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Coverage Pointers - Volume VIII, No. 6

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           As a reminder, Hurwitz & Fine, PC represents parties in insurance coverage and bad faith (extra contractual liability) claims throughout New York State and consults on New York State insurance law matters throughout the world. Have a matter outside of New York State? We can assist you in locating high quality coverage or defense counsel anywhere in North America and in most of Europe. 

 

             An autumnal chill welcomes us in Buffalo this morning, more have evidence that the courts have awakened from their long summer slumber.   

 

We continue to search for decisions which will likely further muddy (or perhaps, clarify) the Court of Appeals decision in  Pecker Iron Works as courts struggle to understand  interplay between named and additional insured status. 

 

            Our hope is that the Courts will recognize that insurance purists have no difficulty with other insurance clauses.  Most are easy to read and not difficult to understand and compare.  The recent court cases that try to read more into Pecker Iron Works than that are imposing non-insurance concepts in areas where apt reading of the policies would serve as a better guide to decision making.

 

Upcoming Highlights

 

            The Court of Appeals, New York's highest court, has agreed to decide (at least) two significant insurance coverage cases during the term just commenced.  Here are our earlier summaries of the Appellate Division decisions which are being reviewed.  Look forward to hearing about the Court's ruling on these cases in the next few months:

 

6/14/05            Appalachian Insurance Company v. General Electric
Appellate Division, First Department
Availability of Excess Coverage Is Triggered by an "Occurrence" - the Last Link Leading to Liability
In an asbestos exposure case, the excess policy defined "occurrence" as "an accident, event, happening or continuous or repeated exposure to conditions . . . which results in personal injury, sickness, disease or death." For the purpose of determining the attachment point of the excess coverage, the appellate division upholds the motion court finding that such clause is not ambiguous; that the operative "occurrence" is the last link in the causal chain leading to liability, i.e., the exposure of each individual claimant to asbestos contained in the turbines manufactured by the insured, rather than earlier events creating the potential for future injury.
 

5/26/05            Great Northern Insurance Company v. Interior Construction Corp.
Appellate Division, First Department
Parties May Allocate Risks by Use of Insurance Policies

While lease provisions purporting to exempt a lessor from liability for its own negligence are void as against public policy, sophisticated parties can agreed to allocate the risk of liability to third parties between themselves, through the use of insurance.  Here, the lease demonstrated the intent of the parties for Depository to indemnify New Water for the latter's own negligence, except as to claims arising from a condition created by New Water or from any accident, injury or damage caused solely by New Water's negligence. The lease further requires Depository to maintain insurance and to name New Water as an additional insured on its comprehensive general liability policy, and requires both parties to include mutual waivers of subrogation in their respective policies. Since it was stipulated that New Water's negligence was not the sole cause of the damage, New Water is entitled to contractual indemnification under the lease.

 

This Week's Issue

 

            There is a host of interesting decisions in this week's edition, as well as a very interesting discussion by No Fault Guru Audrey Seeley on recent Insurance Department Circular Letters dealing with the No Fault law, a must read for those who handle those claims.  This week you'll find these decisions in the attached issue:

 

  • The Earth May Be Moved Beneath the House, Yet "Earth Movement" it is Not
  • Question of Fact as to Timeliness of Disclaimer for SUM Coverage
  • Action for Failure to Procure Accrues when Policy Issued Not when Agreement to Procure is Executed
  • Remember Lang - Injured Party Does Not Have Standing to Sue Liability Carrier to Determine Coverage Until After Judgment is Obtained Against Insured 
  • Municipality Recovery of Payments to Police Officer Limited by No-Fault Provisions
  •  Excess Carrier Cannot be Forced into Coverage Arbitration because Arbitration Clause Gave Carrier Right to Choose Judicial Review
  • Where Other Driver is Identified, 90 Day Requirement to File Sworn Statement in UM  Claim is Inapplicable
  • Yes, Virginia, Liability Insurers Can Still Win Late Notice Cases
  • Doctor Affirmation (Upon Correction of his Transcription error) is Sufficient to Defeat Threshold Motion
  • Defendants' IME Reports Failed to Specify Range of Motion Comparisons
  • Jury Determination of Serious Injury Correct 
  • Excess Carrier Cannot be Forced into Coverage Arbitration because Arbitration Clause Gave Carrier Right to Choose Judicial Review

Enjoy and feel free to call with any questions.

 

We love to hear from you so please continue sending in your comments and suggestions.

 

Dan
 

Dan D. Kohane

[email protected]

 

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9/19/06            Lee v. State Farm Fire & Casualty Co.

Appellate Division, Second Department

The Earth May Be Moved Beneath the House, Yet “Earth Movement” it is Not

Lee owned a residential rental property in Corona, Queens. Lee obtained a rental dwelling property insurance policy from State Farm. In September 2002, soil located underneath and supporting the plaintiffs' building was removed during excavation and underpinning operations on the lot adjoining the plaintiff's property to the south. As a result, the plaintiffs' property was damaged, and they filed a claim with State Farm. State Farm disclaimed coverage alleging that the earth movement exclusion in the policy barred coverage.  The policy stated:

 

"We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce loss.

. . .

b. Earth Movement meaning the sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, sinkhole, subsidence and erosion. Earth movement also includes volcanic explosion or lava flow[.]"

The Court disagrees with State Farm's contention that the earth movement exclusion clearly and unambiguously applies to the plaintiff's loss at issue. The exclusion defines Earth Movement' as "sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not." Here, the record established that the earth underneath the plaintiff's dwelling did not sink, rise, shift, expand, or contract. Rather, earth was excavated from underneath the plaintiff's dwelling and did not fall within the language of the exclusion, which defines "Earth Movement" as "sinking, rising, shifting, expanding, or contracting of earth."

The exclusion did not bar coverage.

 

9/19/06            Ciasullo v. Nationwide Insurance Company

Appellate Division, Second Department

Question of Fact as to Timeliness of Disclaimer for SUM Coverage

A disclaimer pursuant to Insurance Law § 3420(d) is required when the denial of coverage is based upon a policy exclusion without which the claim would be covered. The instant insurance policy was issued by Nationwide to the plaintiff's father. Plaintiff was involved in an automobile accident and sought coverage under the Supplementary Uninsured Motorists (hereinafter SUM) endorsement. Nationwide denied coverage based upon a policy exclusion that excluded SUM coverage for "bodily injury to an insured incurred while occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM coverage by the policy under which a claim is made".  Thus, the insurer was required to issue a timely disclaimer under Insurance Law § 3420(d) based upon the policy exclusion. The insured raised a triable issue of fact as to the timeliness of Nationwide's denial of coverage upon conflicting evidence as to when Nationwide first received notice of the accident and when it first became aware that the plaintiff was operating her own vehicle.

 

 

9/19/06            Neary v. Tower Insurance

Appellate Division, Second Department

Action for Failure to Procure Accrues when Policy Issued Not when Agreement to Procure is Executed

The causes of action accrued and the relevant statutes of limitations begins to run on the date the policy at issue was procured and issued not when the agreement to procure coverage was executed.  Although the alleged breach of contract may have been made earlier in connection with procurement of coverage from a different insurer, it does not result in an earlier accrual date for the instant causes of action relating to the Tower policy.

 

9/19/06            Selchick v. Automobile Insurance Company of Hartford

Appellate Division, Second Department

Remember Lang – Injured Party Does Not Have Standing to Sue Liability Carrier to Determine Coverage Until After Judgment is Obtained Against Insured

Injured party’s lawsuit against insurer seeking declaratory judgment challenging disclaimer is dismissed for lack of standing.  The plaintiffs' right to maintain an action against the insurer is subject to the provisions of Insurance Law § 3420. Therefore, plaintiffs must obtain a judgment against the carrier’s insured (in this case, defendant Selchick), and it must remain unsatisfied for 30 days before a direct action can be maintained against the carrier.  The Court of Appeals told us that in the Lang case cited in the decision.

 

9/19/06            Musgrove v. American Protection Insurance Company

Appellate Division, Second Department

Municipality Recovery of Payments to Police Officer Limited by No-Fault Provisions

This question has come up more and more frequently, lately and it involves a municipality’s obligation to pay for injuries to police officers injured in auto accidents.

 

A municipality's right, pursuant to General Municipal Law § 207-c (6), to reimbursement of the salary and medical expenses it paid on behalf of an officer injured in the line of duty, is subject to the limitations articulated in the no-fault provisions of Insurance Law § 5104. Insurance Law § 5104(a) limits the items of damage that may be recovered in an action commenced by a person injured in a motor vehicle accident against another motor vehicle operator or owner, here the uninsured motorist, to non-economic loss, i.e., pain and suffering, plus only that economic loss which exceeds basic economic loss, defined by statute as $50,000 for medical and hospital expenses, lost wages, and incidental expenses, with certain exceptions not applicable here (see Insurance Law § 5102[a]. The plaintiff's UIM claim, by definition, could only seek recovery only for non-economic loss and economic loss greater than basic economic loss. So, there can be no Insurance Law § 5104(b) lien imposed upon any amount he might recover on account of non-economic loss. Where no Insurance Law § 5104(b) lien attaches, there can be no recovery under General Municipal Law § 207-c(6).

 

9/14/06            Gulf Underwriters Ins. Co. v. Verizon Communications, Inc.

Appellate Division, First Department

Excess Carrier Cannot be Forced into Coverage Arbitration because Arbitration Clause Gave Carrier Right to Choose Judicial Review
After settling two intellectual property claims with its primary carrier, Verizon sought excess coverage from plaintiff, which disclaimed and started this declaratory judgment of non-coverage. Verizon moved to compel arbitration pursuant to the arbitration clause in the primary carrier's policy arguing that Gulf was bound by its terms.  However, the appellate court refused to force Gulf into arbitration.  The arbitration clause in this case provided that "[n]o action shall lie against [the insurer] unless as a condition precedent" the matter is first submitted to arbitration. Since Verizon is not the insurer, there is no arbitration requirement which conditions Gulf’s right to seek judicial review. The court was not free to rewrite the limited arbitration clause.

 

9/12/06            In the Matter of Insurance Company of State of Pennsylvania v. Dentale

Appellate Division, Second Department

Where Other Driver is Identified, 90 Day Requirement to File Sworn Statement in UM  Claim is Inapplicable
Insurer brought application to stay uninsured motorist arbitration on ground that claimant failed to file a sworn statement under oath within 90 days of accident.  However, in this case, driver of uninsured car was located and apprehended.  The condition precedent in the SUM Endorsement which requires an insured to file a statement under oath that the insured has a cause of action against a person whose identity is unascertainable only applies where neither the owner nor driver of the offending vehicle can be identified. Here, the identity of the driver of the offending vehicle was known, so requirement inapplicable.  Since moving carrier failed to establish that offending driver’s vehicle was insured, application to stay is denied and the Uninsured Motorists claim can be pursued.

 

9/12/06            Rael Automatic Sprinkler Company, Inc., v. Schaefer Agency, et al M.
Appellate Division, Second Department

Yes, Virginia, Liability Insurers Can Still Win Late Notice Cases
Policy involved was an Agents/Brokers Errors and Omissions Policy.  Insurer established that its insured became aware of an alleged “wrongful act” some 21 months before notifying insurer.  The policy contained a provision obligating the insured to notify the insurer "in writing as soon as practicable of any wrongful act' which may result in a claim.'" The insured failed to fulfill a condition precedent to coverage and failed to establish any justifiable excuse for the delay.  There was no discussion about whether or not there was prejudice to the insurer in the lateness of the notice because prejudice is of no consequence in liability insurance coverage late notice cases in New York.

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

9/19/06            Myers v. Davis

Appellate Division, First Department

Doctor Affirmation (Upon Correction of his Transcription error) is Sufficient to Defeat Threshold Motion

Plaintiff failed to establish that he sustained serious injury within the meaning of Insurance Law § 5102(d) and upon grant of the motion for renewal defendants' motion for summary judgment is denied.  The uncontradicted affirmation of plaintiff’s physician where the doctor failed to state that plaintiff’s back injuries were causally related to the November 23, 2001 automobile accident was the result of a transcription error. Upon renewal, Dr. Goldman's affirmation, as corrected, which was based upon his physical examination of plaintiff and a review of his medical records, as well as a recitation of the tests and findings upon which his opinion was based, was sufficient to defeat defendants' summary judgment motion.

 

9/19/06            Connors v. Flaherty

Appellate Division, Second Department

Defendants’ IME Reports Failed to Specify Range of Motion Comparisons

Defendants failed to establish that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Affirmed medical reports of the defendants' examining physicians failed to specify the degrees of range of motion in the plaintiff's cervical spine and only specified the degrees of range of motion with respect to two types of movement of the plaintiff's lumbar spine, without comparing these findings to the normal range of motion. The defendants thus left the court to speculate as to the significance of the numerical results they did report.

 

9/12/06            Tapia v. Dattco

Appellate Division, Second Department

Jury Determination of Serious Injury Upheld

The Court finds that a fair interpretation of the evidence supports the jury's conclusion that, based on the evidence before it, the first accident caused serious injury to the plaintiff. Although the existence of a disc herniation, standing alone, is not sufficient to establish a serious injury within the meaning of the Insurance Law, the plaintiff adduced evidence that, as a result of the herniation, she suffered from an objectively determined significant limitation of motion to her lumbar spine between the first and second accidents, and that the herniation, in turn, was caused by the trauma attributable to the first 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.

 

9/15/06            Circular Letter from the New York State Insurance Department

Friendly Reminder to Insurer’s On Claim Settlement Practices

Here is the Angle:  If you reach a settlement wherein principal and interest are paid, the amount of each must be itemized.  The interest payment made cannot be applied toward the maximum aggregated policy limits.  Further, insurers cannot suggest as a condition to settlement that interest be waived.

 

The question becomes what about those claims in arbitration or litigation where we are represented by counsel?  My angle on this issue is that the intent of the regulation is to prevent an insurer from taking advantage of an unsophisticated applicant for benefits when trying to settle a claim.  Once the claim gets to the arbitration and/or litigation phase counsel are typically involved and two sophisticated entities are negotiating resolution of the claim.  Further, when discussing resolution with opposing counsel and the issue of what we will comprise is raised interest, some or all of it, becomes the compromise.  Think about it – if the full value of the case (medical bills plus interest plus filing fees plus attorney’s fees) is paid in settlement what is the purpose of settling the case?

 

The Analysis:  A practice by insurers was reported to the Insurance Department that when settlement agreements are entered into on a claim for a monetary amount that the principal and interest components are not itemized.  This violates 11 NYCRR §§65-3.9(e) and (f) which require separate identification of any interest payment from the principal payment.  Further, interest payments cannot be included in ratemaking calculations.  The Insurance Department further reminds insurers that they are prohibited from crediting interest payments toward the calculation of the maximum aggregated policy limits.

 

Also, the Insurance Department notes that under 11 NYCRR §65-3.9(b) an insurer “shall not suggest or require, as a condition to settlement of a claim, that the interest due be waived.”  The intent of the regulation was to encourage prompt payment of claims and resolution of disputes while preventing insurers from unduly influencing an applicant by inducing them to waive their rights to the payment of accrued interest as a condition to obtaining a quick settlement of their claim.  The Insurance Department warns that it will investigate complaints on these topics and monitor the insurer’s claim settlement practices to ensure insurers are not violating the regulations.  Finally, it is noted that 11 NYCRR §65-3.2(g) requires every insurer, self-insurer, and MVAIC to provide copies of the insurance regulations to every person directly responsible for handling and settling its claims for PIP and APIP benefits as well as ensure that every person is thoroughly conversant with the regulation.

 

9/6/06  Circular Letter from the New York State Insurance Department

Required Denial Language When Denial Based Upon Priority of Payment

Here is the Angle:  If the basis for a denial is that there is another insurer primary to you for No-Fault benefits you must advise the applicant for benefits of that fact as well as their ability to arbitration this issue if the other insurer denies the applicant’s claim.

 

The Analysis:  This is a supplement to the Insurance Department’s October 5, 2005, Circular Letter No. 16.  This letter is simply to remind insurers that it must use the following language in Box 33 of its denial of claim form (NF-10) when the basis for the denial is that the insurer is not primary insurer for No-Fault benefits:

 

If after contacting the insurer that we advised you has primary responsibility for the payment of first party benefits, that insurer denies coverage for your claim, you have the option to submit this dispute for expedited arbitration by providing a copy of the denial form and a written request along with a $40.00 filing fee to the organization listed under option two on the back of this form.  Your $40.00 filing fee will be refunded to you by the insurer determined to be responsible for processing your claim.  This arbitration is limited solely to determining the insurer to process your claim, and it will not resolve issues regarding pending bills or consider any other defense to payment.  You do not need to submit bills for this arbitration.

 

9/19/06            In the Matter of the Arbitration between the Applicant and Respondent

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

Insurer’s Receipt of Police Accident Report Five Days After Accident Is Timely Notice of Claim.

Here is the Angle:  The rule, after the Insurance Department’s September 2004 opinion letter, was that if a general denial of medical benefits is issued based upon an IME, any submission of subsequent medical bills to the carrier must also be timely denied.  Here, in 2001 the insurer issued general denials of medical benefits based upon multiple IMEs from various specialties.  When the EIP and/or providers continued to submit medical bills the insurer never issued a denial, as it had already issued its general denial.  Arbitrator O’Connor’s decision retroactively applies the September 2004 rule to insurers.    

 

The Analysis:  The eligible injured person (“EIP”) was involved in an August 15, 2000, motor vehicle accident.  The EIP received medical treatment from neurologists, chiropractor, as well as a physical therapist, at issue in this arbitration.

 

On April 24, 2001, Dr. Reza Samie conducted a neurological independent medical examination (“IME”).  Dr. Samie opined that the EIP sustained a mild whiplash injury and had a good prognosis for recovery.  Dr. Samie did not recommend any further neurological diagnostic studies or treatment.  Dr. Samie found no disability.

 

On May 9, 2001, the insurer issued a general denial of all neurological benefits effective May 16, 2001, based upon Dr. Samie’s IME.

 

On April 25, 2001, John Gaiser, DC conducted a chiropractic IME.  Mr. Gaiser opined that the objective evidence was unremarkable.  He did not find that further chiropractic care was warranted.

 

On May 7, 2001, the insurer issued a general denial of all chiropractic benefits effective May 15, 2001, based upon Mr. Gaiser’s IME.

 

On August 13, 2001, Dr. David Bagnall conducted a pain management review IME.  Dr. Bagnall observed various loss of active range of motion in the lumbar spine as well as the shoulders.  The conclusions of his report were not discussed in the arbitration award.

 

On August 28, 2001, the insurer issued a general denial of all pain management benefits effective September 4, 2001, based upon Dr. Bagnall’s report.

 

On September 13, 2001, Dr. John Ring conducted an orthopedic IME.  Dr. Ring found decreased range of motion in the low back and positive straight leg raise.  Dr. Ring summarily stated that he did not recommend any further orthopedic treatment.

 

The insurer issued a denial, effective October 8, 2001, generally denying all orthopedic benefits.

 

After the denials were issued medical bills continued to be sent to the insurer for payment.  The insurer never issued a denial for any of the medical bills submitted after it issued general denials.

 

Arbitrator O’Connor noted that the Insurance Department issued a September 2, 2004, opinion letter stating that an insurer who issued a denial of future medical benefits based upon an IME must continue to issue a denial for claims are subsequently submitted for payment.

 

The insurer argued that since that opinion letter was issued after the date of the denials at issue here that the opinion was not binding.  Arbitrator O’Connor held that the opinion was controlling despite the fact that it was issued after the general denials in this case as well as the treatment dates at issue.

 

9/8/06  In the Matter of the Arbitration between the Applicant and Respondent

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

Insurer’s Receipt of Police Accident Report Five Days After Accident Is Timely Notice of Claim.

Here is the Angle:  The insurer’s denial of a claim for the eligible injured person’s failure to provide a timely completed application for no-fault benefits was not upheld.  The eligible injured person’s counsel sent the insurer, five days after the accident, and a copy of the police accident report as well as an authorization for medical records.  A copy of a MV-104 or other accident report is sufficient notice of a claim.

 

The Analysis:  The eligible injured person (“EIP”) was involved in an October 28, 2005, motor vehicle accident while a bus passenger.  On November 2, 2005, the EIP attorney sent correspondence to the insurer which stated:

 

Please accept this letter on behalf of the no fault claim of [EIP]…resulting from the referenced accident.  Enclosed please find a copy of the police accident report and an authorization allowing [insurer] to speak with this office regarding [the EIP’s] claim….

 

On November 8, 2005, the insurer sent an Application for No-Fault Benefits to the EIP as well as a form letter requesting the EIP’s doctors’ contact information.  The EIP faxed to the insurer the information in response only to the form letter.  The application was not returned to the insurer until March 13, 2006.

 

Interestingly, the EIP underwent a November 29, 2005, orthopedic independent medical examination (“IME”) with Dr. John Ring where he indicated he reviewed a no-fault application and police accident report in addition to his examination.  Dr. Ring found low back strain causally related to the accident and agreed with obtaining an MRI and physiotherapy three times per week.

 

On March 27, 2006, the insurer denied the EIP’s claim for No-Fault benefits on the basis:

 

Written notice of claim as required by policy conditions was not given to the Company within 30 days; the Application wasn’t received until March 13, 2006.  Based on the evidence, reasonable justification has not been established.  The entire claim remains denied per our prior notice dated 12/16/05.

 

The referenced December 16, 2005, denial stated:

Injured person failed to provide Insurer written proof of claim to the Company, Including (sic) full particulars of nature and extent of injuries and treatment, as soon as reasonably practicable but in no event later than 45 days after the date services rendered.  No reasonable written justification has been provided.

 

Arbitrator O’Connor held that timely notice of claim was provided on November 8, 2006, with the submission of the police accident report.  11 NYCRR §65-3.3 provides that an insurer’s receipt of a MV-104 – Department of Motor Vehicles Accident Report OR other accident report indicating injuries to the eligible injured persons, shall be deemed written notice of a claim.

 

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.


9/14/06            Sandberg v. American Family Insurance Co.

Supreme Court of North Dakota

The Rights of a State May Become Part of an Insurance Policy
The court found that the unauthorized settlement by an insured with the Workforce Safety and Insurance does not negatively affect an insurer. There is no adverse result because the settlement did not affect the insurer’s right to a reduction in the insured’s damages for uninsured motorist coverage by the amount paid or payable to the insured for worker’s compensation damages.

 

Submitted by: Kristi M. Pfotenhauer (Baker, Sterchi, Cowden & Rice, L.L.C.)


9/14/.06           Mee v. Safeco Insurance Co.

Superior Court of Pennsylvania

Court Established Various Legal Principles Regarding an Insurer's Payment of Overhead and Profit
Summary judgment was not proper because a genuine issue of material fact existed as to whether a general contractor was reasonably likely to be needed to make home repairs. An objective standard must be used for an insurer to determine whether to pay overhead and profit, i.e., payment of overhead and profit is required when then use of a general contractor is reasonably likely. The court established the following legal principles; “(1) actual cash value includes repair and replacement costs; (2) repair and replacement costs include O&P where use of a general contractor would be reasonably likely; (3) because a homeowner pays higher premiums for repair and replacement coverage, he is entitled to O&P where use of a general contractor would be reasonably likely, even if no contractor is used or no repairs are made; (4) expert testimony about industry standards may be used to answer whether use of a general contractor is reasonably likely; and (5) whether use of a general contractor is reasonably likely depends on the nature and extent of the damage and the number of trades needed to make repairs.”

 

Submitted by: Kristi M. Pfotenhauer (Baker, Sterchi, Cowden & Rice, L.L.C.)

 

 

 

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Gulf Underwriters Insurance Company v. Verizon Communications, Inc
 

Order, Supreme Court, New York County (Herman Cahn, J.), entered November 30, 2005, which granted defendant's motion to compel arbitration and stay the instant proceedings for 60 days, unanimously reversed, on the law, without costs, and defendant's motion denied.

After settling two intellectual property claims with its primary carrier, nonparty American International Specialty Lines Insurance Company, Verizon sought excess coverage from plaintiff, which disclaimed and commenced the instant proceeding for a declaratory judgment of non-coverage. Verizon moved to compel arbitration pursuant to the arbitration clause in the primary carrier's policy, by which plaintiff is bound by operation of its excess coverage policy.

Although the IAS court agreed that Verizon's agreement with the primary carrier only required arbitration of claims by the insured against the insurer, the court nevertheless determined that plaintiff excess insurer's declaratory judgment action is, in reality, a coverage dispute, and therefore "clearly arbitrable pursuant to the policies." We disagree and reverse.

A party cannot be forced to an arbitration to which it has not agreed, and any arbitration agreement must reflect a clear and unequivocal manifestation of an intention to arbitrate (see Mionis v Bank Julius Baer & Co., Ltd., 301 AD2d 104, 109 [2002]). The arbitration clause in this case is unambiguous in providing that "[n]o action shall lie against [the insurer] unless as a condition precedent" the matter is first submitted to arbitration. Since Verizon is not the insurer, there is no arbitration requirement which conditions plaintiff's ability to seek judicial review. Had Verizon desired to require arbitration of claims by the insurers, it could have bargained for an arbitration clause in its contracts with the primary or excess insurers. It did not, and the IAS court was not free to rewrite the limited arbitration clause. We have reviewed the other arguments raised by Verizon and find them to be without merit.

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

ENTERED: SEPTEMBER 14, 2006 [*2]

CLERK

Rael Automatic Sprinkler Company v. Schaefer Agency

 


 In an action, inter alia, to recover damages for breach of contract, the defendant third-party plaintiff appeals from an order of the Supreme Court, Nassau County (Bucaria, J.), dated April 4, 2005, which upon, in effect, treating the motion of the third-party defendant Utica Mutual Insurance Company pursuant to CPLR 3211(a)(7) to dismiss the third-party complaint insofar as asserted against it as a motion for summary judgment dismissing the third-party complaint insofar as asserted against it, granted the motion.

ORDERED that the order is affirmed, with costs.

Compliance with an insurance policy notice provision is a condition precedent to coverage, and the failure to comply vitiates the policy (see White v City of New York, 81 NY2d 955, 957; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440; Quality Invs., Ltd. v Lloyd's London, England, 11 AD3d 443; Yarar v Children's Museum of Manhattan, 4 AD3d 420, 421). The insured has the burden of demonstrating a reasonable excuse for the delay in providing notice (see White v City of New York, supra at 957; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra at 441). [*2]

Here, the respondent insurer established its prima facie entitlement to summary judgment by presenting evidence demonstrating that the appellant, its insured, became aware of an alleged "wrongful act" under its Agents and Brokers Errors and Omissions Insurance policy approximately 21 months before notifying the insurer of it. The policy contained a provision obligating the insured to notify the insurer "in writing as soon as practicable of any wrongful act' which may result in a claim.'" Thus, the insured failed to fulfill a condition precedent to coverage.

In opposition, the insured failed to raise a triable issue of fact (see Quality Invs. Ltd. v Lloyd's London, England, supra; see generally Zuckerman v City of New York, 49 NY2d 557, 562). Therefore, the Supreme Court properly granted the insurer's motion.

The insured's remaining contentions are without merit.
SCHMIDT, J.P., SKELOS, LUNN and DILLON, JJ., concur.

 

Insurance Company of State of Pennsylvania v. Dentale

 

In a proceeding pursuant to CPLR article 75 to stay arbitration of a claim for uninsured motorist benefits, Patsy Dentale appeals from (1) an order of the Supreme Court, Nassau County (Parga, J.), entered March 29, 2005, which granted the petition, and (2) an order of the same court entered July 5, 2005, which denied her motion for leave to renew and reargue the prior motion.

ORDERED that the order entered March 29, 2005, is reversed, on the law and the facts, the petition is denied, and the proceeding is dismissed; and it is further,

ORDERED that the appeal from the order entered July 5, 2005, is dismissed; and it is further,

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

The petitioner brought this proceeding to stay arbitration of an uninsured motorist [*2]claim made by its insured, the appellant Patsy Dentale. Dentale's claim arose out of an automobile accident she had with a vehicle driven by Fernando Ortiz. According to the police accident report, Ortiz fled the scene of the accident, but was apprehended by the police shortly thereafter.

The Supreme Court granted the petition based upon Dentale's failure to file a statement under oath with the petitioner within 90 days of the accident. This was error. The condition precedent in the supplementary uninsured/underinsured motorists endorsement of the petitioner's policy which requires an insured to file a statement under oath that the insured has a cause of action against a person whose identity is unascertainable only applies where neither the owner nor driver of the offending vehicle can be identified. Here, the identity of the driver of the offending vehicle, Ortiz, was known.

Moreover, since the petitioner failed to make a prima facie showing that the offending vehicle was insured at the time of the hearing, the petition should have been denied and the proceeding dismissed (see Matter of Government Employees Ins. Co. v Williams-Staley, 288 AD2d 471).

The appeal from so much of the order entered July 5, 2005, as denied that branch of the motion which was for leave to renew must be dismissed as academic, in light of our determination on the appeal from the order entered March 29, 2005. The appeal from so much of the order entered July 5, 2005, as denied that branch of the motion which was for leave to reargue must be dismissed, as no appeal lies from an order denying reargument (see Almonte v Western Beef, 21 AD3d 516).
LUCIANO, J.P., RIVERA, LIFSON and COVELLO, JJ., concur.

 

Tapia v. Dattco


    In an action to recover damages for personal injuries, the defendant appeals from a judgment of the Supreme Court, Kings County (Schack, J.), entered August 16, 2004, which, upon a jury verdict, and upon denying the defendant's motion pursuant to CPLR 4401 to dismiss the complaint as a matter of law for failure to establish a prima facie case and subsequent motion pursuant to CPLR 4404 to set aside the verdict as a matter of law or, in the alternative, as against the weight of the evidence, is in favor of the plaintiff and against it in the total sum of $305,740.

ORDERED that the judgment is affirmed, with costs.

This action arises from a two-car collision occurring on October 23, 2000, in which a vehicle being operated by the plaintiff was struck in the rear by a bus owned by the defendant. Approximately eight months after the accident, the plaintiff started a job with Home Depot which, initially, required her to operate machinery. According to the plaintiff's testimony, she was eventually relegated to sedentary work because the medication she was taking for her injuries caused her to become drowsy. On December 15, 2001, the plaintiff was involved in a second motor vehicle accident and, on the following day, she quit her job at Home Depot as a result of the injuries sustained in that accident. On December 5, 2002, the plaintiff underwent an endoscopic discectomy to treat a herniated disc in her lumbar spine.

At trial, the plaintiff's physiatrist testified that, in May 2001, or seven months after the first accident, and seven months prior to the second accident, he measured, inter alia, the flexion and rotation of the plaintiff's lumbar spine, and found that she suffered a 33 % limitation of motion [*2]in both the flexion and right rotation of her lumbar spine. The physiatrist diagnosed a pinched nerve in the plaintiff's back and a herniated disc, both of which, he testified, caused the limitation of motion. The plaintiff's orthopedist, Jeffery Klein, testified that he administered a Magnetic Resonance Imaging (hereinafter MRI) scan of the plaintiff's lumbar spine in July 2001 9 months after the first accident, and 5 months before the second accident and diagnosed the plaintiff with a disc herniation at L4-L5. He conceded that there was some degeneration at the L4-L5 site, but opined that the acute herniation he observed in July 2001 was not the result of a degenerative process, but of a trauma. He further opined that an MRI scan taken in November 2002, almost one year after the second accident, was virtually identical at L4-L5 to the MRI scan taken in July 2001.

In May 2004, the physiatrist re-examined the plaintiff with respect to limitation of motion. The 33 % limitations on lumbar flexion and right lumbar rotation were the same limitations that had been measured after the first accident but before the second. Although the physiatrist testified that the plaintiff suffered from radiculopathy, and ascribed the limitations of motion measured in 2004 to the combined effects of both accidents, he did not refute his earlier testimony that the first limitations he measured in May 2001 were attributable to the herniation.

Following the close of the plaintiff's case, the defendant moved pursuant to CPLR 4401 to dismiss the complaint as a matter of law for failure to prove a prima facie case that the plaintiff's injuries were causally related to the first accident. The court denied the motion. The jury subsequently reached a verdict finding that the plaintiff had sustained a serious injury which was caused by the first accident. Thereafter, the defendant moved pursuant to CPLR 4404 to set aside the verdict as a matter of law or, in the alternative, as against the weight of the evidence, and for a new trial. The court denied that motion as well. On appeal, the defendant maintains that the court erred in denying the motions. We disagree, and affirm the judgment.

A motion for judgment as a matter of law pursuant to CPLR 4401 or 4404 may be granted only when the trial court determines that, upon the evidence presented, there is no valid line of reasoning and permissible inferences which could possibly lead rational persons to the conclusion reached by the jury upon the evidence presented at trial, and no rational process by which the jury could find in favor of the nonmoving party (see Szczerbiak v Pilat, 90 NY2d 553, 556; Broadie v St. Francis Hosp., 25 AD3d 745, 746). In considering such a motion, " the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant'" (Hand v Field, 15 AD3d 542, 543, quoting Szczerbiak v Pilat, supra). Contrary to the defendant's contention, viewing the facts in the light most favorable to the plaintiff, the evidence adduced at trial was at least sufficient to establish a prima facie case that the plaintiff's injuries were the result of the first accident. Since the foregoing standard is also used to determine whether a verdict should be set aside as based on legally insufficient evidence (see Cohen v Hallmark Cards, 45 NY2d 493, 498), the Supreme Court properly denied that branch of the defendant's post-verdict motion which was for that relief.

The standard for determining whether a jury verdict is against the weight of the evidence is whether the evidence so preponderated in favor of the movant that the verdict could not have been reached on any fair interpretation of the evidence (see Lolik v Big V Supermarkets, 86 NY2d 744, 746; Harris v Marlow, 18 AD3d 608, 610; Torres v Esaian, 5 AD3d 670, 671; Nicastro v Park, 113 AD2d 129, 133). Where the verdict can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view (see [*3]Torres v Esaian, supra at 671). Here, a fair interpretation of the evidence supports the jury's conclusion that, based on the evidence before it, the first accident caused serious injury to the plaintiff. Although the existence of a disc herniation, standing alone, is not sufficient to establish a serious injury within the meaning of the Insurance Law (see Pommells v Perez, 4 NY3d 566, 574; Toure v Avis Rent A Car Sys., 98 NY2d 345, 353 n 4; Kearse v New York City Transit Authority, 16 AD3d 45, 49; Pierre v Nanton, 279 AD2d 621), the plaintiff adduced evidence that, as a result of the herniation, she suffered from an objectively determined significant limitation of motion to her lumbar spine between the first and second accidents, and that the herniation, in turn, was caused by the trauma attributable to the first accident.

In light of the foregoing, we do not reach the parties' other contentions.
KRAUSMAN, J.P., SPOLZINO, LIFSON and DILLON, JJ., concur.

Myers v. Davis

 

Order, Supreme Court, Bronx County (Norma Ruiz, J.), entered January 10, 2005, which, insofar as appealed from as limited by the briefs, denied the motion by plaintiffs Javon and Jaquelynn Cowan, pursuant to CPLR 2221(e) for renewal of defendants' previously granted motion for summary judgment dismissing the complaint of said plaintiffs on the ground that Javon Cowan failed to establish that he sustained serious injury within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the motion for renewal granted, and, upon renewal, defendants' motion for summary judgment denied, the complaint reinstated as to the Cowan plaintiffs, and the matter remanded for further proceedings. Appeal from order, same court and Justice, entered July 27, 2004, unanimously dismissed, without costs, as superseded by the appeal from the order entered January 10, 2005.

Given the uncontradicted affirmation of Dr. Goldman and his administrative assistant that his failure to state in his original report, dated February 16, 2004, that Javon Cowan's back injuries were causally related to the November 23, 2001 automobile accident was the result of a transcription error, it was improvident to deny plaintiffs' motion for renewal. Upon renewal, Dr. Goldman's affirmation, as corrected, which was based upon his physical examination of plaintiff [*2]and a review of his medical records, as well as a recitation of the tests and findings upon which his opinion was based, was sufficient to defeat defendants' summary judgment motion.

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

ENTERED: SEPTEMBER 19, 2006

CLERK

 

 

Ciasullo v. Nationwide Insurance Company



 

DECISION & ORDER

In an action, in effect, for a judgment declaring that the plaintiff is entitled to receive Supplementary Underinsured Motorist benefits under a policy of insurance issued by the defendant Nationwide Insurance Company, the defendants appeal, as limited by their brief, from so much of an amended order of the Supreme Court, Orange County (McGuirk, J.), dated September 2005 as, upon reargument, denied their prior motion for summary judgment dismissing the complaint, which had been granted in an order of the same court dated April 10, 2005.

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

A disclaimer pursuant to Insurance Law § 3420(d) is required when the denial of coverage is based upon a policy exclusion without which the claim would be covered (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188-189; Handelsman v Sea Ins. Co., 85 NY2d 96). In contrast, a disclaimer pursuant to Insurance Law § 3420(d) "is unnecessary when a claim falls outside the scope of the policy's coverage portion" (Matter of Worcester Ins. Co. v Bettenhauser, supra at 188; see Zappone v Home Ins. Co., 55 NY2d 131, 134). The instant insurance policy was issued by the defendant Nationwide Insurance Company (hereinafter Nationwide) to the plaintiff's father. The plaintiff, who was involved in an automobile accident, sought coverage under the Supplementary Uninsured Motorists (hereinafter SUM) endorsement of the subject policy. Nationwide denied coverage based upon a policy exclusion to the SUM endorsement which excluded from SUM coverage "bodily injury to an insured incurred while [*2]occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM coverage by the policy under which a claim is made" (emphasis added). But for the exclusion, coverage would have been afforded the plaintiff under the SUM endorsement. Thus, the insurer was required to issue a timely disclaimer under Insurance Law § 3420(d) based upon the policy exclusion (see Matter of Worcester Ins. Co. v Bettenhauser, supra; Handelsman v Sea Ins. Co., supra).

The defendants established their prima facie entitlement to judgment as a matter of law by demonstrating that the SUM exclusion applied to the plaintiff who, at the time of the accident, was operating her own vehicle which was not covered by the subject policy (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324). However, the plaintiff, in opposition, raised a triable issue of fact as to the timeliness of Nationwide's denial of coverage upon conflicting evidence as to when Nationwide first received notice of the accident and when it first became aware that the plaintiff was operating her own vehicle and therefore, was subject to the exclusion from SUM coverage (see Matter of Worcester Ins. Co. v Bettenhauser, supra; Handelsman v Sea Ins. Co., supra; Zappone v Home Ins. Co., supra). Thus, the Supreme Court properly, upon reargument, denied the defendants' motion for summary judgment.
FLORIO, J.P., SKELOS, FISHER and DILLON, JJ., concur.

Connors v. Flaherty

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Schulman, J.), dated March 23, 2005, which granted the defendants' motion for summary judgment dismissing the complaint and denied his cross motion for summary judgment on the issue of whether he sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the motion and substituting therefor a provision denying the motion; as so modified, the order is affirmed, with costs to the plaintiff, and the complaint is reinstated.

A motor vehicle operated by the plaintiff struck the rear of a motor vehicle operated by the defendant Clotilde Sepulveda and owned by the defendant Maritza Flaherty, while both vehicles were proceeding westbound along Atlantic Avenue in Brooklyn. The plaintiff commenced this action to recover damages for personal injuries against the defendants and, after discovery was completed, the defendants moved for summary judgment dismissing the complaint, arguing that they were free from negligence as a matter of law and that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The plaintiff cross-moved for summary judgment on the issue of whether he sustained a serious injury within the meaning of Insurance Law § 5102. The Supreme Court granted the motion and denied the cross motion. We modify by denying the motion and reinstating the complaint. [*2]

In her affidavit submitted in support of the motion, Sepulveda averred that the defendants' vehicle was stopped at the moment of impact, and that she was thus free from negligence as a matter of law. At his deposition, however, the plaintiff testified that, as he proceeded in the left westbound lane of Atlantic Avenue, the defendants' vehicle, while making a U-turn, cut him off as it moved from the center lane of Atlantic Avenue into the left lane, less than one car length ahead of him. He also testified that the defendants' vehicle was moving at the time of impact. In opposition to the defendants' motion, the plaintiff also submitted the police accident report, which contained a transcribed statement from Sepulveda admitting that she was in the process of making a U-turn at the moment immediately before the impact.

"A rear-end collision with a stopped vehicle establishes a prima facie case of liability against the moving vehicle and imposes a duty of explanation on its driver" (Rozengauz v Lok Wing Ha, 280 AD2d 534, 535, quoting Kachuba v A & G Cleaning Serv., 273 AD2d 277, 277; see Ayach v Ghazal, 25 AD3d 742, 743; Russ v Investech Sec., 6 AD3d 602, 602; Belitsis v Airborne Express Freight Corp., 306 AD2d 507, 508; Dickie v Pei Xiang Shi, 304 AD2d 786, 787). Here, the defendants established, prima facie, that they were entitled to summary judgment on the issue of liability, based on the affidavit of Sepulveda that the defendants' vehicle was stopped in traffic when it was struck in the rear by the vehicle operated by the plaintiff. The burden then shifted to the plaintiff to come forward with an explanation for the accident. Contrary to the determination of the Supreme Court, the plaintiff's explanation that the accident occurred when the defendants' vehicle switched lanes, cutting in front of his vehicle, and attempting to make an illegal U-turn, and that the defendants' vehicle was still moving at the moment of impact, raised triable issues of fact sufficient to defeat the defendants' motion (see Hussain v Manhattan Cable T.V., 308 AD2d 433, 434; Rozengauz v Lok Wing Ha, supra at 535; Green v Hong Lee Trading, 263 AD2d 445; Galitsis-Orengo v MCL Imports, 251 AD2d 285; Figueroa v Cadbury Util. Constr. Corp., 239 AD2d 285).

In addition, the defendants failed to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The affirmed medical reports of the defendants' examining physicians failed to specify the degrees of range of motion in the plaintiff's cervical spine (see Madatova v Madatov, 27 AD3d 531), and only specified the degrees of range of motion with respect to two types of movement of the plaintiff's lumbar spine, without comparing these findings to the normal range of motion (see Aronov v Leybovich, 3 AD3d 511, 512). The defendants have thus left the court to speculate as to the significance of the numerical results they did report. Since the defendants failed to meet their initial burden of establishing a prima facie case, the sufficiency of the plaintiff's opposition papers need not be considered in connection with the defendants' motion (see Paulino v Dedios, 24 AD3d 741, 741-742; Aronov v Leybovich, supra).

Thus, the defendants were not entitled to summary judgment dismissing the complaint.

On the plaintiff's cross motion, his submissions were insufficient to establish his entitlement to judgment as a matter of law on the issue of serious injury. Viewing the evidence in the light most favorable to the defendants in connection with the plaintiff's cross motion, the affidavit of the plaintiff's most recent treating chiropractor failed to disprove, as a matter of law, the existence of a 7 ½; year gap in treatment, and does not explain the reason for any such discontinuity in treatment (see Pommells v Perez, 4 NY3d 566, 574; Vasquez v Reluzco, 28 AD3d 365; McConnell v Ouedraogo, 24 AD3d 423, 424). The Supreme Court thus properly denied the plaintiff's cross motion. [*3]

In light of the foregoing, we need not consider the plaintiff's remaining contentions.
CRANE, J.P., SPOLZINO, FISHER and LUNN, JJ., concur.

 

Lee v. State Farm Fire & Casualty Co.



 

DECISION & ORDER

In an action to recover damages for breach of contract and for a judgment declaring that the loss to the plaintiffs' property is covered under their insurance policy, the plaintiffs appeal from so much of an order of the Supreme Court, Queens County (Golar, J.), entered September 20, 2004, as denied their motion for summary judgment against the defendant State Farm Fire & Casualty Co. on the issue of liability and granted the cross motion of the defendant State Farm Fire & Casualty Co. for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the motion is granted, the cross motion is denied, the complaint is reinstated insofar as asserted against the defendant State Farm Fire & Casualty Co., and the matter is remitted to the Supreme Court, Queens County, for a trial on the issue of damages.

The plaintiffs own a residential rental property in Corona, Queens. They obtained a rental dwelling property insurance policy (hereinafter the policy) from the defendant State Farm Fire & Casualty Co. (hereinafter State Farm). In September 2002 soil located underneath and supporting the plaintiffs' building was removed during excavation and underpinning operations on the lot adjoining the plaintiff's property to the south. As a result, the plaintiffs' property was damaged, and they filed a claim with State Farm. State Farm disclaimed coverage asserting, inter alia, that coverage was excluded under the earth movement exclusion in the policy, which states: [*2]

"We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce loss.

. . .

b. Earth Movement meaning the sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, sinkhole, subsidence and erosion. Earth movement also includes volcanic explosion or lava flow[.]"

"Generally, where an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311). Such exclusions or exceptions from policy coverage must be specific and clear in order to be enforceable, and they are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction. Thus the insurance company bears the burden of establishing that the exclusions apply in a particular case and that they are subject to no other reasonable interpretation (see Seaboard Sur. Co. v Gillette Co., supra at 311)" (Gaetan v Fireman's Ins. Co. of Newark, 264 AD2d 806). The burden is a heavy one, and if the language is doubtful or uncertain in its meaning, any ambiguity will be construed in favor of the insured and against the insurer (see Pepsico, Inc. v Winterhur Intl. Am. Ins. Co., 13 AD3d 599).

We disagree with State Farm's contention that the earth movement exclusion clearly and unambiguously applies to the plaintiff's loss at issue. The exclusion defines Earth Movement' as "sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not." Here, the record establishes that the earth underneath the plaintiff's dwelling did not sink, rise, shift, expand, or contract. Rather, earth was excavated from underneath the plaintiff's dwelling.

This case is distinguishable from Sheehan v State Farm Fire and Cas. Co. (239 AD2d 486), and Kula v State Farm Fire and Cas. Co. (212 AD2d 16). This court found in Sheehan that the same Earth Movement' exclusion as at issue here applied to exclude coverage of the plaintiffs' loss which occurred when a portion of the slab foundation of the insured's house collapsed as the result of decomposing organic matter within the ground underneath the foundation. The Appellate Division, Fourth Department, found in Kula that the same Earth Movement' exclusion as at issue here applied to exclude coverage of the insured's loss which occurred when a water pipe ruptured beneath their home, causing the soil beneath the home to wash away. In both of those cases, there was a "sinking" of the ground underneath the insureds' dwellings, such that the loss fell within the language of the exclusion to coverage. The facts of this case, however, involving the physical removal by excavation of earth from underneath the plaintiffs' dwelling, does not fall squarely within the language of the exclusion, which defines "Earth Movement" as "sinking, rising, shifting, expanding, or contracting of earth."

Since the plaintiffs' house suffered a collapse loss which is covered by the policy (see Royal Indem. Co. v Grunberg, 155 AD2d 187), the plaintiffs' motion for summary judgment against State Farm on the issue of liability should have been granted. Accordingly, we remit the matter to the Supreme Court, Queens County, for a trial on the issue of damages.
CRANE, J.P., GOLDSTEIN, LUCIANO and COVELLO, JJ., concur.

ENTER:

Neary v. Tower Insurance



 

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and negligence, the defendant Lincoln Brokerage Corp. appeals from an order of the Supreme Court, Kings County (F. Rivera, J.), dated February 3, 2006, which denied its motion pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against it.

ORDERED that the order is affirmed, with costs.

The Supreme Court properly determined that the action was not time barred. The causes of action accrued and the relevant statutes of limitations began to run on August 5, 2002, the date the Tower Insurance policy at issue was procured and issued (see St. George Hotel Assoc. v Shurkin, 12 AD3d 359, 360). Contrary to the appellant's contention that the same error constituting the alleged breach of contract may have been made earlier in connection with its procurement of coverage from a different insurer does not result in an earlier accrual date for the instant causes of action relating to the Tower Insurance policy (see Vic Char Realty v Alliance Plus, 26 AD3d 278, cf. Mauro v Niemann Agency, 303 AD2d 468).
SCHMIDT, J.P., RITTER, SANTUCCI and LUNN, JJ., concur.

 

 

 

Selchick v. Automobile Insurance Company of Hartford

 


DECISION & ORDER

In an action for a judgment declaring that the defendant Automobile Insurance Company of Hartford, Connecticut, is obligated to defend and indemnify the defendant Warren Selchick in an underlying personal injury action entitled Selchick v Schultz Ford, pending in the Supreme Court, Rockland County, under Index No. 6220/02, the plaintiffs appeal from an order of the Supreme Court, Rockland County (Garvey, J.), dated April 18, 2005, which denied their motion for summary judgment and granted that branch of the cross motion of the defendant Automobile Insurance Company of Hartford, Connecticut, which was to dismiss the complaint pursuant to CPLR 3211(a)(7) insofar as asserted against it.

ORDERED that the order is affirmed, with costs.

Contrary to the plaintiffs' contention, their right to maintain this action against the defendant Automobile Insurance Company of Hartford, Connecticut (hereinafter AIC), is subject to the provisions of Insurance Law § 3420 (see Lang v Hanover Ins. Co., 3 NY3d 350). As the plaintiffs did not obtain a judgment against the defendant Warren Selchick, which remained unsatisfied for 30 days, the plaintiffs cannot maintain a direct action against AIC, and we do not address the merits of the coverage issue (see Lang v Hanover Ins. Co., supra; Evans v Prudential Fin., 23 AD3d 993; Geissler v Liberty Mut. Ins. Co., 23 AD3d 432).
MILLER, J.P., ADAMS, SKELOS and COVELLO, JJ., concur.

Musgrove v. American Protection Insurance Company

DECISION & ORDER

In an action for a declaratory judgment, (a) the plaintiff appeals from so much of (1) an order of the Supreme Court, Nassau County (Parga, J.), entered March 23, 2005, as denied that branch of his motion which was for summary judgment declaring that he is not obligated to reimburse the defendant Incorporated Village of Lake Success for the money paid to him pursuant to General Municipal Law § 207-c, and granted the cross motion of the defendant Incorporated Village of Lake Success for summary judgment, in effect, declaring that the plaintiff is obligated to reimburse it for the money paid to him pursuant to General Municipal Law § 207-c, and (2) an order of the same court dated July 22, 2005, as denied his motion, in effect, for leave to reargue that branch of his prior motion which was for summary judgment declaring that the plaintiff is not obligated to reimburse it for the money paid to the plaintiff pursuant to General Municipal Law § 207-c and the prior cross motion, and (b) the defendant American Protection Insurance Company separately appeals from so much of (1) the order entered March 23, 2005, as denied that branch of its motion which was for summary judgment declaring that the defendant Incorporated Village of Lake Success is not entitled to a lien in the amount it paid the plaintiff pursuant to General Municipal Law § 207-c against any underinsured motorist arbitration award that is made to the plaintiff, and granted the cross motion of the Incorporated Village of Lake Success for summary judgment declaring that the [*2]defendant Incorporated Village of Lake Success is entitled to a lien against any award the plaintiff obtains in his arbitration for underinsured motorist benefits in the amount paid to him pursuant to General Municipal Law § 207-c, and (2) the order dated July 22, 2005, as denied its motion which was denominated as one for leave to renew and reargue, but which was, in actuality, for leave to reargue that branch of its prior motion which was for summary judgment declaring that the plaintiff is not obligated to reimburse it for the money paid to the plaintiff pursuant to General Municipal Law § 207-c and the prior cross motion of the defendant Incorporated Village of Lake Success.

ORDERED that the appeals from the order dated July 22, 2005, are dismissed, as no appeal lies from an order denying reargument (see Fischer v RWSP Realty, LLC, 19 AD3d 540; Matter of Lloida W., 18 AD3d 665, 666); and it is further,

ORDERED that the order entered March 23, 2005, is reversed insofar as appealed from, on the law, the cross motion is denied, that branch of the plaintiff's motion which was for summary judgment declaring that he is not obligated to reimburse the defendant Incorporated Village of Lake Success for the money paid to him pursuant to General Municipal Law § 207-c is granted, that branch of the motion of the defendant American Protection Insurance Company which was for summary judgment declaring that the defendant Incorporated Village of Lake Success is not entitled to a lien in the amount it paid the plaintiff pursuant to General Municipal Law § 207-c against any underinsured motorist arbitration award that is made to the plaintiff is granted, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the defendant Incorporated Village of Lake Success is not entitled to a lien in the amount it paid the plaintiff pursuant to General Municipal Law § 207-c against any underinsured motorist arbitration award that is made to the plaintiff, and that the plaintiff is not obligated to reimburse the defendant Incorporated Village of Lake Success for the money paid to him pursuant to General Municipal Law § 207-c; and it is further,

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

The plaintiff, a police officer employed by the defendant Incorporated Village of Lake Success (hereinafter the Village), was injured in the line of duty when an underinsured motorist collided with his police vehicle. Pursuant to General Municipal Law § 207-c, the Village paid the plaintiff's salary and medical expenses during the period of his disability. The plaintiff received a settlement from the underinsured motorist's liability insurer, and thereafter filed a claim for underinsured motorist benefits (hereinafter the UIM claim) with the defendant American Protection Insurance Company (hereinafter API), the insurer of the police vehicle. When the UIM claim was set down for arbitration, the Village sought to assert a lien against any arbitration award the plaintiff might recover from API, in the amount that the Village had paid to the plaintiff pursuant to General Municipal Law § 207-c. The Supreme Court determined that the Village had a lien against any such award. We reverse.

General Municipal Law § 207-c(1) provides, inter alia, that a village must pay an officer on its police force who is injured in the line of duty the "full amount of his regular salary or wages until his disability arising therefrom has ceased," in addition to covering the costs of "all medical treatment and hospital care necessitated by reason of such injury." The Village predicates its entitlement to the lien it seeks on General Municipal Law § 207-c(6), which provides that "a cause of action shall accrue to the municipality . . . for reimbursement in such sum or sums actually paid as salary or wages and or for medical treatment and hospital care as against any third party against whom the policeman shall have a cause of action for the injury sustained or sickness caused [*3]by such third party." Contrary to the Village's position, that provision does not provide a basis for the lien it asserts here.

A municipality's right, pursuant to General Municipal Law § 207-c(6), to the reimbursement of the salary and medical expenses it had previously paid to or on behalf of an officer injured in the line of duty, is subject to the limitations articulated in the no-fault provisions of Insurance Law § 5104 (see Village of Suffern v Baels, 215 AD2d 751). Insurance Law § 5104(a) limits the items of damage that may be recovered in an action commenced by a person injured in a motor vehicle accident against another motor vehicle operator or owner, here the uninsured motorist, to non-economic loss, i.e., pain and suffering (see Insurance Law § 5102[c]), plus only that economic loss which exceeds basic economic loss, defined by statute as $50,000 for medical and hospital expenses, lost wages, and incidental expenses, with certain exceptions not applicable here (see Insurance Law § 5102[a]; see generally Matter of Adams, 52 AD2d 118, 120). The plaintiff's UIM claim, by definition, could only seek recovery only for non-economic loss and economic loss greater than basic economic loss (see Matter of Shutter v Phillips Display Components Co., 90 NY2d 703, 710). Thus, there can be no Insurance Law § 5104(b) lien imposed upon any amount he might recover on account of non-economic loss in the arbitration which will determine that claim (see Matter of Adams, supra). Where no Insurance Law § 5104(b) lien attaches, there can be no recovery under General Municipal Law § 207-c(6) (see Village of Suffern v Baels, supra).

"[A]n insured who has sustained personal injury should not be required to pay for his no-fault benefits out of his recovery for pain and suffering" (Aetna Cas. & Sur. Co. v Jackowe, supra at 42; see Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 176; Lang v City of New York, 98 AD2d 792, 793; see also Dymond v Dunn, 148 AD2d 56, 59; Matter of Celona v Royal Globe Ins. Co., 85 AD2d 635, 636; Matter of Adams, supra at 119). As it pertains to the plaintiff's arbitration claim for non-economic loss, the situation presented here is no different.

Moreover, the statutory lien sought to be asserted by a third party on a recovery obtained by a person injured in a motor vehicle accident, on account of the sums paid by the third party to compensate the injured person for lost wages and medical expenses (see Insurance Law § 5104[b]), extends only to so much of the recovery as also compensated the injured person for lost wages and medical expenses (see Aetna Cas. & Sur. Co. v Jackowe, 96 AD2d 37, 42). Here, it is unclear whether the plaintiff, by pursuing arbitration with API, seeks to recover economic loss greater than basic economic loss, and thus, whether part of his claim is for lost wages and medical expenses greater than $50,000. In any event, while the Village has, in fact, compensated the plaintiff for lost wages and medical expenses in excess of basic economic loss, and thus asserts that the plaintiff, if successful, would unfairly recover the identical sum in arbitration, the lien created by Insurance Law § 5104(b), by its terms, applies only to a recovery obtained by an injured person "in any action." The recovery sought by the plaintiff from API is not pursuant to an action. The plaintiff, by seeking arbitration pursuant to the SUM endorsement contained in the policy issued by API, is not commencing an "action . . . against a non-covered person," as required by Insurance Law § 5104(b), but is instead seeking to enforce a contractual right he has pursuant to statute against API. Hence, the limitations on the assertion of a lien, imposed by Insurance Law § 5104, as applied to General Municipal Law § 207-c(6), preclude the result sought by the Village here.

Finally, General Municipal Law § 207-c(6) permits a municipality to seek reimbursement of wages and medical expenses only from "any third party against whom the policeman shall have a cause of action for the injury sustained . . . caused by such third party." The plaintiff, from whom the Village seeks reimbursement, and API, upon whose obligation the Village [*4]seeks to impose a lien, are not parties who caused the injury. Hence, the cause of action created by General Municipal Law § 207-c(6) is not available to the Village insofar as it seeks to assert it against either the plaintiff or API. Furthermore, General Municipal Law § 207-c, "includes no . . . provision for an equitable lien. It merely gives the [municipality] a direct remedy against the person liable to the employee in negligence'" (Foy v Florczuk, 51 AD2d 534, 535 quoting City of Buffalo v Maggio, 21 NY2d 1017, 1018).

Contrary to the Village's contention, Matter of City of Newburgh v Travis (228 AD2d 497) does not require a contrary result. In that case, the self-insured City of Newburgh, which was required to arbitrate an employee's underinsured motorist claim, was entitled, pursuant to a specific provision of the subject insurance policy, to offset the payments it already made against the employee's arbitration award (see Matter of City of Newburgh v Travis, supra at 498-499). Unlike the City of Newburgh, the Village is not self-insured, and it has nothing to offset, as any arbitration award will be paid by the insurer, API. Nor does the API insurance policy contain a specific offset provision. The "non-duplication" provision in the API policy relied upon by the Village does not similarly create a right of offset (see generally Reilly v United States Fid. & Guar. Co., 139 AD2d 796, 797).

For all of these reasons, the Village is not entitled to assert a lien pursuant to General Municipal Law § 207-c(6), and the Supreme Court therefore improperly granted the Village's cross-motion. Rather, it should have granted the relevant branch of the plaintiff's motion for summary judgment and the relevant branch of API's motion for summary judgment.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that the Village is not entitled to a lien, in the amount of salary and medical expenses it paid to the plaintiff pursuant to General Municipal Law § 207-c, against any award the plaintiff receives in his underinsured motorist arbitration, and that the plaintiff is not obligated to reimburse the Village for the money it paid pursuant to General Municipal Law § 207-c (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
MILLER, J.P., GOLDSTEIN, SPOLZINO and DILLON, JJ., concur.

 

 

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