Coverage Pointers - Volume VIII, No. 15

Dear Coverage Pointers Subscribers:

 

As dawn breaks over Times Square, we complete this issue of Coverage Pointers.  You will pardon the brief covering note this week, but duty calls!

 

You will find a variety of interesting cases in this week's edition.  I have a special love for "late notice" cases and there are four or five here, all worth close reading.

 

We even have a few carrier victories in the collection.

 

From Audrey Seeley, the Queen of No Fault, I offer her comments:

 

While the arbitration world in the Western New York area is relatively silent (perhaps it's the -5 degree wind chill), the downstate courts have been busy, as usual.  This issue brings an interesting decision on whether insurers must accept electronic signatures on an AOB or NF-3.  The Court held that the insurer is not required to accept electronic signatures despite the Federal and State electronic signature and document law. 

 

We also see another upstate arbitration award declining to uphold a denial based upon a peer review.  It is clear that if an insurer is going to succeed on demonstrating through a peer review that a medical service is not medically necessary that its peer reviewer must provide an opinion as to how the service is inconsistent with generally accepted medical/professional standard.  The advice is to review those peer review reports to see if they pass muster before issuing a denial. 

 

By the way, I feel compelled to weigh in on Dan's comment in our last edition that an unnamed client has kindly petitioned for the firm to give me a tiara.  Currently, it is snowy and FRIGID in the beautiful, friendly kingdom of Buffalo.  For the time being, I am willing to forego the request for a tiara OR crown (as one subscriber aptly advised that a Queen wears a crown not a tiara).  Please note I reserve my right to raise the crown issue again in the unspecified future.  Instead, I would LOVE to come to a warmer climate, if only for a day, to provide YOU with training!  Please let us know if you would like or need some training on No-Fault issues.  We would be more than happy to pay you a visit and address issues specific to you.

 

Thanks, Aud.  She knows her stuff.

 

You will find these cases in our issue attached

 

• Twenty Day Period to Move to Stay Underinsured Motorist Claim Not Extended Where Demand for Arbitration Sent to Home Office Rather than Local Office
• First Party Claim Properly Denied Where Insured Had Obligation to Preserve Damaged Property and Did Not
• While Insured had Valid Excuse for Late Notice to Carrier, Carrier Raised Valid Exclusion to Justify Denial of Coverage
• Where Policy Provides Coverage to Additional Insured Named in Declarations, Coverage is Established.  Additional Endorsement Adding Parties who were Promised Coverage by Contract Found Irrelevant
• Reasonableness of Belief of Non-Liability, to Excuse Late Notice, Left for Jury
• Where Policy Requires Showing of Prejudice, Insurer Need Raise it in Disclaimer and Insured Need Raise it in Motion
• Policy's Grant of Coverage Excluded New York Accidents; Accordingly, No Necessity for Carrier to Provide Timely Disclaimer Because Coverage Not Afforded in the First Instance
• Questions of Fact about Additional Insured's Diligence in Giving Notice are for Jury to Determine
• Question of Fact About Delay in Filing Disability Claim Because of Mental Illness Requires Trial.
  
   

STarosieleC'S serious (Injury) Side of New York No-FaulT
Mark Starosielec
[email protected]

 

• Not Enough to Just Specify Range of Motion, Defendant's Doc Must Compare Too
• Limitation in Range of Motion of Plaintiff's Shoulder Must Be Qualified or Quantified to Make Prima Facie Showing that Plaintiff Did Not Sustain a Serious Injury  
• Evidence of Herniated Disc is Enough Evidence to Survive Summary Judgment Motion
• Using Reports Prepared by Plaintiff's Treating Physicians Sinks Defendant's Hopes for Motion for Summary Judgment Victory 
    

Audrey's Angle on No-Fault

Audrey Seeley

[email protected]

 

                       

• Denial Not Upheld Because Peer Review Report Failed To Address How Services Inconsistent With Generally Accepted Practice
• Insurers Are Not Required To Accept Electronic Signatures On Assignment Of Benefit Form or NF-3 Form
• Plaintiff's Summary Judgment Motion Denied As Premature In Order To Permit Discovery on Insurer's Defense Of Fraudulent Incorporation.

 

All the best and see you in two weeks.  Keep those e-mails coming in.

 

Dan

Hurwitz & Fine, P.C. is a full-service law firm         
providing legal services throughout the State of New York.

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Audrey A. Seeley
Vivian Perry Roché

Steven E. Peiper

Fire, First-Party and Subrogation Team
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Philip M. Gulisano

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Vivian Perry Roché
Mark Starosielec

APPELLATE TEAM
Dan D. Kohane
Scott M. Duquin

 

 

1/25/07            In the Matter of the Arbitration between State Farm and De Sarbo
Supreme Court, Third Department
Twenty Day Period to Move to Stay Underinsured Motorist Claim Not Extended Where Demand for Arbitration Sent to Home Office Rather than Local Office
July 2004 accident which settled for $25,000, other carrier’s policy limits.  Underinsurance claim submitted to State Farm and State Farm reserved rights to deny coverage. Negotiations with respect to the underinsurance claim were held with upstate New York offices. In February 2006, demand for arbitration sent to home office in Illinois and application to stay arbitration filed in April 2006, long after the 20-day limitation period set forth in law had expired. Insured claimed that application to stay arbitration was untimely.

Court holds that the 20-day deadline will not control if the insurer establishes that the original demand was served in a fashion to attempt to cause the insurer to default, such as by concealing it in voluminous, unrelated documents or sending it to a remote, uninvolved office.  Here, demand was sent to home office and eventually was transferred back to local office before twenty days had expired.  However, State Farm waited another 45 days before seeking the stay via an order to show cause. The demand sent to the home office was not buried in other documents, but was a short document pertaining only to the demand for arbitration, together with a cover letter which included, in bold print, the policy number, respondent's last name and the date of loss. Therefore, stay of arbitration not allowed as carrier’s application to stay was too late.

Editor’s Note:  It is not clear from the decision why State Farm was seeking a stay of this arbitration.  In the Uninsured Motorists area, a stay is often sought where the insured failed to comply with the provisions of the UM policy.  This was not an uninsured motorists claim but a SUM claim (underinsured motorist benefits).  There is an argument to be made under the SUM regulations (Regulation 35-D) a SUM arbitrator has greater powers and responsibilities than a UM arbitrator and may have the ability to decide some issues of arbitrability that are not within the jurisdiction of a UM arbitrator

 

1/25/07            Seaport Park Condominium V. Greater New York Mutual Ins. Co.
Supreme Court, First Department

First Party Claim Properly Denied Where Insured Had Obligation to Preserve Damaged Property and Did Not
First party claim involving burst pipes from a rooftop cooling tower, apparently as a result of freezing temperatures.  Incident occurred in January 2004 and notice given four months later.  Policy provided:

 

3. Duties In The Event Of Loss Or Damage

a. You must see that the following are done in the event of loss or damage to Covered Property:

* * *

(4) [I]f feasible, set the damaged property aside and in the best possible order for examination.

* * *

(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records [emphasis added].

Insurer retains adjustment company on day it received notice, and the adjuster retained an HVAC expert. At inspection, with all parties present, the parties agreed that old water tower would be removed and new one installed and that old water tower was subject to further inspection to determine whether the damage was the result of a covered cause of loss under the policy. According to the affidavit of plaintiff's attorney, all parties present at that meeting agreed that Matco, company hired by insured,  would remove the old tower and install a new one and Matco would store the old tower in a safe place for further inspection before insurer determined whether loss was covered. Matco destroyed the tower after removing it.

Taken together, the provisions relating to the insured's "Duties in the Event of Loss or Damage" imposed upon plaintiff the obligations to set the damaged property aside for examination and to permit GNY to inspect the damaged property as often as reasonably required, in order to determine whether the loss was covered.

1/18/07            Massot v. Utica First Insurance Company

Appellate Division, First Department
While Insured had Valid Excuse for Late Notice to Carrier, Carrier Raised Valid Exclusion to Justify Denial of Coverage
Yet another late notice case by insured.  Here, the insured did not report plaintiff’s injuries until four month after they occurred. Given plaintiff's own testimony that she experienced no pain, considered the wound superficial, and did not initially seek medical treatment for her injury, Classic's four-month delay was reasonable, the court held.

 

However, another exclusion was raised, one involving claims by “unlicensed operators.”  The insurer conducted an investigation and determined an unlicensed employee performed the services and raised it clearly in its disclaimer letter and in a timely fashion.  Accordingly, carrier has no obligation to insured.

 

1/18/07            Travelers Ind. Co. v. . Commerce & Industry Ins. Co. and Peerless Ins. Co.

Appellate Division, Third Department
Where Policy Provides Coverage to Additional Insured Named in Declarations, Coverage is Established.  Additional Endorsement Adding Parties who were Promised Coverage by Contract Found Irrelevant
Finch contracted to have GL & V build, deliver and install a new caustic washer at Finch's mill. GL & V subcontracted the removal of the old washer and installation of the new one to Pinchook. An employee of Pinchook fell while working on removal of the old washer, resulting in a Labor Law action against Finch and GL & V, and GL & V brought a third-party action against Pinchook.

Travelers, Finch’s insurer, demanded that Pinchook's insurer, defendant Peerless Insurance Company, defend and indemnify Finch upon the ground that Finch was an additional insured under the Peerless policy. Travelers and Finch commenced this action seeking, among other things, a declaratory judgment that Peerless had such an obligation to defend and indemnify.

Plaintiffs and defendants each moved for summary judgment. Supreme Court granted plaintiffs' motion, finding that endorsement CG 20 10 of the Peerless policy, together with the specific naming of Finch as an additional insured in the policy, established that plaintiffs were entitled to coverage from Peerless. An appeal was taken

Defendants argue that Supreme Court erred in finding that endorsement CG 20 10 provides coverage to Finch. That endorsement, which is entitled "ADDITIONAL INSURED OWNERS, LESSEES OR CONTRACTORS," provides in pertinent part:

Schedule

Name of Person or Organization:

 

(If no entry appears above, information required to complete this endorsement will be shown in the declarations as applicable to this endorsement).

 

WHO IS INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your ongoing operations performed for that insured."

Since no name is listed directly under "Name of Person or Organization," the policy's declarations were reviewed for "information required to complete this endorsement." A "declarations extension" in the policy specifically lists Finch as an additional insured. The clear language of the policy reveals that Finch is an "organization shown in the Schedule" and, under the facts of this case, the accident occurred while Pinchook was performing operations for Finch and thus coverage was afforded Finch under the endorsement

The argument advanced by Peerless that the declaration extension referred to its 22-45 endorsement [extending coverage to "any person or organization with whom [Pinchook] agreed, because of a written contract or agreement or permit, to provide insurance such as is afforded under this policy] was rejected.  That endorsement afforded coverage based on contract without the necessity of the entity being listed specifically in the policy.  In this case, Finch was listed (and coincidentally, did not have a contract that required insurance to be provided).  However, since it was listed specifically, coverage was afforded to Finch.

           

1/18/07            Klersy Building Corp. v. Harleysville Worcester Ins. Co.

Appellate Division, Third Department
Reasonableness of Belief of Non-Liability, to Excuse Late Notice, Left for Jury
Injured plaintiff, employee of insured’s subcontractor, fell from room during construction of home.  The insured knew of the accident the day it occurred but did not contact his insurer.  Four months later he was sued under the Labor Law and notified the carrier who promptly denied on grounds of late notice.  Insured argues that he did not contact his carrier because it was subcontractor’s supervisor who was supervising plaintiff, subcontractor has provided workers compensation coverage and proof of liability insurance and contractor did not believe his company had any liability.

The question was whether there was a “good faith believe in non-liability” so as to justify the late notice. The insured alleged that during the company's nearly 50 years in business, it had minimal experience with job site accidents that resulted in claims, was aware of only two prior claims, both of which settled before an action was commenced and only one of which (occurring in 1991) involved a worker being injured at the job site. Appellate Division believed that these statements were enough to establish a question of fact on the reasonableness of his belief of non-liability and refused to grant the insurer judgment.

 

Editor’s Note: We’re seeing more and more of this – Court’s refusing to determine late notice issues as a matter of law, no matter what the excuse offered (well, almost).

 

1/18/07            Bender v. Peerless Insurance Company
Appellate Division, Third Department
Where Policy Requires Showing of Prejudice, Insurer Need Raise it in Disclaimer and Insured Need Raise it in Motion
Policy required showing of prejudice for late notice to vitiate coverage.  Issue of prejudice not fully explored below and matter sent back for full hearing. 

 

1/16/07            Commercial Union Ins. Co. v. Liberty Mutual Ins. Co.
Appellate Division, Second Department
Policy’s Grant of Coverage Excluded New York Accidents; Accordingly, No Necessity for Carrier to Provide Timely Disclaimer Because Coverage Not Afforded in the First Instance

However, the terms of an insurance contract are not considered ambiguous merely because the parties interpret the language differently.  The policy, in its grant of coverage, provided that the policy did not cover accidents in certain states, including New York.  Since there was no grant of coverage for New York accidents, there was no requirement for Liberty Mutual to provide a timely disclaimer.

Editors Note:  Doubtless, the argument on the other side was that the coverage was limited by language which excluded New York accidents and thus a failure to disclaim timely was fatal.  However, here, the limiting language appears to have been in the grant of coverage so the court held, properly we suggest, that coverage was never afforded in the first place.  The carrier could have listed all the states where accidents were covered, but instead, chose the same tactic but listing states where the coverage was not provided.

 

1/16/07            Greenman-Pedersen, Inc., v. Zurich American Insurance Company
Appellate Division, Second Department
Questions of Fact about Additional Insured’s Diligence in Giving Notice are for Jury to Determine
Court finds that there are unresolved issues of fact as to whether the additional insured exercised reasonable diligence in ascertaining the existence of coverage under the policy issued by the defendant carrier and whether it complied with those policy conditions applicable to additional insureds.

 

1/16/07            Bailer v. Guardian Life Insurance Company

Appellate Division, Second Department
Question of Fact About Delay in Filing Disability Claim Because of Mental Illness Requires Trial
Action on disability policy.  Plaintiff applied for benefits in September 2000 alleging that he became disabled as on March 1999.  Insurer denied, claiming late notice and this action resulted.  Insured argued that the severity of his mental illness delayed giving notice and that notice was given as soon as reasonably possible.  Court thought the record was unclear as to whether the incapacity was sufficient to justify the delay and set the matter down for a hearing to determine (1) whether plaintiff was able to engage in rational thought and deliberate decision making sufficient to pursue his claim for coverage, and (2) whether the delay was caused by [circumstances] other than plaintiff's alleged impairment." The trial court determined that the totality of the evidence did not support the plaintiff's claim of mental incapacity and granted judgment for the insurer.  The Appellate Division determined that the court should not have scheduled a hearing but, upon concluding that the record was unclear and instead, denied the motion for summary judgment and set the matter for trial.

STarosieleC’S serious (Injury) Side of New York No-FaulT
Mark Starosielec
[email protected]

1/16/07            Borelli v. Ogno
Appellate Division, Second Department

Not Enough to Just Specify Range of Motion, Defendant’s Doc Must Compare Too
Lower court’s order granting defendant’s motion for summary judgment is reversed. Appellate Division found that defendant failed to make a prima facie case that plaintiff did not sustain a serious injury. While the report of defendant’s examining orthopedist specified degrees of the range of motion he found in the plaintiff’s spine upon his examination of her, he failed to compare those findings to the normal range of motion, thereby leaving the court to speculate as to the meaning of those figures.

 

1/16/07            Dzaferovic v Polonia
Appellate Division, Second Department

Limitation in Range of Motion of Plaintiff’s Shoulder Must Be Qualified or Quantified to Make Prima Facie Showing that Plaintiff Did Not Sustain a Serious Injury  
Appellate Division reversed lower court’s order granting defendants’ motion for summary judgment. In the affirmed medical report of the defendants’ examining neurologist, there was noted a limitation in the range of motion of the injured plaintiff’s left shoulder. However, the limitation was not sufficiently quantified or qualified to establish the absence of a significant limitation of motion.

 

1/16/07            Lim v Tiburzi
Appellate Division, Second Department

Evidence of Herniated Disc and Objective Findings are Enough Evidence to Survive Summary Judgment Motion
Here, defendants did establish prima facie case. In response, plaintiff submitted affirmation of her treating physician and affidavit of her treating physical therapist, which highlighted a decreased range in motion in her cervical spine as evidenced by objective findings. Plaintiff’s evidence also included evidence of a herniated disc at C4-5 as confirmed by an MRI test.  The plaintiff’s examining physician further asserted that the plaintiff’s injuries to her cervical spine were permanent, and causally related to the subject motor vehicle accident.

 

1/16/07            Ramsey v Kaszuba
Appellate Division, Second Department

Using Reports Prepared by Plaintiff’s Treating Physicians Sinks Defendant’s Hopes for Motion for Summary Judgment Victory
Appellate Division affirmed lower court’s order denying defendant’s motion for summary judgment but on different grounds. It held the appellant failed to show on his motion for summary judgment dismissing the complaint in that the plaintiff in that action did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident. In support of his motion, the defendant submitted reports prepared by, among others, the plaintiff’s treating physicians indicating that the plaintiff exhibited restricted ranges of motion in her cervical spine, and that the injuries which the plaintiff sustained were the result of the subject motor vehicle accident.

 

 

Audrey’s Angle on No-Fault

Audrey Seeley

[email protected]

 

The reporting of No-Fault arbitration awards is not at the same level of reported case law, meaning there is no one source to turn to for comprehensive research of arbitration awards.  We encourage you to submit to us, in a PDF format, at [email protected], any recent no-fault arbitration awards, especially Master Arbitration awards, that address interesting no-fault issues. 

 

1/19/07            In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Veronica K. O’Connor, Esq. (Erie County)                   

Denial Not Upheld Because Peer Review Report Failed To Address How Services Inconsistent With Generally Accepted Practice

 

Here is the Angle:  Part of this claim was rejected as there was no proof that either the chiropractor or the massage therapist ever submitted their bills to the insurer for payment.  The remainder of the claim was awarded on the basis of defective IME and peer review reports.

 

I said it in the last edition and I will say it again, if an insurer is going to deny a bill based upon a peer review report, that report MUST discuss how the service rendered was inconsistent with generally accepted medical/professional practice.

 

The Analysis:  The Applicant, eligible injured person, sought reimbursement for chiropractic, massage therapy, orthopedic, physical therapy, and radiology medical services as a result of an April 11, 2000, motor vehicle accident.

 

The insurer denied the chiropractic care on the basis that the provider failed to submit the bills for service within 45 days of the treatment date as well as an independent medical examination by Mr. Gerow.  Mr. Gerow’s evaluation of the Applicant revealed a minimal L4-5 disc desiccation with minimal disc bulge.  Mr. Gerow commented that it was over 2 ½ years since the Applicant’s motor vehicle accident with the Applicant reporting transient symptom benefit from chiropractic care.  The Applicant still reported lower back pain with the development within the past six months of bilateral hip and left lower extremity pain.  Mr. Gerow opined that the Applicant benefited as much as was going to from chiropractic care and no further care was necessary or required as a result of the April 2000, motor vehicle accident.

 

Arbitrator O’Connor upheld the insurer’s denial for chiropractic care on the basis that the chiropractic provider failed to submit the bills at issue in the arbitration to the insurer for payment in a timely fashion.

 

Regarding the massage therapy bills, Arbitrator O’Connor declined to award the Applicant reimbursement due to the fact that the Applicant could not demonstrate that the bills were ever submitted to the insurer for payment.

 

The insurer denied Applicant’s claim for orthopedic and physical therapy medical services on the basis of an independent medical examination conducted by Dr. Anthony Leone.  Dr. Leone examined the Applicant noting that she could stand and walk without difficulty.  There was normal tone and muscle bulk.  The Applicant had a negative straight leg raise, nerve root tension signs, and Lasegue test.  Her range of motion was excellent with excellent flexibility.  However, Applicant had 50% of normal rotation and 50% of normal flexion and extension of the cervical spine.  Dr. Leone noted that Applicant’s EMG/NCV testing was negative.  Her MRI revealed no significant findings except mild, early L4-5 changes.  The most recent MRI of the cervical and lumbar spine revealed unspecified disc abnormalities.  However, Dr. Leone opined that since five years lapsed between the motor vehicle accident and the current MRI studies he was not sure that the recent abnormalities could be attributed to the accident.

 

Dr. Leone opined that Applicant sustained cervical and lumbar myofascial pain syndrome with disc disease that was grossly related to the April 2000, motor vehicle accident.  Dr. Leone concluded that Applicant’s treatment was reasonable and necessary.  Dr. Leone recommended another aggressive course of physical therapy as well as avoiding lifting, pushing, pulling or carrying more than 30 pounds.

 

A few weeks later, Dr. Leone issued an addendum to his report clarifying the amount of physical therapy recommended.  He also opined that the causal relationship between the findings in the recent MRI studies and the motor vehicle accident were dubious.  Accordingly, while Applicant required medical treatment, Dr. Leone felt that the recommended treatment was not related to the April 2000, motor vehicle accident.

 

Based upon Dr. Leone’s addendum, the insurer issued a general denial.

 

Arbitrator O’Connor declined to uphold the insurer’s denials for orthopedic treatment and physical therapy finding that Dr. Leone’s opinion was not adequately supported.  Instead, the Applicant did submit sufficient documentation to establish that the treatment was necessary.

 

Finally, the insurer requested Dr. Paarlberg conduct a peer review regarding the MRI studies conducted.  Dr. Paarlberg concluded that the cervical spine MRI study was not medically necessary since the Applicant stated she had no cervical spine complaints.  Further, Dr. Paarlberg opined that the lumbar spine MRI study was not medically necessary based upon her treating physicians recent records stating full range of motion of the lumbar spine with marked improvement secondary to physical therapy.

 

Arbitrator O’Connor declined to uphold the insurer’s denial based upon the peer review report as the report’s conclusion was not supported by any showing that the MRI studies were inconsistent with generally accepted medical/professional practice.  See, CityWide Social Work & Psychological Servs. v. Travelers Indem. Co., 3 Misc3d 608 (Civ. Ct. Kings Cty. 2004); Alliance Med. Office, PC v. Allstate Ins. Co., 196 Misc2d 268 (Civ. Ct. Kings Cty. 2005); Nir v. Allstate Ins. Co., 7 Misc3d 544 (Civ. Ct. Kings Cty. 2005).

 

 

1/16/07            DWP Pain Free Med. P.C., Edison Alcantara v. Progressive Northeastern

Ins. Co.,

Suffolk Cty., 3d Dist., 2006 NY Slip Op 26531                   

Insurers Are Not Required To Accept Electronic Signatures On Assignment Of Benefit Form or NF-3 Form

 

Here is the Angle:  An insurer is not required to accept an electronic signature or an electronic document as an original on an assignment of benefits form or NF-3 form in spite of the state and federal laws on electronic signature and documents.  If the insurer is going to delay the claim based upon this then it is highly recommended that the insurer clearly advise the provider in its request for additional verification that it does not accept electronic signatures or electronic documents as originals.

 

The Analysis:  Defendant moved to dismiss Plaintiff’s Complaint as its claim was premature as no claim for no-fault benefits was overdue.  The interesting issue in the case was whether the Plaintiff’s production of an electronic signature on an assignment of benefits form and NF-3 claim form in response to the Defendant’s verification request was proper thereby triggering the Defendant to either pay or deny the claim within 30 days.

 

Initially, it is noted that the Defendant issued timely verification and additional verification requests under the Insurance Regulations.  The Plaintiff submitted a claim for medical services on August 11, 2005.  On August 22, 2005, the Defendant requested verification of inter alia, an Assignment of Benefits (“AOB”) and NF-3.  The Plaintiff returned the AOB and NF-3 to Defendant which sparked a request for additional verification.  The Defendant in its request stated that the Plaintiff was required under the Insurance Regulations to submit a properly executed AOB or authorization to pay in order to receive direct payment from the Defendant. 

 

The AOB submitted was not properly executed as it was not signed by the patient and the provider signed the AOB with an electronic signature, which the Defendant advised it does not accept.

 

The NF-3 submitted was also not properly executed because not all boxes were filled in.  Apparently, the NF-3 submitted indicated that the patient elected for authorization to pay as well as provided an assignment of benefits which is not permitted.  Furthermore, the Defendant advised it required the physician’s original signature and would not accept an electronic or signature stamp.

 

The Defendant issued a timely follow up verification request when no response was received and it was unrefuted that the Plaintiff had not responded to the Defendant’s verification requests.

 

The Defendant argued in support of its motion to dismiss that it is not required to accept electronic or stamped signatures but has the right to verify the signatures of the provider and patient.  In support of its argument, the Defendant submitted an October 25, 2006, opinion from the General Counsel’s Office of the New York State Insurance Department which opined that the New York State Electronic Signatures and Records Act (“ESRA”) and the Federal Electronic Signatures in Global and National Commerce Act (“E-Sign”) do not require an insurer to accept either electronic signature or electronic records with No-Fault insurance claim forms.  Yet, a digitally reproduced AOB can serve as an original document for purposes of verification by an insurer under 11 NYCRR §65-3.11(c) provided it is accurate and accessible as required by E-Sign §7001(d)(1) AND the insurer consents to the use of an electronic record as an original document.  Further, while ESRA and E-Sign do not require an insurer to accept an electronic signature the insurer can chose to accept it.

 

The Court accepted the Defendant’s argument and that it did not accept an electronic signature on an AOB and NF-3 forms.  The Plaintiff’s complaint was dismissed as the claim was premature since the Defendant’s time to either pay or denial the claim had not expired.

 

1/16/07            Midwood Acupuncture, P.C. a/a/o Willaims Bernadette et. al. v. State Farm Mut. Auto. Ins. Co.

NY Sup. App. Term, 2d Dept., 2007 NY Slip Op 50052(U)

Plaintiff’s Summary Judgment Motion Denied As Premature In Order To Permit Discovery On Insurer’s Defense Of Fraudulent Incorporation.

 

Here is the Angle:  The insurer survived a cross-motion for summary judgment on the basis that it had not completed discovery concerning its defense of fraudulent incorporation.  It is noted that the Defendant made a sufficient showing that the issue of operation and control of the corporation and the viability of the defense were real.

 

The Analysis:  The Court reversed the lower court and denied Plaintiff’s cross-motion for summary judgment and granted Defendant’s motion to sever as well as permitted discovery on the issue of fraudulent incorporation.

 

Of great interest in this case was the Court’s discussion on the insurer’s allegation of the provider not being entitled to reimbursement under 11 NYCRR §65-3.16(a)(12) due to fraudulent incorporation.  The Court, citing State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313 (2005), pointed out that the lack of entitlement for reimbursement of No-Fault benefits under the regulation pertained not only to fraudulently licensed providers but also to providers who failed to meet the applicable state and local licensing requirements.  Furthermore, this defense in nonwaivable and not subject to the 30-day preclusion rule.

 

In reviewing the Defendant’s opposition papers to Plaintiff’s cross-motion, the Court held that issues were sufficiently raised as to who really operated and controlled Plaintiff.  The Court found that much of the Defendant’s discovery demands that sought information regarding whether the Plaintiff was fraudulently incorporated were material and necessary.  Accordingly, the Plaintiff’s cross-motion for summary judgment was denied as premature pending discovery being completed.

.

 

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.

 

1/19/07            VIRGINIA SURETY CO., INC. v. NORTHERN INS. CO. OF NEW YORK
Illinois Supreme Court
General Liability Insurance: “Insured Contract” Exception to Exclusion for Bodily Injury to Employee Did Not Apply

Under a construction subcontract, Subcontractor waived its right to contribution against and agreed to indemnify and hold harmless General Contractor for all claims resulting from Subcontractor’s work. Subcontractor obtained a CGL policy from Northern Insurance Company of New York (“Northern”). The Northern policy excluded coverage for bodily injury to Subcontractor’s employees, except for liability assumed by Subcontractor under an “insured contract.” After being injured while working on the job site, Subcontractor’s employee (“Employee”) filed a workers’ compensation claim against Subcontractor. Employee also sued General Contractor for negligence, and General Contractor filed a third-party claim against Subcontractor for contribution. Subcontractor tendered the third-party claim to Virginia Surety Company (“Virginia”) under a workers’ compensation and employer’s liability policy, and to Northern under the CGL policy. Virginia accepted the defense, but Northern refused to defend or indemnify. Virginia then filed a declaratory judgment action against Northern, arguing that the subcontract between General Contractor and Subcontractor is an “insured contract” within the meaning of the Northern policy, and therefore, coverage should have been available under the “insured contract” exception to the exclusion for bodily injury to Subcontractor’s employees. The Virginia Supreme Court upheld the trial court’s ruling on summary judgment that the subcontract was not an “insured contract.” General Contractor and Subcontractor intended the subcontract to provide General Contractor with the right to seek contribution from Subcontractor (i.e., General Contract could require Subcontractor to pay its proportionate share); not that Subcontractor would assume General Contractor’s joint and several liability. Therefore, the “insured contract” exception to the exclusion did not apply, and Northern had no duty to defend or indemnify Subcontractor under the CGL policy.

Submitted by: Bruce D. Celebrezze, Esq. & Jamison R. Narbaitz, Esq. of Sedgwick, Detert, Moran & Arnold LLP

1/19/07            NATIONWIDE MUT. INS. CO. v. CHILLURA
Florida Court of Appeals
Property Insurance: Prophylactic Repairs Not Covered Under Coverage for “Direct Physical Loss” to Structures
Frank and Steve Chillura own four adjacent apartment buildings. Nationwide Mutual Insurance Company insured the buildings under a policy that specifically covered sinkhole damages. A sinkhole opened, damaging the four buildings. Nationwide denied the majority of the Chilluras’ claims, so the Chilluras filed a breach of contract action against Nationwide. On summary judgment, the trial court ruled that “subsurface foundation stabilization” repairs were necessary to return the buildings to pre-loss conditions, and that the repairs were covered under the policy’s Coverage A (covering “direct physical loss or damage” to the covered structures). Nationwide appealed, arguing that the trial court erred in finding that Coverage A covered the cost of the repairs, since it provides coverage for the structures but specifically excludes coverage for soil. Nationwide argued that the repairs would be covered under other policy provisions covering prophylactic measures that have actually been completed; because the Chilluras did not actually complete the repairs, no coverage was available. The repairs involved two components: (1) grout injection to fill sinkholes; and (2) driving pins through the foundation slabs until they reach solid rock. The appellate court ruled that the trial court erred in finding coverage for the “grout” component, because a material issue of fact existed as to whether the grout repairs served to return the buildings to pre-loss condition or prevent future damages. However, the trial court properly granted summary judgment with regard to the “pinnings” component, since the parties’ experts agreed that they served to return the structures to a pre-loss condition.

Submitted by: Bruce D. Celebrezze, Esq. & Jamison R. Narbaitz, Esq. of Sedgwick, Detert, Moran & Arnold LLP

 

 

 

 

CASES IN FULL TEXT

 

Bailer v. Guardian Life Insurance Company

Belesi & Conroy, P.C., Garden City, N.Y. (Matthew J. Conroy of
counsel), for appellant.
Windels Marx Lane & Mittendorf, LLP, New York, N.Y.
(Robert D. Mercurio and Delton L. Vandever
of counsel), for respondent.

 

DECISION & ORDER

In an action to recover damages for breach of an insurance contract, and for a judgment declaring that the plaintiff is disabled pursuant to the language and within the meaning of the subject policy of insurance, the plaintiff appeals from an order of the Supreme Court, Kings County (Demarest, J.), dated June 16, 2005, which granted the defendant's motion for summary judgment.

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

On or about September 1, 2000, the plaintiff applied to the defendant for benefits under his disability insurance policy. He sent in claim forms alleging that, in March 1999, he became totally disabled as a result of mental illness. The defendant denied the claim, stating, inter alia, that the plaintiff failed to give timely notice of his claim. Subsequently, the plaintiff commenced this action against the defendant to recover damages for breach of contract and for a declaratory judgment, asserting that he had complied with the policy's provisions, and that the defendant owed him benefits under the policy.

Following discovery, the defendant moved for summary judgment, asserting, inter alia, that the plaintiff failed to give timely notice of the claim. In opposition, the plaintiff contended [*2]that, given the circumstances of his severe mental illness, he notified the defendant of his disability claim as soon as was reasonably possible. The Supreme Court found that the record was insufficient for it to determine whether the plaintiff's alleged mental disability rose to a level such that it constituted a "legally acceptable mitigating circumstance" and reasonable excuse for the delay in giving notice of the claim. In order to resolve this factual issue, the Supreme Court scheduled a framed-issue hearing to determine "(1) whether plaintiff was able to engage in rational thought and deliberate decision making sufficient to pursue his claim for coverage, and (2) whether the delay was caused by [circumstances] other than plaintiff's alleged impairment." After the framed-issue hearing, the Supreme Court determined that the totality of the evidence did not support the plaintiff's claim of mental incapacity. Thus, the Supreme Court granted the defendant's motion for summary judgment. This was error.

"Absent a valid excuse, a failure to satisfy the notice requirement vitiates the [insurance] policy" (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440 [citations omitted]). Ordinarily, the reasonableness of any delay and the sufficiency of the mitigating circumstances offered are factual issues for trial (see Eveready Ins. Co. v Chavis, 150 AD2d 332, 333; Jenkins v Burgos, 99 AD2d 217, 220-221; cf. Can-Am Roofing v American States Ins. Co., 229 AD2d 973, 974). Here, once the Supreme Court determined that a factual issue existed as to whether the plaintiff's alleged mental illness constituted a sufficient mitigating circumstance, the framed-issue hearing was not warranted and the motion for summary judgment should have been denied (see CPLR 3212[b]; 3212[c]).

SPOLZINO, J.P., RITTER, LUNN and ANGIOLILLO, JJ., concur.

Commercial Union Insurance Company v. Liberty Mutual Insurance Company

Martyn, Toher, Esposito, Martyn & Adler, Mineola, N.Y. (Thomas
M. Martyn of counsel), for appellant-respondent.
Joseph C. Scibilia, Rockville Centre, N.Y. (Joseph R. Crafa of
counsel), for respondent-appellant.

 

DECISION & ORDER
In an action, in effect, for a judgment declaring, inter alia, that the defendant Liberty Mutual Insurance Company was obligated to either defend and/or indemnify its insureds in an underlying personal injury action entitled Kulbacki v J & C Building Renovations, pending in the Supreme Court, New York County, Index No. 124171/00, the plaintiff, Commercial Union Insurance Company, appeals from so much of an order of the Supreme Court, Nassau County (Peck, J.), entered August 18, 2004, as denied that branch of its cross motion which was for summary judgment in its favor against the defendant Liberty Mutual Insurance Company declaring that the defendant Liberty Mutual Insurance Company was obligated to defend and indemnify its insureds in the underlying personal injury action, and the defendant Liberty Mutual Insurance Company cross-appeals, as limited by its brief, from so much of the same order as denied its motion for summary judgment in its favor.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying the motion of Liberty Mutual Insurance Company for summary judgment in its favor and substituting therefor a provision granting that motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that Liberty Mutual Insurance Company was not [*2]obligated to either defend and/or indemnify its insureds in the underlying personal injury entitled Kulbacki v J & C Building Renovations, pending in the Supreme Court, New York County, under Index No. 124171/00.

As a general rule, the construction of terms and conditions of an insurance policy that are clear and unambiguous presents a question of law to be determined by the court (see Caporino v Travelers Ins. Co., 62 NY2d 234, 239; Breed v Insurance Co. of N. Am., 46 NY2d 351, 355; Raino v Navigators Ins. Co., 268 AD2d 419, 420; Dubay v Trans-Am. Ins. Co., 75 AD2d 312). On the other hand, any ambiguity in an insurance contract must be construed against the insurer and in favor of the policyholder (see Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, 49). However, the terms of an insurance contract are not considered ambiguous merely because the parties interpret the language differently (see Mount Vernon Fed. Ins. Co. v Creative Hous., 88 NY2d 347, 352).

We agree with the contention of the defendant Liberty Mutual Insurance Company (hereinafter Liberty Mutual) that the Supreme Court incorrectly determined that the insurance policy in question was ambiguous. Item 3, subsection c, of the insurance policy issued by Liberty Mutual to its insureds, J & C Building Renovations and Cezary Bartosiewicz, provides that no coverage is afforded for accidents occurring in certain states. Contrary to the plaintiff's contentions, Item 3, subsection c, clearly and unambiguously delineates New York as one of the states in which there is no coverage provided. Since there was no coverage in the first instance, there was no requirement for Liberty Mutual to provide a timely disclaimer (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; National Union Fire Ins. Co. of Pittsburgh, Pa. v Utica First Ins. Co., 6 AD3d 681, 682).

Accordingly, Liberty Mutual is entitled to a declaration that it was not obligated to either defend and/or indemnify its insureds in the underlying personal injury action entitled Kulbacki v J & C Building Renovations, et al., in the Supreme Court, New York County, Index No. 124171/00 (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
SANTUCCI, J.P., GOLDSTEIN, SKELOS and LIFSON, JJ., concur.

Greenman-Pedersen, Inc., v. Zurich American Insurance Company

Melito & Adolfsen, P.C., New York, N.Y. (Ignatius John Melito,
Tania Gondiosa, and Paul F. McAloon of counsel), for appellant.
Sinnreich Safar & Kosakoff, LLP, Central Islip, N.Y. (Jonathan
Sinnreich of counsel), for respondent.

 

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying personal injury action entitled Byrne v Greenman-Pedersen, Inc., pending in the Supreme Court, New York County, under Index No. 124171/00, the defendant appeals from an order of the Supreme Court, Suffolk County (Cohalan, J.), dated July 27, 2005, which granted the plaintiff's motion for summary judgment declaring that it was obligated to defend and indemnify the plaintiff in the underlying personal injury action, and denied its cross motion for summary judgment declaring that it was not so obligated.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the plaintiff's motion for summary judgment, and substituting therefor a provision denying that motion; as so modified, the order is affirmed, without costs or disbursements.

On this record, we discern unresolved material issues of fact as to whether the plaintiff exercised reasonable diligence in ascertaining the existence of coverage under the policy issued by the defendant carrier and whether it complied with those policy conditions applicable to additional insureds (see Greaves v Public Serv. Mut. Ins. Co., 4 AD2d 609, 613, affd 5 NY2d 120; Seeman v Sterling Ins. Co., 267 AD2d 677; cf. Nationwide Ins. Co. v Empire Ins. Group., 294 AD2d 546; Winstead v Uniondale Union Free School Dist., 201 AD2d 721). Accordingly, the Supreme Court erred in granting the plaintiff's motion for summary judgment.

Bender v. Peerless Insurance Company

MEMORANDUM AND ORDER

Lahtinen, J.

Appeal from an order of the Supreme Court (Coccoma, J.), entered July 5, 2006 in Delaware County which, inter alia, denied plaintiffs' motion for summary judgment.

Plaintiffs admit spilling a small amount of fuel oil while making a residential delivery in March 2002. Notice of the incident was ostensibly provided to defendants in January 2004, and they disclaimed coverage in April 2004. The owners of the home subsequently commenced a lawsuit alleging that the spill and concomitant damages were much more extensive than acknowledged by plaintiffs. Defendants again denied coverage, prompting this declaratory judgment action by plaintiffs seeking to compel defendants to defend and indemnify them in the underlying action by the homeowners. Plaintiffs and defendants eventually moved for summary judgment.

Supreme Court denied plaintiffs' motion finding that there were factual issues as to whether they provided defendants with timely notice under the terms of the policies. Supreme Court granted dismissal as to defendant Excelsior Insurance Company upon the ground that its policies contained pertinent pollution exclusion clauses, but Supreme Court found that defendants Peerless Insurance Company and Netherlands Insurance Company (hereinafter defendants) could not properly disclaim under their pollution exclusion clauses. Plaintiffs appeal, contending that their motion should have been granted. 

The sole ground urged by plaintiffs for reversal on appeal is that, even if they did not establish as a matter of law that they afforded timely notice to defendants, the language of the policies required defendants to show prejudice flowing from the lack of notice and there is no evidence of prejudice. Defendants allege that plaintiffs did not raise the issue of prejudice before Supreme Court and, accordingly, it is not properly before us (see Blair v County of Albany, 127 AD2d 950, 951 [1987]; see also Matter of Cavalieri v Commissioner of State of N.Y. Dept. of Taxation & Fin., 250 AD2d 973, 974 [1998]). Plaintiffs assert in their brief, however, that they did raise the issue before Supreme Court at oral argument and both parties argued the point. Nevertheless, this issue does not appear anywhere in the record on appeal and plaintiffs did not move for leave to reargue their summary judgment motion before Supreme Court (see CPLR 2221 [d]). Under the circumstances of this case, we decline to consider the issue (see Barclay's Bank of N.Y. v Smitty's Ranch, 122 AD2d 323, 325 [1986]; see generally 1 Newman, NY Appellate Practice § 4.18 [2]), particularly since defendants were not afforded a full opportunity to expand on their written disclaimer.

Defendants' assertion, that despite their failure to file a notice of appeal we should exercise our power to search the record and grant them summary judgment (see Doin v Bluff Point Golf & Country Club, 262 AD2d 842, 843 [1999], lv denied 94 NY2d 753 [1999]), is rejected as unwarranted in this case.

Peters, J.P., Mugglin, Rose and Kane, JJ., concur.

ORDERED that the order is affirmed, with costs.

Klersy Building Corp. v. Harleysville Worcester Ins. Co.

Calendar Date: November 13, 2006
Before: Cardona, P.J., Mercure, Spain, Mugglin and Lahtinen, JJ.


O'Connor, Redd & Sklarin, L.L.P., White Plains, for
appellant.
Hacker & Murphy, L.L.P., Latham (Thomas D.
Buchanan of counsel), for respondent.

MEMORANDUM AND ORDER


Lahtinen, J.

Appeal from an order of the Supreme Court (McNamara, J.), entered April 5, 2006 in Albany County, which, inter alia, denied defendant's motion for summary judgment dismissing the complaint.

Plaintiff is a small, family-run general contractor that has been in business for nearly 50 years and primarily constructs single family homes. On June 16, 2004, Michael Clegg allegedly fell from the second story of a house construction project for which plaintiff was the general contractor. Clegg was an employee of a subcontractor, David C. Donato Carpentry (hereinafter Donato). Although plaintiff's president, Kevin Klersy, received notice of the accident on the day it occurred, he did not contact defendant, the company's commercial insurer.

About four months later, on October 26, 2004, plaintiff was served with a summons and complaint in an action commenced by Clegg and his spouse alleging Labor Law causes of action. Plaintiff notified defendant on October 29, 2004. Defendant denied coverage in a letter dated November 12, 2004, asserting that plaintiff had failed to comply with a policy provision to notify it of any occurrence "as soon as practicable." Plaintiff then brought this declaratory judgment action seeking to compel defendant to defend and indemnify. Both parties moved for summary judgment. Supreme Court denied the motions, finding triable issues of fact. Defendant appeals.

"Where a policy of liability insurance requires that notice of an occurrence be given 'as soon as practicable,' such notice must be accorded the carrier within a reasonable period of time" [*2](Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 743 [2005] [citation omitted]). Failure to comply with the notice requirement vitiates the contract of insurance and, under such circumstances, the insurer is not required to demonstrate actual prejudice from the delay in order to successfully disclaim coverage (see id.; Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]). However, omitting to provide timely notice may be excused in certain situations, such as "where the insured has 'a good-faith belief of nonliability,' provided that belief is reasonable" (Great Canal Realty Corp. v Seneca Ins. Co., supra at 743, quoting Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]). "Although the insured bears the burden of proving that there was a reasonable excuse for a delay, the question of such reasonableness is generally a question of fact for a jury" (Hudson City School Dist. v Utica Mut. Ins. Co., 241 AD2d 641, 642 [1997] [citations omitted]; see Morehouse v Lagas, 274 AD2d 791, 794 [2000]).

Here, Klersy explained that he did not immediately contact defendant because Clegg was employed by Donato, Donato was supervising Clegg when the accident occurred, and Donato had provided plaintiff with proof of both liability and workers' compensation coverage prior to the construction project. He believed that any potential claim would be covered by Donato's insurance and did not think plaintiff had any liability for the incident. Klersy added that, during the company's nearly 50 years in business, it had minimal experience with job site accidents that resulted in claims. He was aware of only two prior claims, both of which settled before an action was commenced and only one of which (occurring in 1991) involved a worker being injured at the job site. In view of the circumstances of this case and in light of the preference for permitting a jury to determine the question of reasonableness, we are unpersuaded that Supreme Court erred in denying defendant's motion for summary judgment (see G.L.G. Contr. Corp. v Aetna Cas. & Sur. Co., 215 AD2d 821, 822-823 [1995]; Triantafillou v Colonial Coop. Ins. Co., 178 AD2d 925, 926-927 [1991]).

Massot v. Utica First Insurance Company

Jason Bijur, Brooklyn, for appellant.
Faust Goetz Schenker & Blee LLP, New York (Matthew B.
Stein of counsel), for respondent.

Order, Supreme Court, New York County (Louis B. York, J.), entered November 9, 2005, which denied plaintiff's motion for summary judgment and granted defendant Utica's cross motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

In this declaratory judgment action arising from Utica's disclaimer of coverage, although Classic Nails did not report plaintiff's injury until four months after it occurred it did so immediately upon being served with plaintiff's summons and complaint. Under the circumstances, given plaintiff's own testimony that she experienced no pain, considered the wound superficial, and did not initially seek medical treatment for her injury, Classic's four-month delay was reasonable (see Kelly v Nationwide Mut. Ins. Co., 174 AD2d 481, 483 [1991]).

Nevertheless, contrary to plaintiff's assertion, and regardless of any interpretation of the term "unlicensed operator," Utica's denial of coverage on the additional basis of the policy's exclusion for services rendered by an unlicensed employee, or products or equipment used in violation of the law, which identified the applicable policy exclusion and set forth the factual basis for the insurer's position that the claim fell within such exclusion, was sufficiently specific to render such notice timely (see Insurance Law § 3420[d]; Realm Natl. Ins. Co. v Hermitage Ins. Co., 8 AD3d 110 [2004]). Moreover, the investigative reports submitted by Utica — finding no evidence the disputed service was rendered by a licensed pedicurist, and that the service was performed with a sharp instrument as prohibited by law — were sufficient to support Utica's reliance on the exclusion.

We have considered plaintiff's remaining arguments and find them without merit.

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

 

Travelers Ind. Co. v. . Commerce & Industry Ins. Co. and Peerless Ins. Co.

Calendar Date: November 21, 2006
Before: Cardona, P.J., Mercure, Crew III, Mugglin and Lahtinen, JJ.


Flink Smith, L.L.C., Latham (Jeffrey D. Wait of
counsel), for appellants.
Lazare, Potter, Giacovas & Kranjac, L.L.P., New
York City (Stephen M. Lazare of counsel), for respondents.

MEMORANDUM AND ORDER


Lahtinen, J.

Appeal from an order of the Supreme Court (Teresi, J.), entered April 10, 2006 in Albany County, which, inter alia, granted plaintiffs' motion for partial summary judgment.

The underlying facts are set forth in a prior appeal (28 AD3d 914 [2006], appeal dismissed 7 NY3d 844 [2006]). Briefly stated, plaintiff Finch Pruyn & Company contracted to have defendant GL & V LaValley Industries, Inc. build, deliver and install a new caustic washer at Finch's mill. GL & V subcontracted the removal of the old washer and installation of the new one to defendant Pinchook & Buckley Construction, Inc. Pinchook was an approved contractor of Finch that frequently did work for Finch. An employee of Pinchook fell while working on removal of the old washer, resulting in a Labor Law action against Finch and
GL & V, and GL & V brought a third-party action against Pinchook.

Plaintiff Travelers Indemnity Company, the insurer of Finch, demanded that Pinchook's insurer, defendant Peerless Insurance Company, defend and indemnify Finch upon the ground that Finch was an additional insured under the Peerless policy. Travelers and Finch commenced this action seeking, among other things, a declaratory judgment that Peerless and Pinchook (hereinafter collectively referred to as defendants) had such an obligation to defend and indemnify. Plaintiffs and defendants each moved for summary judgment. Supreme Court granted plaintiffs' motion, finding that endorsement CG 20 10 of the Peerless policy, together with the specific naming of Finch as an additional insured in the policy, established that plaintiffs were entitled to coverage from Peerless. Defendants appeal.

When addressing an insurance coverage dispute, a court looks first to the language of the policy (see Raymond Corp. v National Union Fire Ins. Co., 5 NY3d 157, 162 [2005]; State of New York v Home Indem. Co., 66 NY2d 669, 671 [1985]). The policy is construed "'in a way that affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect'" (Raymond Corp. v National Union Fire Ins. Co., supra at 162, quoting Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221-222 [2002]). "Unambiguous provisions of a policy are given their plain and ordinary meaning" (Lavanant v General Acc. Ins. Co., 79 NY2d 623, 629 [1992]) and ambiguous provisions are construed "against the insurer who drafted the contract" (State Farm Mut. Auto Ins. Co. v Glinbizzi, 9 AD3d 756, 757 [2004]).

Defendants argue that Supreme Court erred in finding that endorsement CG 20 10 provides coverage to Finch. That endorsement, which is entitled "ADDITIONAL INSURED OWNERS, LESSEES OR CONTRACTORS," provides in pertinent part:

"Schedule

Name of Person or Organization:

(If no entry appears above, information required to complete this endorsement will be shown in the declarations as applicable to this endorsement).

WHO IS INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your ongoing operations performed for that insured."

Since no name is listed directly under "Name of Person or Organization," the policy's declarations must be reviewed for "information required to complete this endorsement." A "declarations extension" in the policy specifically lists Finch as an additional insured. The clear language of the policy reveals that Finch is an "organization shown in the Schedule" and, under the facts of this case, the accident occurred while Pinchook was performing operations for Finch (cf. Tishman Constr. Corp. of N.Y. v American Mfrs. Mut. Ins. Co., 303 AD2d 323, 323-324 [2003]; Impulse Enter./F & V Mech. Plumbing & Heating v St. Paul Fire & Mar. Ins. Co., 282 AD2d 266, 266-267 [2001]; Pavarini Constr. Co. v Liberty Mut. Ins. Co., 270 AD2d 98, 98-99 [2000]). Accordingly, we agree with Supreme Court that coverage is afforded Finch pursuant to Peerless policy endorsement CG 20 10.

We find unpersuasive defendants' assertion that the declarations extension in which Finch is named relates solely to a different endorsement in the policy, to wit, endorsement 22-45. That endorsement provides coverage to "any person or organization with whom [Pinchook] agreed, because of a written contract or agreement or permit, to provide insurance such as is afforded under this policy." This extension affords coverage based on Pinchook's contract with an entity, without the necessity of that entity being specifically listed in the Peerless policy as an additional insured (see generally Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 393-394 [2003]). Plaintiffs did not seek coverage under endorsement 22-45 because Finch had no written contract with Pinchook. Finch, however, was already specifically named as an additional insured in the Peerless policy and the language used in the policy does not limit such a named additional insured's coverage to only situations arising under endorsement 22-45 or otherwise foreclose coverage to the additional insured.

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

ORDERED that the order is affirmed, with costs.

 

Borelli v. Ogno

Harold Solomon, Rockville Centre, N.Y. (Bernard G. Chambers of
counsel), for appellant.
Leahey & Johnson, P.C., New York, N.Y. (Peter James Johnson,
Peter James Johnson, Jr., James P.
Tenney, and Matthew Charles Baron
of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Hurkin-Torres, J.), dated January 3, 2006, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). While the report of the defendant's examining orthopedist specified the degrees of the range of motion he found in the plaintiff's lumbar spine upon his examination of her, he failed to compare those findings to the normal range of motion, thereby leaving the court to speculate as to the meaning of those figures (see Hernandez v Stanley, 32 AD3d 428; Mondi v Keahon, 32 AD3d 506; Benitez v Mileski, 31 AD3d 473; Abraham v Bello, 29 AD3d 497; Yashayev v Rodriguez, 28 AD3d 651; 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 initial burden of establishing a prima facie case, it is unnecessary to consider whether the plaintiff's papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., RIVERA, SKELOS and LUNN, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

Dzaferovic v. Polonia

Sherman & Basichas, LLP (Pollack, Pollack, Isaac & De Cicco,
New York, N.Y. [Brian J. Isaac and Kenneth J. Gorman] of
counsel), for appellants.
Baker, McEvoy, Morrissey, & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for
respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Queens County (Agate, J.), dated October 27, 2005, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Musa Dzaferovic 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.

The defendants failed to make a prima facie showing that the plaintiff Musa Dzaferovic (hereinafter the injured 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). In the affirmed medical report of the defendants' examining neurologist there was noted a limitation in the range of motion of the injured plaintiff's left shoulder that was not sufficiently quantified or qualified to establish the absence of a significant limitation of motion (see Whittaker v Webster Trucking Corp., 33 AD3d 613; Kaminsky v Waldner, 19 AD3d 370, 371). Since the defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiffs' papers submitted in opposition were sufficient to raise a triable issue of fact (see Whittaker v Webster Trucking Corp., supra; Kaminsky v Waldner, supra; Coscia v 938 Trading Corp., 283 AD2d 538).
CRANE, J.P., MASTRO, SANTUCCI and LIFSON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

Lim v. Tiburzi

Sim & Park, LLP, New York, N.Y. (Sang J. Sim of counsel), for
appellant.
James P. Nunemaker, Jr., Uniondale, N.Y. (Marcella Gerbasi
Crewe of counsel), for respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Price, J.), dated December 19, 2005, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Kearse v New York City Tr. Auth., 16 AD3d 45). In opposition, the plaintiff submitted the affirmation of her examining physician and the affidavit of her treating physical therapist, both specifying the decreased range of motion in her cervical spine as evidenced by objective findings, along with evidence of a herniated disc at C4-5 as confirmed by a magnetic resonance imaging test. The plaintiff's examining physician also asserted that the plaintiff's injuries to her cervical spine were permanent, and causally related to the subject motor vehicle accident. This evidence was sufficient to raise a triable issue of fact as to whether the plaintiff sustained a permanent consequential or significant limitation of use of her cervical spine as a result of the subject accident (see Shpakovskaya v Etienne, 23 AD3d 368; Clervoix v Edwards, 10 AD3d 626; Acosta v Rubin, 2 AD3d 657; Rosado v Martinez, 289 AD2d 386; Vitale v Lev Express Cab Corp., 273 AD2d 225).
RITTER, J.P., GOLDSTEIN, FLORIO and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

Ramsey v. Kaszuba


 

Boeggeman, George, Hodges & Corde, P.C., White Plains, N.Y.
(Lisa M. Rolle of counsel), for appellant.
DupÉ;e & Monroe, P.C., Goshen, N.Y. (William J. Garvin of
counsel), for respondent.

 

DECISION & ORDER

In two related actions to recover damages for personal injuries, Alan Kaszuba appeals, as limited by his brief, from so much of an order of the Supreme Court, Orange County (Horowitz, J.), dated September 27, 2005, as, upon reargument, denied his motion for summary judgment dismissing the complaint in Action No. 2 insofar as asserted against him 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 order insofar as appealed from, we do so on grounds other than those relied upon by the Supreme Court. Contrary to the Supreme Court's holding, the appellant failed to show on his motion for summary judgment dismissing the complaint in Action No. 2 that the plaintiff in that action (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In support of his motion, the appellant submitted reports prepared by, among others, the plaintiff's treating physicians indicating that the plaintiff exhibited restricted ranges of motion in her cervical spine, and that the injuries which the plaintiff sustained were the result of the subject motor vehicle accident (see Brown v Motor Vehicle Acc. Indemnification Corp., 33 AD3d 832; Campbell v Vakili, 30 AD3d 457; McCluskey v Aguilar, 10 AD3d 388). Under these circumstances, we need not consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Brown v Motor Vehicle Acc. Indemnification Corp., supra; Campbell v Vakili, supra; McCluskey v Aguilar, supra; Coscia v 938 Trading Corp., 283 AD2d 538).
RITTER, J.P., GOLDSTEIN, FLORIO and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

 

Seaport Park Condominium V. Greater New York Mutual Insurance Company

 

Defendant Greater New York Mutual Insurance Company appeals from an order of the Supreme Court, New York County (Walter B. Tolub, J.), entered June 20, 2005, which denied its motion to dismiss the complaint.


Thomas D. Hughes, New York (Richard C. Rubinstein
of counsel), for appellant.
Stiefel & Cohen, New York (George Stiefel of
counsel), for respondent.


SULLIVAN, J.

Defendant Greater New York Mutual Insurance Company (GNY) issued a business owners policy, effective September 30, 2003, providing first-party property damage coverage to plaintiff for its seven-story condominium apartment building at 117 Beekman Street in Manhattan. The building contained a rooftop cooling tower whose pipes burst on or about January 12, 2004, allegedly the result of freezing temperatures.

On or about May 6, 2004, plaintiff notified GNY of the incident and requested payment for the property damage to the cooling tower as a result of the burst pipes. Ultimately, on the basis of plaintiff's alleged breach of a post-loss policy condition requiring it to maintain and preserve the cooling tower for inspection, GNY disclaimed coverage for the loss, prompting this lawsuit.

GNY's policy, in relevant part, provides:

E. Loss Conditions

* * *

3. Duties In The Event Of Loss Or Damage

a. You must see that the following are done in the event of loss or damage to Covered Property:

* * *

(4) [I]f feasible, set the damaged property

aside and in the best possible order for examination.

* * *

(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records [emphasis added].

On May 6, 2004, the day it received notice of the loss, GNY retained Prestige Adjustment, Inc. to adjust the claim. After visiting the site and realizing that it required the services of an expert, Prestige hired Levine Group, Inc., an HVAC expert, to inspect the cooling tower and its component parts to ascertain what had caused the pipes to burst. This inspection would, in turn, determine whether the loss was covered under the GNY policy. Levine visited the site and inspected the cooling tower on May 24 and June 1, 2004.

On the latter date, a group assembled on the roof of the building to inspect the tower, among those assembled were a representative of Levine; the executive vice-president of Akam Associates, the managing agent of the building; George Stiefel, Seaport's attorney; Jennifer Granda, Akam's on-site manager; a representative of defendant Matco Service Corp., which had been hired by Akam on plaintiff's behalf on May 7, 2004 to replace the cooling tower; a representative of the public adjuster retained by plaintiff; and several Matco workers. After inspecting the tower for about an hour, Levine's representative reported that, while he believed there were burst pipes within the cooling tower, he was unable to render a final report until he had the opportunity to conduct a more complete examination of the cooling system. This examination would determine whether the damage was the result of a covered cause of loss under the policy. According to the affidavit of plaintiff's attorney, all parties present at that meeting agreed that Matco would remove the old tower and install a new one and would store the old tower in a safe place, "advis[ing] all parties as to where [it] would be located and make arrangements for its further inspection" (emphasis added). This agreement was confirmed by Akam's on-site manager. As the complaint alleges, however, Matco destroyed the tower.

GNY subsequently denied coverage, and plaintiff commenced this action. Prior to joinder of issue, GNY moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7) on the basis of plaintiff's breach of a policy condition in failing to preserve the damaged cooling tower for inspection. Supreme Court denied the motion, finding an issue of fact based on Matco's sworn assertion that under its contract with plaintiff it had no obligation to store the cooling tower once it was removed from the building. The motion court also cited the absence of any document, report or affidavit from Levine indicating the need for a further examination of the cooling tower. Since neither of these arguments is sufficient to defeat GNY's motion, the order should be reversed and the motion to dismiss granted.

At the outset, Matco's argument that it never agreed in its May 7, 2004 contract with plaintiff to store the cooling tower for further inspection raises no factual issue as between plaintiff and GNY to justify denial of the motion, since the parties present at the June 1, 2004 inspection agree — and Matco does not dispute — that Matco had undertaken to store the cooling tower. In any event, whether Matco was obligated under its contract with plaintiff to store the tower is irrelevant. The point is that under plaintiff's policy with GNY, as well as the June 1, 2004 agreement among all those present at the meeting, plaintiff was required to store the tower for GNY's expert to inspect, and the provisions — or lack thereof — in plaintiff's contract with Matco with regard to storage do not relieve it of its obligation to GNY under the policy.

The interpretation of the policy's terms is a question of law for the court (Chimart Assoc. v Paul, 66 NY2d 570, 572-573 [1986]). As with the interpretation of any contract, the unambiguous terms of an insurance policy must be accorded their plain and ordinary meaning (Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514, 520 [1996]; 2619 Realty v Fidelity & Guar. Ins. Co., 303 AD2d 299, 300 [2003], lv denied 100 NY2d 508 [2003]; West 56th St. Assoc. v Greater N.Y. Mut. Ins. Co., 250 AD2d 109, 112 [1998]). The provisions in the GNY policy at issue could not be clearer. Taken together, the provisions relating to the insured's "Duties in the Event of Loss or Damage" imposed upon plaintiff the obligations to set the damaged property aside for examination and to permit GNY to inspect the damaged property as often as reasonably required, in order to determine whether the loss was covered.

GNY and plaintiff, as well as the others present at the June 1 inspection, agreed that Matco would store the cooling tower and make it available to GNY's expert for a further inspection. It is undisputed that because of the destruction of the replaced cooling tower, GNY [*4]never had the opportunity for a further inspection of the damage. Thus, plaintiff breached the policy condition in depriving GNY of this opportunity.

Plaintiff argues that an issue of fact exists as to whether GNY required an additional inspection of the cooling tower. This argument, of course, ignores the agreement at the June 1 rooftop meeting for a further inspection. Such an agreement reflects a tacit acknowledgment that a further inspection was reasonably required. Unfortunately, that inspection never took place because the property was destroyed.

In that regard, the argument, apparently accepted by Supreme Court, that GNY should have submitted an affidavit from Levine, its HVAC expert, attesting to the necessity of an additional inspection, is similarly misguided. It ignores plaintiff's admission that all the parties agreed on June 1, 2004 to permit GNY a final inspection of the cooling tower to complete its investigation.

The failure to preserve the cooling tower is no mere technicality. The interpretation of an insurance contract, as noted, presents a question of law (Chimart, 66 NY2d at 572-573), and a court is not free to "make or vary the contract of insurance to accomplish its notions of abstract justice or moral obligation" (Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]). The condition at issue here, i.e., the obligation to preserve the damaged cooling tower, is clear and unambiguous and stated in unmistakable language. Thus, it constitutes an express condition precedent (Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 691 [1995]) that must be literally complied with before plaintiff may recover (Sulner v G.A. Ins. Co. of N.Y., 224 AD2d 205 [1996], lv denied 88 NY2d 805 [1996];
see Charney v Commonwealth Land Tit. Ins. Co., 215 AD2d 152 [1995], lv denied 86 NY2d 709 [1995]). Since compliance with the requirement is a condition precedent to coverage, the insurer need not show prejudice (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743 [2005]). That plaintiff was only required to preserve the tower "if feasible" does not warrant a different conclusion. Preservation was not only feasible here, it was expressly agreed to by plaintiff.

Plaintiff offers as an excuse simply that Matco is the party responsible for the tower's destruction, conceding that the tower was destroyed before GNY's expert was afforded a dispositive inspection, upon which the parties had agreed. While that circumstance may give rise to a claim against Matco, it does not excuse plaintiff's failure to comply with the policy's loss condition, and thus precludes its recovery against GNY.

Accordingly, the order of the Supreme Court, New York County (Walter B. Tolub, J.), entered June 20, 2005, which denied GNY's motion to dismiss the complaint, should be reversed, on the law, without costs or disbursements, the motion granted and the complaint against GNY dismissed. The Clerk is directed to enter judgment in favor of GNY dismissing the complaint as against it.

All concur.

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

 

In the Matter of the Arbitration between STATE FARM INSURANCE COMPANIES, Respondent, and De Sarbo

 

Calendar Date: December 13, 2006
Before: Cardona, P.J., Mercure, Spain, Mugglin and Lahtinen, JJ.


The DeLorenzo Law Firm, L.L.P., Schenectady
(Thomas E. DeLorenzo of counsel), for appellant.
Pennock, Breedlove & Noll, L.L.P., Clifton Park
(Carrie McLoughlin Noll of counsel), for respondent.

MEMORANDUM AND ORDER

Lahtinen, J.

Appeal from an order of the Supreme Court (Hall, J.), entered May 24, 2006 in Saratoga County, which granted petitioner's application pursuant to CPLR 7503 to stay arbitration between the parties.

In July 2004, respondent allegedly sustained personal injuries in an automobile accident and was eventually paid $25,000, the limits of the other driver's insurance policy. He also submitted a claim for underinsurance benefits to the local office of petitioner (his insurance company) and, thereafter, had communications regarding the matter with petitioner's offices in Saratoga and Monroe Counties. Petitioner reserved its right to deny coverage and, eventually, on February 16, 2006, respondent sent a demand for arbitration by certified mail, return receipt requested, to petitioner's home office in Bloomington, Illinois. Petitioner sought a stay of the arbitration in an application commenced via an order to show cause, dated and filed April 21, 2006. Respondent contended, among other things, that the application for a stay was untimely under the 20-day limit set forth in CPLR 7503 (c). Supreme Court, without providing a written decision, granted petitioner's request to stay arbitration. Respondent appeals.

We reverse. CPLR 7503 (c) provides that, after a party has served a demand for [*2]arbitration, an application to stay the arbitration is precluded if not made within 20 days. The 20-day deadline will not control if the insurer establishes that the original demand was served in a fashion to attempt to cause the insurer to default, such as by concealing it in voluminous, unrelated documents or sending it to a remote, uninvolved office (see Matter of Nationwide Ins. Co. v Singh, 6 AD3d 441, 443-444 [2004]; see also Crawford v Merrill, Lynch, Pierce, Fenner & Smith, 35 NY2d 291, 296 [1974]; Matter of Balboa Ins. Co. v Barnes, 123 AD2d 691, 691 [1986]; Rider Ins. Co. v Marino, 84 AD2d 832, 832 [1981]; Matter of Empire Mut. Ins. Co. v Levy, 35 AD2d 916, 916 [1970]).

Here, the demand was dated February 16, 2006 and was received in the home office of petitioner in Illinois on February 20, 2006. After an apparent internal transfer in which it was stamped "P & C Claims" on March 1, 2006, it was forwarded to and received by petitioner's office in Saratoga County on March 7, 2006. Hence, it had made its way back to Saratoga County before the 20 days in which to properly seek a stay had passed. Significantly, thereafter, petitioner waited 45 days before seeking the stay via an order to show cause. The demand sent to the home office was not buried in other documents, but was a short document pertaining only to the demand for arbitration, together with a cover letter which included, in bold print, the policy number, respondent's last name and the date of loss. Moreover, review of earlier correspondence in the record from petitioner's offices in Saratoga and Monroe Counties reveals that reference to the home office in Bloomington, Illinois was included thereon. And, while an affidavit was provided by an employee of petitioner articulating a timeline of events, no explanation was set forth therein as to how mailing the demand to petitioner's home office, which was prominently set forth in prior correspondence, and receiving the demand in the local office before the 20 days expired nevertheless resulted in petitioner being so misled that it was unable to seek a stay for a month and a half (cf. Matter of Nationwide Ins. Co. v Singh, supra at 444). Under the totality of circumstances revealed by the record, we conclude that it was error to grant a stay.

The remaining issues are academic.