Coverage Pointers - Volume VIII, No. 10

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Dear Coverage Pointers Subscribers:

The travelogue continues with a weekend sojourn to San Juan to celebrate nuptials (not mine). So, you may be getting this issue Thursday night with a Friday dateline, because we surely didn't want to leave without dropping this issue into your mailbox.

By the way, so you do remember Hurwitz & Fine breeds trial lawyers as well as coverage mavens, we are congratulating partners Harry Mooney and Donna Burden for a defense verdict in a truck - motorcycle accident case where the plaintiff's counsel sought some $30 million from the jury in summation. Jurors often do just what is right and just and we should never forget the importance to all litigants of the civil jury trial, guaranteed to both plaintiffs and defendants by the Seventh Amendment.

Back to our edition: we're certainly glad you have a sense of humor and like us, can enjoy the jocular side of insurance law. We try as we can to offer up our bi-weekly specials laced with a practical approach that will keep you reading to the end.

There's a great array of cases today - coverage for the National Football League, attempts to rescind property policies due to fraud, late notice in the SUM arena, lack of coverage for the recovery of improperly secured funds, pollution coverage under first party policies and a very interesting case involving the 20-day period in which to file applications to stay Uninsured Motorist arbitrations. That last one is a must read.

You'll also find cases which provide guidance in the quality of the IME report and affidavits necessary to sustain the dismissal of an automobile accident case on the basis of a lack of "serious injury." Clearly, the trends are developing and clear instructions are coming from the appellate courts.

And for those ardent and loyal followers of Audrey's Angle's on No Fault, you'll find a couple of decisions which reflect disappointing but important lessons to be learned.

In the attached issue you'll find the following:

3-6 Record! We Figure the Buffalo Bills need a New Quarterback, Offensive Line, Pass Defense and Punter. But, We Digress. Here the NFL Gets Coverage for a College Player's Action Alleging Draft Eligibility Problems.
The Truth. The Whole Truth. And Nothing But the Truth. Question of Fact as to Intention to Defraud Insurer under First Party Policy.
Exclusion for "Investment Banking Work" Doesn't Include "Unduly Influenced by Investment Banking Concerns" Alleged by SEC.
I Know "Late" When I See It: Sixteen Months is Too Late to Give Notice of SUM Claim.
Claim for Breach of Trust and Reimbursement of Alleged Ill-Gotten Gains, Not a Claim for Personal Injury or Property Damage Under Liability Policy --- No Duty to Defend or Indemnify.
When Policy Excludes Cost of Extracting Pollutants from Land and Groundwater, Loss of Market Value Due to That Pollution is Not Recoverable. Policy and Oil Don't Mix When the Policy Excludes Part of the Claimed Damages.
Question of Fact as to Broker's Liability for Failure to Procure.
Substance Over Form - Read this One Closely: Twenty (20) Day Time Period to Move to Stay UM / SUM Arbitration Begins to Run With Receipt of Letter Demand for Arbitration, Even Though Demand "Form" Sent Later.
No Final Bill and No Compliance with V& T Equals No Valid Policy Cancellation.

· This Makes No Sense - Bad Faith Case Allowed to Proceed Even Though Personal Injury Case Not Yet Resolved.

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

Evidence of Herniations Without Limitations Not Sufficient.
Question to Defendant's Doctors: What is Normal Range of Motion?
Just Answer the Question, What is Normal?
Really, the Defendant's Counsel Needs to Know. What is Normal?
Same Old Story, Part I, Defendants' Docs Say There's Nothing Wrong Yet Forget to Put Forward Objective Testing.
Same Old Story, Part II, Defendants' Docs Say There's Nothing Wrong Yet Forget to Put Forward Objective Testing.

Audrey's Angle on No-Fault

Applicant Voluntarily Resigns From Her Job And Entitled To Lost Wages From Date Of Resignation Until Date Of Denial Because Insurer Untimely Denied Lost.
If The Denial Does Not Contain A Detailed Explanation For The Denial And Does Not Attach The IME or Peer Review Report Then The Insurer Will Be Precluded From Arguing Lack of Medical Necessity.
Yet Another Denial Struck Due To Denial Wording, And More Importantly For The Insurer Failing To Provide Proof That The Peer Review Report Was Sent To The Applicant.

Keep those e-mails coming in and we'll keep delivering quality product. Hasta luego.

Dan

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11/14/06 National Football League v. Vigilant Insurance Company

Appellate Division, First Department

3-6 Record! We Figure the Buffalo Bills need a New Quarterback, Offensive Line, Pass Defense and Punter. But, We Digress. Here the NFL Gets Coverage for a College Player’s Action Alleging Draft Eligibility Problems.

The issue here is whether a former college football player's antitrust lawsuit against the NFL challenging the NFL's draft eligibility rule falls within the employment practices exclusion of an insurance policy issued by defendant Vigilant to the NFL. The Court finds that because the employment practices exclusion is subject to a reasonable interpretation that would render it inapplicable to the subject antitrust claim against the NFL; the exclusion was inapplicable as a matter of law.

Vigilant issued to the NFL an executive protection insurance policy covering the period between April 30, 2003 and April 30, 2004. The policy provided the NFL with claims-made liability coverage and defined "Loss" to include indemnification for defense costs. The insuring clause required Vigilant to pay for "all Loss for which [the NFL] becomes legally obligated to pay on account of any Claim first made against the [NFL] during the Policy Period . . . for a Wrongful Act." The policy defined "Wrongful Act" as "any error, misstatement, misleading statement, act, omission, neglect or breach of duty committed . . . by [the NFL] before or during the policy period." The policy also included the following exclusion: "[Vigilant] shall not be liable . . . for Loss on account of any Claim made against [the NFL] . . . for any Employment Practices."

The Court finds that because the NFL has offered a plausible interpretation of the employment practices exclusion that would result in a determination of coverage, its position must be sustained. In light of the exclusion's clear focus on employment claims arising out of the employment relationship, it was reasonable to interpret the policy to exclude only employment practices that occur in a direct employment context. Had Vigilant intended to exclude wrongful deprivations of career opportunities arising outside the direct employment context, such as the Clarett situation, it could have accomplished this result by including language clearly indicating that the exclusion was not limited to the NFL's liability as an employer.

The NFL now has someone to take care of its legal bills. We need some help with our Buffalo Bills.

Go ~~Bills~~ SABRES!

11/14/06 Christophersen v. Allstate Insurance Company

Appellate Division, Second Department

The Truth. The Whole Truth. And Nothing But the Truth. Question of Fact as to Intention to Defraud Insurer under First Party Policy

A policy of insurance is vitiated where the insured has " willfully and fraudulently placed in the proofs of loss a statement of property lost which he did not possess, or has placed a false and fraudulent value upon the articles which he did own'". However, unintentional fraud or false swearing or the statement of any opinion mistakenly held is not grounds for vitiating a policy. In the present case, while there was no question that the insured gave Allstate inaccurate information in his original proof of loss statements, a triable issue of fact existed to whether the insured intended to defraud Allstate.

11/14/06 Vigilant Insurance Company v. Bear Stearns Companies

Appellate Division, First Department

Exclusion for “Investment Banking Work” Doesn’t Include “Unduly Influenced by Investment Banking Concerns” Alleged by SEC

The Appellate Division finds that the motion court properly found triable issues of fact as to whether insured breached the insurance policies' provision which prohibited defendant from settling any claims or assuming any contractual obligations without Vigilant’s consent. The insurance policies excluded claims that arose from or in consequence of “any underwriting, syndicating, or investment banking work.” The gravamen of the SEC complaint was that defendant's research analysts were unduly influenced by investment banking concerns. The Court holds that influencing research analysts is not like the examples of investment banking work listed in the Vigilant exclusion. The Court also rejects Vigilant’s argument that the $25 million payment for independent research and the $5 million for investor education were not covered by the insurance policies. The policies covered "loss," not merely "damages." "Loss" included "judgments" and "settlements."

11/9/06 In re The Hartford Insurance Company of the Midwest v. Gamel
Appellate Division, First Department

I Know “Late” When I See It: Sixteen Months is Too Late to Give Notice of SUM Claim

Claim for Supplementary Uninsured Motorists benefits made 16 months after the claimant received notice that the tortfeasor’s insurer was insolvent was not provided “as soon as practicable and was untimely as a matter of law.

11/9/06 Shapiro v. One Beacon Insurance Co.

Appellate Division, First Department
Claim for Breach of Trust and Reimbursement of Alleged Ill-Gotten Gains, Not a Claim for Personal Injury or Property Damage Under Liability Policy --- No Duty to Defend or Indemnify

No obligation to defend or indemnify the insured in a guardianship proceeding or in a lawsuit commenced by the insured against the law firm retained to represent him in the guardianship proceeding, holds the appellate court. In the guardianship matter, the trustees sought disgorgement of fees paid plaintiff, on the basis of an alleged breach of fiduciary duty, and asked that the court deny plaintiff's petitions for further payments. The allegations sounded in breach of fiduciary duty, self-dealing, and incompetence as a guardian, and sought a reduction or denial of compensation to plaintiff for services purportedly rendered by him as guardian. The successor trustees did not seek to hold plaintiff liable for personal injury, but rather, alleged that plaintiff's improper conduct as a fiduciary warranted disgorgement of fees already paid. The policy at issue provides coverage for amounts the insured is legally obligated to pay by virtue of personal injury or property damage. Moreover, the risk of being directed to return improperly acquired funds is not insurable and restitution of such funds does not constitute "damages" or "loss" as those terms are used in insurance policies. Also proper was its determination of non-coverage with respect to the Fensterstock suit. The claims in that suit, seeking unpaid legal fees and sounding in breach of contract and account stated, did not set forth claims coming within the policy's coverage.

11/9/06 White v. Rhodes

Appellate Division, Third Department

When Policy Excludes Cost of Extracting Pollutants From Land and Groundwater, Loss of Market Value Due to That Pollution is Not Recoverable. Policy and Oil Don’t Mix When the Policy Excludes Part of the Claimed Damages

Plaintiff had purchased the property from her mother's estate approximately two months prior to the accident, at which time she obtained a dwelling fire insurance policy with an extended coverage rider from New York Mutual. Following the accident, plaintiff filed a claim. New York Mutal denied the claim and canceled plaintiff's policy. Plaintiff then commenced this action, seeking to recover for damages caused by the oil contamination, including clean-up costs. Dueling motions for summary judgment. Lower court partially granted insurer’s motion, finding that the insurance policy expressly excluded costs related to extracting pollutants from land and water and, thus, did not cover the cost of the oil clean up on plaintiff's property. The court, however, denied defendant's motion in part based upon the extended coverage which addresses losses associated with vehicle impact.

The appellate court holds that New York Mutual is not liable for the full loss in market value caused by the oil spill. Finding no ambiguity in the relevant language, the Court finds that as a matter of law that the policy expressly excludes damage to land and groundwater; thus, any loss in market value attributable to such damages is not covered. Accordingly, if a loss in market value was used to measure the damages recoverable by plaintiff, only the loss in market value of the premises which is attributable to damage, if any, to the house, personal property and/or structures on the premises may be considered.

11/8/06 Katz v. Tower Insurance Company

Appellate Division, Second Department

Question of Fact as to Broker’s Liability for Failure to Procure

This was an action to recover damages for negligence in the procurement of insurance coverage. The insurance broker appealed from an order that denied its cross motion for summary judgment dismissing the complaint. The Court holds that an insurance agent or broker may be held liable under a theory of negligence for failing to procure insurance. In order for a broker to be held liable, "a plaintiff must demonstrate that the broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.” In the instant case, the brokerage failed to establish its entitlement to judgment as a matter of law as there existed a triable issue of fact as to whether it exercised due care in the transaction.

11/8/06 Matter of Government Employees Insurance Company v. Castillo-Gomez

Appellate Division, Second Department

Substance Over Form – Read : Twenty (20) Day Time Period to Move to Stay UM / SUM Arbitration Begins to Run With Receipt of Letter Demand for Arbitration, Even Though Demand “Form” Sent Later.

CPLR Article 75 proceeding to permanently stay arbitration of an uninsured motorist claim. Castillo claimed that he was injured as a result of an accident on March 30, 2003, caused by an allegedly uninsured vehicle. On April 9, 2003, his attorney sent Geico a letter by certified mail, return receipt requested, claiming no-fault insurance benefits, uninsured motorist benefits, and supplemental uninsured motorist (hereinafter SUM) benefits. The letter contained a statement pursuant to CPLR 7503(c) that the appellant "intends and provides this notice of claimant's intention to demand arbitration" and that Geico would be precluded from objecting, inter alia, that a valid agreement had not been made or complied with unless it applied to stay arbitration within 20 days after receipt of the notice.

By a document entitled "Request for SUM Policy Arbitration" received May 3, 2005, the appellant notified Geico that he was demanding arbitration before the American Arbitration Association. Within 20 days of receipt of this demand, Geico commenced this proceeding to stay arbitration on the ground that the offending vehicle was insured on the date of the accident. The appellant moved to dismiss on the ground that the proceeding was not timely commenced, relying on the letter dated April 9, 2003, containing his notice of intention to arbitrate.

The Supreme Court stayed arbitration, finding that the proceeding was timely. It determined that the letter dated April 9, 2003, was not a valid demand for arbitration as it did not contain all of the information required by the American Arbitration Association Rules governing arbitration of SUM disputes, and thus, the 20-day period would be measured from the later demand for arbitration. The Appellate Division reverses.

Where an insurance policy contains an agreement to arbitrate, CPLR 7503(c) "requires a party, once served with a demand for arbitration, to move to stay such arbitration within 20 days of service of such demand, else he or she is precluded from objecting". The validity of the 20-day limitation depends on compliance with the requirements of CPLR 7503(c) and not those of the rules promulgated by the American Arbitration Association. Since the appellant's April 9, 2003, notice of intention to arbitrate complied with all of the statutory requirements, it was sufficient to commence the 20-day period of limitations.

11/8/06 Matter of Transcontinental Insurance Company v. Gibbs

Appellate Division, Second Department

No Final Bill and No Compliance with V& T Equals No Valid Policy Cancellation

Supreme Court properly determined that Allstate Insurance Company (Allstate) failed to effectuate the cancellation of a policy of insurance it issued to its insured because it failed to prove that a proper final premium bill had been timely mailed to her. Allstate also failed to prove that its notice of cancellation to its insured complied with the requirements of Vehicle and Traffic Law § 313(1)(a).

11/8/06 Plaza Restoration v. Nationwide Mutual Insurance Co.

Appellate Division, Second Department

This Makes No Sense – Bad Faith Case Allowed to Proceed Even Though Personal Injury Case Not Yet Resolved

The insured sought a judgment declaring that the carrier breached its covenant of good faith and fair dealing in connection with an action to recover damages for personal injuries sustained by a worker at a construction site, commenced against the plaintiff. The carrier claimed that the action was not ripe for adjudication as entry of judgment in the underlying action was yet accomplished. The Court holds that a declaratory judgment action against an insurer with respect to jural relations, either as to present or prospective obligations, is permitted before entry of judgment in the underlying action.

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

11/14/06 Park v. Ellison Champagne

Appellate Division, First Department

Evidence of Herniations Without Limitations Not Sufficient

Affirmations from orthopedist Sheldon Manspeizer, M.D. and radiologist Steven L. Mendelsohn, M.D. Dr. Manspeizer performed an examination of Ms. Johnson in January 2005 and conducted an evaluation of the medical record. His "examination did not demonstrate any objective physical findings to indicate any significant injury to her neck or lower back," and the disc bulging and herniation reported in the June 2002 MRI studies "did not correlate with any significant injury to her neck or lower back." Dr. Mendelsohn conducted an evaluation of the MRI studies in May 2005 and found them to be normal, concluding, "I must take issue with the interpretation provided by Dr. Mark Freilich insofar as I find no evidence of any of the multiple herniations he reports."

The Court finds that Plaintiff’s subjective complaints of pain were insufficient to meet the statutory burden to demonstrate that a serious injury has been sustained. "Proof of a herniated disc, without additional objective medical evidence establishing that the accident resulted in significant physical limitations, is not alone sufficient to establish a serious injury" (Pommells v Perez, 4 NY3d 566, 574 [2005]). A further deficiency in Plaintiff’s proof was the failure to provide any explanation for the gaps in her treatment.

11/14/06 Spektor v. Dichy

Appellate Division, Second Department

Question to Defendant’s Doctors: What is Normal Range of Motion?

In his affirmed medical report following cervical range of motion testing, the defendant's examining orthopedic surgeon merely stated that the injured plaintiff had "excellent" range of motion with "60 degrees of extension, 80 degrees of rotation to the right and left, and full forward flexion to 50 degrees." He further noted that right and left lateral bending was to "40 degrees." As to the lumbar spine range of motion, he found that the injured plaintiff had "75 degrees of forward flexion and 30 degrees of extension," and lateral bending to the left and right was to "30 degrees." Nowhere were these findings compared against what is normal range of motion. His failure to do so required denial of the defendant's motion.

11/14/06 Cohen v. A One Products, Inc.

Appellate Division, Second Department

Just Answer the Question, What is Normal???

Defendants established their prima facie entitlement to summary judgment dismissing the complaint insofar as asserted by the plaintiff by submitting affirmed reports of three physicians whose opinions of the cervical and lumbar normalcy of the plaintiff were based upon specified objective tests. In opposition, the plaintiff failed to meet her burden. The report of the plaintiff's radiologist was not affirmed, and therefore, was insufficient to raise a triable issue of fact. Furthermore, the affirmed report of the plaintiff's examining but not treating physician failed to proffer medical evidence that the limitations in motion he observed were contemporaneous with the accident that occurred almost three years earlier.

11/14/06 LaCagnina v. Bernard

Appellate Division, Second Department

Really, the Defendant’s Counsel Needs to Know. What is Normal?

The affirmed medical reports of the defendant's examining neurologist concerning each plaintiff established significant limitations in various aspects of their respective cervical and lumbar spines which required denial of the motion. Moreover, while the affirmed medical reports of the defendant's examining orthopedist concerning each plaintiff set forth range of motion findings as to their respective cervical and lumbar spines he failed to compare those findings to what is considered normal ranges of motion.

11/8/06 Thai v. Butt

Appellate Division, Second Department

Same Old Story, Part I, Defendants’ Docs Say There’s Nothing Wrong Yet Forget to Put Forward Objective Testing

The defendants' examining neurologist and orthopedist opined in their reports that the plaintiff's cervical range of motion was "normal" and "full,” yet failed to set forth the objective test or tests performed to support their conclusions. Moreover, the defendants' motion papers did not adequately address the plaintiff's claim, clearly set forth in her verified bill of particulars, that she sustained a medically determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The defendants' examining neurologist and orthopedist conducted their independent examinations of the plaintiff over two years after the subject accident. Neither expert related their findings concerning this category of serious injury for the period of time immediately following the accident.

11/8/06 Hernandez v. Stanley

Appellate Division, Second Department

Same Old Story, Part II, Defendants’ Docs Say There’s Nothing Wrong Yet Forget to Put Forward Objective Testing

Defendants relied on the affirmed medical report of their examining orthopedic surgeon. During that expert's examination of the plaintiff, which took place a little more than two months after the subject accident, the expert noted that the plaintiff had "full" flexion, extension and lateral flexion in his cervical spine range of motion. However, he further concluded that the plaintiff had "60 degrees of rotation bilaterally" upon examination. While the expert set forth this finding, he failed to compare that finding to what is considered the normal range of motion. Since there was no comparative quantification it could not be concluded that the plaintiff's rotation, bilaterally, was normal or that any limitation was insignificant within the meaning of the no-fault statute.

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.

11/15/06 In the Matter of the Arbitration between the Applicant and Respondent

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

Applicant Voluntarily Resigns From Her Job And Entitled To Lost Wages From Date Of Resignation Until Date Of Denial Because Insurer Untimely Denied Lost Wage Benefits.

Here is the Angle: In this arbitration the Applicant voluntarily resigned from her position at a school district after a November 13, 2003, motor vehicle accident due to excessive absenteeism and insubordination that began in August 2003. The insurer proved that the Applicant voluntarily resigned. However, the insurer’s denial of lost wage benefits was found to be untimely. The Applicant was awarded lost wages from the date she resigned until the date of the insurer’s denial. However, the insurer’s denial was found to be appropriate from the date of the denial forward.

Arbitrator McCorry found that an insurer, despite the untimeliness of a denial, can raise coverage, fraud, standing, and subject matter jurisdiction issues at any time. However, the issue of whether the Applicant is entitled in the first instance to lost wages under the regulation because she resigned is not a coverage issue. Therefore, the Applicant was entitled to lost wages from the date of her resignation until the date of the insurer’s untimely denial.

The Analysis: The Applicant, eligible injured person (“EIP”), sought lost wages from January 25, 2004 to the present. On November 13, 2003, the EIP was involved in a one car accident after her car hit an icy patch on the road going into a ditch. The EIP treated the following day at the emergency room where she was diagnosed with back strain. The EIP claimed she missed around 16 days from work until December 1, 2003, where after she worked half days until the beginning of January when she returned to work full time with restrictions.

The EIP also had several work related accidents starting in 1995. The most recent work related accident occurred in 2002, resulting in the EIP’s employer providing her with accommodations in the form of working half the day in the nurse’s office and the remainder of the day assisting a first grade special education student. The EIP also had a restriction of no lifting or sitting on hard floors or chairs.

On January 20, 2004, the EIP alleged she resigned from her position at the school district under duress because the school district would not accommodate disabilities purportedly related to the November 2003, accident.

The insurer produced the school district’s primary school Principal, and the EIP’s immediate supervisor to testify as to the reason for the EIP’s termination. The Principal testified that the school district began having a problem with the EIP in August 2003, after she received her school year assignment. Apparently the EIP only wanted to work in the nurse’s office and not spend part of her day working with a special education student. Thereafter, the situation escalated and the Principal advised the EIP that her actions in disregarding his instructions and assignments amounted to “insubordination and would not be tolerated.”

On the day before the November 2003, motor vehicle accident, the Principal issued another letter to the EIP regarding her excessive absenteeism which the Principal indicated was nearly a 50% absence rate. Thereafter, the EIP and the school district had a series of meetings and the EIP was offered a Section 75 Civil Service Law hearing or a two week unpaid suspension with the provision she return able to work. The EIP chose to resign on January 20, 2004.

Arbitrator McCorry found that based upon the Principal’s testimony and the documentation the EIP voluntarily resigned, which Arbitrator McCorry also noted was the finding of the New York State Division of Human Rights after the EIP filed a complaint.

Then Arbitrator McCorry found that the insurer’s denial was untimely. He acknowledged the insurer’s argument that even if its denial was late, the EIP failed to demonstrate a prima facie case of entitlement to benefits. Further, the issue regarding coverage and proper reimbursement under the No-Fault regulations can be raised at any time. Arbitrator McCorry agreed that “core issues such as fraud, coverage, standing (sic) and subject matter jurisdiction can be raised at any time during the pendency of the proceeding even if not timely raised in a denial.”

Yet, Arbitrator McCorry found that it is undisputed that the EIP was involved in a motor vehicle accident and that she claimed her work related injuries were aggravated by the accident. Also, the EIP claimed that the excessive days missed as claimed by her employer, were in part related to the aggravation of her injuries.

Arbitrator McCorry found in favor of the insurer that the EIP voluntarily resigned from her position BUT there was no coverage issue involved that excuses the insurer’s late denial. Arbitrator McCorry stated “What we are met with here is nothing more than a disputed claim of entitlement to benefits for which the denial of 8/8/05 was untimely.”

Arbitrator McCorry issued an award in favor of the EIP from the date of her resignation on January 25, 2004 until August 5, 2005, the date on the denial. However, he awarded in favor of the insurer from the date of the denial forward stating that the denial was appropriate.

Editor’s Note: INSURERS: Review Your Practices Regarding the Wording of Your Denials!

11/7/06 In the Matter of the Arbitration between the Applicant and Respondent

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

If The Denial Does Not Contain A Detailed Explanation For The Denial And Does Not Attach The IME or Peer Review Report Then The Insurer Will Be Precluded From Arguing Lack of Medical Necessity.

Here is the Angle: An insurer must provide an explanation of a high degree of specificity in its denials, particularly so if the basis for the denial is upon an IME and peer review. This decision indicates that insurer’s denials will be subject to more scrutiny by the Arbitrator and if the denials do not pass muster the insurer is precluded from arguing lack of medical necessity. An insurer will not be able to merely state in Box 33 of its denial that the basis for the denial is upon an IME or peer review conducted on a certain date. We also venture to add that a denial which references and relies upon a previously issued general blanket denial due to an IME or peer review report will not be upheld.

The counseling point that should be seriously heeded from this decision is to review your practice on the content of a denial. If you are going to issue a denial based upon the IME or peer review report state the name of the physician or chiropractor who conducted it; when they conducted it; and copy the medical conclusion and opinion from the report in the denial. This should be done on every denial without exception. While there is still debate regarding whether insurers are required to attach the report (HIPPA concerns and the No-Fault regulation does not require it), I am aware of some insurers now making it their practice to attach a copy of the report every time they issue a denial.

The Analysis: The Applicant sought payment for various medical health service expenses that were denied by the insurer as a result of multiple independent medical reviews (“IME”) and peer reviews. Arbitrator McCorry held that various denials issued by the insurer were “so vague and unclear that they were valueless and not in compliance with the regulations.” Some examples provided were:

TREATMENT RENDERED IS NOT RELATED TO MOTOR VEHICLE ACCIDENT OF 12/24/01. THEREFORE THIS CHARGE IS DENIED.

BASED ON THE RESULTS OF AN INDEPENDENT PEER REVIEW, MEDICAL JUSTIFICATION AND/OR NECESSITY CANNOT BE ESTABLISHED FOR THE SERVICES BILLED. THEREFORE, YOUR REQUEST FOR REIMBURSEMENT IS DENIED.

BASED ON THE RESULTS OF AN INDEPENDENT MEDICAL EXAMINATION (IME), THIS PATIENT WAS DENIED FURTHER TREATMENT EFFECTIVE 10/4/04.

Relying upon Accessible and Advance Medical P.C. v. Allstate and Nyack Hospital v. State Farm Mut. Ins. Co. (citations omitted) Arbitrator McCorry held that the denials must contain an explanation that apprises the claimant for the benefit with a high degree of specificity of the ground or grounds for the denial. If the denial does not provide a sufficient explanation then the insurer is precluded from arguing lack of medical necessity.

Arbitrator McCorry noted that the aforementioned explanations the insurer placed in the denial were vague in that they did not mention the physician who conducted the IME or the peer review; did not mention the date of the review; and the reports were not attached to the denial.

11/6/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Brynne L. Haines, Esq. (Westchester County)

Yet Another Denial Struck Due To Denial Wording, And More Importantly For The Insurer Failing To Provide Proof That The Peer Review Report Was Sent To The Applicant.

Here is the Angle: Again, insurers need to review their practices regarding the wording for the basis for the denial. Here, the denial stated that the basis for the denial was upon an IME report, with the report to follow. The insurer failed to provide proof that the report was actually sent to the Applicant. Another counseling point is to consider preparing Affidavits of Service of denials if you choose to send a copy of the IME or peer review report with the denial.

The Analysis: In this arbitration, the Applicant sought reimbursement for physical therapy and electro diagnostic studies. The insurer denied the claim for the electro diagnostic studies based upon a peer review. The denial indicated that the basis for the denial was “Pursuant to the peer review by Dr. Frida Goldin MD on (date) your bill has been denied. Report to follow.” Arbitrator Haines found that there was no evidence that the insurer ever mailed the peer review report to the Applicant. She declined to uphold the denial.

Arbitrator Haines stated that insurers are not required to attach a peer review or IME report to a denial based upon lack of medical necessity. However, if the insurer chooses not to attach the report then the denial must provide with specificity the “factual basis and medical rationale” for the denial. It is not sufficient for the denial to merely state that it is based upon an IME or peer review. Furthermore, if the insurer chooses to attach the IME or peer review report then a medical explanation does not have to be on the denial itself. Yet, the insurer must be able to demonstrate that the IME or peer review report was actually sent within the 30-day claim determination period.

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.

11/9/06 Stigggers v. Erie Insurance Group

Ohio Appellate Court, Eighth District

Insurer Waived Right to Assert Notice Provision in CGL Policy
Plaintiff contracted with non-party Elie Construction to build an addition onto her house. Erie insured under a CGL policy by Erie Insurance. Plaintiff was unsatisfied with Elie’s work and Elie eventually abandoned the project before completion. Plaintiff sued Elie but subsequently dismissed the suit without prejudice. Plaintiff refiled and obtained a default judgment against Elie for the estimated cost of repair and/or replacement of the defective construction. Plaintiff then filed suit against Erie, the insurer, seeking a declaration of the parties’ rights and obligations under the insurance contract. The trial court granted summary judgment in the insurer’s favor, holding that plaintiff’s failure to provide notice of the refiled suit was a violation of the notice provision in the policy and the taking of a default judgment without providing notice constituted prejudice to Erie as a matter of law. On appeal, the court reversed, holding that the insurer was estopped from asserting noncompliance with the notice provision as a defense. The court found that plaintiff’s statement of facts showed that the insurer waived its right, through its agent, to insist that plaintiff give notice of her refiled suit, after the agent told plaintiff’s counsel that the insurer would not defend Elie against plaintiff’s claims. The agent’s conversation with plaintiff was sufficient, under Ohio law, to estop the insurer from asserting a right to notice under the policy.

Submitted by: Bruce D. Celebrezze & Vanessa L. O'Brien (Sedgwick, Detert, Moran, & Arnold LLP)

11/9/06 American National Fire Insurance v. Hammer Trucking Co.
Court of Appeals of Texas, Fort Worth

Insurer Not Required to Indemnify Under Excess Policy
American National Fire Insurance Company appealed from a summary judgment in favor of Hammer Trucking, in which the trial court ruled that Hammer was covered as a matter of law under an excess insurance policy issued by American to JTM Materials Inc. A Hammer employee injured Grant Morris in a car accident while driving a tractor-trailer Hammer had leased to JTM. Morris obtained a judgment in excess of $3,000,000, and JTM’s primary insurer paid $1.9 million. On appeal, the court held that Hammer’s claim for indemnity was not a first party claim under Article 21.55 of the Texas Insurance Code. Applying principles of statutory construction to Article 21.55, the court concluded that a first-party claim is one in which an insured seeks recovery for the insured’s own loss. Here, Hammer sought to be indemnified for the amount of the Morris judgment in excess of the amount that the primary insurer had paid. The court held that any attempt to apply Article 21.55 to a claim for indemnity was “unworkable and, based on the language of the statute, clearly unintended by the legislature.” Thus, the appellate court reversed and rendered judgment in American’s favor.

Submitted by: Bruce D. Celebrezze & Vanessa L. O'Brien (Sedgwick, Detert, Moran & Arnold LLP)

11/9/06 Brass & Singer v. United Automobile Insurance Company
Supreme Court of Florida

Insured That Loses On Appeal Is Not Entitled To Conditional Award Of Fees Under Section 627.428 of the Florida Statutes

The court was faced with a split of authority among Florida's intermediate appellate courts regarding whether an appellate court may conditionally award appellate attorneys' fees to an insured that loses on appeal, under Section 627.428. In a short opinion solely addressing this purely legal issue, the Supreme Court of Florida held that an appellate court may not do so.

Submitted by: John P. Craver and Lucas Lorenz (White and Steele, P.C.)

11/9/06 Hall v. Norfolk Southern Railway
United States Court of Appeals for the Seventh Circuit

Lack Of Knowledge As To Which Party To Sue, Or Misunderstanding As To Who Is Liable, Is Not Sufficient “Mistake” Under Fed. R. Civ. P. 15(c)(3)
Plaintiff was injured while employed at a rail yard, and sued the Defendant based on the incorrect belief that Defendant was Plaintiff's employer. In fact, Defendant had acquired many of the assets and liabilities of Plaintiff's employer, Conrail. Defendant moved to dismiss, and in response Plaintiff moved to amend his complaint to name Conrail as a defendant. Plaintiff argued that the amended complaint would relate back under Rule 15(c)(3) because of a “mistake concerning the identity of the proper party.” The court held that a lack of knowledge as to which party to sue, or misunderstanding as to who is liable for a plaintiff's injury, is not within the scope of Rule 15(c)(3). Judgment in favor of Defendant was affirmed.

Submitted by: John P. Craver and Lucas Lorenz (White and Steele, P.C.)

11/8/06 American Home Assurance v. AGM Marine Contractors
United States Court of Appeals for the First Circuit

“Assured's Product” Exclusion Applied To Preclude Coverage For Damaged Docks That Had Been Installed By The Insured
The Defendant in this declaratory judgment action was hired to repair a pier and install a floating dock system. A strong storm damaged the docks, and the Defendant sought coverage for the damages. Defendant had been issued a commercial marine liability policy (which was based on an ISO commercial general liability policy form) by Plaintiff. The court discussed a split of authority as to interpreting the definitions of “occurrence” and “property damage” in commercial general liability policies, and also discussed how the “Assured's work” exclusion may or may not apply in this case. However the court held that regardless of whether that exclusion applied, the “Assured's product” exclusion did apply to preclude coverage. The docks were not real property within the meaning of the real property exception to the “Assured's product” exclusion.

Submitted by: John P. Craver and Lucas Lorenz (White and Steele, P.C.)

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Thai v. Butt

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Douglass, J.), dated July 13, 2005, as 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 insofar as appealed from, with costs.

While we affirm the Supreme Court's determination we do so on grounds other than those relied upon by that court. The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants' examining neurologist and orthopedist opined in their respective affirmed medical reports that the plaintiff's cervical range of motion was "normal" and "full," respectively, yet failed to set forth the objective test or tests performed to support their conclusions (see Ilardo v New York City Tr. Auth., 28 AD3d 610, 611; Kelly v Rehfeld, 26 AD3d 469, 470; Nembhard v Delatorre, 16 AD3d 390, 391; Black v Robinson, 305 AD2d 438, 439). On this finding alone the defendants failed to meet their initial prima facie burden. Moreover, the defendants' motion papers did not adequately address the plaintiff's claim, clearly set forth in her verified bill of particulars, that she sustained a medically determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The defendants' examining neurologist and orthopedist conducted their independent examinations of the plaintiff over two years after the subject accident. Neither expert related their findings concerning this category of serious injury for the period of time immediately following the accident (see Volpetti v Yoon Kap, 28 AD3d 750, 751; Sayers v Hot, 23 AD3d 453, 454). Under these circumstances, it is not necessary to consider whether the plaintiff's papers submitted 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., KRAUSMAN, RIVERA and LIFSON, JJ., concur.

Hartford Insurance Company of the Midwest, Petitioner-Respondent,

v

Ruchama Gamiel, Respondent-Appellant. The Breakstone Law Firm, P.C., Bellmore (Jay L.T. Breakstone of counsel), for appellant. Shayne, Dachs, Stanisci, Corker & Sauer, Mineola (Jonathan A. Dachs of counsel), for respondent.

Judgment, Supreme Court, New York County (Leland DeGrasse, J.), entered August 5, 2005, which granted the petition to permanently stay arbitration, unanimously affirmed, without costs.

Respondent's notice of her claim for SUM benefits under the SUM coverage she purchased (see Insurance Law § 3420[f][2]), provided to petitioner insurer at least 16 months after respondent's receipt of notice that the tortfeasor's insurer was insolvent and in liquidation was not provided "as soon as practicable," as required by the policy, and was untimely as a
matter of law (see Great Canal Realty Corp. v Seneca Mut. Ins. Co. Inc., 5 NY3d 742, 743 [2005]; Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 474 [2005]).

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

ENTERED: NOVEMBER 9, 2006

CLERK

Hernandez v. Stanley

DECISION & ORDER

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

ORDERED that the order is reversed, on the law, with costs, and the motion for summary judgment dismissing the complaint is denied.

Contrary to the finding of the Supreme Court, the defendants failed to establish their 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 defendants relied on the affirmed medical report of their examining orthopedic surgeon. During that expert's examination of the plaintiff, which took place a little more than two months after the subject accident, the expert noted that the plaintiff had "full" flexion, extension and lateral flexion in his cervical spine range of motion. However, he further concluded that the plaintiff had "60 degrees of rotation bilaterally" upon examination. While the expert set forth this finding, he failed to compare that finding to what is considered the normal range of motion (see Sullivan v Dawes, 28 AD3d 472; Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Kennedy v Brown, 23 AD3d 625; Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462; Aronov v Leybovich, 3 AD3d 511). Since there was no comparative quantification it cannot be concluded that the plaintiff's rotation, bilaterally, was normal or that any limitation was insignificant within the meaning of the no-fault statute (see Licari v Elliot, 57 NY2d 230, 236; Gaddy v Eyler, 79 NY2d 955, 957). Since the defendants failed to establish their prima facie burden, we need not consider whether the plaintiff's papers submitted in opposition raised a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
MILLER, J.P., SANTUCCI, GOLDSTEIN, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Hartford Insurance Company v. Gamiel

Judgment, Supreme Court, New York County (Leland DeGrasse, J.), entered August 5, 2005, which granted the petition to permanently stay arbitration, unanimously affirmed, without costs.

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

ENTERED: NOVEMBER 9, 2006

CLERK

Shapiro v. OneBeacon Insurance Co.

Order and judgment (one paper), Supreme Court, New York County (Louis B. York, J.), entered June 16, 2005, which, inter alia, granted the cross motion of defendant insurer to the extent of declaring that defendant had no obligation to defend or indemnify plaintiff in the underlying guardianship proceeding and in the subsequent action commenced against plaintiff by Fensterstock & Partners, LLP, the attorneys retained by plaintiff to represent him in the guardianship proceeding, and otherwise dismissed the complaint, unanimously affirmed, without costs.

The motion court properly found that no coverage existed with respect to allegations made in the guardianship matter or the Fensterstock lawsuit. In the guardianship matter, the successor trustees sought disgorgement of fees paid plaintiff, on the basis of an alleged breach of fiduciary duty, and asked that the court deny plaintiff's petitions for further payments. The allegations sounded in breach of fiduciary duty, self-dealing, and incompetence as a guardian, and sought a reduction or denial of compensation to plaintiff for services purportedly rendered by him as guardian. The successor trustees did not seek to hold plaintiff liable for personal injury, but rather, alleged that plaintiff's improper conduct as a fiduciary warranted disgorgement of fees already paid. The policy at issue provides coverage for amounts the insured is legally obligated to pay by virtue of personal injury or property damage. Moreover, the risk of being directed to return improperly acquired funds is not insurable and restitution of such funds does not constitute "damages" or "loss" as those terms are used in insurance policies (see Vigilant Ins. Co. v Credit Suisse First Boston Corp., 10 AD3d 528 [2004]; Reliance Group Holdings, Inc. v Natl. Union Fire Ins. Co. of Pittsburgh, Pa, 188 AD2d 47, 55 [1993], lv dismissed in part and denied in part 82 NY2d 704 [1993]). Accordingly, the motion court properly held that plaintiff is not entitled to coverage in connection with the guardianship matter. Also proper was its determination of non-coverage with respect to the Fensterstock suit. The claims in that suit, seeking unpaid legal fees and sounding in breach of contract and account stated, did not set forth claims coming within the policy's coverage.

The motion court also correctly found that plaintiff was not entitled to a defense from defendant in either the guardianship matter or the Fensterstock suit. In neither matter did the allegations against plaintiff state a claim suggesting a reasonable possibility of coverage (see [*2]Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]).

We have considered plaintiff's remaining arguments and find them unavailing.

Katz v. Tower Insurance Company

In an action, inter alia, to recover damages for negligence in the procurement of insurance coverage, the defendant Silberstein Brokerage, Inc., appeals from so much of an order of the Supreme Court, Kings County (Bunyan, J.), dated March 3, 2005, as denied its cross motion for summary judgment dismissing the complaint insofar as asserted against it.

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

An insurance agent or broker may be held liable under a theory of negligence for failing to procure insurance (see Mickey's Rides-N-More v Anthony Viscuso Brokerage, 17 AD3d 328, 329; Structural Bldg. Prods. Corp. v Business Ins. Agency, 281 AD2d 617; American Ref-Fuel Co. of Hempstead v Resource Recycling, 281 AD2d 574, 575). In order for a broker to be held so liable, however, "a plaintiff must demonstrate that the broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction" (Mickey's Rides-N-More v Anthony Viscuso Brokerage, supra at 329; see Structural Bldg. Prods. Corp. v Business Ins. Agency, supra at 620; American Ref-Fuel Co. v Resource Recycling, supra at 575; Santaniello v Interboro Mut. Indem. Ins. Co., 267 AD2d 372). In the instant case, the defendant Silberstein Brokerage, Inc., failed to establish its entitlement to judgment as a matter of law insofar as there exists a triable issue of fact as to whether it exercised due care in the transaction. Accordingly, the cross motion was properly denied.
SCHMIDT, J.P., ADAMS, DILLON and COVELLO, JJ., concur.

Matter of Government Employees Insurance Company v. Castillo-Gomez

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Fernando Castillo-Gomez appeals from an order of the Supreme Court, Nassau County (Davis, J.), dated August 15, 2005, which denied his motion to dismiss the proceeding as untimely and granted the petition.

ORDERED that the order is reversed, on the law, with costs, and the appellant's motion to dismiss the proceeding as untimely is granted.

The appellant claimed that he was injured as a result of an accident on March 30, 2003, caused by an allegedly uninsured vehicle. On April 9, 2003, his attorney sent to his insurer, the petitioner Government Employees Insurance Company (hereinafter Geico), a letter by certified mail, return receipt requested, claiming no-fault insurance benefits, uninsured motorist benefits, and supplemental uninsured motorist (hereinafter SUM) benefits. The letter contained a statement pursuant to CPLR 7503(c) that the appellant "intends and provides this notice of claimant's intention to demand arbitration" and that Geico would be precluded from objecting, inter alia, that a valid agreement had not been made or complied with unless it applied to stay arbitration within 20 days after receipt of the notice.

By document entitled "Request for SUM Policy Arbitration" received May 3, 2005, the appellant notified Geico that he was demanding arbitration before the American Arbitration Association. Within 20 days of receipt of this demand, Geico commenced this proceeding to stay arbitration on the ground that the offending vehicle was insured on the date of the accident. The appellant moved to dismiss on the ground that the proceeding was not timely commenced, relying on the letter dated April 9, 2003, containing his notice of intention to arbitrate.

Where an insurance policy contains an agreement to arbitrate, CPLR 7503(c) "requires a party, once served with a demand for arbitration, to move to stay such arbitration within 20 days of service of such demand, else he or she is precluded from objecting" (Matter of Steck v State Farm Ins. Co., 89 NY2d 1082, 1084). The validity of the 20-day limitation depends on compliance with the requirements of CPLR 7503(c) (see State Farm Mut. Auto. Ins. Co. v Szwec, 36 AD2d 863) and not those of the rules promulgated by the American Arbitration Association. Since the appellant's April 9, 2003, notice of intention to arbitrate complied with all of the statutory requirements, it was sufficient to commence the 20-day period of limitations (see Matter of Blamowski v Munson Transp., 91 NY2d 190, 195). Accordingly, the instant proceeding to stay arbitration, which was commenced more than 20 days after service of the intention to arbitrate, is time barred (see Matter of Transportation Ins. Co. v Desena, 17 AD3d 478; Matter of Hartford Ins. Co. v Buonocore, 252 AD2d 500).
FLORIO, J.P., SCHMIDT, KRAUSMAN and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Matter of Transcontinental Insurance Company v. Gibbs

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the proposed additional respondent Allstate Insurance Company appeals from an order of the Supreme Court, Kings County (Archer, J.H.O.), dated October 7, 2005, which, after a hearing, granted the petition.

ORDERED that the order is affirmed, with costs.

The Supreme Court properly determined that the proposed additional respondent Allstate Insurance Company (hereinafter Allstate) failed to effectuate the cancellation of a policy of insurance it issued to its insured, Lisa Cruz, because it failed to prove that a proper final premium bill had been timely mailed to her (see Lumberman's Mut. Cas. Co. v Gamble, 250 AD2d 540; Matter of Paramount Ins. Co. v Moctezuma, 201 AD2d 652, 653; Matter of Home Indem. Co. v Scricca, 147 AD2d 697; cf. Matter of Eagle Ins. Co. v Gervais, 242 AD2d 572, 573). Allstate also failed to prove that its notice of cancellation to Cruz complied with the requirements of Vehicle and Traffic Law § 313(1)(a) (see Duhs v Royal Globe Insurance Co., 63 AD2d 992).

Accordingly, the Supreme Court properly granted the petition to permanently stay arbitration of the uninsured motorist claim (see Matter of Allstate Ins. Co. v Ramirez, 208 AD2d 828).
ADAMS, J.P., SKELOS, FISHER and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Plaza Restoration v. Nationwide Mutual Insurance Co.

In an action, inter alia, for a judgment declaring that the defendant insurer breached its covenant of good faith and fair dealing in connection with an action to recover damages for personal injuries commenced against the plaintiff insured, the defendant appeals from an order of the Supreme Court, Nassau County (Warshawsky, J.), entered November 9, 2005, which denied those branches of its motion which were pursuant to CPLR 3211(a)(7) to dismiss the complaint or, in the alternative, for summary judgment.

ORDERED that the order is affirmed, with costs.

The plaintiff insured sought a judgment declaring, inter alia, that the defendant insurance carrier breached its covenant of good faith and fair dealing in connection with an action to recover damages for personal injuries sustained by a worker at a construction site, commenced against the plaintiff. The defendant claims, inter alia, that the action is not ripe for adjudication.

We reject the defendant's contention that the plaintiff's action is premature. A declaratory judgment action against an insurer with respect to jural relations, either as to present or prospective obligations, is permitted before entry of judgment in the underlying action (see Tepedino v Zurich-American Ins. Group, 220 AD2d 579; Costa v Colonial Penn Ins. Co., 204 AD2d 591).

The plaintiff's remaining contentions are without merit.
FLORIO, J.P., SCHMIDT, KRAUSMAN and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

White v. Rhodes

Appeals (1) from an order of the Supreme Court (McCarthy, J.), entered August 8, 2005 in Ulster County, which, inter alia, partially denied the motion of defendant New York Mutual Insurance Company for summary judgment dismissing the complaint against it, and (2) from an order of said court, entered January 5, 2006 in Ulster County, which, upon reargument, adhered to its prior decision.

In this action, plaintiff seeks to recover for property damages sustained when defendant Michelle G. Rhodes, while pulling out of a parking lot, stepped on her vehicle's gas pedal instead of the brake, lost control of her vehicle and ultimately crashed into one of two, interconnected, above-ground home heating oil storage tanks located on plaintiff's property in the Town of Gardiner, Ulster County. The impact caused the tank to rupture and the fuel oil from both tanks approximately 500 gallons to spill out onto plaintiff's land and into her dwelling.

Plaintiff had purchased the property from her mother's estate approximately two months prior to the accident, at which time she obtained a dwelling fire insurance policy with an extended coverage rider from defendant New York Mutual Insurance Company (hereinafter defendant). Following the accident, plaintiff filed a claim. Defendant denied the claim and canceled plaintiff's policy. Plaintiff then commenced this action, seeking to recover for damages caused by the oil contamination, including clean-up costs. Defendant moved for summary judgment and plaintiff cross-moved for summary judgment. Supreme Court partially granted defendant's motion, finding that the insurance policy expressly excluded costs related to extracting pollutants from land and water and, thus, did not cover the cost of the oil clean up on plaintiff's property. The court, however, denied defendant's motion in part based upon the extended coverage which addresses losses associated with vehicle impact ^[FN1]. On reargument, Supreme Court adhered to its decision, clarifying that, under the extended coverage, defendant can be held liable for the loss in market value of the property but not for the costs of clean up. Defendant appeals from both orders.

"Courts must determine the rights and obligations of parties under an insurance contract based on the policy's specific language" and in accordance with the "plain and ordinary meaning" of such language (State Farm Mut. Auto. Ins. Co. v Glinbizzi, 9 AD3d 756, 757 [2004] [citations omitted]). Where "an insurance policy's meaning is not clear or is subject to different reasonable interpretations, ambiguities must be resolved in the insured's favor and against the insurer" (Pepper v Allstate Ins. Co., 20 AD3d 633, 635 [2005]). However, "'[w]here the terms of an insurance policy are clear and unambiguous, interpretation of those terms is a matter of law for the court'" (Senate Ins. Co. v Tamarack Am., 14 AD3d 922, 923 [2005], quoting B.U.D. Sheetmetal v Massachusetts Bay Ins. Co., 248 AD2d 856, 857 [1998]).

It is now undisputed that plaintiff's policy does not cover the clean-up costs of the oil contamination; the policy language clearly states: "We do not pay for these costs: 1) To extract pollutants from land or water; or 2) to remove, restore or replace polluted land or water." Further, the policy specifically states that it does not cover "land, including the land on which the property is located. This includes costs of excavating, removing, grading or filling land, or water in or on that land." However, under the optional, extended coverage purchased by plaintiff, the policy insures:

"against direct physical loss or damage by these causes of loss: . . .

6. Vehicles - including loss or damage caused by impact by a vehicle, or an object thrown by it, with the covered property."

On appeal, defendant argues that the coverage afforded against "direct physical loss or damage" caused by a vehicle impact does not include the loss of market value to plaintiff's property due to the oil contamination.

Initially, we disagree with defendant's assertion that the vehicle impact clause could not, under any circumstances, cover loss of market value. When resulting from some physical damage to the property caused by a vehicle impact, the loss in market value could be an appropriate measure of the actual, physical damage done to the property. Here, physical damage clearly did occur to the oil tanks and to the ground and ground water when the oil spilled from the tanks; thus, the vehicle impact clause
standing alone would appear to cover the damage. Contrary to defendant's contention, this interpretation of the policy does not render the pollution exclusion provisions meaningless; in many situations, clean-up costs could well exceed the physical damage to the property caused by the vehicle impact, as measured by a loss in market value.

We do agree, however, that defendant is not liable for the full loss in market value caused by the oil spill. Finding no ambiguity in the relevant language, we hold as a matter of law that the policy expressly excludes damage to land and groundwater; thus, any loss in market value attributable to such damages is not covered (see Senate Ins. Co. v Tamarack Am., supra at 923; Belardo v Fulmont Mut. Ins. Co., 271 AD2d 837, 838 [2000]). Accordingly, if a loss in market value is used to measure the damages recoverable by plaintiff, only the loss in market value of the premises which is attributable to damage, if any, to the house, personal property and/or structures on the premises may be considered.

Cardona, P.J., Mercure, Crew III and Peters, JJ., concur.

ORDERED that the orders are modified, on the law, without costs, by reversing so much thereof as declared that defendant New York Mutual Insurance Company is liable for damages for the actual loss to the premises; it is declared that said defendant is liable only for actual damages to the structures and/or personal property on the premises but not for damages stemming from contamination of the ground and groundwater and matter remitted to the Supreme Court for further proceedings not inconsistent with this Court's decision; and, as so modified, affirmed.

Footnotes

Footnote 1: In a prior order which is not a subject of this appeal, Supreme Court granted summary judgment to plaintiff against Rhodes on the issue of liability.

National Football League v. Vigilant Insurance Company

Plaintiff appeals from an order of the Supreme Court, New York County (Bernard J. Fried, J.), entered July 22, 2005, which granted defendant's motion to dismiss the complaint and declared that, under the terms of an insurance policy issued by defendant to plaintiff, defendant had no duty to compensate plaintiff for loss incurred in defending a federal lawsuit.

GONZALEZ, J.

This appeal requires us to determine whether a former college football player's antitrust lawsuit against the National Football League (NFL) challenging the NFL's draft eligibility rule falls within the employment practices exclusion of an insurance policy issued by defendant Vigilant to the NFL. We find that because the employment practices exclusion is subject to a reasonable interpretation that would render it inapplicable to the subject antitrust claim against the NFL, we reverse the trial court's dismissal of the complaint and find the exclusion inapplicable as a matter of law.

The policy also included the following exclusion: "[Vigilant] shall not be liable . . . for Loss on account of any Claim made against [the NFL] . . . for any Employment Practices." "Employment Practices" were defined in the policy as:

"any actual or alleged wrongful dismissal, discharge or termination of employment, breach of any oral or written employment contract or quasi-employment contract, employment-related misrepresentation, violation of employment discrimination laws (including workplace and sexual harassment), wrongful failure to employ or promote, wrongful discipline, wrongful deprivation of a career opportunity, failure to grant tenure, negligent evaluation, employment-related invasion of privacy, employment-related defamation or employment-related wrongful infliction of emotional distress or violation of any other federal, state, local or common law, statute, ordinance, rule or regulation or any public policy relating to employment or employees, including without limitation the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, and any workers' compensation, unemployment insurance, social security, disability benefits or similar law."^[FN1]

The instant coverage dispute arose after Maurice Clarett, a former college football player for Ohio State University, sought entry into the 2003 NFL draft. The NFL has a rule prohibiting any player who has not completed three college seasons, or is not three years removed from high school graduation, from being eligible for the draft. Pursuant to this rule, the NFL denied Clarett draft eligibility for the 2003 draft because he did not meet either criteria.

In 2003, Clarett commenced an action against the NFL in United States District Court for the Southern District of New York alleging that the NFL's draft eligibility rule violated the Sherman and Clayton Acts (15 USC § 1, et seq.; 15 USC § 15, et seq.). In addition to the anti-competitive allegations in his complaint, Clarett expressly alleged that he was interested in entering the 2003 NFL draft "but was prevented from doing so by the [NFL] Rule."

On February 4, 2004, the District Court granted summary judgment in favor of Clarett and ordered him eligible to enter the 2004 draft. The NFL appealed to the Second Circuit, which reversed the District Court, holding that the NFL's "eligibility rules are immune from antitrust scrutiny under the non-statutory labor exemption" (Clarett v National Football League, 369 F3d 124, 125 n 1 [2d Cir 2004], cert denied 544 US 961 [2005]). The court explained that although the NFL rule "deprives Clarett of the opportunity to pursue, at least for the time being, the kind of high-paying, high-profile career he desires" (id. at 141), any challenge to the NFL's and player's union's criteria "must be founded on labor rather than antitrust law" (id. [internal quotation marks omitted]).

Previously, in October 2003, the NFL had provided notice of Clarett's federal court complaint to Vigilant and requested reimbursement of defense costs, which ultimately totaled $850,000. In a letter dated December 22, 2003, Vigilant denied the NFL coverage for costs associated with the Clarett litigation, citing the employment practices exclusion in the policy.

The NFL commenced the instant action in October 2004 for a declaratory judgment and breach of contract. In its complaint, the NFL sought a declaration that Vigilant is contractually obligated under the policy to pay for all defense costs incurred by the NFL in the Clarett litigation, and compensatory damages for Vigilant's breach of its contractual duty to pay such costs.

In December 2004, Vigilant moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7) and sought an order declaring that, pursuant to the employment practices exclusion, it was not obligated to provide coverage for the Clarett litigation. Specifically, Vigilant argued that Clarett's federal action against the NFL alleged a "wrongful deprivation of a career opportunity," which was one of the 12 enumerated employment practices expressly excluded under the policy. In opposition, the NFL argued that the employment practices exclusion applies only to employment law claims brought against the NFL, not violations of the antitrust laws, which are not laws "related to employment or employees."

Supreme Court granted Vigilant's motion and declared that it was not obligated to provide coverage for the Clarett litigation. The court found that Clarett's federal claim challenging the NFL's draft eligibility rule fell within the plain meaning of "wrongful deprivation of a career opportunity," and thus was unambiguously excluded under the policy. The court further noted that the underlying legal theory of the Clarett litigation — violation of the antitrust laws — was irrelevant to the applicability of the exclusion, since "[t]he list of excluded items in the definition clearly refers to factual bases for lawsuits that may give rise to various causes of action[,] not to any particular cause of action."

On appeal, the NFL argues that the Clarett antitrust action did not fall within the terms of the employment practices exclusion because the exclusion is limited to claims alleging violations of employment laws, not antitrust laws. At the very least, the NFL argues, the employment practices exclusion is ambiguous in its scope and must therefore be construed in favor of the insured, here the NFL. We agree with both arguments and reverse.

The standard for determining the applicability of an insurance policy exclusion to a particular claim is well established in New York law. "To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652 [1993]). Thus, "policy exclusions are given strict and narrow construction, with any ambiguity resolved against the insurer" (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [2003]).

Initially, we agree with Supreme Court that the conduct underlying Clarett's federal claim appears to fit the description of one of the employment practices listed in the exclusion, namely, "wrongful deprivation of a career opportunity." Clarett's lawsuit alleged that he wanted to become employed by an NFL team, but was prevented from doing so by virtue of the NFL-imposed draft eligibility rule. Thus, for at least the period covering 2003, the NFL's rule clearly did deprive Clarett of a career opportunity and the NFL does not seriously argue to the contrary. However, it is not enough for Clarett's claim to fit within the terms of the exclusion; rather, it must do so in "clear and unmistakable language" and be "subject to no other reasonable interpretation" (Continental Cas., 80 NY2d at 652). It is on this point that the parties disagree.

The NFL contends that the language, content and structure of the employment practices exclusion compels the conclusion that it is intended to apply only to claims alleging violations of common or statutory law relating to employment or employees, and not to antitrust claims that are only tangentially related to employment with an NFL team. The NFL notes that all 12 of the listed employment practices are couched in employment law jargon, that the majority of them are commonly recognized employment law causes of action and that the "catch-all" provision of the exclusion cites specific employment law statutes and employee benefit laws. It further emphasizes that each of the employment practices listed in the exclusion relate to claims that typically are brought by an employee against his or her actual, former or prospective employer. Here, in contrast, the Clarett claim was not made against a prospective employer (an NFL club), but rather was made against the NFL, which does not employ NFL players.

In addition, the NFL relies on the principle of statutory construction known as "reverse ejusdem generis" to support its interpretation of the employment practices exclusion (see Safe Food & Fertilizer v Environmental Protection Agency, 350 F3d 1263, 1268 [DC Cir 2003] [explaining that under principle of reverse ejusdem generis, the phrase "A, B or any other C indicates that A is a subset of C"]). As indicated above, the subject exclusion identifies 12 excluded employment practices, followed by a catch-all provision that further excludes any claim for "violation of any other federal, state, local or common law, statute, ordinance, rule or regulation or any public policy relating to employment or employees." Relying on reverse ejusdem generis, the NFL argues that the 12 excluded employment practices must be interpreted in light of the limiting language of the catch-all provision referring to a "violation of any other . . . law . . . relating to employees or employment." In other words, the NFL contends that since the antitrust laws are not "any other . . . law" relating to employment or employees, Clarett's claim is not within the exclusion.

Vigilant, on the other hand, argues that the employment practices exclusion clearly and unambiguously excludes any claim against the NFL for wrongful deprivation of a career opportunity, and that Clarett's federal claim plainly fits within this definition. It further contends that the NFL's interpretation of the exclusion to cover only employment law causes of action is unreasonable and strained, and cannot defeat the plain meaning of the policy terms. Finally, it notes that several of the 12 employment practices listed in the exclusion — including wrongful deprivation of a career opportunity, failure to grant tenure, and negligent evaluation — are not recognized employment law claims, thus undermining the NFL's narrow interpretation of the exclusion.

We find that because the NFL has offered a plausible interpretation of the employment practices exclusion that would result in a determination of coverage, its position must be sustained (see RJC Realty Holding Corp. v Republic Franklin Ins. Co., 2 NY3d 158, 165 [2004]). As the NFL argues, it is undeniable that 8 of the 12 employment practices expressly listed in the exclusion are either recognized employment causes of action (wrongful termination, breach of contract, violation of employment discrimination laws) or are other recognized tort causes of action that are required to be "employment-related" (employment-related misrepresentation, employment-related invasion of privacy, employment-related defamation and employment-related wrongful infliction of emotional distress). In addition, the fact that the exclusion's catch-all provision specifically mentions 6 employment law statutes and 4 categories of employee benefits laws further supports the NFL's argument that the intent of the exclusion was to remove from coverage only those claims alleging a violation of employment rights.

More significantly, all 12 of the listed employment practices appear to contemplate the existence of an actual, former or prospective employment relationship between the claimant and the NFL. It is clear that many of the listed employment practices — including wrongful termination, breach of contract, violation of anti-discrimination laws, wrongful failure to employ or promote, wrongful discipline, failure to grant tenure or negligent evaluation — could only be brought in the context of an employee-employer relationship. Further, it may be fairly assumed that the "employment-related" torts listed in the exclusion must also be predicated on an actual employment relationship (see Peterborough Oil Co. v Great American Ins. Co., 397 F Supp 2d 230, 238-239 [D Mass 2005] [term "employment-related" in exclusion had narrow meaning; it was intended to refer only to matters concerning the employment relationship itself, and not all matters that concern or relate to employees]). By contrast, Clarett's antitrust claim against the NFL did not arise from any actual or prospective employment relationship with the NFL, as it is undisputed that NFL players are employees of individual NFL teams, not the NFL itself.

It is true that "wrongful deprivation of a career opportunity" does not, on its face, require an existing or prospective employment relationship. Although Vigilant views this as evidence that the exclusion extends beyond traditional employment law claims, we cannot view this single employment practice in isolation. Under the principle of statutory construction known as noscitur a sociis, which translates to "it is known by its associates" (McKinney's Cons Laws of NY, Book 1, Statutes § 239[a]), we interpret the meaning of "wrongful deprivation of a career opportunity" by considering it in context of the other 11 listed employment practices with which it is associated — all of which describe employment law claims or workplace torts traditionally brought by a prospective, current or former employee against an employer.

In light of the exclusion's clear focus on employment claims arising out of the employment relationship, it is reasonable to interpret the policy to exclude only employment practices that occur in a direct employment context (see North American Bldg. Maintenance v Fireman's Fund Ins. Co., 137 Cal App 4th 627, 642, 40 Cal Rptr 3d 468, 480 [Ct App 5th Dist 2006] [language of employment practices exclusion reasonably interpreted to require actual former or prospective employment relationship]; Peterborough Oil Co., 397 F Supp 2d at 241-242 [exclusionary language requiring "employment-related act or omission" is inherently ambiguous and therefore inapplicable to malicious prosecution claim by former employee]).

Nor is there any language in the exclusion to suggest that a claim against the NFL not arising out of an employment relationship would be excluded. Had Vigilant intended to exclude wrongful deprivations of career opportunities arising outside the direct employment context, such as the Clarett situation, it could have accomplished this result by including language clearly indicating that the exclusion was not limited to the NFL's liability as an employer. Here, however, the language of the employment practices exclusion did not clearly and unambiguously indicate that it extended to the NFL's liability as a non-employer, and such ambiguity concerning its scope must be construed in favor of the insured.

To conclude that a claim alleging antitrust violations against a non-employer unambiguously falls within an exclusion that is focused almost entirely on employment wrongs by an employer would, in our view, destroy the internal consistency of the employment practices exclusion. At the very least, it was reasonable for the NFL to interpret "wrongful deprivation of a career opportunity" to apply only to claims brought by current, former or prospective employees of the NFL, and not to the NFL's role in setting draft eligibility criteria.

The motion court's finding that the list of excluded items in the definition refers to "factual bases for lawsuits," and not to any particular cause of action, does not compel a different result. As indicated above, a reasonable interpretation of the exclusion is that it applies only to claims against an employer arising out of an actual or potential employment relationship, and no such relationship exists here between Clarett and the NFL.

For similar reasons, the parties' disagreement over whether wrongful deprivation of a career opportunity, failure to grant tenure and negligent evaluation constitute recognized employment law causes of action is beside the point. The NFL has shown that claims fitting these descriptions have been asserted in the direct employment context, and, to that extent, they are consistent with the other nine employment practices listed in the exclusion. We reiterate, it is not the NFL's burden to show all 12 of the employment practices listed are recognized causes of action; rather, it is Vigilant that must demonstrate that the NFL's interpretation of the exclusion — that it is limited to employment law claims arising from a direct employment relationship — is unreasonable. In our view, Vigilant has failed to meet this burden and its motion to dismiss should have been denied.

Accordingly, the order of the Supreme Court, New York County (Bernard J. Fried, J.), entered July 22, 2005, which granted defendant's motion to dismiss the complaint and declared that, under the terms of an insurance policy issued by defendant to plaintiff, defendant had no duty to compensate plaintiff for loss incurred in defending a federal lawsuit, should be reversed, on the law, with costs, the motion denied and the matter remanded for further proceedings.

All concur.

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

ENTERED: NOVEMBER 14, 2006

CLERK

Footnotes

Footnote 1:The definition of "Employment Practices" is found in a single paragraph of the subject policy, but is separated into two paragraphs herein, consisting of 12 enumerated employment practices (paragraph 1) and a "catch-all" provision (paragraph 2).

Park v. Ellison Champagne

Cohen, Kuhn & Associates, New York (Erika L. Hartley of
counsel), for appellants.
Fine, Olin & Anderman, LLP, Newburgh (Ann R. Johnson of
counsel), for respondent.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered August 17, 2005, which denied the motion of defendants-appellants Martha L. Mogro and Gustavo G. Carrera for summary judgment dismissing plaintiff Rashida Johnson's complaint on the ground that she did not sustain a "serious injury" as defined in Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the motion granted and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complaint as against them.

On June 15, 2001, plaintiffs Mavis Park and Rashida Johnson were traveling southbound on the FDR Drive in Manhattan in a 1998 Ford sedan owned by the New York State Department of Transportation and operated by plaintiff Park. Ms. Johnson was riding in the front passenger seat and wearing a seat belt. The vehicle reduced speed to exit at E. 98th Street, precipitating a series of rear-end collisions. It was struck from behind by a 2001 Toyota sedan owned and operated by Ellison Champagne. His vehicle was in turn struck by a vehicle owned and operated by Angel Medina, and the Medina vehicle was struck by a vehicle owned by appellant Martha L. Mogro and operated by appellant Gustavo Carrera. Finally, appellants' vehicle was struck by a vehicle that left the scene of the accident.

Ms. Johnson did not seek treatment at a hospital after the incident and told a responding police officer that she was uninjured. She was not prevented from continuing her part-time employment or attending college and was never confined to her home. However, six days after the accident, she was seen for neck and back pain by Leo E. Batash, M.D. He conducted a physical examination and referred her to Mark Freilich, M.D., a radiologist, whose reports of June 8, 2002 MRI studies of the cervical and lumbar spine indicate bulging discs at C3-C4, C4-C5 and L2-L3 and herniated discs at C5-C6, C6-C7, L3-L4, L4-L5 and L5-S1. Ms. Johnson received physical therapy until early October 2002 but has not been treated subsequently. She saw Dr. Batash periodically until early January 2003 and was last examined by him in May 2004 at the request of her attorney. The doctor's progress notes include complaints of intermittent pain in the neck and lower back.

Ms. Johnson's bill of particulars alleges cervical and lumbar disc herniations, cervical thoracic and lumbar strains with radiculitis, muscle spasms and restricted motion. At her deposition, while complaining of intermittent back pain from standing too long or holding heavy objects, she stated that there is no activity she has been required to discontinue as a result of the accident.

Appellants interposed this motion to dismiss the complaint in June 2005, including with their papers affirmations from orthopedist Sheldon Manspeizer, M.D. and radiologist Steven L. Mendelsohn, M.D. Dr. Manspeizer performed an examination of Ms. Johnson in January 2005 and conducted an evaluation of the medical record. His "examination did not demonstrate any objective physical findings to indicate any significant injury to her neck or lower back," and the disc bulging and herniation reported in the June 2002 MRI studies "did not correlate with any significant injury to her neck or lower back." Dr. Mendelsohn conducted an evaluation of the MRI studies in May 2005 and found them to be normal, concluding, "I must take issue with the interpretation provided by Dr. Mark Freilich insofar as I find no evidence of any of the multiple herniations he reports."

The affirmations of Dr. Manspeizer and Dr. Mendelsohn establish appellants' prima facie entitlement to summary dismissal of the complaint. Ms. Johnson's opposing papers, consisting of her deposition testimony and the police accident report, are insufficient to withstand the dismissal motion (see Giuffrida v Citibank Corp., 100 NY2d 72, 81 [2003]). Her subjective complaints of pain are insufficient to meet the statutory burden to demonstrate that a serious injury has been sustained (Insurance Law § 5102[d]; see Gaddy v Eyler, 79 NY2d 955, 957-958 [1992]; Scheer v Koubek, 70 NY2d 678, 679 [1987]). Even fully crediting the June 2002 MRI studies, they are insufficient, standing alone, to create a triable issue of fact. "Proof of a herniated disc, without additional objective medical evidence establishing that the accident resulted in significant physical limitations, is not alone sufficient to establish a serious injury" (Pommells v Perez, 4 NY3d 566, 574 [2005]). The findings have never been correlated to the accident (Franchini v Palmieri, 1 NY3d 536, 537 [2003]). Only a single report dated June 21, 2001 by Dr. Batash causally relates the results of an examination to the accident.

A further deficiency in Ms. Johnson's proof is the failure to provide any explanation for the gaps in her treatment. No reason has been provided for the lapse in time between a previous examination performed in January 2003 and the visit to Dr. Batash in May 2004 at counsel's request, the last medical consultation of any kind. The notation made at that time in the margin of the progress notes, "PPD mild to moderate degree of C/L/S spine," does not suffice as proof of permanent partial disability, a diagnosis otherwise absent from the medical history. Such "conclusory assertions tailored to meet statutory requirements . . . are insufficient to rebut defendants' prima facie showing" (Shaw v Looking Glass Assoc., LP, 8 AD3d 100, 103 [2004]). Furthermore, the record contains no report of a recent examination that might provide objective medical findings to demonstrate a loss in range of motion (see Thompson v Abbasi, 15 AD3d 95, 97 [2005]). Finally, the failure to provide any valid explanation for the cessation of physical therapy in 2002 is fatal to the viability of this personal injury action (see Pommells, 4 NY3d at 574 ["the so-called gap in treatment was, in reality, a cessation of all treatment").

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

ENTERED: NOVEMBER 14, 2006

CLERK

Vigilant Insurance Company v. Bear Stearns Companies

Order, Supreme Court, New York County (Karla Moskowitz, J.), entered January 13, 2006, which granted in part and denied in part plaintiffs' summary judgment motion, unanimously modified, on the law, summary judgment granted to defendant on the investment banking exclusion and the independent research/ investor education issue, and denied to plaintiffs regarding disgorgement, and otherwise affirmed, without costs.

The motion court properly found triable issues of fact as to whether defendant breached the insurance policies' provision which prohibited defendant from settling any claims or assuming any contractual obligations without plaintiffs' consent. The December 2002 settlement-in-principle was subject to the approval of the SEC and state regulatory authorities and required finalization of terms and documentation, so a trier of fact could find it was not a binding contract (see e.g. Silverman v Member Brokerage Servs., 298 AD2d 381 [2002]; Winston v Mediafare Entertainment Corp., 777 F2d 78 [2d Cir 1985]). The April 2003 settlement with the SEC was subject to court approval, and defendant submitted an affidavit from a member of its negotiating team, stating defendant could not be compelled to proceed with the settlement in the absence of court approval. Viewing the evidence in the light most favorable to defendant (the non-movant), an issue of fact exists as to whether the April 2003 settlement was binding (compare Valentino v State of New York, 48 AD2d 15, 17 [1975], with TLC Beatrice Intl. Holdings v CIGNA Ins. Co., 2000 US Dist LEXIS 2917, *20-21, 2000 WL 282967, *7 [SD NY]).

Defendant is not estopped from denying that the settlement was binding in April 2003 (see e.g. Van Kipnis v Van Kipnis, 8 AD3d 94 [2004]). In the prior lawsuit, defendant prevailed on the ground that "the Attorney General of West Virginia does not have the authority pursuant to . . . the Consumer Credit and Protection Act to bring an action based upon conduct that is ancillary to the general business of buying and selling securities" (State of West Virginia v Bear, Stearns & Co., 217 W Va 573, 588, 618 SE2d 582, 579 [2005]), not because of the settlement.

The insurance policies exclude claims that are

based upon, arising from or in consequence of any underwriting, syndicating, or investment banking work, or associated counseling or investment activities, including, but not limited to, any aspect of any actual, attempted or threatened mergers, acquisitions, divestitures, tender offers, proxy contests, leveraged buy-outs, going private transactions, reorganizations, capital restructurings, recapitalizations, spinoffs, primary or secondary offerings of securities (regardless of whether the offering is a public offering or a private placement), other efforts to raise or furnish capital or financing for any enterprise or entity or any disclosure requirements in connection with any of the foregoing . . .

"[P]olicy exclusions are given a strict and narrow construction, with any ambiguity resolved against the insurer" (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [2003]). To prevail, an insurer must show that its interpretation is the only reasonable one (see e.g. RJC Realty Holding Corp. v Republic Franklin Ins. Co., 2 NY3d 158, 165 [2004]).

The gravamen of the SEC complaint was that defendant's research analysts were unduly influenced by investment banking concerns. Using the principle of ejusdem generis (see 242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co., 31 AD3d 100, 103-104 [2006]), we find that influencing research analysts is not like the examples of investment banking work listed in the exclusion. Even if reasonable minds could differ on whether the exclusion applied, defendant (the insured) would be entitled to summary judgment (see Belt Painting, 100 NY2d at 387; see also RJC Realty, 2 NY3d at 165). Although defendant does not request partial summary judgment on this point, this Court has the power to, and hereby does, grant such relief (see CPLR 3212[b]; Chateau D'If Corp. v City of New York, 219 AD2d 205, 209-210 [1996], lv denied 88 NY2d 811 [1996]). We note that plaintiffs have insisted this issue should be decided as a matter of law.

Under these circumstances, we find an issue of fact as to whether the portion of the settlement attributed to disgorgement actually represented ill-gotten gains or improperly acquired funds. The allegations against defendant were very different from those in Vigilant Ins. Co. v Credit Suisse First Boston Corp. (10 AD3d 528 [2004]). Furthermore, defendant submitted evidence the settlement amount was based on market share instead of being tied to the amount of commissions or fees it received.

Plaintiffs' argument that the $25 million payment for independent research and the $5 million for investor education are not covered by the insurance policies is unavailing. The policies cover "loss," not merely "damages." "Loss" includes, inter alia, "judgments" and "settlements." It is undisputed that the payments for independent research and investor education were part of a settlement; plaintiffs do not contend that these payments (as opposed to disgorgement) are uninsurable under New York law. The motion court did not find any triable issues of fact on this question, nor do we; hence, summary judgment is
granted to defendant on this point.

Spektor v. Dichy

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Lewis, J.), dated September 9, 2005, as upon granting, in effect, reargument, adhered to its determination in a prior order of the same court dated May 13, 2005, granting the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff Yury Spektor did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, in effect, upon reargument, the order dated May 13, 2005, is vacated, and the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff Yury Spektor did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is denied.

Upon granting, in effect, reargument, the Supreme Court erred in adhering to its prior determination dated May 13, 2005, granting summary judgment to the defendant. The defendant failed to establish prima facie that the injured plaintiff, Yury Spektor, 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 his affirmed medical report following cervical range of motion testing, the defendant's examining orthopedic surgeon merely stated that the injured plaintiff had "excellent" range of motion with "60 degrees of extension, 80 degrees of rotation to the right and left, and full forward flexion to 50 degrees." He further noted that right and left lateral bending was to "40 degrees." As to the lumbar spine range of motion, he found that the injured plaintiff had "75 degrees of forward flexion and 30 degrees of extension," and lateral bending to the left and right was to "30 degrees." Nowhere were these findings compared against what is normal range of motion. His failure to do so requires denial of the defendant's motion (see Sullivan v Dawes, 28 AD3d 472; Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Kennedy v Brown, 23 AD3d 625; Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462; Aronov v Leybovich, 3 AD3d 511).

Since the defendant failed to sustain his initial burden on his motion, it is not necessary to consider whether the plaintiffs' papers in opposition were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).

The defendant's remaining contention is without merit
MILLER, J.P., SANTUCCI, GOLDSTEIN, SKELOS and LUNN, JJ., concur.

Christophersen v. Allstate Insurance Company

DECISION & ORDER

In an action, inter alia, to recover damages for breach of an insurance contract, the defendant Allstate Insurance Company appeals from so much of an order of the Supreme Court, Rockland County (Nelson, J.), dated September 9, 2005, as, upon denying the plaintiff's cross motion, inter alia, for summary judgment on the first cause of action to recover damages for breach of contract, in effect, denied its request to search the record and award it summary judgment dismissing that cause of action insofar as asserted against it.

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

A policy of insurance is vitiated where the insured has " willfully and fraudulently placed in the proofs of loss a statement of property lost which he did not possess, or has placed a false and fraudulent value upon the articles which he did own'" (Saks & Co. v Continental Ins. Co., 23 NY2d 161, 165, quoting Domagalski v Springfield Fire & Marine Ins. Co., 218 App Div 187, 190). However, "unintentional fraud or false swearing or the statement of any opinion mistakenly held are not grounds for vitiating a policy" (Sunbright Fashions v Greater N.Y. Mut. Ins. Co., 34 AD2d 235, 237, affd 28 NY2d 563). While there is no question that the plaintiff gave the defendant Allstate Insurance Company (hereinafter Allstate) inaccurate information in his original proof of loss statements, a triable issue of fact exists as to whether the plaintiff thereby intended to defraud Allstate (see e.g. St. Irene Chrisovalantou Greek Orthodox Monastery v Cigna Ins. Co., 226 AD2d 624; cf. Pipo Bar & Rest. v Certain Underwriters at Lloyd's at London, 15 AD3d 556, 557; Rickert v Travelers Ins. Co., 159 AD2d 758, 760).

Further, a triable issue of fact exists regarding whether the plaintiff's other alleged misrepresentations were sufficiently material to warrant the denial of coverage under the policy. Indeed, "[t]he issue of materiality is generally a question of fact for the jury [and] [c]onclusory statements by insurance company employees . . . are insufficient to establish materiality as a matter of law" (Parmar v Hermitage Ins. Co., 21 AD3d 538, 540-541; see Lenhard v Genesee Patrons Co-op. Ins. Co., 31 AD3d 831).

Accordingly, the Supreme Court correctly declined to search the record and award Allstate summary judgment dismissing the first cause of action to recover damages for breach of contract insofar as asserted against it.
SANTUCCI, J.P., MASTRO, SPOLZINO and FISHER, JJ., concur.

Cohen v. A One Products, Inc.

In an action, inter alia, to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Lewis, J.), entered December 22, 2005, which denied their motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Bella Cohen 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, and the defendants' motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Bella Cohen is granted.

The defendants established their prima facie entitlement to summary judgment dismissing the complaint insofar as asserted by the plaintiff Bella Cohen (hereinafter the plaintiff) by submitting, inter alia, the affirmed reports of three physicians whose opinions of the cervical and lumbar normalcy of the plaintiff were based upon specified objective tests (see Toure v Avis Rent - A - Car Sys., 98 NY2d 345, 350; Gaddy v Eyler, 79 NY2d 955, 956; Zuckerman v City of New York, 49 NY2d 557, 562). In opposition, the plaintiff failed to meet the burden, which had shifted to her, of raising a triable issue of fact (see Zuckerman v City of New York, supra; Indig v Finkelstein, 23 NY2d 728, 729). The report of the plaintiff's radiologist was not affirmed, and therefore, it was insufficient to raise a triable issue of fact (see Vallejo v Builders for Family Youth, Diocese Of Brooklyn, 18 AD3d 741, 742; Pagano v Kingsbury, 182 AD2d 268, 271). Furthermore, the affirmed report of the plaintiff's examining but not treating physician failed to proffer medical evidence that the limitations in motion he observed were contemporaneous with the accident that occurred almost three years earlier (see Ranzie v Abdul-Massih, 28 AD3d 447, 448; Li v Woo Sung Yun, 27 AD3d 624, 625; Suk Ching Yeung v Rojas, 18 AD3d 863; Nemchyonok v Peng Liu Ying, 2 AD3d 421.

The plaintiffs' remaining contentions are without merit.
SCHMIDT, J.P., RITTER, MASTRO, FISHER and DILLON, JJ., concur.

LaCagnina v. Bernard

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendant appeals from an order of the Supreme Court, Kings County (F. Rivera, J.), dated February 17, 2006, which denied his motion for summary judgment dismissing the complaint on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

Contrary to the defendant's contention, the Supreme Court properly determined that he failed to establish, prima facie, that neither plaintiff sustained 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 affirmed medical reports of the defendant's examining neurologist concerning each plaintiff established significant limitations in various aspects of their respective cervical and lumbar spines which required denial of the motion (see Smith v Delcore, 29 AD3d 890; Sano v Gorelick, 24 AD3d 747; Kaminsky v Waldner, 19 AD3d 370; Spuhler v Khan, 14 AD3d 693; Omar v Bello, 13 AD3d 430; Scotti v Boutureira, 8 AD3d 652). Moreover, while the affirmed medical reports of the defendant's examining orthopedist concerning each plaintiff set forth range of motion findings as to their respective cervical and lumbar spines he failed to compare those findings to what is considered normal ranges of motion (see Sullivan v Dawes, 28 AD3d 472; Browdame v Candura, 25 AD3d 747; Paulino v Dedios, 24 AD3d 741; Kennedy v Brown, 23 AD3d 625; Baudillo v Pam Car & Truck Rental, 23 AD3d 420; Manceri v Bowe, 19 AD3d 462; Aronov v Leybovich, 3 AD3d 511). Since the defendant failed to meet his prima facie burden it is unnecessary to consider whether the papers submitted by the plaintiffs in opposition were sufficient to raise a triable issue of fact as to whether either plaintiff sustained a serious injury as a result of the subject accident (see Coscia v 938 Trading Corp., 283 AD2d 538).
ADAMS, J.P., KRAUSMAN, RIVERA and LIFSON, JJ., concur.

Coverage Pointers - Volume VIII, No. 10

Across Borders

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Dan D. Kohane, Team Leader
[email protected]
Audrey A. Seeley

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Coverage Pointers - Volume VIII, No. 10

Across Borders

No-Fault/SUM Arbitration Team Dan D. Kohane, Team Leader [email protected] Audrey A. Seeley

Newsletter Sign Up

Headquarters

Long Island Office

Albany

Additional Offices

No-Fault/SUM Arbitration Team
Dan D. Kohane, Team Leader
[email protected]
Audrey A. Seeley