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Greetings from Bermuda and the FDCC Annual Meeting. We hope you're enjoying your summer.


Hurwitz & Fine is delighted to introduce to you another member of our insurance coverage team. Vivian Perry Roché, who just joined our firm after several years in another Buffalo firm, handling coverage and No Fault litigation. We're delighted to have her with us and you can look forward to working with her in the months and years to come.


Today's issue presents a variety of interesting cases, including the following:


No Duty to Disclaim on Late Notice Where Notice of Accident Did Not Come From Insured or Injured Party Absent Insurer's "Express Acknowledgment" of Knowledge of the Claim

No Coverage under Title Policy as the Claimed Defect in Title was Cured

Insured Fails to Prove an Exception to the Statute of Limitations

Anti-Subrogation Rule Only Applies up to the Limits of the Policy at Issue

Proper Cancellation Results in Proper Denial of Claim

Loss Payee's Rights under Policy Not Invalidated by the Acts of the Insured

Terms of "Replacement Cost" Policy are Clear and Say What They Mean and Mean What They Say

Chacha Can't Dance Around Status as Covered Person by Not Receiving No Fault

Defendant Failed to Procure Insurance as a Matter of Law


You will also find the usual array of interesting No Fault cases including one dealing with a run-away car.


Please continue to advise us of those in your office who would like to get this publication directly. We know that many of our 1200 subscribers share this publication with others in their offices and we'd be glad to add those individuals directly.


Thanks to Scott Billman and Audrey Seeley for their usual fine work.

Dan

Dan D. Kohane
[email protected]

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7/27/06 Hernandez v. American Transit Insurance

Appellate Division, First Department

No Duty to Disclaim on Late Notice Where Notice of Accident Did Not Come From Insured or Injured Party Absent Insurer’s “Express Acknowledgment” of Knowledge of the Claim

Plaintiff obtained a judgment in the amount of $42,675 and then sought recovery from the insurer of one of the defendants in the action. The basis for recovery was that the insurer's disclaimer of liability was untimely as a matter of law, pursuant to Insurance Law § 3420(d). The motion court held that since neither plaintiff nor the insured ever notified the insurer of the accident, the insurer had no duty to disclaim liability, notwithstanding that it was made aware of the accident by counsel to one of the insured's co-defendants in the personal injury action. The Court distinguishes the New York Court of Appeals case of First Financial Ins. Co. v Jetco Contr. Corp. (1 NY3d 64 [2003]). In First Financial, the insurer took the unusual step of acknowledging in writing that it had received late notice of the claim from another source and that it was reserving the right to deny coverage on the basis of untimely notice. Given the insurer's express acknowledgment of the claim, the Court of Appeals concluded that the duty to disclaim had been triggered.

In this case, however, the insurer was never provided with the required notice from the insured and/or claimant, nor did it ever acknowledge an awareness of the claim or a basis for disclaimer prior to issuing the actual disclaimer. In these circumstances, the duty to disclaim was never triggered.

Editors Note: Although the recent Court of Appeals case, New York Central Mutual Fire Insurance Company v. Aquirre, cited First Financial to support it’s strange holding that required the carrier to disclaim on late proof of a UM claim before it received the proof of claim form, the First Department does not adopt that holding in this case. Thankfully.

7/25/06 Darbonne v. Goldberger

Appellate Division, Second Department

No Coverage under Title Policy as the Claimed Defect in Title was Cured

Fidelity paid the attorney's fees incurred by the plaintiff in defending his title against the Town, which resulted in the invalidation of a restrictive covenant. Since the alleged defect in the plaintiff's title no longer existed, he had no further claim of loss under his title insurance policy. In addition, according to the allegations contained in the pleadings, the plaintiff's property was not diminished in value as a result of any defect in title as it was allegedly worth almost double the price that the plaintiff paid for the property.

The Court emphasized that "title insurance only provides indemnification for any diminution in the value of property sustained as a result of defects in a title insured by the policy” and that it is well settled that a " title insurer's obligation to indemnify is defined by the policy itself and limited to the loss in value of the title as a result of title defects against which the policy insures”.

7/25/06 Halim v. State Farm Fire & Casualty Co.

Appellate Division, Second Department

Insured Fails to Prove an Exception to the Statute of Limitations

The defendant sustained its initial burden of demonstrating its entitlement to summary judgment by presenting evidence that the action for breach of an insurance contract was commenced after the two-year limitations period contained in the plaintiff's homeowners’ insurance policy had expired. Thus, the burden shifted to the plaintiff to provide evidence that the case fell within an exception to the limitations period. The plaintiff failed to raise a triable issue of fact on the issue of whether the defendant waived its right to rely upon the protection of the contractual limitations period, or whether it should have been estopped from asserting the limitations period as a defense because it engaged in conduct which induced the plaintiff to postpone bringing suit.

7/25/06 Lodovichetti v. Wheels, Inc.

Appellate Division, Second Department

Anti-Subrogation Rule Only Applies up to the Limits of the Policy at Issue

It is well established, under the so called “anti-subrogation” rule, that an insurance carrier cannot seek to recover proceeds it pays from its own insured or additional insured. The anti-subrogation rule applies only to the policy limits of the policy at issue, and claims for contribution and/or indemnification beyond the limits of the policy are not barred. Accordingly, the Supreme Court properly permitted the defendants to maintain their cross claim against the co-defendant, their co-insured, for damages to the extent that such damages exceeded the policy limits of $2 million. The claims for recovery of damages to the extent that such damages exceeded the limits of the applicable insurance policy were valid.

7/25/06 Montefiore Medical Center v. Liberty Mutual
Appellate Division, Second Department

Proper Cancellation Results in Proper Denial of Claim

Liberty Mutual established that it had cancelled the policy of insurance covering the subject vehicle before the date of the accident and thus properly denied the claim for no-fault benefits. Contrary to the contention of the plaintiff Medical Center, the affidavit of the defendant's claims representative based on records maintained by the insurer in the ordinary course of business was sufficient to establish the defense. Similarly, the documents submitted on the cross motion demonstrate that the insurer effectively canceled the policy. It is well settled that no notice of disclaimer is required where the policy does not provide coverage for the claim, nor do principles of waiver or estoppel preclude the insurer from denying coverage in this case.

7/25/06 Universal Underwriters Acceptance Corporation v. Peerless Insurance

Appellate Division, Second Department

Loss Payee’s Rights under Policy Not Invalidated by the Acts of the Insured

The Rudophs purchased an automobile under an installment contract and the seller assigned its rights under the installment contract to Universal (UUAC). UUCAC was named as a "loss payee" under Defendants auto policy with Peerless.

The auto was involved in a two-car collision and the Rudolphs entered into a settlement with the insurer of the other automobile. They did not make a claim under their policy, nor did they satisfy their obligations to UUAC.

Subsequently, UUAC made a demand for payment under the policy, but Peerless denied the claim on the ground that the Rudolphs had never made a claim. At issue was the language of the loss payee clause in the policy which provided: "[T]his insurance with respect to the interest of the loss payee, shall not become invalid because of your fraudulent acts or omissions unless the loss results from your conversion, secretion or embezzlement of your covered auto.'"

The Court reverses the grant of the Peerless motion for summary judgment. To establish its prima facie entitlement to judgment as a matter of law, Peerless was required to establish that it had no obligation to UUAC, however the loss payee clause explicitly provided that the loss payee's rights were not invalidated by the fraudulent acts of the insured.

The Court holds that the purpose of the loss payee clause was to create an independent contract between the insurer and the loss payee. To interpret it as protecting the loss payee only where coverage was denied or precluded by the insured's fraudulent acts or omissions would be to improperly narrow the protective clause against the interests of the loss payee/lien holder. Therefore, Peerless did not meet its burden on its motion for summary judgment.

Then, although UUAC had not appealed, the Appellate Division exercises its power to search the record and grants summary judgment to UUAC. The Court finds that UUAC established its entitlement to summary judgment against Peerless for breach of contract and that Peerless failed to raise a triable issue of fact. UUAC'S cross motion for summary judgment is granted and remanded to determine the amount due UUAC on its claim under the Peerless Policy.

7/20/06 Todd v. Wayne Cooperative Insurance Company

Appellate Division, Third Department

Terms of “Replacement Cost” Policy are clear and Say what they mean and Mean What They Say

Where first party policy makes it clear that replacement cost coverage is only available if property is repaired or replaced within six months and property was not so replaced or repaired during that time period, replacement cost coverage is unavailable and insured is limited to Actual Cash Value of loss.

7/18/06 Chacha v. Clement

Appellate Division, Second Department

Chacha Can’t Dance Around Status as Covered Person by Not Receiving No Fault Benefits
Plaintiff was injured in a car accident but chose not to apply for or receive No Fault benefits. When he commenced his action for personal injuries, the jury awarded him medical expenses and lost wages. The Appellate Division held that the plaintiff’s recovery in the lawsuit must be reduced by those medical expenses and wages that fall within the definition of “Basic Economic Loss,” That is, his wage verdict, up to $2000 per month for three years from the date of the accident (and medical expenses, up to a combined total of $50,000) cannot be recovered in a lawsuit by a covered person against another covered person. The definition of covered person includes the driver or passenger of a car, irrespective of whether that individual actually applies for or received No Fault benefits.

7/18/06 Jackson 37 Company, LLC v. Laumat, LLC

Appellate Division, Second Department

Defendant Failed to Procure Insurance as a Matter of Law

The parties executed a lease providing that the defendants' failure to procure a liability insurance policy naming the plaintiff as an additional insured would constitute a material default of the terms of the subject lease, and the defendants failed to procure the required policy. Thus, the plaintiff made a prima facie showing of its entitlement to judgment as a matter of law regarding the defendants' default. In opposition, the defendants merely asserted that the plaintiff should have exercised its alternative remedies under the lease. However, pursuant to the lease, the exercise of these remedies was at the plaintiff's option. Accordingly, the defendants failed to raise a triable issue of fact.

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

7/25/06 Cardillo v. Xenakis

Appellate Division, Second Department

Case Dismissed as Plaintiff Failed to Address Spinal Degeneration Proof of the Defendant

Plaintiff failed to raise a triable issue of fact with affirmations and affidavits of her experts who failed to address the findings of degeneration in her spine as noted in the affirmed medical report of the defendant's examining radiologist, rendering speculative the findings that the injuries to her spine were caused by the subject accident.

7/25/06 Collado v. Pineda

Appellate Division, Second Department

Plaintiff Sufficiently Supports Range of Motion Restrictions

Defendants established a prima facie case that neither plaintiff sustained a serious injury by submitting affirmations of an orthopedist, a neurologist, and a radiologist, stating that test results for those plaintiffs were normal and that those plaintiffs had a full range of motion in their cervical and lumbar spines. However, contrary to the conclusion of the Supreme Court, the plaintiffs raised triable issues of fact by submitting the affirmed reports of their radiologist stating that they had sustained herniated discs and the affirmed reports of their neurologist stating that they had limitations in range of motion.

7/18/06 Ruddock v. Boland Rentals, Inc.

Appellate Division, Second Department

Plaintiffs Fail to Raise Triable Issue on 90/180 Category

The respondents made a prima facie showing that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether their injuries were causally related to the accident or whether they were unable to perform substantially all of their daily activities for not less than 90 of the first 180 days immediately following the accident.

7/18/06 Zarate v. McDonalad

Appellate Division, Second Department

Even with Plaintiff’s MRI Admissible, Plaintiff Failed to Address Degenerative Changes

Supreme Court reversed where the MRI report of the plaintiff's lumbar spine was ruled inadmissible because it was unsworn, and that it was improper for the plaintiff's physician to rely on that report. Because the results of the MRI report were referred to in the affirmed medical report of the defendant's examining neurologist, the plaintiff and his treating physician properly submitted and relied on the MRI report in opposition to the motion. However, the plaintiff's submission failed to address the findings of degenerative changes at the L4-5 and L5-S1 levels of the plaintiff's lumbar spine as noted in the plaintiff's MRI report. This rendered speculative the opinion of the plaintiff's treating physician that the plaintiff's lumbar conditions were caused by the subject accident.

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.

7/17/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Mary Anne Theiss, Esq. (Onondaga County)

The Treating Chiropractor’s Testimony Regarding Medical Necessity More Persuasive than Reviewing Peer’s Report.

Here is the Angle: The treating chiropractor’s testimony regarding the medical decision making for the electrodiagnostic testing as well as the change in the eligible injured person’s care was more persuasive than the peer reviewer’s opinion.

The Analysis: The eligible injured person (“EIP”) was involved in a December 2, 2005, motor vehicle accident. The EIP was a back seat passenger who was extracted from the vehicle via the Jaws of Life. The EIP was transported to Crouse Irving Medical Center and released. A few days later he presented at St. Joseph’s Hospital with increased pain in the neck and left arm pain with numbness, tingling, and restricted range of motion. The EIP also complained of low back pain. The EIP had diminished strength via the Jamar dynamometer and dermatomal sensory deficits at C6 and C8 via the pinprick and pinwheel method.

The EIP came under the Applicant’s, chiropractor, care who ordered upper extremity electrodiagnostic testing. We note that the testing results were abnormal.

The insurer denied payment of the testing on the basis of a peer review conducted by Dr. Weiland. Dr. Weiland opined that the testing was not medically necessary as it did not clarify any specific differential diagnosis or alter any specific treatment protocol. Further, the medical records did not indicate how the testing had any direct impact on the EIP’s care.

The Applicant testified that the EIP had diminished grip strength and dermatomal sensory deficits. Further, the EIP disclosed a history of a gun shot wound to the head with metal fragments in his brain. Due to the EIP complaining of numbness and pain into his arms, the Applicant testified that the metal fragments could have shifted causing same or it could have been related to the accident. Also, after the testing was conducted the EIP’s treatment changed due to the abnormal findings. The EIP was provided with motorized traction and an MRI to ascertain the source of the C6 radiculopathy.

Arbitrator Theiss found the electrodiagnostic testing medically necessary and permitted the claim.

7/17/06 In the Matter of the Arbitration between the Applicant and Respondent

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

Runaway Car Resulting In Knee Injury Is Not An Intentional Act And Arises Out Of Use And Operation Of Motor Vehicle.

Here is the Angle: The Applicant did not engage in an intentional act when she attempted to stop her car after it rolled away while parked and running in front of the post office. Further, Arbitrator O’Connor found that Applicant’s knee injury arose out of the use and operation of a motor vehicle.

The Analysis: The Applicant sought medical expenses, lost wages, and co-payments made to her private health insurer as a result of a January 4, 2006, incident involving her motor vehicle.

The Applicant stopped in front of the post office and exited her vehicle. She claimed that the vehicle was in park; remained running; and front driver’s side door open while she ran into the post office. Upon Applicant exiting the post office she discovered her motor vehicle rolling forward.

The Applicant, in an effort to stop the vehicle, ran after it; jumped into the driver’s seat; and hit the brakes. In the process of jumping into the driver’s seat, the Applicant twisted her knee and heard a click or snap. Her motor vehicle did not strike any other object. Also, no one witnessed this incident or approached her during the 10-15 minutes she sat in her vehicle composing herself. The Applicant left the post office to have dinner with her Aunt. Later that evening, she experienced left knee pain and treated at the emergency room.

Applicant’s left knee did not demonstrate any fracture of dislocation. Her knee was placed in an immobilizer and Applicant was provided with crutches. She was instructed to elevate her knee and apply cold packs. Applicant was provided with a “work excuse” for approximately two months.

The insurer denied Applicant’s claim on the basis that intentional acts are excluded from coverage for no-fault benefits.

Arbitrator O’Connor concluded that based upon the testimony and the evidence submitted that the denial was improper. Rather, the incident was not intentional and arose out of the use and operation of a motor vehicle. Accordingly, Applicant was awarded her medical expense claim and lost wages. However, Applicant was not entitled to reimbursement of health and dental insurance premiums she paid during her period of disability attributed to the incident.

Across Borders


Visit the
Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org ranked among the top five legal research websites in an article published in Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor Emeritus.


7/24/06 Reagan National Advertising v. Hartford Casualty Insurance Company

Tenth Circuit Court of Appeals

Insurer No Duty to Defend Claim for "Advertising Injury"
Hartford refused to defend and indemnify Reagan against suit for damages for "personal and advertising injury" based on policy language which excludes such coverage arising out of a violation of any antitrust law. Reagan argued that the injury arose from a malicious prosecution claim, for which there would have been coverage. The Court of Appeals held that the antitrust exclusion applied, and affirmed the district court's decision that the policy did not provide coverage.

Submitted by: Oliver Smith (Richards & Connor)

7/18/06 Wilkes, Ehrenwerth and Clark v. Phoenix Home Life Mutual Insurance Co.
Supreme Court of Pennsylvania, Western District

Policy Holders Pay A Price For Failing To Opt Out Of Class Action
The primary issue was whether res judicata barred appellees from bringing suit against appellant, Phoenix Home Life Mutual Insurance Company (“Phoenix”), due to an out-of-state class action settlement concerning the failure of some Phoenix insurance policies to perform as promised. The Supreme Court confirmed the trial court’s summary judgment for Phoenix finding that since appellees had not opted out of the New York class action settlement, res judicata barred appellees from subsequently bringing suit against appellant in Pennsylvania on the same matter.

Submitted by: W. Michael Scott and Aimée Robert (Beirne, Maynard & Parsons, LLP)

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

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Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Scott C. Billman
Audrey A. Seeley

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[email protected]

Jody E. Briandi
Philip M. Gulisano

No-Fault/SUM Arbitration Team

Dan D. Kohane, Team Leader
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Audrey A. Seeley

Appellate Team
Scott C. Billman, Team Leader
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Dan D. Kohane

Scott M. Duquin

Chacha v. Clement


Flink Smith, LLC, Latham, N.Y. (Jeffrey D. Wait of counsel),
for appellant.
Kerri B. Blank, Ossining, N.Y. (Karen Cigna of counsel), for
respondent.

In an action to recover damages for personal injuries, the defendant appeals from a judgment of the Supreme Court, Westchester County (Nastasi, J.), entered February 24, 2005, which, upon a jury verdict on the issue of liability finding the defendant 70% at fault in the happening of the accident, and upon a separate jury verdict on the issue of damages, is in favor of the plaintiff and against him in the sum of $42,000.

ORDERED that the judgment is modified, on the law, by reducing the sum of $42,000 to the sum of $24,500; as so modified, the judgment is affirmed, without costs or disbursements.

The accident at issue occurred on December 19, 2001, and the jury rendered its verdict with respect to damages on June 23, 2004. The $42,000 judgment in the plaintiff's favor was calculated as follows. The jury found that the plaintiff sustained damages in the sum of $5,000 for past pain and suffering, and $15,000 for future pain and suffering, over a three-year period. Further, the jury found that the plaintiff sustained damages in the sum of $20,000 for pre-verdict lost earnings, and $20,000 for post-verdict lost earnings, over a two-year period. The court then reduced these sums in accordance with the jury's apportionment of fault, resulting in the judgment in the sum of $42,000. The court rejected the defendant's objection that the lost earnings portion of the award ran afoul of the no-fault law (see Insurance Law § 5104). The court rejected the objection on the ground that the plaintiff never received no-fault benefits. [*2]

We agree with the defendant that the Supreme Court erred in failing to adjust the lost earnings portion of the award in order to account for the no-fault provision barring recovery by one "covered person" against another for "basic economic loss" (see Insurance Law § 5104[a]). A "covered person," for purposes of the section, is defined as "any owner, operator or occupant of, a motor vehicle which has in effect [the insurance required under article six of the Vehicle and Traffic Law]; or any other person entitled to first party benefits" (Insurance Law § 5102[j]).

As the plaintiff does not contend he is a noncovered person and acknowledged in his pleadings that he is subject to New York's no-fault law, the Supreme Court erred in not reducing the jury award "to reflect the first $50,000 of basic economic loss, which is not recoverable under the Insurance Law" (Lloyd v Russo, 273 AD2d 359, 360; see State-Wide Ins. Co. v Buffalo Ins. Co., 105 AD2d 315, 320).

As relevant here, "basic economic loss" is defined as loss of earnings from work "for not more than three years from the date of the accident" (Insurance Law § 5102[a][2]). As applied in this context, we agree with the defendant again that the only portion of the award for lost earnings that the plaintiff may recover is the portion of future damages pertaining to the period December 19, 2004, through June 23, 2006 (i.e., the period beginning with the third anniversary of the accident, and ending with the second anniversary of the jury's damages verdict). That amount is $15,000, which, when reduced to account for the plaintiff's share of fault (30%), is $10,500. Added to $14,000 for pain and suffering ($20,000, again reduced by the plaintiff's share of fault), the amount of damages the plaintiff should recover is $24,500. We modify to reduce the judgment accordingly.
MILLER, J.P., ADAMS, GOLDSTEIN and COVELLO, JJ., concur.

ENTER:

TODD v. WAYNE COOPERATIVE INSURANCE COMPANY

MEMORANDUM AND ORDER

Calendar Date: May 31, 2006
Before: Crew III, J.P., Peters, Spain, Lahtinen and Kane, JJ.


Holmberg, Galbraith, Van Houten & Miller (Dirk A.
Galbraith of counsel), for appellant.
Law Office of Roy A. Mura, Buffalo (Scott D. Storm
of counsel), for respondent.




Peters, J.

Appeals (1) from that part of an order of the Supreme Court (Relihan Jr., J.), entered July 12, 2005 in Tompkins County, which limited plaintiff's recovery on his dwelling, and (2) from the judgment entered thereon.

Plaintiff's home, located in the Town of Lansing, Tompkins County, was destroyed by fire on March 30, 2002. The property was covered by a farm owners insurance policy issued by defendant. After plaintiff sought to collect on his insurance policy, defendant disclaimed liability and denied coverage alleging, among other things, that plaintiff committed an arson.

Plaintiff commenced this action, seeking damages for the replacement cost of the dwelling, its contents and the loss of the use of the premises in the sum of $100,224.38. Following joinder of issue, he moved for, among other things, summary judgment on the issue of replacement damages if liability was ultimately proven. Defendant contended that even with a verdict in favor of plaintiff, the policy states that if plaintiff did not replace the property within 180 days, he would only be entitled to the actual cash value of the property. In a July 2005 order, Supreme Court granted that part of plaintiff's motion regarding damages, with an amount stipulated to by the parties, but noted that pursuant to the terms of the policy, defendant would not be liable for any amount exceeding the actual cash value unless plaintiff actually repaired or replaced his property and/or structure. [*2]

Following a five-day trial, the jury returned a liability verdict in favor of plaintiff. In a judgment after trial, Supreme Court ordered that if plaintiff replaced the structure and personal property within 12 months, defendant was required to pay plaintiff the replacement costs thereof, up to the limit of its liability, less the amounts of the actual cash values of the structure and property which were also awarded by that judgment.
Plaintiff appeals from so much of the order and judgment that limited his recovery to the actual cash value unless he rebuilds or replaces the structure and/or personal property.

When interpreting an insurance contract, a court "'must determine the rights and obligations of the parties under . . . [that] contract based on the policy's specific language'" (Pepper v Allstate Ins. Co., 20 AD3d 633, 634 [2005], quoting State Farm Mut. Auto. Ins. Co. v Glinbizzi, 9 AD3d 756, 757 [2004]). Where the provisions of a contract are unambiguous, the terms must be given their plain and ordinary meaning (see Pepper v Allstate Ins. Co., supra at 634; Stasack v Capital Dist. Physicians' Health Plan, 290 AD2d 866, 867 [2002]). Viewing the provisions here, we find that Supreme Court properly determined that plaintiff had the option to seek either the actual cash value for his loss, determined pursuant to a broad rule of evidence (see Mazzocki v State Farm Fire & Cas. Corp., 1 AD3d 9, 12-13 [2003]), or a settlement of the loss according to the policy's replacement cost provision. Under the terms thereof, replacement cost value cannot be awarded without plaintiff first actually repairing or replacing the property (see D.R. Watson Holdings v Caliber One Indem. Co., 15 AD3d 969, 969 [2005], lv dismissed 4 NY3d 882 [2005], lv dismissed 5 NY3d 842 [2005]; Stasack v Capital Dist. Physicians' Health Plan, supra at 867-868; Matter of New York Cent. Mut. Fire Ins. Co. [Prehoda], 231 AD2d 829, 830 [1996])[FN1]. Contrary to plaintiff's contentions, Zaitchick v American Motorists Ins. Co. (554 F [*3]Supp 209 [1982]) is not applicable because here plaintiff was entitled to receive the actual cash values for his property and structure which enabled him to commence the rebuilding process.

Crew III, J.P., Spain, Lahtinen and Kane, JJ., concur.

Footnotes


Footnote 1: Pursuant to the "REPLACEMENT COST PROVISION," which is subject to the terms of the "HOW MUCH WE PAY FOR LOSS OR CLAIM" provision: "3.If the policy indicates that Residence Replacement Costs Coverage applies . . . or the limit of liability on the damaged building is at least 80 percent of its replacement cost at the time of loss, [defendant] pay[s] the full cost of repair or replacement of the damaged part without deduction for depreciation. [Defendant] pay[s] the smallest of the following amounts: a. the limit of liability applicable to the building; b. the cost . . . to repair or replace the damage on the same premises . . .; or c. the amount (in excess of the deductible) actually and necessarily spent to replace or repair the damage. 4.When the cost to repair or replace exceeds the lesser of $1,000 or 5 percent of the applicable limit of liability on the damaged building, [defendant is] not liable for more than the actual cash value of the loss until actual repair or replacement is completed

Jackson 37 Company, LLC v. Laumat, LLC


Mishaan Dayon & Lieblich, New York, N.Y. (Kenenth M. Lieblich and Matthew Bondy of counsel), for appellant.
Warren S. Hecht, Forest Hills, N.Y., for respondents.

In an action, inter alia, for reformation of a lease, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Taylor, J.), dated March 9, 2005, as denied its motion for summary judgment on its fifth cause of action for ejectment.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the motion is granted.

The parties executed a lease providing that the defendants' failure to procure a liability insurance policy naming the plaintiff as an additional insured would constitute a material default of the terms of the subject lease, and the defendants failed to procure the required policy. Thus, the plaintiff made a prima facie showing of its entitlement to judgment as a matter of law regarding the defendants' default (see Schultz v Ljungqvist, 1 AD3d 498; C & N Camera & Elecs. v Farmore Realty, 178 AD2d 310; Brainerd Mfg. Co. v Dewey Garden Lanes, 78 AD2d 365; see also Fishkill Health Related Ctr. v Van DeWater & Van DeWater, 235 AD2d 389, 390-391).

In opposition, the defendants merely asserted that the plaintiff should have exercised its alternative remedies under the lease. However, pursuant to the lease, the exercise of these remedies was at the plaintiff's option. Accordingly, the defendants failed to raise a triable issue of fact and the plaintiff's motion for summary judgment should have been granted.
PRUDENTI, P.J., ADAMS, RIVERA and LIFSON, JJ., concur.

Ruddock v. Boland Rentals, Inc.

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Kings County (Harkavy, J.), dated August 13, 2004, which granted the respective motions of the defendants, the third-party defendant, and the second third-party defendant 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 insofar as appealed from, with one bill of costs to the respondents appearing separately and filing separate briefs. [*2]

The respondents made a prima facie showing that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether their injuries were causally related to the accident of November 19, 1996 (see Sibrizzi v Davis, 7 AD3d 691), or whether they were unable to perform substantially all of their daily activities for not less than 90 of the first 180 days immediately following the accident (see Sibrizzi v Davis, supra; Sainte-Aime v Ho, 274 AD2d 569).
SCHMIDT, J.P., KRAUSMAN, MASTRO and LUNN, JJ., concur.

Zarate v. McDonalad

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Dunne, J.), entered July 25, 2005, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

Although we affirm the Supreme Court's order we do so on grounds other than those relied upon by the Supreme Court. The Supreme Court properly determined that the defendant met her prima facie burden, via her submissions, of 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; Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241).

With respect to plaintiff's opposition, however, the Supreme Court erred in determining that a magnetic resonance imaging (hereinafter MRI) report of the plaintiff's lumbar spine was inadmissible because it was unsworn, and that it was improper for the plaintiff's physician to rely on that report. Because the results of the MRI report were referred to in the affirmed medical [*2]report of the defendant's examining neurologist, the plaintiff and his treating physician properly submitted and relied on the MRI report in opposition to the motion (see Ayzen v Melendez, 299 AD2d 381).

However, even when considering this additional evidence, the plaintiff's submission failed to address the findings of degenerative changes at the L4-5 and L5-S1 levels of the plaintiff's lumbar spine as noted in the plaintiff's MRI report dated November 11, 2002. This rendered speculative the opinion of the plaintiff's treating physician that the plaintiff's lumbar conditions were caused by the subject accident (see Giraldo v Mandanici, 24 AD3d 419).

The plaintiff also failed to submit competent medical evidence that he was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days subsequent to the subject accident (see Davis v New York City Tr. Auth., 294 AD2d 531; Sainte-Aime v Ho, 274 AD2d 569).
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

Cardillo v. Xenakis


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, Nassau County (Winslow, J.), dated July 13, 2005, as granted that branch of the defendant's motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Carol C. Cardillo on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the appeal by the plaintiff Joseph Cardillo is dismissed as he is not aggrieved by the portion of the order appealed from (see CPLR 5511); and it is further,

ORDERED that the order is affirmed insofar as appealed from by the plaintiff Carol C. Cardillo; and it is further,

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

The defendant met his prima facie burden by establishing that the plaintiff Carol C. Cardillo (hereinafter 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; Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456; Kearse v New [*2]York City Tr. Auth., 16 AD3d 45).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's affidavit and the affirmations and affidavits of her experts failed to address the findings of degeneration in her spine as noted in the affirmed medical report of the defendant's examining radiologist, rendering speculative the findings that the injuries to her spine were caused by the subject accident (see Giraldo v Mandanici, 24 AD3d 419; Ifrach v Neiman, 306 AD2d 380; Lorthe v Adeyeye, 306 AD2d 252; Ginty v MacNamara, 300 AD2d 624). Further, the affirmed medical reports of Dr. Stephen G. Zolan, the orthopedist who examined the plaintiff on April 7, 2004, and February 16, 2005, in connection with her application for no-fault insurance benefits, failed to set forth the objective test or tests he performed to determine that the plaintiff suffered limitations of movements in her spine and did not address the allegation of degenerative disease (see Murray v Hartford, 23 AD3d 629, lv denied 6 NY3d 713; Nozine v Sav-On Car Rentals, 15 AD3d 555; Bailey v Ichtchenko, 11 AD3d 419; Kauderer v Penta, 261 AD2d 365).
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

Collado v. Pineda


In an action to recover damages for personal injuries, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Dollard, J.), dated January 7, 2005, as granted that branch of the motion of the defendants Jose Romero and Jose Camas which was for summary judgment dismissing the complaint insofar as asserted against them by the plaintiffs Jeffrey Collado and Juan Carlos Diaz on the ground that neither of those plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the appeal by David Nunez is dismissed on the ground that he is not aggrieved from the portion of the order appealed from (see CPLR 5511); and it is further,

ORDERED that the order is reversed insofar as appealed from by the plaintiffs Jeffrey Collado and Juan Carlos Diaz, on the law, that branch of the motion which was for summary judgment dismissing the complaint insofar as asserted against the defendants Jose Romero and Jose Camas by the plaintiffs Jeffrey Collado and Juan Carlos Diaz is denied, and the complaint is reinstated insofar as asserted against those defendants by those plaintiffs; and it is further,

ORDERED that one bill of costs is awarded to the appellants Jeffrey Collado and Juan Carlos Diaz payable by the respondents. [*2]

The defendants Jose Romero and Jose Camas established a prima facie case that neither of the plaintiffs Jeffrey Collado and Juan Carlos Diaz sustained a serious injury by submitting affirmations of an orthopedist, a neurologist, and a radiologist, stating that test results for those plaintiffs were normal and that those plaintiffs had a full range of motion in their cervical and lumbar spines (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). However, contrary to the conclusion of the Supreme Court, Diaz and Collado raised triable issues of fact by submitting the affirmed reports of their radiologist stating that they had sustained herniated discs and the affirmed reports of their neurologist stating that they had limitations in range of motion as quantified in the reports (see Pommells v Perez, 4 NY3d 566, 567; Shpakovskaya v Etienne, 23 AD3d 368; Paul v Allstar Rentals, 22 AD3d 476; Kerzhner v N.Y. Ubu Taxi Corp., 17 AD3d 410).

Accordingly, the Supreme Court erred in granting that branch of the motion of Romero and Camas which was for summary judgment dismissing the complaint insofar as asserted against them by Collado and Diaz.
ADAMS, J.P., GOLDSTEIN, FISHER and LIFSON, JJ., concur.

Darbonne v. Goldberger

In an action, inter alia, to recover damages for breach of a title insurance policy, the plaintiff appeals, as limited by his notice of appeal and brief, from so much of an order of the Supreme Court, Rockland County (O'Rourke, J.), entered September 14, 2004, as granted those branches of the motion of the defendants Town of Orangetown and Planning Board of Orangetown which were pursuant to CPLR 3211(a)(7) to dismiss the 20th and 21st causes of action in the third amended complaint insofar as asserted against them, denied that branch of his cross motion which was for leave to serve a fourth amended complaint, and, sua sponte, in effect, directed the dismissal of the cause of action to recover damages for breach of a title insurance policy in the third amended complaint.

ORDERED that on the court's own motion, the notice of appeal from so much of the order as, sua sponte, in effect, directed the dismissal of the cause of action to recover damages for breach of a title insurance policy in the third amended complaint is treated as an application for leave to appeal from that portion of the order, and leave to appeal from that portion of the order is granted [*2](see CPLR 5701[c]); and it is further,

ORDERED that the order is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the respondents appearing separately and filing separate briefs.

The Supreme Court correctly granted those branches of the motion of the defendants Town of Orangetown and Planning Board of Orangetown (hereinafter collectively the Town) which were pursuant to CPLR 3211(a)(7) to dismiss the 20th and 21st causes of action in the third amended complaint insofar as asserted against them. The plaintiff's 20th cause of action sought a permanent injunction against the Town's enforcement of a restrictive covenant, which provided that the plaintiff's property could not be subdivided. The plaintiff alleged that an injunction was necessary because the restrictive covenant constituted a "continuing trespass" on his property. However, the need for a permanent injunction has been rendered academic by the Supreme Court's declaration in the order appealed from that the restrictive covenant is invalid and unenforceable, and thus no longer constitutes a continuing restriction on the plaintiff's property.

In addition, the 21st cause of action fails to state a claim for a de facto taking or inverse condemnation. "[A] property owner who challenges land regulation as a taking has a heavy burden of proof. He must demonstrate, by 'dollars and cents evidence' . . . that under no permissible use would the parcel as a whole be capable of producing a reasonable return" (Briarcliff Assocs. v Town of Cortlandt, 272 AD2d 488, 491, quoting Matter of Smith v Williams, 166 AD2d 536, 537; see Spears v Berle, 48 NY2d 254, 263). In his third amended complaint, the plaintiff alleged that the subject property was currently worth $825,000 and, thus, he failed to allege that the property was incapable of producing a reasonable return as necessary to support a de facto taking or inverse condemnation claim.

Contrary to the plaintiff's contention, the third amended complaint insofar as asserted against the defendants Fidelity National Title Insurance Company of New York (hereinafter Fidelity), Ellner & Ellner, and Ellner & Ellner, Inc. (hereinafter collectively the title insurance defendants), failed to state a claim with respect to the sole cause of action remaining against the title insurance defendants, for breach of the plaintiff's title insurance policy. It is well settled that a " title insurer's obligation to indemnify is defined by the policy itself and limited to the loss in value of the title as a result of title defects against which the policy insures'" (Brucha Mtge. Bankers Corp. v Nations Tit. Ins. of N.Y., 275 AD2d 337, 337-338, quoting Citibank v Chicago Tit. Ins. Co., 214 AD2d 212, 221). "The kind of loss contemplated by such a policy is that loss or damage sustained when, because of a defect in the title, the insured was bound to pay something to make it good'" (Grunberger v Iseson, 75 AD2d 329, 332, quoting Empire Dev. Co. v Title, Guar. & Trust Co., 225 NY 53, 60). Moreover, "title insurance only provides indemnification for any diminution in the value of property sustained as a result of defects in a title insured by the policy" (Citibank v Chicago Tit. Ins. Co., supra at 221-222). In the instant case, Fidelity paid the attorney's fees incurred by the plaintiff in defending his title against the Town, which resulted in the invalidation of the restrictive covenant. Since the alleged defect in the plaintiff's title no longer exists, he has no further claim of loss under his title insurance policy. In addition, according to the allegations contained in the third amended complaint, the plaintiff's property has not diminished in value as a result of any defect in title as it is allegedly worth almost double the price that the plaintiff paid for the property. [*3]

Finally, the Supreme Court providently exercised its discretion in denying that branch of the plaintiff's cross motion which was for leave to serve a fourth amended complaint. While generally leave to amend should be freely given (see CPLR 3025[b]), there must be a proper basis for granting the motion, where, as here, it was made in response to a motion to dismiss (see Clark v Trois, 21 AD3d 439, 440; Gannett Suburban Newspapers v El-Kam Realty Co., 306 AD2d 314). Here, the plaintiff failed to demonstrate that the proposed amendments had merit (see Clark v Trois, supra; Heckler Elec. Co. v Matrix Exhibits-N.Y., 278 AD2d 279).
KRAUSMAN, J.P., MASTRO, SPOLZINO and COVELLO, JJ., concur.

Halim v. State Farm Fire & Casualty Co.


In an action to recover damages for breach of an insurance contract, the plaintiff appeals from an order of the Supreme Court, Queens County (Agate, J.), dated July 14, 2005, which granted the defendant's motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs.

The defendant sustained its initial burden of demonstrating its entitlement to summary judgment by presenting evidence that the action was commenced after the two-year limitations period contained in the plaintiff's homeowners insurance policy had expired (see Schachter v Royal Ins. Co. of Am., 21 AD3d 1024; Neary v Nationwide Mut. Fire Ins. Co., 17 AD3d 331; Minichello v Northern Assur. Co. of Am., 304 AD2d 731; Don's Corp. v Commercial Union Ins. Cos., 300 AD2d 535; Enright v Nationwide Ins., 295 AD2d 980). Thus, the burden shifted to the plaintiff "to aver evidentiary facts establishing that the case at hand falls within [an exception to the limitations period]" (Minichello v Northern Assur. Co. of Am., supra at 732). In opposition, the plaintiff failed to raise a triable issue of fact as to whether the defendant waived its right to rely upon the protection of the contractual limitations period, or whether it should have been estopped from asserting the limitations period as a defense because it engaged in conduct which induced the plaintiff to postpone bringing suit (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966; Schachter v Royal Ins. Co., supra; Neary v Nationwide Mut. Fire Ins. Co., supra; Minichello v Northern Assur. Co. of Am., [*2]supra; Enright v Nationwide Ins., supra; Gongolewski v Travelers Ins. Co., 252 AD2d 569). Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint.

The plaintiff's remaining contentions are without merit.
KRAUSMAN, J.P., MASTRO, SPOLZINO and COVELLO, JJ., concur.

Lodovichetti v. Wheels, Inc.


In an action, inter alia, to recover damages for wrongful death, the defendant Raul Baez appeals from so much of an order of the Supreme Court, Dutchess County (Sproat, J.), dated March 30, 2005, as denied that branch of his motion which was for summary judgment dismissing the cross claims of the defendants Wheels, Inc., Schering-Plough Corporation, and Schering Sales Corporation for damages against him to the extent that such damages exceeded the limits of the applicable insurance policy.

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

Pursuant to the antisubrogation rule, "[a]n insurer. . . has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered" (North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294). "The rule against allowing subrogation claims against an insured is based, in part, on the potential for conflict of interest that is inherent in these situations" (Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 472 [citation omitted]). The antisubrogation rule applies only to the policy limits of the comprehensive general liability policy at issue, and claims for contribution and/or indemnification beyond the limits of a common insurance policy are not barred (see ELRAC v Ward, 96 NY2d 58, 78; Blanco v CVS Corp., 18 AD3d 685; Dunn v Hurtt, 4 AD3d 884; Curran v City of New York, 234 AD2d 254). Accordingly, the Supreme Court properly permitted the defendants Wheels, Inc., Schering-Plough [*2]Corporation, and Schering Sales Corporation to maintain their cross claim against the defendant Raul Baez, their co-insured, for damages to the extent that such damages exceeded the policy limits of $2 million, by denying that branch of his motion which was for summary judgment dismissing their cross claims for damages against him to the extent that such damages exceeded the limits of the applicable insurance policy.
FLORIO, J.P., SKELOS, FISHER and DILLON, JJ., concur.

Montefiore Medical Center v. Liberty Mutual


Joseph Henig, P.C., Bellmore, N.Y., for appellants.

In an action to recover no-fault benefits, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Mahon, J.), dated October 3, 2005, as, upon renewal, adhered to so much of a prior determination in an order of the same court dated July 15, 2004, as denied that branch of their motion which was made on behalf of the plaintiff Montefiore Medical Center for summary judgment on the first cause of action, asserted on behalf of the plaintiff Montefiore Medical Center, and granted the defendant's cross motion dismissing that cause of action.

ORDERED that the appeal by the plaintiffs Hospital for Joint Diseases and Mary Immaculate Hospital is dismissed, without costs or disbursements, as they are not aggrieved by the order; and it is further,

ORDERED that the order is affirmed insofar as appealed from, without costs or disbursements.

The Supreme Court correctly determined that the defendant, Liberty Mutual Insurance Company, established a meritorious defense to the first cause of action. The defendant established that it had cancelled the policy of insurance covering the subject vehicle before the date of the accident. It is well settled that no notice of disclaimer is required where the policy does not provide coverage for the claim, nor do principles of waiver or estoppel preclude the insurer from denying coverage in this case (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195; Zappone v Home Ins. Co., 55 NY2d 131; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568; Commissioners of State Ins. Fund v Aetna Cas. & Sur. Co., 283 AD2d 335). [*2]

Contrary to the contention of the plaintiff Montefiore Medical Center, the affidavit of the defendant's claims representative based on records maintained by the insurer in the ordinary course of business was sufficient to establish the defense (see Hospital for Joint Diseases v ELRAC, 11 AD3d 432, 433). Similarly, the documents submitted on the cross motion demonstrate that the insurer effectively canceled the policy (see Hughson v National Grange Mut. Ins. Co., 110 AD2d 1072).
SCHMIDT, J.P., ADAMS, LUCIANO and LIFSON, JJ., concur.

Universal Underwriters Acceptance Corporation v. Peerless Insurance Company

In an action, inter alia, to recover damages for breach of contract, the defendant Peerless Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Dunne, J.), dated February 14, 2005, as denied its motion for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order is modified, on the law, by, upon searching the record, deleting the provision thereof denying that branch of the plaintiff's cross motion, in effect, which was for summary judgment on the cause of action against the defendant Peerless Insurance Company to recover damages for breach of contract and substituting therefor a provision granting that branch of the cross motion; as so modified, the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Nassau County, for entry of an appropriate judgment in favor of the plaintiff and against the defendant Peerless Insurance Company in the principal sum of $10,746.61.

The defendants Quincy Rudolph and Danita Rudolph purchased an automobile under an installment contract. The seller subsequently assigned its rights under the installment contract to the plaintiff, Universal Underwriters Acceptance Corporation (hereinafter UUAC). UUAC was named as a "loss payee" under the Rudolphs' automobile insurance policy (hereinafter the policy), [*2]which was issued by the appellant Peerless Insurance Company (hereinafter Peerless).

On May 23, 2003, the automobile was involved in a two-car collision. The Rudolphs entered into a settlement with the insurer of the other automobile, and they did not make a claim under the policy. Nor did they satisfy their obligations to UUAC.

UUAC made a demand for payment under the policy, but Peerless denied the claim on the ground that the Rudolphs had not made a claim under the policy. UUAC commenced this action. Peerless moved for summary judgment dismissing the complaint insofar as asserted against it, and UUAC cross-moved, among other things, in effect, for summary judgment on its cause of action against Peerless to recover damages for breach of contract.

To establish its prima facie entitlement to judgment as a matter of law, Peerless was required to establish that it had no obligation to UUAC under the circumstances presented (see Zuckerman v City of New York, 49 NY2d 557, 562). At issue here is the language of the loss payee clause in the policy which provided: "[T]his insurance with respect to the interest of the loss payee, shall not become invalid because of your fraudulent acts or omissions unless the loss results from your conversion, secretion or embezzlement of your covered auto.'"

A loss payee clause that explicitly provides that the loss payee's rights "shall not be invalidated by any act or neglect of the [insured]" creates "an independent and separate insurance coverage for the [loss payee's] interest and... the [insured] may not, through its actions or neglect, defeat the independent rights of the [loss payee]" (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 234; see Syracuse Sav. Bank v Yorkshire Ins. Co. Ltd., 301 NY 403, 408-409; Rubenstein v Cosmopolitan Mut. Ins. Co., 61 AD2d 1029). UUAC maintains that a clause, such as the one here, providing that the loss payee's rights shall not be invalidated because of the insured's "fraudulent acts or omissions" also creates an independent contract between the insurer and the loss payee. We agree.

As in the above-cited cases, the purpose of the loss payee clause was to create an independent contract between the insurer and the loss payee. To interpret it as protecting the loss payee only where coverage is denied or precluded by the insured's fraudulent acts or omissions would be to improperly narrow the protective clause against the interests of the loss payee/lienholder (see United States Fid. & Guar. Co. v Annunziata, supra). Consequently, Peerless did not meet its burden on its motion for summary judgment. Because Peerless failed to establish its prima facie entitlement to judgment as a matter of law, its motion for summary judgment dismissing the complaint insofar as asserted against it was properly denied, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Mariaca-Olmos v Mizrhy, 226 AD2d 437, 438).

Although UUAC has not appealed, this court has the authority to search the record and grant summary judgment to a nonappealing party with respect to an issue that was the subject of the motion before the Supreme Court (see Colon v Vargas, 27 AD3d 512). Upon searching the record, we find that UUAC established its prima facie entitlement to judgment as a matter of law on its cause of action against Peerless alleging breach of contract (see Zuckerman v City of New York, supra), and that Peerless failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320). Accordingly, that branch of UUAC'S cross motion, in effect, which was for summary judgment on its cause of action against Peerless alleging breach of contract should have been granted [*3]and we remit the matter to the Supreme Court for the purpose of entering an appropriate judgment for the amount due UUAC on its insurance claim.
CRANE, J.P., SPOLZINO, FISHER and LUNN, JJ., concur.

Hernandez v. American Transit Insurance

Order, Supreme Court, New York County (Sherry Klein Heitler, J.), entered July 27, 2005, which denied plaintiff's motion for summary judgment and granted defendant's cross motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

In an action for personal injuries arising from an automobile accident, plaintiff obtained a judgment in the amount of $42,675, which he seeks to recover from the insurer of one of the defendants in that action, on the ground that the insurer's disclaimer of liability was untimely as a matter of law, pursuant to Insurance Law § 3420(d), and therefore of no effect. The motion court properly held that since neither plaintiff nor the insured ever notified the insurer of the accident, the insurer had no duty to disclaim liability, notwithstanding that it was made aware of the accident by counsel to one of the insured's co-defendants in the personal injury action (see Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40 [2002]).

First Financial Ins. Co. v Jetco Contr. Corp. (1 NY3d 64 [2003]), cited by plaintiff, is distinguishable. Although First Financial also involved a situation where the insured or injured claimant failed to notify the insurer of the underlying claim, and the insurer ultimately learned of the claim from a third party, the issue regarding the source of the notice apparently was not raised in that litigation. Thus, contrary to plaintiff's argument, First Financial cannot be read to stand for the proposition that the duty to disclaim generally will be triggered when notice of the claim is received from a third party.

In any event, First Financial is distinguishable because the insurer took the unusual step of acknowledging in writing that it had received late notice of the claim from another source and that it was reserving the right to deny coverage on the basis of untimely notice (id. at 66). Given the insurer's express acknowledgment of the claim, the Court of Appeals concluded that the duty to disclaim had been triggered (id. at 69). The insurer's acknowledgment, moreover, effectively rendered notice of the claim pointless. In this case, however, the insurer was never provided with the required notice from the insured and/or claimant, nor did it ever acknowledge an awareness [*2]of the claim or a basis for disclaimer prior to issuing the actual disclaimer. In these circumstances, the duty to disclaim was never triggered.

New York Central Mutual Fire Insurance Company v. Aquirre



Mitchell Dranow, for appellants.
Joseph Miller, for respondent.

MEMORANDUM: [*2]The order of the Appellate Division should be reversed, with costs, and the petition to stay arbitration dismissed. Jorge Aguirre and Rosa and Amanda Alzate were allegedly injured on August 4, 2002 while sitting in a car owned by F.A. Rodriguez, which was parked on Northern Boulevard in [*3]Queens, New York. Their injuries occurred when another car was struck and pushed into the rear bumper of the Rodriguez vehicle by a car operated by an unidentified hit-and-run driver. New York Central Mutual Fire Insurance Company had issued an automobile insurance policy to Rodriguez, which included Supplementary Uninsured/Underinsured Motorists (SUM) coverage with bodily injury limits of $25,000 per person and $50,000 per accident. The policy's SUM endorsement set forth several conditions, including the following: "Notice and Proof of Claim. As soon as practicable, the insured or other person making claim shall give us written notice of claim under this SUM coverage. "As soon as practicable after our written request, the insured or other person making claim shall give us written proof of claim, under oath if required, including full particulars of the nature and extent of injuries, treatment, and other details we need to determine the SUM amount payable. "The insured and every other person making claim hereunder shall, as may reasonably be required, submit to examinations under oath by any person we name and subscribe the same. Proof of claim shall be made upon forms we furnish unless we fail to furnish such forms within 15 days after receiving notice of claim" (emphasis added). On August 15, 2002, an attorney representing Aguirre and the Alzates sent a letter to the attention of New York Central Mutual's "No-Fault Department" to make a claim under Rodriguez's policy's SUM provisions. He enclosed claimants' completed and subscribed New York State applications for no-fault insurance benefits. On September 3, 2002, the insurer sent a letter acknowledging the three claims. This letter directed the attorney's attention to and quoted the above-described "Notice and Proof of Claim" condition, and advised him as follows: "New York Central Mutual is currently investigating the facts and circumstances of the [claimed] loss. We require the immediate completion and return of the enclosed Notice of Intention to Make Claim forms. "Your failure to cooperate will jeopardize any rights which you may have under this policy for us to make Supplementary Uninsured Motorists payments" (emphasis added). [*4]Claimants never filled out and returned the proof-of-claim forms, which asked for information about the accident and claimants' injuries. In May 2003, however, they served a request for uninsured motorist arbitration on New York Central Mutual, which responded on June 19, 2003 with a proceeding in Supreme Court to stay arbitration. Supreme Court granted the insurer's petition because of claimants' failure to return the completed forms, concluding that this [*5]was a "condition precedent in the policy" for which timely disclaimer was not required. The Appellate Division affirmed on the same basis, and we granted leave to appeal. We now reverse. As an initial matter, the policy's requirement to fill out and return a proof-of-claim form is an exclusion or a condition of coverage, as the insurer concedes. This case is not analogous to Zappone v Home Ins. Co. (55 NY2d 131 [1982]), where there was no coverage under the contract of insurance. Accordingly, the outcome of this appeal turns on whether New York Central Mutual disclaimed liability or denied coverage "as soon as reasonably possible" within the meaning of Insurance Law § 3420 (d). An "insurer's failure to provide notice as soon as is reasonably possible precludes effective disclaimer, even [where] the policyholder's own notice of the incident to its insurer is untimely" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 67 [2003]). The "timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage" (id. at 68-69 [internal quotation marks omitted]). When "the basis for denying coverage was or should have been readily apparent before the onset of the delay [of disclaimer]," the insurer's explanation is insufficient as a matter of law (id. at 69). In Jetco, we held that an insurer's unexcused 48-day delay in notifying an insured of denial of coverage was unreasonable as a matter of law. Here, the delay was significantly longer. New York Central Mutual sent claimants a letter on September 3, 2003, directing their "immediate completion and return" of the notice-of-claim forms. The word "immediate" denotes New York Central Mutual's expectation of receipt of the completed forms right away, or without substantial loss or interval of time after they were sent. Thus, the insurer became aware of its basis for denying coverage — that claimants had not completed and returned properly filled-out proof-of-claim forms — at a point in time significantly before June 19, 2003, when it petitioned to stay arbitration. That completed forms were never returned or that the letter did not set a precise deadline for their return does not extend the insurer's time to disclaim or deny coverage, or excuse its delay in doing so [FN1]. [*6]


R. S. Smith, J. (dissenting):

Claimants were required under the policy to send a notice to the insurance company "[a]s soon as practicable." The Court today holds, in substance, that this requirement was nullified because the insurance company did not, as soon as possible after as soon as practicable, send claimants a notice that they had failed to send a notice. The Catch-22 quality of this holding is [*7]too much for me, and I dissent.

Insurance Law § 3420 (d) requires an insurance company to give written notice of a disclaimer of coverage "as soon as is reasonably possible." I would hold that, where the disclaimer is based on a claimant's failure to submit a document in timely fashion, and there is no fixed deadline for the claimant's submission, the time to disclaim does not start running at least until the belated submission arrives. To hold otherwise, it seems to me, places an unreasonable and unnecessary burden on the insurance company.

New York Central Mutual acted reasonably here. It demanded, as was its right, a proof of claim (or "Notice of Intention to Make Claim") form, and then waited to see when and if claimants sent the form in. New York Central Mutual no doubt assumed, quite appropriately, that until the form arrived it was in no position to judge whether the claimants had submitted the form "as soon as practicable." The insurance company could also reasonably assume that, if it never received the form, it could forget about the claim.

The form was never submitted. This was not an insignificant oversight; a proof of claim form enables an insurance company to investigate a claim and to decide whether it is legitimate or not. To permit claimants who have never submitted proof of their claim to recover is to open the door to claims that are spurious or fraudulent. Under today's holding, however, insurance companies cannot use the failure to submit proof of claim as a defense unless they [*8]themselves do what the claimant is supposed to do — send a notice before too much time has gone by. I do not think it makes sense to impose this requirement on insurance companies, and I do not think the statute requires it.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and petition to stay arbitration dismissed, in a memorandum. Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur. Judge R.S. Smith dissents in an opinion in which Judge Read concurs.
Decided June 13, 2006

Footnotes



Footnote 1:The dissent complains that there is a Catch-22 quality to the majority's position. But there is also a certain circularity to the insurer's argument that it could not disclaim as soon as reasonably possible until after it received the filled out proof-of-claim forms because it could not evaluate whether claimants had timely provided the facts until the forms were reviewed and still does not know if the facts claimants might have provided would have been timely or not, because claimants never returned the forms. The simple answer to this conundrum, of course, is for the insurer to set a deadline for return of a proof-of-claim form. And, of course, if the insurer suspects fraud in this case, it can still fight the claim in the arbitration on this basis.