintiff had obtained such authority through an arrangement with a Guardian executive. "[T]he legal question for the court on a motion to dismiss is whether the contested statements are reasonably susceptible of a defamatory connotation" (Armstrong v Simon & Schuster, Inc., 85 NY2d 373, 380 [1995]). Given the state of the record, the IAS court wrongly concluded that Starr's first letter contained truthful, non-defamatory allegations about plaintiff. If, as plaintiff contends, such statements were inaccurate, they would constitute libel per se since they would tend to injure plaintiff by suggesting that it [*2]was violating the terms of the CAT facility agreement by underwriting unauthorized risks (see Liberman v Gelstein, 80 NY2d 429, 435 [1992]). Since the third and fifth causes of action sufficiently allege defamatory statements, the CPLR 3211(a)(7) motion was properly denied.

The fourth cause of action, based on disparagement of goods, did not set forth special damages and was properly dismissed (see Drug Research Corp. v Curtis Publ. Co., 7 NY2d 435, 441 [1960]). The sixth and eighth causes of action were premised on allegations that defendants slandered plaintiff by making defamatory statements to third parties, but these causes of action should have been dismissed for failure to set forth the
particular words purportedly used (see e.g. Khan v Duane Reade, 7 AD3d 311 [2004]). We have considered the parties' remaining claims and find them without merit.

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

ENTERED: APRIL 11, 2006

Lincoln Life and Annuity Company of New York v. Caswell

Defendant Benjamin Caswell appeals from an order of the Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered on or about March 7, 2005, which denied his motion for summary judgment on his counterclaim, granted plaintiff's cross motion for leave to deposit into court the proceeds of Aetna Life Insurance and Annuity Company's policy issued to Martha L. Hubbard, deceased, discharged plaintiff from any liability under such policy, and granted the branch of plaintiff's cross motion seeking costs, disbursements and reasonable attorneys' fees to the extent of setting the matter down for a framed issue hearing.



FRIEDMAN, J.

In McCarthy v Aetna Life Ins. Co. (92 NY2d 436 [1998]), the Court of Appeals held that, where a life insurance policy sets forth a procedure for changing beneficiaries and does not authorize making such a change by will, a general testamentary statement in the insured's will does not override a prior designation of the policy beneficiary that was made in the manner provided by the policy. This appeal requires us to decide which instrument controls — the will or the prior beneficiary designation made in accordance with the terms of the policy — where, unlike McCarthy, the will specifically identifies the policy in question and purports to require a disposition of its proceeds inconsistent with the beneficiary designation under the policy. We hold that, under these circumstances, the purported testamentary disposition of the policy proceeds does not constitute "substantial compliance" with the policy and, therefore, cannot be given effect over the policy's beneficiary designation. As in McCarthy, this result is not affected by the insurance company's waiver of "strict compliance" with the policy terms by its commencement of an interpleader action to adjudicate among the conflicting claims to the policy proceeds.

There is no dispute as to the material facts. In April 1985, Aetna Life Insurance and Annuity Company (Aetna) issued Policy No. U1179854, a life insurance policy in the face amount of $200,000 (the 854 policy), to Martha L. Hubbard (hereinafter, the insured). The 854 policy provides that, to change the beneficiary, "[a] signed request must be sent to Aetna. When Aetna gives its written acceptance, the change will take effect as of the date the request was signed."

On two occasions, the insured changed the beneficiary designation in the manner provided by the 854 policy. Her last such change was made by a signed request dated October 9, 1987. That request, made on a printed form Aetna provided for the purpose, designated the insured's son, Robert W. Hubbard, Jr., as primary beneficiary, and defendant Bennie Caswell, Jr. (sued herein as Benjamin Caswell), as contingent beneficiary. Aetna's acceptance of that request is dated October 27, 1987. Since Robert W. Hubbard, Jr. predeceased the insured, giving effect to the October 1987 beneficiary designation would make Caswell the sole beneficiary of the 854 policy.

More than 15 years after she filed the October 1987 beneficiary designation with Aetna, the insured executed a last will and testament, dated June 16, 2003. This will specifically refers to the 854 policy by number, and purports to "devise and bequeath" portions of the proceeds of that policy to various individuals and charities. It appears that the will purports to leave Caswell only $25,000 of the proceeds of the 854 policy. There is no indication that the insured ever took any steps to have the legatees of the 854 policy under the will designated as beneficiaries of the [*3]policy in the manner provided by the policy itself.

The insured died on May 17, 2004, and her will of June 2003 has been filed in probate proceedings in Surrogate's Court. In June 2004, Caswell and the nominated executors of the insured's estate, by their respective attorneys, sent letters to the insurance company asserting conflicting claims to the proceeds of the '854 policy. Thereafter, plaintiff Lincoln Life and Annuity Company of New York, as Aetna's administrator, in accordance with CPLR 1006, commenced this interpleader action in the Supreme Court, Bronx County, seeking to be discharged of its obligations under the policy while allowing the competing claims to the proceeds to be resolved among the interested parties. The defendants named in the amended interpleader complaint are Caswell, the preliminary executors of the insured's estate, the various individual and charitable legatees of the 854 policy under the will, and the Attorney General, as statutory representative of the charitable legatees. Plaintiff admits that the 854 policy's death benefit is now due and owing, but takes no position on the question of whether such payment should be made to Caswell alone, pursuant to the October 1987 beneficiary designation, or, alternatively, to the executors of the insured's estate for disposition in accordance with the June 2003 will.

Although Caswell's answer is not set forth in the record, it appears that he asserted a counterclaim seeking an order directing plaintiff to pay over the proceeds of the 854 policy to him. In January 2005, Caswell moved for summary judgment on his counterclaim. Plaintiff cross-moved for an order, pursuant to CPLR 1006(f), permitting it to pay the proceeds of the policy into court, discharging it from any further liability under the policy, and awarding it costs, disbursements and reasonable attorneys' fees.

By order entered on or about March 7, 2005, the motion court denied Caswell's summary judgment motion, based on the court's view that the dispositive consideration was the insured's intent, as to which, the court opined, there exists a triable issue of fact. The same order granted plaintiff's cross motion insofar as it sought permission to pay the policy proceeds into court and a discharge upon so doing. The branch of plaintiff's cross motion seeking an award of costs, disbursements and reasonable attorneys' fees was granted to the extent of setting the matter down for a framed issue hearing. On Caswell's appeal, we now modify to grant Caswell's summary judgment motion to the extent of declaring him the sole beneficiary of the 854 policy, and otherwise affirm.

As the Court of Appeals stated in McCarthy v Aetna Life Ins. Co. (92 NY2d 436, supra), the general rule is that "the method prescribed by the insurance contract must be followed in order to effect a change of beneficiary" (id. at 440 [citations omitted]). As a corollary of this rule, it has long been recognized that, unless an insurance policy permits the beneficiary to be designated or changed by will, even a specific testamentary bequest of the policy proceeds generally will not override a prior beneficiary designation made in accordance with the terms of the policy (see Fink v Fink, 171 NY 616, 625 [1902]; Matter of Jaccoma, 142 AD2d 875, 876-877 [1988], lv denied 73 NY2d 703 [1988]; Pruchnowski v Prudential Ins. Co. of Am., 242 App Div 899 [1934], affd 270 NY 530 [1936]; Matter of Ziolkowski, 47 Misc 2d 752, 753-754 [Sur Ct, Erie County 1965]; Ralph v Equit. Life Assur. Soc. of U.S., 46 NYS2d 957, 959 [Sup Ct, [*4]Kings County 1944]).

Over the years, there has been some relaxation of the requirement of strict compliance with the procedures specified by an insurance policy for designating or changing beneficiaries. At first, it was held that "exact compliance with the provisions of the policy [would be excused] where the attempt at such compliance has been substantial and its full success prevented by some cause not within the control of the person attempting to make the change" (Schoenholz v New York Life Ins. Co., 234 NY 24, 29-30 [1922] [citations omitted])^[FN1]. As the law has evolved, the courts, recognizing that a primary purpose of specifying a procedure for changing beneficiaries is to protect the insurer from double liability, have come to hold that exact compliance with the contractual procedure will be deemed waived where the insurer, faced with conflicting colorable claims to the same policy proceeds, pays the proceeds into court in an interpleader action so that the opposing claimants may litigate the matter between themselves (see McCarthy, 92 NY2d at 442 [noting that "the insurer who has brought the proceeds of the policy into court and requested the court to adjudicate the rights of contesting claimants may no longer insist upon strict
compliance"]; Cable v Prudential Ins. Co. of Am., 89 AD2d 636 [1982] ["strict compliance" with the policy's requirements for effecting a change of beneficiaries was "unnecessary" where the insurer had "paid the proceeds of the policy into court leaving the parties to settle the controversy between themselves"]).

Although an interpleading insurer is deemed, by paying the policy proceeds into court, to waive exact compliance with the policy's procedures for changing beneficiaries, the question is still not purely one of the insured's intent. Rather, "[t]here must be an act or acts designed for the purpose of making the change, though they may fall short of accomplishing it. Mere intent is not enough" (Aetna Life Ins. Co. v Sterling, 15 AD2d 334, 335 [1962], affd 11 NY2d 959 [1962] [designation of beneficiary for new policy did not change beneficiary of old policy that was still in effect when insured died]; see also Cook v Aetna Life Ins. Co., 166 AD2d 895, 896 [1990] [insured's alleged statements of intent to change beneficiary were not a sufficient basis for giving effect to such change]; Cable v Prudential Life Ins. Co., 89 AD2d at 636 [change given effect where insured failed only to send the policy to the insurer for endorsement, but otherwise [*5]followed the procedure set forth in the policy]; Hunnell v Hunnell, 45 AD2d 521, 523 [1974], affd 37 NY2d 931 [1975] [to same effect as Cook]). Thus, the controlling consideration as to whether a change of beneficiary has been effectuated in such cases is whether there has been "substantial compliance with the terms of the policy" (McCarthy, 92 NY2d at 440 [emphasis added; citation omitted]; see John Hancock Mut. Life Ins. Co. v McManus, 247 AD2d 513 [1998] ["the insured did not substantially comply with the requirements of her life insurance policies in order to effectuate a change of beneficiary" where, after the insurer advised her that her initial change-of-beneficiary form was unacceptable and sent her a new form, "she failed to fill out and return the new form in the month before her death, even though completion of the new form was within her power to accomplish"]; Connecticut Gen. Life Ins. Co. v Boni, 48 AD2d 621 [1975], appeal dismissed 37 NY2d 917 [1975] [there was no "triable issue concerning decedent's attempted substantial compliance" where the change-of-beneficiary form he executed 11 years before his death was never delivered to the insurer]). Obviously, as the law has developed, it still seeks to encourage compliance with the requirements of the policy for changing beneficiaries.

Against the foregoing legal background, the dispositive question that emerges in this case is whether the insured's specific testamentary disposition of the 854 policy in her will can be deemed to constitute "substantial compliance" with that policy's requirements for effecting a change of beneficiary. Our answer to this question is "no." Although the will may constitute some evidence of the insured's subjective intentions, the making of the will plainly was not an attempt to comply with the simple change-of-beneficiary procedure set forth in the 854 policy. So far as the record shows, in the 15 years the insured lived after effecting the October 1987 change of beneficiary, she did nothing at all that could be characterized as an attempt to comply with the change-of-beneficiary procedure required by the policy, which, again, was simply to send the insurer a signed request — a procedure the insured herself had followed twice before she executed her will. Nor is there any evidence that the insured was "physically or mentally incapable of attempting to substantially comply with the requirements of the policy" (McCarthy, 92 NY2d at 441-442).

We recognize that at least two reported pre-McCarthy Surrogate's Court decisions have given effect to a specific testamentary bequest of an individual retirement account as a change of the beneficiary, although the bequest did not comply with the contractual requirements for effectuating such a change (see Matter of Trigoboff, 175 Misc 2d 370 [Sur Ct, NY County 1998]; Matter of Morse, 150 Misc 2d 415 [Sur Ct, NY County 1991]). In both Trigoboff and Morse, the court deemed the custodian of the account to have waived the contractual requirements for effecting a change of beneficiary, thereby rendering the question (in those courts' views) purely one of the decedent's intent (see Trigoboff, 175 Misc 2d at 373; Morse, 150 Misc 2d at 418). In the life insurance context, we do not believe that this position continues to be tenable in light of the Court of Appeals' McCarthy decision. McCarthy, after all, specifically rejected the view "that the requirement of substantial compliance with the requirements of the insurance policy is waived where . . . the insurance company becomes a stakeholder in an interpleader action" (921 [*6]NY2d at 442)^[FN2]. In this regard, we note that the policy consideration the McCarthy court invoked in support of its holding that a general testamentary statement in a will does not constitute substantial compliance — avoiding uncertainty on the part of the insurers that could lead to the delay of payment on life insurance
policies (id. at 441, quoting Stone v Stephens, 155 Ohio St. 595, 600-601, 99 NE2d 766, 769 [1951]) — applies as much to specific testamentary bequests as to general testamentary statements.

In view of the foregoing, Caswell's motion for summary judgment should have been granted to the extent of declaring him the sole beneficiary of the 854 policy. Plaintiff did, however, act appropriately in bringing this interpleader action in the face of the conflicting demands made upon it for payment of the policy proceeds, neither of which was "patently without substance" (Connecticut Gen. Life Ins. Co. v Boni, 48 AD2d at 621, quoting Boden v Arnstein, 293 NY 99, 103 [1944]). Plaintiff, as an insurance company rather than a court, was entitled to avail itself of the interpleader mechanism for the purpose of discharging its obligations under the policy while affording the interested parties an opportunity to litigate the dispute between themselves. Accordingly, Caswell was not entitled to an order directing plaintiff to pay the proceeds directly to him, and Supreme Court correctly granted plaintiff's cross motion insofar as it sought permission to pay the proceeds into court and a discharge pursuant to CPLR 1006(f).

Finally, the motion court did not improvidently exercise its discretion under CPLR 1006(f) in ordering a framed issue hearing on plaintiff's claim for costs, disbursements and reasonable attorneys' fees (see e.g. American Intl. Life Assur. Co. of N.Y. v Ansel, 273 AD2d 421, 422 [2000], citing Republic Natl. Bank of N.Y. v Lupo, 215 AD2d 467, 468 [1995]; see also Siegel, NY Prac
§ 149, at 258 [4th ed]; 2 New York Practice Series - Commercial Litigation in New York State Courts § 16:11, at 1004 [2d ed]). We hasten to add that, in determining "such terms relating to payment of expenses, costs and disbursements as may be just" (CPLR 1006[f]), Supreme Court should bear in mind that any award of attorneys' fees should be limited, given that plaintiff has no interest in the underlying dispute and has been required to establish only its entitlement to interpleader relief as a neutral stakeholder. Any further discussion of this issue should await Supreme Court's determination after the framed issue hearing (should an appeal be taken from that determination), when a fuller record will be available for review. We do not perceive a need [*7]to set forth more specific guidelines for Supreme Court in advance of the hearing.

Accordingly, the order of the Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered on or about March 7, 2005, which denied defendant Caswell's motion for summary judgment on his counterclaim, granted plaintiff's cross motion for leave to deposit into court the proceeds of Policy No. U1179854, issued by Aetna Life Insurance and Annuity Company to Martha L. Hubbard, deceased, discharged plaintiff from any liability under such policy, and granted the branch of plaintiff's cross motion seeking costs, disbursements and reasonable attorneys' fees to the extent of setting the matter down for a framed issue hearing, should be modified, on the law, to grant Caswell's motion for summary judgment to the extent of declaring him the sole beneficiary of the subject insurance policy, and otherwise affirmed, without costs.

All concur except McGuire, J. who concurs in a separate Opinion.

McGUIRE, J. (concurring)

I agree that this case is controlled by McCarthy v Aetna Life Ins. Co. (92 NY2d 436 [1998]), and that Caswell's motion for summary judgment should have been granted to the extent of declaring him the sole beneficiary of the 854 policy. I agree as well that given the conflicting claims to the policy proceeds, plaintiff properly commenced this interpleader action and sought to be discharged of its obligations under the policy. Although I also agree that the branch of plaintiff's cross motion seeking costs, disbursements and reasonable attorneys' fees under CPLR 1006(f) was properly granted to the extent of setting the matter down for a framed issue hearing, I believe plaintiff's claim therefor warrants additional discussion.

In directing an award of expenses, costs and disbursements "as may be just," CPLR 1006(f) makes plain that the matter is committed to the sound discretion of the court (see also Fischbein, Badillo, Wagner v Tova Realty Co., 193 AD2d 442, 444-445 [1993]). The statutory language, moreover, contemplates that all relevant facts and circumstances are to be considered. Although the majority recognizes that "any award of attorneys' fees should be limited," it provides no guidance to Supreme Court with respect to the factors which should inform its discretion. Indeed, the majority notes only what is true in all cases in which an interpleader action properly is commenced: "that plaintiff has no interest in the underlying dispute and has been required to establish only its entitlement to interpleader relief as a neutral stakeholder." In addition, the majority's writing is ambiguous on the question of whether some award of attorneys' fees is required. In my judgment, that question should be answered with an unequivocal "no," and at least a modicum of guidance is warranted. Regardless of whether "more specific guidelines" are necessary to the resolution of this appeal, they unquestionably are appropriate. The majority provides virtually no guidance and does not cite a single decision of this Court or any other court that provides any. [*8]

In the first place, not all stakeholders forced to participate in disputes in which they are disinterested have the same equitable claim to recover their costs, disbursements and reasonable attorneys' fees. In this regard, the decision by the Second Circuit Court of Appeals in Travelers Indem. Co. v Israel (354 F2d 488 [1965]), construing the analogous federal interpleader statute (28 USC § 1335), is instructive. There, insurance companies brought an interpleader action to resolve competing claims to liability on five fire insurance policies, four of the insurers contending on appeal that they should have been awarded costs and counsel fees "because they were disinterested stakeholders who brought the interpleader solely for the benefits of claimants" (354 F2d at 490). After noting that interpleader was an "equitable remedy . . . devised by the chancellors" (id.), Judge Friendly rejected their claim:

We are not impressed with the notion that whenever a minor problem arises in the payment of insurance policies, insurers may, as a matter of course, transfer a part of their ordinary costs of doing business [to] their insureds by bringing an interpleader. Denial of allowances in this case was by no means an abuse of discretion (id.).

In Travelers Ins. Co. v Garcia (2003 WL 1193535 [EDNY 2003]), the court upheld the insurer's claim for costs and attorneys' fees, stressing the "unique problems" with which the insurer was confronted. Significantly, however, the court made clear that such an award hardly was to be granted as a matter of course:

Usually, courts need not award attorneys' fees in interpleader actions where the fees are expenses incurred in the ordinary course of business. See Correspondent Servs. Corp v J.V.W. Investments Ltd., 204 FRD 47, 49 [SDNY 2001]. This is particularly true in the case of insurance companies, where minor problems that arise in the payment of insurance policies must be expected and the expenses incurred are part of the ordinary course of business. Travelers Indem. Co. v Israel, 354 F2d 488, 490 [2d Cir 1965] . . . . (id. at *4).

See also Commercial Union Life Ins. Co. of N.Y. v Almonor, 1999 WL 292562 *1 (SDNY 1999) ("The ordinary cost of doing business in the life insurance industry must reflect the need for interpleader actions in some cases. Because this interpleader action was relatively simple and plaintiff has not submitted any reason why the costs of this interpleader action have exceeded the ordinary cost of doing business, plaintiff's motion for attorney[s'] fees is denied").

Merrimack Mut. Fire Ins. Co. v Moore (91 AD2d 759 [1982]) provides additional guidance. There, the Third Department held that the trial court did not abuse its discretion in denying the stakeholder's motion for attorneys' fees, costs and disbursements, given that it had been dilatory in commencing the action (id. at 761). This conclusion is consonant with the equitable origins of interpleader relief and the venerable maxim that "[h]e who seeks equity must do equity" (Langel v Betz, 250 NY 159, 162 [1928]). That is not to say, of course, that the absence of dilatory conduct or other fault requires that a successful stakeholder be given relief under CPLR 1006(f). From the premise that a motion for that relief can be denied on the basis of [*9]dilatory conduct or other fault, it scarcely follows that the motion must result in an actual award whenever there is no dilatory conduct or other fault.

A determination that the stakeholder properly brought the interpleader action and should be discharged from liability in whole or in part, in my judgment, is a necessary but not a sufficient condition for an award of costs, disbursements and reasonable attorneys' fees under CPLR 1006(f). A showing by the stakeholder that it has done no wrong establishes only that it has cleared one hurdle potentially barring its eligibility for this equitable remedy. Clearing a hurdle, of course, is not the same as reaching the finish line. In exercising their discretion on the basis of all relevant facts and circumstances, trial courts reasonably may conclude in particular cases that successful stakeholders who have done no wrong should not receive any award or an award of some expenses, costs and disbursements, with or without all or some reasonable attorneys' fees.^[FN1]

Whether plaintiff should in fact be awarded any expenses, costs or disbursements, including any attorneys' fees, cannot, of course, be determined on the present record. However, because the statute directs that the court "shall impose such terms relating to payment of expenses, costs and disbursements as may be just" (CPLR 1006[f] [emphasis added]), Supreme Court did not err in according plaintiff an opportunity at a framed issue hearing to attempt to make its case. At that hearing, Supreme Court should be able to take into account, among other [*10]things, the less than compelling nature of the executors' claims to the policy's proceeds.^[FN2]

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

ENTERED: APRIL 11, 2006

CLERK

Footnotes

Footnote 1:For example, a change of beneficiary has long been given effect, notwithstanding a failure to complete the procedure specified by the policy, where the insured died while in the process of making the change in accordance with the contractual procedure (see Luhrs v Luhrs, 123 NY 367 [1890]; Greenfield v Massachusetts Mut. Life Ins. Co., 253 App Div 51 [1937]; Matter of Chatham Phenix Natl. Bank & Trust Co., 232 App Div 598 [1931]), or was prevented from completing the contractual procedure by the originally designated beneficiary's refusal to surrender the policy for the insurer's required endorsement (see Lahey v Lahey, 174 NY 146 [1903]; Levy v New York Life Ins. Co., 238 App Div 711 [1933], affd 266 NY 570 [1935]).

Footnote 2:In light of McCarthy, it appears that Kane v Union Mut. Life Ins. Co. (84 AD2d 148 [1981]) is no longer good law to the extent it stands for the proposition that, where the insurer has become a stakeholder of policy proceeds alleged to have been disposed of by will, the issue is simply "whether the will of the decedent clearly manifested [his] intent' to change the beneficiaries of the . . . policy in question" (id. at 154, quoting Franklin Life Ins. Co. v Mast, 435 F2d 1038, 1043 [9th Cir 1970]).

Footnote 1:To take a perhaps extreme example, it surely would not be an abuse of discretion for a trial court to decline to award any attorneys' fees in a case in which the amount of the otherwise reasonable attorneys' fees sought by a successful insurer-stakeholder that did no wrong represents a large percentage of the amount of the disputed policy proceeds, the adverse claim prompting the interpleader action was of dubious merit and the attorneys handling the matter were employees of the insurer.

Footnote 2:I recognize that in McCarthy the Court of Appeals was not confronted with the exact issue presented in this case — whether to give effect to a specific testamentary disposition of insurance policy proceeds that is inconsistent with the actual beneficiary designation under the policy. As the majority persuasively demonstrates, however, the result in this case is essentially dictated by the rationale in McCarthy. Without pre-judging the outcome of the framed issue hearing, and despite Supreme Court's denial of Caswell's motion for summary judgment declaring him the sole beneficiary of the policy, it well may be reasonable to conclude that the claims of the executors presented plaintiff only with the kind of "minor problem[] that arise[s] in the payment of insurance policies" that "must be expected" and which causes expenses to be incurred that "are part of the ordinary course of business" (Travelers Ins. Co. v Garcia, 2003 WL 1193535 at * 4).

Herman v. Serio

MEMORANDUM AND JUDGMENT

Calendar Date: February 21, 2006
Before: Mercure, J.P., Peters, Spain, Rose and Kane, JJ.


Law Office of Roy A. Mura, Buffalo (Susan H.
Sadinsky of counsel), for petitioner.
Eliot Spitzer, Attorney General, Albany (William E.
Storrs of counsel), for respondent.




Rose, J.

Proceeding pursuant to CPLR article 78 (transferred to this Court by order of the Supreme Court, entered in Albany County) to review a determination of respondent Superintendent of Insurance which, inter alia, revoked petitioner's insurance license.

When petitioner applied to renew his license as an insurance agent in 2001, he disclosed that the American Stock Exchange (hereinafter ASE) had barred him from further employment on its floor in 1999. Upon this disclosure, respondent sought further information and ultimately brought an administrative proceeding to revoke petitioner's license and deny his application for renewal. After a hearing, the Hearing Officer found that petitioner had engaged in securities violations and "used fraudulent and dishonest practices . . . within the meaning of Section 2110 (a) (4) (A) and (C) of the Insurance Law." Respondent then adopted the Hearing Officer's findings and recommendation of license revocation, and this CPLR article 78 proceeding ensued.

While conceding his past errors, petitioner contends that evidence of his misconduct in the securities industry fails to demonstrate that he is untrustworthy to act as an insurance agent. We cannot agree. Respondent has wide discretion, and we will defer to his special expertise unless the resulting decision is irrational or runs counter to statutory language (see Matter of [*2]Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N.Y., 72 NY2d 753, 762-763 [1988], cert denied 490 US 1080 [1989]; Matter of Nash v Stewart, 31 AD2d 564, 564 [1968], lv denied 23 NY2d 643 [1969]). This discretion extends to the determination of what constitutes untrustworthy conduct (see Matter of Gold v Lomenzo, 29 NY2d 468, 476-477 [1972]). Here, the administrative citation charged that petitioner had violated ASE rules on several occasions by knowingly inputting false information, making intentional misstatements and omissions, concealing errors and effectuating securities trades without authorization. As a result of this misconduct, petitioner was first sanctioned by a fine and a five-year suspension, and later barred permanently from the ASE, a determination sustained by the Securities and Exchange Commission in 2001. Given the evidence presented concerning this misconduct and petitioner's admissions, respondent's conclusion that petitioner had breached his fiduciary duties and had been untrustworthy is supported by substantial evidence in the record (see e.g. Matter of Dona v Levin, 263 AD2d 602, 603-604 [1999]).

Petitioner also argues that the penalty of license revocation was excessive in light of his own disclosure of the ASE discipline and the lesser punishments imposed on other licensees for worse misconduct. Again, we must disagree. The penalty imposed on petitioner was not so disproportionate to his offenses as to shock our sense of fairness (see Matter of Kelly v Safir, 96 NY2d 32, 39-40 [2001]), and the allegation that others may have received lesser penalties does not warrant modification (see Matter of Pietranico v Ambach, 82 AD2d 625, 627 [1981], affd 55 NY2d 861 [1982]).

Mercure, J.P., Peters, Spain and Kane, JJ., concur.

ADJUDGED that the determination is confirmed, without costs, and petition dismissed.

Travelers Indemnity Company v. Machado

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum] of counsel), for appellant.
Moore & Associates, New York, N.Y. (Michael L. Rappaport
of counsel), for petitioner-
respondent.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Allstate New Jersey Insurance Company appeals from an order of the Supreme Court, Kings County (George, J.H.O.), dated June 23, 2005, which, after a hearing, granted the petition.

ORDERED that the order is reversed, on the law, with costs, the petition is denied, the proceeding is dismissed, and the petitioner is directed to proceed to arbitration.

The petitioner commenced this proceeding to permanently stay arbitration of an uninsured motorist claim, arguing that the offending vehicle was covered by an automobile insurance liability policy issued by either the appellant or Metropolitan Property and Casualty Insurance Company. A framed-issue hearing was held at which the appellant presented the testimony of one of its underwriters who detailed the name, address, and vehicle searches she conducted to determine if the appellant insured the offending vehicle at the time of the accident. Computer printouts corroborating the search results were also admitted into evidence. [*2]

This evidence of an exhaustive search of the appellant's records disclosing that no policy of insurance was ever issued to the offending vehicle was sufficient to rebut the petitioner's prima facie showing of coverage (see Matter of New York Cent. Mut. v Coriolan, 5 AD3d 493; Matter of American Tr. Ins. Co. [Glaude], 208 AD2d 376, 377; Matter of Allstate Ins. Co. v Karadag, 205 AD2d 531, 532; Matter of Nationwide Ins. Co.[Dye], 170 AD2d 683). To the extent that the Appellate Division, First Department's decision in Highlands Ins. Co. v Baez (18 AD3d 238) can be read to hold that the appellant was required to attempt to locate the owner of the offending vehicle by telephone or letter or to compel her appearance at the hearing, we decline to follow it. It is properly the burden of the insurer for the claimant seeking uninsured motorist coverage, not the disclaiming insurance company, to produce this type of additional evidence of coverage once sufficient evidence, i.e., the "exhaustive search," is introduced to rebut the prima facie case (see Matter of American Tr. Ins. Co. [Glaude], supra at 377; Matter of State Wide Ins. Co. v Libecci, 104 AD2d 893; Matter of New York Cent. Mut. v Coriolan, supra). Since the petitioner did not submit any additional proof of insurance coverage following the appellant's rebuttal of its prima facie case, the hearing court improperly granted the petition to stay arbitration (see Matter of Allstate Ins. Co. v Karadag, supra; Matter of New York Cent. Mut. v Coriolan, supra).
MILLER, J.P., MASTRO, FISHER and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

New York and Presbyterian Hospital v. Allstate Insurance Company

McDonnell & Adels, P.C., Garden City, N.Y. (Elizabeth A.
Fitzpatrick of counsel), for appellant.
Joseph Henig, P.C., Bellmore, N.Y., for respondent and the
plaintiffs.

In an action to recover no-fault benefits under an insurance contract, the defendant appeals from an order of the Supreme Court, Nassau County (Bucaria, J.), dated March 17, 2005, which granted the motion of the plaintiff New York and Presbyterian Hospital, a/a/o Yaakov Elman, for summary judgment on the first cause of action and denied its cross motion for summary judgment dismissing that cause of action.

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

The Supreme Court should have denied the motion of the plaintiff New York and Presbyterian Hospital, a/a/o Yaakov Elman (hereinafter the hospital), for summary judgment on the first cause of action to recover no-fault benefits under an insurance contract its assignee had with the defendant Allstate Insurance Company (hereinafter the insurer). The hospital failed to establish its entitlement to judgment as a matter of law (see CPLR 3212; Alvarez v Prospect Hosp., 68 NY2d 320-327).
The Supreme Court should have granted the insurer's cross motion for summary judgment dismissing the first cause of action. The insurer made a prima facie showing, through the affidavits of its claims representatives, the "denial of claim" forms sent to the hospital and to Mount Sinai Hospital (the healthcare provider whose claim exhausted the policy limits), and its payment [*2]log listing all payments made to other healthcare providers under the subject policy, that it had exhausted the policy's coverage limits before it became obligated to pay the hospital's claim and that such payments were made in compliance with 11 NYCRR 65.15 (see Nyack Hosp. v General Motors Acceptance Corp., AD3d [2d Dept, Dec. 27, 2005]). In opposition, the hospital failed to raise a triable issue of fact.

The hospital's remaining contentions are without merit.
ADAMS, J.P., SKELOS, FISHER and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Travelers Indemnity Company v. Commerce & Industry Company

MEMORANDUM AND ORDER

Peters, J.

Cross appeals from an order of the Supreme Court (Teresi, J.), entered July 7, 2005 in Albany County, which, inter alia, denied plaintiffs' motion for partial summary judgment.

Plaintiff Finch Pruyn & Company, owner of a paper mill, entered into a contract with defendant GL&V/LaValley Industries, Inc. to "fabricate, deliver & install" a replacement drum. As part of that contract, GL&V was required to procure a certificate of insurance naming Finch as an additional insured under its policy, but only with respect to the "operations" of GL&V. GL&V thereafter subcontracted with defendant Pinchook & Buckley Construction to provide the "labor, equipment, supervision, and insurance" to remove the old washer and install a new one. Pinchook determined that to remove the existing washer, it was necessary to raise a venting hood [*2]that hung over the old washer. While securing the hood for its removal, defendant Frederick Fish, a Pinchook employee, fell and was injured. Fish commenced an action (hereinafter the underlying action) against Finch and GL&V, seeking damages based on negligence and various sections of the Labor Law. After GL&V impleaded Pinchook, the parties cross-moved for summary judgment. Supreme Court (Krogmann, J.) partially granted Fish's motion for summary judgment with respect to his Labor Law § 240 (1) claim and granted Pinchook's cross motion for dismissal regarding the third-party complaint against it, which sought indemnification and damages for breach of contract. Supreme Court denied all motions seeking contractual indemnification. Although Finch and GL&V filed notices of appeal, neither was perfected.

Finch and its insurer, plaintiff Travelers Indemnity Company, commenced this declaratory judgment action against GL&V, GL&V's insurer, Commerce & Industry Insurance Company of Canada, Pinchook, and Pinchook's insurer, Peerless Insurance Company, seeking a declaration that Commerce, GL&V and/or Peerless must defend and indemnify Finch in the underlying action. Commerce answered, as did Peerless, which asserted a cross claim against Commerce for indemnification/contribution. Plaintiffs moved for partial summary judgment against Commerce, which thereafter cross-moved with GL&V for, among other things, summary judgment against plaintiffs, Peerless and Pinchook. Supreme Court (Teresi, J.) denied the cross motions based upon a question of fact as to whether Fish's injury occurred during the "operations" of GL&V. However, it did determine that Finch was an additional insured under Commerce's policy and rejected the cross motion against Peerless and Pinchook as "premature." Plaintiffs, Peerless, Pinchook, GL&V and Commerce cross appeal.

The issue of whether Fish's claimed injuries occurred "with respect to the operations" of GL&V is dispositive because it frames Commerce's coverage of Finch, which is clearly an additional insured under the Commerce policy. Upon our reading of the contract between GL&V and Finch, we find that GL&V agreed to "fabricate, deliver & install" a replacement drum which would include the removal of the old drum, evidenced by GL&V's subcontract with Pinchook. Therefore, at the time that Finch and GL&V entered into their contract, the parties agreed that GL&V's "operations" would include replacement of the existing washer. As this was the activity in which Fish was engaged when he was injured, the only question of fact, in our view, is the parties' respective negligence, not the parameters of this term in the Commerce policy ^[FN1]. For these reasons, we find Fish's injury to have occurred in connection with the work that GL&V subcontracted for after being hired by Finch to "fabricate, deliver and install" the replacement drum (see Bedford Cent. School Dist. v Commercial Union Ins. Co., 295 AD2d 295, 296 [2002]; Aetna Cas. & Sur. Co. v National Union Fire Ins. Co. of Pittsburgh, Pa., 228 AD2d 385, 386 [1996]; Lim v Atlas-Gem Erectors Co., 225 AD2d 304, 305 [1996]). [*3]

Next addressing whether Commerce's coverage is primary or excess over that provided by Travelers, Commerce's policy states that "[t]he insurance afforded by this policy is primary insurance, except when stated to apply in excess of or contingent upon the absence of other insurance." The Travelers' policy states, in its "[e]xcess [i]nsurance" provision, that it will provide coverage:

"excess over any of the other insurance, whether primary, excess, contingent or on any other basis:

(1) That is [f]ire, [e]xtended [c]overage, [b]uilder's [r]isk, [i]nstallation [r]isk or similar coverage for 'your work';

(2) That is [f]ire insurance for premises rented to you; or

(3) If the loss arises out of the maintenance or use of aircraft, 'autos' or watercraft. . ."

While none of these categories is applicable here, a later endorsement to that policy specifically amended such section by adding, as here relevant, "(4) [t]hat is valid and collectible insurance available to you if you are added as an additional insured under any other policy." It thereafter states that "[w]hen this insurance is excess, we will have no duty . . . to defend any claim or 'suit' that any other insurer has a duty to defend." Since Finch is named as an additional insured under the GL&V policy, plaintiffs correctly contend that the Commerce policy is primary. With a duty to defend broader than a duty to indemnify (see Agoado Realty Corp. v United Intl. Ins. Co., 95 NY2d 141, 145 [2000]) and it being clear that Finch cannot seek contractual indemnification for its own negligence (see Duffy v Wal-Mart Stores, 24 AD3d 1156, 1158 [2005]), we further find that Commerce has a duty to defend Finch since the allegations in the complaint, liberally construed, demonstrate that they fall within the embrace of the policy (see Agoado Realty Corp. v United Intl. Ins. Co., supra at 145).

Addressing next Peerless's allegations in its cross appeal that Supreme Court erred in finding Commerce's claims against Peerless and Pinchook "premature," we agree that Commerce's request for relief should have been denied as a matter of law because Commerce had not interposed a cross claim against Peerless (see CPLR 3212 [a]) and because Pinchook had already been dismissed from the underlying action.

Mercure, J.P., Crew III, Rose and Kane, JJ., concur.

ORDERED that the order is modified, on the law, without costs, by partially granting plaintiffs' motion by declaring that the claimed injury occurred with respect to the operations of defendant GL&V/LaValley Industries, Inc. and that defendant Commerce & Industry Insurance Company of Canada has a duty to defend plaintiff Finch, Pruyn & Company, Inc. in the underlying action, and, as so modified, affirmed. [*4]

Footnotes

Footnote 1: While we recognize that "operations" is not adequately defined by the policy and that ambiguities must be strictly construed against Commerce, as the drafter (see Battenkill Veterinary Equine v Cangelosi, 1 AD3d 856, 858 [2003]), the language here reflects the "general nature of the operation in the course of which the injury was sustained" (Consolidated Edison Co. of N.Y. v Hartford Ins. Co., 203 AD2d 83, 83 [1994]).

Tudisco v. James

Faust Goetz Schenker & Blee, LLP, New York, N.Y. (Mary Joseph
of counsel), for appellant.
Yankowitz Law Firm, P.C., Great Neck, N.Y. (Brian Morris of
counsel), for respondents.

In an action to recover damages for personal injuries, etc., the defendant appeals from an order of the Supreme Court, Suffolk County (Berler, J.), dated May 19, 2005, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff Rosanna Tudisco 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 defendant made a prima facie showing that the injured plaintiff, Rosanna Tudisco (hereinafter the injured plaintiff), did not sustain a serious injury within the meaning of Insurance Law § 5102(d) through the submission of evidence including her deposition testimony and the affirmed medical reports of the defendant's examining physicians (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 945). The plaintiffs thus were required to come forward with objective medical evidence, based upon a recent examination, to verify the injured plaintiff's subjective complaints of pain and limitation of movement (see Farozes v Kamran, 22 AD3d 458; Ali v Vasquez, 19 AD3d 520). Neither the report of the injured plaintiff's chiropractor nor the report of her neurologist was sufficient to sustain this burden, since both reports were based upon examinations conducted over one year before the defendant moved for summary judgment (see [*2]Murray v Hartford, 23 AD3d 629; Brown v Tairi Hacking Corp., 23 AD3d 325; Hernandez v DIVA Cab Corp., 22 AD3d 722; Farozes v Kamran, supra). Although the plaintiffs also submitted the affirmed report of a physician who examined the injured plaintiff more recently, that physician did not indicate that the injured plaintiff had sustained a fall and injured her neck approximately three months after the subject accident, and did not address the fact that the magnetic resonance imaging test upon which he relied showed degenerative changes in her cervical spine. Under these circumstances, his conclusion that the injured plaintiff's injuries were causally related to the subject accident was speculative (see Allyn v Hanley, 2 AD3d 470; Ifrach v Neiman, 306 AD2d 380; Lorthe v Adeyeye, 306 AD2d 252; see also Brown v Tairi Hacking Corp., supra).
SCHMIDT, J.P., CRANE, KRAUSMAN, SKELOS and LUNN, JJ., concur.

Faulkner v. Steinman

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (LaMarca, J.), dated March 8, 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 affirmed, with costs.

The defendant's evidence, consisting of, inter alia, the plaintiff's deposition testimony and the affirmed medical report of the defendant's examining orthopedist, established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). Although the orthopedist set forth range of motion findings as to the plaintiff's cervical spine and did not compare those findings to what is normal, a prima facie case for summary judgment was made out when he attributed the conditions in the plaintiff's cervical spine to degenerative changes (see Giraldo v Mandanici, 24 AD3d 419; Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456).

In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the [*2]plaintiff's treating chiropractor, which was premised on a recent examination of the plaintiff, specified the degrees of the range of motion in the plaintiff's cervical spine but did so without comparing those findings to the normal range of motion (see Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462, 463; Aronov v Leybovich, 3 AD3d 511, 512; cf. Browdame v Candura, 25 AD3d 747, 748). Furthermore, the affidavit of the plaintiff's chiropractor failed to address the finding of the defendant's orthopedist, who attributed the condition of the plaintiff's cervical spine to degenerative changes (see Giraldo v Mandanici, supra at 420; Ifrach v Neiman, 306 AD2d 380; Ginty v MacNamara, 300 AD2d 624, 625). This rendered speculative the opinion of the plaintiff's chiropractor that the plaintiff's cervical conditions were caused by the subject accident (see Giraldo v Mandanici, supra; Lorthe v Adeyeye, 306 AD2d 252, 253; Ginty v MacNamara, supra). Moreover, the plaintiff failed to proffer competent medical evidence that the plaintiff was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days subsequent to the subject accident (see Davis v New York City Tr. Auth., 294 AD2d 531; Sainte-Aime v Ho, 274 AD2d 569; Arshad v Gomer, 268 AD2d 450).

Accordingly, the Supreme Court properly 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).
SCHMIDT, J.P., CRANE, KRAUSMAN, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Ilardo v. New York City Transit Authority

In an action, inter alia, to recover damages for personal injuries, etc., the plaintiff Domenica Ilardo appeals from so much of an order of the Supreme Court, Kings County (Partnow, J.), dated March 18, 2005, as granted that branch of the defendants' motion which was for summary judgment dismissing her causes of action on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the defendants' motion which was for summary judgment dismissing the causes of action asserted by the plaintiff Domenica Ilardo is denied, and those causes of action are reinstated.

The defendants failed to make a prima facie showing that the appellant did not sustain a serious injury (see Insurance Law § 5102[d]; see generally, Toure v Avis Rent A Car Sys., 98 NY2d 345, 353; Kearse v New York City Tr. Auth., 16 AD3d 45; Meely v 4 G's Truck Renting Co., 16 AD3d 26). The affirmation of the defendants' examining orthopedist failed to set forth the objective tests he performed in concluding that the appellant had a normal range of motion. Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law, we need not address the sufficiency of the appellant's opposition papers (see Nembhard v Delatorre, 16 AD3d 390, 391; Minlionica v Shahabi, 296 AD2d 569, 570). [*2]

We note that to the extent that the appellant has raised issues in her brief concerning the plaintiffs' entitlement to summary judgment on the issue of liability, we do not reach those issues. The notice of appeal specified that the appeal was limited to that part of the order which granted the defendants' motion for summary judgment. "An appeal from only part of an order constitutes a waiver of the right to appeal from other parts of that order" (532 Realty Assoc. v Spearhead Sys., 1 AD3d 476, 477; see Clark v 345 E. 52nd St. Owners, 245 AD2d 410, 413).
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Yashayev v. Rodriguez

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Kings County (Bayne, J.), dated March 15, 2005, which granted the motion of the defendants Acevedo Rodriguez and Carmen Diaz, and the separate motion of the defendant Ilgar Ashurov, for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed on the law, with one bill of costs, the motions are denied, and the complaint is reinstated.

The defendants failed to make a prima facie showing that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The orthopedist who examined the plaintiff Dmitry Yashayev on November 18, 2004, noted in his report that Dmitry had "decreased" flexion [*2]of the lumbar spine to 70 degrees, but did not compare that finding to what is normal (see Browdame v Candura, 25 AD3d 747; Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462, 463; Aronov v Leybovich, 3 AD3d 511). Absent such comparative quantification, the court cannot conclude that the decreased lumbar flexion is "mild, minor or slight" so as to be considered insignificant within the meaning of the no-fault statute (Licari v Elliott, 57 NY2d 230, 236; Gaddy v Eyler, supra at 957).

As to the plaintiff Vitaliy Iskiyayev, the defendants relied upon, inter alia, the affirmed medical report of an orthopedist who examined Vitaliy on November 3, 2003. The doctor's findings, which were quantified as to cervical and lumbar ranges of motion, were not compared to what is normal, and hence, were insufficient to establish prima facie entitlement to summary judgment (see Browdame v Candura, supra; Baudillo v Pam Car & Truck Rental, supra at 420; Manceri v Bowe, supra at 463; Aronov v Leybovich, supra at 511).

Since the respective defendants failed to establish their prima facie entitlement to summary judgment as to each plaintiff, it is unnecessary to consider whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact (see Facci v Kaminsky, 18 AD3d 806; Rich-Wing v Baboolal, 18 AD3d 726; Coscia v 938 Trading Corp., 283 AD2d 538).
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Kasim v. Defretias

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Kings County (Hubsher, J.), dated October 19, 2004, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that none of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the appeal by the plaintiff Yasmin Alibocas is dismissed as abandoned, without costs or disbursements; and it is further,

ORDERED that the order is modified by deleting the provision thereof granting that branch of the motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Samira Kasim and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as reviewed, without costs or disbursements, and the complaint is reinstated insofar as asserted by the plaintiff Samira Kasim.

While the defendants' examining orthopedist set forth in his affirmed medical reports range of motion findings concerning the respective cervical and lumbar spines of the plaintiffs Yousaf Kasim, Samir Kasim, and Samira Kasim (hereinafter the plaintiffs), he never compared those ranges of motion to the normal range of motion. Such proof alone is insufficient to establish a lack [*2]of serious injury (see Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462; Aronov v Leybovich, 3 AD3d 511). As the defendants failed to adduce any other proof demonstrating the absence of serious injury as to the plaintiff Samira Kasim, the defendants failed to meet their initial burden as to that plaintiff (see Insurance Law § 5102[d]; Toure v Avis Rent A Car Sys., 98 NY2d 345; cf. Gaddy v Eyler, 79 NY2d 955) and we need not consider whether the plaintiffs' papers were sufficient to raise a triable issue of fact as to that plaintiff (see Facci v Kaminsky, 18 AD3d 806; Rich-Wing v Baboolal, 18 AD3d 726).

However, the defendants submitted deposition testimony which showed that the plaintiff Yousaf Kasim resumed his duties in the military service of the United States without any impairments and limitations, and that the plaintiff Samir Kasim engaged in a rigorous weight-lifting regimen without any impairment or limitation of motion. Such proof, coupled with the medical proof submitted by the defendants, indicated that each of those plaintiffs had a full range of motion (without establishing the norms of such range) and was sufficient to establish, prima facie, that the plaintiffs Yousaf Kasim and Samir Kasim did not sustain any permanent injury or a "significant limitation of use of a body function or system" (Insurance Law § 5102[d][emphasis added]). The proof in opposition submitted on behalf of the plaintiffs Yousaf Kasim and Samir Kasim was insufficient to raise an issue of fact.
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Allstate Insurance Company v. Rico

Order and judgment (one paper), Supreme Court, Bronx County (Dianne T. Renwick, J.), entered on or about July 21, 2005, which denied and dismissed the petition for a permanent stay of the uninsured motorist arbitration between petitioner and its insured respondent Joshua Rico, unanimously affirmed, with costs.

Supreme Court properly found the disclaimer of additional respondent Metropolitan Group Property & Casualty Company (Metropolitan) based on its insured's lack of cooperation effective, where the evidence showed that the insured and her husband made repeated misrepresentations to Metropolitan designed to hide the circumstance that the driver of the insured's vehicle at the time of the subject accident was the insured's husband, who was not then licensed to drive (see Lewis v Nationwide Mut. Ins. Co., 202 AD2d 816 [1994]; National Grange Mut. Ins. Co. v Olsen, 30 AD2d 825 [1968]). Inasmuch as the identity of the driver of the vehicle could not be ascertained by Metropolitan for two years after the disclaimer, the failure to serve the driver with a separate disclaimer did not render the disclaimer ineffective (cf. Matter of Eveready Ins. Co. v Dabach, 176 AD2d 879 [1991]). [*2]

We have considered petitioner's remaining contentions and find them unavailing.

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

ENTERED: APRIL 20, 2006

CLERK

Lancer Insurance Company v. Robayo

In related proceedings, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of uninsured motorist claims, the petitioner appeals from an order of the Supreme Court, Queens County (Rios, J.), dated August 19, 2004, which, after a hearing, denied the petitions and dismissed the proceedings.

ORDERED that the order is affirmed, with costs.

Juan Pampara, Anna Pampara, and Leonardo Robayo were allegedly injured in a motor vehicle accident which involved a hit-and-run driver. At the time of the accident, Juan Pampara was operating a vehicle he had rented from NYARC, Inc., d/b/a Budget-Rent-A-Car (hereinafter Budget), and Anna Pampara and Robayo were passengers in the vehicle. The petitioner, Lancer Insurance Company (hereinafter Lancer), insured the rented vehicle through a "Business Auto" insurance policy issued to Budget. Juan Pampara was using the rental as a temporary [*2]substitute for his own vehicle, which was insured by State Farm Mutual Automobile Insurance Company (hereinafter State Farm).

Robayo, as well as Juan Pampara and Anna Pampara, filed demands for uninsured motorist arbitration. Lancer commenced a proceeding, inter alia, to stay Robayo's arbitration and a separate proceeding, inter alia, to stay the Pamparas' arbitration, contending that State Farm was required to provide primary coverage because the rental car was a temporary substitute. Based on the terms of the insurance policies before it, the Supreme Court determined that each insurer was liable on a pro rata basis, because each policy contained an applicable provision stating that it was excess to other similar insurance, and denied the petitions. We affirm, but for reasons other than those cited by the Supreme Court.

Contrary to Lancer's contention, the Supreme Court correctly determined that State Farm's policy provision stating it was excess over similar insurance was applicable. However, the Supreme Court erroneously determined that Lancer's policy provision making it excess over other similar insurance was applicable as well. The "other insurance" provision in Lancer's uninsured motorist endorsement provided that:

With respect to bodily injury to an insured while occupying a motor vehicle not owned by the named insured, the coverage under this UM endorsement shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such motor vehicle as primary insurance, and this UM endorsement shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Since Lancer's named insured, Budget, owned the rental vehicle involved in the accident, the excess provision did not apply. Accordingly, Lancer's policy constituted primary insurance for all coverage.
GOLDSTEIN, J.P., LUCIANO, RIVERA and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Guy St. Pierre v. Fevrier

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Rockland County (Garvey, J.), dated April 11, 2005, which denied her 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.

It is well settled that the existence of a bulging disc is not evidence of serious injury "in the absence of objective evidence of the extent of alleged physical limitations resulting from the disc injury" (Kearse v New York City Tr. Auth., 16 AD3d 45, 50; see Meely v 4 G's Truck Renting Co., 16 AD3d 26, 30; see also Pommells v Perez, 4 NY3d 566, 574). Here, the affirmed report of the defendant's examining physician established that the plaintiff did not sustain physical limitations from the bulging discs. The plaintiff did not submit opposition papers to rebut the defendant's prima facie showing of the absence of a serious injury. Under the circumstances, the court should have granted the defendant's motion to dismiss the complaint (see Insurance Law 5102[d]; Toure v Avis Rent A Car Sys., 98 NY2d 345; Kearse v New York City Tr. Auth., supra; Meely v 4 G's Truck Renting Co., supra).
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Pimentel v. Mesa

Leahey & Johnson, P.C., New York, N.Y. (Peter James Johnson,
Jr., Peter James Johnson, James P. Tenney, and Kimberly A.
Schirripa of counsel), for appellant.
Rimland & Associates, Brooklyn, N.Y. (Anthony M. Grisanti of
counsel), for respondents.

In an action to recover damages for personal injuries, etc., the defendant Tatiana Mesa appeals from an order of the Supreme Court, Kings County (Lewis, J.), dated July 29, 2005, which granted the plaintiffs' motion for reargument of the defendant's prior motion for summary judgment dismissing the complaint insofar as asserted against her on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d), which had been granted in an order dated April 29, 2005, and upon reargument, denied the motion for summary judgment.

ORDERED that the order is modified, on the law, by deleting the provision thereof which, upon reargument, denied the motion of the defendant Tatiana Mesa for summary judgment, and substituting therefor a provision adhering to the original determination granting the motion for summary judgment; as so modified, the order is affirmed, with costs to the appellants.

Contrary to the defendant Tatiana Mesa's contention, the Supreme Court providently exercised its discretion in granting reargument (see Foley v Roche, 68 AD2d 558). However, upon reargument, the Supreme Court erred in failing to adhere to its prior determination. Mesa made a prima facie showing that neither plaintiff sustained a serious injury within the meaning of Insurance [*2]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; see also Kearse v New York City Tr. Auth., 16 AD3d 45). In opposition, the plaintiffs failed to raise a triable issue of fact. The affirmed medical reports of the plaintiffs' examining physician were insufficient to raise a triable issue of fact insofar as they were based upon examinations that occurred approximately three years after the plaintiffs' last medical treatments, a gap in time which was not satisfactorily explained either by his reports or the plaintiffs' other submissions (see Pommells v Perez, 4 NY3d 566; Sammut v Davis, 16 AD3d 658; Vita v Enterprise Rent-A-Car, 8 AD3d 558).
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

State Farm Mutual Automobile Insurance Company v. Hertz Corporation

In a subrogation action to recover certain damages paid by the plaintiff to its insured, the third-party defendant, Aryeh Weinreb, appeals, as limited by his brief, from so much of an order of the Supreme Court, Queens County (Dorsa, J.), dated October 1, 2004, as denied his motion to dismiss the third-party complaint pursuant to CPLR 3211(a)(5).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs payable to the third-party defendant-appellant, the motion is granted, and the third-party complaint is dismissed.

On July 9, 2000, the plaintiff's insured, Edward Bradley, sustained personal injuries in an automobile accident with Aryeh Weinreb, the third-party defendant. The plaintiff paid Bradley approximately $35,000 pursuant to a provision of its policy allowing additional personal injury protection benefits (hereinafter A-PIP). There is no evidence that the plaintiff notified Weinreb's insurance carrier of that payment, or of the plaintiff's right of subrogation for that payment. Indeed, there is no evidence of any claim ever made by the plaintiff against Weinreb for subrogation.

On June 24, 2003, Bradley settled his underlying personal injury claims against Weinreb and the defendants, who owned and drove, respectively, another car that was involved in the accident, and Bradley signed a general release of "all . . . claims." [*2]

On May 30, 2003, the plaintiff, as Bradley's subrogee, commenced this action against the defendants to recover the A-PIP payment. The defendants then brought a third-party action against Weinreb for indemnification. Weinreb moved to dismiss the third-party complaint pursuant to CPLR 3211(a)(5) on the ground of release. The plaintiff, in opposition to the defendants' cross motion for similar relief based on the general release that Bradley gave Weinreb, asserted that the general release was not a bar to its claim because, at the time the general release was executed, Weinreb knew or possessed information which, reasonably pursued, would have given it knowledge of the plaintiff's subrogation rights with respect to the A-PIP payment (see Ocean Accident & Guarantee Corporation v Hooker Electrochemical Co., 240 NY 37). The thrust of the plaintiff's argument was that Weinreb was aware of the plaintiff's status as the automobile insurance carrier for the other party to the accident, and, therefore, had constructive notice of its subrogation rights at the time he accepted the release. The Supreme Court agreed and denied Weinreb's motion to dismiss the third-party complaint. We disagree.

The plaintiff's right of subrogation only arose upon payment of the claim for A-PIP benefits (see Winkelmann v Excelsior Ins. Co., 85 NY2d 577, 581, 582). The plaintiff, via the extrinsic evidence submitted on the motion, established that the general release, executed in connection with the underlying personal injury action, was intended to cover the subject matter of the action. There is no evidence that, at the time the plaintiff's insured reached settlement with Weinreb and signed the general release, Weinreb was aware of the plaintiff's payment of A-PIP benefits, or of any claim against Weinreb for such payment such that the release would not have barred the subrogation claim (see Nationwide Ins. Co. v Mocchia, 243 AD2d 692; Scavone v Kings Craft Corp., 55 AD2d 807). Under the circumstances, Weinreb did not know or have reason to know of the plaintiff's subrogation rights at the time he entered into the settlement (see Nationwide Ins. Co. v Mocchia, supra; cf. Aetna Cas. & Sur. Co. v Schulman, 70 AD2d 792, 793; Scavone v Kings Craft Corp., supra; Aetna Cas. & Sur. Co. v Norwalk Foods, 125 Misc 2d 986). At best, the defendants third-party plaintiffs' claim of notice to Weinreb is speculative. Therefore, the Supreme Court should have granted Weinreb's motion to dismiss the third-party complaint. Insofar as Weinreb is concerned, Bradley impaired the plaintiff's right of subrogation against him (see Ziegler v Raskin, 100 AD2d 814, 815). It is noteworthy that the plaintiff has not sued Weinreb on its subrogation claim.

Weinreb's remaining contentions are unpreserved for appellate review and, in any event, are academic in light of our determination.
CRANE, J.P., KRAUSMAN, RIVERA and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Vasquez v. Reluzco

Becker & D'Agostino, P.C., New York (Michael D'Agostino of
counsel), for appellants.
Fiedelman & McGaw, Jericho (Andrew Zajac of counsel), for
respondents.

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered March 24, 2005, which granted defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

In opposing summary judgment, plaintiffs never argued the deficiency of the defense neurologist's reports before the motion court. Their argument in this regard is thus unpreserved for appellate review (Matter of Stevens v Wing, 293 AD2d 49, 55 [2002], lv denied 98 NY2d 616 [2002]; Murray v City of New York, 195 AD2d 379, 381 [1993]), and we decline to review it. Were we to do so, we would find that defendants satisfied their initial burden of demonstrating, prima facie, that plaintiffs had not sustained serious injuries within the meaning of Insurance Law § 5102(d). Defendants submitted affirmed reports of a neurologist who examined both plaintiffs and diagnosed them as "normal," finding no spasm, full range of motion of their cervical spines, and negative straight-leg raising as to their lumbar spines.

Plaintiffs failed to meet their consequent burden to demonstrate they had sustained serious injuries as defined in the statute (Franchini v Palmieri, 1 NY3d 536 [2003]). Their medical submissions, while setting forth numerical ranges of motion of plaintiffs' cervical and lumbosacral spines, were deficient in failing to specify what objective tests, if any, their doctor performed to get such measurements, or what the normal range of motion should be. Plaintiffs' doctor failed to explain the significance, if any, of his findings that they both had positive straight-leg-raising tests (see Nagbe v Minigreen Hacking Group, 22 AD3d 326 [2005]). To raise a triable issue of fact, those positive findings had to be accompanied by objective findings of either a specific percentage of the loss of range of motion or a sufficient description of the qualitative nature of plaintiffs' limitations based on the normal function, purpose and use of the body part (id.; Bent v Jackson, 15 AD3d 46, 49 [2005]).

Plaintiff Vasquez's failure to offer an explanation for her cessation of treatment more than three years ago undermines her claim of serious injury (see Pommells v Perez, 4 NY3d 566, 574 [2005]). Unexplained gaps in [*2]plaintiff Paceco's treatment are fatal to his claim of serious injury (Smith v Brito, 23 AD3d 273 [2005]).

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

ENTERED: APRIL 20, 2006

CLERK