Coverage Pointers - Volume VIII, No. 9

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Dear Coverage Pointers Subscribers:

 

Perhaps I'm just cranky this week.  I'm allowed.  After all, my damaged trees haven't fixed themselves miraculously, the clocks were turned back so it is getting darker earlier, it's getting cold outside and the courts are rendering some coverage decisions that make my hair curl. 

 

Still reeling from the Raffellini decision reported in our Special Edition, we offer you an eclectic array of appellate court coverage opinions.  A few of offer mysterious rationale and some might suggest they were outcome-determinative.  The first two listed below require the closest scrutiny, the third one needs a different analysis to get it right:

 

  • Oh, the Cleverness of Me! (Peter Pan)
    The Insurer May Need to Disclaim Promptly, but the Insured? Well, Children will be Children, and are Excused for their Tardiness on Notice of Claim
     
  • Winning Isn't Everything - In Fact, it Doesn't Even Count
    If We've Told You Once, We've Told You 100 times - Insurer has but 20 days, After Receipt of Demand, to Move to Stay UM Arbitration, Even if UM Carrier's Argument is that it has Already Won the Case
     
  • No Fault Experts Take Note --  Wage Loss Recover in Auto Accident -- Judgment Right, Rationale Hazy
     
  • Retroactive Contracts and "Additional Insured by Contract:" Can Subcontractor's Insurer be Required to Provide Coverage to GC?
     
  • When Playing the Game of "Let Your Child Drive Your Car", The Right Move is to tell her No One Else Can Drive It.  That Way, No Coverage to the Child's Friend in the MVA
     
  • In Policies, Mistakes that are not Mutual are Not Reformable

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

 

  • How Much is Nothing? Part I
     
  • Both Physicians Opine Full Range of Motion, but Without Basis for Opinion, Worthless
     
  • It's All about Degenerative Changes
     
  • Proving up the Negative is Tough, Miss Brown's Knees May be Limited, and so the Case will go on

     
  • How Much is Nothing? Part II
    Serious Injury Motion Fails.  You need to Measure Nothing to Find Out

You'll also find Audrey's Angles, already gathering a cult following.  By the way, for those of you who have asked, any resemblance between Audrey's Angles and Charlie's Angels is purely coincidental.  Well, perhaps so.

 

Do you know anyone else who might be interested in receiving Coverage Pointers?  We know our "secondary readership" is substantial and we'd be happy to save you the trouble of forwarding it to your colleagues and friends. 

 

Anyway, maybe I'm just counting the days until the birds return from the south and spring arrives again.

 

Dan

 

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11/2/06            Progressive Insurance Companies v. House

Appellate Division, Third Department

Oh, the Cleverness of Me! (Peter Pan)

The Insurer May Need to Disclaim Promptly, but the Insured? Well, Children Will be Children, and are Excused for Their Tardiness on Notice of Claim

We all know the constraints placed on both the insured and the insurer for notices of claims and, likewise, notices of disclaimer. However, sometimes the courts do not see it as a set of mutual obligations. 

 

Amanda C. House, an infant, was seriously injured on 2/25/05 in a MVA. At the time of the accident, House's mother, Antoinette, maintained an insurance policy with Progressive which provided SUM/UM coverage. As a condition precedent to such coverage, written notice of a claim had to be given "as soon as practicable." House's mother did not provide notice until July 2005, some five months later.  As soon as Progressive received notice, it disclaimed coverage on untimeliness.  House filed for SUM arbitration and Progressive sought a permanent stay.

The court finds that House provided Progressive with reasonably prompt notice of their claim. Why? Well, because House was hospitalized through March 3, 2005 and didn’t meet with counsel until April 2, 2005 and then counsel did not figure out until May 16, 2005 of the liability limits of the other driver’s policy (50/100/50).  The Court finds that even though the claimant’s counsel sat on this information for approximately two months and then finally provided notice (nearly 4½ post accident) House was timely.  Permanent stay denied.

 

Editor’s Note: So, let’s be kind to the claimant and give a pass on the time in the hospital.  We can even try to blink our eyes on the delay to May 2005.  How does the Court justify the next two months?  It relies on two cases that have little to do with the point at all.  First, the Court cites to Rekemeyer v. State Farm Mut. Auto. Ins. Co., 4 N.Y.3d 468 (2005), the Court of Appeals case that held that an insurer that had notice of an accident and claim must show prejudice before being able to deny coverage to justify denying coverage for not having being given timely notice of a personal injury suit commenced by the plaintiff.  In this case the insurer had no notice of the accident so the Reckemeyer “no-prejudice” considerations are surely off point.  See Coverage Pointers, Volume VI, No. 16.

 

The Court then cites to the recent Third Department case in Nationwide Insurance Company v. Mackey, 25 A.D.3d 905, reported in Volume VII, No. 14 of Coverage Pointers.  In that case, Nationwide argued that the insured failed to comply with a condition precedent to supplemental uninsured motorist (SUM) coverage when they allegedly did not return a "Proof of Claim" form as soon as practicable. But there, Mackey’s attorney supplied prompt written notice of the accident, made a claim for no-fault benefits and indicated that SUM coverage was implicated.

 

Editors note:  Here, there is nothing in the decision that suggests the carrier had any notice of the accident soon after it occurred, as in the two cases upon which the Court relied.  We’d suggest it’s wrongly decided.   

 

Carriers should ask: What if we waited 18 weeks to disclaim, same outcome?  Nah.

 

11/2/06            Herron v. Essex Insurance Company

Appellate Division, Third Department

In Policies, Mistakes that are not Mutual are Not Reformable

The Court reminds us that to reform a policy of insurance "a party seeking reformation must establish, by clear and convincing evidence, that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud.” In the event "that an innocent mistake occurred with respect to a named insured and it is evident that the parties intended to cover the risk, the error may be deemed mutual for purposes of reformation even though the insurer was not aware of the error.”

 

Here, the parties entered into a lease agreement permitting Grand Villa to operate a resort on plaintiffs' property. The lease agreement required Grand Villa to obtain fire insurance and to list plaintiffs as "mortgage insured" in the policy. Grand Villa sought such insurance through defendant High Peak Agency, Inc., a general insurance agency that had allegedly served plaintiffs for many years and that plaintiffs contacted regarding Grand Villa's insurance needs. As a result, defendant Essex Insurance Company was issued a policy to Grand Villa. Although Grand Villa listed plaintiffs as owners of the property and "Lender Loss Payees" on its application, the policy designated plaintiffs as mortgagees and "loss payees" in the property or first-party section of the policy. Essex conceded that the distinction between loss payee and lender loss payee was significant because a lender loss payee is not subject to an insurer's defenses against an insured.

 

The Court holds that plaintiffs did not qualify for designation as "lender loss payees" because they were not lenders. Inasmuch as plaintiffs failed to establish the existence of a mutual mistake on behalf of the contracting parties Grand Villa and Essex or that Essex intended to insure the risk, they were not entitled to reformation of the policy.

 

10/31/06          Eagle Insurance Company v. Lucia

Appellate Division, First Department

When Playing the Game of “Let Your Child Drive Your Car”, The Right Move is to Tell Her No One Else Can Drive It.  That Way, No Coverage to the Child’s Friend in the MVA

Eagle commenced a proceeding to stay arbitration of Lucia's UM claim, contending that the offending car (driven by Cuadrado) and owned by Nusenbaum, had insurance. Nusenbaum and her insurer contended that Cuadrado had been driving Nusenbaum's car without Nusenbaum's knowledge or consent and so Lucia was not entitled to any coverage under Nusenbaum’s policy.

 

It was undisputed that Nusenbaum and her insurer could be held to account for Cuadrado's negligent operation of Nusenbaum's car only if it was found that Nusenbaum, in entrusting the car to her daughter Anna, did not instruct Anna not to permit others to drive the vehicle. If Nusenbaum did not give such instructions, and instead placed the car under Anna's unrestricted control, Nusenbaum's implied consent to the use of the vehicle may be found to extend to any third person whom Anna allowed to drive it.  The Court finds that a hearing must be held to determine the apparent contradictory affidavits submitted by the parties.

 

10/31/06          National Abatement Corp. v. National Union Fire Insurance

Appellate Division, First Department

Retroactive Contracts and "Additional Insured by Contract:" Can Subcontractor's Insurer be Required to Provide Coverage to GC?

Here’s the scenario: Parties enter into a contract where subcontractor agrees to procure insurance for the contractor (insurance procurement clause) and defend and indemnify the other party (hold harmless agreement).  However, the accident occured before  the contract was executed?  Is the carrier liable to provide coverage?  Is the indemnity agreement enforceable?

 

This scenario occurs with some regularity in the construction field.  The “paperwork” doesn’t catch up with the parties until after an accident, or the parties realize an accident occurred and then try to recreate the contracts they may have believe should have been in force when the accident took place.

Here, the insurer was justified in denying additional insured status to the GC.  The Court held that the party claiming insurance coverage bears the burden of proving entitlement …and is not entitled to coverage if not named as an insured or an additional insured on the face of the policy.  The additional insured coverage was only available to the GC if required by “written contract” but none existed at the time of the underlying accident. The Court recognized that the contract might be enforceable if there is objective evidence the parties intended to be bound or the eventual writing was intended to be valid retroactively.  However, the Court held that the enforceability of the contract has no bearing on whether there is a "written contract" pursuant to the policy endorsement.

As an aside, the Court also noted (correctly) that the failure to disclaim timely to the purported additional insured was not fatal to an enforceable denial of coverage because the additional insured endorsement is an addition to coverage, rather than a limitation. If the claim falls outside the grant of coverage the insurer is not required to disclaim.

The second avenue of relief is under the indemnification provision in the contract.  The Court explains that if the eventual writing was intended to be valid retroactively, the indemnification provision will be held enforceable despite the contract’s execution after the date of accident.  A second bite out of the apple? Not quite, but close.

 

10/24/06          State Farm Mutual Automobile Insurance Company v. Scudero

Appellate Division, Second Department
Winning Isn’t Everything – In Fact, it Doesn’t Even Count

If We’ve Told You Once, We’ve Told You 100 times – Insurer has but 20 days, After Receipt of Demand, to Move to Stay UM Arbitration, Even if UM Carrier’s Argument is that it has Already Won the Case
It’s the shortest time limitation around and the once most frequently missed.  If an Uninsured Motorists Demand for Arbitration is filed and the UM carrier believes, for example, that the offending motorist was not uninsured, or there wasn’t contact with a hit-and-run vehicle (in that kind of a case) or has any other reason it believes that the arbitration should not go forward, it must go to court and file an application to permanently stay arbitration within 20 days of the arbitration demand.  Here, the carrier waited six months,  and argued that the claimant had previously made an identical demand to arbitrate a claim for uninsured motorist benefits, and State Farm was granted a permanent stay of arbitration based on the court's finding that the alleged offending vehicle was insured by New York Central Mutual Fire Insurance Company.  Well, there’s a good reason, you would think, to stay arbitration – the carrier has already WON in a previous application.  “Sorry,” sayeth the Court.  “Since you did not file your demand to say within 20 days, it’s too late to complain about it.”

 

Editors Note:  What an unfortunate decision.  Talk about placing form over substance.  Here, the carrier has already won, in a previous proceeding and now its win is being negated because the claimant refiled.  In any event, pay attention to the 20 day requirement.

 

10/24/06          Colon v. Montemurro

Appellate Division, First Department

No Fault Experts Take Note --  Wage Loss Recover in Auto Accident -- Judgment Right, Rationale Hazy
In personal injury auto action, trial court reduced past lost wage claim from $20,000 to $12,000.  Parties had stipulated that plaintiff suffered $8,000 in wages during “an absence of two months from work over the course of the three-year period immediately following the accident.”  The appellate court correctly reminded that plaintiff cannot recover Basic Economic Loss in action by covered person against another person and properly defined Basic Economic Loss to mean up to $50,000 per person for, inter alia, loss of earnings of no more than $2,000 per month for not more than three years from the date of the accident (§ 5102[a][2]).   The Court should have then indicated that if the $8000 would have been earned in two months (that is, two AND ONLY two months, plaintiff could not recover the first $2,000 of each of those months wages, and thus could recover $6,000 for those two months in a lawsuit, because those amounts were in excess of Basic Economic Loss, for a total of $12,000.

However, the appellate court held: “since plaintiff's lost earnings for the three-year period did not reach the $50,000 threshold, she cannot recover any of that amount in this plenary action.”   Well, that’s not entirely accurate.  What is the more precise analysis when considering Basic Economic Loss?

·        Even without the $50,000 combined threshold for wages, medical expenses and household expenses being reached, plaintiff could recover wages in excess of $2000/month, if during any month during the first three years, the amount of wage loss exceeded the $2000 per month limit for Basic Economic Loss (and of course, any wage lost after three years from the date of the accident).

·        If, on the other hand, there were no months (during the first three years) where the wages exceeded $2000 per month and the combined three categorical losses never exceeded $50,000 during that time, plaintiff could not recover any First Party Benefits for wage loss;

·        In summary, if there were some months where the $2000 limitation were exceeded and some months where they were not exceeded in those three years, any amount in any month that was over $2000 was recoverable just as any wage loss incurred after a combined $50,000 in benefits were accrued would be recoverable.

 

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

10/31/06          Johnson v. Cauthen

Appellate Division, Second Department

How Much is Nothing? Part I

Both Physicians Opine Full Range of Motion, but Without Basis for Opinion, Worthless

Apparently, the doctors needed only to complete the sentence that begins “Plaintiff has full range of motion” with the phrase “because I tested the plaintiff.”  Without it, not sufficient for dismissal under serious injury.  The defendant failed to carry his burden of establishing, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law

§5102(d) as a result of the subject accident. Although the defendant's examining neurologist asserted that the plaintiff had a "full" range of motion in the cervical and lumbar regions of her spine and the defendant's examining orthopedist asserted, in an affirmed medical report, that Johnson had "full" range of motion in the cervical region of her spine, the defendant's proof was insufficient because neither physician set forth the basis for those conclusions.

 

10/31/06          Khan v. Finchler

Appellate Division, Second Department

It’s All about Degenerative Changes

The defendant's orthopedist reported that the MRI films of the plaintiff's back showed preexisting degenerative disc disease in the lumbar region and age-related changes in the cervical region. The records of the plaintiff's treating chiropractor included an X-ray examination report stating that there were "degenerative changes" in the cervical and lumbar regions of the injured plaintiff's spine. The affirmations of the injured plaintiff's physicians failed to address the findings of degeneration and age-related changes and were improperly relied upon as they were unsworn submissions.

 

 10/24/06         Brown v. Motor Vehicle Accident Indemnification Corp

Appellate Division, Second Department

Proving Up the Negative is Tough, Miss Brown’s Knees May be Limited, and so the Case Will Go On
Defendant relied upon the medical records and reports of plaintiff’s treating physicians. Those reports and records failed to establish, as a matter of law, that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). In fact, one of the reports noted the existence of limitations in the range of motion of plaintiff’s knees without sufficient quantification or qualification to establish that the limitation of motion was not significant.

 

10/24/06          Schacker v. County of Orange

Appellate Division, Second Department

How Much is Nothing? Part II

Serious Injury Motion Fails.  You Need to Measure Nothing to Find Out

The defendant submitted an affidavit from an examining physician in support of a motion seeking to dismiss a case base on lack of a serious injury. The orthopedist discussed range of motion testing and stated that such testing revealed "full range of motion" of the cervical and lumbar spine, as well as the plaintiff's shoulders. “Not enough,” says the Appellate Divison, to support a motion.  Since “Dr. Hendler failed to set forth the objective testing he performed in order to come to the conclusion that the plaintiff did not sustain any limitations in range of motion as a result of the subject accident” his affidavit is insufficient?

Editors note: Oh, come on.  Now this is getting downright silly.

 

 

 

 

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.

 

10/31/06          In the Matter of the Arbitration between the Applicant and Respondent

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

If An Insurer Is Going To Deny A Claim Based Upon It Not Being Related To The Motor Vehicle Accident Then It Helps To Have A Medical Opinion To Support The Basis.

Here is the Angle:  I have seen a few clients and a few arbitration awards now where the insurer acts as its own medical expert in determining whether treatment is related to an accident and even medically necessary.  I have not seen any favorable result for the insurer when challenged on this tactic.  This arbitration award is yet another instance where the insurer acted as its own medical expert in determining whether an injury was related to its accident or a subsequent accident.  The award was not in favor of the insurer.  The counseling point when you are not sure if an injury is related to your accident, a subsequent accident, or a pre-existing condition is to take the time to have at least an independent medical records review ensuring that all records and films are sent to the physician, therapist, or chiropractor.

 

The Analysis:  The Applicant, eligible injured person, was involved in a July 3, 2004, motor vehicle accident wherein he allegedly sustained injury to his neck, back, and left shoulder.  Then on December 3, 2004, the Applicant was involved in another motor vehicle accident with an alleged minor impact exacerbating his left shoulder pain.

 

The Applicant only received an emergency room evaluation for the December accident and testified that his left shoulder pain increased for one day then returned to pre-December accident status.  Also, the Applicant testified he lost no time from work as a result of the December accident.

 

The Applicant sought payment of multiple physician evaluations, surgery, and multiple MRIs. 

 

The insurer issued a general denial dated March 5, 2005, stating that the treatment was not related to the July motor vehicle accident.  Rather, the Applicant was instructed to submit his bills to the insurer for the December motor vehicle accident for payment.

 

Arbitrator O’Connor found the Applicant’s testimony very persuasive and convincing that the December accident only caused a temporary exacerbation of his left shoulder injury.  Since there was no peer review or independent medical evaluation to contradict Applicant’s testimony, Arbitrator O’Connor found in Applicant’s favor.

 

10/30/06          In the Matter of the Arbitration between the Applicant and Respondent

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

Electrodiagnostic Providers Must Establish Medical Necessity – Arbitration and Litigation Worlds Are Aligned On Issue.

Here is the Angle:  Arbitrator McCorry aptly points out in this decision, which is in line with recent case law, that an electrodiagnostic provider must establish medical necessity even if it is merely conducting the test on referral from a treating physician. 

 

The Analysis:  The 75 year old Applicant was involved in an October 22, 2005, motor vehicle accident and subsequently came under the care of Geoffrey Gerow, D.C.  Mr. Gerow recommended the Applicant undergo EMG/NCV testing and referred the Applicant to Mr. Smith.  The Applicant submitted SOAP notes from Mr. Gerow which indicated that in November 2005, the Applicant’s chief complaint was low back pain, which changed in December 2005, to cervical spine pain.  There was also mention of a history of low back problem secondary to a work related injury.

 

The Applicant also submitted a report from Mr. Smith, who conducted the electrodiagnostic testing, which indicated that an upper extremity neurodiagnostic evaluation was to be performed to isolate suspected cervical radiculopathy as well as rule out right upper extremity peripheral neuropathy.

 

The insurer denied the electrodiagnostic testing on the basis of a peer review conducted by Dr. Edward Weiland.  Dr. Weiland’s peer review acknowledged that while Mr. Smith’s physical examination found paraspinal muscle spasm and cervical area tenderness, there was no pathologic reflexes or reflex asymmetry identified.  Also, there was no finding of sensory abnormality in any dermatomal or peripheral nerve distribution.  Further, there was no evidence of compressive neuropathy in the upper extremities or abnormality in muscle bulk or tone in the upper extremities.  Dr. Weiland opined that Mr. Smith and Mr. Gerow had not substantiated how the performance of “the invasive electrophysiologic testing of the cervical paraspinous regions and upper extremities would have clarified any specific differential diagnosis or alter any specific treatment protocols…”

 

The Applicant also argued to Arbitrator McCorry that since Mr. Smith was merely performing this testing based upon Mr. Gerow’s referral that he could not be denied on the basis of lack of medical necessity.  The Applicant cited West Tremont Medical Diagnostic, PC a/a/o Janette Lamb-McCloud.  Unfortunately, the Applicant was not aware that this decision was overruled.  We note that the decision was reported in our last edition of Coverage Pointers.  Well, Arbitrator McCorry noted that the case Applicant relied upon was overruled with the Appellate Division stating:

 

Nowhere in the statutory or regulatory scheme is there any suggestion that services rendered by diagnostic centers…or radiological facilities, all of which rely upon prescriptions or referral from treating or examining medical providers, be exempt from the requirement that said services be ‘medically necessary.’

 

Arbitrator McCorry upheld the insurer’s denial and found Dr. Weiland’s peer review to be more persuasive.

 

10/26/06          In the Matter of the Arbitration between the Applicant and Respondent

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

So What If You Hit “6” Instead of “5” When Typing The Denial – You Should Have Proofread Before Mailing.

Here is the Angle:  This decision is a warning for insurers, which I have been hearing from Arbitrator McCorry lately, to review the denials to ensure that they are accurate and completely filled out.  Further, if you realize that one of your denials does contain an error you should immediately issue an amended or corrected denial. 

 

The Analysis: The Applicant sought reimbursement for a $708.00 MRI.  She was involved in a June 3, 2005, motor vehicle accident allegedly sustaining injury to her neck, low back, and shoulders.  The Applicant’s treating physician, Dr. Whitbeck, referred her for an MRI in June of 2005 or 2006 of the lumbar spine.  There was no stated reason for the referred for an MRI.  Keep that fact in the back of your mind.

 

In September 2005, the insurer sent the Applicant for an independent medical examination with Dr. Katzman.  Dr. Katzman opined the Applicant had resolved cervical, lumbar, and shoulder strains with no further treatment required.

 

Based upon Dr. Katzman’s opinion, the insurer issued a denial of all orthopedic, physical therapy, massage therapy, and surgery effective 12:01 A.M. on September 20, 2006.  OOOPPPS!

 

The insurer’s counsel, seeing the typo, argued the obvious that the cutoff date was supposed to be September 20, 2005 and not 2006.  Arbitrator McCorry noted that the insurer never issued an amended or corrected denial.  Therefore, under this set of facts, the insurer was bound by what the denial stated – cutoff of benefits was September 20, 2006.

 

Okay, stop groaning and complaining because Arbitrator McCorry found in favor of the insurer.  Huh??  What??  I will give you a moment to clean up your spilled coffee. 

 

Remember earlier, I said to keep one fact in the back of your mind.  Well, the Applicant did not establish medical necessity for the MRI.  How is that you ask?  Dr. Whitbeck’s submitted report never stated a reason for the referral for the MRI.  Ingenious!  Even better though is that Arbitrator McCorry rejected the Applicant’s bare assertion that the MRI was prescribed due to a flair up in the Applicant’s condition.  Arbitrator McCorry found that the Applicant could not support that position in her papers.

 

While the insurer escaped this time, the lesson is that it may not be so lucky next time.  Make sure you proofread your denial!

 

10/23/06          In the Matter of the Arbitration between the Applicant and Respondent

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

Insurer Has Success On One Year Rule.

Here is the Angle:  Arbitrator McCorry’s decision is a good example of when the one year rule applies.  Arbitrator McCorry’s decision carefully outlines what complaints were made immediately after the accident together with the type of treatment provided within a year of the accident.

 

The Analysis: The Applicant, a 36-year old female, was involved in a July 29, 2002, motor vehicle accident.  She complained of neck pain immediately after the accident.  The Applicant treated at a nearby hospital where she was diagnosed with whiplash.  The Applicant, for three years, treated only for the cervical spine.

 

In July 2005, three years after the accident, the Applicant complained of a severe increase in her low back down her left leg after undergoing cervical traction and physical therapy.

 

Arbitrator McCorry found that the Applicant did not receive treatment for her low back condition until three years after the accident.  Arbitrator McCorry noted that although there is no time limitation on submitting medical bills for treatment relating to the accident, it must be demonstrated that further medical expenses are related and ascertainable within one year from the date of the accident.  The Applicant did not meet that burden.

 

 

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.


10/30/06          McGowan, et al. vs. Progressive Preferred Insurance Company, et al.

Supreme Court of
Georgia

The court held that the enforcement of an appraisal provision in an insurance contract that resulted in a total-loss valuation greater than the amount initially determine by State Farm, and subsequent payment by State Farm of the higher amount, did not render moot the issue of alleged fraud, breach of contract and alleged conspiracy to undervalue the plaintiff’s total-loss claim.
Plaintiff brought suit against three insurance companies, alleging that the insurance companies conspired with CCC Information Services, Inc. to intentionally undervalue automobile property damage claims. While the plaintiff’s case was pending, the trial court ordered the enforcement of an appraisal provision in her State Farm insurance court, which resulted in a total-loss valuation that was greater than the amount initially determined by State Farm. State Farm paid the higher valuation and the trial court dismissed the fraud, breach-of-contract, and RICO claims, finding these issues were moot in light of the appraisal and the resulting higher payment. The Georgia Supreme Court reversed the ruling, finding that the appraisal clause at issue provides a method by which the insurer and insured can make a final determination regarding the actual case value of a totaled car when there is a dispute as to the car’s value. The clause did not provide a means of addressing broader issues such as an insurer’s potential liability for claims made in a lawsuit. The fraud, breach-of-contract and RICO claims involve more than just the actual cash value of the car, thus, the appraisal clause, which simply addresses the issue of value, cannot render these issues moot.

 

Submitted by: Richard Chappuis and Laura Kraemer (Voorhies & Labbe’)


10/26/06          Michelle Macola, et al. vs. Government Employees Insurance Company

Supreme Court of Florida

The court found that the tendering of policy limits by an insurer in response to the filing of a civil remedy by the insured that occurs after the initiation of a lawsuit against the insured but before the entry of an excess judgment does not preclude a common law bad faith cause of action by the insured and injured parties.
Plaintiffs brought a third-party bad faith claim against GEICO. Frances Quigley negligently caused an automobile accident that resulted in personal injuries and property damages. Settlement could not be reached and the plaintiffs filed suit. After suit had been filed, but before an excess judgment, Quigley’s representative filed a statutory Civil Remedy Notice of Insurer Violation with the Department of Insurance against GEICO, alleging a statutory violation by GEICO’s failure to settle for the policy limits when it had an opportunity to do so. GEICO then sent a settlement check in the amount of policy limits; however, plaintiff did not cash or deposit the check and the trial court subsequently rendered an excess judgment, including attorney fees. Thereafter, Quigley’s representative filed a third party bad faith suit against GEICO. The district court granted GEICO’s motion for summary judgment that the tender of the policy limits cured any statutory third-party bad faith. The Supreme Court held that while GEICO’s tender of the policy limits may be used by GEICO as evidence of its good faith (or conversely as further evidence of its bad faith), the tender of the policy limits after the filing of the civil remedy notice did not eliminate the underlying tort action, which gave rise to the common law third-party bad faith cause of action against the insurer.

 

Submitted by: Richard Chappuis and Laura Kraemer (Voorhies & Labbe’) –


10/26/06          Willis v. Swain

Hawaii Supreme Court

General Expression Of Willingness to Bargain In Certificate Policy Does Not Constitute An Offer Of Supplemental Coverage
Shilo Willis received from the Department of Human Services eligibility for basic motor vehicle insurance coverage at no cost in accordance with HRS §431:10C-407(b)(2). Willis enrolled in a “certificate policy” issued by First Insurance, effective from July 2, 1998 through July 2, 1999. Willis’ certificate policy did not include uninsured motorist (“UM”) coverage but stated “If you desire … [UM] … coverage …, contact an insurance agent to assist you in obtaining th[is] coverage upon payment of the appropriate premium.” On February 10, 1999, Willis was injured as a passenger in an uninsured vehicle owned and operated by Swain. At some point after the accident, Willis filed an application for benefits under the Hawaii Assigned Claim Plan which was assigned to First Insurance on August 11, 1999. First Insurance informed Willis it would grant her no benefits pursuant to the assigned claim because she was covered under her certificate policy on the date of the collision. Willis filed a complaint for damages against First Insurance arguing that there was no other bodily injury insurance for her to turn to and that the legislature intended for her to be covered under the assigned claim plan. First Interstate argued that certificate policies are not required to include UM coverage to comply with the code and Willis, by disregarding First Interstate’s “offer” of supplemental UM coverage, forewent her eligibility for assigned claims. The circuit court granted summary judgment in First Interstate’s favor. The Supreme Court vacated the circuit’s court decision and remanded the matter. The Supreme Court determined that because First Insurance did not demonstrate an applicable and identifiable alternative to Willis’ assigned claim, it was not entitled to judgment as a matter of law. The First Insurance certificate policy’s “general expression of willingness to bargain [did] not constitute an offer” of UM coverage to Willis.

 

Submitted by: Sedgwick, Detert, Moran & Arnold LLP (Bruce D. Celebrezze & Erin Meagher)


10/25/06          Kvaerner Metals v. Commercial Union Insurance

Supreme Court of Pennsylvania, Middle District

Claims Based on Faulty Workmanship do not Constitute Occurrence Under CGL Policies
Bethlehem Steel brought action against Kvaerner Metals asserting claims of breach of contract and breach of warranty in connection with contract under which Kvaerner agreed to design and construct a coke oven battery for Bethlehem. Kvaerner filed declaratory judgment action against National Union Fire Insurance Company after National Union disclaimed coverage, defense and indemnity for all allegations in Bethlehem's suit against Kvaerner based on conclusion that Bethlehem's claims did not fall within coverage provisions of two commercial general liability policies. After parties engaged in discovery, National Union filed motion for summary judgment, asserting that Bethlehem had not alleged "property damage" caused by an "occurrence", defined by policies as an accident, and even if Bethlehem alleged property damage caused by an occurrence, such damages were excluded under various "business risk/work product" exclusions in the policies. National Union appealed from Superior Court's order reversing trial court's order granting National Union's motion for summary judgment. In reversing Superior Court, Supreme Court found that National Union had no duty under its policies to defend or indemnify Kvaerner. Supreme Court held that the definition of "accident" required to establish an "occurrence" under the policies cannot be satisfied by claims based on faulty workmanship. Court concluded that such claims do not present the degree of fortuity contemplated by the ordinary definition of "accident" or its common judicial construction in this context, and stated that to hold otherwise would be to convert a policy for insurance into a performance bond.

Submitted by: Gregory L. Cochran (McKenna Storer)

 

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In the Matter of State Farm Mutual Automobile Insurance Company v. Scudero

 

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the appeal is from an order of the Supreme Court, Nassau County (Bucaria, J.), dated August 8, 2005, which granted the petition and permanently stayed arbitration.

ORDERED that the order is reversed, on the law, with costs, the petition is denied, and the proceeding is dismissed.

On August 13, 2004, Lauren Scudero served a notice of intent to arbitrate an uninsured motorist claim on State Farm Mutual Automobile Insurance Company (hereinafter State Farm). Almost six months later, State Farm commenced this proceeding for a permanent stay of arbitration on the ground that Scudero had previously made an identical demand to arbitrate a claim for uninsured motorist benefits, and State Farm was granted a permanent stay of arbitration based on the court's finding that the alleged offending vehicle was insured by New York Central Mutual Fire Insurance Company. The Supreme Court granted State Farm's petition for a permanent stay of arbitration, finding that it was barred by the doctrine of res judicata. We reverse.

A petition to stay arbitration must be brought within 20 days of service of a notice of intent to arbitrate (CPLR 7503[c]). "This limitation is strictly enforced and a court has no jurisdiction to entertain an untimely application" (Matter of Metropolitan Prop. and Liab. Ins. Co., v Hancock, 183 AD2d 831, 832). We reject State Farm's contention that the 20-day limitation [*2]period does not apply when the basis for the stay is res judicata (see Matter of Allcity Ins. Co. [Vitucci], 151 AD2d 430, 431, affd 74 NY2d 879, 880). Accordingly, the proceeding was untimely and should have been dismissed.

In light of our determination, it is unnecessary to reach the merits of whether the arbitration was barred by the doctrine of res judicata.
CRANE, J.P., RITTER, RIVERA and LUNN, JJ., concur.

Schacker v. County of Orange

 

 

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Orange County (Slobod, J.), dated November 4, 2005, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent a Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In support of their motion, the defendants relied upon, among other things, the affidavit of Dr. Robert Hendler, an orthopedist, who examined the plaintiff on April 21, 2003. Dr. Hendler, in discussing range of motion testing performed on the plaintiff on that date, merely stated that such testing revealed "full range of motion" of the cervical and lumbar spine, as well as the plaintiff's shoulders. Dr. Hendler failed to set forth the objective testing he performed in order to come to the conclusion that the plaintiff did not sustain any limitations in range of motion as a result of the subject accident (see Ilardo v New York City Tr. Auth., 28 AD3d 610, 611; Kelly v Rehfeld, 26 AD3d 469, 470; Nembhard v Delatorre, 16 AD3d 390, 391; Black v Robinson, 305 AD2d 438, 439). Since the [*2]defendants failed to establish their prima facie entitlement to judgment as a matter of law, we need not address the sufficiency of the plaintiff's opposition papers (see Nembhard v Delatorre, supra; Coscia v 938 Trading Corp., 283 AD2d 538).
FLORIO, J.P., CRANE, LUCIANO, SPOLZINO and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Brown v. Motor Vehicle Accident Indemnification Corp

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendant appeals from an order of the Supreme Court, Kings County (Kramer, J.), dated August 5, 2005, which denied its motion for summary judgment dismissing the first cause of action on behalf of the plaintiff Tiffany Brown, as well as the derivative cause of action on behalf of the plaintiff Vanessa Brown with respect to Tiffany Brown, on the ground that the plaintiff Tiffany Brown did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

In support of its motion for summary judgment dismissing the first cause of action on behalf of the infant plaintiff Tiffany Brown, as well as the derivative cause of action of the plaintiff Vanessa Brown with respect to Tiffany Brown, the defendant relied upon the medical records and reports concerning Tiffany Brown prepared by her treating physicians. Those reports and records failed to establish, as a matter of law, that Tiffany Brown did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Indeed, one of those reports noted the existence of limitations in the range of motion of Tiffany Brown's knees without sufficient quantification or qualification to establish that the limitation of motion was not significant. Since the defendant's assertions were thus belied by the documentary evidence submitted in support of the motion, the [*2]Supreme Court correctly denied the motion (see Smith v Delcore, 29 AD3d 890; Sano v Gorelik, 24 AD3d 747; Kaminsky v Waldner, 19 AD3d 370; Spuhler v Khan, 14 AD3d 693; Omar v Bello, 13 AD3d 430; Scotti v Boutureira, 8 AD3d 652; see also Toure v Avis Rent a Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Willis v New York City Tr. Auth., 14 AD3d 696). Since the defendant failed to meet its prima facie burden, we need not consider the sufficiency of the papers submitted in opposition to the motion (see Coscia v 938 Trading Corp., 283 AD2d 538).
FLORIO, J.P., CRANE, LUCIANO, SPOLZINO and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Colon v. Montemurro

 

Order, Supreme Court, Bronx County (Alexander W. Hunter, Jr., J.), entered October 21, 2005, which granted defendant's motion to the extent of amending an earlier judgment by reducing the award for past lost wages from $20,000 to $12,000, unanimously affirmed, without costs.

In this personal injury action arising out of an automobile accident, the parties stipulated that plaintiff suffered $8,000 in lost wages that she would have earned during an absence of two months from work over the course of the three-year period immediately following the accident. Basic economic loss may not be recovered in a plenary action by one covered person against another covered person (Insurance Law § 5104[a]). Basic economic loss means up to $50,000 per person for, inter alia, loss of earnings of no more than $2,000 per month for not more than three years from the date of the accident (§ 5102[a][2]). Accordingly, plaintiff, a covered person, is only entitled to recover, in a plenary action against another covered person, lost earnings that exceed the basic economic loss threshold (see Canfield v Beach, 305 AD2d 440 [2003]). Since plaintiff's lost earnings for the three-year period did not reach the $50,000 threshold, she cannot recover any of that amount in this plenary action.

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

.

Eagle Insurance Company v. Lucia

 

 

Order, Supreme Court, Bronx County (George D. Salerno, J.), entered on or about February 2, 2005, which vacated a prior order denying the petition to stay arbitration and granted the petition, unanimously modified, on the law, to vacate the granting of the petition, and the matter remanded for a new framed issue hearing to determine whether proposed additional respondent Tatyana Nusenbaum gave express or implied consent to the operation of her motor vehicle by intervenor-respondent A.L. Caudrado, 3rd, so as to render Nusenbaum vicariously liable for Cuadrado's alleged negligent operation of the vehicle under Vehicle & Traffic Law § 388, and otherwise affirmed, without costs.

On December 11, 2001, a collision occurred between a car operated by respondent Joseph Lucia and a car operated by intervenor-respondent A. L. Caudrado, 3rd. Lucia, who was injured in the accident, made a claim for uninsured motorist benefits under the policy insuring the car he had been driving, issued by petitioner Eagle Insurance Company. Eagle commenced this proceeding to stay arbitration of Lucia's claim, contending that the car driven by Cuadrado, which was owned by proposed additional respondent Tatyana Nusenbaum, had insurance. Nusenbaum and her insurer then appeared in this proceeding, contending that, because Cuadrado had been driving Nusenbaum's car without Nusenbaum's knowledge or consent, Nusenbaum [*2]could not be held liable for Cuadrado's allegedly negligent driving, and Lucia was not entitled to any coverage under her policy.

At the direction of the court, a framed issue hearing was held to determine whether Nusenbaum was subject to any liability for damages arising from Cuadrado's use of her vehicle in the subject accident. The only witnesses who testified at the hearing were Nusenbaum and her teenaged daughter, Anna. Nusenbaum testified that, on the day of the accident, she had given Anna permission to use the car to go to a play rehearsal at a high school, but had specifically told Anna that she was not to allow anyone else to drive the car. Anna testified that she understood that her mother was allowing her to use the car on the condition that she not let anyone else drive it. Anna further testified that she had given the car keys to a friend, Isabel Santiago, not to drive it, but so that Isabel (whom Anna had driven to the school) could retrieve some books and listen to music in the car. Later that day, the car was involved in the accident while being driven by Isabel's boyfriend, Cuadrado. Isabel was a passenger in the car when the accident occurred. Based on the evidence received at the framed issue hearing, the court rendered a decision, entered May 11, 2004, holding that, because neither Nusenbaum nor Anna had consented to Cuadrado's use of the car, "the Nusenbaum's [sic] are exonerated from any liability arising from the use of the Nusenbaum vehicle by [Cuadrado]."

In August 2004, Cuadrado (who apparently had not previously been made a party to this proceeding) appeared and moved to vacate the court's May 2004 order and to hold a new framed issue hearing on the issue of whether Nusenbaum and her insurer were subject to liability in this matter. In support of the application, Cuadrado submitted affidavits by himself, Isabel Santiago, and two other friends, which asserted that Anna Nusenbaum had given Cuadrado permission to drive the subject automobile on the day of the accident, and that she had given Cuadrado permission to drive the car on prior occasions. Lucia, the driver of the other vehicle, supported Cuadrado's application. Nusenbaum and her insurer opposed, arguing that, whether or not Anna Nusenbaum had consented to Cuadrado's operation of the car, it was uncontroverted that Nusenbaum herself, the sole owner of the car, had instructed her daughter not to permit others to drive it.

In the order appealed from, the motion court granted Cuadrado's request to vacate its May 2004 order. Instead of directing that a new framed issue hearing be held, however, the court went beyond the relief Cuadrado requested and found that "the Nusenbaum vehicle was driven on the day of the accident with the owner's permission." On this basis, the court granted the petition to stay arbitration. We now modify to vacate the granting of the petition, and to remand for a new framed issue hearing.

It is undisputed that Nusenbaum and her insurer can be held to account for Cuadrado's negligent operation of Nusenbaum's car only if it is found that Nusenbaum, in entrusting the car to her daughter Anna, did not instruct Anna not to permit others to drive the vehicle. If Nusenbaum did not give such instructions, and instead placed the car under Anna's unrestricted control, Nusenbaum's implied consent to the use of the vehicle may be found to extend to any third person whom Anna allowed to drive it (see Bernard v Mumuni, 22 AD3d 186, 188-189 [2005], affd 6 NY3d 881 [2006], and cases there cited). We acknowledge, of course, that the testimony by Nusenbaum and Anna that Nusenbaum told Anna not to let anyone else drive the car is not specifically contradicted by the affidavits in support of Cuadrado's application. Contrary to Nusenbaum's contentions, however, the lack of evidence to contradict such testimony is not the end of the matter. [*3]

The Court of Appeals has recently reaffirmed the rule that, if evidence negating consent to the operation of a vehicle "may reasonably be disregarded" by the factfinder "because of improbability, interest of the witnesses or other weakness," the determination of the "weight [of such evidence] lies with the [factfinder]" (Country-Wide Ins. Co. v Natl. R.R. Passenger Corp., 6 NY3d 172, 177 [2006], quoting St. Andrassy v Mooney, 262 NY 368, 372 [1933]). Thus, "[w]here the disavowals [of consent] are arguably suspect, as where there is evidence suggesting implausibility, collusion or implied permission, the issue of consent should go to a [factfinder]" (Country-Wide, 6 NY3d at 178). Here, the obviously self-interested testimony by Nusenbaum and Anna that Nusenbaum told her daughter not to let others drive the car plainly raises credibility issues that should be resolved in factfinding proceedings (see Schrader v Carney, 180 AD2d 200, 210 [1992]). Thus, the motion court was correct to the extent it found that credibility of the Nusenbaums' testimony would have to be weighed against the testimony of Cuadrado, Santiago and two other students that Anna Nusenbaum had a practice of giving Cuadrado permission to drive the car in question.

Although the motion court was correct in determining that the Nusenbaums' testimony does not negate implied consent as a matter of law, the court erred in deciding the issue on a paper record, rather than simply granting Cuadrado's request to hold a new framed issue hearing at which he and other witnesses could testify. In this regard, we note that Nusenbaum and her insurer are entitled to an opportunity to test the credibility of Cuadrado and the other student witnesses through cross-examination. We also note that Cuadrado evidently was not a party to this proceeding when the court rendered its May 2004 order, and that order was therefore not binding on him. Finally, that Cuadrado may have defaulted in certain of the underlying personal injury actions does not affect his ability to litigate the coverage issues raised in this proceeding.

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

ENTERED: OCTOBER 31, 2006

CLERK

National Abatement Corp. v. National Union Fire Insurance

 

Order, Supreme Court, New York County (Jane S. Solomon, J.), entered on or about April 24, 2006, which, upon reargument, granted defendant insurer's motion for summary judgment and declared that plaintiffs are not entitled to defense and indemnification in an underlying personal injury action, unanimously affirmed, with costs.

There is no need to engage in conflicts of laws analysis absent a conflict between the laws of New York and Pennsylvania with respect to the applicability of basic tenets of contract interpretation in determining whether plaintiffs are covered under the additional insured endorsement (see Matter of Allstate Ins. Co. [Stolarz—N.J. Mfrs. Ins. Co.], 81 NY2d 219, 223 [1993]; see e.g. Ehrlich v Hambrecht, 19 AD3d 259 [2005]). The party claiming insurance coverage bears the burden of proving  entitlement (Kidalso Gas Corp. v Lancer Ins. Co., 21 AD3d 779, 780-781 [2005]), and is not entitled to coverage if not named as an insured or an additional insured on the face of the policy (Tribeca Broadway Assoc. v Mount Vernon Fire Ins. Co., 5 AD3d 198, 200 [2004]). Here, there is additional insured coverage only if such coverage is required by a "written contract," but none existed at the time of the accident underlying this personal injury action. Contrary to plaintiffs' understanding, the fact that an unsigned contract may be enforceable if there is objective evidence the parties intended to be bound or the eventual writing was intended to be valid retroactively (see e.g. God's Battalion of Prayer Pentecostal Church, Inc. v Miele Assoc., LLP, 6 NY3d 371, 374 [2006]; Hartman v Baker, 2000 Pa Super 140, 766 A2d 347, 351, petition to appeal denied 564 Pa 712 [2000]) has no bearing on whether there is a "written contract" pursuant to the policy endorsement. Interpreting the insurance contract under the same principles as any ordinary business contract, we find the subject provision unambiguous, and reasonably susceptible to only one meaning (see Greenfield v Philles Records, 98 NY2d 562, 569-570 [2002]), leaving no occasion to consider parol evidence of the parties' course of conduct (239 E. 79th Owners Corp. v Lamb 79 & 2 Corp., 30 AD3d 167 [2006]).

An additional insured endorsement is an addition, rather than a limitation, of coverage (Consolidated Edison Co. of N.Y. v Hartford Ins. Co., 203 AD2d 83, 84 [1994]). If the claim falls outside the policy's coverage, as does plaintiffs' herein, the insurer is not required to [*2]disclaim (Zappone v Home Ins. Co., 55 NY2d 131 [1982]; National Union Fire Ins. Co. of Pittsburgh, Pa. v State Ins. Fund, 18 AD3d 202, 204 [2005]).

In view of the foregoing, we need not address plaintiffs' other contentions, which are, in any event, unavailing.

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

ENTERED: OCTOBER 31, 2006

CLERK

Johnson v. Cauthen

 

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals, as limited by his brief, from so much of an order of the Supreme Court, Kings County (Lewis, J.), dated July 22, 2005, as denied that branch of his motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Esther Johnson on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

The defendant failed to carry his burden of establishing, prima facie, that the plaintiff Esther Johnson 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). Although the defendant's examining neurologist asserted, in an affirmed medical report, that Johnson had a "full" range of motion in the cervical and lumbar regions of her spine and the defendant's examining orthopedist asserted, in an affirmed medical report, that Johnson had "full" range of motion in the cervical region of her spine, the defendant's proof was insufficient because neither physician set forth the basis for those conclusions (see Nembhard v Delatorre, 16 AD3d 390; Black v Robinson, 305 AD2d 438). Since the defendant failed to establish his prima facie entitlement to judgment as a matter of law, it is unnecessary to consider whether Johnson's opposition papers were sufficient to raise a triable issue of fact (see Nembhard v Delatorre, supra; [*2]Coscia v 938 Trading Corp., 283 AD2d 538).
SCHMIDT, J.P., RITTER, MASTRO, FISHER and DILLON, JJ., concur.

 

Khan v. Finchler


 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Nassau County (Galasso, J.), dated August 1, 2005, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant established, prima facie, that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Giraldo v Mandanici, 24 AD3d 419), and the plaintiffs, in opposition, failed to raise a triable issue of fact.

The defendant's orthopedist noted in an affirmed medical report that the magnetic resonance imaging films of the injured plaintiff's back "show[ed] preexisting degenerative disc disease" in the lumbar region and "age-related changes" in the cervical region. The records of the injured plaintiff's treating chiropractor included an X-ray examination report stating that there were [*2]"degenerative changes" in the cervical and lumbar regions of the injured plaintiff's spine. The affirmations of the injured plaintiff's physicians failed to address the findings of degeneration and age-related changes (see Tudisco v James, 28 AD3d 536; Allyn v Hanley, 2 AD3d 470; Giraldo v Mandanici, supra; Lorthe v Adeyeye, 306 AD2d 252). Moreover, the plaintiffs improperly relied upon the unsworn submissions of the injured plaintiff's treating neurologist (see Pagano v Kingbury, 182 AD2d 268).

Furthermore, the plaintiffs failed to proffer competent medical evidence that an injury caused the injured plaintiff to be unable to perform substantially all of his daily activities for not less than 90 of the first 180 days subsequent to the accident (see Sainte-Aime v Ho, 274 AD2d 569).
MILLER, J.P., SANTUCCI, GOLDSTEIN, SKELOS and LUNN, JJ., concur.

 

 

 

Progressive Insurance Companies v. House

 

 Peters, J.

Appeal from an order of the Supreme Court (Mulvey, J.), entered December 28, 2005 in Tompkins County, which, inter alia, denied petitioner's application pursuant to CPLR 7503 to stay arbitration between the parties.

On February 27, 2005, respondent Amanda C. House, an infant, was seriously injured in a single-vehicle accident while a passenger in a vehicle operated by Joshua Benjamin. At the time of the accident, House's mother, respondent Antoinette L. House, maintained an insurance policy with petitioner which provided supplemental uninsured/underinsured motorist (hereianfter SUM) coverage. As a condition precedent to such coverage, written notice of a claim had to be given "[a]s soon as practicable"; House's mother did not provide such notice to petitioner until July 2005. Shortly thereafter, petitioner disclaimed coverage due to the alleged untimely notice. Respondents filed for SUM arbitration and petitioner commenced this proceeding, pursuant to CPLR article 75, for a permanent stay of arbitration. Supreme Court denied the petition and petitioner appeals.

It is settled that the notice provisions of insurance contracts, including those for underinsurance coverage, are conditions precedent before liability can be imposed (see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 492-493 [1999]). However, unlike other insurance claims where the occurrence of a single event could trigger the ripening of a claim from which the timeliness of the notice could be measured, a claim for underinsurance benefits must be assessed on a case-by-case basis (see id. at 493). It is for this reason that the Court of Appeals has stated that "[i]n interpreting the phrase 'as soon as practicable' in the underinsurance context we hold that the insured must give notice with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured" (id. at 495 [footnote omitted]; see Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 474 [2005]; Matter of Nationwide Mut. Ins. Co. [Mackey], 25 AD3d 905, 906 [2006]).

Working from this standard, we find respondents to have provided petitioner with reasonably prompt notice of their claim. House remained hospitalized from the date of the accident through March 3, 2005. A few days after the accident, her mother was contacted by the driver's carrier, Farmer's Insurance Company, who later informed her that it would be responsible for, among other things, her daughter's medical bills and lost wages. Neither House nor her mother met with their own counsel until April 2, 2005 and it was not until May 16, 2005 that counsel learned that the liability limits of the Benjamin policy were "50/100/50." Approximately two months from their receipt of this information, and approximately 4½; months after the accident, respondents sent petitioner the requisite written notice of their claim for SUM benefits. Due to the promptness with which respondents filed for SUM benefits after learning of the liability limits on the Benjamin policy (compare Matter of Nationwide Ins. Co. v Mancuso, supra at 497, with Brown v Travelers Ins. Co., 4 AD3d 835, 836-837 [2004]), we find their case unlike Rekemeyer v State Farm Mut. Auto. Ins. Co. (supra) and agree that the petition to stay arbitration was appropriately denied.

Cardona, P.J., Mercure, Carpinello and Rose, JJ., concur.

ORDERED that the order is affirmed, without costs.   

Herron v. Essex Insurance Company

 

 
Mercure, J.P.

Cross appeals from an order of the Supreme Court (Stein, J.), entered April 22, 2005 in Greene County, which, upon reargument, granted a cross motion by defendant Essex Insurance Company for summary judgment dismissing the complaint against it and partially denied a motion by defendant High Peak Agency, Inc. to dismiss the complaint.

In November 2001, plaintiffs and defendant Grand Villa Resort, Inc. entered into a lease agreement permitting Grand Villa to operate a resort on plaintiffs' property in Greene County. As relevant here, the lease agreement required Grand Villa to obtain fire insurance and to list [*2]plaintiffs as "mortgage insured" in the policy. Grand Villa sought such insurance through defendant High Peak Agency, Inc., a general insurance agency that had allegedly served plaintiffs for many years and that plaintiffs contacted regarding Grand Villa's insurance needs. As a result, defendant Essex Insurance Company was issued a policy to Grand Villa. Although Grand Villa listed plaintiffs as owners of the property and "Lender Loss Payee[s]" on its application, the policy designated plaintiffs as mortgagees and "loss payee[s]" in the property or first-party section of the policy. Essex concedes that the distinction between loss payee and lender loss payee is significant because a lender loss payee is not subject to an insurer's defenses against an insured (see Wometco Home Theatre v Lumbermens Mut. Cas. Co., 97 AD2d 715, 716 [1983], affd on mem below 62 NY2d 614 [1984]).

In January 2002, one of the insured buildings was destroyed by fire. Grand Villa refused to cooperate with Essex in the investigation of the fire, thereby breaching an obligation under the policy to cooperate and provide testimony under oath during claim investigations. Essex denied plaintiffs' claim for damages to the building and, thereafter, plaintiffs commenced this action against Essex, Grand Villa and High Peak. High Peak and Essex answered, asserting cross claims against each other. Plaintiffs subsequently moved for summary judgment directing Essex to turn over the insurance proceeds and seeking reformation of the policy to reflect their proper status. Essex cross-moved for summary judgment dismissing the complaint; High Peak sought dismissal of the complaint, along with the cross claim asserted by Essex. Supreme Court denied plaintiffs' motion and, upon a motion for reargument, granted Essex summary judgment dismissing the complaint. High Peak's motion was denied in part, however, to the extent that the complaint could be construed as asserting a cause of action arising out of High Peak's alleged special relationship with plaintiffs requiring it to obtain appropriate coverage for them. Plaintiffs and High Peak cross-appeal, and we now affirm.

Contrary to their argument before Supreme Court that they should have been listed in the policy as "lender loss payees," plaintiffs now rely on a theory of mutual mistake in asserting that the insurance policy should be reformed to state their interest as owners instead of mortgagees, loss payees or lender loss payees. Inasmuch as plaintiffs' argument that they are entitled to reformation naming them as owners is raised for the first time on appeal, it is not preserved for our review and we decline to review it (see Matter of Radio Eng'g Indus. v Denton, 30 AD3d 672, 673 [2006]; JP Morgan Chase Bank v Tecl, 24 AD3d 1001, 1003 [2005]). Moreover, Supreme Court properly determined that plaintiffs are not entitled to reformation of the policy to list them as lender loss payees.

"A party seeking reformation must establish, by clear and convincing evidence, that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud" (Leavitt-Berner Tanning Corp. v American Home Assur. Co., 129 AD2d 199, 201-202 [1987], lv denied 70 NY2d 609 [1987] [citation omitted]; see Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 218-219 [1978]). In the event "that an innocent mistake occurred with respect to a named insured and it is evident that the parties intended to cover the risk, the error may be deemed mutual for purposes of reformation even though the insurer was not aware of the error" (Cheperuk v Liberty Mut. Fire Ins. Co., 263 AD2d 748, 749 [1999]). Here, plaintiffs did not qualify for designation as "lender loss payees" because they were not lenders. Inasmuch as plaintiffs failed to establish the existence of a mutual mistake on behalf of the contracting parties Grand Villa and Essex or that Essex intended to insure the risk, they are not entitled to reformation of the policy (see Leavitt-Berner Tanning Corp. v American Home Assur. Co., surpa at 202; Ogdensburg Bldg. Supply v Lumber Mut. Ins. Co., 102 AD2d 960, 961 [1984]; cf. [*3]Cheperuk v Liberty Mut. Fire Ins. Co., supra at 749-750).

Further, contrary to High Peak's argument on its cross appeal, Supreme Court did not improperly search the record and grant summary judgment in favor of a nonmoving party on a cause of action that was not the subject of the motions before the court (cf. Dunham v Hilco Constr. Co., 89 NY2d 425, 429-430 [1996]). Instead, the court evidently construed High Peak's motion as seeking dismissal of the complaint for failure to state a cause of action (see CPLR 3211 [a] [7]; [e]). In our view, because the facts alleged in the complaint fit within a cognizable legal theory that High Peak breached a continuing duty, arising out of a special relationship with plaintiffs, to advise them to obtain additional coverage (see Murphy v Kuhn, 90 NY2d 266, 272-273 [1997]; Curanovic v New York Cent. Mut. Fire Ins. Co., 307 AD2d 435, 438 [2003] High Peak failed to demonstrate prima facie entitlement to dismissal of the complaint and Supreme Court properly denied its motion to the extent that the complaint asserts a cause of action arising out of High Peak's alleged special relationship with plaintiffs (see generally Leon v Martinez, 84 NY2d 83, 87-88 [1994]).

Crew III, Carpinello, Rose and Kane, JJ., concur.

ORDERED that the order is affirmed, without costs.

 

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