Coverage Pointers - Volume VIII, No. 1

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Dear Coverage Pointers Subscribers:


Buon Giorno from Rome where I'm privileged to represent the Federation of Defense & Corporate Counsel at a sister organization's Annual Meeting. Thanks for Scott and Audrey for their usual fine work in assembling this week's issue of CP.


OK, today's trivia question. I will name a few events and tell me what they have in common:


· New Mexico Gov. Gary Johnson endorses Steve Forbes for President, in his primary run against Texas Gov. George W. Bush.


· The Federal Aviation Administration announces proposed rules to limit the number of aircraft that fly over the Grand Canyon.


· Hurwitz & Fine, PC issues inaugural issue of its new electronic publication, Coverage Pointers and changes the face of law firm newsletters, forever.



I know, I know. You almost forgot about the Johnson endorsement of Forbes but when I remind you that is was on July 9, 1999, the day that Coverage Pointers filled the electronic mailbox of its first 25 subscribers, it all comes rushing back.


With this issue, we are delighted to begin our eighth year of publication of our labor of love, Coverage Pointers and thank our readership for its continuing support and the wonderful feedback which follows the distribution of each issue.


Today is also Bastille Day, the 217th anniversary of the founding of the French Republic and my 29th anniversary with Hurwitz & Fine. There will be fireworks on the\Champs Élysées to mark at least one of those occasions today or perhaps both


Today's issue brings you another series of very interesting cases in the ever-evolving New York insurance universe.


Bang, Bang Cases


Recently, we reported on the Court of Appeals decision in Hartford v. Cook which involved the intentional discharge of a gun aimed at an intruder and the high court's finding that the incident might be accidental. Now the Third Department finds that a fellow who pleaded guilty to attempted assault in the first degree, admitting that he aimed what he knew was a loaded and operable flare gun and fired it at another man causing serious physical injuries, including the loss of his left eye is entitled to a defense under a homeowner's policy. When the carrier denied coverage based on three months late notice of the incident, the Appellate Division excused the lateness because "the unsophisticated insured individuals were preoccupied with the criminal charges." Sheesh. The court also found that the carrier was not prejudiced by the late notice, a factor totally inconsequential under current case law.


Rights of Additional Insured


We also share with you a very interesting case on the rights afforded to parties who might be (but might not be) blanket additional insureds under CGL policies. It is a case likely to go to New York's high court for further review.


Underinsured Policies



When the liability carrier for the defendant is the same carrier as the SUM insurer, is a decision on the value of the claim in the liability venue binding on the underinsured claim? We report on a decision which outlines a scenario where the SUM carrier was precluded from relitigating the case value/


Material Misrepresentation in First Party Cases



You'll find an interesting case defining just what the term "material" means, when considering whether an insurer can deny coverage based on "material misrepresentation" of an insured under a first party policy.


No Fault


You will also find a crazyquilt of decisions in the No Fault arena which, we know, is a special delicacy for a large number of our subscribers.


Anyway, keep those cards and letters coming in and thanks for allowing us to visit you on alternating Fridays for now, our eighth year.


Ciao

Dan

Dan D. Kohane
[email protected]

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7/13/06 Merchant’s Insurance of New Hampshire v. Weaver

Appellate Division, Third Department

The Hartford v. Cook Progeny: He Aims. He Shoots. He Intended to Harm. And He Still Gets Coverage (but, now in an Assault Case)

Merchants issued a homeowner's policy to Susan Sweeney. Her son was an insured under the policy. Her son plead guilty to attempted assault in the first degree, admitting that he aimed what he knew was a loaded and operable flare gun and fired it at his friend. The fiery projectile struck the friend, causing serious physical injuries, including the loss of his left eye. Merchants disclaimed coverage based upon the policy definition of "occurrence" as "an accident . . . which results in: a "bodily injury." The Lower Court agreed and found the son’s acts were not an "occurrence" within the meaning of the policy and that the policy's intentional act exclusion applied because he intended to cause bodily injury.

Based on the recent Court of Appeals case of Hartford v. Cook , the Appellate Division reverses and holds that the allegations are within the "'embrace of the policy'" and thus Merchants must defend "'even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered'. As in the Hartford case, the complaint alleges that the weapon was negligently discharged by an insured.

Counseling Point: Upon issuance of the Hartford decision (a self defense case); we cautioned that the Court of Appeals had applied a much more expansive definition of “accident”. Here, we see the results. Based on the case description, there was no self-defense component, yet the Third Department carves out a duty to defend in an assault case.

7/11/06 Culpepper v. Allstate Insurance Company
Appellate Division, Second Department
Where Liability Carrier and SUM Carrier are the Same, Determination of Value in One Proceeding Can Be Binding on Other
Culpepper was injured and sued McAllister. McAlister was insured by Allstate with a $25,000 policy. Culpepper also had an underinsured (SUM) policy with Allstate in the amount of $100,000. A trial was held in the personal injury action on the value of the damages to Culpepper after all parties, including Allstate, agreed to a concession of liability. Of course, Allstate provided McAllister with defense counsel. The jury awarded the plaintiff damages in the sum of $115.000. Allstate paid the $25,000 under McAlister’s liability policy but would not pay the SUM coverage (which would be $75,000 as the $100,000 in coverage would be reduced by the $25,000 in payment of the liability limits). Culpepper then instituted this action against Allstate alleging breach of contract. The Court held that Allstate was bound by the determination of the value of the injuries since it supplied defense counsel to McAllister. It had a full opportunity to contest damages through its defense counsel, particularly because the parties agreed that McAllister would not be responsible for any verdict over $25,000 personally.

The plaintiff was NOT allowed to pre-judgment interest, however, since this was a personal injury action.

7/11/06 New York and Presbyterian Hospital v. Allstate Insurance Company

Appellate Division, Second Department

Extension of Time to Pay/Deny No-Fault Claim Proper when Additional Information Requested from Claimant

This was an action to recover no-fault medical payments. New York and Presbyterian Hospital submitted evidence that the prescribed statutory billing forms had been mailed and received, and that the defendant had failed to either pay or deny the claim within the requisite 30-day period.

However, in opposition to the motion, the defendant established that it had made a timely request for additional information and that it timely denied the claim within 30 days of receipt of the hospital records it had requested to verify the claim. However, although the defendant established that its denial of the subject claim was timely, it failed to submit sufficient evidentiary proof, in admissible form, to make a prima facie showing that it properly denied the claim upon the ground that the medical treatment provided was unrelated to the accident.



7/11/06 Santo v. GEICO

Appellate Division, Second Department

Insurer not Estopped from Disclaiming No-Fault Benefits when Issues not yet Adjudicated

Here, the underlying liability action was settled, and the issue of whether the accident in which the plaintiff was injured arose from the use and operation of the insured vehicle was never raised or adjudicated. GEICO is not estopped from disclaiming an obligation to pay no-fault benefits to the plaintiff on that ground, particularly where the categories of occurrences covered under the liability provisions of the relevant policy are broader than those covered under the no-fault provisions, and there was no evidence in the record that the GEICO made any actual or implied promises that it would provide no-fault coverage.



7/11/06 City of New York v. Safeco Insurance Company of America

Appellate Division, Second Department

Allegations in the Complaint Not Encompassed by the Policy

This was a declaratory judgment action that arose from a personal injury action in which two parents sued the City of New York Administration for Children's Services (ACS) and the Coalition for Hispanic Family Services (Coalition). The complaint in the underlying personal injury action alleged that ACS initiated petitions to have the three children removed from their home based on the observation of blood in one of the children's stool, and the child's subsequent positive test for a sexually transmitted disease. Furthermore, that ACS removed the children and placed them in foster care with the Coalition. The complaint stated that "the proceeding[s] were protracted because of the . . . prosecutor's failure to comply with the judge's order to produce witnesses, lab reports and medical records," and that, in October 2000, ACS discontinued its petition for lack of evidence. Aside from the allegation that ACS placed the children with the Coalition, the complaint in the underlying personal injury action did not allege any specific wrongdoing by the Coalition. Thus, the Court finds that both liability insurance policies provided that the additional insured coverage applied "only with respect to liability arising out of [the Coalition's] operations." A fair and reasonable reading of the complaint in the underlying personal injury action indicates that the complaint alleged damages only arising out of ACS's decisions to remove the children, engage in protracted litigation to terminate parental rights, and to require supervised visitation with the children. Thus, no coverage was available based on the allegations.

7/7/06 State Farm Mutual v. Jackson

Appellate Division, Fourth Department

UM Claim Denied as Claimant was Not Residing with Mother and so Was Not
Entitled to Coverage under Mother’s Policy

This was an Article 75 proceeding that sought a permanent stay of arbitration with respect to respondent's "uninsured motorist's claim on the basis that the Respondent was not covered under his mother’s policy as he did not reside in his mother's household in Rochester, New York. The Appellate Division affirms the Trial Court finding on the basis that "(a) resident is one who lives in the household with a certain degree of permanency and intention to remain" The evidence before the jury established that respondent was the father of six children who resided in Dunkirk, New York, with his girlfriend, the children's mother. The evidence further established that Respondent was unemployed and received disability benefits that were sent to his girlfriend's address in Dunkirk. The motor vehicle accident occurred in Dunkirk, while Respondent was a passenger in an uninsured vehicle driven by a Dunkirk resident. Following the hospitalization of respondent for the injuries that he sustained in the accident, Respondent was released to the care of his girlfriend in Dunkirk, and all his follow-up medical care took place in Dunkirk.

7/6/06 BP Air Conditioning Corp v. One Beacon Insurance Group

Appellate Division, First Department

In a Case Destined for Court of Appeal Review, Split Court Rules Obligation to Defend Purported Blanket Additional Insured Based on Allegations in Complaint, Even if the Eventual Determination May be that Injuries Did Not Arise Out of Named Insured's Work

Is an additional insured under CGL policy entitled to a defense when it is uncertain whether any eventual judgment might fall within coverage? Court holds that additional insured, has same rights as named insured and if allegations fall within potential coverage, additional insured entitled to defense. Henegan was the general contractor and retained BP, an HVAC subcontractor for project. BP hired ALFA as sub-sub contractor for steam fitting work. The purchase order between BP and ALFA required ALFA to purchase CGL coverage naming BP as additional insured.

ALFA secured the policy which contained a Blanket Additional Insured endorsement, providing that any insured for “whom you are performing operations …. When you and such person or organization have agreed in writing to be added as an additional insured …[shall become an additional insured] …only with respect to liability arising out of your ongoing operations performed for that insured. “One Beacon was the carrier on the risk...

Consentino worked for Karo Sheet Metal, another subcontractor of BP, and slipped and fell on a patch of oil at the jobsite. He sued Henegan and Henegan sued BP and ALFA (and then Consentino sued BP and ALFA and others later. BP tendered the defense of the matter to One Beacon who denied coverage and BP commenced a declaratory judgment against one Beacon seeking defense.

Discovery did not resolve, conclusively, the source of the oil and Beacon opposed a motion for summary judgment in the DJ action, arguing that it should not bear the responsibility for defending until it is determined that the source of the oil was its insured’s and in any event, there are other carriers whose coverage may be triggered because their insureds were on the job as well and may have left the oil patch.

The Appellate Division held that since the allegations led to a “reasonable possibility” that the Consentino action could lead to a judgment against BP within the scope of the coverage under ALFA’s policy, One Beacon had an obligation to defend... It makes no difference that there may be a contrary result, and that One Beacon may not be required to indemnify, “once the litigation has run its course.”

One Beacon argued that rules requiring a broad defense based on allegations in the complaint should not apply to additional insureds, but only to named insureds but the majority rejected that argument. The three judge majority rejected that argument declaring that the rights of the additional insured to a defense are not to be determined by the eventual outcome, but by the allegations in the complaint – they are to be treated just as a named insured would be treated.

The Court then interprets Pecker Iron Works, the famous Court of Appeals decision on the obligations of a carrier providing additional insured status, to hold that the additional insured status provided was primary, even with respect to BP’s coverage under its own CGL policy). However, multiple additional insured coverage may exist here, given that, as previously noted, the contract between BP and Karo (Cosentino's employer) contained an insurance provision identical to the one in the contract between BP and Alfa, requiring Karo to have BP named as an additional insured under Karo's CGL policy and One Beacon may be able to get some help in paying for the defense, but in the meantime, it is 100% responsible.

A strong dissent argues that the determination of coverage at this state is premature and that additional insured status cannot and should not be resolved based on the allegations in the complaint. The party afforded additional insured status is only entitled to it if is determined that the liability arose out of the named insured’s work. Here, there was no such determination and accordingly, any determination on the obligation to defend – and the primacy of that obligation – is premature.

7/6/06 Gerold v. Companion Life Insurance Company

Appellate Division, Second Department

Premium Due Date not Modified by Insurer’s Mistake on Automatic Withdrawal from Insured’s Account

Companion issued a term life insurance policy with a face value of $1,000,000 to the plaintiff's husband, Mr.Gerold. The policy defined "premium due date" as "the date of issue and each month thereafter" and stated "[i]f any premium is not paid by the end of the grace period, [the] policy will terminate as of the due date." Mr. Gerold paid the initial two premiums (i.e., August 24, 2001, and September 24, 2001) at the time of the application and simultaneously executed an authorization permitting the defendant to automatically withdraw the prospective premiums from his bank account on the 15th day of each month pursuant to its "Bank Service Plan" (BSP). Companion inadvertently began the automatic withdrawals on November 15, 2001, instead of October 15, 2001. Since, however, the premiums were received before the expiration of the policy's 31-day grace period (see Insurance Law § 3203[a][1]), the policy did not lapse. On August 21, 2002, ownership of the policy was transferred to the plaintiff.

On November 15, 2003, and November 19, 2003, the defendant's repeated requests to withdraw the October 24, 2003, premium were rejected due to insufficient funds. Thereafter, Companion contended that the policy terminated due to nonpayment of premiums.

Companion’s inadvertent delay in implementing the BSP, which related solely to the manner of payment, did not modify the premium due date. Pursuant to the policy's terms, "[a]ny change of [the] policy require[d] the written consent of an executive officer" (see Insurance Law 3204[a][3]). Moreover, the defendant was not estopped from asserting the policy's lapse by its unilateral mistake and withdrawal of earlier premium payments during the grace period.

7/6/06 Lenhard v. Genesee Patrons Co-Operative Insurance Company

Appellate Division, Third Department

Information Supplied by the Insured Relating to the Distance of Insured Premises to Fire Station was Not Material Misrepresentation that Voided Coverage

An appeal from a denial of Genesee Patrons’summary judgment motion seeking dismissal dismissing the complaint on the grounds that the insured representations that the insured property was approximately five miles from the nearest responding fire department not the actual of distance of 9 to 9.4 miles away and thus caused it to be inaccurately classified as "semi-protected" under the policy which, in turn, influenced its decision to bind the property. Genesee Patrons, as the movant, had the burden of establishing the materiality of this misrepresentation by "clear and substantially uncontradicted evidence” which could include documentation showing that the insurer had refused coverage in the past under similar circumstances (see Insurance Law § 3105 (c). The Court holds that Genesee Patrons did not sustain its burden of establishing the materiality of this statement as a matter of law. None of the evidence submitted in support of its motion indicated that Genesee would not have underwritten this property if they had known that its distance was actually between 9 to 9.4 miles from the nearest fire station. Moreover, no documentation established that Genesee Patrons had denied coverage under similar circumstances.


7
/5/06 Chubb Group of Insurance Carriers v. DePalma

Appellate Division, Second Department

Improper Notice of Cancellation Did Not Bar UM Claim

CPLR article 75 to permanently stay arbitration of an uninsured motorist claim. Chubb commenced the proceeding to stay the SUM arbitration, contending that the Kitsios vehicle was insured by Atlantic Mutual on the date of the accident. Following a framed-issue hearing, the JHO determined that Connecticut law would apply and that Atlantic Mutual had effectively canceled the insurance policy due to the nonpayment of the premium prior to the date of the accident and that the Kitsios vehicle was therefore not insured by Atlantic Mutual on the date of the accident. Chubb's petition for a stay of arbitration was denied.

Appellate Division agrees. It was undisputed that the notice of cancellation sent by Atlantic Mutual to Kitsios did not contain the warnings required by Connecticut Statutes Annotated § 38a-343, and therefore, it was ineffective. Since Atlantic Mutual's insurance policy was in effect on the date of the accident, arbitration of the DePalmas's claim for uninsured motorist benefits against Chubb must be permanently stayed.

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

7/11/06 Benitez v. Mileski

Appellate Division, Second Department

Defendants’ Expert Fails to Compare Findings with Normal Range of Motion

Defendants failed to establish that the plaintiffs did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. Defendants' examining orthopedic surgeon set forth in his affirmed medical reports his findings with respect to their ranges of motion in their cervical and lumbar spines, but failed to compare those findings to what is normal. Moreover, the defendants' examining neurologist, who examined the plaintiffs on November 10, 2004, merely stated in her reports that upon examination "movements of the neck are normal in all directions" without setting forth the objective testing used to arrive at those conclusions.

7/11/06 Powell v. Alade

Appellate Division, Second Department

Ambiguity in Defendant’s Expert Report as to “Normal” Extension

The Court held that the report of the defendants' orthopedist ambiguously asserted only that the plaintiff had "normal" extension, flexion, or rotation up to the extent indicated. By failing to compare the results that were reported to the normal range, the report leaves it to the court to speculate as to whether the range of extension, flexion, or rotation beyond that which was reported would have been abnormal because it could be accomplished only with pain and difficulty.

7/7/06 Caldwell v. Grant

Appellate Division, Fourth Department

Plaintiff’s Chiropractor Failed to Rebut Defendant’s Expert Opinion

The evidence submitted by defendant, including plaintiff's medical records, several MRI reports and an expert opinion, established that plaintiff had a preexisting degenerative injury to his cervical spine. The affidavit of plaintiff's treating chiropractor failed to address these findings, except in conclusory terms, and thus was insufficient to raise a triable issue of fact.

7/5/06 Walters v. Papanastassiou

Appellate Division, Second Department

Absence of Objective Testing Fatal to Defendant’s Motion

While the defendants' examining orthopedist stated in his affirmed medical report that the injured plaintiff had "appropriate" range of motion of the cervical spine, and the defendants' examining neurologist stated in his affirmed medical report that the injured plaintiff had "excellent" range of motion of the neck and lower back, they both did so without setting forth the objective testing performed to arrive at their respective conclusions. The defendants' examining orthopedist set forth a single range of motion finding as to forward flexion in the injured plaintiff's lumbar spine, however he failed to compare that finding with what is normal.

7/5/06 Mullen v. Lauffer

Appellate Division, Second Department

Serious Injury Motion Denied as Defendant’s Expert Finds Range of Motion Restrictions Existed Two Years Post-Accident

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendant's examining neurologist found that the plaintiff continued to have restrictions in motion of her cervical spine approximately two years after the accident. In light of this finding, the defendant did not meet her initial burden on her motion.

7/5/06 Burns v. Stranger

Appellate Division, Second Department

Serious Injury Motion Denied as Defendant’s Expert Finds Range of Motion Restrictions with no Opinion as to Whether Un-Related to the Accident

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affirmed medical report of the defendant's examining neurologist indicated the existence of limitations in the range of motion of the plaintiff's cervical spine in all directions, without rendering an opinion that such limitations were unrelated to the accident.

7/5/06 Ramirez v. Parache

Appellate Division, Second Department

Lack of Objective Proof of Serious Injury to Infant Plaintiff

Plaintiffs failed to raise a triable issue of fact as to whether the infant plaintiff sustained a serious injury. The affirmation of the examining physician was insufficient to establish a triable issue of fact. While the affirmation was based on a recent examination of the infant and noted limitations in the range of motion in his lumbar and cervical spine, the plaintiffs failed to provide any medical proof that was contemporaneous with the subject accident which showed range of motion limitations in his spine. Moreover, in this affirmation the infant plaintiff's examining physician impermissibly relied upon the unsworn reports of other doctors in giving his opinion. In the absence of objective medical evidence of injury, the infant plaintiff's self-serving affidavit was insufficient to raise a triable issue of fact.

7/5/06 Coppage v. Svetlana Hacking Corp.

Appellate Division, Second Department

And Again, If the Defense Finds Range of Motion Restrictions, the Motion will Fail

In support of the motion the defendants submitted the affirmed medical reports of their examining orthopedist and neurologist. These affirmed reports indicated that a MRI of the plaintiff's left knee taken approximately two months after the subject accident revealed a tear in of the medial meniscus. Notably, the report of the defendants' orthopedist specified a single range of motion finding in the plaintiff's left knee without comparing that finding to the normal range of motion. Finally, in his affirmed medical report, the defendants' examining neurologist stated that he found limited range of motion in the plaintiff's lumbar spine.

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.

INSURERS THIS DECISION IS A MUST READ FOR THOSE WITH CLAIMS PENDING IN BUFFALO CITY COURT

6/27/06 Proscan Radiology of Buffalo v. Progressive Ins. Co., 2006 NY Slip Op 51242

(Buffalo City Court)

Important and Instructive Decision Issued On The Future Handling Of No-Fault Claims In Buffalo City Court.

Here is the Angle: There has been discussion in the community that a lengthy, instructive decision would be forthcoming from the Buffalo City Court regarding the standard of review for No-Fault suits that have been inundating the system. We predict that this decision will only spur an increase in the filings.

Some things to take away from this decision is to again, and we can’t say it enough, make sure your denials are timely. Also, make sure you insert every single basis for a denial – i.e., issues with the claimant for benefits and the assignment of benefits not matching, medical necessity, proper fee schedule. We mean EVERY single basis that a denial could be issued. This decision further indicates that when the timeliness of a denial is raised that the adjuster who actually signed and mailed the together with any verification must provide the affidavit attesting to it. It appears that an affidavit from the insurer’s representative who may just have reviewed the file and is familiar with it is not sufficient.

The Analysis: The plaintiff in this No-Fault action sought payment for multiple MRI scans. The plaintiff commenced an action against the insurer in Buffalo City Court, Small Claims Commercial Division. The hearing officer referred the case to a Judge in the Special Term Part of Buffalo City Court, who agreed to hear the matter as a Judge sitting in the Small Claims Part when the insurer attempted to argue a written motion for summary judgment.

The insurer’s defense to the plaintiff’s claim was that the MRI scans were not medically necessary based upon a peer review report. Further, plaintiffs, Proscan Radiology and Dr. Dhillon, lacked standing to sue because they were not the assignee named in the original no-fault assignment. Also, plaintiff, Proscan Imaging, lacked standing to sue as it is not licensed to practice medicine in New York thus rendering it ineligible for reimbursement pursuant to 11 NYCRR §65-3.16, as interpreted by the Court of Appeals in State Farm v. Mallela.

Both parties moved for summary judgment. Judge Nowak noted that while pre-trial motion practice is discouraged in small claims it is permitted pursuant to 22 NYCRR §210.41-a(1). Further, Judge Nowak stated, “this court agreed to hear this motion because it appears that this issue will recur repeatedly in small claims proceedings unless the court makes and publishes a ruling.

Judge Nowak acknowledges that the goals and intentions of the small claims commercial part and no-fault law are synonymous in that both seek prompt resolution of a claim. Further, the small claims commercial part will not routinely transfer the case to a regular part of the court absent a compelling reason.

In addition, while UCAA §1804-A provides that the case is not bound by statutory rules of practice and procedure, 22 NYCRR §210.41-a(1) does not permit such relaxation for motion practice. Judge Nowak also notes that the small claims commercial part is not bound in making its decision by any arbitrator’s holding.

The analysis next turns to whether plaintiff established a prima facie case. A plaintiff seeking to recover No-Fault benefits for medical services it provided to the eligible injured person establishes a prima facie case entitlement to summary judgment through submission of:

§ a valid assignment of benefits;

§ a claim setting forth the fact and the amount of the loss sustained; and

§ that payment of no-fault benefits are overdue.

(citing Mary Immaculate Hosp. v. Allstate, 5 AD3d 742 (2d Dept. 2004)).

Once the plaintiff establishes a prima facie case, the burden shifts to the insurer to come forward with admissible evidence refuting the plaintiff’s evidence and demonstrating a material issue of fact.

Here, the insurer submitted the following documents in support of its motion for summary judgment:

§ an assignment of benefits;

§ a copy of the health insurance claim form which listed Dr. Dhillon as the physician/supplier of services, Proscan Radiology as the facility where the services were rendered and Proscan Imaging as the physician/supplier’s billing name; and

§ an NF-10 denial of claim form for a claim of $3,400.00, with a treatment date of 12/7/04, bill date of 12/16/05, and bill dated received by the insurer as 1/3/05, and denial dated 3/18/05.

It is further noted that the NF-10 stated the basis for the denial was lack of medical necessity based upon a peer review and fees were not in accordance with the Workers’ Compensation fee schedule. The denial was signed by Daniel R. Mack as representative of the insurer.

Judge Nowak noted that the health insurance claim form is the functional equivalent of the NF-3 claim form. Further, the NF-10 is admissible as an admission by the insurer. All of this is sufficient to establish a prima facie case entitlement to summary judgment by the plaintiffs, Dr. Dhillon and Proscan Imaging as the assignment and claim were transmitted to the insurer, the insurer received them, and the insurer failed to pay deny the claim within 30-days.

Then the issue of the insurer’s defense of lack of medical necessity based upon the peer review was precluded due to an untimely denial. We note that there was evidence that verification was requested upon receipt of the bill. However, Judge Nowak held that while the insurer submitted the verification requests together with an affidavit of Georgia Pape, an adjuster on the claim, it failed to submit proof, in evidentiary form that the follow up verifications were ever sent rendering the denial timely. More importantly Judge Nowak held:

[The] assertion that it timely denied the claim lacks merit because the record does not contain an affidavit form a person with personal knowledge stating either than the March 18, 2005 denial of claim form was mailed, or setting forth a sufficiently detailed description of standard office mailing procedure so as to give rise to the presumption of mailing.

Rather, the evidence the insurer submitted was unsubstantiated hearsay. In other words, the affidavit of Georgia Pape was insufficient as she was not the adjuster who requested verification and signed the denial and could not attest to actually mailing the documents.

Accordingly, without a timely denial the insurer is precluded from raising any defenses to a claim, other than lack of coverage or fraud. Judge Nowak held that the insurer was barred from denying the claims by Dr. Dhillon and Proscan Imaging based on lack of medical necessity.

Yet, Judge Nowak continues in a lengthy discussion regarding the outcome of case had the denial been timely. Judge Nowak discussed that the lack of medical necessity defense still would have failed, despite the insurer’s peer review and subsequent affidavit from the chiropractor, because it did not provide the appropriate rational for lack of medical necessity or how the MRI tests could be medically unnecessary when they yielded positive results. Moreover, the Court would not second guess a treating physician who decides that a medical test is necessary for diagnosis or treatment when the only support for the denial is peer review performed by a physician who never examined the eligible injured person. Further:

An insured expects coverage for treatment recommended by a physician because he trusts that the physician has recommended a reasonable treatment consistent with good medical practice; the insured’s expectations can best be fulfilled by construing the policy liberally, so that uncertainties about the reasonableness of treatment will be resolved in favor of coverage.

Oceanside Med. Healthcare v. Progressive, 2002 Slip Op 50188 (2002).

Next, the Court turned to the issue of standing the insurer raised with all three plaintiffs. The insurer argued that Proscan Radiology and Dr. Dhillon cannot seek payment under the assignment of benefits because they were not listed as the assignee. Judge Nowak held that if the insurer had concerns regarding the proper claimant or who held the valid assignment of benefits it should have raised that objection in its denial of claim OTHERWISE IT IS WAIVED. The insurer did not question the validity of Proscan Radiology and Dr. Dhillon’s ability to seek payment of the claim on its denial. Thus, the defense is waived and it is precluded from raising it now as a defense.

However, since Proscan Radiology never put forth any proof that it submitted any claim, its claim is dismissed.

In addition, the insurer raised the interesting issue that Proscan Imaging is entitled to payment of the claim as it is not licensed to practice medicine in New York State, thus rendering it ineligible for reimbursement pursuant to 11 NYCRR §65-3.16(a)(12), as interpreted by the Court of Appeals in State Farm v. Mallela, 4 NY 3d 313 (2005). Judge Nowak dismissed Proscan Imaging’s claim for failure to offer proof in response to the issue. Yet, indicated that the claim would be paid since Dr. Dhillon, a purported principle of the corporate entity, was licensed to practice medicine in New York. More importantly, Judge Nowak stated:

To be clear, this is not the type of matter that was decided by the Court of Appeals in State Farm v Mallela (internal citation omitted). There is no allegation of fraud. This is more of the nature of a “technical” violation described by the court in Mallela, but the importance of licensed professionals performing these tests is not lost on the court.

Judge Nowak further stated that, in this fact pattern, fairness dictates that Proscan Imaging be permitted 60 days to apply for and obtain the requisite licensure.

Finally, with respect to the rate of each bill, the insurer raised the argument that it is only required to pay the Workers’ Compensation fee schedule rate under Insurance Law §5108. The Court declined to award the fee scheduled rate as the insurer’s denial was not timely.

Ultimately, the insurer was ordered to pay the bill for the MRI scans at the rate, in excess of the fee schedule, with statutory interest, but declined to award attorney’s fees to the plaintiff since he did not submit his bill in conformance with the Workers’ Compensation fee schedule rate required under Insurance Law §5108.


7/8/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Mary Anne Theiss, Esq. (Onondaga County)

The Applicant’s Failure To Submit Any Medical Records, Other Than The IME Report, Results In Finding Of Chiropractic Care Not Medically Necessary.

Here is the Angle: The Applicant, eligible injured person, failed to submit any evidence of treating physician or chiropractic notes to demonstrate that chiropractic care was medically necessary. The only medical opinion that both the eligible injured person and the insurer submitted to Arbitrator Theiss was the insurer’s independent medical examination report. Accordingly, Arbitrator Theiss adopted the independent medical examiner’s findings.

The Analysis: On June 17, 1998, the eligible injured person (“EIP”) was involved in a two-car rear end motor vehicle accident. The EIP experienced neck and back pain several hours after the accident. The EIP underwent chiropractic care and massage therapy, which was eventually denied by the insurer. The EIP in support of her claim only submitted a note, not a treatment record, from her treating chiropractor and massage therapist, who share a location. That note demonstrated a history of low back pain relating back to the June 1998 accident. The treating chiropractor opined that the EIP’s condition, despite any other events, was attributed to the June 1998 accident. Also, the EIP underwent a lumbar laminectomy in the Fall 2001.

The EIP underwent an independent medical examination with Dr. Sanfilipo. Dr. Sanfilipo’s report revealed a January 2001, re-injury to the EIP’s low back after falling on ice. Further, the EIP’s complaint of leg pain was worse. She was unable to continue with jazz exercise class. In 2001, there was a possible surgical evaluation recommendation. Dr. Sanfilipo noted that the EIP’s treating physicians related the low back and leg pain solely to the January 2001 fall and not the June 1998 accident. Dr. Sanfilipo further noted that a review of a March 3, 1999, independent medical examination conducted by Dr. Richard Ganga revealed the EIP was provided with an excellent prognosis and had mysofascial pain syndrome. Also, prior to the January 2001 fall the EIP was active in dance, jazzercise, and dramatic play. Yet, subsequent to her January 2001 fall the EIP’s condition significantly deteriorated.

Arbitrator Theiss found in favor of the insurer as the EIP failed to provide chiropractic treatment notes or notes from treating physicians that contradict the only medical opinion provided by Dr. Sanfilipo.

7/3/06 Adam Marigliano, LMT a/a/o Guillermo Rios and Criselda Rodriquez v. State Farm Mut. Auto Ins. Co., 2006 NY Slip Op 51349 (Richmond County)

Plaintiff Can Properly Use Notice To Admit To Help Establish Prima Facie Case BUT Has To Actually Enter NF-3 Or Its Equivalent Into Evidence To Demonstrate Prima Facie Case.

Here is the Angle: Don’t let a Notice to Admit go unresponded!! The insurer failed to respond to the almost brilliant Plaintiff’s Notice to Admit that contained all of the elements to demonstrate a prima facie case. The result was that the insurer admitted the facts alleged in the Notice to Admit. Unfortunately, the Plaintiff’s Complaint was dismissed because he failed to append one document to the Notice to Admit or introduce it into evidence at the trial - a copy of the NF-3 form or its functional equivalent.

The Analysis: On April 12, 2006, this No-Fault suit was trial without a single witness being called to testify. The Plaintiff, to establish its prima facie case, solely relied upon a Notice to Admit served upon the insurer on November 30, 2005. The Notice to Admit requested admission of the following facts:

  • the insurer received a claim for No-Fault benefits subject to the action;
  • the insurer received an NF-3, Verification of Treatment Form, subject to the action;
  • the insurer received the bills subject to the action;
  • the insurer received an Assignment of Benefits Form for the claims subject to the action;
  • the insurer failed to mail any verification requests to the Plaintiff for the claims subject to the action; and
  • the insurer issued an insurance policy covering the motor vehicle the Plaintiff’s assignor was in at the time of the accident.

HOWEVER, the Plaintiff never annexed to the Notice to Admit the documents described. The Plaintiff also never attempted to introduce the documents described in the Notice to Admit at the time of trial.

Plaintiff argued that by the insurer failing to respond to the Notice to Admit it admitted to the true of the facts alleged, which facts are sufficient to establish a prima facie case. The insurer argued that it was not required to respond to the Notice to Admit as it was vague, ambiguous, and sought admissions that to the ultimate issues of fact. Further, the Plaintiff was required to introduce into evidence the documents described in the Notice to Admit.

The trial court held that the insurer was required to respond to the Notice to Admit. Moreover, the Plaintiff properly used the discovery tool to dispose of “uncontroverted questions of fact which would have been easily provable at trial.” Moreover, the fact that the Notice to Admit will establish the Plaintiff’s prima facie case on paper does not bar using it. Further, the fact that certain facts are denied in an Answer do not mean that they are facts in actual dispute. Accordingly, the Notice to Admit was proper and the insurer’s failure to respond to it resulting in the insurer admitting to the facts alleged in it.

Despite this, the trial court held that the Plaintiff did not establish a prima facie case as he was failed to enter into evidence, one document – the NF-3 or its functional equivalent. Hence, the Complaint was dismissed.

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.


7/13/06 Glendening’s v. Reimer

Wisconsin Court of Appeals

An “Occurrence” Found By Accident
This appeal arises out of a dispute between the Kenkhuises and the general contractor hired to make improvements to the dairy facility they lease. Kenkhuis appeal the circuit court's order granting summary judgment in favor of the general contractor's insurer, West Bend Mutual Insurance Company. The circuit court concluded that the commercial general liability policy (CGL) issued the general contractor did not provide coverage for the Kenkhuises' claims against him. The primary issue on this appeal is whether the Kenkhuises' claims of breach of contract and implied warranty against the general contractor allege an "occurrence" within the meaning of the CGL policy. The Appellate Court concluded that faulty workmanship in itself does not constitute an "occurrence" within the meaning of this CGL policy. However, the pleadings allege that the rubber mats the subcontractor improperly installed were damaged by the scraper that cleans the manure from them. The damage to the mats is "physical damage to tangible property." The damage was caused by an accident in that the damage was not intended or anticipated and it also was not intended or anticipated that using the scraper to clean the manure off the mats would damage the mats.

Submitted by: Sal DeSantis (Molod Spitz & DeSantis, P.C.)


7/13/06 Pilimai v. Farmers Insurance

Supreme Court of
California

Insured Gets What He Paid For And Then Some
This case presents several questions regarding whether a party to an uninsured motorist arbitration pursuant to Insurance Code section 11580.2 is eligible to recover costs and prejudgment interest. Specifically, we are asked to decide (1) whether the cost-shifting provisions of Code of Civil Procedure section 998 apply to such arbitrations; (2) whether the award of such costs, together with the arbitration award, can exceed an insurer’s “maximum liability” under Insurance Code section 11580.2, subdivision (p)(4), which “shall not exceed the insured’s underinsured motorist coverage limits”; (3) whether prejudgment interest pursuant to Civil Code section 3291 is available for an uninsured motorist arbitration; and (4) whether, if costs are available under Code of Civil Procedure section 998, those costs include deposition and exhibit preparation costs. The judgment of the Court of Appeal was affirmed insofar as it recognizes that Code of Civil Procedure section 998 costs are available to parties conducting arbitration pursuant to Insurance Code section 11580.2, even when those costs added to the arbitration award exceed the policy limit, and that such costs may include expert witness fees and costs related to depositions and exhibit preparation. The judgment is reversed inasmuch as it permits an award of prejudgment interest pursuant to Civil Code section 3291.

Submitted by: Sal DeSantis (Molod Spitz & DeSantis, P.C.)


7/12/06 Wittig v. Allianz

The Intermediate Court of Appeals State of
Hawaii.

Cash And Carry–Settlement Contingent On Resignation Is Okay
In this case, a workers' compensation insurer made an offer to settle a workers' compensation claim on terms that included the employee's resignation. The employee sued, alleging bad faith on the part of the insurer. The Appellate court agreed with the circuit court that Fireman's Fund's settlement offer cannot reasonably be interpreted as requiring Wittig to release Fireman's Fund from tort liability. The settlement offer simply states that the amount offered "would be for closure of your entire workers' compensation claim." An insurer's tort liability for bad faith is separate from its liability for a workers' compensation claim. On its face, the offer simply identified certain terms under which Fireman's Fund would be willing to settle Wittig's workers' compensation claim; it did not preclude Wittig from making a counteroffer proposing different terms or suggest that Wittig's resignation was a non-negotiable condition of any settlement.

Submitted by: Sal DeSantis (Molod Spitz & DeSantis, P.C.)

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BP Air Conditioning Corp v. One Beacon Insurance Group

Cross appeals from an order of the Supreme Court, New York County (Paula J. Omansky, J.), entered October 1, 2004, which granted BP's motion for partial summary judgment to the extent of declaring Beacon obligated to defend BP as an additional insured in the Cosentino Action.

FRIEDMAN, J.

The question presented is whether plaintiff, as an additional insured under a commercial general liability (CGL) policy, is entitled to a defense in an action in which it is uncertain whether any eventual judgment against plaintiff will be within the scope of the coverage. Our answer to this question is dictated by the controlling principle that, in the absence of unambiguous contractual language to the contrary, an additional insured "enjoy[s] the same protection as the named insured" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, [*2]393 [2003] [internal quotation marks and citation omitted]). Since nothing in the subcontract or CGL policy here at issue indicates that plaintiff, as an additional insured, is to be afforded less protection than the named insured, we conclude, as did the IAS court, that the insurer's duty to defend plaintiff in the underlying personal injury action has been triggered. Consistent with the further holding of Pecker, we modify the IAS court's declaration to make clear that plaintiff is afforded primary coverage in the underlying action by the additional insured endorsement, rather than by any policy covering plaintiff as a named insured.

The relevant facts may be briefly stated. In 2000, Henegan Construction Company, Inc. (Henegan), a general contractor, hired plaintiff BP Air Conditioning Corp. (BP) as HVAC subcontractor for a construction project at One World Trade Center (the Project). BP, in turn, subcontracted the HVAC-related steamfitting work for the Project to Alfa Piping Corp. (Alfa). The purchase order representing the agreement between BP and Alfa required Alfa to obtain "Comprehensive General Liability Insurance (including contractual liability) and automobile insurance in amounts of not less than $4,000,000 combined single limit, naming [BP] additional insured, all policies to provide for 30 day notice to [BP] prior to cancellation or material modification."

As required by Alfa's agreement with BP, Alfa's CGL policy for the relevant period included an additional insured endorsement providing in pertinent part as follows:

"Who is An Insured (Section II) is amended to include as an insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured. A person's or organization's status as an insured under this endorsement ends when your operations for that insured are completed."


Defendant One Beacon Insurance Group (Beacon) is the successor-in-interest to the insurance company that issued Alfa's CGL policy.

On December 5, 2000, Joseph Cosentino, while working on the Project as an employee of Karo Sheet Metal, Inc. (Karo), another subcontractor of BP, allegedly was injured when he slipped and fell on a patch of oil at the work site. Cosentino commenced an action against Henegan, which action is now captioned Cosentino v Henegan Construction Company, Inc., et al. (New York County Clerk's Index No. 110853/01) (hereinafter, the Cosentino Action). Henegan brought a third-party action against BP and Alfa; thereafter, Cosentino added BP and Alfa (among other parties) as direct defendants. After Beacon declined BP's tender of its defense in the Cosentino Action, BP commenced a fourth-party action against Beacon seeking a declaration as to BP's rights as an additional insured under Alfa's policy. BP's fourth-party claim against Beacon was subsequently severed from the Cosentino Action, giving rise to the instant independent declaratory judgment action, to which BP and Beacon are the sole parties.

It appears from the evidence gathered through discovery in the Cosentino Action (and placed in the record before us) that a question of fact exists as to which contractor was the source of the patch of oil on which Cosentino slipped. Specifically, the oil may have originated from any of the contractors who used oil to thread pipe at the work site. Such contractors included [*3]Alfa, Forest Electric Corporation (the electrical contractor), and a sprinkler contractor. Of these contractors, only Alfa was a subcontractor of BP.

The instant appeal arises from BP's motion for partial summary judgment in this declaratory judgment action. The motion sought a declaration requiring Beacon to undertake BP's defense in the Cosentino Action and to reimburse BP for its past defense costs therein. Beacon opposed the motion, arguing, inter alia, that BP's additional insured coverage under Alfa's policy would not be triggered until the cause of Cosentino's accident had been adjudicated. Beacon also argued, in the alternative, that, even if its duty to defend BP under Alfa's policy had been triggered, it could not be determined whether Beacon was required to bear 100% of BP's defense costs as the primary insurer. Beacon contended that coverage by other carriers, who were not parties to this action and whose policies were not before the court, might also have been triggered, requiring such carriers to share in the cost of defending BP. Beacon suggested that such coinsurers might include BP's own carrier and the carrier insuring Karo, the BP subcontractor that had employed Cosentino. In this regard, Beacon pointed out that Karo's contract with BP contained an insurance provision (identical to the one in the BP/Alfa contract) requiring Karo to have its CGL policy cover BP as an additional insured.

In the order appealed from, the motion court held that the allegations against Alfa in the Cosentino Action had triggered BP's additional insured coverage under Alfa's policy, thereby obligating Beacon to defend BP, and granted BP's motion to the extent of issuing a declaration to that effect. The court denied the motion, however, to the extent it sought a declaration that Beacon's coverage was primary, on the ground that no such determination could be made without an examination of the other potentially applicable policies, which were not before the court [FN1]. BP has appealed, and Beacon has cross-appealed.

We turn first to the question raised by Beacon's cross appeal, namely, whether the pleadings and evidence in the Cosentino Action obligate Beacon to defend BP as an additional insured under Alfa's policy. For the reasons set forth below, we answer this question in the affirmative, as did the motion court.

We begin by reviewing the principles governing a liability insurer's duty to defend its insured. Our Court of Appeals very recently has had occasion to reiterate these principles:

"It is well settled that an insurance company's duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is exceedingly broad' and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage' (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]). If, liberally construed, the claim is within the embrace of the [*4]policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be' (Ruder & Finn Inc. v Seaboard Sur. Co., 52 NY2d 663, 670 [1981]).

"The duty remains even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered' (Fitzpatrick v Am. Honda Motor Co., Inc., 78 NY2d 61, 63 [1991]). For this reason, when a policy represents that it will provide the insured with a defense, we have said that it actually constitutes litigation insurance' in addition to liability coverage (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310 [1984], citing Intl. Paper Co. v Cont. Cas. Co., 35 NY2d 322, 326 [1974]). Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course." (Automobile Ins. Co. of Hartford v Cook, __ NY3d __, 2006 WL 1547725, 2006 NY LEXIS 1400, *6-7 [June 8, 2006] [emphasis added].)

Under the foregoing principles, there can be no doubt that Beacon is obligated to defend BP in the Cosentino Action. Cosentino's amended complaint alleges that his injuries were caused by the negligence of, among other defendants, Alfa, BP's subcontractor and the subject policy's named insured. Thus, there is a "reasonable possibility" (Continental Cas. Co., 80 NY2d at 648) that the Cosentino Action will result in a judgment against BP within the scope of its coverage under Alfa's policy with Beacon. That policy, to reiterate, covers BP as an additional insured "with respect to liability arising out of [Alfa's] ongoing operations performed for [BP]." Plainly, if BP is ultimately held liable to Cosentino, such liability would "aris[e] out of [Alfa's] ongoing operations performed for [BP]" to the extent the factfinder in the Cosentino Action determines that Alfa's negligence in the course of its work as a BP subcontractor was a contributing cause of Cosentino's injuries. It has no bearing on the existence of a duty to defend that it is also possible that Beacon "may not be required to pay once the litigation has run its course" (Automobile Ins. Co. of Hartford v Cook, 2006 NY LEXIS 1400, *7, supra).

Beacon concedes that the Cosentino Action may result in a judgment against BP within the scope of BP's coverage under Alfa's policy. Nonetheless, Beacon denies that it has any duty to defend BP at this juncture. Beacon argues that the liberal principles governing the activation of the duty to defend (as set forth in Automobile Ins. Co. of Hartford v Cook, supra, and the cases cited therein) apply only to named insureds, not to parties covered pursuant to additional insured endorsements, such as BP. Coverage under an additional insured endorsement is triggered, Beacon asserts, only when a court has made findings of fact giving rise to such coverage under the terms of the endorsement. Although the dissent accepts this line of argument, it is inconsistent with the Court of Appeals' teaching on the rights of additional insureds.

In Pecker Iron Works of N.Y. v Traveler's Ins. Co. (99 NY2d 391, supra), the issue presented was whether Pecker was afforded primary or excess coverage pursuant to its status as an additional insured under an insurance policy issued to Upfront, one of Pecker's subcontractors. The Pecker-Upfront agreement, like the BP-Alfa agreement here, required the subcontractor (Upfront) to have its liability policy name the general contractor (Pecker) as an additional insured (id. at 392). Upfront's liability policy provided Upfront with primary coverage, and allowed Upfront to designate additional insureds, but provided that such an [*5]additional insured would receive only excess coverage, unless Upfront had agreed in writing to provide the additional insured with primary coverage (id. at 393). Although the Pecker-Upfront agreement did not specify whether Upfront was to furnish Pecker with primary or excess insurance, the Court of Appeals held that Pecker's additional insured coverage under Upfront's policy was primary.

The Court of Appeals began its analysis by taking note of the meaning of the term "additional insured":

" Additional insured' is a recognized term in insurance contracts, with an understanding crucial to our conclusion in this case. As cases have recognized, the well-understood meaning' of the term is an "entity enjoying the same protection as the named insured."'" (Id., 99 NY2d at 393 [emphasis added], quoting Del Bello v General Acc. Ins. Co., 185 AD2d 691, 692 [1992], quoting Rubin, Dictionary of Insurance Terms 7 [Barron's 1987].)


Thus, the Court concluded that, since there was no indication in the Pecker-Upfront agreement that nonprimary coverage would satisfy the additional insured coverage requirement, and since Upfront's coverage under the subject policy was primary, Pecker's additional insured coverage under the policy was also primary. The Court stated:

"When Pecker engaged Upfront as a subcontractor and in writing provided that Upfront would name Pecker as an additional insured, Pecker signified, and Upfront agreed, that Upfront's carrier — not Pecker's — would provide Pecker with primary coverage on the risk. Pursuant to the policy provision at issue, Travelers [Upfront's carrier] agreed to provide primary insurance to any party with whom Upfront had contracted in writing for insurance to apply on a primary basis. When Upfront agreed to it, the policy provision was satisfied." (99 NY2d at 393-394.)


Notably, the Appellate Division order in Pecker, which the Court of Appeals affirmed, specifically declared that Travelers was "obligated to defend" Pecker in the underlying action (290 AD2d 426, 427 [2002], affd 99 NY2d 391, supra).

It follows from Pecker that BP's coverage as an additional insured under Alfa's policy is primary, a point apparently not disputed by Beacon. Moreover, since BP, as an additional insured under Alfa's policy, "enjoy[s] the same protection as the named insured" (Pecker, 99 NY2d at 393), the same principles govern the activation of Beacon's duty to defend for both Alfa and BP [FN2]. Accordingly, since it is undisputed that Cosentino's amended complaint sets forth a potential basis for BP's liability within the scope of BP's coverage under Alfa's policy, and it remains possible that Cosentino will prevail on that basis, Beacon is obligated to defend BP in the Cosentino Action, just as it would be obligated to defend Alfa if called upon to do so. That Alfa may ultimately be exonerated of responsibility for Cosentino's injuries — in which event Beacon would have no obligation to indemnify BP — is immaterial to the issue of Beacon's duty [*6]to defend BP while the issue of Alfa's responsibility remains unresolved.

The dissent claims that we "confuse[] an insurer's duty owed to its named insured with the duty owed . . . to a putative additional insured." Far from being "confuse[d]," we are simply giving effect to the Court of Appeals' statement that an additional insured "enjoy[s] the same protection as the named insured" (Pecker, 99 NY2d at 393). As applied here, this principle can mean only that, for named insureds and additional insureds alike, the activation of the duty to defend depends on the allegations of the pleadings. In light of Pecker, it is simply untenable for the dissent to assert that it is a "condition precedent" to an insurer's duty to defend an additional insured that a court have rendered findings of facts establishing the additional insured's entitlement to indemnification. While the dissent dismisses additional insureds in BP's position as having only "putative" additional insured status, and attempts to distinguish a named insured from an additional insured on the ground that the former's "status as an insured is not conditional," this distinction cannot withstand scrutiny. The named insured and the additional insured each enjoys "status as an insured" to the extent of the coverage afforded it by the policy. As the Court of Appeals has recently reminded us, where a liability policy promises defense as well as indemnification, "litigation insurance" — even where an eventual judgment against the insured may not be within the scope of coverage — is an integral part of the benefit of the insured's bargain (Automobile Ins. Co. of Hartford v Cook, 2006 NY LEXIS 1400, *7, supra).

Since "litigation insurance" is an essential component of the liability insurance package, and an additional insured "enjoy[s] the same protection as the named insured" (Pecker, 99 NY2d at 393), adoption of the dissent's position would defeat the reasonable expectations of the additional insured. As a California appellate court has observed:

"[A] key motivation in procuring an additional insured endorsement is to offset the cost of defending lawsuits where the general contractor's liability is claimed to be derivative. Since only a small percentage of these cases are resolved by a final liability determination, a defense obligation contingent on a liability finding would undermine a primary purpose for which the insurance was obtained." (Maryland Cas. Co. v Nationwide Ins. Co., 65 Cal App 4th 21, 33, 76 Cal Rptr 2d 113, 121 [1998] [citation omitted].)


A treatise on additional insured coverage offers a similar explanation:

"One of the reasons additional insured status is sought is to avoid the necessity for the [additional insured] to use its own policy. If the [additional insured] is forced to have its own insurance defend a suit, the very purpose underlying additional insured status has been thwarted." (Malecki, Ligeros & Gibson, The Additional Insured Book 104 n 12 [5th ed 2004].)


Thus, parties seek additional insured status with the expectation of receiving "the right to an immediate defense by the named insured's insurer rather than being indemnified for defense costs at a later date" (id. at 1).

Consistent with the foregoing analysis, this Court held, in at least three unanimous decisions predating Pecker, that an insurer's duty to defend an additional insured is not contingent on there having been an adjudication of liability issues giving rise to a duty to [*7]indemnify the additional insured (see Pavarini Constr. Co. v Liberty Mut. Ins. Co., 270 AD2d 98, 99 [2000] [insurer was obligated to defend additional insureds in personal injury action brought by employee of named insured, notwithstanding that "(w)hether the underlying plaintiff's injuries come within the policy's exclusion for injuries caused by the additional insureds' negligence is a question that must await a determination of liability in the underlying action"]; 79th Realty Co. v X.L.O. Concrete Corp., 247 AD2d 256, 257 [1998] [insurer was obligated to defend general contractor as additional insured under subcontractor's liability policy, although there were not yet any liability findings from which it could be determined whether insurer would be obligated to indemnify general contractor]; City of New York v Consolidated Edison Co. of N.Y., 238 AD2d 119, 121 [1997] [the author of the dissent herein joined in holding that a determination in the underlying personal injury action that named insured was free of liability, thereby absolving insurer of any duty to indemnify additional insureds, was "immaterial to the issue of the insurer's duty to provide a defense" to additional insureds]).

This Court's succinct analysis of this issue in 79th Realty Co. v X.L.O. Concrete Corp. (247 AD2d 256, supra) — a case almost exactly on point — is instructive:

"Here, since the complaint in the underlying personal injury action contains allegations against both the general contractor and the subcontractor, and the subject policy clearly names the general contractor as an additional insured and provides coverage that is primary, the insurer has a duty to defend as a matter of law, and we so declare. However, a declaration that the insurer has a duty to indemnify the general contractor requires a determination that the underlying accident arose out of the subcontractor's performance of work under its contract with the general contractor, which must await a determination of the liability in the underlying personal injury action." (Id. at 257 [citations omitted].)

The dissent acknowledges the Court of Appeals' decision in Pecker, but seeks to avoid Pecker's clear implication for this case by restricting the applicability of the principle it announces to the particular set of facts presented in that case. The dissent overlooks the fact that the Pecker Court answered the question before it in a way that plainly was not circumscribed to the particular factual scenario before it. To reiterate, the Court explained that the basis for its decision in Pecker was the principle — not limited in any way that would make it inapplicable here — that, absent unambiguous contractual language to the contrary, an additional insured "enjoy[s] the same protection as the named insured" (99 NY2d at 393). The precise holding in Pecker was that additional insurance is primary insurance unless the controlling documents specifically provide otherwise; that holding fully applies to this case insofar as it means that BP's additional insured coverage is primary — a point not even disputed by Beacon. Since the coverage is primary, it follows that Beacon has a duty to defend BP in the Cosentino Action.

Notwithstanding Pecker and this Court's pre-Pecker authority discussed above, the dissent asserts that this case is "controlled" by AIU Ins. Co. v Am. Motorists Ins. Co. (292 AD2d 277 [2002]), a case this Court decided a year before the Court of Appeals' decision in Pecker. To the extent AIU supports the dissent's position, we decline to follow it, as it is inconsistent with the definition of "additional insured" adopted by the Court of Appeals in Pecker and by this Court in Wong v New York Times Co. (297 AD2d 544, 547 [2002]), which was decided five months prior to Pecker. Moreover, even before Pecker and Wong were decided, the above-cited prior decisions of this Court that support BP's position (Pavarini, 79th Realty, and Consolidated [*8]Edison), rather than the apparently anomalous AIU decision, represented the clear weight of authority in this Department on the precise issue presented by this appeal. We would add that Pavarini, 79th Realty and Consolidated Edison may not have been brought to the attention of the bench that decided AIU, since those cases are not discussed in AIU.[FN3]

This Court's decision in Kajima Constr. Servs. v CATI, Inc. (302 AD2d 228 [2003]), in which an additional insured was denied a declaration concerning the insurer's defense obligations, does not support the dissent's position. In Kajima, unlike in this case, the additional insured endorsement of the subject liability policy (issued by the defendant insurer, Investors) "provide[d] that the additional insured coverage [would] be primary only if the underlying claim [were] determined to be solely as a result of the negligence or responsibility of the named insured" (id. at 229). Under this provision, we said, "it cannot be determined whether [the additional insured] is entitled to primary liability coverage under the policy issued by Investors until a determination as to liability is made in the underlying action" (id.). Pending such a determination, Investors was, by the terms of its additional insured endorsement, merely an excess insurer, and, as such, without any obligation to defend the additional insured prior to the exhaustion of primary coverage (see General Motors Acceptance Corp. v Nationwide Ins. Co., 4 NY3d 451, 456 [2005]; Firemen's Ins. Co. of Washington, D.C. v Federal Ins. Co., 233 AD2d 193 [1996], lv denied 90 NY2d 803 [1997]). Thus, we stated in Kajima that the "determination [of the underlying action] will also resolve the issue of primary responsibility for defense expenses" (302 AD2d at 229). Nothing of the kind is true here, where, under the terms of the additional insured endorsement to Alfa's policy, Beacon's current status as a primary insurer is not contingent on any future factual determination. We note that Kajima was distinguished on [*9]similar
grounds in Landpen Co., L.P. v Maryland Cas. Co. (2005 WL 356809, *8-9, 2005 US Dist LEXIS 2145, *26-28 [SD NY, Feb. 15, 2005]).

The particular language of the Kajima additional insured endorsement provides the context of our characterization there of the rule governing the activation of the duty to defend as "not unyielding but rather one of expedience" (302 AD2d at 229). It was only because Investors was not, at that juncture, a primary insurer under its policy's additional insured endorsement that we saw "no practical need," prior to the determination of the underlying action, for Investors to contribute to the defense of an additional insured that was already being defended by its own carrier (id.). Since the additional insured endorsement at issue here does not use the contingent language found in the additional insured endorsement in Kajima, the additional insured's receipt of a defense from its own carrier lacks the significance in this case that it had in Kajima. Plainly, "expedience" cannot trump the meaning of the applicable contractual language, as that language has been construed by the Court of Appeals. To reiterate, under Pecker, the applicable provisions of the BP-Alfa agreement and of Alfa's insurance policy mean that BP is currently afforded primary coverage as an additional insured under Alfa's policy - coverage that obviously includes a defense.[FN4]

The dissent finds it "puzzling" that we are affirming the declaration of Beacon's duty to defend BP. In fact, our holding is readily explained. As discussed above, the result we reach is required by Pecker, accords with the weight of this Court's prior authority, and gives effect to the parties' reasonable expectations and to the contractual arrangements they have made among themselves. While the dissent may see "no practical need" for BP to receive a defense from Beacon before there is a determination as to liability in the underlying action, that is precisely what BP bargained to receive from Alfa, and what the issuer of Alfa's CGL policy agreed to provide, presumably in exchange for payment of an additional premium charge. Since these arrangements are entirely legal and do not violate any public policy, it is not a court's place to undo them, or to delay giving them effect, based on the bench's view of what would best serve [*10]efficiency or convenience.[FN5]

The dissent's concern about a potential conflict of interest is misplaced. Notwithstanding any dicta in Kajima (which we have already distinguished), we see nothing "unseemly" or (as the dissent would have it) "absurd" about the prospect that BP's attorneys, while Beacon is paying their bills, may take positions adverse to Beacon's named insured. This is a frequent scenario in litigation, and one specifically contemplated by Alfa's CGL policy, which provides that the insurance applies "[s]eparately to each insured against whom claim is made or suit' is brought." As the dissent recognizes, a major league baseball team may pay part of the salary of a player who has been traded to another team. Similarly — and especially in the context of additional insurance — insurance companies frequently retain and pay lawyers who may adopt positions adverse to the interests of other parties covered by the same insurer. Contrary to the dissent's complaint, we are not "cavalier[ly] blurring . . . discrete and antagonistic interests" simply by giving recognition to this fact of life in the world of business and law. The operative principle is that the lawyer's loyalty is owed, not to the insurance company that has retained and paid it, but to the client alone. Thus, no conflict of interest need arise.[FN6]

We now proceed to consider the question raised by BP's appeal, which is whether carriers other than Beacon, depending on the terms of their policies (which are not in the record), may be primary coinsurers of BP's exposure in the Cosentino Action. The motion court expressed the [*11]view that such coinsurance may exist. BP, on the other hand, takes the position that the Court of Appeals' decision in Pecker establishes that Beacon's coverage is primary to any other insurance. We agree in part with BP, and in part with the motion court.

In Pecker, the Court of Appeals stated:

"When Pecker engaged Upfront as a subcontractor and in writing provided that Upfront would name Pecker as an additional insured, Pecker signified, and Upfront agreed, that Upfront's carrier — not Pecker's — would provide Pecker with primary coverage on the risk" (99 NY2d at 393-394 [emphasis added]).


This statement that Pecker's primary coverage for the relevant risk was its additional insured coverage under Upfront's policy, rather than the coverage under its own policy, is controlling here. On this point, the instant case cannot be meaningfully distinguished from Pecker. Here, as in Pecker, the contractual provision requiring Alfa to procure additional insured coverage (quoted above, in the third paragraph of this writing) contains "no indication . . . that as an additional insured' [BP] would receive only excess, as opposed to primary, coverage" (99 NY2d at 393). Thus, as between BP's coverage as an additional insured under Alfa's policy and BP's coverage as a named insured under its own policy, the additional insured coverage is primary. Accordingly, we modify the motion court's order to render a declaration to that effect.[FN7]

While Pecker establishes that BP's coverage under its own policy is excess to BP's coverage under Alfa's policy, nothing in Pecker excludes the possibility that a party may have additional insured primary coverage for the same exposure under more than one policy, with each carrier having a duty to defend. If this proves to be the case here, Beacon may be entitled to require any other carrier whose policy affords BP primary coverage in the Cosentino Action to contribute to the costs of BP's defense (see Cordial Greens Country Club v Aetna Cas. & Sur. Co., 41 NY2d 996, 997 [1977]; Federal Ins. Co. v Atlantic Natl. Ins. Co., 25 NY2d 71, 78-79 [1969]; Fireman's Fund Ins. Co. v Abax, Inc., 12 AD3d 277, 278 [2004]); Travelers Ins. Co. v Commissioners of State Ins. Fund, 227 AD2d 208 [1996]; 15 Couch on Insurance §§ 217:4, 217:12 [3d ed]).

Multiple additional insured coverage may exist here, given that, as previously noted, the contract between BP and Karo (Cosentino's employer) contained an insurance provision identical to the one in the contract between BP and Alfa, requiring Karo to have BP named as an additional insured under Karo's CGL policy. While the contract between BP and Karo is in the present record, Karo's liability insurance policy is not, so we cannot determine, at this juncture, whether or not that policy affords BP additional insured coverage under the circumstances of this case. Beacon is not precluded from seeking to prove that Karo's carrier, or any other carrier affording BP additional insured coverage, is required to contribute to BP's defense and, if necessary, indemnification, in the Cosentino Action. We hasten to add, however, that this does [*12]not mean that BP is not entitled to require Beacon, as primary insurer, to bear 100% of BP's defense costs in the first instance (see Continental Cas. Co., 80 NY2d at 655 [each primary insurer is required "to defend if there is an asserted occurrence covered by its policy, and the insured should not be denied initial recourse to a carrier merely because another carrier may also be responsible"] [citations omitted]; 14 Couch on Insurance § 200:40). Rather, whether Beacon is entitled to require other responsible carriers, if any, to contribute to the costs of BP's defense is a matter between Beacon and those other carriers.

BP has also argued that, apart from its status as an additional insured under Alfa's policy, Beacon is obligated to defend and indemnify it in the Cosentino Action pursuant to Alfa's coverage under the policy for its contractually assumed indemnification obligations. In this connection, BP points to the provision of its subcontract with Alfa requiring Alfa to "indemnify [BP] and hold [it] harmless" against any claims for bodily injury, inter alia, "arising out of or resulting from the performance of [Alfa's] Work" that are "caused in whole or in part by any negligent act or omission of [Alfa]." However, even if it is assumed that the indemnification provision of Alfa's subcontract is enforceable (a question we need not decide), and that BP is (as it contends) a third-party beneficiary of Alfa's contractual indemnification coverage under the subject policy, BP's rights as a beneficiary of such coverage apparently would be no greater under present circumstances than its rights as an additional insured. Accordingly, since we have already concluded that BP is currently entitled to primary coverage and a defense in the Cosentino Action pursuant to its status as an additional insured, we need not address BP's argument based on the policy's contractual indemnification coverage.

Finally, the motion court correctly determined that, contrary to Beacon's arguments, the record establishes that the purchase order purporting to set forth the terms of an agreement between BP and Alfa does, in fact, constitute the agreement between such parties with respect to the Project. Accordingly, BP and Alfa "agreed in writing in a contract or agreement that [BP] be added as an additional insured on [Alfa's] policy," as Alfa's CGL policy required to render BP an additional insured thereunder.

Accordingly, the order of the Supreme Court, New York County (Paula J. Omansky, J.), entered October 1, 2004, which granted BP's motion for partial summary judgment to the extent of declaring Beacon obligated to defend BP as an additional insured in the Cosentino Action, should be modified, on the law, to further declare that, as between Beacon's policy and any policy
covering BP as named insured, any coverage Beacon's policy affords BP in the Cosentino Action is primary, and otherwise affirmed, with costs in favor of BP.

All concur except Sullivan and Catterson, JJ. who dissent in an Opinion by Sullivan, J.


SULLIVAN, J. (dissenting) [*13]

In the related personal injury action giving rise to this separate action, Joseph Cosentino, an employee of a subcontractor at a construction project, was allegedly injured at the job site at the World Trade Center when he slipped on an oil slick on the 39th floor. He sued the general contractor, Henegan Construction Company, which, in turn, commenced a third-party action against BP Air Conditioning Corp., the plaintiff in this action, which it had retained to perform the HVAC installation work, and Alfa Piping Corp., to which BP had subcontracted the steamfitting portion of the job. Karo Sheet Metal Inc., Cosentino's employer, had also been subcontracted by BP to do the sheet metal work under the same terms and conditions as Alfa. Cosentino thereupon served an amended complaint naming both BP and Alfa as direct defendants. As the majority notes, pre-trial discovery in the underlying action indicates the existence of a factual question as to which of these contractors, among others, is responsible for the patch of oil on which Cosentino allegedly slipped.

BP's agreement with Alfa required the latter to obtain comprehensive general liability insurance naming BP as an additional insured. General Assurance Company issued such a policy to Alfa; Beacon Insurance Group is the successor in interest to General Assurance and the defendant in the instant action. Beacon declined to defend BP in the Cosentino action on the ground, inter alia, that its policy's additional insured endorsement was never triggered given the factual issue as to liability in the underlying Cosentino action. As a result, BP commenced a fourth-party action against Beacon, claiming additional insured status under Alfa's policy and seeking a declaration of its rights thereunder. The fourth-party action was thereafter severed as an independent action. BP thereafter moved for summary judgment on liability declaring that Beacon was obligated to defend and indemnify it in the Cosentino action. Supreme Court granted the motion but only to the extent of declaring that Beacon is obligated to defend it in the underlying Cosentino action. The order granting that limited relief is the subject of this appeal.

The critical language of the additional insured endorsement at issue, insofar as is relevant, is as follows: A "person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured." Thus, the endorsement creates a condition precedent to the triggering of additional insured coverage, that is, as in this case, that the putative additional insured's liability for the underlying claim "aris[e] out of [Alfa's] ongoing operations performed for [BP]." In the circumstances presented here, in order to activate the endorsement, it must be shown that the oil that caused Cosentino to slip and fall emanated, in whole or part, from Alfa's work. As the motion court recognized, the record confirms and the majority concedes, Cosentino, at this juncture, cannot show which contractor at the job site created the complained-of condition. For that reason, the motion court denied that part of BP's motion which sought partial summary judgment declaring Beacon obligated to indemnify it for any liability damages awarded to Cosentino in the underlying action. That determination has not been appealed. The motion court, however, did declare that Beacon is obligated to defend BP in that action. It is with the latter aspect of the court's ruling that we disagree, and which prompts this dissent.

The motion court's determination that Beacon, at this point, has no obligation to indemnify is eminently correct. That determination should as well dispose of any alleged obligation to defend, a duty which, unlike that in the defense clause in direct liability coverage, is inseparable from the duty to indemnify. At his deposition, Cosentino testified that many contractors were working at the job site on the 39th floor where his accident occurred. Cosentino [*14]remembered seeing electricians, sprinkler system workers and possibly steamfitters. In that regard, Cosentino also sued the sprinkler contractor, as well as a plumbing and mechanical contractor. Nowhere in his testimony did Cosentino specifically identify any particular contractor as having caused the oil spill. Henegan's field superintendent testified that both Forest Electric, also a defendant in the underlying action, and Alfa used lubricating machines. Forest used them on electrical conduit pipe. The witness described Forest's lubricating machine as a threading machine that has an oil pump with a reservoir pan at the bottom that furnishes oil to lubricate the pipe being threaded. The witness did not know where Alfa's lubricating machines were located. Thus, the oil that caused plaintiff to fall could have emanated from the activities of Forest, Alfa or the sprinkler system contractor, or a combination thereof.

Given this material issue of fact, which can only be resolved by the factfinder in the Cosentino action, the motion court correctly ruled that it cannot be summarily determined, as a matter of law, that an oil spill resulting from Alfa's activities caused Cosentino's accident. If it is determined by the factfinder that Cosentino slipped on oil attributable to the work of Forest, the sprinkler company or some contractor other than Alfa, BP would not have additional insured status because the Beacon additional insured endorsement is triggered only if the liability arose out of the operations of the named insured, Alfa. Since that issue cannot be summarily resolved, no coverage obligation, either to indemnify, as the motion court held, or to defend, is, as yet, triggered.

It is the insured's burden to show that the provisions of a policy provide coverage (Chase Manhattan Bank v Travelers Group, 269 AD2d 107, 108 [2000]). "It is . . . well-established that the insured or the party seeking a declaration of coverage is obliged in the first instance to demonstrate the existence of coverage and the satisfaction of all conditions precedent" (Thomson v Power Auth. of State of N.Y., 217 AD2d 495, 496 [1995]).

The instant case is controlled by this Court's determination in AIU Ins. Co. v American Motorists Ins. Co. (292 AD2d 277 [2002]). There, the plaintiff in the underlying personal injury action, an employee of a drywall subcontractor, allegedly tripped during the course of construction and fell over debris, including a pipe that may have been left at the site by the electrical subcontractor. The employer's liability insurer, American Motorists, as here, additionally covered the owner of the construction site and the general contractor. The electrical subcontractor had liability coverage with St. Paul Fire & Marine Ins. Co. that similarly covered the owner and the general contractor. In the employee's underlying action, the owner and general contractor defendants impleaded the plaintiff's employer - the drywall subcontractor - and the electrical subcontractor. AIU, the liability insurer of both the owner and the general contractor, commenced a declaratory action against both American Motorists and St. Paul to compel them to undertake the defense of the owner and the general contractor and to reimburse AIU for the expenditures incurred in their defense. In both the American Motorists and St. Paul policies the endorsements naming the owner and the general contractor as additional insureds limited liability coverage for additional insureds to claims specifically "arising out of" work performed for the additional insured.

This Court held that since the employee allegedly suffered his injury during the course of work for the owner and the general contractor, the insurer for the employer of the injured plaintiff in the underlying action, American Motorists, owed a coverage obligation to these additional insureds both to defend and cover their already incurred defense expenditures. By contrast, [*15]however, the court found that since the injured worker was not employed by the electrical subcontractor, his activities did not "arise out of" work being performed by that subcontractor for the owner or the general contractor. In a holding determinative of the duty-to-defend issue presented on this appeal, the court held, "It may turn out that [the electrical contractor], by failing to clean up the area, was responsible for the debris that caused the [drywall subcontractor's] employee's slip and fall, but that remains to be determined in the underlying action. At the present time, under the facts in the record before us, [the electrical contractor's] insurer is under no obligation to defend or indemnify [the owner and the general contractor]" (id. at 279). As in the AIU case, Beacon cannot be declared obligated to defend or indemnify BP unless and until it is determined that its additional insured obligation is triggered. That determination can only be made if the fact finder in the underlying Cosentino action determines that Cosentino's accident resulted from Alfa's activities (see Brookhaven Mem. Hosp. Med. Ctr. v County of Suffolk, 155 AD2d 404, 406 [1989]).

This court's language in Crespo v City of New York (303 AD2d 166, 167 [2003]), where only a declaration of an insurer's obligation to indemnify was sought, is instructive:

The additional insured endorsement pursuant to which indemnification from Nationwide is sought states that the insurance "with respect to [TDX] applies only to the extent that [TDX] is held liable for [S & P's] acts or omissions." Inasmuch as it has not yet been determined whether plaintiff's harm was caused by negligence by S & P, and it remains possible that the trier of fact will find that plaintiff's harm was caused by negligence by TDX, it cannot now be determined whether TDX's claim falls within the subject additional insured endorsement.


Interestingly, the cases interpreting the "arising out of" language cited by BP involve situations where the named insured of the insurer from whom additional insured coverage is sought is either the injured plaintiff's employer or a party who hired the plaintiff's employer as a subcontractor (see e.g. Structure Tone v Component Assembly Sys., 275 AD2d 603 [2000]). In Structure Tone, the general contractor sought additional insured coverage from the liability insurer of a carpentry subcontractor. The additional insured endorsement limited such coverage "to liability arising out of your work' . . . by or for you." The carpentry subcontractor further subcontracted work to the employer of the injured plaintiff. This Court held that the additional insured clause was sufficiently broad to cover the situation. That is, given the relationship between the carpentry subcontractor and the injured plaintiff's employer, the court implicitly found the injured plaintiff's presence at the job site and his injury to have arisen out of the operations of the carpentry subcontractor.

That, of course, is not the case here. Karo, Cosentino's employer, is not a subcontractor of Alfa, Beacon's named insured. In fact, Karo was BP's subcontractor. Thus, Karo's presence on the job site, and hence, plaintiff's presence, had no connection, contractual or otherwise, with Alfa's presence or work. Cosentino's presence at the job site was in furtherance of BP's operations, not Alfa's. Therefore, Structure Tone lends no support to BP's arguments. As AIU clearly shows, this Court makes a clear distinction between the applicability of the "arising out of" language in the additional insured endorsement in the policy of an injured party's employer as opposed to that of a subcontractor, such as Alfa, which holds no relationship to the injured party. [*16]

Similarly, Pavarini Constr. Co. v Liberty Mut. Ins. Co. (270 AD2d 98 [2000]), relied upon by the majority, involved a declaration of a defense obligation to a contractor as an additional insured under the insurance policy of the injured plaintiff's employer. The court found that the "injury clearly falls within the general scope of the policy's coverage for bodily injury arising out of the primary insured's work for the additional insureds" (id. at 99). Thus, the additional insured's status was unconditional. Only an exclusion for the additional insured's own negligence was left open for resolution in the underlying trial. That is clearly not the case here.

The majority seeks to avoid this Court's holding in AIU and the clear and unambiguous language of the policy by invoking the well-established rule that "an insurer's duty to defend is broader than its duty to indemnify" (General Motors Acceptance Corp. v Nationwide Ins. Co., 4 NY3d 451, 456 [2005], citing Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65-66 [1991]). In so doing, the majority confuses an insurer's duty owed to its named insured with the duty owed, as here (and as the motion court found) to a putative additional insured.
Fitzpatrick
and its progeny (see e.g. Automobile Ins. Co. of Hartford v Cook, __ NY3d __, 2006 NY LEXIS 1400, 2006 WL 1547725; Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435 [2002]; Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640 [1993]) all involve disclaimers of coverage as against the insurers' direct insureds. Conditional insured coverage was not at issue. No one challenges an insurer's broad duty to defend its named insured, whose status as an insured is not conditional. In the case of BP's coverage as an additional insured, however, BP must meet the condition precedent set forth in Beacon's additional insured endorsement before the endorsement, and hence, coverage, is triggered.

The most recently decided case cited by the majority for the proposition that the duty to defend is broader than the duty to indemnify (Automobile Ins. Co. of Hartford v Cook, supra) also involves a coverage question with respect to a named insured under a policy (in that case, a homeowner's policy), not, as here, a putative additional insured. The insured had shot and killed someone in the course of a dispute and the administrator of the victim's estate sued the insured for wrongful death, alleging negligence, inter alia. The insurer disclaimed coverage. In the subsequent action for a declaration as to the duty to defend, the insurer raised two coverage claims: whether an "occurrence" under the policy terms was involved, and whether the "expected or intended" injury exclusion applied. Like Fitzpatrick and its progeny, Automobile Ins. involves a named insured, not conditional, additional insured coverage, and the well-established rule - "an insured's duty to defend is broader than its duty to indemnify - has unquestioned application.

The majority, in support of its position, cites this Court's decisions in 79th Realty Co. v X.L.O. Concrete Corp. (247 AD2d 256 [1998]) and City of New York v Consolidated Edison Co. of N.Y. (238 AD2d 119 [1997]),[FN1] both interpreting language in an additional insured provision similar to that involved here. Although standing for the proposition that the duty to defend is not affected by the possibility that the underlying action will result or has already resulted in a factual [*17]determination absolving the named insured of any liability, thereby relieving the insurer of the duty to indemnify, these cases should yield in their precedential value to the subsequently decided AIU case. AIU carefully delineated the distinction between the additional insured provision in the policy of an employer whose employee is the injured party, and the same or similar provision in the policy of a contractor who is not the employer (292 AD2d at 278-279) and whose status as an additional insured is limited to and triggered by liability arising out of the named insured's work or, as here, operations.

Ultimately, the majority rests its case on Pecker Iron Works of N.Y. v Travelers Ins. Co. (99 NY2d 391 [2003]), in which the Court of Appeals, citing Del Bello v General Acc. Ins. Co. (185 AD2d 691, 692 [1992], quoting Rubin, Dictionary of Insurance Terms 7 [Barron's 1987]), stated that the term "additional insured" has a "well-understood meaning in the insurance industry" as an "entity enjoying the same protection as the named insured" (99 NY2d at 393 [internal quotation marks omitted]). Pecker dealt with the issue of whether a promise to provide additional insurance coverage in a liability policy was satisfied by the procurement of a policy providing such coverage, but on an excess basis. Del Bello, cited in support of the proposition that an additional insured "enjoy[s] the same protection as the named insured," had to do with a special multi-peril policy issued to a tenant that included general liability and fire and contents coverage as well as an additional insured endorsement covering the landlord, who sought coverage for fire damage. After the loss, the insurer sought to limit the additional insured coverage to the liability section of the policy. In holding the insurer liable for the landlord's fire loss, the court found that it was uncontroverted that the insurer's agent had sought fire and property damage protection for the landlord as an additional insured and, in so finding, described "additional insured" in the manner quoted. That handy description, easily applicable to the facts of Del Bello, where the landlord's status as an additional insured was never at issue, has no application here.

Nor is Pecker, which adopted Del Bello's description of an additional insured, relevant here. In Pecker, there was no challenge to the contractor's status as an additional insured; the only issue was whether the coverage afforded it as an additional insured was primary, as Pecker claimed, or excess, as the insurer argued [FN2]. Here, absent a finding of its vicarious liability arising out of Alfa's work, BP, unlike the subcontractor in Pecker, does not enjoy additional insured status.

The majority's insistence that Beacon undertake BP's defense at this stage of the litigation, notwithstanding BP's unresolved status as an additional insured, is puzzling. As noted in Kajima Constr. Serv., Inc. v CATI, Inc. (302 AD2d 228, 229 [2003]), the oft-stated rule that the duty to defend is greater than the duty to indemnify "is not unyielding but rather one of expedience." It finds no basis in the policy text. Rather, it represents a judicial interpretation of the defense obligation fashioned to protect a party with insurance who, because it is engaged with its insurer in a coverage dispute, would otherwise be without defense coverage in a pending [*18]litigation. That is not the case here. As in Kajima, BP, the party seeking additional insured coverage, is already being afforded a defense, presumably by its own insurer. Thus, there is no practical need for Beacon to contribute to that effort, given that the issue of coverage with respect to indemnity is necessarily deferred pending a determination of liability in the underlying action. That determination will also resolve the issue of defense coverage. As noted in Kajima, there is here the "unseemly" spectacle of having Beacon, at this juncture, underwrite the defense expenses of BP, whose attorneys will undoubtedly endeavor in the underlying action to cast Beacon's named insured, Alfa, as the party responsible for Cosentino's injuries (see id.)[FN3]. Such a result is absurd.

The majority's response to the spectacle of compelling Alfa's insurer to pay BP's legal expenses so that BP can saddle Alfa with the loss is to observe that such an anomaly is a "frequent scenario" in litigation [FN4]. If it is, the practice should not be extended to a situation where, as here, the party being so indemnified is already covered by insurance for such defense expenses and, in turn, that party's standing as an additional insured entitled to a defense is still subject to ultimate resolution in a pending action.

Since, under the foregoing analysis, Beacon's obligation to defend BP has not been established and must await resolution of the liability question at the trial of the underlying action, [*19]there is no need to reach the issue of the application and apportionment of its coverage with any other policies covering a liability verdict. At this point, the issue is not ripe for adjudication.

I would reverse the order appealed.

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

ENTERED: JULY 6, 2006

CLERK

Footnotes



Footnote 1:Although the order appealed from also purports to deny BP's motion insofar as it sought indemnification, it appears from the record that BP's motion did not seek a declaration concerning indemnification. In any event, BP's appeal does not challenge the motion court's accurate statement that a declaration as to whether Beacon is obligated to indemnify BP for any liability to Cosentino cannot be made until the cause of Cosentino's accident (i.e., the source of the oil on which he slipped) has been determined.

Footnote 2:For this reason, it is of no moment that, as the dissent points out, Automobile Ins. Co. of Hartford v Cook (supra) and the cases cited therein dealt with the rights of named insureds.

Footnote 3:Contrary to the dissent's view, Pavarini cannot be distinguished on the ground that the status of the additional insured in that case was "unconditional." BP's additional insured status is, as previously discussed, also unconditional, the only question being the same one that was presented in Pavarini, i.e., whether any eventual judgment against the additional insured will be covered by the policy's additional insured endorsement. The dissent cites no authority for its theory that the existence of a duty to defend an additional insured depends on whether the additional insured's eventual liability may fall outside the general scope of coverage (as here) or within a particular exclusion from coverage (as in Pavarini). We note that the dissent does not dispute that 79th Realty and Consolidated Edison are contrary to its position, but instead contends that "these cases should yield in their precedential value" to AIU, an argument to which we have already responded. As to the remark by the author of the dissent that his change of position since Consolidated Edison may reflect "his capacity for growth," we can only salute our esteemed colleague's refreshing, and characteristic, intellectual honesty, even as we respectfully disagree with the conclusion he reaches in this case.

Footnote 4:As the dissent acknowledges, in Crespo v City of New York (303 AD2d 166 [2003]), we held that an additional insured was not entitled to summary judgment against the carrier on the issue of indemnification — not defense — before there were findings as to liability. Thus, the dissent's quotation from Crespo does little to advance its position on this appeal, in which, as discussed at footnote 1 above, it is undisputed that whether Beacon will ultimately have a duty to indemnify BP against any eventual judgment cannot yet be determined. Indeed, not only does our Crespo decision not discuss the duty to defend, the record of that case reveals that the motion court declared that the carrier did have an obligation to defend the additional insured, and that no appeal was taken from that determination.

Footnote 5:We disagree with the dissent's apparent suggestion that the availability of a defense under additional insured coverage should depend upon whether coverage by the additional insured's own carrier is available. Given that additional insured coverage is primary coverage (unless the controlling documents expressly provide otherwise), we do not see why the availability of coverage from the additional insured's own carrier is relevant to the triggering of the duty to defend on the part of the carrier providing additional insured coverage.

Footnote 6:Although it does not affect our conclusion that Beacon is obligated to defend BP, we do not share the dissent's certainty that BP's "attorneys will undoubtedly endeavor in the underlying action to cast Beacon's named insured, Alfa, as the party responsible for Cosentino's injuries." To the contrary, the dissent's speculation overlooks the prospect that BP may seek to avoid liability by casting Forest Electric Corporation or the sprinkler contractor — neither of which was a subcontractor of BP — as the source of the oil on which Cosentino slipped. We would add that the additional insured endorsement to Alfa's CGL policy (quoted in pertinent part in the third paragraph of this opinion) does not, contrary to the dissent's assertion, appear to limit BP's coverage to vicarious liability for Alfa's conduct. Nothing in the endorsement excludes coverage for liability for injuries caused by the concurrent negligence of Alfa and BP, or of Alfa and another BP subcontractor.

Footnote 7:We observe that pre-Pecker case law from the Court of Appeals arguably would have supported deeming BP's own carrier and a carrier affording BP additional insured coverage to be primary coinsurers (see Jefferson Ins. Co. of N.Y. v Travelers Indem. Co., 92 NY2d 363, 372 [1998]).

Footnote 1:The majority notes that the dissenter here was a member of the Consolidated Edison court. Whatever the majority's point, that the dissenter now views the matter differently may well be a measure of his capacity for growth.

Footnote 2:The same issue was posed and decided in Wong v New York Times Co. (297 AD2d 544 [2002]), also relied upon by the majority. Wong fails to advance the majority's position any more than Pecker does.

Footnote 3:We note that Alfa, as part of its subcontract with BP, was required, in addition to its insurance procurement obligation, to indemnify BP "[t]o the fullest extent permitted by law" against any and all claims for bodily injury caused, in whole or part, by th negligence of Alfa, "any sub-contractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable." This obligation, which, on its face, provides as much and perhaps even broader indemnification than additional insured coverage, has not been asserted. Under the motion court's holding and the majority's view, its assertion would, in any event, be barred by the anti-subrogation rule (Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 472 [1986]).

Footnote 4:While it may be standard practice in major league baseball for a team to pay a portion of the salary of a traded player who will then compete against that team, the courts, charged with the obligation to avoid lawyer conflicts of interest and the appearance of impropriety, should not countenance such a cavalier blurring of discrete and antagonistic interests.

Burns v. Stranger


In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (McCarty III, J.), dated January 6, 2005, which granted the defendant's motion for summary judgment dismissing the complaint 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, on the law, with costs, the motion is denied, and the complaint is reinstated.

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affirmed medical report of the defendant's examining neurologist indicated the existence of limitations in the range of motion of the plaintiff's cervical spine in all directions, without rendering an opinion that such limitations were unrelated to the accident (see Berkowitz v Decker Transp. Co., 5 AD3d 712). Since the defendant failed to meet her initial burden of establishing a prima facie case, it is unnecessary to consider whether the plaintiff's papers in opposition to the defendant's motion were sufficient to raise a triable issue of fact (see Rich-Wing v Baboolal, 18 AD3d 726; Lesane v Tejada, 15 AD3d 358; Coscia v 938 Trading Corp., 283 AD2d 538). Accordingly, the Supreme Court erred in granting the defendant's motion for summary judgment dismissing the complaint.
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Courat

Caldwell v. Grant



Appeal from an order of the Supreme Court, Niagara County (Amy J. Fricano, J.), entered October 13, 2005 in a personal injury action. The order, insofar as appealed from, upon reargument, adhered to the court's prior decision.


THE LAW OFFICE OF JON LOUIS WILSON, LOCKPORT (JON LOUIS WILSON OF COUNSEL), FOR PLAINTIFF-APPELLANT.
CHELUS, HERDZIK, SPEYER, MONTE & PAJAK, P.C., BUFFALO (THOMAS P. KAWALEC OF COUNSEL), FOR DEFENDANT-RESPONDENT.


It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously affirmed without costs.

Memorandum: Plaintiff commenced this action to recover damages for injuries allegedly sustained in a motor vehicle accident. He now appeals from an order granting his motion for leave to reargue and, upon reargument, adhering to Supreme Court's prior decision granting defendant's motion for summary judgment dismissing the complaint. The complaint, as amplified by the bill of particulars, alleges that plaintiff sustained a serious injury under three categories of serious injury as defined in Insurance Law § 5102 (d), i.e., the significant limitation of use, the permanent consequential limitation of use and the 90/180 categories. As plaintiff correctly concedes, defendant met his initial burden on the motion for summary judgment by establishing that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d), and thus the burden shifted to plaintiff to raise a triable issue of fact (see Sandoro v Andzel, 307 AD2d 706). We reject the contention of plaintiff that he raised a triable issue of fact whether he sustained a serious injury under the significant limitation of use and the permanent consequential limitation of use categories by submitting the affidavit of his treating chiropractor in opposition to the motion. The evidence submitted by defendant, including plaintiff's medical records, several MRI reports and an expert opinion, established that plaintiff had a preexisting degenerative injury to his cervical spine. The affidavit of plaintiff's treating chiropractor failed to address these findings, except in conclusory terms, and thus was insufficient to raise a triable issue of fact (see Lagois v Public Adm'r of Suffolk County, 303 AD2d 644; Monette v Keller, 281 AD2d 523; Watt v Eastern Investigative Bur., 273 AD2d 226).

In addition, while plaintiff demonstrated that he had a herniated disc, "[p]roof of a [*2]herniated disc, without additional objective medical evidence establishing that the accident resulted in significant physical limitations, is not alone sufficient to establish a serious injury" (Pommells v Perez, 4 NY3d 566, 574). The affidavit of plaintiff's treating chiropractor did not constitute
" objective evidence of the extent or degree of the alleged physical limitations resulting from this disc injury' " (Owen v Rapid Disposal Serv., 291 AD2d 782, 782-783) inasmuch as it failed to provide a numeric percentage of plaintiff's loss of range of motion or a qualitative assessment of plaintiff's condition (seeToure v Avis Rent-A-Car Sys., Inc., 98 NY2d 345, 350-351). Thus, because plaintiff failed to raise a triable issue of fact whether he sustained a serious injury under the significant limitation of use and permanent consequential limitation of use categories of serious injury, and because plaintiff did not oppose the motion with respect to the 90/180 category, we conclude that defendant's motion for summary judgment was properly granted.

We have considered plaintiff's remaining contentions and conclude that they are without merit.

Coppage v. Svetlana Hacking Corp.


Composto & Composto, Brooklyn, N.Y. (John L. Fendt of
counsel), for appellants.
Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr.,
of counsel), for respondent.

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Rivera, J.), dated March 11, 2005, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The Supreme Court properly denied the defendants' motion for summary judgment since they failed to establish prima facie that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In support of the motion the defendants submitted, inter alia, the affirmed medical reports of their examining orthopedist and neurologist. The affirmed medical report of the defendants' examining orthopedist indicated that a magnetic resonance imaging of the plaintiff's left knee taken approximately two months after the subject accident revealed, inter alia, a tear in the posterior horn of the medial meniscus. Notably, the report of the defendants' orthopedist specified a single range of motion finding in the plaintiff's left knee without comparing that finding to the normal range of motion (see Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Aronov v Leybovich, 3 AD3d 511). Moreover, in his affirmed medical report, the defendants' examining neurologist stated that he found limited range of motion [*2]in the plaintiff's lumbar spine (see Kaminsky v Waldner, 19 AD3d 370; Omar v Bello, 13 AD3d 430; Scotti v Boutureira, 8 AD3d 652). Since the defendants failed to meet their initial burden of establishing a prima facie case, it is unnecessary to consider whether the plaintiff's papers in opposition to the defendants motion were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

Gerold v. Companion Life Insurance Company


In an action, inter alia, for a judgment declaring that the plaintiff is entitled to recover the proceeds of a life insurance policy, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Costello, J.), dated February 22, 2005, as denied that branch of its motion which was for summary judgment dismissing the complaint and granted the plaintiff's cross motion for summary judgment on the first cause of action.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the branch of the motion which was for summary judgment dismissing the complaint is granted, the cross motion for summary judgment on the first cause of action is denied, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the plaintiff is not entitled to recover on the subject life insurance policy.

On August 24, 2001, the defendant issued a term life insurance policy with a face value of $1,000,000 to the plaintiff's husband, Kenneth S. Gerold. The policy defined "premium due date" as "the date of issue and each month thereafter" and stated "[i]f any premium is not paid by the end of the grace period, [the] policy will terminate as of the due date." Mr. Gerold paid the initial two premiums (i.e., August 24, 2001, and September 24, 2001) at the time of the application and simultaneously executed an authorization permitting the defendant to automatically withdraw [*2]the prospective premiums from his bank account on the 15th day of each month pursuant to its "Bank Service Plan" (hereinafter BSP). The defendant inadvertently began the automatic withdrawals on November 15, 2001, instead of October 15, 2001. Since, however, the premiums were received before the expiration of the policy's 31-day grace period (see Insurance Law § 3203[a][1]), the policy did not lapse. On August 21, 2002, ownership of the policy was transferred to the plaintiff.

Approximately one year later, on November 15, 2003, and November 19, 2003, the defendant's repeated requests to withdraw the October 24, 2003, premium were rejected due to insufficient funds. The defendant therefore contends that the policy terminated due to nonpayment of premiums, following expiration of the grace period, on November 24, 2003, or before the insured's December 9, 2003, death.

The plaintiff, as the policy's owner and sole beneficiary, thereafter commenced this declaratory judgment and breach of contract action seeking to recover the death benefit less the unpaid premium (see Insurance Law § 3203[a][2]). Following joinder of issue, the defendant moved for summary judgment dismissing the complaint and the plaintiff cross-moved for summary judgment on the first cause of action. The plaintiff contends, in effect, that the defendant's commencement of the automatic withdrawals on November 15, 2001, altered the premium due date from the 24th to the 15th day of each month, and therefore, the grace period did not expire at the time of the insured's death. The Supreme Court denied the defendant's motion, granted the plaintiff's cross motion, and declared that Mr. Gerold died during the grace period, thereby entitling the plaintiff to payment of the death benefit.

Contrary to the plaintiff's contention, the defendant's inadvertent delay in implementing the BSP, which related solely to the manner of payment, did not modify the premium due date (see Guardian Life Ins. Co. of Am. v Goduti-Moore, 36 F Supp 2d 657, 663-664, revd on other grounds 229 F3d 212). Pursuant to the policy's terms, "[a]ny change of [the] policy require[d] the written consent of an executive officer" (see Insurance Law 3204[a][3]). Moreover, the defendant was not estopped from asserting the policy's lapse by its unilateral mistake and withdrawal of earlier premium payments during the grace period (see McGarr v Guardian Life Ins. Co. of Am., 19 AD3d 254, 256; Brecher v Mutual Life Ins. Co. of N.Y., 120 AD2d 423; Guardian Life Ins. Co. of Am. v Goduti-Moore, supra at 663-664; 5 Couch on Insurance § 78.27 [3d ed]). Neither the insured nor the plaintiff detrimentally relied upon this practice since they were unaware of the defendant's error until the default, the defendant did not accept a premium payment after the grace period expired, and the policy explicitly stated that "[i]f any premium is not paid by the end of the grace period, [the] policy will terminate as of the due date."

Finally, the defendant was not required to notify the plaintiff that the policy lapsed because the insured elected to pay the premiums on a monthly basis (see Insurance Law § 3211[f][2]; Reczek v National Benefit Life Ins. Co., 20 AD3d 887, lv denied 6 NY3d 704; McGarr v Guardian Life Ins. Co. of Am., supra at 256; Elston v Allstate Life Ins. Co. of N.Y., 274 AD2d 938). Accordingly, the policy terminated due to nonpayment of premiums on November 24, 2003, or before the insured's December 9, 2003, death.

The plaintiff's remaining contentions are without merit.

Since this is, in part, a declaratory judgment action, we remit the matter to the [*3]Supreme Court, Suffolk County, for the entry of a judgment declaring that the plaintiff is not entitled to recover on the subject life insurance policy (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).

Lenhard v. Genesee Patrons Co-Operative Insurance Company

MEMORANDUM AND ORDER

Calendar Date: May 3, 2006
Before: Cardona, P.J., Peters, Carpinello, Rose and Lahtinen, JJ.


Peters, J.

Appeal from an order of the Supreme Court (Ryan, J.), entered February 24, 2005 in Clinton County, which denied a motion by defendant Genesee Patrons Co-operative Insurance Company for summary judgment dismissing the complaint against it.

In 1992, plaintiffs purchased property in the Town of Altona, Clinton County. In 1998, they began construction of a home on that property and defendant Andree LaBarge arranged for its insurance shortly thereafter. At that time, plaintiff P.J. Lenhard worked as a chiropractor for the Mohawk tribe in the Holistic Healing Clinic located on the Ganienkeh territory. Plaintiff Ann Lenhard, his wife, also worked in that facility. When the original policy was close to expiring, LaBarge contacted Edward Russell, an insurance underwriter, to obtain new coverage [*2]for plaintiffs' property with defendant Genesee Patrons Co-operative Insurance Company. After an initial telephone conversation with Russell, Francis Spiotta, the vice-president of Genesee Patrons, permitted Russell to quote a premium to LaBarge, as agent, to bind coverage. LaBarge completed the insurance application for plaintiffs but it contained several errors, including a representation that the house was located five miles from the nearest fire department when the actual distance was somewhere between 9 to 9.4 miles; Ann signed the application and never noticed the error. Genesee Patrons received and processed the application, and construction on the home was completed in late fall of 2000. It is undisputed that in none of the initial conversations between Russell and LaBarge was there a discussion regarding the distance of the house to the closest fire department.

In December 2000, P.J. left his job with the clinic on the Ganienkeh territory under acrimonious circumstances. Ann testified that there were extreme philosophical differences between P.J. and the Mohawk tribe. She also feared for her family's physical safety, asserting that she had been threatened by a member of the tribe after P.J. and their daughter left for Hawaii. Plaintiffs ultimately purchased property in Hawaii and P.J. remained there with his daughter until March 2002 while Ann placed the Clinton County property up for sale. While Ann was visiting family on the night of February 10, 2001, the home in Clinton County burned to the ground. The local police found no evidence of arson. A Genesee Patrons investigator conducted several interviews with Ann shortly after the fire wherein she misrepresented P.J.'s whereabouts. She later maintained that such misrepresentations were an attempt to protect P.J. from the Mohawks. When the claim for loss was denied by Genesee Patrons, plaintiffs commenced this action. Genesee Patrons unsuccessfully moved for summary judgment, claiming that plaintiffs were uncooperative and that they made material misrepresentations justifying noncoverage.

Upon appeal, Genesee Patrons contends that the fact that the property was not five miles, but 9 to 9.4 miles, away from the nearest responding fire department caused it to be inaccurately classified as "semi-protected" which, in turn, influenced its decision to bind the property. While it is undisputed that this information was not properly listed in the insurance application (see Insurance Law § 3105 [a]), the issue of whether this misrepresentation was sufficiently material to void the policy is generally a question of fact (see Leamy v Berkshire Life Ins. Co., 39 NY2d 271, 274 [1976]; Parmar v Hermitage Ins. Co., 21 AD3d 538, 540 [2005]; Curanovic v New York Cent. Mut. Fire Ins. Co., 307 AD2d 435, 436-437 [2003]; Carpinone v Mutal of Omaha Ins. Co., 265 AD2d 752, 754 [1999]). Genesee Patrons, as the movant, had the burden of establishing the materiality of this misrepresentation by "clear and substantially uncontradicted evidence" (Carpinone v Mutal of Omaha Ins. Co., supra at 754), which could include documentation showing that the insurer had refused coverage in the past under similar circumstances (see Insurance Law § 3105 [c]; Curanovic v New York Cent. Mut. Fire Ins. Co., supra at 437); conclusory statements alone will not be sufficient (see Parmar v Hermitage Ins. Co., supra at 540-541).

Reviewing Genesee Patrons's proffer and acknowledging Russell's and Spiotta's averments that coverage would not have been offered had the distance been accurately represented, we find that Genesee Patrons did not sustain its burden of establishing the materiality of this statement as a matter of law. Neither Russell nor Spiotta averred that they would not have underwritten this property if they had known that its distance was actually between 9 to 9.4 miles from the nearest fire station. Moreover, no documentation established that Genesee Patrons had denied coverage under similar circumstances. Left with their [*3]statements alone, the proffer was insufficient (see Curanovic v New York Cent. Mut. Fire Ins. Co., supra at 437; Carpinone v Mutal of Omaha Ins. Co., supra at 755).

Addressing Ann's misrepresentations to Genesee Patrons when asked about P.J.'s whereabouts after the fire, we acknowledge the numerous clauses in plaintiffs' policy requiring their cooperation in the investigation of a claim and warning against misrepresentations. However, Genesee Patrons had to show that Ann's misrepresentations were "willful and intentional" (Kyon Nam Chang v General Acc. Ins. Co. of Am., 193 AD2d 521, 521 [1993]; see Charnock v Preferred Mut. Ins. Co., 281 AD2d 981, 982 [2001]). Clearly, Ann made misrepresentations regarding P.J.'s whereabouts immediately after the fire. However, P.J. was not in the area for one month prior to the fire, the fire was not found to be arson and his location was ultimately provided, resulting in his examination by both the Hawaiian police and by Genesee Patrons's attorney. With Ann maintaining that she feared for not only P.J.'s safety but that of their daughter, we agree that Genesee Patrons's proffer was insufficient to establish, as a matter of law, that Ann made these misrepresentations with the intent to defraud or that her deception, amounting to a brief delay, could be found, as a matter of law, to be a material breach of her duty to cooperate under the policy.

Walters v. Papanastassiou

In an action to recover damages for personal injuries, etc., the defendants appeal from an order of the Supreme Court, Kings County (Bayne, J.), dated June 28, 2005, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff Garnet Walters did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, without costs or disbursements.

The defendants failed to establish that the plaintiff Garnet Walters (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). While the defendants' examining orthopedist stated in his affirmed medical report that the injured plaintiff had "appropriate" range of motion of the cervical spine, and the defendants' examining neurologist stated in his affirmed medical report that the injured plaintiff had "excellent" range of motion of the neck and lower back, they both did so without setting forth the objective testing performed to arrive at their respective conclusions (see Nembhard v Delatorre, 16 AD3d 390). Moreover, while the defendants' examining orthopedist set forth a single range of motion finding as to forward flexion in the injured plaintiff's lumbar spine, he failed to compare that finding with what is normal (see Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Kennedy v Brown, 23 AD3d 625; Aronov v Leybovich, 3 AD3d 511). Since the defendants failed to establish their entitlement to judgment as a matter of law, it is not necessary to consider whether [*2]the plaintiffs' papers in opposition to the defendants' motion were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

Chubb Group of Insurance Carriers v. DePalma

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the proposed additional respondents Dimitrios Kitsios and Anastasia Kitsios appeal from an order of the Supreme Court, Westchester County (Carey, J.H.O.), entered November 8, 2004, which, after a framed-issue hearing, denied the petition and, in effect, dismissed the proceeding.

ORDERED that the order is reversed, on the law and the facts, with costs payable by the proposed additional respondent Atlantic Mutual Companies, the petition is granted, and arbitration is permanently stayed.

This action arises out of an automobile accident that occurred on February 24, 2003, in Yonkers, New York, when a vehicle owned and operated by the appellant Dimitrios Kitsios came into contact with a vehicle operated by the respondent Gregory DePalma, in which the respondent Elaine DePalma (hereinafter collectively the DePalmas) was a passenger. Following the accident, [*2]the DePalmas served a demand for arbitration of their right to benefits under the Supplemental Uninsured/Underinsured Motorists (hereinafter SUM) provision upon the petitioner Chubb Group of Insurance Carriers (hereinafter Chubb), which insured the car in which the DePalmas were riding. Chubb thereafter commenced this proceeding to stay the SUM arbitration, contending that the Kitsios vehicle was insured by the proposed additional respondent Atlantic Mutual Companies (hereinafter Atlantic Mutual) on the date of the accident. Following a framed-issue hearing, the Judicial Hearing Officer determined that Atlantic Mutual had effectively canceled the insurance policy due to the nonpayment of the premium prior to the date of the accident and that the Kitsios vehicle was therefore not insured by Atlantic Mutual on the date of the accident, and denied Chubb's petition for a stay of arbitration.

The parties are in agreement that Connecticut law applies because that is the State with the most significant contacts with the parties involved and the subject policy of insurance (see Matter of Integon Ins. Co. v Garcia, 281 AD2d 480). On appeal, Kitsios argues that Atlantic Mutual's notice of cancellation was ineffective because the language of the cancellation warning did not comply with Connecticut Statutes Annotated § 38a-343(b).

"[W]hen written notice of cancellation is required, an insurer must comply strictly with policy provisions and statutory mandates" (Majernicek v Hartford Cas. Ins. Co., 240 Conn 86, 95). It is undisputed that the notice of cancellation sent by Atlantic Mutual to Kitsios did not contain the warnings required by Connecticut Statutes Annotated § 38a-343, and therefore, it was ineffective. Since Atlantic Mutual's insurance policy was in effect on the date of the accident, arbitration of the DePalmas's claim for uninsured motorist benefits against Chubb must be permanently stayed.
FLORIO, J.P., ADAMS, LUCIANO and FISHER, JJ., concur.

State Farm Mutual v. Jackson


Appeal from a judgment of the Supreme Court, Erie County (Joseph R. Glownia, J.), entered April 13, 2005. The judgment, upon a jury verdict, granted the petition seeking a permanent stay of arbitration.


It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously affirmed without costs.

Memorandum: Petitioner commenced this proceeding pursuant to CPLR article 75 seeking a permanent stay of arbitration with respect to respondent's "uninsured motorist's claim" or, alternatively, a hearing to determine "the residency/coverage issue herein" before a jury. Respondent's mother was insured by petitioner and, pursuant to the terms of her automobile insurance policy, respondent also would be covered if he resided in his mother's household in Rochester, New York. This Court determined in a prior appeal that Supreme Court erred in denying petitioner's request for a jury trial, and we remitted the matter to Supreme Court for further proceedings (Matter of State Farm Mut. Auto. Ins. Cos. v Jackson, 12 AD3d 1142). On remittal, the jury determined that respondent was not a resident of his mother's household, and respondent appeals from the judgment entered in favor of petitioner.

We affirm. "A resident is one who lives in the household with a certain degree of permanency and intention to remain" (Canfield v Peerless Ins. Co., 262 AD2d 934, 934-935, lv denied 94 NY2d 757; see Appell v State Farm Ins. Co., 292 AD2d 407). The evidence before the jury established that respondent is the father of six children who reside in Dunkirk, New York, with his girlfriend, the children's mother. The evidence further established that respondent was unemployed and received disability benefits that were sent to his girlfriend's address in Dunkirk. The motor vehicle accident occurred in Dunkirk, while respondent was a passenger in an uninsured vehicle driven by a Dunkirk resident. Following the hospitalization of respondent for the injuries that he sustained in the accident, respondent was released to the care of his girlfriend in Dunkirk, and all his follow-up medical care took place in Dunkirk. "[T]he determination[] of [the jury must be] accorded due deference on appeal and should not be disturbed when supported by a fair interpretation of the evidence" (Government Empls. Ins. Co. v Paolicelli, 303 AD2d [*2]633, 633 [internal citations omitted]) and, here, the jury's determination is supported by the requisite fair interpretation of the evidence (cf. id. at 633-634).

Entered: July 7, 2006

Mullen v. Lauffer

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Orange County (Horowitz, J.), dated September 12, 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 affirmed, with costs.

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendant's examining neurologist found that the plaintiff continued to have restrictions in motion of her cervical spine approximately two years after the accident. In light of this finding by the defendant's expert, the defendant did not meet her initial burden on her motion (see Kaminsky v Waldner, 19 AD3d 370; Omar v Bello, 13 AD3d 430; McDowall v Abreu, 11 AD3d 590; Scotti v Boutureira, 8 AD3d 652). Since the defendant failed to establish a prima facie case, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538). [*2]
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

Ramirez v. Parache

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Queens County (Agate, J.), dated January 28, 2005, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that they did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is modified, on the law, 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 Nelcy Rivera individually and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

The Supreme Court properly determined that the defendant made a prima facie showing that the plaintiff Jonathan Ramirez (hereinafter the infant plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350; Gaddy v Eyler, 79 NY2d 955, 956-957; Kearse v New York City Tr. Auth., 16 AD3d 45, 46). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether the infant plaintiff sustained a serious injury. The affirmation of the infant plaintiff's examining physician was insufficient to establish a triable issue of fact. While the affirmation was based on a recent examination of the infant plaintiff and noted limitations [*2]in the range of motion in his lumbar and cervical spine, the plaintiffs failed to provide any medical proof that was contemporaneous with the subject accident which showed range of motion limitations in his spine (see Ranzie v Massih, 28 AD3d 447; Li v Woo Sung Yun, 27 AD3d 624; Suk Ching Yeung v Rojas, 18 AD3d 863, 864; Nemchyonok v Peng Liu Ying, 2 AD3d 421, 421; Ifrach v Neiman, 306 AD2d 380, 380-381). Moreover, in this affirmation the infant plaintiff's examining physician impermissibly relied upon the unsworn reports of other doctors in giving his opinion (see Vallejo v Builders for Family Youth, Diocese of Brooklyn, 18 AD3d 741, 742; Mahoney v Zerillo, 6 AD3d 403, 403; Friedman v U-Haul Truck Rental, 216 AD2d 266, 266-267). In the absence of objective medical evidence of injury, the infant plaintiff's self-serving affidavit was insufficient to raise a triable issue of fact (see Fisher v Williams, 289 AD2d 288, 289). Furthermore, the plaintiffs failed to proffer competent medical evidence showing that the infant 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 Sainte-Aime v Ho, 274 AD2d 569, 570; Arshad v Gomer, 268 AD2d 450).

The Supreme Court, however, erred in finding that the defendant established his prima facie burden with respect to the plaintiff Nelcy Rivera (hereinafter the plaintiff mother). The defendant's examining orthopedist found limitations in the range of motion of the plaintiff mother's right shoulder (see Kaminsky v Waldner, 19 AD3d 370, 371; Scotti v Boutureira, 8 AD3d 652, 652; Omar v Bello, 13 AD3d 430, 430-431; Grant v Parsons Coach, Ltd., 12 AD3d 484, 485). Where, as here, the moving party fails to carry his initial burden of establishing his prima facie entitlement to judgment as a matter of law, it is unnecessary to consider the sufficiency of the papers in opposition to the motion (see Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., CRANE, KRAUSMAN, SKELOS and LUNN, JJ., concur.

Benitez v. Mileski


In an action to recover damages for personal injuries, the defendants separately appeal, as limited by their respective briefs, from so much of (1) an order of the Supreme Court, Suffolk County (Berler, J.), dated June 22, 2005, as denied their respective motions for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2) an order of the same court dated September 20, 2005, as, upon granting those branches of their respective motions which were for reargument, adhered to the original determination in the order dated June 22, 2005.

ORDERED that the appeals from the order dated June 22, 2005, are dismissed, on the ground that the order was superseded by the order dated September 20, 2005, made upon reargument; and it is further,

ORDERED that the order dated September 20, 2005, is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the plaintiffs. [*2]

The original determination in the order dated June 22, 2005, was proper, but we affirm on grounds different from those relied upon by the Supreme Court. The defendants failed to establish that the plaintiffs did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants' examining orthopedic surgeon, who examined each of the plaintiffs on October 26, 2004, set forth in his affirmed medical reports his findings with respect to their ranges of motion in their cervical and lumbar spines, but failed to compare those findings to what is normal (see Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Aronov v Leybovich, 3 AD3d 511). Moreover, the defendants' examining neurologist, who examined the plaintiffs on November 10, 2004, merely stated in her reports that upon examination "movements of the neck are normal in all directions" without setting forth the objective testing used to arrive at those conclusions (see Murray v Hartford, 23 AD3d 629, lv denied 6 NY3d 713; Nembhard v Delatorre, 16 AD3d 390; Nozine v Sav-On Car Rentals, 15 AD3d 555; Bailey v Ichtchenko, 11 AD3d 419). Since the defendants failed to establish, prima facie, their entitlement to judgment as a matter of law, the sufficiency of the papers in opposition need not be considered (see Aronov v Leybovich, supra; Coscia v 938 Trading Corp., 283 AD2d 538).
MILLER, J.P., LUCIANO, SPOLZINO and DILLON, JJ., concur.

City of New York v. Safeco Insurance Company of America


In an action for a declaratory judgment, the defendants separately appeal, as limited by their respective briefs, from so much of an order and judgment (one paper) of the Supreme Court, Kings County (Partnow, J.), dated August 3, 2004, as granted the plaintiff's motion for summary judgment, denied their respective cross motions for summary judgment, and declared that they are obligated to defend, and if necessary, indemnify the plaintiff in an underlying action, inter alia, to recover damages for personal injuries pending in the Supreme Court, Kings County, under Index No. 47924/01.

ORDERED that the order and judgment is reversed insofar as appealed from, on the law, with one bill of costs, the motion is denied, the cross motions are granted, and it is declared that the defendants are not obligated to defend and indemnify the plaintiff in the underlying action pending in the Supreme Court, Kings County, under Index No. 47924/01. [*2]

This declaratory judgment action arises from a personal injury action in which two parents, proceeding pro se and on behalf of their three daughters, sued, among others, the City of New York Administration for Children's Services (hereinafter ACS) and the Coalition for Hispanic Family Services (hereinafter the Coalition). The complaint in the underlying personal injury action alleged that, beginning in August 1998, ACS initiated petitions to have the three children removed from their home based on the observation of blood in one of the children's stool, and the child's subsequent positive test for a sexually transmitted disease. The complaint further alleged that, soon thereafter, ACS removed the children and placed them in foster care with the Coalition. The complaint stated that "the proceeding[s] were protracted because of the . . . prosecutor's failure to comply with the judge's order to produce witnesses, lab reports and medical records," and that, in October 2000, ACS discontinued its petition for lack of evidence.

Aside from the allegation that ACS placed the children with the Coalition, the complaint in the underlying personal injury action did not allege any specific wrongdoing by the Coalition. Rather, the complaint stated, albeit inartfully, four causes of action that ostensibly implicated the Coalition. These causes of action alleged that, "[t]he defendants' combined actions [1] tore the family asunder . . . [2] interfered with the right to parent without undue state interference and cause[d] the children to lose their parents . . . [3] caused physical stres[s], emotional pain and suffering . . . [and 4] resulted in malicious prosecution and conspiracy."

After the City's request for a defense and indemnification as an "additional insured" under the Coalition's general liability policies was denied, the City commenced this declaratory judgment action against the Coalition's insurers. The City moved for summary judgment, and the insurers separately cross-moved for summary judgment. The Supreme Court, inter alia, granted the motion and denied the cross motions. We reverse.

"[A]n insurer's duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65; see Labate v Liberty Mut. Fire Ins. Co., 19 AD3d 652, 653). "If the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend" (Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73).

Here, both liability insurance policies provided that the additional insured coverage applied "only with respect to liability arising out of [the Coalition's] operations." A fair and reasonable reading of the complaint in the underlying personal injury action indicates that the complaint alleged damages only arising out of ACS's decisions to remove the children, engage in protracted litigation to terminate parental rights, and to require supervised visitation with the children. Contractually, the City reserved to itself final authority for all decisions relative to the welfare of the children. Inasmuch as the complaint failed to allege any wrongdoing on the part of the Coalition, it cannot be said that any allegations of the complaint arise out of the Coalition's operations (see Greater N.Y. Mut. Ins. Co. v Mutual Mar. Off., 3 AD3d 44; Minerva v Merchants Mut. Ins. Co., 117 AD2d 720; Town of Oyster Bay v Employers Ins. of Wausau, 269 AD2d 387). The City is not an additional insured for purposes of the acts set forth in the complaint in the underlying personal injury action. Accordingly, the Supreme Court should have denied the motion and granted the cross motions.
MILLER, J.P., MASTRO, FISHER and LUNN, JJ., concur.

New York and Presbyterian Hospital v. Allstate Insurance Company

In an action to recover no-fault medical payments, the plaintiffs appeal from so much of an order of the Supreme Court, Nassau County (McCarty, J.), dated September 30, 2005, as denied that branch of their motion which was for summary judgment on their first cause of action to recover payments for medical services rendered by the plaintiff New York and Presbyterian Hospital, and granted that branch of the defendant's cross motion which was for summary judgment dismissing the first cause of action.

ORDERED that the appeal by the plaintiff Mount Vernon Hospital is dismissed, without costs or disbursements, as that plaintiff is not aggrieved by the order appealed from (see CPLR 5511); and it is further,

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the defendant's cross motion which was for summary judgment dismissing the first cause of action and substituting therefor a provision denying that branch of the cross motion; as so modified, the order is affirmed insofar as appealed from by the plaintiff New York and Presbyterian Hospital, without costs or disbursements, and the first cause of action is reinstated.

Pursuant to the statutory and regulatory framework governing the payment of no-fault automobile benefits, insurance companies are required to either pay or deny a claim for benefits within 30 days of receipt of the claim (see Insurance Law § 5106[a]; 11 NYCRR 65-3.8[c]). [*2]However, the 30-day period may be extended where the insurer makes a request for additional information within 15 business days of its receipt of the claim (see 11 NYCRR 65-3.5[b]; Nyack Hosp. v General Motors Acceptance Corp., 27 AD3d 96, 100; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432, 434; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 569-570), and an insurer is not obligated to pay or deny a claim until all demanded verification is provided (see Nyack Hosp. v General Motors Acceptance Corp., supra at 100-101; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492, 493, lv denied NY3d [Jun. 29, 2006]).

The plaintiff New York and Presbyterian Hospital (hereinafter the plaintiff) made a prima facie showing that it was entitled to judgment as a matter of law on its first cause of action by submitting evidence that the prescribed statutory billing forms had been mailed and received, and that the defendant had failed to either pay or deny the claim within the requisite 30-day period (see Nyack Hosp. v General Motors Acceptance Corp., supra at 100; New York & Presbyterian Hosp. v AIU Ins. Co., 20 AD3d 515, 516; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., supra at 570). However, in opposition to the motion, the defendant established that it had made a timely request for additional information and that it timely denied the claim within 30 days of receipt of the hospital records it had requested to verify the claim. Accordingly, the Supreme Court properly denied that branch of the plaintiffs' motion which was for summary judgment on the first cause of action.

However, the Supreme Court should have denied that branch of the defendant's cross motion which was for summary judgment dismissing the first cause of action. Although the defendant established that its denial of the subject claim was timely, it failed to submit sufficient evidentiary proof, in admissible form, to make a prima facie showing that it properly denied the claim upon the ground that the medical treatment provided was unrelated to the accident (see New York & Presbyt. Hosp. v AIU Ins. Co., supra; Hospital for Joint Diseases v Hertz Corp., 9 AD3d 392; Nyack Hosp. v State Farm Mut. Auto Ins. Co., 8 AD3d 250; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 20).
CRANE, J.P., RITTER, KRAUSMAN and SKELOS, JJ., concur.

Powell v. Alade

In an action to recover damages for personal injuries, the defendants Ibrahim N. Toure and Laura Rogers appeal, and the defendant Paul Thompson separately appeals, from so much of an order of the Supreme Court, Kings County (Vaughan, J.), dated June 15, 2005, as denied their respective motions for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The Supreme Court properly denied the defendants' respective motions for summary judgment dismissing the complaint insofar as asserted against them on the issue of serious injury. In order to be entitled to summary judgment on the issue of serious injury, the moving parties, the defendants Ibrahim M. Toure, Laura Rogers, and Paul Thompson (hereinafter the defendants), were required to submit admissible medical evidence demonstrating that the degrees of range of motion with respect to various movements of the plaintiff's cervical and lumbar spine were limited in [*2]comparison to the normal range of motion one would expect of a healthy person of the same age, weight, and height (see Aronov v Leybovich, 3 AD3d 511, 512). The affirmed report of the defendants' orthopedist, however, ambiguously asserted only that the plaintiff had "normal" extension, flexion, or rotation up to the extent indicated. By failing to compare the results that were reported to the normal range, the report leaves it to the court to speculate as to whether the range of extension, flexion, or rotation beyond that which was reported would have been abnormal because it could be accomplished only with pain and difficulty. Since the defendants failed to meet their initial burden of establishing a prima facie case, the sufficiency of the plaintiff's opposition papers need not be considered in connection with the defendants' motions (see Paulino v Dedios, 24 AD3d 741, 741-742; Aronov v Leybovich, supra).
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., conc

Santo v. GEICO


In an action to recover no-fault benefits under an insurance contract brought by motion for summary judgment in lieu of complaint pursuant to CPLR 3213, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Nassau County (Brennan, J.), dated August 10, 2005, as denied her motion for summary judgment in lieu of complaint.

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

Because the plaintiff's action was not based upon an instrument for the payment of money only, it was improperly commenced by motion for summary judgment in lieu of complaint (see CPLR 3213; New York Cent. Mut. Fire Ins. Co. v Danaher, 290 AD2d 783, 784 n 3; cf. Hellert v Travelers Ins. Co., 52 AD2d 751). Nonetheless, since the issues in dispute were fully submitted by the parties, the Supreme Court properly disposed of the motion on the merits (see Schulz v Barrows, 94 NY2d 624, 628; New York Cent. Mut. Fire Ins. Co. v Danaher, supra; see also CPLR 103[c]; Miller v North Shore Towers Assoc., 119 Misc 2d 644).

With respect to the merits, the plaintiff failed to establish her prima facie entitlement to judgment as a matter of law in connection with her cause of action alleging that the defendant insurer is collaterally estopped from rejecting her claim for no-fault benefits. In order to invoke collateral estoppel against the defendant, the plaintiff must demonstrate that a pending issue was [*2]raised, that it was necessarily decided and material in a prior action, and that the party to be estopped had a full and fair opportunity to litigate the issue in the earlier action (see Bansbach v Zinn, 1 NY3d 1, 10; Pinnacle Consultants v Leucadia Natl. Corp., 94 NY2d 426, 431-432; Matter of Kleiger-Brown v Brown, 306 AD2d 482, 483; Airco Alloys Div., Airco, Inc. v Niagara Mohawk Power Corp., 76 AD2d 68, 81-82). Here, the underlying liability action was settled, and the issue of whether the accident in which the plaintiff was injured arose from the use and operation of the insured vehicle was never raised or adjudicated. The defendant is thus not estopped from disclaiming an obligation to pay no-fault benefits to the plaintiff on that ground, particularly where the categories of occurrences covered under the liability provisions of the relevant policy are broader than those covered under the no-fault provisions, and there is no evidence in the record that the defendant, by its conduct, made any actual or implied promises that it would provide no-fault coverage (see Walsh v Prudential Ins. Co. of Am., 101 AD2d 988, affd 64 NY2d 1053).

In addition, the plaintiff failed to sustain her burden of establishing, as a matter of law, that her accident, which occurred when she slipped and fell on an icy sidewalk while attempting to walk around a parked vehicle owned by the defendant's insured, arose from the use and operation of that vehicle (see Matter of Transcontinental Ins. Co. v Hampton, 10 Misc 3d 1056(A); Pavone v Aetna Cas. & Sur. Co., 91 Misc 2d 658, 661; see generally Walton v Lumbermen's Mut. Cas. Co., 88 NY2d 211, 215; Matter of New York Cent. Mut. Fire Ins. Co. [Hayden], 209 AD2d 927).

The parties' remaining contentions are either academic or without merit.
SANTUCCI, J.P., SPOLZINO, LIFSON and COVELLO, JJ., concur.

Culpepper v. Allstate Insurance Company

In an action to recover damages for breach of contract, the defendant Allstate Insurance Company appeals from a judgment of the Supreme Court, Queens County (Dollard, J.), entered August 18, 2005, which, upon an order of the same court dated August 3, 2005, granting that branch of the plaintiff's motion which was for summary judgment, is in favor of the plaintiff and against it in the principal sum of $75,000, plus interest from July 9, 2004.

ORDERED that the judgment is modified, on the law, by deleting the provision thereof awarding interest from July 9, 2004; as so modified, the judgment is affirmed, with costs to the plaintiff.

The proceedings in this case arose from an automobile accident which occurred on March 24, 2000. Before the trial of the plaintiff's action against the tortfeasor, Lindburg McAlister, in an action entitled Culpepper v McAlister, in the Supreme Court, Queens County, under Index No. 448/2001 (hereinafter the underlying action), McAlister conceded liability in exchange for the [*2]plaintiff's agreement not to seek recovery against him personally in excess of his liability policy limit, $25,000. The plaintiff also had Supplemental Underinsured Motorist (hereinafter SUM) coverage in the amount of $100,000. The defendant in the current action, Allstate Insurance Company (hereinafter Allstate), was both McAlister's liability insurer and the plaintiff's SUM carrier. It, too, agreed, in exchange for McAlister's concession of liability, not to seek recovery against McAlister for amounts it would pay to the plaintiff under her SUM coverage.

Thereafter, a trial was held on the issue of damages only, at which McAlister was represented by an attorney supplied by Allstate; the jury awarded the plaintiff damages in the sum of $115,000. After Allstate paid the judgment to the plaintiff at the limit of McAlister's policy, the plaintiff sought recovery from Allstate under her policy's SUM provisions, but Allstate, for reasons not specified in the record, did not pay her claim. The plaintiff then instituted this action against Allstate alleging breach of contract.

The plaintiff, inter alia, moved for summary judgment, arguing that Allstate was collaterally estopped from contesting the issue of damages. In support of her motion, the plaintiff met her prima facie burden of establishing that the sole issue litigated at the trial of her personal injury action against McAlister and decided in her favor was the same issue the defendant Allstate sought to litigate in the instant action (see Schwartz v Public Administrator of County of Bronx, 24 NY2d 65, 73). In response, Allstate failed to raise a triable issue of fact as to whether it had a full and fair opportunity to litigate the issue of damages in the prior action (id.). In the trial on damages only in the underlying action, Allstate's interest and McAlister's interest did not diverge and Allstate was the only entity with a financial risk in that action. Consequently, Allstate was in privity with McAlister on the issue of Culpepper's damages for purposes of collateral estoppel (see Buechel v Bain, 97 NY2d 295, 303-305, cert denied 535 US 1096; see generally Siegel, NY Prac § 458, at 770-772 [4th ed]; 22 Holmes' Appleman on Insurance § 136.9, at 72-73 [2d ed]). Additionally, the amounts at issue in the earlier action and in this action are not so divergent that the first action could be considered to have been for "trivial stakes" (Goepel v City of New York, 23 AD3d 344, 345). Under these circumstances, the Supreme Court properly determined that Allstate was collaterally estopped from contesting the issue of damages in this action and granted the plaintiff's motion for summary judgment (see Zuckerman v City of New York, 49 NY2d 557, 562; Console v Wyckoff Hgts. Med. Ctr., 19 AD3d 637, 638).

The action is based upon one to recover damages for personal injuries, for which prejudgment interest is not available (see CPLR 5001[a]; cf. Gillespie v Great Atlantic & Pacific Tea Co., 26 AD2d 953, modified on other grounds 21 NY2d 823). Accordingly, the Supreme Court erred in awarding prejudgment interest to the plaintiff.

Allstate's argument that it should have been given an opportunity in this action to contest the issue of McAlister's liability was not raised in the Supreme Court or in the appellant's main brief on appeal; because it has been raised for the first time in its reply brief, it is not properly before this court (see Taormino v State of New York, 286 AD2d 490, 491).

Merchant’s Insurance of New Hampshire v. Weaver

Mugglin, J.

Appeal from an order of the Supreme Court (McNamara, J.), entered August 3, 2005 in Albany County, which granted plaintiff's motion for summary judgment.

Plaintiff issued a homeowner's policy to Susan Sweeney. It is not disputed that her son, defendant Joshua D. Sweeney (hereinafter Sweeney), is an insured thereunder. The policy defines "occurrence" as "an accident . . . which results in: a "bodily injury." The policy covers an insured for damages for bodily injury caused by an occurrence, but excludes from coverage injury "expected or intended" by the insured. Sweeney pleaded guilty to attempted assault in the first degree, admitting that he aimed what he knew was a loaded and operable flare gun and fired it at Jacob Weaver and Weaver's friend. The fiery projectile struck Weaver, causing serious physical injuries, including the loss of his left eye.

Under these circumstances, plaintiff brought this action seeking a declaratory judgment that it owed no duty to either defend or indemnify Sweeney. After joinder of issue, plaintiff moved for summary judgment, which Supreme Court granted, finding both that Sweeney's acts were not an "occurrence" within the meaning of the policy and that the policy's intentional act [*2]exclusion applied because Sweeney intended to cause bodily injury to Weaver. Defendant Jean Weaver (hereinafter defendant), individually and as Jacob Weaver's parent, now appeals.

We reverse, based on the recent decision of the Court of Appeals in Automobile Ins. Co. of Hartford v Cook (___ NY3d ___, 2006 NY Slip Op 04456 [June 8, 2006]). In that case, the definition of an "occurrence" and the exclusion for intended results language contained in the policy of insurance are identical to that found herein. There, as here, the complaint alleges that the weapon was negligently discharged by an insured. As such a claim is within the "'embrace of the policy'" (id. at *3, quoting Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 670 [1981]), the insurer must defend "'even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered'" (Automobile Ins. Co. of Hartford v Cook, supra at *3, quoting Fitzpatrick v American Honda Co., 78 NY2d 61, 63 [1991]).

With respect to the exclusion from coverage, plaintiff was required but here failed to show that the allegations of the complaint "cast that pleading solely and entirely within the policy exclusions, and, further that the allegations, in toto, are subject to no other interpretation" (Automobile Ins. Co. of Hartford v Cook, supra at *4). As a result, plaintiff's disclaimers based on the policy language are without merit and plaintiff must defend its insured in this action, with the issue of indemnification to await the outcome of the trial.

Furthermore, we are unpersuaded by plaintiff's argument that it properly disclaimed coverage because it did not receive notice of this occurrence as soon as practicable. Although coverage may be disclaimed as a result of a violation of this provision (see First City Acceptance Corp. v Gulf Ins. Co., 245 AD2d 649, 651 [1997]), the phrase "as soon as practicable" simply requires that the insurer get notice of the occurrence within a reasonable period of time under all of the attendant circumstances (see Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 19 [1979]). Here, plaintiff received notice of the occurrence within three months of the alleged incident and, in fact, disclaimed coverage on April 10, 2003, prior to the institution of this personal injury action. It is noteworthy that during this time period, the unsophisticated insured individuals were preoccupied with the criminal charges brought against Sweeney. Moreover, after suit was commenced, Sweeney was served at the state prison. Because he did not forward the papers to plaintiff, it further disclaims on this basis. While the duty to forward papers is separate from the duty to notify, as plaintiff had previously disclaimed, forwarding the papers would have been a useless act (see Mid City Dodge v Universal Underwriters Ins. Co., 306 AD2d 868, 869 [2003]). Lastly, we further find lack of merit in these disclaimer arguments because plaintiff has demonstrated no resultant prejudice.

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

6/8/06 Automobile Insurance Company of Hartford v. Cook

New York Court of Appeals

I Aimed at Him. I Shot Him. I Meant to Injure Him. I Still Get Coverage (in Self-Defense Case)

Alfred Cook shot and killed Richard Barber, an estranged business associate inside the Cook home. Barber was a big guy, about three times Cook’s size and had previously attacked the smaller man. On this particular morning, Barber and another man were outside of Cook's home, hurling objects at the house. They left without further incident, but Barber returned later that day with two other companions. When Cook, who was standing outside his door, saw them approaching, he asked a person visiting him to leave because he expected trouble. He returned inside, locked the door and, anticipating a confrontation, retrieved a .25 caliber hand gun from his bedroom.

Apparently the group burst into the Cook home and Barber demanded money while pounding his fist on the table. An “alarmed” Cook, drew his gun and demanded that they leave his house. Barber apparently laughed at the small size of the pistol, at which point Cook withdrew to his bedroom for a larger weapon. He picked up a loaded, 12 gauge shotgun and stood in his living room at the end of a pool table and again ordered them to leave the house.

Barber started to head toward the door with his companions, he stopped at the opposite end of the pool table, turned to face Cook and told his companions to take anything of value, and that he would meet them outside because he had some business to attend to. When Barber menacingly started advancing toward Cook, Cook warned him that he would shoot if he came any closer. Cook aimed his gun toward the lowest part of Barber's body that was not obscured by the pool table — his navel. When Barber was about one step away from the barrel of the gun, Cook fired a shot into Barber's abdomen. Barber died later that day at a hospital. Cook was acquitted of criminal charges.

Barber's estate commenced a wrongful death action against Cook. The first cause of action alleges that "[i]njury to the decedent and the decedent's death were caused by the negligence of the defendant, Alfred S. Cook." Specifically, the complaint alleges that Cook's behavior "consisted of negligently playing with a loaded shotgun; negligently pointing that shotgun at the abdomen of the decedent; negligently discharging that shot gun into the decedent's abdomen; and engaging in unruly behavior at the Defendant's residence on February 20, 2002." In a separate cause of action, the complaint alleges that Cook intentionally shot Barber causing Barber's death. At his examination before trial, Cook testified, "I knew the [shot from the] shotgun would injure Mr. Barber because I had to stop him, but I did not anticipate it killing him."
The homeowner’s carrier disclaimed arguing that the incident was not an "occurrence" within the meaning of the policy and furthermore that the injury inflicted upon Barber fell within a policy exclusion, as it was "expected or intended" by Cook. The insurer commenced this declaratory judgment action against both Cook and Pruyn for a declaration that it was not obligated to defend or indemnify Cook in the wrongful death action.

The lower court found that insurer failed to prove that the incident was not an occurrence covered by the policy or that Cook's actions were subject to the exclusion for injuries expected or intended by the insured. The court held that the insurer had a duty to defend because the negligence allegations in the complaint could potentially be proven at trial.

The Appellate Division reversed, concluding that since Cook intentionally shot Barber, his actions could not be considered an accident or "occurrence" and, thus, were not covered by the policy. The court also noted that the acts came within the policy exclusion for bodily injury "expected or intended" by the insured.

Despite the insured’s admission that he intended to shoot and injury the plaintiff, the Court of Appeals found, at least, that the insurer had a duty to defend the claim, but included some troubling language that will need future clarification. The Court held that since the complaint alleged that Cook negligently caused Barber's death, they “would fall within the scope of the policy as a covered occurrence.” Oddly, however, the Court looked to a life insurance case for guidance.

The policy defines an "occurrence" as an accident, and we have previously defined the term "accident" albeit in a life insurance policy "to pertain not only to an unintentional or unexpected event which, if it occurs, will foreseeably bring on death, but equally to an intentional or expected event which unintentionally or unexpectedly has that result" (Miller v Cont. Ins. Co., 40 NY2d 675, 678 [1976]). Thus, if Cook accidentally or negligently caused Barber's death, such event may be considered an "occurrence" within the meaning of the policy and coverage would apply.

What about the admission by the insured that he intentionally shot the Cook and intended to injury him? Well, said the Court, “the fact-finder in the underlying action may indeed ultimately reject the notion that Cook negligently caused Barber's death given the evidence of intentional behavior, but that uncertain outcome is immaterial to the issue raised here — the insurer's duty to defend in an action where it is alleged that the injury was caused by the negligent conduct of the insured.” Why the Court in the declaratory judgment action couldn’t be the fact-finder is unclear.

With respect to the exclusion — as an allegation of negligence implies an unintentional or unexpected event, Hartford necessarily has failed to demonstrate that the allegations of the complaint are subject to no other interpretation than that Cook "expected or intended" the harm to Barber so the carrier was required to defend Cook in the underlying wrongful death action. The Court did not reach the question as to “whether acts of self defense are intentional acts precluding coverage under a homeowner's policy” deciding the question on the duty to defend.

Counseling Point: While this is only a “duty to defend” case, the Court of Appeals reference to the life insurance case suggesting that an “accident” can apply “equally to an intentional or expected event which unintentionally or unexpectedly has that result" harkens back to the “unexpected results from intentional acts” language which has not been used to define “accident” in the last few years. It’s troubling. We’ll watch and report.

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