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Coverage Pointers - Volume X, No. 26

Dear Coverage Pointers Subscribers:

Greetings from Niagara-on-the-Lake, Ontario.

When winter melts into spring, the robins return, the leaves return to the trees and there is corresponding spiritual and ecological rebirth.

When spring eases into summer, there is closet cleaning at the appellate courthouses through the state, as the courts release their few remaining unresolved decisions before taking the long summer rest.

Last issue, we reported on the Court of Appeals decision in Rivera, a SUM case dealing with settlements and offsets where there are settlements with other persons in the car.  This week, we have two more Court of Appeals coverage decisions: the Bemiss decision relating to the "consent before settlement" provisions of the SUM policy and the Kassis ruling relating to "additional insured by contract" coverage.  Both are worth reading and both are worth understanding.

Party Time

It's a time for celebration.

Celebration One

This issue marks the 26th and final issue of Volume 10.  We have now finished a decade of service to our readers and we so very pleased to have some 1800 dedicated members of our Coverage Pointers family.   There are a few pretenders out there but we suggest you still can't find a more comprehensive review of New York insurance coverage law for any price.  We've reviewed ever New York appellate case involving insurance coverage for the past 10 years, evaluating trends, predicting (sometimes incorrectly) the future course of appellate decisions and always sprinkling in counseling points, editor's notes and analysis designed to help you, our readers, learn something to help you in your daily practice.  We hope we've been successful and surely, we've had a good deal of fun along the way.

My special thanks to our great editorial team - Audrey ("Audrey's Angles") Seeley, Steve ("Property and Potpourri") Peiper, Margo ("Musings on No Fault") Lagueras, Earl (Earl's Pearls) Cantwell, the Federation of Defense & Corporate Counsel for the contribution of "Across Borders") submissions and our occasional contributor Scott ("The Duke of Lead") Duquin.

Celebration Two

We are delighted to announce that we've promoted two of our senior associates to the rank of partner, Audrey Seeley (the undeniable Queen of No Fault) and Shawn Martin.

  • AUDREY A. SEELEY focuses her practice in insurance coverage, No-Fault coverage, municipal and environmental counseling, and governmental liability and is the Village Attorney for the Village of Springville.  Ms. Seeley routinely counsels insurers on personal and commercial lines insurance policies. She handles declaratory judgment actions in State and Federal Courts across New York State and monitors out-of-state of state litigation for insurance clients. Audrey Seeley handles No-Fault arbitration and litigation, as well as loss transfer and special arbitrations. Ms. Seeley and is the leader of our No Fault Practice Group.  She is also very active in the DRI Insurance Law Committee.

  • SHAWN P. MARTIN is an experienced trial attorney who focuses his practice in civil litigation matters including municipal liability, municipal counseling, personal injury, commercial transportation, premises liability and products liability. In his role as a trial attorney, he has handled all aspects of litigation from discovery through trial and appeal. Shawn Martin also serves as the Town Attorney for the Town of West Seneca wherein he handles day to day legal matters for the town, including but not limited to planning and zoning issues. He serves Mr. Martin is Chair of the Municipal Law Committee of the Torts, Insurance and Compensation Law Section of the New York State Bar Association.  

Audrey's Message: 

There are dates that stick in your mind forever - your birthday, your wedding date (okay maybe not for all men), or your child's birthday.  June 16, 2009.  That date will stick in my mind.  Why?  It is the date that I was named a partner at Hurwitz & Fine, P.C.!   I also extend congratulations to Shawn P. Martin, Esq. of our firm who was also named partner at the same time.  It was a great day and it is a great feeling after years of hard work and dedication.  I am very excited about this accomplishment in my career and excited to be able to share it with you.

Audrey

[email protected]

Editor's Note: I beat you to it, Audrey.  I told them first and watch those sexist comments.  You're a partner now and they are actionable!

One Hundred Years Ago Today:

 

New York Times

June 26, 1909

Page 5, Column 4

AUTOIST'S ODD REPLY TO SUIT.

Says Man He Ran Down Damaged His

Car $150 Worth


Gutmann Rubin of 857 Madison Street, who was run down on March 5 at Twelfth Street and Fourth Avenue by an automobile owned by A. H. Flint, a broker of 15 Broad Street, and who sued the broker for $500 damages for injuries sustained, received a shock yesterday when Stuart M. Kohn of 35 Wall Street, counsel for Mr. Flint, filed in the Madison Street Municipal Court a counter-claim for $150 against the plaintiff.

In his claim the lawyer alleges Rubin "negligently and carelessly kicked the body of said automobile, indenting thereby the metal framework and injuring the enamel and paint thereof to the damage of this defendant in the sum of $150 and that said Injuries were occasioned solely by the negligence of the plaintiff without any fault or negligence on the part of the defendant."

The case will come up for trial in a few weeks, and it will be for the jury to decide whether the man who had received injuries which necessitated his being taken to St. Vincent's Hospital for a day has sufficient strength in his legs to inflict $150 damages on the automobile that ran him down. Automobile enthusiasts will watch the outcome with interest.

Man Bites Dog?  Man Kicks Car.

From Steve Peiper, Patriarch of Property:

 An interesting decision from the Second Department this week.  New York Central Mutual brought a subrogation claim against a tortfeasor whom NYCM's insured had already released from future liability.  Although the Release extinguished the insured's rights to contribution under the General Obligations Law, the Court ruled that NYCM's rights to subrogate, even though derivative of the insured's rights, were not affected.  In addition, we also offer an interesting decision permitting a carrier to recover a loss from its agent as a result of a breach of the agency agreement.  Finally, be sure to check out the First Department's ruling in NYP Holdings v. McClier which addresses the rarely seen volunteer doctrine in the context of another subrogation dispute.  Best wishes until next time. 

Steve Peiper

[email protected]

In this Week's Issue:

 

KOHANE'S COVERAGE CORNER

Dan D. Kohane

[email protected]

Two from the Court of Appeals:

  • Court of Appeals Decides Second Underinsured Coverage Case in a Week.  Consent to Settle Secured with One Tortfeasor Does Not Give Policyholder the Right to Destroy Carrier's Subrogation Rights with Another
  • Where Tenant is to Provide Coverage for Mutual Benefit of Landlord and Tenant, that is a Requirement that Landlord Enjoy Additional Insured Protection Under Tenant's Policy

From the Appellate Division:

  • Assault Exclusion Removes Coverage from Bar for Glass Tossing Incident
  • Two Month Delay by Insured in Reporting Claim is Inexcusable
  • Certificate of Insurance Redux; It Confers No Benefits
  • Where Co-Insurer Knows of Claim at Inception, it is Hard-Pressed to Argue it was Prejudiced when it Refuses to Defend or Indemnify and Carrier that has Accepted Claim is Later Seeking Contribution
  • Oral Promise to Provide Additional Insured Status Does Not Satisfy Policy Requirement that Status Must be Promised in Writing
  • In Non-Construction Cases, Indemnity Agreements Can Require Protection Even for Owner's Negligence; So Can Insurance Policy
  • How Broad is the Duty to Defend?  It is Not Broad Enough to Extend to Separate Litigation Commenced by an Insured where the Responsive Pleadings Allege an Offset
  • Oops.  There was $25,000 available in SUM Coverage, Not $750,000
  • Proof Sufficient of Physical Contact in Hit-and-Run
  • Question of Fact as to When the Insurer First Received Notice; While Proof of Mailing Usually Assumes Delivery, it Can be Rebutted
  • Sworn Proof of Claim Serves as Equivalent of "Notice of Claim" in Application for Uninsured Motorists Benefits, in the Absence of Prejudice

MARGO'S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT

Margo M. Lagueras

[email protected]

  • Missing More Than 90 Days of Work is Not Determinative Under the 90/180-Day Category
  • MRI Findings Shortly after Accident Do Not Serve to Rebut Recent Findings that Injury is Resolved
  • Serious Injury Threshold Must be Met, and Negligence in the Use or Operation Must Cause the Injury, Even Where the Vehicle is Not the Proximate Cause of the Injury
  • Affidavit that Ignores Claim of Degenerative Disease and Prior Accident with Virtually Identical Injuries Is Speculative
  • Cessation in Treatment after Reaching "Maximum Medical Improvement" Explains Gap in Treatment
  • Statement of What Constitutes Normal Range-of-Motion Set Forth by Defendant's Expert May be Relied on by Plaintiff's Expert
  • In Bifurcated Trials, Prejudgment Interest Runs from the Date Liability is Fixed, Even if Damages are Later Decided by Arbitrator
  • Conclusion in Affidavit That Addresses Prior Accident and Injuries is Not Merely Speculative
  • Reports Did Not Relate Findings to 90/180-Day Category and therefore Failed to Meet Burden

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]  

Arbitration

  • Treating Physician's Testimony Helps Case
  • Report Interpreted as Concluding Maximum Medical Improvement = Invalid Defense
  • Bilateral Hip Treatment Not Causally Related to Accident

Litigation

  • Priority of Payment is Not Defense in Provider Suit
  • Plaintiff's Failure to Properly Rebut Conclusions in IME Fatal

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

  • Broker's Breach of Agency Agreement with Carrier Makes It Responsible for Carrier's Loss
  • Carrier That Was Ordered to Pay Damages Beyond the Scope of the Policy Is Entitled to Restitution from the Recovering Insured
  • Insured's Settlement and Release of Co-Tortfeasor DOES NOT Bar Carrier's Subsequent Subrogation Action
  • Question of Fact Regarding Whether Settling Carrier's Subrogation Rights Were Barred by Application of the Volunteer Doctrine 

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

Kinney v. Lisk:  A Claim without a Remedy

New York Law May Not Penalize a Contractor's Failure to Procure Insurance

That's all the news from our house to yours.  Thanks for your loyalty during the past decade.  We look forward to many years to come.

Dan

 

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

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]
Michael F. Perley
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader

[email protected]
Tasha Dandridge-Richburg
Margo M. Lagueras

APPELLATE TEAM
Jody E. Briandi, Team Leader

[email protected]
Scott M. Duquin

Index to Special Columns

Kohane’s Coverage Corner
Margo’s Musings on “Serious Injury”
 Audrey’s Angles on No Fault
Peiper on Property and Potpourri
Earl’s Pearls
Across Borders

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

6/25/09            Matter of Central Insurance Company v. Bemiss
New York State Court of Appeals
Court of Appeals Decides Second Underinsured Coverage Case in a Week.  Consent to Settle Secured with One Tortfeasor Does Not Give Policyholder the Right to Destroy Carrier’s Subrogation Rights with Another
Accepting $2,500 from a minor tortfeasor leads to a loss of up to $72,500 in SUM benefits.

In April 2005, Bemiss was involved in a chain-reaction auto collision in Albany. Her vehicle, the third in line, was struck twice in the rear.  First it was struck by Kati’s car, and then again when Kati’s car was struck by John’s car, pushing Kati’s car into Bemiss again.
Kati had a $25,000 in limits through GEICO, John had a $25,000 policy with Progressive.  Bemiss had a $100,000 in liability limits through Central, along with a SUM (underinsured) policy with limits of $100,000.
Since Bemiss’ liability limits exceeded GEICO’s and Progressive’s her SUM coverage triggered.  
Following the “consent” provisions in the SUM policy, Bemiss's attorney informed Central that GEICO, Pati’s insurance carrier, had tendered the policy limits of $25,000, giving Central 30 days to respond.  Central did not respond and therefore Bemiss was free to settle with Kati and release her.  Later, Bemiss agreed to settle with John and Progressive for $2,500 less than the $25,000 policy limits and never notified Central of her intent to do so. A release was issued to the two defendants for the total of $27,500.
The release did not preserve Central's subrogation rights. Bemiss then served Central with a request for underinsured arbitration, seeking $72,500 in SUM benefits ($100,000 - $27,500). Central denied coverage and moved to stay, claiming that Bemiss had violated policy conditions by "settl[ing] with both responsible parties [i.e., Kowalczyk and Genski] in this loss, and in signing the release, waived [Central's] subrogation rights."
Central maintained that Bemiss was not entitled to SUM benefits because she did not protect its subrogation rights, give prior written notice of her intent to settle, or obtain its written consent before settling with John and Progressive. Bemiss argued that the policy read that where there are multiple tortfeasors, and one of those tortfeasors offers the maximum coverage under its policy, then written notice must be given of the policy tender before execution of a release. The policy [does not contain] any language that requires the insured to provide written notice for a partial tender from a second tortfeasor.  Bemiss argued that "where multiple tortfeasors are involved and the insured has permissibly settled with one tortfeasor for his/her policy limits, . . . the insured has no right under Regulation 35-D to be notified of and withhold consent to a settlement.”
The court held that the settlement with Progressive destroyed Central’s subrogation rights against John and Progressive and thus the insured had violated the obligation under the policy to protect the carrier’s subrogation rights.  Instead, Bemiss should have prosecuted her SUM claim before she gave John a release.
Editor’s Note:  A tip of the hat to Jonathan Dachs who predicted this outcome (and with whom I respectfully disagreed).  This is yet another trap for the unwary practitioner.  Had Bemiss prosecuted its SUM case prior to settling with John, Bemiss would have been able to do so.


6/25/09            Kassis v The Ohio Casualty Insurance Company
New York State Court of Appeals
Where Tenant Is to Provide Coverage for Mutual Benefit of Landlord and Tenant, That Is a Requirement That Landlord Enjoy Additional Insured Protection Under Tenant’s Policy

This is a troubling one.  I don’t like this decision at all.
Holden slipped and fell on snow and ice on property owned by Kassis.  Kassis had leased the property to Superior Sign. Ohio Casualty insured Superior Sign and Kassis claimed it was an additional insured under that policy.
Under the lease, Superior Sign was obligated to pay for snow removal services and to
"indemnify, defend, and hold harmless Landlord from any and all damages, costs, expenses, and liabilities for anything arising out of the occupancy of the Premises caused by Tenant or its agents and from any loss or damage arising out of the acts of Tenant or its agents or the failure of Tenant to comply with the terms and conditions" of the lease. The lease further provides that Superior Sign, "at its sole cost and expense and for the mutual benefit of Landlord and Tenant, shall maintain a general liability policy . . . providing coverage against claims for bodily injury, personal injury and property damage" with specified aggregate and per occurrence coverage amounts.
The policy did not specifically require additional insured status
The Ohio Casualty policy provides bodily injury coverage where "the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement" and that contract or agreement falls within the definition of an "insured contract." The lease was an “insured contract.” The policy's blanket additional insured provision extended coverage not simply to the named insured, "any person or organization whom [the named insured is] required to name as an additional insured on this policy under a written contract or agreement." 
The Court posed the question this way:  to determine whether Kassis is an additional insured we need only determine whether, under the lease, Superior Sign was required to ensure that Kassis received general liability insurance coverage equivalent to the coverage Superior Sign enjoyed. It concluded that the use of the term “mutual benefit” is equivalent to a requirement of additional insured status:
The natural and intended meaning of the term "mutual benefit" as used in this provision is that Kassis and Superior Sign are intended to enjoy the same level of coverage.
The Court looked at provisions requiring fire insurance and other insurance purchased by one party for itself and not the other concluding that  where a disparity in coverage as between insureds was contemplated — i.e., where the insurance to be procured was not for the insureds' "mutual benefit" — it was expressly noted.
It became therefore “clear” to the high court that Superior Sign was obligated under the lease to procure the same level of general liability insurance coverage for Kassis as it obtained for itself, and because of that, Kassis falls within the policy's additional insured provision.


6/23/09            Marina Grand, Inc. v. Tower Insurance Company
Appellate Division, Second Department
Assault Exclusion Removes Coverage from Bar for Glass Tossing Incident
Lisa and Yvonne were at a bar operated by Marina Grand Inc. (MGI).  The two got into an argument and Yvonne threw a glass at Lisa and it struck her in the face. Lisa sued Yvonne and MGI alleging that Yvonne, while intoxicated, intentionally threw the glass at her face and that  MGI's employees negligently maintained, controlled, and operated MGI's premises, and violated the Dram Shop Act (see General Obligations Law.)
Tower refused to defend MGI  citing, among other policy provisions, an endorsement excluding from coverage any injury caused by an assault or battery committed by any patron or customer of MGI. 
Tower was successful in establishing that the assault and battery exclusion is applicable to the claims asserted against MGI in the underlying action.
Editor’s Note:  Attaboy Max


6/23/09            School Construction Consultants, Inc. v. ARA Plumbing & Heating Corp.
Appellate Division, Second Department
Certificate of Insurance Redux; It Confers No Benefits
The documents submitted by the two insurers, consisting of the subcontract between ARA and Federal (the subcontractor) and the liability insurance policy issued by Arch established that neither was neither contractually obligated to provide insurance coverage to the plaintiff nor in fact provided such coverage. The certificate of insurance listing the plaintiff as an additional insured was insufficient to alter the language of the policy itself, especially since the certificate recited that it was for informational purposes only, that it conferred no rights upon the holder, and that it did not amend, alter, or extend the coverage afforded by the policy.
A contractual liability claim against Federal remains for future consideration by the lower court.


6/23/09           Juvenex Ltd. v. The Burlington Insurance Company
Appellate Division, First Department
Two Month Delay by Insured in Reporting Claim Is Inexcusable
Insured’s delay of two months in giving defendant notice of the claim was unreasonable as a matter of law.  Notice to the insured’s broker did not constitute notice to insurer. Notice of claim provided to insurer by the injured person two months after learning identity of insured was also untimely.

6/23/09          XL Insurance America, Inc. v. Lumbermens Mutual Casualty Company
Appellate Division, First Department
Where Co-Insurer Knows of Claim at Inception, It Is Hard-Pressed to Argue It Was Prejudiced When It Refuses to Defend or Indemnify and Carrier That Has Accepted Claim Is Later Seeking Contribution
A co-insurer may be estopped from denying coverage in a coverage allocation dispute between insurers if prejudiced.  Here, XL has not shown that it was prejudiced during the 3½ years that defendant defended the underlying action since it new of claim at inception.

6/19/09         Erie Insurance Co. v. National Grange Ins. Co.
Appellate Division, Third Department
Oral Promise to Provide Additional Insured Status Does Not Satisfy Policy Requirement That Status Must Be Promised in Writing
Pine Ridge, insured by Erie, was the general contractor for the construction of a home.  McClary, the foundation subcontractor, was insured by National Grange Mutual (NGM) McClary's employee, Giblin, lost an eye while working on the project. Pine Ridge and Erie claimed that McClary entered into an oral contract with Pine Ridge to name Pine Ridge as an additional insured under his policy issued by NGM.
The policy carried the AI by Contract endorsement: "Each of the following is added as an Additional Insured . . . [a]ny general contractor, subcontractor or owner for whom you are required to add as an additional insured on this policy under a written construction contract or agreement where a certificate of insurance showing that person or organization as an additional insured has been issued and received by [NGM] prior to the time of loss." The Third Department found that this provision is ambiguous.  Did the clause mean that the construction contract or agreement to list someone as an additional insured must be in writing, and a certificate of insurance listing that person or organization must be issued and received by NGM prior to the loss-inducing incident?  Or, did it mean that there are two alternate ways of including a person or organization as an additional insured: if a written construction contract so requires, regardless of whether NGM is ever notified; or if any agreement — oral or written — so requires and a certificate of insurance listing that person or organization is received by NGM prior to the loss-inducing incident. 
Regardless of which interpretation is used, the policy's contractual requirements have not been satisfied so as to include Pine Ridge as an additional insured. The record does not contain a written contract or agreement between McClary and Pine Ridge. Nor did anyone introduce a certificate of insurance listing Pine Ridge as an additional insured, let alone proof that such a certificate was sent to or received by NGM. In fact, NGM's employee affirmed that no such certificate was ever received.
Editor’s Note:  Seems to your editor that the language was quite clear:  there must be a written contract AND there must be a Certificate of Insurance received by NGM prior to the loss identifying a party as an AI.  We don’t see an ambiguity.  Still left unresolved in this case – and the court so noted – was a claim for breach of contract brought by Pine Ridge against the subcontractor for failure to provide the required insurance.  Under current case law, however, since Pine Ridge has coverage through Erie, the only amount recoverable if that breach is established is the premium differential.

6/19/09            Balyszak v. Siena College
Appellate Division, Third Department
In Non-Construction Cases, Indemnity Agreements Can Require Protection Even for Owner’s Negligence; So Can Insurance Policy
Plaintiff was a volleyball referee, injured when referee’s platform collapsed during a tournament  sponsored by sustained injuries when a referee's platform upon which he was standing collapsed during a volleyball tournament being held at defendant Siena College. United States Volleyball Association, Inc. (USVBA) had contracted with Siena to hold the tournament and rental agreement provided that USVBA would indemnify Siena for all claims for injury to person or property and also that USVBA would furnish a certificate of insurance naming Siena as an additional insured on USVBA's liability policy. The certificate provided that USVBA’s carrier included Siena as additional insured but only with respect to the negligence of USVBA at the tournament.

Court found broad indemnification provisions of rental agreement were enforceable and Siena was entitled to contractual indemnification even for its own negligence.
With respect to the insurer’s obligations, the court found that that the insurers named Siena as an additional insured requiring them under the broad scope of the duty to defend to provide Siena a defense (even if Siena was ultimately found to have been negligent), and that the insurers were further obligated to defend and indemnify based upon the "contractual liability" provision of the policy. 
Editor’s Note:  The decision with respect to insurance coverage was a little odd; probably right result but not necessarily for right reason. What does the “contractual liability” provision of the policy have to do with any direct obligation to defend be the college?  Surely, it would make sense that if Siena was an “additional insured,” the college would entitled to protection from the carrier.   The “contractual liability coverage” gives the college no additional rights.  That coverage protects the USVBA for the claim against it under the indemnity agreement.  It is unclear whether the language in the Certificate – that the college would only be an AI for the USVBA’s negligence was included in the policy endorsement.  If it were, and this liability was incurred because of the college’s negligence then the college would not be an AI.  In that case, USVBA would still have an obligation to defend and indemnify the college, and it would get the protection of the policy for the claim over by the college.


6/18/09            P.J.P. Mechanical Corp. v. Commerce and Industry Insurance Company
Appellate Division, First Department
How Broad Is the Duty to Defend?  It Is Not Broad Enough to Extend to Separate Litigation Commenced by an Insured Where the Responsive Pleadings Allege an Offset
PJP was insured under a commercial general liability policy issued by Commerce. It entered into a contract with Cauldwell, a general contractor, to perform HVAC work at a particular building.  PJB subcontracted out part of its work to Penava. A pipe separated from a water riser causing substantial damage to the building. .Cauldwell advised PJP and and Penava that it considered them solely responsible for the property damage.
Thereafter, Cauldwell advised PJP that it was withholding the contract balance of approximately $650,000 owed to plaintiff because of Cauldwell's position that plaintiff was solely responsible for the property damage. PJP requested Commerce to assign counsel to defend it against Cauldwell's claim of negligence that resulted in the withholding of the contract balance. Commerce refused indicating that the claim of negligence seeking an offset was not a “claim” as defined under the policy.
The court held that an affirmative defense based on offset in the collection action does not trigger the insurer's duty to defend a "suit."  Had there been a counterclaim asserted seeking direct relief and had a occurrence been alleged, there may well have been an obligation to defend.  However here, there is only an affirmative defense and that does not require the carrier to step into the litigation.


6/16/09            Matter of Anderson v. Gulf
Appellate Division, Second Department
Oops.  There was $25,000 available in SUM Coverage, Not $750,000
The Appellate Division affirmed an order which had modified an underinsured motorist arbitrator’s award that there might be up to $750,000 in SUM benefits available.  In fact there was only $25,000.  A bit, different, perhaps. 
Editor’s Note:  We’re trying to determine why there was a $725,000 mistake.

6/16/09            Matter of Progressive Northeastern v. Harding
Appellate Division, Second Department
Proof Sufficient of Physical Contact in Hit-and-Run
In order to qualify for Uninsured Motorists benefits where the injured party claims a hit-and-run vehicle was involved, it is necessary to demonstrate that there was physical contact between the vehicles involved.  Progressive moved to stay arbitration, contesting the proof on physical contact.  The court below found that there was sufficient proof of physical contact and the Second Department refused to set the determination aside.

6/9/09              Liriano v. Eveready Insurance Company
Appellate Division, Second Department
Question of Fact as to When the Insurer First Received Notice; While Proof of Mailing Usually Assumes Delivery, It Can be Rebutted
The fact that notice was sent to the insurer of a default judgment taken against the insured, does not necessarily mean that it was received.  In this case, the lower court ruled that the process server’s affidavit of service indicating that the defendant was served by mail with a default judgment against its insured in the underlying action.  That constituted prima facie proof of proper service.  However, Eveready came forward a sworn denial of receipt and an affidavit of an employee with personal knowledge regarding the defendant's regular practices and procedures in retrieving, opening, and indexing its mail and in maintaining its files on existing claims. That affidavit indicated that the defendant did not receive the judgment in the mail, and instead first learned of it on March 13, 2008, promptly issuing a disclaimer only six days later.

6/9/09              Matter of New York Cent. Mut. Fire Ins. Co. v Vento
Appellate Division, Second Department
Sworn Proof of Claim Serves as Equivalent of “Notice of Claim” in Application for Uninsured Motorists Benefits, in the Absence of Prejudice

Vento sought to compel arbitration of her uninsured motorists claim after being allegedly struck by an unidentified car while crossing a street in October 2006.  NY Central sought to permanently stay arbitration on late notice grounds as well as NY Central’s claim that there wasn’t physical contact with the hit-and-run vehicle.
There are two notice provisions in the UM/SUM endorsement.  The first requires that "the insured or someone on the insured's behalf . . . shall have filed with the [insurer] a statement under oath." The second requires both a "notice of claim" and a "proof of claim" as soon as practicable on forms furnished by the insurer.
Vento submitted a form entitled "Notice of Intention to Make Claim" sworn to on December 27, 2006.  To the extent that the insurer demonstrated a delay in receiving the "Notice of Intention to Make Claim" form after it sent a written request for proof of claim, the insurer failed to demonstrate that it was prejudiced by any such delay.
On the issue of physical contact, the lower court held a hearing and determined physical contact had occurred and the Second Department had no reason to disturb that factual finding

MARGO’S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT
Margo M. Lagueras
[email protected]

6/23/09            Maffei v. Santiago
Appellate Division, Second Department
Affirmation of Neurologist That Fails to Acknowledge Re-injury in Subsequent Accident Is Speculative
The affidavit of the plaintiff’s treating neurologist was insufficient to raise a triable issue of fact.  The affidavit did not explain the 18 month gap in treatment, nor did it address notations in the plaintiff’s medical records that she had full range-of-motion in her back, neck and ankles within two months of the accident.  In addition, the affidavit did not acknowledge a subsequent accident and re-injury of the lumbar spine.  As such, it was also speculative as regards causation.

6/23/09            Gonzalez v. MTA Bus Co.
Appellate Division, Second Department
Limitations Observed in Contemporaneous and Recent Examinations and Causally Related to the Accident Raise Triable Issues of Fact to Defeat Summary Judgment
The plaintiff raised a triable issue of fact with regard to the permanent consequential limitation of use and/or the significant limitation of use categories through the submission of the initial examination of his treating physician who found significant limitations in the cervical and lumbar ranges-of-motion and related those limitations to the accident.  The plaintiff also submitted reports of contemporaneous and recent examinations by his neurologist who additionally reviewed MRI films revealing bulging and herniated discs.  The neurologist observed significant range-of-motion limitations and concluded that they were permanent and causally related to the accident.  All this was sufficient and defendants’ motion should have been denied.

6/23/09            Caraballo v. Kim
Appellate Division, Second Department
Tendons and Ligaments Must Be Treated Similarly and There Must Be Evidence of Extent and Duration of the Limitations
The plaintiffs’ opposition fails on all fronts.  First, the treating chiropractor’s report was not affirmed and therefore did not constitute competent evidence.  The chiropractor’s affidavit, which revealed significant limitations in cervical and lumbar ranges-of motion, was based on a recent examination but there was no competent medical evidence that was contemporaneous with the accident, nor did the chiropractor even examine the injured plaintiff’s knees.  The only contemporaneous findings in the treating physician’s affirmation indicated the range-of-motion of the plaintiff’s knees was “good.”  Moreover, the affirmed MRI reports merely revealed the existence of disc bulges, a herniation, possible tears of the medial menisci of the right and left knees and a possible tear of the anterior cruciate ligament in the left knee.  All of these conditions are not evidence of a serious injury absent objective evidence of the extent of the alleged limitation and its duration.  Injuries involving tendons and ligaments must be treated similarly and there must be evidence of the extent and duration of any limitation, something the plaintiffs failed to proffer. 

6/23/09            Ortiz v. Ash Leasing, Inc.
Appellate Division, First Department
Missing More Than 90 Days of Work Is Not Determinative Under the 90/180-Day Category
Two of the plaintiffs admitted during their depositions that they had not been confined to bed or home after the accident.  The third did not say anything during his deposition about being prevented from performing substantially all his usual and customary daily activities during 90 of the 180 days following the accident.  The court, citing its decision in Uddin v. Cooper, finds that merely because each plaintiff missed more than 90 days of work is not determinative. 

Plaintiffs’ opposing papers failed on both the issues of incapacity and causation as no limitations on their daily activities, except work, were noted, no affidavit from their employers were submitted, and no objective evidence was submitted to rule out the defendants’ assertions of degenerative conditions.  The fact that the defendants’ experts did not address plaintiffs’ condition during the 90/180-day period did not save the plaintiffs’ claim because plaintiffs did not offer objective medical evidence in response to defendants’ showing of degenerative changes.  In addition, although Ortiz had knee surgery, his doctor’s conclusory statement relating it to the accident was contradicted by x-rays and an MRI showing degenerative changes and the doctor did not explain, or even address, why he ruled out degenerative changes as the cause of the knee problems.

6/23/09            Gibbs v. Hee Hong
Appellate Division, First Department
MRI Findings Shortly After Accident Do Not Serve to Rebut Recent Findings That Injury Is Resolved
The MRI taken shortly after the accident revealed a torn meniscus in the plaintiff’s right knee.  At trial, the defendants presented evidence that the plaintiff had normal range-of-motion in her right knee, that any injury had resolved, and that there was no evidence of traumatic injury to the knee.  The plaintiff’s radiologist failed to link the torn meniscus to the accident.  The MRI report did not rebut the recent findings by the defendants’ orthopedist that there was no disability and that any injury had resolved.  In addition, the requirement of loss of “substantially all” of her usual activities was not met by plaintiff’s statement that she could not run, go upstairs or stand for any length of time.

6/18/09            Mazzarella v. Paolangeli
Appellate Division, Third Department
Serious Injury Threshold Must Be Met, and Negligence in the Use or Operation Must Cause the Injury, Even Where the Vehicle Is Not the Proximate Cause of the Injury
Interesting facts and novel argument.  The defendant’s employee was driving an empty dump truck when he lost control and went into a ditch.  Not realizing the fuel pump had been damaged, the driver got the truck out of the ditch and drove about 100 feet along the road, spilling fuel along the way, before stopping.  Although he immediately notified his base and began to advise other drivers of the accident, the plaintiff had already slid off the road and into a tree, injuring her back.

The defendant moved for summary judgment following an IME of the plaintiff.  The plaintiff alleged that the defendant was negligent in spilling fuel on the road and that the serious injury threshold did not apply because her injury did not arise from the negligent “use or operation.”  She asserted, instead, that the truck was removed in “time and space” from the accident and that it was the fuel on the road that caused the accident.  The court disagreed with this argument and determined that the injuries arose out of the negligent use or operation of the truck and that the serious injury threshold, which the plaintiff did not meet, was applicable.  Summary judgment to the defendant was affirmed.

6/18/09            Moses v. Gelco Corp.
Appellate Division, First Department
Affidavit That Ignores Claim of Degenerative Disease and Prior Accident with Virtually Identical Injuries Is Speculative
The defendants established both that the plaintiff’s injuries were the result of degenerative disease and that he was involved in another motor vehicle accident three years earlier and had brought a lawsuit for almost identical injuries at that time.  In support of his claim under the 90/180-day category, the plaintiff submitted the affidavit of his chiropractor which did not, however, address the degenerative causation or explain why the prior accident was not the cause of the current injuries.  The affidavit was, therefore, speculative.

6/16/09           Hernandez v. Rodriguez
Appellate Division, First Department
Cessation in Treatment After Reaching “Maximum Medical Improvement” Explains Gap in Treatment
Although, on appeal, the plaintiff’s 90/180-day claim is dismissed, her claims under the permanent consequential limitation or significant limitation categories are affirmed.  The plaintiff’s treating physician reported she had disc bulges, herniations and decreased range-of-motion in her cervical and lumbar spine.  The defendants’ expert claimed that the condition was degenerative but did not review the MRIs of the plaintiff’s cervical or lumbar spine.  The claim was, therefore, speculative.  In addition, there was no gap in treatment because the plaintiff ceased physical therapy after reaching “maximum medical improvement.”

6/09/09            Dietrich v. Puff Cab Corp.
Appellate Division, Second Department
Statement of What Constitutes Normal Range-of-Motion Set Forth By Defendant’s Expert May Be Relied on by Plaintiff’s Expert
Believe it or not, while driving in Manhattan, the plaintiff noticed a pedestrian lying in a crosswalk.  She stopped her car and then saw a taxi driver chasing his unoccupied cab.  He caught up with the cab, jumped into it, and then proceeded to steer it into the plaintiff’s car, which spun around from the impact, causing her to hit her head on the window. 

The plaintiff continued to receive treatment for over two years.  The defendants’ expert, who performed a neurological exam, reviewed an MRI of the plaintiff’s cervical spine, and also reviewed reports from her treating physicians, found that her range-of-motion of the lumbar and cervical spine were within normal range, which he set forth.  He concluded she did not suffer any permanent neurological injury.  In opposition, the plaintiff submitted reports showing that her range-of-motion in the cervical spine was significantly limited.  Her expert used the ranges-of-motion set forth as normal in the defendant’s expert’s report and which, because they were set forth by a party’s expert, were deemed a judicial admission by the court.

6/09/09            Grobman v. Chernoff
Appellate Division, Second Department
In Bifurcated Trials, Prejudgment Interest Runs from the Date Liability Is Fixed, Even if Damages Are Later Decided by Arbitrator
The defendants attempted to prevent the plaintiff from receiving pre-arbitration award interest after a bifurcated trial at which the defendants were found to be 100% at fault.  During the damages portion of the trial, the jury found that the plaintiff suffered a permanent consequential limitation of use and awarded her damages for future medical expenses, but nothing for future pain and suffering.  Judgment was entered for $1,100 for past pain and suffering, and $8,900 for future medical expenses.

The appellate court found this result to be inconsistent with a determination of permanent consequential limitation and remitted for a new trial on damages.  The parties then agreed to arbitrate the issue of damages.  The arbitrator, however, refused to hear the case unless the issue of serious injury was also heard.  Over the plaintiff’s objection, the trial court directed the arbitrator to hear all the issues.  On appeal, the court reversed concluding that the jury’s determination of serious injury, and which the defendants failed to challenge in the first appeal, was binding.  The arbitrator’s award was for $125,000 but did not consider the question of interest.  The defendants paid the $125,000. 

The plaintiff then argued that, if she was to be made whole, interest had to be computed from the date of the entry of final judgment of the liability verdict.  Citing the Court of Appeals in Love v. State of New York, the court held that interest runs on damages warded from the date liability was determined.  The defendants’ argument, that the arbitrator has the authority to rule on the issue and where he does not allow pre-award interest, the courts may not step in to do so, did not convince the court as the cases cited did not deal with bifurcated trials, or with a case where liability is determined by a court and damages by an arbitrator.

6/09/09            Keum Lee Jeong v. Imperial Contract Cleaning, Inc.
Appellate Division, Second Department
Conclusion in Affidavit That Addresses Prior Accident and Injuries Is Not Merely Speculative
The plaintiff’s treating physician acknowledged and addressed the fact raised by the defendants that the plaintiff was in a prior accident in which she injured her neck and back.  As such, his conclusions that she sustained permanent, significant limitations to her neck and back as the result of the subject accident were not merely speculative.

6/09/09            Hossain v. Singh
Appellate Division, Second Department
Reports Did Not Relate Findings to 90/180-Day Category and Therefore Failed to Meet Burden
This is yet another case where the plaintiff’s bill of particulars sets forth his 90/180-day claim, he testifies at his deposition that he missed three months of work, and he informs the defendants’ examining physicians that he missed three months of work, and yet the defendants’ examining physicians do not relate any of their findings to this category of serious injury, and therefore do not refute the claim. 

AUDREY’S ANGLES ON NO-FAULT
Audrey Seeley
[email protected]

Arbitration

6/18/09            Capicotto Orthopedic v. New York Cent. Mut. Fire Ins. Co.
Arbitrator Veronica O’Connor (Erie County)
Treating Physician’s Testimony Helps Case
Here is the Angle:      I don’t know what happened here and this is not meant to criticize anyone, but my rule of thumb is that if the treating surgeon decides to testify at the hearing the peer
reviewer had better testify as well. 

Here is the Analysis:  The eligible injured person (“EIP”) was involved in a December 20, 2003, motor vehicle accident and came under the care of Dr. Capicotto.  Dr. Capicotto testified at the arbitration that his examination of the EIP on March 31, 2004,revealed no loss of range of motion but painful movement.  In reviewing the February 18, 2004, Dr. Capicotto testified that he took issue with the report and opined there was an L4/5 disc herniation.  He requested another lumbar spine MRI on January 5, 2005, which confirmed the herniation and also revealed an L5/S1 herniation.  By January 25, 2005, two level lumbar spinal fusion was scheduled, which occurred on March 21, 2005.  Dr. Capicotto opined that the fusion surgery was medically necessary because the EIP failed conservative care and her pain increased.  It was noted that the surgery provided the EIP with only moderate pain improvement and functionality.

The insurer denied surgery based upon the peer review report of Dr. Robert Orlandi.  Dr. Orlandi’s report indicated that a review of the most recent MRI scan indicated an L4/5 disc bulge with disc desiccation unchanged from the prior study.  A small to moderate left paracentral disc herniation was present at L5/S1 without annular tear or nerve root impingement.

Further, the objective testing that Dr. Capicotto conducted revealed that one year before surgery the EIP had extremely good forward flexion and negative bilateral straight leg testing.  Dr. Orlandi noted that while the EIP always described a low back pain into the right leg he has never encountered a person that could tolerate straight leg raising to 90 degrees and required lumbar spine surgery.  Dr. Orlandi also noted that Dr. Capicotto never noted any muscle spasms or any neurologic deficits upon examination.  Accordingly, Dr. Orlandi concluded that there was no medical justification for the surgery.

The assigned arbitrator concluded that the Applicant submitted sufficient records and that Dr. Capicotto’s testimony was “most persuasive” to establish medical necessity for the surgery.

6/18/09            South Buffalo Chiropractic v. Nationwide Ins. Co.
Arbitrator Veronica O’Connor (Erie County)
Report Interpreted as Concluding Maximum Medical Improvement = Invalid Defense.
On January 26, 2003, the eligible injured person (“EIP”) was involved in a motor vehicle accident and sustained injuries to her neck and back.  She underwent acupuncture, massage therapy, and chiropractic adjustments. 

The insurer denied chiropractic care based upon the independent chiropractic re-examination of the EIP conducted by Craig Horner, D.C.  Mr. Horner concluded that chiropractic care was useful and necessary despite her unresolved symptoms but that it was not able to restore the EIP back to preaccident status.  Mr. Horner concluded “in lieu of the longstanding nature of her symptoms and the lack of improvement from chiropractic care, it is determined that no further chiropractic care is indicated.”  Mr. Horner did recommend continued massage therapy.

The assigned arbitrator declined to uphold the insurer’s denials reasoning that Mr. Horner’s conclusions amount to maximum medical improvement which is not recognized under Hobby v. CNA Ins. Co

6/17/09            Pinnacle Orthopedic Spine Specialists v. New York Cent. Mut. Fire. Ins. Co.
Arbitrator Veronica O’Connor (Erie County)
Bilateral Hip Treatment Not Causally Related to Accident
Hurwitz & Fine’s own Margo Lagueras, Esq. argued this arbitration on the behalf of the insurer and prevailed.  Excellent legal work Margo!

The eligible injured person (“EIP”) was involved in a June 12, 2006, motor vehicle accident and sought treatment with Dr. Huckell for bilateral hip pain and surgical intervention.  The insurer denied the treatment as not causally related to the accident.

The insurer relied upon the peer review of Dr. Raghava Polavarapu who concluded that neither hip injury nor surgical intervention was causally related to the accident.  Dr. Polavarapu opined that the EIP had a preexisting condition.  Further, the application for no-fault benefits that the EIP completed never mentioned any injury to the hips.  It was only a year later that the EIP presented to Dr. Huckell complaining of bilateral hip pain.  A bilateral hip x-ray revealed severe osteoarthritis.  Dr. Polavarapu concluded that there was no documentation that indicated the bilateral hip pain and subsequent bilateral hip replacement surgeries were causally related to the accident.

The assigned arbitrator upheld the denials based not only upon the peer review but also the EIP’s treating physician’s reports.  The first report that the Applicant presented was from Dr. Polina dated September 28, 2006, which never mentioned bilateral hip complaints.  Further, an acupuncturist treatment record from May 8, 2007, indicated that the EIP had intermittent arthritis in her hips that was much better.  Then three days after that visit, Dr. Huckell treated the EIP with the assessment of severe bilateral hip osteoarthritis.  Dr. Huckell further opines that while the EIP had this pre-existing condition, the motor vehicle accident rendered it symptomatic requiring bilateral hip replacement surgery.

The assigned arbitrator noted that Dr. Huckell’s note was the only one that presented regarding causal relationship.  The Applicant did not submit any other treatment notes from Dr. Huckell’s office or any treatment notes from any other physician.  Accordingly, there was no objective evidence to causally relate the bilateral hip treatment to the accident.

Litigation

6/19/09            M.N. Dental Diag., P.C. a/a/o Daniel Burgos v. GEICO
Appellate Term, First Department
Priority of Payment Is Not Defense in Provider Suit
Plaintiff’s assignor was involved in a motor vehicle accident while operating a rented car.  The car owner was insured by Fidelity and Guaranty Insurance Company while plaintiff’s assignor was insured by GEICO.  GEICO denied no-fault benefits on the ground that Fidelity was responsible for paying them.  The trial court held that it could not adjudicate the issue of whether Fidelity was responsible for paying no-fault benefits as this issue is a priority of payment issue that is subject to arbitration under Insurance Law §5105(b).  In this holding the trial court granted judgment in plaintiff’s favor reasoning that GEICO priority of payment was not a defense to plaintiff’s action.  In other words, GEICO could not prevail in dismissing the action on the ground that priority of payment is a lack of coverage defense.  Rather, under 11 NYCRR §65-3.12(b), the first insurer to be provided with notice is obligated to pay the benefit then seek arbitration against the second insurer to resolve the priority of payment dispute.

6/12/09            Bronze Acupuncture P.C. a/a/o Lavel Folks v. Mercury Ins. Co.
Appellate Term, Second Department
Plaintiff’s Failure to Properly Rebut Conclusions in IME Is Fatal.
The insurer’s motion for summary judgment should have been granted as it submitted an affirmed independent medical examination (“IME”) report and an affidavit from the acupuncturist that performed the IME.  The plaintiff only submitted an affidavit from its treating acupuncturist merely stating she disagreed with the IME report but failed to set forth facts to support her conclusion. 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

6/16/09            American Motorists Ins. Co. v Keep Services, Inc.
Appellate Division, Second Department
Broker’s Breach of Agency Agreement with Carrier Makes It Responsible for Carrier’s Loss
In this case, defendant, Keep, is an authorized agent of plaintiff American.  As part of the agency agreement, Keep was permitted to bind coverage within the terms of a defined underwriting manual.  However, American established that Keep issued the policy in question even though the risk did not comply with the guidelines established in the underwriting manual. 

In finding for the plaintiff, the Second Department noted that an agent will be responsible – in contract or negligence – for underwriting risks that went beyond the scope of risks acceptable to its principal.  Accordingly, although the policy at issue provided coverage for the loss, because it was issued by Keep in violation of Keep’s defined authority, Keep was responsible to reimburse American for the payable loss.

6/16/09            Seward Park Housing Corp.v Greater New York Mutual Ins. Co.
Appellate Division, First Department
Carrier That Was Ordered to Pay Damages Beyond the Scope of the Policy Is Entitled to Restitution from the Recovering Insured
Pursuant to an earlier decision, New York Mutual was compelled to pay plaintiff’s property damage claim to the tune of nearly $19 million dollars.  However, in the current litigation, it was determined that nearly $1.6 million of the damages tendered were not covered under the terms of the New York Mutual policy.  Accordingly, the First Department ruled that New York Mutual was entitled to recovery of those damages not covered not under the policy, along with pre-judgment interest.  In addition, the Court also granted interest, at the statutory rate, from the date the nearly $1.6 was tendered until the restitution was finalized.

06/16/09          New York Central Mutual Fire Insurance Company v Barry        
Appellate Division, Second Department
Insured’s Settlement and Release of Co-Tortfeasor DOES NOT Bar Carrier’s Subsequent Subrogation Action

This case has a long and tortured history which we will briefly recite here in order to provide some much needed background.  In essence, Barry and his wife were injured in a collision with an automobile operated by New York Central’s insured, Hildreth.  Hildreth, who also sustained injuries in the collision, commenced a third-party action against Barry.  Hildreth, with the assistance of counsel, later settled the third-party claim for $22,500. 

The Barry v. Hildreth matter, however, proceeded to trial which resulted in a verdict in favor of Mrs. Berry.  At that time, the jury concluded that Hildreth was 30% at fault and Mr. Berry was 70% at fault for the accident.   Thereafter, Hildreth commenced a new action seeking common law contribution and indemnification from Mr. Berry.  Because Hildreth had issued a release to Berry as part of the resolution of her earlier third-party claim, the Court properly dismissed Hildreth’s claim for contribution as barred by General Obligations Law § 15-108.  Likewise, because there was a finding of fault against Hildreth, her claim for common law indemnification was likewise barred. 

This all leads to the current case, which is Hildreth’s insurer, New York Central, pursing its subrogation rights as a result of the payment made on behalf of Hildreth to Mrs. Berry.  The Second Department noted that New York Central’s subrogation rights were not impacted by the earlier settlement and release Hildreth executed which exonerated Mr. Berry.  This is presumably because the Release was executed with knowledge of the existence of New York Central, and without New York Central’s consent.  Finally, the Court also noted that Hildreth’s apparent abandonment of her main-party counter claim for contribution did not bar the related subrogation action on collateral estoppel principles.  In support of this ruling, the Court noted that the issue of contribution was never decided on the merits in the main-party action, and as such, collateral estoppel was not an available remedy.

6/16/09            NYP Holdings, Inc. v McClier Corporation
Appellate Division, First Department                            
Question of Fact Regarding Whether Settling Carrier’s Subrogation Rights Were Barred by Application of the Volunteer Doctrine
In this matter, NYP Holdings engaged McClier to arrange for the construction of a certain printing press.  McClier, subsequently, subcontracted out the various components of the project to a number of third-party contractors.  When NYP Holdings became dissatisfied with the work being performed, it commenced action seeking approximately $100,000,000 in damages from McClier.  McClier, in turn, commenced actions against the various third-party contractors. 

Eventually, McClier’s carrier, Lloyds, resolved the claim brought by NYP Holdings for nearly $24,000,000 (just over $23,000,000 of which was paid by NYP Holdings).  At that time, the third-party contractors then moved to dismiss McClier’s pending lawsuits on the basis that Lloyd’s made the payment as a volunteer, and as such was barred from seeking recovery.  Under the third-party defendants’ analysis, Lloyds did not have to provide coverage for the loss.

As a threshold matter, the First Department noted that the question of whether Lloyds had a right of subrogation must be determined prior to any assessment of whether it was a volunteer in settling the underlying claim.  Those rights, the Court reasoned, were solely derivative of whether McClier possessed a claim against the various subcontractors.  Where McClier’s rights to contribution/indemnity were not impacted, it followed that neither were Lloyds’ subrogation claims. 

Further, the Court noted that a question of fact existed to whether Lloyds acted as a volunteer.  In so holding, it noted the fact that there had been no determination relative to who was responsible for the loss.  Likewise, it also noted that the resolution brokered by Lloyds resulted in a settlement that was a fraction of the demand initially offered by NYP Holdings. 

 

EARL’S PEARLS
Earl K. Cantwell, II
[email protected]
Kinney v. Lisk:  A Claim without a Remedy
New York Law May Not Penalize a Contractor’s Failure to Procure Insurance

Bill, a subcontractor’s employee, is injured on the job and (inevitably) sues the owner and general contractor.  The subcontractor, his employer, was contractually obligated to obtain insurance for such claims, but because money was tight did not.  The owner and general contractor have no insurance of their own applicable to the site or wok, so they sue the subcontractor for breach of contract and obtain reimbursement for attorneys’ fees and the costs of defending and settling Bill’s claim, which could be several hundred thousand dollars.

In a more likely scenario, on another job, Bob, a subcontractor’s employee, is injured on the job and (inevitably) sues the owner and general contractor.  The subcontractor, his employer, was contractually obligated to obtain insurance for such claims and add the owner and general contractor as additional insureds.  However, due to an administrative lapse the owner and contractor were not named as additional insureds on the subcontractor’s policy.  However, the owner and general contractor each have other CGL or umbrella liability insurance applicable to the site and work, and they turn Bob’s claim over to their respective insurance carriers for defense and indemnity.  They sue the subcontractor successfully for breach of contract for failure to obtain insurance and list them as additional insureds, but they are awarded virtually no damages, and NO costs of defense or reimbursement of indemnity payments to settle Bob’s claim.

Two very similar claims, two almost identical breaches of contract, two cases where the owner and contractor were compelled to defend and indemnify claims that should have been handled by the subcontractor’s insurance.  Yet in Bill’s case the owner and contractor could sue and recover all of their damages in defending and paying Bill’s injury claim, but in Bob’s case the owner and contractor and their insurance companies could recover virtually nothing.  In Bob’s case, in fact, the owner and contractor are penalized for their foresight and good business judgment to have other available insurance which should not have been tapped to deal with Bob’s case.  In Bob’s case, the subcontractor is in effect rewarded for screwing up and failing to add the owner and contractor as additional insureds on its policy.  However, regrettably, this is the current State of New York law on this subject.

In Kinney v. Lisk, 76 N.Y.2d 215, 557 N.Y.S.2d 283 (1990), the general contractor hired a subcontractor to perform work on a building project owned by Lisk.  After an employee of the subcontractor suffered personal injuries, a jury apportioned liability between the general contractor and the subcontractor.  The general contractor, however, was granted summary judgment on its third party action asserting that the subcontractor failed to procure insurance coverage as required by the subcontract.  The Court of Appeals held that “…because the [subcontractor] breached its agreement to procure liability insurance covering [the general contractor], it is liable for the resulting damages, including the [general contractor]’s liability to the plaintiff.”  The Court of Appeals affirmed a trial court’s judgment that awarded the general contractor $125,000 plus attorneys’ fees on the basis that the subcontractor failed to obtain requisite insurance coverage.

In very similar circumstances, the Court of Appeals some ten years later decided  Inchaustegui v. 666 5th Ave. Ltd. P'ship, 96 N.Y.2d 111, 725 N.Y.S.2d 627 (2001), where a tenant agreed to maintain comprehensive general liability insurance on the premises and name the landlord as an additional insured.  The tenant took out a policy, but failed to name the landlord as an additional insured as required under the lease.  One of the tenant’s employees suffered personal injuries and brought suit against the landlord which then brought a third-party action against the tenant for breach of the lease.  The trial court granted the landlord’s summary judgment motion as to liability, holding that the “…tenant breached its agreement to add the landlord as a named insured.”  However, the trial court, noting that the landlord had its own liability insurance, limited the landlord’s damages to the cost of ‘maintaining and securing’ its insurance policy for the year that included the date of the accident.    This was probably very small solace to the landlord and its insurance carrier who were forced to defend the case and indemnify against the loss.

The Appellate Division was divided in determining exactly what damages were recoverable by the landlord due to the breach of the lease provision on insurance coverage.  The majority held that the landlord should recover the purchase cost of the insurance but also certain out-of-pocket expenses arising out of the liability claim and not covered by the substitute insurance procured by the landlord. Id at 114.  Such costs could include “any co-payment, deductible or rate increase in the landlord’s insurance.”  The dissent argued (on the basis of Kinney) that the landlord should have been awarded “…all damages resulting from the tenant’s failure to acquire insurance, including the full amount of the loss on the underlying personal injury claim, along with defense costs.” 

The Court of Appeals affirmed the majority decision and reasoning and held that a “…landlord who has no knowledge of a tenant’s failure to acquire the requisite insurance and is left uninsured may recover the full amount of the underlying tort liability and defense costs from the tenant.”  Id.  However, the landlord had other insurance applicable to the risk. and therefore sustained no loss beyond its out-of-pocket costs.  The landlord cited Kinney in support of its contention that the tenant should be required to pay the full amount of the loss/settlement and defense costs.  The Court of Appeals demurred and explained that, in Kinney, the question of whether resulting damages could be minimized by substitute insurance was not raised by the parties or considered by the Court.  The landlord was therefore “…limited to the loss it actually suffered by reason of the breach.” 

In a recent case interpreting Kinney and Inchaustegui, the Third Department emphasized that Inchaustegui, “…placed great significance on the fact that the landlord procured his own insurance and acknowledged that, had the landlord been left uninsured, it could have recovered the full amount of the underlying tort liability and defense costs from the tenant.”  Murray v. New York City Tr. Auth., 2008 NY Slip Op 28163, 862 N.Y.S.2d 706, 708 (3d Dept 2008), quoting Inchaustegui, 96 N.Y.2d at 114.  The Third Department held that Inchaustegui is limited to those cases where a party has obtained its own insurance and therefore sustained no loss beyond miscellaneous insurance cost increases, expenses or out-of-pocket costs.   Thus, whether a party damaged by a failure to procure insurance has a real damages claim is dependent on whether that party obtained other insurance or not, in effect penalizing proactive and good business practices and rewarding a breach of contract.

In Murray, the plaintiff suffered personal injuries and brought suit against the Transit Authority.  The Authority impleaded its general contractor, Kosangeo Construction Corp. and the subcontractor Navillus Tile.  The owner and general contractor moved for summary judgment based on Navillus’ breach to procure insurance since the contract required that Kosangeo and the Authority be covered as additional insureds.  Murray noted that Kinney dealt with a subcontractor’s failure to procure insurance for the benefit of the general contractor, and did not address whether the “…resulting damages could be minimized by any insurance the general contractor had obtained.”  In Murray, the subcontractor purchased insurance but failed to follow the terms of the contract that required Kosangeo and the Authority be named as additional insureds.  If a party agrees to procure insurance on behalf of another party and the party fails to do so, it will be liable for the resulting harm if the promisee has no coverage.  Where a promisor promises to provide insurance and name the promisee as an additional insured, the promisee can only recover incidental damages if it has its own liability insurance applicable to the loss. 

The Third Department stated that Inchaustegui is limited to where one of the parties failed to name the other as an additional insured and “…those cases where a party has obtained its own insurance and therefore sustained no loss beyond its out-of-pocket costs.”  The Court drew an implicit distinction between cases where a contracting party fails to procure insurance and where the contracting party fails to name the other party as an additional insured and that party has existing insurance coverage.  Here, Navillus failed to procure insurance on behalf of the Authority, and thus would be obligated to cover the Authority’s underlying tort liability and defense costs if the Authority did not have its own insurance coverage (an unlikely proposition).

The “distinction” between failure to procure insurance and failure to name as an additional insured seems non-existent – in both cases the promisee does not received bargained-for insurance coverage, but if it has its own coverage, which is likely if not a certainty, the damages are minor and limited to minimal incidental costs which frankly may not be worth the effort and may even be virtually incapable of proof.  Some items of damages such as deductibles and SIR payments may be capable of proof, but it may be almost impossible for an insured to prove why an insurance company raised a premium, increased a deductible or co-pay, or even dropped or decreased coverage on an insured.

Further case law however, has largely sustained the holding of Inchaustegui.  Where a subcontractor failed to name the general contractor as an additional insured, a general contractor was limited to “…out-of-pocket expenses….[w]here, as here, a promisee has general liability coverage, any damages arising out of an agreement to procure insurance are limited to out-of-pocket expenses.”  Antinello v. Young Men's Christian Assn., 42 A.D.3d 851, 841 N.Y.S.2d 150, 151 (3d Dept 2007).  The Second Department has held that, where a subcontractor failed to name the general contractor as an additional insured and a personal injury resulted, the subcontractor was liable to the general contractor for all out-of-pocket damages caused by the breach.  Taylor v. Gannett Co., 303 A.D.2d 397, 760 N.Y.S.2d 47, 49 (2d Dept 2003).  Presumably, the general contractor had other insurance which precluded it from recovering attorneys’ fees and any indemnity loss payment on the loss.  

Similarly, in Amato v. Rock-McGraw, Inc., 297 A.D.2d 217,  746 N.Y.S.2d 150, 152 (1st Dept 2002), the court held that, if the subcontractor was negligent, and if the subcontractor failed to procure insurance on behalf of the general contractor as provided by the contract, the general contractor would be limited to the measure of damages as governed by Inchaustegui for “…any out-of-pocket expenses such as premiums and any additional costs incurred including deductibles, co-payments and increased future premiums.”  Id. 

In another Second Department case, the Appellate Division reversed a case holding that the trial court erred in failing to grant summary judgment to the general contractor and owner on “…their causes of action to recover damages for breach of contract for failure to procure general liability insurance naming them as additional insureds.” Kennelty v. Darlind Constr., Inc., 260 A.D.2d 443, 688 N.Y.S.2d 584, 586 (2d Dept 1999).  Neither subcontractor demonstrated any evidence that they had purchased the required insurance under the contracts and “…therefore, they are responsible for all resulting damages, including the liability [of the general contractor and the site owner] to [the] plaintiff.”  Id.  However, Kinney did not extend its analysis to whether resulting damages could potentially be “minimized” from a promisee’s existing insurance coverage.  Inchaustegui at 115.  Under present case law and the holding of Inchaustegui, damages are only fully recoverable if the promisee has no insurance coverage.  Otherwise, on remand the appropriate damages would be limited to “out of pocket” costs if the promisee has other coverage.  Id.

In Wong v. N.Y. Times Co., 297 A.D.2d 544, 747 N.Y.S.2d 213 (1st Dept 2002), the plaintiff working for a subcontractor was injured.  A third party action was brought against the subcontractor, Budco, which alleged that Budco had “…failed to procure insurance pursuant to the terms of the purchase order,” and that “if any judgment were recovered by plaintiffs against the [general contractor] Budco was responsible for all the ‘resulting damages’ of the [general]” including liability, legal fees and expenses.”  Id at 216.  The court analyzed both Kinney and Inchaustegui and noted: 

Where a landlord procured its own insurance, it may not look to the tenant for the full amount of the settlement and defense costs it incurred in an underlying personal injury action against the landlord and tenant by an employee of the tenant. Having procured its own insurance, the landlord sustained no loss beyond its out-of-pocket costs. The Court distinguished Kinney because the question whether resulting damages could be minimized by any insurance the general contractor had obtained was not raised by the parties or considered by the Court. Id at 217. 

The First Department held that the “…proper measure of damages is the full cost of insurance, i.e., the premiums it paid for its own insurance, any out-of-pocket costs that may have been incurred incidental to the policy and any increase in future insurance premiums resulting from the present liability claim.”  Quoting Sheppard v. Blitman/Atlas Bldg. Corp., 288 A.D.2d 33, 734 N.Y.S.2d 1, 4 (1st Dept 2001).  Therefore, the trial court erred in allowing the general contractor to “recover the full amount of its liability to [the] plaintiffs.”  Id.  Another case stated the proposition more explicitly:  Where a party seeks damages for breach of an agreement to procure insurance has other insurance available which covers the loss, its damages are limited to the cost of obtaining and maintaining such substitute coverage.  Am. Ref-Fuel Co. v. Res. Recycling, Inc., 307 A.D.2d 939, 763 N.Y.S.2d 657, 659 (2d Dept 2003).  The court stated that the issue framed in Inchaustegui was “…whether the damages caused by breach of an insurance procurement provision could be minimized where other insurance coverage was available” and was inapposite from recovering reasonable defense costs as subrogee for its insureds.   Id at 660. 

Where an agreement required a promisor to procure insurance naming the promisee as an additional insured and the promisor failed to procure that insurance, the promisor “breached the agreement and is liable for the resulting damages, including [the promisee’s] liability to the plaintiffs and [its] costs and expenses incurred in defending plaintiffs’ action.”  Moll v. Wegmans Food Mkts., Inc., 300 A.D.2d 1041, 755 N.Y.S.2d 131, 132 (4th Dept 2002).  The court cited Kinney as authority indicating that the promisor failed name the promisor as an additional insured as prescribed by the contract, and because of that breach the promisee Wegmans was entitled to out-of-pocket expenses.  The Appellate Division remanded to the trial court to determine the appropriate damages where the principles of Inchaustegui would be implemented since Kinney ostensibly did not address whether damages could be minimized by substitute or other available insurance coverage.  When a promisee has its “…own insurance coverage, recovery for breach of a contract to procure insurance is limited to the promisee’s out-of-pocket expenses in obtaining and maintaining such insurance, i.e., the premiums and any additional costs incurred such as deductibles, co-payments, and increased future premiums.”  Lima v. NAB Constr. Corp., 59 A.D.3d 395, 873 N.Y.S.2d 141, 144 (2d Dept 2009).  Incidentals may be recoverable; however, defense costs are not.  Therefore, the party that fails to name the promisee as an additional insured may get away relatively unscathed and is not required to pay attorneys’ fees or the costs of settlement, but merely any incidental costs of increased future premiums, co-payments, deductibles, and the like. 

If you are managing, supervising or a party to a construction project, what should you do?  The best defense and approach is prevention and diligent contract administration:

  1. Read and be aware of the contractual insurance provisions.  They may not be pretty and full of legalspeak, but read and understand them.
  2. Know who is providing what type of insurance coverage on the project (builder’s risk, CGL, property, even Workers’ Compensation) to whom (owner, general contractor, construction manager, architect).
  3. Know who is providing insurance coverage to your company.
  4. Know if you should be listed as an Additional Insured on another party’s liability policy, and insist on a primary, unconditional, additional insured endorsement.
  5. Prior to commencement of work, require copies of all policies, Additional Insured endorsements and Certificates of Insurance.  Check for details such as type of coverage, amount of coverage, policy period, adequacy of endorsements and correct Certificates of Insurance.  Remember, however, that legally a mere Certificate of Insurance does not prove or bind coverage.
  6. Do not allow a contractor or subcontractor on a site to commence work if they have not provided required insurance coverages and documents.
  7. Make sure the contract provides that you receive notice of expiration or cancellation of a policy, or any other change in coverage, during the expected pendency of the job.
  8. A recent trend is for certain insurers is to require subs to indemnify GC’s and owners and provide AI status or risk that inapplicable or severe restriction of the GCs policy, as a penalty for non-compliance.  If your policy has requirements like that, make certain that you comply with policy terms.
  9. If a loss occurs, immediately put all potential carriers on notice – someone else’s carrier who may be providing coverage, and your own CGL or property insurance carrier.
  10. Do not accept verbal or even written representations of insurance – demand to see policies, endorsements and Certificates of Insurance.  Otherwise, you and your insurance carrier may wind up defending and paying a claim if another party and the coverage they were to obtain are nowhere to be found.

 


ACROSS BORDERS

6/18/09            Barbinski v. American Family Ins. Group
Eighth Circuit Court of Appeals Upholds Household Drop-Down Exclusion Limiting Liability Coverage in Automobile Insurance Policy
United States Court of Appeals, Eighth Circuit

Babinski filed a diversity action seeking a declaratory judgment that the automobile insurance policy he purchased from American Family Insurance Group provides up to $1,000,000 in liability coverage in a wrongful death suit bought against the estate of his son, of which Babinski was the personal representative. American Family argued that the policy’s household drop down exclusion limited the liability coverage available in the wrongful death suit to the minimum amount required by state law. Both parties moved for summary judgment. The district court granted summary judgment to Babinski holding the policy obligates American Family to indemnify Babinski up the $1,000,000 policy limit because the drop-down exclusion was vague, ambiguous and falls below any ordinary consumer reasonable expectation. On appeal, the Eighth Circuit Court of Appeals reversed finding that the exclusion was not ambiguous merely because the Court must look beyond the four corners of the Policy to state law in order to determine the exact dollar amount of coverage. Because the exclusion was clear and unambiguous, the Court of Appeals held that it must enforce its plain language.
Submitted by: Latha Raghavan of Goldberg Segalla, LLP

6/15/09            In Re The Exxon Valdez
Ninth Circuit Rules That Interest Ran From Date Original Judgment Was Entered and Each Party Was to Bear Its Own Costs
Ninth Circuit Court of Appeals
In the epic punitive damages litigation arising from the 1989 wreck of the Exxon Valdez, the United States Supreme Court remanded the case to the Ninth Circuit Court of Appeals to decide issues related to interest and appellate costs. The remand followed the Supreme Court’s 5-3 decision that, under maritime law, the maximum ratio of punitive damages to compensatory damages is 1-1. The parties stipulated to entry of judgment for punitive damages against defendant Exxon and in favor of the plaintiffs in the amount of $505.5 million, representing the amount the plaintiffs were awarded as compensatory damages achieving the 1-1 ratio the Supreme Court deemed appropriate. The issue with respect to interest was whether interest ran from the date of the original judgment entered in 1996, or whether it should run only from the 2008 date when the Court of Appeals entered judgment in the wake of the Supreme Court’s decision. The Court of Appeals found that interest ordinarily should be computed from that date of the original judgment’s initial entry when the evidentiary and legal bases for an award were sound. Thus, the Court concluded that plaintiffs’ entitlement to punitive damages was “meaningfully ascertained” when the original district court judgment was entered in 1996. With respect to costs, Exxon claimed to be the winner of the litigation because the initial verdict was reduced by about 90% and therefore plaintiffs should bear all, or at least 90% of, Exxon’s appellate costs. The Court held that neither side was the clear winner because the defendant still owed plaintiffs $505.5 million in punitive damages and yet the award represented a reduction by 90% of the original $5 billion. Therefore, exercising its discretion, the Court required each party to bear its own costs.
Submitted by: Latha Raghavan of Goldberg Segalla, LLP

REPORTED DECISIONS

Liriano v. Eveready Insurance Company


Sweetbaum & Sweetbaum, Lake Success, N.Y. (Marshall D.
Sweetbaum of counsel), for appellant.
Jose R. Mendez, P.C., Ridgewood, N.Y., for respondent.

DECISION & ORDER
In an action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against the defendant's insured, the defendant appeals from (1) an order of the Supreme Court, Queens County (Cullen, J.), dated September 29, 2008, which granted the plaintiff's motion for summary judgment on the complaint, and (2) a judgment of the same court entered November 21, 2008, which, upon the order, is in favor of the plaintiff and against it in the principal sum of $40,112.06.
ORDERED that the appeal from the order is dismissed; and it is further,
ORDERED that the judgment is reversed, on the law, the plaintiff's motion for summary judgment is denied, and the order dated September 29, 2008, is modified accordingly; and it is further,
ORDERED that the defendant is awarded one bill of costs.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
The Supreme Court improperly granted the plaintiff's motion for summary judgment. The plaintiff submitted a process server's affidavit of service indicating that the defendant was served by mail with a default judgment against its insured in the underlying action on August 13, 2007, which constituted prima facie evidence of proper service (see Kihl v Pfeffer, 94 NY2d 118, 122; Matter of de Sanchez, 57 AD3d 452, 454). In response, the defendant came forward with a sworn denial of receipt and an affidavit of an employee with personal knowledge regarding the defendant's regular practices and procedures in retrieving, opening, and indexing its mail and in maintaining its files on existing claims. That affidavit indicated that the defendant did not receive the judgment in the mail, and instead first learned of it on March 13, 2008, promptly issuing a disclaimer only six days later. Under the circumstances of this case, the defendant's submissions sufficed to raise a triable issue of fact regarding the service of the judgment, and the question of whether the defendant's disclaimer of coverage was timely must await the resolution of that issue (see e.g. Matter of TNT Petroleum, Inc. v Sea Petroleum, Inc., 40 AD3d 771; Johnson v Deas, 32 AD3d 253; First Union Mtge. Corp. v Silverman, 242 AD2d 258; Long Is. Sav. Bank v Meliso, 229 AD2d 478; Poet v Kolenda, 142 AD2d 633).
Contrary to the plaintiff's contention and the determination of the Supreme Court, the letter of disclaimer was not defective and, therefore, was not invalid as against the plaintiff. Rather, the letter sent to the plaintiff adequately recited that the defendant was disclaiming coverage as to the plaintiff on the ground that he failed to provide the defendant with timely notice of the underlying litigation and with legal papers filed in connection therewith (see American Tr. Ins. Co. v Sartor, 3 NY3d 71; Matter of GEICO Co. v Wingo, 36 AD3d 908; cf. Shell v Fireman's Fund Ins. Co., 17 AD3d 444; Vacca v State Farm Ins. Co., 15 AD3d 473).
In the Matter of New York Central Mutual Fire Insurance Company v. Vento


Cullen and Dykman, LLP, Brooklyn, N.Y. (Andrew G. Vassalle of
counsel), for appellant.
Sanders, Sanders, Block, Woycik, Viener & Grossman, P.C.,
Mineola, N.Y. (Martin Block of
counsel), for respondent.

DECISION & ORDER
In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Suffolk County (Jones, J.), dated September 13, 2007, which, after a framed-issue hearing, denied that branch of the petition which was to permanently stay arbitration and, in effect, directed the parties to proceed to arbitration.
ORDERED that the order is affirmed, with costs.
The respondent, Ann Vento (hereinafter the insured), sought to compel arbitration of her insurance claim after she allegedly was struck by an unidentified vehicle while crossing a street at a crosswalk on October 14, 2006. The petitioner, New York Central Mutual Fire Insurance Company (hereinafter the insurer), petitioned the Supreme Court to permanently stay arbitration on the ground that the insured failed to comply with the notice provisions of the subject insurance policy and failed to demonstrate that her injuries were caused by physical contact with the hit-and-run vehicle.
The first notice provision in the supplemental uninsured/underinsured motorist endorsement (hereinafter the SUM endorsement) required that "the insured or someone on the insured's behalf . . . shall have filed with the [insurer] a statement under oath." The second notice provision of the SUM endorsement required both a "notice of claim" and a "proof of claim." Written notice of claim was required "[a]s soon as practicable." However, written proof of claim was required, upon forms furnished by the petitioner, "[a]s soon as practicable after [the petitioner's] written request."
"In general, the insured's failure to comply with the requirement in an insurance policy that it give notice as soon as practicable of an incident that may result in a claim constitutes a failure to satisfy a condition precedent which vitiates the policy" (St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d 1030, 1031). "Where, as here, an insured is required to provide [written] notice of a claim as soon as practicable, such notice must be given within a reasonable time under all of the circumstances" (Matter of State Farm Mut. Auto. Ins. Co. v Bombace, 5 AD3d 782, 782; see Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; Matter of State Farm Mut. Auto. Ins. Co. of N.Y. v Adams, 259 AD2d 551, 551-552). The respondent submitted a form entitled "Notice of Intention to Make Claim" subscribed and sworn to on December 27, 2006.
The insurer's own submissions in support of its petition demonstrated that the insured provided it with notice of the accident as soon as practicable (see Matter of Firemen's Ins. Co. v Clinton, 54 AD3d 759, 759). To the extent that the insurer demonstrated a delay in receiving the "Notice of Intention to Make Claim" form after it sent a written request for proof of claim, the insurer failed to demonstrate that it was prejudiced by any such delay (see Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 476; Matter of New York Cent. Mut. Fire Ins. Co. v Ward, 38 AD3d 898, 901; Matter of Nationwide Mut. Ins. Co. [Mackey], 25 AD3d 905, 906-907).
Furthermore, the sworn, signed, and notarized "Notice of Intention to Make Claim" form received by the insurer satisfied the first notice provision of the subject policy which required that the insured file a "statement under oath" that indicated that the insured had a cause of action arising out of an accident against a person whose identity was unascertainable (cf. Matter of Allstate Ins. Co. v Estate of Aziz, 17 AD3d 460, 461; Matter of Eveready Ins. Co. v Ruiz, 208 AD2d 923, 923), and the insurer failed to demonstrate that it was prejudiced thereby (accord Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d at 476; Matter of New York Cent. Mut. Fire Ins. Co. v Ward, 38 AD3d at 901; Matter of Nationwide Mut. Ins. Co. [Mackey], 25 AD3d at 906-907).
With respect to the insurer's contention that the insured failed to demonstrate physical contact, we note that "[p]hysical contact is a condition precedent to an arbitration based upon a hit-and-run accident involving an unidentified vehicle" (Matter of Great N. Ins. Co. v Ballinger, 303 AD2d 503, 504; see Insurance Law § 5217; State Farm Mut. Auto. Ins. Co. v Johnson, 287 AD2d 640, 640-641; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d 530, 530). When there is an issue of fact as to whether physical contact occurred, a hearing on the issue must be conducted (see State Farm Mut. Auto. Ins. Co. v Johnson, 287 AD2d at 640-641; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d at 530).
Where, as here, a case is tried without a jury, this Court's power to review the evidence is as broad as that of the trial court, "taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses'" (Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499, quoting York Mortgage Corp. v Clotar Costr., 254 NY 128, 133-134). In this case, the Supreme Court's determination that the insured had been struck by an unidentified vehicle is supported by the record and will not be disturbed on appeal (see Matter of Halycon Ins. Co. v Fox, 44 AD3d 662). The insured's testimony, credited by the court, demonstrated that she had come into physical contact with the hit-and-run vehicle (see Matter of Nova Cas. Co. v Musco, 48 AD3d 572, 573; Matter of Allstate Ins. Co. v McMahon, 251 AD2d at 572; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d at 530).
The insurer's remaining contentions are without merit.
P.J.P. Mechanical Corp. v. Commerce and Industry Insurance Company

Plaintiff appeals from a judgment of the Supreme Court, New York County (Karla Moskowitz, J.), entered April 24, 2007, which, upon the parties' respective motions for summary judgment, declared that defendant has no duty to pay the legal fees and other litigation expenses incurred by plaintiff in an underlying action plaintiff brought against the general contractor to recover the balance due under the subcontract.

Arthur J. Semetis, P.C., New York (Arthur J. Semetis
and Shannon P. Gallagher of
counsel), for appellant.
Law Offices of Green & Lavelle, Brooklyn (William
J. Cleary and Martin P.
Lavelle of counsel), for respondent.

SWEENY, J.
This case involves the extent of an insurer's duty to defend under the terms of its policy. Specifically, does an insurer have a duty either to fund or to reimburse for separate litigation commenced by its insured, where the responsive pleadings raise an affirmative defense based on a claim of offset? For the following reasons, we hold that it does not.
Plaintiff was insured under a commercial general liability policy issued by defendant. It entered into a contract with Cauldwell, a general contractor, to perform heating and ventilation work in a building leased by JP Morgan Chase Bank. Plaintiff subcontracted out part of its work to Penava Mechanical Corp. On November 30, 2001, a pipe separated from a water riser, causing damage to the building in excess of $500,000. Cauldwell immediately advised plaintiff and Penava that it considered them solely responsible for the property damage caused by the ruptured pipe.
Plaintiff, in turn, immediately notified defendant of Cauldwell's claim. Defendant conducted an investigation pursuant to the terms of its insurance policy and determined that preservation of the burst pipe was necessary in the event of litigation. Counsel was assigned to file a pre-suit motion to preserve the pipe. This counsel attended various meetings, inspections and tests conducted by the insurance carriers for the parties involved in this incident, with each taking differing positions on the question of liability. On December 14, 2001, Cauldwell's insurer filed a notice of claim against plaintiff. However, no litigation was commenced by any of the parties for damages resulting from the burst pipe incident.
Thereafter, Cauldwell advised plaintiff that it was withholding the contract balance of approximately $650,000 owed to plaintiff because of Cauldwell's position that plaintiff was solely responsible for the property damage resulting from the ruptured pipe. Plaintiff requested defendant to assign counsel to defend it against Cauldwell's claim of negligence that resulted in the withholding of the contract balance. Defendant refused, taking the position that pursuant to the terms of the policy, Cauldwell's claim of negligence did not fall within the definition of a "claim" as defined in the insurance policy, as it was not a "suit, [or] a demand for injunctive or equitable relief."
In February 2003, plaintiff hired its own counsel and served an amended complaint [FN1] on Cauldwell, JP Morgan and others to recover the disputed contract balance. Cauldwell and the other named defendants joined issue, asserting three affirmative defenses. The only substantive affirmative defense was Cauldwell's claim of the right to offset any recovery based on damages sustained as a result of the negligence of plaintiff or its subcontractor.
In November 2004, plaintiff filed a second amended complaint against Cauldwell, JP Morgan and others. In their answer, Cauldwell and JP Morgan asserted counterclaims against plaintiff to recover for property damage caused by the alleged negligence of plaintiff or its subcontractors. Plaintiff again forwarded this answer to defendant and demanded a defense. At this point, defendant notified plaintiff that counsel would be assigned to represent it, but that such representation would be limited solely to the defense of Cauldwell's counterclaim for negligence. In exchanges of correspondence, plaintiff demanded that defendant also reimburse it for legal fees and expenses it incurred and would incur in connection with the prosecution of the underlying action to collect the contract balance. Defendant refused such demands, again taking the position that the policy only provided for the defense of covered claims, not claims for breach of contract, and that it would only pay for legal expenses incurred at its request.
In December 2005, plaintiff commenced this declaratory judgment action, alleging that defendant had a duty to pay all legal expenses and costs directly incurred by plaintiff in the underlying collection action. Defendant moved for summary judgment, arguing that Cauldwell's affirmative defense of negligence in the underlying collection action was not an "occurrence" as defined in the policy, which would trigger coverage. Defendant contended that once Cauldwell and JP Morgan, in response to the second amended complaint, asserted counterclaims against plaintiff, it appointed counsel to represent plaintiff solely with respect to those counterclaims, while plaintiff's counsel continued to represent it in the collection action. Defendant further argued that since the collection action was ultimately settled for $930,000, plaintiff's demand for reimbursement of legal costs incurred in connection therewith did not constitute a claim for property damage or bodily injury as defined in the policy, and defendant thus was under no obligation to pay those sums.
Plaintiff cross-moved for summary judgment, arguing that the policy did not differentiate among a pre-suit claim of negligence, an affirmative defense of negligence, and a counterclaim for negligence with respect to the insured's duty to
defend. Plaintiff contended that although defendant maintained it could take no action as the matter was not in suit, it should have done a more extensive investigation and settled the claim resulting from the ruptured pipe.
Supreme Court held that the contract language of the policy controls. The policy definitions, when read in conjunction with the entire policy, placed no obligation on defendant to defend plaintiff against an affirmative defense filed in response to an action, even though that affirmative defense was couched in terms of plaintiff's negligence. The court granted defendant's motion and denied plaintiff's cross motion.
Well established principles governing the interpretation of insurance contracts provide that the unambiguous provisions of the policy must be given their plain and ordinary meaning (Greater N.Y. Mut. Ins. Co. v United States Underwriters Ins. Co., 36 AD3d 441, 442 [2007]). This is a question of law for the court to determine (Titlebaum Holdings v Gold, 48 NY2d 51, 56 [1979]; Seaport Park Condominium v Greater N.Y. Mut. Ins. Co., 39 AD3d 51, 54 [2007]). However, a court is not at liberty to "make or vary the contract of insurance to accomplish its notions of abstract justice or moral obligation" (Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]).
The policy in question provides:
"We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury and property damage to which this insurance applies. We will have the right and duty to defend any suit seeking those damages. We may at our discretion investigate any occurrence and settle any claim or suit that may result . . ."
With respect to the burst pipe, it is clear that defendant did exercise its discretion to investigate the occurrence and closed its file after determining that plaintiff was not liable for any property damage. The policy does not require the insurer to defend any "occurrence" which is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Additionally, there is nothing in the policy language that requires defendant to either prosecute affirmative claims or reimburse plaintiff for the fees paid its counsel for such affirmative claims (see National City Bank v New York Central Mut. Fire Ins. Co., 6 AD3d 1116, 1117 [2004], lv denied 3 NY3d 605 [2004]; Goldberg v American Home Assur. Co., 80 AD2d 409, 411-12 [1981]).
We find no ambiguity in the contract reference to "suit,"
which is defined as
"a civil proceeding in which damages to which this insurance applies are alleged. Suit includes:
"a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or
"b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent."
The policy, when read as a whole, clearly states that defendant has the duty to defend a suit, which means a proceeding brought against the insured, not by the insured. "Defend," by its clear import, does not envision affirmative litigation.
The only remaining question is whether an affirmative defense based on offset in the collection action triggered the insurer's duty to defend a "suit." The motion court properly held that it did not.
Contrary to plaintiff's arguments, an affirmative defense is substantively different from a counterclaim. A counterclaim is a cause of action asserted by a defendant against a plaintiff (CPLR 3019[a]). By its very nature, a counterclaim seeks affirmative relief.
Affirmative defenses, on the other hand, cannot seek such relief. Cauldwellcould not obtain affirmative relief by asserting an offset defense. CPLR 3018(b) requires an affirmative defense to be raised in an answer for one of two reasons: (1) to prevent surprise against the adverse party, or (2) to raise issues of fact not appearing on the face of a prior pleading. The effect of a successful affirmative defense is the dismissal of a plaintiff's complaint or cause of action. It does not give the defendant any affirmative relief against a plaintiff, such as monetary damages.
When raised as an affirmative defense, Cauldwell's claim of plaintiff's negligence merely sought dismissal of the suit for the balance of the contract amount. When raised as a counterclaim, however, it effectively sought damages from plaintiff, thus triggering the insurer's duty to defend, which it did.
The distinctions between affirmative defenses and counterclaims set forth in CPLR 3018(b) and 3019(b) are not merely semantic; these are substantive differences. The distinction has been succinctly explained as follows:
"Facts pleaded which controvert the plaintiff's claim and serve merely to defeat it as a cause of action constitute a defense, and are inconsistent with the legal idea of a counterclaim, which is a separate and distinct cause of action. On the other hand, a claim that does not defeat the plaintiff's cause of action, but constitutes an independent cause of action for the defendant, should be pleaded as a counterclaim, and not as an affirmative defense." (84 NY Jur 2d, Pleading § 166.)
Significantly, if plaintiff believed that Cauldwell's defense was truly a counterclaim, the prudent action was to immediately move to strike the defense and force Cauldwell to
replead the claim as a counterclaim. This would have triggered the insurer's duty to defend. Had these steps been taken in the instant action, defendant would have been forced to defend plaintiff at the beginning of the case, rather than when the counterclaim was voluntarily asserted by Cauldwell several months later.
There do not appear to be any New York cases addressing the issue of whether the assertion of a claim such as Cauldwell's offset claim, when pleaded as an affirmative defense, triggered the insurer's duty to defend. Plaintiff relies on Construction Protective Servs. v TIG Specialty Ins. Co. (29 Cal 4th 189, 57 P3d 372 [2002]) and argues that we should adopt the rationale therein. In that case, a security firm sued the insurance company that provided its comprehensive general liability policy, claiming the insurer breached its duty to defend and indemnify against a setoff claim. The setoff was asserted as an affirmative defense in a lawsuit for unpaid services. The customer alleged that the security firm was legally responsible for fire damage at its construction site and thus was entitled to set those damages off against the amounts owed for security services. The trial court sustained the insurance company's demurrer without leave to amend, based on its conclusion that a liability insurer's duty to defend does not extend to affirmative defenses raised in response to a lawsuit initiated by the insured. Based solely on its Code of Civil Procedure, the California Supreme Court held that the trial court had erroneously sustained the demurrer, but it declined to address the question on the facts where the precise terms of the insurance policy were not before the court. In an action on a written contract, a plaintiff could, under California procedure, plead "the legal effect of the contract rather than its precise language," thus enabling the court to determine whether "a prima facie right to relief" had adequately been stated, notwithstanding the specific language of the contract (29 Cal 4th at 198-199, 57 P3d at 377).
Despite the omission of a copy of the insurance policy as an exhibit to the complaint, the court concluded that the allegations in the complaint were sufficient to allege that the setoff claim fell within the scope of the contractual obligation to defend against suits seeking damages, and left open the question whether the duty would extend to the setoff claim once the precise language of the policy was known.
We decline to follow this holding. Were we to adopt the reasoning of Construction, it would represent a dramatic change in long-established New York law, which mandates that unambiguous contract language controls. It would essentially eliminate our pleading distinctions between affirmative defenses and counterclaims by holding that how the setoff is pleaded does not control. While Construction recognized that a setoff is limited to defeating a plaintiff's claim in the same manner that an affirmative defense is so limited, it then went on to hold the effect of pleading a setoff defense is the same as if it were pleaded as a counterclaim, and thus, at least for the purposes of whether utilized defensively (as in an affirmative defense) or offensively (as in a counterclaim), there is no distinction between the two. In either case, an insurer would be mandated to assign counsel to defend the insured. This would impact the long-established business practices of insurers, and lead to uncertainty in the drafting of insurance contracts.
To ignore the clear language of an insurance policy and order a carrier to litigate an affirmative action chosen by the policyholder based on a mere claim in a defendant's answer that the affirmative action somehow relates, however tenuously, to an occurrence or allegation of negligence on the part of the insured would run afoul of the rule enunciated in Breed (46 NY2d at 355). We see no reason to set aside long-standing precedent on this issue.
Accordingly, the judgment of the Supreme Court, New York County (Karla Moskowitz, J.), entered April 24, 2007, upon the parties' respective motions for summary judgment, declaring that defendant has no duty to pay the legal fees and other litigation expenses incurred by plaintiff in an underlying action plaintiff brought against the general contractor to recover the balance due under the subcontract, should be affirmed, without costs.
Balyszak v Siena Coll.

Appeal from that part of an order of the Supreme Court (Lynch, J.), entered March 11, 2007 in Albany County, which partially granted a cross motion by defendant Siena College for summary judgment on its cross claim seeking contractual indemnification and on its third-party action.
Plaintiff sustained injuries when a referee's platform upon which he was standing collapsed during a volleyball tournament being held at defendant Siena College. Defendants United States Volleyball Association, Inc. and Bad Influence (Pac-Man) Volleyball Club (hereinafter collectively referred to as USVBA) had contracted with Siena to hold the tournament at the college's field house. The contract — entitled a "Facility Rental Agreement" — provided that USVBA would indemnify Siena for all claims for injury to person or property and also that USVBA would furnish a certificate of insurance naming Siena as an additional insured on USVBA's liability policy. USVBA provided a certificate of insurance from their insurers, third-party defendants, American Speciality Insurance Services, Inc. and United States Fidelity and Guaranty Company (hereinafter collectively referred to as the insurers). That certificate stated that Siena was an additional insured, but only with respect to the negligence of USVBA at the tournament.
Plaintiff commenced this action against Siena and USVBA. Siena asserted cross claims against USVBA for common-law indemnity, contractual indemnity and breach of contract. The insurers refused Siena's request for a defense and indemnification, prompting Siena to bring a third-party action against the insurers claiming that they had a duty to defend and indemnify Siena both as an additional insured and also under a "contractual liability" provision of the insurance policy, which provided coverage for contractual duties to indemnify assumed by USVBA.
Following motions by USVBA and Siena, Supreme Court rendered a comprehensive written decision. The court found that questions of fact existed as to whether negligence by Siena or USVBA was a cause of the accident. However, Supreme Court partially granted Siena's cross motion finding, among other things, that USVBA had contracted to provide indemnification regardless of Siena's negligence, that the insurers named Siena as an additional insured requiring them under the broad scope of the duty to defend to provide Siena a defense (even if Siena was ultimately found to have been negligent), and that the insurers were further obligated to defend and indemnify based upon the "contractual liability" provision of the policy. USVBA and the insurers appeal.
Initially, we note that during the time that this appeal was pending, plaintiff settled his action for $75,000. That settlement does not, however, render this appeal moot. The settlement was made with the express reservation of the right to pursue this appeal regarding the relative responsibilities of Siena, USVBA and the insurers. Since the rights of those parties will be affected by our determination, the appeal is not moot (see Matter of Utica Mut. Ins. Co. [Selective Ins. Co. of Am.], 27 AD3d 990, 991-992 [2006]; Matter of Sacket v Bartlett, 241 AD2d 97, 100 [1998], lv denied 92 NY2d 806 [1998]).
The insurers and USVBA contend that USVBA did not agree to indemnify Siena for negligence by Siena. We are unpersuaded. "When the intent is clear, an indemnification agreement will be enforced even if it provides indemnity for one's own or a third party's negligence" (Bradley v Earl B. Feiden, Inc., 8 NY3d 265, 275 [2007] [citation omitted]). Here, paragraph 12 of the agreement provided, in relevant part, that "[USVBA] hereby expressly covenants and agrees to indemnify [Siena] against all claims and demands for damages for injury to any person or property occurring on or about the lease facility premises."[FN1] Similar language has been found to extend indemnification even if the party being indemnified was negligent (see Levine v Shell Oil Co., 28 NY2d 205, 210-213 [1971]). We agree with Supreme Court that a subsequent paragraph in the contract supplements, but does not limit or replace, the indemnification requirement of paragraph 12. Indeed, adopting the construction urged by the insurers and USVBA would render paragraph 12 essentially a "nullity," and "this could not have been the intent of the parties" (id. at 213).
Considering next the duty to defend, it is axiomatic that the duty to defend is "exceedingly broad" (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006] [internal quotation marks and citations omitted]). It is clear from this record that the fact that Siena was named an additional insured gave rise to such a duty (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714 [2007]; Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 393 [2003]). Moreover, as explained by Supreme Court, the "contractual liability" provision of the coverage also gave rise to a duty to defend and indemnify Siena under the circumstances of this case. The remaining arguments have been considered and are either academic or unpersuasive.
Erie Insurance Group v. National Grange Mutual Insurance Co.

Calendar Date: April 29, 2009
Before: Cadona, P.J., Peters, Lahtinen, Kane and Garry, JJ.

Ryan & Smallacombe, P.L.L.C., Albany (Melissa J.
Smallacombe of counsel), for appellants.
Pennock, Breedlove & Noll, L.L.P., Clifton Park
(Carrie McLoughlin Noll of counsel), for respondent.
Appeal from an order of the Supreme Court (Kramer, J.), entered July 25, 2008 in Schenectady County, which, among other things, granted a motion by defendant National Grange Mutual Insurance Company to dismiss plaintiffs' first cause of action.
Defendant Martin McClary subcontracted with the general contractor, plaintiff Pine Ridge Log Homes, Inc., to do foundation work for the construction of a home. McClary was insured by defendant National Grange Mutual Insurance Company (hereinafter NGM). McClary's employee, defendant Michael P. Giblin, commenced an underlying personal injury action after he lost an eye while working on the project (see Giblin v Pine Ridge Log Homes, Inc., 42 AD3d 705 [2007]). Pine Ridge and its insurer, plaintiff Erie Insurance Group, commenced this action seeking a declaration that NGM was required to defend and indemnify Pine Ridge in the underlying action. Specifically, plaintiffs allege that McClary entered into an oral contract with Pine Ridge to name Pine Ridge as an additional insured under his policy issued by NGM.
Prior to answering, NGM moved to dismiss the complaint based upon documentary evidence (see CPLR 3211 [a] [1]), arguing that Pine Ridge was not insured under McClary's policy. Plaintiffs cross-moved for summary judgment against NGM. Supreme Court granted NGM's motion to dismiss the complaint against NGM, denied the cross motion and declared that Pine Ridge is not an additional insured under NGM's insurance policy issued to McClary [FN1]. On plaintiffs' appeal, we affirm.
While "[u]nder CPLR 3211 (a) (1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Weston v Cornell Univ., 56 AD3d 1074, 1075 [2008]), plaintiffs cross-moved for summary judgment, permitting the court to grant judgment to any party (see CPLR 3212 [e])[FN2] . NGM was entitled to dismissal of the complaint against it based upon undisputed facts and the language of the insurance policy.
A portion of the insurance policy issued by NGM to McClary stated, "Each of the following is added as an Additional Insured . . . [a]ny general contractor, subcontractor or owner for whom you are required to add as an additional insured on this policy under a written construction contract or agreement where a certificate of insurance showing that person or organization as an additional insured has been issued and received by [NGM] prior to the time of loss." This provision is ambiguous (compare Superior Ice Rink, Inc. v Nescon Contr. Corp., 52 AD3d 688, 691 [2008]; Travelers Indem. Co. of Am. v Royal Ins. Co. of Am., 22 AD3d 252, 253 [2005]). One possible reading of the provision is that the construction contract or agreement to list someone as an additional insured must be in writing, and a certificate of insurance listing that person or organization must be issued and received by NGM prior to the loss-inducing incident. The provision could also be read as containing two alternate ways of including a person or organization as an additional insured: if a written construction contract so requires, regardless of whether NGM is ever notified; or if any agreement — oral or written — so requires and a certificate of insurance listing that person or organization is received by NGM prior to the loss-inducing incident. Despite this ambiguity, and the rule that any ambiguity in an insurance contract is resolved against the insurer (see Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340 [2000]), NGM must prevail here.
Regardless of which interpretation is used, the policy's contractual requirements have not been satisfied so as to include Pine Ridge as an additional insured. The record does not contain a written contract or agreement between McClary and Pine Ridge. Nor did anyone introduce a certificate of insurance listing Pine Ridge as an additional insured, let alone proof that such a certificate was sent to or received by NGM. In fact, NGM's employee affirmed that no such certificate was ever received. Under the first reading of the policy provision above, plaintiffs cannot prevail because the agreement between Pine Ridge and McClary was not in writing and no pertinent certificate of insurance was issued or received by NGM. Under the second reading, the first alternative is not met due to the lack of a written contract or agreement and the second alternative is not met due to the lack of the required certificate of insurance. Although the documentary evidence alone was insufficient to conclusively establish a defense, the record evidence supports a grant of summary judgment dismissing the complaint as against NGM and declaring that Pine Ridge is not an additional insured under the insurance policy at issue.
Cardona, P.J., Peters, Lahtinen and Garry, JJ., concur.
ORDERED that the order is affirmed, with costs.
Footnotes

Footnote 1: The complaint also contained a second cause of action alleging breach of contract against McClary and seeking to have him indemnify Pine Ridge if NGM does not do so. That cause of action was not dismissed by Supreme Court and is not at issue on appeal.

Footnote 2: While a motion for summary judgment is premature when filed before joinder of issue (see CPLR 3212 [a]; Roche v Claverack Coop. Ins. Co., 59 AD3d 914, 916 [2009]), no party complained of this procedural defect.

In the Matter of Progressive Northeastern Insurance Company v. Harding


Buratti, Kaplan, McCarthy & McCarthy, Yonkers, N.Y. (Michael A.
Zarkower of counsel), for appellant.
Thomas Guccione (Thomas Torto, New York, N.Y., of counsel),
for respondent.

DECISION & ORDER
In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Kings County (Kurtz, Ct. Atty. Ref.), dated April 4, 2008, which, after a hearing, denied the petition and, in effect, directed the parties to proceed to arbitration.
ORDERED that the order is affirmed, with costs.
The record supports the Supreme Court's determination that there was physical contact between the vehicle of the petitioner's insured and an unidentified vehicle (see NorthernWestchesterProfessionalPark Assoc. v Town of Bedford, 60 NY2d 492, 499). Accordingly, the Supreme Court properly denied the petition and, in effect, directed the parties to proceed to arbitration (cf. Matter of Nova Cas. Co. v Musco, 48 AD3d 572, 573). 
In the Matter of Anderson v. Gulf Insurance Company


Schwartz Goldstone & Campisi, LLP (Annette G. Hasapidis, South
Salem, N.Y., of counsel), for appellant.
Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, New York,
N.Y. (Richard E. Lerner of counsel), for
respondent.

DECISION & ORDER
In a proceeding pursuant to CPLR article 75 to confirm an arbitration award dated August 27, 2004, the petitioner appeals, as limited by her brief, from so much of an order of the Supreme Court, Kings County (Ruchelsman, J.), dated April 3, 2008, as, upon reargument, granted that branch of the motion of Gulf Insurance Company which was to vacate the arbitration award to the extent of reducing it to the sum of $25,000, and, in effect, denied the petition.
ORDERED that the order is affirmed insofar as appealed from, without costs or disbursements.
Following a hearing, the arbitrator directed the respondent to pay the petitioner "the maximum available SUM coverage up to $750,000." The Supreme Court correctly determined that the maximum available SUM coverage was $25,000. Accordingly, the Supreme Court, upon reargument, correctly granted that branch of the respondent's motion which was to vacate the arbitration award to the extent of reducing it to the sum of $25,000, and, in effect, denied the petition.
Dietrich v. Puff Cab Corp.


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Herbert William Fischman, New York, N.Y. (Paul S. Ehrlich of
counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., the defendants appeal from an order of the Supreme Court, Kings County (Martin, J.), dated April 28, 2008, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff Jeanne Dietrich did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
The plaintiff Jeanne Dietrich was driving westbound on 96th Street in Manhattan toward its intersection with Second Avenue when she noticed a pedestrian lying in the crosswalk. She stopped her car and saw the defendant Alex Boakye Yiadow, a taxi driver, chasing his unoccupied taxicab, which was moving northbound in reverse on Second Avenue. Yiadow caught up with the taxicab, jumped into it, and steered it into the side of Dietrich's stopped car. Dietrich's car spun to the right from the impact, causing her to strike her head on the window.
The plaintiffs alleged that as a result of this accident, Dietrich sustained injuries both nonpermanent and permanent in nature, limiting her ability to perform her usual work, home care, and recreational activities. She received treatment, including traction, acupuncture, and stimulation which continued for more than two years following the accident.
Dr. Alla Mesh, a physician who performed a neurological examination of Dietrich on behalf of the defendants, reviewed a magnetic resonance imaging report of her cervical spine as well as the reports and notes of her examining and treating physicians. Dr. Mesh also measured Dietrich's range of motion in her lumbar and cervical spine and found that she performed within normal ranges, which were then set forth in his report. As a consequence, he concluded that Dietrich did not suffer permanent neurological injury from the accident.
The defendants, by the submission of the affirmed medical reports of their examining neurologist and radiologist, made a prima facie showing that Dietrich 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 opposition, the plaintiffs raised a triable issue of fact by the submission of the reports of Dr. William Buchmann. Dr. Buchmann's reports demonstrated that Dietrich's range of motion in her cervical spine was significantly limited, when read in conjunction with the report of the defendants' expert, Dr. Mesh. Dr. Mesh's report had set forth the applicable normal ranges of motion against which Dr. Buchmann's findings could be compared. A statement by an expert that is put forward by a party in litigation constitutes an informal judicial admission (see Chock Full O'Nuts Corp. v NRP LLC I, 47 AD3d 189, 192; Matter of City of New York, 73 AD2d 932, 933) that is admissible against, although not binding upon, the party that submitted it. Thus, just as a nonmoving plaintiff in a serious injury case may rely upon the unsworn report of the plaintiff's treating physician once it has been submitted by the moving defendant (see Pagano v Kingsbury, 182 AD2d 268), a nonmoving plaintiff may also rely upon the statement by the moving defendant's expert of the normal range of motion (see Djetoumani v Transit, Inc., 50 AD3d 944, 946).
The defendants' remaining contentions are without merit.
Grobman v. Chernoff


Roura & Melamed (Alexander J. Wulwick, New York, N.Y., of
counsel), for appellant.
John P. Humphreys, Melville, N.Y. (Dominic P. Zafonte of
counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Nassau County (Palmieri, J.), dated August 4, 2008, as granted that branch of the cross motion of the defendants Rhonda Globman, also known as Rhonda Grobman and Adam J. Chernoff which was, in effect, to disallow the plaintiff pre-arbitration award interest upon an arbitration award dated April 9, 2008, determining, after a hearing on the issue of damages only, that the plaintiff was entitled to an award of damages in the amount of $125,000, and, in effect, directed that interest at the "judgment rate" was to run from the date of the arbitration award to the date of the plaintiff's receipt of payment of the award.
ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the cross motion of the defendants Rhonda Globman, also known as Rhonda Grobman and Adam J. Chernoff which was, in effect, to disallow the plaintiff pre-arbitration award interest upon the arbitration award dated April 9, 2008, and substituting therefor a provision denying that branch of the cross motion; as so modified, the order is affirmed insofar as appealed from, with costs to the plaintiff, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment pursuant to CPLR 7514(a), in accordance herewith.
On August 22, 1996, the plaintiff was involved in an automobile accident. She was a passenger in a vehicle driven by the defendant Adam J. Chernoff, and owned by the defendant Rhonda Globman, also known as Rhonda Grobman (hereinafter the respondents). A bifurcated trial was held in the plaintiff's ensuing action to recover damages for her personal injuries. Following the liability phase, on June 25, 2000, a jury found the respondents 100% at fault in the happening of the accident.
In the subsequent trial on the issue of damages, the jury found, among other things, that the plaintiff had sustained a "permanent consequential limitation of use of a body organ or member" (Insurance Law § 5102[d]). It awarded her damages for future medical expenses, but did not award anything for future pain and suffering. A judgment subsequently was entered upon the verdict in the principal sum of $10,000, composed of $1,100 for past pain and suffering and $8,900 for future medical expenses.
On appeal, this Court reversed the judgment, agreeing with the plaintiff that the jury's verdict was inconsistent in finding that she sustained a "permanent consequential limitation of use of a body organ or member" (Insurance Law § 5102[d]), and in awarding damages for future medical expenses, but in failing to her award her any damages for future pain and suffering. The matter was remitted for a new trial on the issue of damages (see Ajoudanpour v Globman, 2 AD3d 373).
Thereafter, the parties agreed to submit the issue of damages to an arbitrator for resolution. However, a dispute arose as to whether the issue of "serious injury" should be submitted in that forum. The plaintiff refused to submit the issue to arbitration, and the arbitrator refused to hear the case if that issue was excluded. The respondents then moved in the Supreme Court to compel the plaintiff to proceed to arbitration on the issue of damages, including the issue whether she sustained a serious injury within the meaning of the Insurance Law. The plaintiff opposed the motion. In an order dated January 20, 2006, the Supreme Court granted the respondents' motion, and directed the arbitrator to decide all issues, including the threshold issue of serious injury.
In a decision and order dated December 19, 2006 (see Grobman v Chernoff, 35 AD3d 658), this Court reversed, concluding that the jury's determination that the plaintiff sustained a serious injury, which the defendants failed to challenge on the first appeal, constituted a final and binding determination of the issue, which could not be relitigated in arbitration.
The arbitration agreement, dated December 13, 2004, contains a section with a heading which reads, "AT ISSUE: Damages," and it further reflects the parties' agreement to high/low parameters of $150,000 and $10,000. The agreement is silent on the issue of whether any damages award was to include interest.
A hearing was held before an arbitrator, who rendered an award in the plaintiff's favor in the sum of $125,000, on April 9, 2008. The award was silent on the issue of interest.
Thereafter, the plaintiff moved, inter alia, pursuant to CPLR article 75 to confirm the award, and to enter judgment thereon. The respondents submitted an affirmation of counsel in "partial opposition" to the motion. As relevant here, the respondents' counsel stated that a check in the sum of $125,000, dated May 23, 2008, had been tendered to the plaintiff's attorney, who "implied" that the plaintiff was entitled to interest in the amount of $90,000. The respondents' counsel argued that any attempt to seek a judgment in excess of $125,000 was improper.
By notice of cross motion dated contemporaneously with their "partial opposition," the respondents cross-moved, inter alia, pursuant to CPLR article 75 to confirm the arbitration award, and to enter judgment thereon in the amount of $125,000, which already had been tendered to the plaintiff. Thus, in effect, the respondents sought to preclude the plaintiff from recovering pre-arbitration award interest. The plaintiff opposed the cross motion. Among other things, she argued that the liability verdict in her favor was rendered on June 25, 2000, and if she was to be made whole in the context of the bifurcated procedure utilized in her case, interest on her damages award had to be computed from that date to the date of entry of the final judgment.
In the order appealed from, the Supreme Court granted both the motion and the cross motion, and confirmed the $125,000 award, with interest at the "judgment rate" to run from the date of the arbitration award (i.e. April 9, 2008), to the date the plaintiff received the check the respondents tendered the following month. In other words, the Supreme Court disallowed pre-award interest. We now modify.
"A successful plaintiff's entitlement to interest on a civil damages award is, in general, governed by CPLR article 50" (Love v State of New York, 78 NY2d 540, 542). In an action to recover damages for personal injuries, interest may be recovered upon the total sum awarded, including interest to the verdict, report or decision, "from the date the verdict was rendered or the report or decision was made to the date of entry of final judgment" (CPLR 5002; Love v State of New York, 78 NY2d 540, 542).
The Court of Appeals has made it clear that in a personal injury action in which the trial is bifurcated, interest runs on the damages awarded from the date liability is determined (see Love v State of New York, 78 NY2d 540). In Love, the Court observed that interest is not a penalty, but rather is the "cost of having the use of another person's money for a specified period" (Love v State of New York, 78 NY2d at 544). Interest is meant to compensate successful plaintiffs for the nonpayment of what is due them, and is not designed to punish defendants for delaying resolution of the litigation. The Court further stated:
"In a bifurcated trial, the plaintiff's right to be made whole becomes fixed when the verdict holding the defendant liable is rendered. At that point, the defendant's obligation to pay the plaintiff is established, and the only remaining question is the precise amount that is due. The fact that damages are not yet liquidated is of no moment. . .
"Accordingly, it follows that, if plaintiffs are to be fully compensated for their losses in bifurcated trials, prejudgment interest must be calculated from the date that liability is established regardless of which party is responsible for the delay, if any, in the assessment of the plaintiff's damages."

(Love v State of New York, 78 NY2d at 544; see also Van Nostrand v Froehlich, 44 AD3d 54, 56-57.)
As applied here, the foregoing principles require that the plaintiff recover interest on her personal injury award from the date the respondents' liability first was fixed —— i.e., from June 25, 2000.
The respondents contend that where a broad arbitration agreement does not prohibit an arbitrator's power to rule on the issue, he or she has the authority to allow pre-award interest, and under such circumstances, if the arbitrator does not do so, the courts may not step in thereafter and allow it. However, the cases they cite do not address the issue presented here, or do not involve bifurcated personal injury cases in which a jury has determined liability, and thereafter, an arbitrator considers the limited issue of damages.
However, contrary to the plaintiff's contention, the Supreme Court correctly directed post-award interest to run up to the date of payment, rather than to the date of judgment (see Matter of Aetna Cas. & Sur. Co. v Rosen, 233 AD2d 499, 499; Matter of Ricciardi, 102 AD2d 871, 871-872).
The parties' remaining contentions either are without merit, or are not properly before us on this appeal.
Hossain v. Singh


Baker, McEvoy, Morrissey & Moskovits, P.C. (Timothy M.
Sullivan, New York, N.Y., of counsel), for appellants.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Nelson, J.), dated September 29, 2008, as denied that branch of their motion which was for summary judgment dismissing so much of the complaint as alleged that the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d)(9).
ORDERED that the order is affirmed insofar as appealed from, without costs or disbursements.
The defendants did not meet their prima facie burden of establishing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d)(9) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352; Gaddy v Eyler, 79 NY2d 955). The plaintiff clearly alleged in his bill of particulars that he sustained, inter alia, a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts constituting his usual and customary activities for not less than 90 days during the 180 days immediately following the accident. Further, not only did the plaintiff testify at his deposition that he had missed three months from work immediately following the accident, he also informed the defendants' examining physicians that he had missed three months of work. However, the affirmed reports of the defendants' examining physicians did not specifically relate any of their findings to this category of serious injury for the relevant time period following the accident, and the defendants did not submit any other evidence to refute the plaintiff's claim (see Neuburger v Sidoruk, 60 AD3d 650; Miller v Bah, 58 AD3d 815; Scinto v Hoyte, 57 AD3d 646). Since the defendants failed to meet their prima facie burden with respect to the 90/180 day category of a serious injury, it is unnecessary to examine the sufficiency of the plaintiff's opposition papers in this regard (see Neuburger v Sidoruk, 60 AD3d 650; Miller v Bah, 58 AD3d 815; Scinto v Hoyte, 57 AD3d 646).
Keum Lee Jeong v. Imperial Contract Cleaning, Inc.


O'Connor, O'Connor, Hintz & Deveney, LLP, Melville, N.Y.
(Michael T. Regan of counsel), for respondents.

DECISION & ORDER
In an action, inter alia, to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Dollard, J.), entered March 12, 2008, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is denied.
The defendants met 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, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). However, in opposition, the plaintiff raised a triable issue of fact through the affidavit of her treating physician, Dr. Sung J. Pahng, as to whether she sustained a serious injury to, among other things, her neck and lower back. Contrary to the Supreme Court's determination, Dr. Pahng acknowledged and addressed the fact that the plaintiff was involved in a prior accident in 2003 in which she injured her neck and back. Accordingly, his conclusions that the plaintiff sustained, as a result of the subject accident, significant limitations of a permanent nature, were not merely speculative (cf. Joseph v A & H Livery, 58 AD3d 688; Moore v Sarwar, 29 AD3d 752; Bennett v Genas, 27 AD3d 601; Allyn v Hanley, 2 AD3d 470).
Hernandez v. Rodriguez


Buratti, Kaplan, McCarthy & McCarthy, Yonkers (Jeffrey A.
Domoto of counsel), for appellant.
Julio J. Marino, Great Neck, for respondent.
Order, Supreme Court, Bronx County (Mary Ann Brigantti- Hughes, J.), entered January 23, 2009, which denied defendant- appellant's motion for summary judgment dismissing the complaint as against her on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, to dismiss plaintiff's 90/180-day claim of serious injury as against all defendants, and otherwise affirmed, without costs.
Appellant made a prima facie showing of entitlement to summary judgment by submitting, inter alia, the affirmed reports of a neurologist and an orthopedist, who both examined plaintiff and determined, based upon the objective tests conducted, that she had not sustained a serious injury.
In opposition, plaintiff raised a triable issue of fact as to whether she suffered a permanent consequential limitation or a significant limitation of her cervical and lumbar spines as a result of the accident. The affirmed report of plaintiff's treating physician provided that as a result of the accident, plaintiff sustained, inter alia, disc bulges and herniations and had decreased range of motion in her cervical and lumbar spine (see Ayala v Douglas, 57 AD3d 266 [2008]). Furthermore, appellant's claim that plaintiff's condition was degenerative in nature was speculative as the physician who offered this opinion did not review the MRIs taken of plaintiff's cervical and lumbar spine (compare Valentin v Pomilla, 59 AD3d 184 [2009]. Nor was there an unexplained gap in treatment as the record shows that following the accident, plaintiff underwent physical therapy and ceased such therapy after reaching the maximum medical improvement (see Pommells v Perez, 4 NY3d 566, 577 [2005]).
Plaintiff, however, failed to raise an issue of fact regarding whether she suffered a 90/180-day injury (see e.g. Blackmon v Dinstuhl, 27 AD3d 241 [2006]). Notably, plaintiff's bill of particulars provided that she was confined to bed and home for one week following the accident. In view of this finding, plaintiff's claim of serious injury under the 90/180-day category is dismissed as against all defendants (see Lopez v Simpson, 39 AD3d 420, 421 [2007]).
Mazzarella v. Paolangeli


Calendar Date: April 27, 2009
Before: Mercure, J.P., Spain, Malone Jr., Kavanagh and McCarthy, JJ.

Holmberg, Galbraith, VanHouten & Miller, Ithaca
(Dirk A. Galbraith of counsel), for appellants.
Costello, Cooney & Fearon, P.L.L.C., Syracuse
(Jennifer L. Hunter of counsel), for respondent.
MEMORANDUM AND ORDER

Mercure, J.P.
Appeal from a judgment of the Supreme Court (Garry, J.), entered August 4, 2008 in Tompkins County, which granted defendant's motion for summary judgment dismissing the complaint.
In October 2003, Darrell Cole, an employee of defendant acting within the scope of his employment, lost control of the empty dump truck that he was driving. As a result, the truck slid into a ditch, damaging the vehicle's fuel primer pump. Cole, unaware of the damage to the truck, then moved it out of the ditch and drove a short distance on the roadway, causing the truck's running engine to deposit diesel fuel along approximately 100 feet of the road before he pulled to the side. Within a minute or two, Cole notified his base of the accident and began to contact other drivers, one of whom informed him that another motorist had already gone off the road — i.e., plaintiff Cathleen A. Mazzarella (hereinafter plaintiff), who had driven across the patch of spilled diesel fuel, lost control of her vehicle, collided with a tree, and injured her back.
Plaintiff and her husband, derivatively, then commenced this personal injury action, alleging that defendant negligently spilled fuel onto the road's surface. Following an independent medical examination, defendant moved for summary judgment dismissing the complaint, asserting that plaintiff did not suffer a serious injury under Insurance Law § 5102 (d). Supreme Court agreed and further concluded that recovery is barred by Insurance Law § 5104 (a) because the accident was caused by Cole's negligence in the operation of the dump truck. The court therefore granted defendant's motion and dismissed the complaint, prompting this appeal.
We affirm. As relevant here, Insurance Law § 5104 (a) provides that "in any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in this state, there shall be no right of recovery for non-economic loss, except in the case of a serious injury." It is undisputed that Cole was negligent, that plaintiff did not suffer a serious injury as defined by Insurance Law § 5102 (d), that both she and Cole are "covered persons" within the meaning of the statute, and that plaintiffs allege only non-economic loss. Accordingly, the question before us is whether Supreme Court properly dismissed the complaint on the ground that plaintiff's injuries arose out of Cole's negligence "in the use or operation of a motor vehicle" such that recovery for non-economic loss is barred in the absence of a serious injury (Insurance Law § 5104 [a]).
In that regard, plaintiffs assert that the serious injury threshold is inapplicable because the accident at issue herein was caused by something other than Cole's negligent "use or operation" of the truck. That is, plaintiffs contend that the truck was removed in "time and space" from the accident and that it was the fuel on the roadway, as opposed to the negligent use of the truck, that caused the injury. For purposes of the no-fault law, an accident will be deemed to arise out of the use and operation of a vehicle when "[t]he vehicle [is] a proximate cause of the injury" (Hammond v GMAC Ins. Group, 56 AD3d 882, 882-883 [2008], lv denied 12 NY3d 702 [2009] [internal quotation marks and citations omitted; emphasis added]; see Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 214-215 [1996]; Sullivan v Barry Scott Agency, Inc., 23 AD3d 889, 889 [2005]; see generally Zacari v Progressive Northwestern Ins. Co., 35 AD3d 597, 599 [2d Dept 2006] [stating that in the context of automobile liability insurance coverage, "(a)lthough the (vehicle) itself need not be the proximate cause of the injury . . . (n)egligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury" (internal quotation marks and citations omitted)]).
A review of the record demonstrates that Cole negligently operated the truck by driving it on the roadway despite the damage to the fuel primer pump, thereby spilling diesel fuel along 100 feet of the roadway and creating a hazardous situation; plaintiff's vehicle slipped on this fuel minutes after it was spilled. Under these circumstances, it cannot be said that the truck, as operated negligently by Cole, was wholly incidental to the accident or that Cole's negligent use of the truck was so remote in time and space from the accident that it cannot be considered a proximate cause of the injuries (see Matter of Farm Family Cas. Ins. Co. [Trapani], 301 AD2d 740, 741 [2003]; Martinelli v Travelers Prop. Cas. Ins. Co., 271 AD2d 890, 891 [2000]; cf. Hammond v GMAC Ins. Group, 56 AD3d at 883; Sullivan v Barry Scott Agency, Inc., 23 AD3d at 890; Walpole v Lockhart, 6 AD3d 1087, 1088 [2004]). Inasmuch as plaintiff's injuries arose out of Cole's negligence in the use or operation of the vehicle, Supreme Court properly concluded, as a matter of law, that the serious injury threshold is applicable and dismissed the complaint.
We have considered plaintiffs' remaining arguments, including those relating to Matter of Manhattan & Bronx Surface Tr. Operating Auth. (Gholson) (71 AD2d 1004 [1979]), and conclude that they are lacking in merit.
Moses v. Gelco Corp.


Pontisakos & Rossi, P.C., Roslyn (Elizabeth Mark Meyerson of
counsel), for appellant.
Eustace & Marquez, White Plains (Rose M. Cotter of counsel),
for respondents.
Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered on or about May 19, 2008, directing entry of judgment dismissing the complaint for lack of a serious injury as required by Insurance Law § 5102(d), unanimously affirmed, without costs. Defendants met their initial burden of demonstrating the lack of a serious injury by submitting the affirmed reports of various physicians establishing that plaintiff's injuries were the result of a degenerative condition (see Pommells v Perez, 4 NY3d 566, 580 [2005]), and documentary evidence showing that plaintiff was involved in another accident three years before the subject accident for which he brought a lawsuit alleging injuries virtually identical to those alleged in this lawsuit (see Becerril v Sol Cab Corp., 50 AD3d 261, 261-262 [2008]).  Plaintiff's opposition, which sought to establish a serious injury under the 90/180 category, failed to offer the requisite "competent medical proof" of incapacity caused by the accident (Rossi v Alhassan, 48 AD3d 270, 271 [2008]; see also Marsh v City of New York, __ AD3d __, 2009 NY Slip Op 3049 [1st Dept 2009] [absent evidence sufficient to raise an issue of fact as to causation, plaintiff's 90/180 claim also lacks merit]). Indeed, plaintiff's medical evidence, namely, the affidavit of his chiropractor, which failed to address, let alone refute, the degenerative causation found by defendants' physicians, and did not purport to explain why the prior accident could be ruled out as the cause of plaintiff's current alleged limitations, was aptly characterized by the motion court as speculative (see Montgomery v Pena, 19 AD3d 288, 290 [2005]; Style v Joseph, 32 AD3d 212, 215 [2006]). We note that plaintiff's claim that at the time of the accident he had been working in his physically demanding job for well over a year without complaint — meant to show that he had healed from the injuries sustained in the prior accident — is directly contradicted by his deposition testimony in the other lawsuit. We have considered plaintiff's remaining arguments and find them unavailing.

Juvenex Ltd  v. The Burlington Insurance Company

Anthony Balsamo, New York, for appellant.
Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York
(James M. Adrian of counsel), for respondent.
Judgment, Supreme Court, New York County (Walter B. Tolub, J.), entered June 25, 2008, dismissing the complaint and declaring that defendant is not obligated to defend or indemnify plaintiff in the underlying personal injury action, unanimously affirmed, with costs. Appeal from order, same court (Leland G. DeGrasse, J.), entered on or about May 23, 2008, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
Plaintiff's delay of two months in giving defendant notice of the claim was unreasonable as a matter of law (see 2130 Willliamsbridge Corp. v Interstate Indem. Co., 55 AD3d 371 [2008]; Republic N.Y. Corp. v American Home Assur. Co., 125 AD2d 247 [1986]). Notice to plaintiff's broker did not constitute notice to defendant (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 442 n 3 [1972]).
We decline to consider plaintiff's argument, raised for the first time on appeal, that the notice of claim provided to defendant by the injured person pursuant to Insurance Law § 3420(a)(3) was timely (see Douglas Elliman-Gibbons & Ives v Kellerman, 172 AD2d 307, 308 [1991], lv denied 78 NY2d 856 [1991]). Were we to consider it, we would find that the delay in the injured person's notice to defendant after he ascertained defendant's identity was also unreasonable as a matter of law (see 2130 Willliamsbridge Corp., supra; Republic N.Y. Corp., supra).
XL Insurance America, Inc.,v. Lumbermens Mutual Casualty Company


Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York
(Douglas J. Steinke of counsel), for appellant.
Lester Schwab Katz & Dwyer, LLP, New York (Eric A.
Portuguese of counsel), for respondent.
Order and judgment (one paper), Supreme Court, New York County (Doris Ling-Cohan, J.), entered January 13, 2009, which denied defendant's motions to dismiss and for summary judgment and granted plaintiff's cross motion for summary judgment to the extent of declaring that defendant has a duty to defend and indemnify in the underlying personal injury action, unanimously reversed, on the law, with costs, defendant's motion for summary judgment granted and plaintiff's cross motion denied, and it is declared that defendant has no duty to defend or indemnify.
Although not addressed by the motion court, we find that the "completed operations" exclusion in defendant's automobile general liability policy, approved in a filing with insurance regulators in New Jersey and not violative of any express public policy in New York, was effective (see American Home Assur. Co. v Employers Mut. of Wausau, 77 AD2d 421, 428-429 [1980], affd 54 NY2d 874 [1981]). While a co-insurer may be estopped from denying coverage in a coverage allocation dispute between insurers (see Liberty Ins. Underwriters, Inc. v Arch Ins. Co., __ AD3d __, 877 NYS2d 44, 45 [2009]), plaintiff has not shown that it was prejudiced during the 3½ years that defendant defended the underlying action; the showing that plaintiff received notice of the underlying claim at its inception was unrebutted.
In view of the foregoing, it is unnecessary to address the parties' remaining contentions.
Ortiz v. Ash Leasing, Inc.


Kagan & Gertel, Brooklyn (Irving Gertel of counsel), for
appellants.
Mead, Hecht, Conklin & Gallagher, LLP, Mamaroneck
(Elizabeth M. Hecht of counsel), for respondent.
Order, Supreme Court, Bronx County (Nelson S. Roman, J.), entered October 30, 2008, which granted defendant's motion for summary judgment dismissing the complaint for lack of a serious injury, unanimously affirmed, without costs.
Defendants made a prima facie showing that none of the three plaintiffs sustained a 90/180-day injury by submitting their deposition testimony (see Copeland v Kasalica, 6 AD3d 253, 254 [2004]). Two of the plaintiffs admitted that they had not been confined to bed or home after the accident, and the third said nothing during his deposition about being prevented from performing substantially all of the material acts that constituted his usual and customary daily activities for 90 days during the 180 days following the accident (Insurance Law § 5102[d]). That each plaintiff missed more than 90 days of work
is not determinative (see Uddin v Cooper, 32 AD3d 270, 271 [2006], lv denied 8 NY3d 808 [2007]). Defendant also made a prima facie showing that plaintiffs' complaints were caused by preexisting, degenerative conditions rather than the accident (see Colon v Tavares, 60 AD3d 419, 419-420 [2009]; see generally Diaz v Anasco, 38 AD3d 295, 295-296 [2007]).
Plaintiffs' opposition failed to raise a triable issue of fact. On the issue of incapacity, plaintiffs' doctor's affirmations did not mention any limitation on their daily activities except work (see Gjelaj v Ludde, 281 AD2d 211, 212 [2001], and plaintiffs did not submit "any substantiating documentation or affidavit from the[ir] employer[s]" about missing work (Dembele v Cambisaca, 59 AD3d 352, 353 [2009]). On the issue of causation, plaintiffs' doctor's affirmations failed to provide objective evidence, as opposed to boilerplate language (see Copeland, 6 AD3d at 254; Thompson v Abbasi, 15 AD3d 95, 99 [2005]), merely stating in conclusory fashion that plaintiffs' injuries were caused by the accident, and offering no "factually based medical opinions ruling out . . . degenerative conditions as the cause of" plaintiffs' limitations (Rose v Citywide Auto Leasing, Inc., 60 AD3d 520 [2009]). Since plaintiffs did not "present objective medical evidence responsive to" defendant's showing of degenerative changes, "it does not avail plaintiff[s'] 90/180-day claim that defendant['s] experts did not address [their] condition during the relevant period of time" (Reyes v Esquilin, 54 AD3d 615, 616 [2008]).
Nor does it avail plaintiff Ortiz that he had surgery for a meniscal tear, absent evidence of the permanency of his knee injury (see Lopez v Mendoza, 40 AD3d 436, 436-437 [2007]). Ortiz's doctor examined him on November 30, 2007 and found that his knee was normal, and Ortiz submitted no evidence that his doctor subsequently found that he was still having problems with his knee. Evidence of causation is also lacking. Ortiz's doctor's conclusory statement in July 2008 that the knee operation was related to the August 3, 2006 accident is contradicted by August 30, 2006 X-rays and a September 18, 2006 MRI showing degenerative changes (see Thompson, 15 AD3d at 99), and the doctor's "failure even to mention, let alone explain, why he ruled out degenerative changes as the cause of plaintiff's knee . . . injuries, rendered his opinion that they were caused by the accident speculative" (Valentin v Pomilla, 59 AD3d 184, 186 [2009]; see also Perez v Hilarion, 36 AD3d 536, 537 [2007]).
Gibbs v. Hee Hong


Richard T. Lau & Associates, Jericho (Gene W. Wiggins of
counsel), for appellants.
Order, Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered January 16, 2008, which, insofar as appealed from, denied defendants' motion for summary judgment dismissing the complaint as to plaintiff-respondent, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.
Defendants sustained their prima facie burden of establishing that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) by submitting the affirmed reports of their expert orthopedist, indicating that plaintiff had normal range of motion in her right knee and that any injury had resolved, and of their expert radiologist, stating that there was no evidence of acute traumatic injury to the knee (see Perez v Rodriguez, 25 AD3d 506, 508 [2006]). Plaintiff's response failed to raise a triable issue of fact. The finding of a torn meniscus by plaintiff's radiologist in an MRI taken shortly after the May 2006 accident does not rebut the finding of defendant's orthopedist, based on his May 2008 examination of plaintiff, of a resolved contusion and no disability (see Dembele v Cambisaca, 59 AD3d 352, 352 [2009]; Hoisington v Santos, 48 AD3d 333, 334 [2008]); a torn meniscus, standing alone, is not evidence of a serious injury (Dembele). Moreover, plaintiff's radiologist did not link the torn meniscus to plaintiff's accident and indeed offered no opinion on causation whatsoever (see id.; Medley v Lopez, 7 AD3d 470 [2004]). Nor is an issue of fact raised by the report of plaintiff's treating physician of her August 2008 re-examination of plaintiff, where the report does not identify the objective tests she used to measure plaintiff's range of motion, does not explain the improvement in the range of motion in plaintiff's knee over the course of her treatment, and otherwise fails to indicate the significance of plaintiff's limitations (see Dembele; Nagbe v Minigreen Hacking Group, 22 AD3d 326, 327 [2005]). Plaintiff's statements that she could not run, go upstairs, or stand for very long do not constitute the loss of "substantially all" of plaintiff's usual activities required to make a showing of serious injury (see Dembele).

In the Matter of Central Mutual Insurance Company v. Bemiss


Michael J. Hutter, for appellant.
Jonathan M. Bernstein, for respondent.
Defense Association of New York, amicus
curiae.

READ, J.:
We are asked in this appeal whether consent-to-settle and subrogation-protection provisions in the supplementary uninsured/underinsured (SUM) endorsement in an automobile liability insurance policy fall by the wayside once an insured has exhausted the available policy limits of a single tortfeasor in a multi-tortfeasor accident. We hold that these provisions remain in force and govern any settlements that the insured may subsequently make with other tortfeasors.
I.
During the morning rush hour on April 12, 2005, a chain-reaction automobile accident unspooled in the west-bound lane of Interstate 90 in the City of Albany when the first car in the ensuing five-vehicle pileup stopped in traffic to avoid becoming entangled in a two-car collision. The vehicle driven by Beverly Bemiss (the third in line in the pileup) was struck twice in the rear — once by the vehicle driven by Kati Kowalczyk, the fourth in line; and again when the automobile driven by John Genski, the fifth in line, rear-ended Kowalczyk's vehicle, pushing it into the back of Bemiss's vehicle a second time. As a consequence of this accident, Bemiss seriously injured her right foot and ankle, which required surgery to repair the Achilles tendon.
Kowalczyk was insured for motor vehicle liability under a policy issued by Government Employees Insurance Company (GEICO), with bodily injury liability limits of $25,000; Genski was insured under a policy issued by Progressive Casualty Insurance Company, also with bodily injury liability limits of $25,000. Central Mutual Insurance Company was Bemiss's automobile liability insurance carrier. Her single limit policy provided $100,000 per accident for bodily injury and property damage, and a SUM endorsement for $100,000 per accident. The provisions in her SUM endorsement were prescribed by the New York State Department of Insurance (the Department) in Regulation 35-D (11 NYCRR subpart 60-2). And since both Kowalczyk's and Genski's bodily injury liability limits were less than Bemiss's, her SUM coverage was activated or triggered as to each of them (see Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 685 n. 1, 686-688 [1994]). SUM benefits are not payable, however, until the available policy limits of a single tortfeasor have been exhausted by payment or settlement (see S'Dao v National Grange Mut. Ins. Co., 87 NY2d 853, 854-855 [1995]).
By letter dated July 27, 2006, Bemiss's attorney informed Central that GEICO, Kowalczyk's insurance carrier, had tendered the policy limits of $25,000. He further advised that Bemiss intended to accept this offer and execute a release on or after August 27, 2006 unless Central advanced this amount to her in return for her cooperation in any lawsuit on her behalf. Central did not respond to the letter. Bemiss also at some point agreed to settle with Genski and his insurer, Progressive, for $2,500 — i.e., less than the $25,000 policy limit. Bemiss never notified Central that she intended to settle with Genski, or solicited Central's consent.
On December 21, 2006, Bemiss executed a single general release in favor of Kowalczyk, GEICO, Genski, and Progressive in consideration of the sum of $27,500 — $25,000 from GEICO and $2,500 from Progressive. The release did not preserve Central's subrogation rights with respect to any payment that might be made to Bemiss under her SUM coverage. Earlier in December (and therefore before exhausting Kowalczyk's policy), Bemiss served Central with a request for arbitration, seeking $72,500 in SUM benefits.
On January 9, 2007, Central's attorney wrote to Bemiss's attorney to ask whether an action had been filed against Genski. On January 17, 2007, Bemiss's attorney replied that his client had settled with Genski and his insurance carrier for $2,500, and that Bemiss was seeking $72,500 from Central under the SUM endorsement.
By letter dated January 26, 2007, Central disclaimed liability to Bemiss and denied coverage. Specifically referencing Condition 10 (without waiving any other ground that it might have for disclaimer), Central told Bemiss that she had violated policy conditions by "settl[ing] with both responsible parties [i.e., Kowalczyk and Genski] in this loss, and in signing the release, waived [Central's] subrogation rights." Condition 10 allows an insured to collect under SUM coverage in a multiple-tortfeasor accident before exhaustion by settlement or judgment. Specifically, 30 days after having given the insurer notice of a tortfeasor's offer to settle for the maximum available policy limits, the insured may execute a general release with the tortfeasor and retain SUM eligibility unless, in the meantime, the insurer has agreed to advance the settlement amount in exchange for the insured's cooperation with its subrogation claim.
In March 2007, Bemiss served Central with another request for arbitration, having withdrawn the December notice after arbitration was temporarily stayed at Central's behest. She again sought $72,500 in SUM benefits. And Central again successfully moved by order to show cause, entered on March 26, 2007, to stay arbitration temporarily pending disposition of its application for an order permanently staying arbitration and vacating Bemiss's notice.
Central maintained that Bemiss was not entitled to SUM benefits because she did not protect its subrogation rights, give prior written notice of her intent to settle, or obtain its written consent before settling with Genski/Progressive. In opposition, Bemiss argued that
"[t]he policy . . . reads that when there are multiple tortfeasors, and one of those tortfeasors offers the maximum coverage under its policy, then written notice must be given of the policy tender before execution of a release. The policy [does not contain] any language that requires the insured to provide written notice for a partial tender from a second tortfeasor."
In May 2007, Supreme Court granted Central's application and permanently stayed arbitration, reasoning that, under the terms of the SUM endorsement, Central "expressly require[d] that it retain the right to subrogate regardless of the exact nature of the settlement." Thus, "[e]ven if the Court were to accept [Bemiss's] argument that once [she] settled for the entire amount of coverage with [GEICO], [she] could settle with Progressive without notice and consent of [Central], this argument does nothing to remedy the fact that [Bemiss] failed to preserve Central's right to subrogate." Bemiss appealed.
The Appellate Division, with one Justice dissenting, affirmed. As an initial matter — and contrary to Supreme Court's assessment — both the majority and the dissenting Justice concluded that Condition 10 in the SUM endorsement "permitted [Bemiss] to settle with the first tortfeasor [Kowalczyk] without preserving [Central's] subrogation rights" with respect to Kowalczyk (Matter of Central Mut. Ins. Co. (Bemiss), 54 AD3d 499, 500 [3d Dept 2008]). The majority, however, rejected Bemiss's additional claim that once she qualified for SUM payments by exhausting Kowalczyk's policy, she was free to settle with Genski without obtaining Central's prior written consent or safeguarding its subrogation rights. The dissent disagreed, and we granted Bemiss permission to appeal. We now affirm.
II.
To decide this appeal, we must examine the interplay of the consent-to-settle (Condition 10), exhaustion (Condition 9), and subrogation protection (Condition 13) provisions in the standard SUM endorsement prescribed by Regulation 35-D, which the Department designed to "reduce confusion regarding [SUM] coverage, make it easier to collect benefits and, when disputes arise, make it simpler to resolve those disputes" (NYS Register, Apr. 22, 1992, at 21). To put these provisions in perspective, a bit of history is in order.
Insurance Law § 3420 (f) (2) (A) provides that
"[a]s a condition precedent to the obligation of the insurer to pay under the [SUM] insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements." And in S'Dao, we concluded that "the exhaustion requirement of section 3420 (f) (2) relates back to the statute's reference to 'another motor vehicle' and indicates that the proper focus is on the underinsured status of each individual tortfeasor" (87 NY2d at 854). As a result, SUM benefits are payable in a multiple-tortfeasor accident once the insured exhausts the bodily injury liability limits applicable to any single tortfeasor. Our decision in S'Dao reversed the Appellate Division, which had interpreted the statute to require a SUM claimant to exhaust the bodily injury liability limits of the policies held by all tortfeasors — i.e., to exhaust the aggregate limits of liability of all applicable policies. Further, in Weinberg v Transamerica Ins. Co. (62 NY2d 379, 381-382 [1984]), we held that in settling personal injury claims arising out of a motor vehicle accident,
"an insured will be held to have prejudiced the subrogation rights of his insurer unless he establishes by express provision in the release . . . or by necessary implication arising from the circumstances of the execution of the release that the settling parties reserved the rights of the insurer against the third-party tortfeasor or otherwise limited the extent of the settlement to achieve that result."

As a corollary, an insured who settles with a tortfeasor without his carrier's written consent forfeits SUM benefits (see State Farm Mut. Auto. Ins. Co. v Taglianetti, 122 AD2d 40 [2d Dept 1986]).
These principles created what commentators referred to as a "Catch-22" for the SUM claimant (see e.g. Dachs and Dachs, The Underinsured Motorist, NYLJ, Dec. 11, 1990, at 3, col 1). That is, if the insured's carrier withheld its consent to an offer of a tortfeasor's full available policy limits in exchange for a general release (which was naturally always demanded), the insured faced unpalatable options: either refuse the offer and litigate the case to judgment in order to exhaust the tortfeasor's policy and become eligible to receive SUM benefits, or accept the offer and risk losing SUM coverage on account of having prejudiced the carrier's subrogation rights. The Department set out to eliminate this dilemma when it formulated Regulation 35-D.
To this end, Regulation 35-D, as initially drafted by the Department, mandated the following in the standard SUM endorsement as Conditions 7 and 8:
"7. Exhaustion Required: Except as provided in Condition 8, we will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies or bonds applicable at the time of the accident in regard to a person that may be legally liable for the bodily injury sustained by the insured.
"8. Release or Advance: In accidents involving the insured and one or more negligent parties, if such insured settles with all such parties for the aggregate limits of the liability coverage of such parties, release may be executed with such parties after thirty calendar days actual written notice to us, unless within this time period we agree to advance such settlement amounts to the insured in return for the cooperation of the insured in our lawsuit on behalf of the insured.
"We shall have a right to the proceeds of any such lawsuit equal to the amount advanced to the insured and any additional amounts paid under this SUM coverage. Any excess above those amounts shall be paid to the insured.
"An insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired" (see Dachs and Dachs, The Undersinsured Motorist, NYLJ, Dec. 11, 1990, at 3, col 1 [discussing development of Department's proposed Regulation 35-D; Dachs and Dachs, SUM Regulation Redux, NYLJ, June 9, 1992, at 3, col 1 [comparing text of proposed and final Regulation 35-D]).

Notice of proposed Regulation 35-D was published in the State Register on September 11, 1991.
In response to comments and criticism, Regulation 35-D was subsequently amended and another notice was published in the State Register on April 22, 1992 [FN1]. In the amended version, Conditions 7 and 8 of Regulation 35-D were renumbered Conditions 9 and 10, and provided respectively as follows:
"9. Exhaustion Required: Except as provided in Condition 10, we will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies or bonds applicable at the time of the accident in regard to any one person who may be legally liable for the bodily injury sustained by the insured.
"10. Release or Advance: In accidents involving the insured and one or more negligent parties, if such insured settles with any such party for the available limit of the motor vehicle bodily injury liability coverage of such party, release may be executed with such party after thirty calendar days actual written notice to us, unless within this time period we agree to advance such settlement amounts to the insured in return for the cooperation of the insured in our lawsuit on behalf of the insured.
"We shall have a right to the proceeds of any such lawsuit equal to the amount advanced to the insured and any additional amounts paid under this SUM coverage. Any excess above those amounts shall be paid to the insured.
"An insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired" (11 NYCRR 60-2.3 [f]).
By changing the reference in Condition 9 (former proposed Condition 7) from "a person that" to "any one person who," eliminating the reference in Condition 10 (former proposed Condition 8) to "aggregate limits" and substituting the singular "party" for the plural "parties," the Department unambiguously applied the exhaustion requirement in section 3420 (f) to any single tortfeasor, not to all potential tortfeasors. This is exactly how we subsequently interpreted the statute in S'Dao.
Urging us to read Conditions 9 and 10 together, Bemiss contends that "where multiple tortfeasors are involved and the insured has permissibly settled with one tortfeasor for his/her policy limits, . . . the insured has no right under Regulation 35-D to be notified of and withhold consent to a settlement with another tortfeasor for less than his/her policy limits" even though Condition 10 mandates that "[a]n insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired." In her view, this restriction "is intended to apply to an insured seeking . . . to settle for the policy limits of [the first] tortfeasor . . . The goal is to allow the settlement to be consummated while giving the insurer the opportunity to protect its subrogation rights" — i.e., to remedy the "Catch-22." Bemiss argues that to read Condition 10 as governing an insured's settlement with a second tortfeasor would "take away" what Condition 9 and our decision in S'Dao give — i.e., the rule that SUM benefits become payable in a multiple-tortfeasor accident after one tortfeasor's policy has been exhausted.
As already noted, an insured generally may not settle with a tortfeasor without the SUM insurer's written consent, and may not prejudice the SUM insurer's subrogation rights. As to the latter point, Condition 13 of the SUM endorsement specifically states as follows:
"13. Subrogation: If we make a payment under this SUM coverage, we have the right to recover the amount of this payment from any person legally responsible for the bodily injury or loss of the person to whom, or for whose benefit, such payment was made to the extent of the payment. The insured or any person acting on behalf of the insured must do whatever is necessary to transfer this right of recovery to us. Except as permitted by Condition 10, such person shall do nothing to prejudice this right" (11 NYCRR 60-2.3 [f]) (emphasis added).
The final sentence of Condition 10 — the crux of Bemiss's argument — specifies that the insured "shall not otherwise settle with any negligent party, without [the SUM carrier's] written consent, such that [the SUM carrier's] rights would be impaired" (emphasis added). Looking at both this language and the structure of Condition 10, "otherwise" refers back to the settlement scenario delineated in the first sentence — i.e., an insured's 30 days' written notice to the insurer of a tortfeasor's offer to settle for the maximum available policy limits. And while Bemiss contends that "any negligent party" refers only to the first tortfeasor whose policy is exhausted so as to make SUM benefits payable, this is not readily apparent from the words used or the regulatory history. In the original version of Condition 10 (former Condition 8), "any negligent party" clearly referred to all the tortfeasors in a multiple-tortfeasor accident. When the Department revised the SUM endorsement to make the exhaustion requirement applicable to any single tortfeasor rather than the aggregate limits of the liability coverage of all tortfeasors, it retained in new Condition 10 the stipulation that the insured could not "otherwise settle with any negligent party" (emphasis added). Bemiss, in effect, asks us to read this provision to mean "otherwise settle with the first party to tender the available limit of his/her motor vehicle bodily injury liability coverage." Even if Bemiss's interpretation of "any negligent party" were correct, there is nothing in the SUM endorsement to suggest that the subrogation-protection provisions in Condition 13 become inoperative once an insured has exhausted a single tortfeasor's policy limits in a multiple-tortfeasor accident.
In short, Condition 10 delineates the sole situation in which an insured may settle with any tortfeasor in exchange for a general release, thus prejudicing the insurer's subrogation rights, without the carrier's written consent. Here, Bemiss violated Condition 10 when she settled with Genski for less than the maximum available policy limits without Central's written consent, such that its subrogation rights were impaired. Moreover, this result is not inconsistent with our decision in S'Dao or Condition 9 of the SUM endorsement. In this case, Bemiss settled with Kowalczyk in compliance with Condition 10, thereby also fulfilling the exhaustion requirement in Condition 9. At that point, she was entitled to make a claim for $75,000 under her SUM coverage and, if Central disagreed, to proceed to arbitration. That is, she did not have to pursue a claim against Genski in order to become eligible to collect up to the remaining limits of her SUM policy. But once having chosen to resolve her claim against Genski, she was not free under the SUM endorsement to compromise Central's subrogation rights unilaterally.
Accordingly, the order of the Appellate Division should
be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Read. Chief Judge Lippman and Judges Ciparick, Graffeo, Smith, Pigott and Jones concur.
Decided June 25, 2009
Footnotes


Footnote 1:Trade associations and insurers brought a CPLR article 78 proceeding to challenge Regulation 35-D, which resulted in a stay of enforcement and a delay in implementation (see Matter of National Assn. of Ind. Insurers v Curiale, 190 AD2d 597 [1st Dept 1993], lv denied 81 NY2d 711 [1993]); see also Dachs and Dachs, The Latest on Regulation 35-D, NYLJ, Nov. 10, 1992, at 3, col 1; Dachs and Dachs, Regulation 35-D: A Reality at Last, NYLJ, Sept. 14, 1993, at 3, col 1).

Kassis v The Ohio Casualty Insurance Company

Lawrence M. Ordway, Jr., for appellants.
Vincent G. Saccomando, for respondent.
Siller Wilk LLP, amicus curiae.

LIPPMAN, Chief Judge:
We are asked to determine whether a landlord is an additional insured under an insurance policy obtained by his tenant such that the insurer is obligated to defend and indemnify the landlord in an underlying personal injury lawsuit. Joseph Kassis (Kassis) leased property in Syracuse, New York to Kassis Superior Sign Co., Inc. (Superior Sign), and Superior Sign obtained a commercial general liability insurance policy on the property from The Ohio Casualty Insurance Company (Ohio Casualty). On February 25, 2004, Andrew Holden, a Superior Sign employee, slipped on an accumulation of snow and/or ice on the leased property and thereafter commenced the underlying action against Kassis. Ohio Casualty disclaimed on the ground that the policy, which names only Superior Sign, did not afford Kassis coverage. Kassis and Superior Sign commenced this action seeking a declaration that Ohio Casualty is obligated to defend and indemnify Kassis in the Holden action [FN1]. Supreme Court granted plaintiffs' motion for summary judgment in part and declared that Ohio Casualty is obligated to provide a defense in the Holden action. The Appellate Division reversed and found no obligation to defend or indemnify (51 AD3d 1366 [4th Dept 2008]). Plaintiffs have appealed as of right, pursuant to CPLR 5601 (a), and we now reverse.
Under the lease, Superior Sign is obligated to pay for snow removal services and to
"indemnify, defend, and hold harmless Landlord from any and all damages, costs, expenses, and liabilities for anything arising out of the occupancy of the Premises caused by Tenant or its agents and from any loss or damage arising out of the acts of Tenant or its agents or the failure of Tenant to comply with the terms and conditions"
of the lease. The lease further provides that Superior Sign, "at its sole cost and expense and for the mutual benefit of Landlord and Tenant, shall maintain a general liability policy . . . providing coverage against claims for bodily injury, personal injury and property damage" with specified aggregate and per occurrence coverage amounts.
Superior Sign obtained a commercial general liability insurance policy from Ohio Casualty. The policy provides bodily injury coverage where "the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement" and that contract or agreement falls within the definition of an "insured contract." The parties do not dispute that Superior Sign's lease is an "insured contract" as that term is defined in the insurance policy [FN2]. Moreover, the policy's blanket additional insured provision extends coverage not simply to the named insured, i.e., Superior Sign, but also to "any person or organization whom [the named insured is] required to name as an additional insured on this policy under a written contract or agreement." "'Additional insured' is a recognized term in insurance contracts," and "the well-understood meaning of the term is an entity enjoying the same protection as the named insured" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 393 [2003] [internal quotation marks and citation omitted] [emphasis added]). Notably, the insurance policy does not require Superior Sign to provide Ohio Casualty with notice of those persons or organizations Superior Sign is contractually required to name as an additional insured on the policy. Superior Sign is not required to complete and return to Ohio Casualty any notification forms listing those persons or organizations that it intended to name as additional insureds under the policy, nor does the policy require the submission of any additional insured certificates or the like.
Thus, in deciding the ultimate question — i.e., whether Kassis is an additional insured under the subject policy obligating Ohio Casualty to defend and indemnify him in connection with the underlying personal injury action — we need only determine whether, under the lease, Superior Sign was required to ensure that Kassis received general liability insurance coverage equivalent to the coverage Superior Sign enjoyed.
Pursuant to the general liability insurance provision of the lease in question, Superior Sign was obligated to obtain coverage at specified monetary levels in the aggregate and per occurrence against "claims for bodily injury, personal injury and property damage, . . . at its sole cost and expense and for the mutual benefit of [Kassis] and [Superior Sign]." The natural and intended meaning of the term "mutual benefit" as used in this provision is that Kassis and Superior Sign are intended to enjoy the same level of coverage.
The intent and meaning of the term "mutual benefit" in the provision becomes clear when juxtaposed with the language of the other insurance provisions of the lease. The lease expressly contemplates that both Kassis and Superior Sign will enjoy fire insurance, and the lease further provides in an "Additional Insurance" provision that Superior Sign may obtain certain types of insurance coverage just for itself. With respect to fire insurance, Kassis, "at Tenant's sole cost and expense," is to "keep the Premises insured for the benefit of the parties against loss or damage by fire," and fire insurance "may be written either under separate policies in Landlord's name or combined with other coverages acquired by Tenant." As for the additional insurance provision, it specifies that Superior Sign, "at its sole cost and expense, may maintain insurance coverage for its benefit on Tenant's leasehold improvements and Tenant's personal property in such amounts as Tenant deems appropriate with Tenant assuming the risk of any co-insurance." The additional insurance provision also expressly permits Superior Sign to "effect for its own account any insurance not required by the provisions of this Lease, including business interruption insurance or insurance covering Tenant's equipment and personal property." Plainly, where a disparity in coverage as between insureds was contemplated — i.e., where the insurance to be procured was not for the insureds' "mutual benefit" — it was expressly noted.
It is therefore clear that Superior Sign was obligated under the lease to procure the same level of general liability insurance coverage for Kassis as it obtained for itself, and because of that, Kassis falls within the policy's additional insured provision. Because Kassis is considered an additional insured, Ohio Casualty is obligated to defend him in the underlying personal injury action and, if appropriate, indemnify him as an additional insured in accordance with the policy. The parties' remaining contentions are without merit.
Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court reinstated.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and judgment of Supreme Court, Onondaga County, reinstated. Opinion by Chief Judge Lippman.
Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.
Decided June 25, 2009
Footnotes

Footnote 1: Kassis has standing to bring this action because a person claiming to be an insured under an insurance policy may bring a declaratory judgment action against an insurer "when an actual controversy develops concerning the extent of coverage, the duty to defend, or other issues arising from the insurance contract" (Lang v Hanover Ins. Co., 3 NY3d 350, 353 [2004]).

Footnote 2: Under the policy, an "insured contract" includes a "contract for a lease of premises" and "[t]hat part of any other contract or agreement pertaining to your business . . . under which you assume the tort liability of another party to pay for 'bodily injury' or 'property damage' to a third person or organization." "[T]ort liability" is further defined as a "liability that would be imposed by law in the absence of any contract or agreement."

Marina Grand, Inc. v. Tower Insurance Company of New York


Max W. Gershweir, New York, N.Y. (Joshua L. Seltzer of counsel),
for defendant/counterclaim plaintiff-appellant.
Passarello & Larosa, Staten Island, N.Y. (John A. Passarello, Jr.,
of counsel), for plaintiff/counterclaim
defendant-respondent and additional
counterclaim defendant-respondent.

DECISION & ORDER
In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff/counterclaim defendant, Marina Grand, Inc., in an underlying personal injury action entitled Polvere v Marina Grand, Inc., pending in the Supreme Court, Richmond County, under Index No. 103894/06, the defendant/counterclaim plaintiff appeals from an order of the Supreme Court, Richmond County (Fusco, J.), entered May 13, 2008, which denied its cross motion for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff/counterclaim defendant, Marina Grand, Inc., in the underlying action, and granted the motion of the plaintiff/counterclaim defendant, Marina Grand, Inc., and the additional counterclaim defendant Joseph Dalessio to consolidate this action with the underlying action to the extent of directing that the actions be jointly tried.
ORDERED that the order is reversed, on the law, with costs, the cross motion of the defendant/counterclaim plaintiff for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff/counterclaim defendant, Marina Grand, Inc., in the underlying action is granted, the motion to consolidate this action with the underlying action is denied as academic, and the matter is remitted to the Supreme Court, Richmond County, for the entry of a judgment declaring that the defendant/counterclaim plaintiff is not obligated to defend and indemnify the plaintiff/counterclaim defendant, Marina Grand, Inc., in the underlying action.
On December 26, 2005, Lisa Polvere and Yvonne Tu were at the bar area in an establishment owned and operated by the plaintiff/counterclaim defendant, Marina Grand, Inc. (hereinafter MGI). At some point, the two women got into an argument. During the argument, Tu threw a glass at Polvere. The glass hit Polvere in the face. Polvere allegedly sustained injuries as a result of the incident.
On or about December 22, 2006, Polvere commenced a personal injury action (hereinafter the underlying action) against MGI and others. Alleging that Tu, in an intoxicated state, intentionally threw the glass at her face, Polvere asserted causes of action against MGI based on allegations, inter alia, that MGI's employees negligently maintained, controlled, and operated MGI's premises, and violated the Dram Shop Act (see General Obligations Law § 11-101).
MGI requested its insurer, the defendant/counterclaim plaintiff, Tower Insurance Company of New York (hereinafter Tower), to provide a defense and indemnification in the underlying action. Tower, however, citing, among other policy provisions, an endorsement excluding from coverage any injury caused by an assault or battery committed by any patron or customer of MGI, disclaimed coverage. MGI subsequently commenced the instant action for a judgment declaring that Tower is obligated to defend and indemnify it in the underlying action.
Tower demonstrated its entitlement to judgment as a matter of law by establishing that the assault and battery exclusion is applicable to the claims asserted against MGI in the underlying action (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 349-352; U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821, 822-823; Shanna Golden, Ltd. v Tower Ins. Co. of N.Y., 1 AD3d 586, 587-588; Sphere Drake Ins. Co. v Block 7206 Corp., 265 AD2d 78, 78-80; Dudley's Rest. v United Natl. Ins. Co., 247 AD2d 425, 425-426). In opposition, MGI failed to raise a triable issue of fact as to the exclusion's applicability. Accordingly, the Supreme Court should have granted Tower's cross motion for summary judgment declaring that it is not obligated to defend and indemnify MGI in the underlying action.
Since Tower is entitled to summary judgment in the instant action, the Supreme Court should not have directed a joint trial of the instant action and the underlying action, as that issue has been rendered academic (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 242).
Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Richmond County, for the entry of a judgment declaring that Tower is not obligated to defend and indemnify MGI in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
School Construction Consultants, Inc. v. ARA Plumbing & Heating Corp.

v

ARA Plumbing & Heating Corp., et al., defendants third-party plaintiffs-appellants, et al., defendants; Arch Speciality Insurance Company, third-party defendants-respondents.

Abrams, Gorelick, Friedman & Jacobson, P.C., New York, N.Y.
(Michael E. Gorelick and Alexandra E. Rigney of counsel), for
defendants third-party plaintiffs-appellants.
Fabiani Cohen & Hall, LLP, New York, N.Y. (Lisa A. Sokoloff
of counsel), for third-party defendants-
respondents.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the defendants third-party plaintiffs ARA Plumbing & Heating Corp. and QBE Insurance Corporation are obligated to defend and indemnify the plaintiff in an action entitled Uzzi v Sachem Central School District, pending in the Supreme Court, Suffolk County, under Index No. 04/26703, the defendants third-party plaintiffs appeal from an order of the Supreme Court, Suffolk County (Costello, J.), dated May 20, 2008, which granted the motion of the third-party defendants pursuant to CPLR 3211(a)(1) to dismiss the third-party complaint.
ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion which was to dismiss the fourth cause of action of the third-party complaint, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.
Contrary to the contention of the defendants third-party plaintiffs ARA Plumbing & Heating Corp. (hereinafter ARA) and QBE Insurance Corporation (hereinafter QBE), the Supreme Court properly granted those branches of the motion of the third-party defendants Arch Specialty Insurance Company (hereinafter Arch) and Federal Sprinkler Corp. (hereinafter Federal) pursuant to CPLR 3211(a)(1) which were to dismiss the first, second, and third causes of action of the third-party complaint based on documentary evidence. The documents submitted by Arch and Federal in support of the motion, consisting of the subcontract between ARA and Federal and the liability insurance policy issued by Arch pursuant thereto, sustained the movants' burden of conclusively establishing a defense to those causes of action (see generally Leon v Martinez, 84 NY2d 83, 88; Fortis Fin. Servs. v Fimat Futures USA, 290 AD2d 383; Scadura v Robillard, 256 AD2d 567), by demonstrating that Arch and Federal were neither contractually obligated to provide insurance coverage to the plaintiff nor in fact provided such coverage (see e.g. Sixty Sutton Corp. v Illinois Union Ins. Co., 34 AD3d 386, 388; Tribeca Broadway Assoc. [*2]v Mount Vernon Fire Ins. Co., 5 AD3d 198, 200). In this regard, the certificate of insurance listing the plaintiff as an additional insured was insufficient to alter the language of the policy itself, especially since the certificate recited that it was for informational purposes only, that it conferred no rights upon the holder, and that it did not amend, alter, or extend the coverage afforded by the policy (see Illinois Natl. Ins. Co. v American Alternative Ins. Corp., 58 AD3d 537, 538; Home Depot U.S.A., Inc. v National Fire & Mar. Ins. Co., 55 AD3d 671, 673; ALIB, Inc. v Atlantic Cas. Ins. Co., 52 AD3d 419; Nicotra Group, LLC v American Safety Indem. Co., 48 AD3d 253, 254; Metropolitan Heat & Power Co. Inc. v AIG Claims Servs. Inc., 47 AD3d 621; International Couriers Corp. v North Riv. Ins. Co., 44 AD3d 568, 569; Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337, 339).
However, the fourth cause of action of the third-party complaint does not concern the procurement of appropriate liability coverage, but instead seeks contractual indemnification for ARA based upon an independent "hold harmless" provision in its subcontract with Federal. Since the motion by Arch and Federal did not specifically address this cause of action, and the documents they submitted did not conclusively demonstrate that it should be dismissed, the Supreme Court erred in granting the motion to this extent.
New York Central Mutual Fire Insurance Company v.  Barry


Saretsky Katz Dranoff & Glass, LLP, New York, N.Y. (Eric Dranoff
of counsel), for appellant.
Peknic, Peknic & Schaefer, LLC, Long Beach, N.Y. (Brian
Peknic and Sean W. Schaefer of counsel), for
respondent.

DECISION & ORDER
In an action for equitable subrogation, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Jones, J.), dated October 9, 2008, which denied its motion for summary judgment on its claim for contribution against the defendant, and granted the defendant's cross motion for summary judgment dismissing the complaint.
ORDERED that the order is reversed, on the law, with costs, the plaintiff's motion for summary judgment on its claim for contribution against the defendant is granted, the defendant's cross motion for summary judgment dismissing the complaint is denied, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment in favor of the plaintiff and against the defendant in the principal sum of $175,000.
The facts of this case are set forth in prior appeals to this Court relating to this matter (see Barry v Hildreth, 9 AD3d 341; New York Cent. Mut. Fire Ins. Co. v Hildreth, 40 AD3d 602).
Contrary to the defendant's contention, the plaintiff established its entitlement to judgment as a matter of law. The plaintiff's claim for equitable subrogation was not barred by the general release executed by the plaintiff's insured (see Fasso v Doerr, 12 NY3d 80, 88; Aetna Cas. & Sur. Co. v Bekins Van Lines Co., 67 NY2d 901, 902; Ocean Acc. & Guar. Corp. v Hooker Electrochemical Co., 240 NY 37; Group Health, Inc. v Mid-Hudson Cablevision, Inc., 58 AD3d 1029; New York Cent. Mut. Fire Ins. Co. v Hildreth, 40 AD3d 602; Travelers Prop. Cas. v Giorgio, 21 AD3d 1086; Lesnick & Mazarin v Cutler, 255 AD2d 367; Silinsky v State-Wide Ins. Co., 30 AD2d 1, 3). Further, the plaintiff's claim was not barred by collateral estoppel. The plaintiff's insured's apparent abandonment, pursuant to CPLR 3215( c), of a counterclaim against the defendant for contribution cannot be characterized as an adjudication on the merits (see Sanders v Marino Falcone Brick Contr., 133 AD2d 342), precluding further litigation (see Bank of N.Y. v LS Monticello JV, 209 AD2d 464; see Peterson v Troy, 96 AD2d 856). In opposition, the defendant failed to raise a triable issue of fact.
The defendant's remaining contentions are without merit.
American Motorists Insurance Company v Keep Services, Inc.


O'Connor, McGuinness, Conte, Doyle & Oleson (Shaub, Ahmuty,
Citrin & Spratt, LLP, Lake Success, N.Y. [Steven J. Ahmuty, Jr.,
Timothy R. Capowski, Gerard S. Rath, and Juan C. Gonzalez], of
counsel), for appellant.
Gennet, Kallmann, Antin & Robinson, New York, N.Y.
(Donald G. Sweetman of counsel), for
respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for breach of contract, the defendant appeals (1), as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Nicolai, J.), dated March 14, 2008, as denied that branch of its motion which was for summary judgment dismissing the complaint and granted that branch of the plaintiff's cross motion which was for summary judgment on the issue of liability, and (2), from a judgment of the same court entered January 20, 2009, which, upon the order dated March 14, 2008, and a trial on damages, is in favor of the plaintiff and against it in the principal sum of $1,414,652.78.
ORDERED that the appeal from the order is dismissed; and it is further,
ORDERED that the judgment is affirmed; and it is further,
ORDERED that one bill of costs is awarded to the plaintiff.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of the judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
The plaintiff insurance company entered into an agency agreement with the defendant insurance agent. The agreement provided that the agent was only permitted to solicit or bind insurance in accordance with the plaintiff's underwriting manual. The defendant procured insurance coverage underwritten by the plaintiff for nonparty Advanced Fertility Service (hereinafter AFS). AFS subsequently suffered a loss. The plaintiff claims that it was damaged by its indemnification of AFS in relation to this loss.
"[A]n agent . . . ha[s] a fiduciary duty to act in the utmost good faith and in the interest of . . . its principal, throughout their relationship" (Cristallina v Christie, Manson & Woods Intl., 117 AD2d 284, 292). "When a breach of that duty occurs, the agent is liable for damages caused to the principal, whether the cause of action is based on contract or on negligence" (Cristallina v Christie, Manson & Woods Intl., 117 AD2d at 292; see Griffin & Evans Cosmetic Mktg. v Madeleine Mono, Ltd., 73 AD2d 957).
The plaintiff established its entitlement to judgment as a matter of law on the issue of liability by showing that the defendant breached the agency agreement and the underwriting manual by procuring coverage for AFS in violation of the agreement and manual, and the defendant failed to raise a triable issue of fact in response (see General Acc. Ins. Co. v Smith & Assoc., 184 AD2d 616).
Further, the defendant failed to rebut the plaintiff's showing that the plaintiff did not ratify the defendant's breach because the plaintiff was prevented by statute from cancelling the policy at issue in the middle of the policy term (see Insurance Law §§ 3426[c], 3105[b]). In any event, the plaintiff did not have "full knowledge of the material facts relating to the transaction" (Holm v C.M.P. Sheet Metal, 89 AD2d 229, 233) at the relevant times. "The act of ratification, whether express or implied, must be performed with full knowledge of the material facts relating to the transaction, and the assent must be clearly established and may not be inferred from doubtful or equivocal acts or language" (Holm v C.M.P. Sheet Metal, 89 AD2d at 233; see Lipman v Vebeliunas, 39 AD3d 488).
The defendant's remaining contentions are without merit.
FISHER, J.P., DILLON, COVELLO and DICKERSON, JJ., concur.
Seward Park Housing Corporation v Greater New York Mutual Insurance Company


Anderson & Ochs, LLP, New York (Mitchel H. Ochs of
counsel), for appellant-respondent.
Thomas D. Hughes, New York, for respondent-appellant.
Order, Supreme Court, New York County (Louis B. York, J.), entered April 16, 2008, which, in an action to recover on a policy of property insurance, upon defendant insurer's motion for restitution of $1,596,639.14 of the approximate $18.4 million it paid to plaintiff insured in satisfaction of a judgment that was partially vacated by this Court on a prior appeal (43 AD3d 23 [2007]), plus the prejudgment interest it paid on the $1,596,639.14, inter alia, granted defendant's motion to the extent of awarding it $1,596,639.14, with interest at the statutory rate from May 13, 2005, i.e., the date defendant paid plaintiff the $18.4 million, unanimously modified, on the law, to award defendant in addition the prejudgment interest it paid on the $1,596,639.14, and otherwise affirmed, with costs in favor of defendant, and the matter remanded to Supreme Court for a calculation of such prejudgment interest and the entry of a judgment in favor of defendant accordingly.
Restitution was properly awarded in view of this Court's prior order that plaintiff was not entitled to recover for items worth some $1.6 million that were, as a matter of law, outside the scope of the policy (see Polipo v Sanders, 245 AD2d 2 [1997], lv dismissed 92 NY2d 845 [1998], and it being highly unlikely that any amount to be awarded plaintiff on the retrial ordered by this Court will be more than the amount awarded plaintiff on the first trial. However, Supreme Court's order, without explanation, failed to direct plaintiff's return of the portion of the prejudgment interest it received attributable to the $1.6 million, and we modify accordingly. Further, in order to avoid confusion as to the enforceability of the restitution being directed (see Marlee, Inc. v Bittar, 257 NY 240, 243 [1931]), the Clerk is directed to enter judgment in defendant's favor once Supreme Court calculates the amounts of such prejudgment interest, costs and disbursements.
NYP Holdings, Inc. v McClier Corporation

McClier Corporation, Second Third-Party Plaintiff-Respondent, Morrell Brown Corporation, Second Third-Party Defendant-Appellant.
Ruttura & Sons Construction Company, Inc., Proto Construction & Development Corp., First Women's Fire Systems Corp., and Morrell Brown Corporation appeal from an order of the Supreme Court, New York County (Herman Cahn, J.), entered July 25, 2008, which denied their motions for summary judgment dismissing the third-party and second third-party complaints.

Peckar & Abramson, P.C., New York (Alvin Goldstein of counsel), for Ruttura & Sons Construction Company, Inc.; Jaspan Schlesinger LLP, Garden City (Charles W. Segal of counsel), Proto Construction & Development Corp.; White and Williams LLP, New York
(Michael J. Kozoriz of counsel), for First Women's Fire Systems Corp.; and McGivney & Kluger, P.C., New York (Lawrence J.T. McGivney of counsel), for Morrell Brown Corporation,
appellants. Zetlin & De Chiara LLP, New York (Raymond T. Mellon and Michelle Fiorito
of counsel), for respondent.

NARDELLI, J.
The issue presented concerns the applicability of the volunteer doctrine when an insurer settles a claim against its insured, and seeks to proceed as subrogee against other parties who also allegedly bear responsibility for the underlying loss.
In August of 1998, plaintiff NYP Holdings, Inc. retained defendant McClier Corporation, a professional architectural firm, to provide certain design services related to the construction of a new printing plant in the Bronx. McClier thereupon produced a design for the contemplated premises, after which it hired various subcontractors, including the various third-party defendants, to perform the actual physical construction. NYP subsequently became dissatisfied with the quality of the work done on the project, and commenced this lawsuit, asserting causes of action for professional errors and omissions, malpractice, fraud, overbilling, delay damages and construction defects.
After being served, McClier instituted third-party actions against various entities, including appellants Ruttura & Sons Construction Company, Inc., Proto Construction & Development, First Women's Fire Systems Corp. and Morrell Brown Corporation (collectively referred to as Ruttura or appellants), who were involved in some phase of the construction. The third-party complaints advanced claims predicated upon contractual and common-law indemnification, negligence, strict liability and breach of contract. The claims asserted by plaintiff aggregated over $100,000,000. During the course of the litigation, McClier settled its dispute with NYP by a payment in the total amount of $23,900,000. McClier paid $750,000, which constituted the aggregate of its deductible along with the balance on its self-insured retention. The remainder of the settlement, $23,150,000, was paid by McClier's insurer, Lloyd's of London. The settlement did not apportion damages between design defects, for which McClier would be responsible, and construction defects, for which the third-party defendants would be responsible.
The Lloyd's policy provided coverage for professional liability for architects and engineers, but not for construction work. As a result of its settlement payment, Lloyd's became subrogated to McClier's claims, although McClier remains the nominal party. McClier seeks indemnification for the sums paid to NYP in settlement of the main lawsuit. The Ruttura entities moved for summary judgment against McClier, arguing that Lloyd's was a volunteer whose payment to NYP was outside of its contractual responsibility and, thus, the settlement could not form the basis for a subrogation claim. McClier opposed the motion on the ground that the law of California, the domicile of McClier's parent company, to which the policy was issued, is controlling, and that under California law Lloyd's was not a volunteer when it made the payment. Therefore, McClier claimed, it would be entitled to pursue its subrogation claim.
The motion court found that New York law governed the dispute since McClier had an office in Manhattan, and that New York, which does preclude claims by volunteers, was the state where the risk was located.
Although the court found that the Ruttura entities had met their burden, as the moving party, of establishing that Lloyd's paid the settlement amount when there was no obligation for Lloyd's to do so, it ultimately concluded that McClier had come forward with evidence that by virtue of the settlement payment, Lloyd's avoided exposure for significantly greater damages in the main action. The court also observed that it was not clear what percentage of the potential damages could be attributable to design errors and what percentage was attributable to construction defects.
The court reasoned that there was thus a question of fact as to Lloyd's status as a volunteer, and denied the motion for summary judgment. It specifically stated:
"The argument that a settling insurer is a
volunteer' and thus barred from making a
subrogation claim should not be used without
careful consideration. Its widespread use
would discourage settlement, and might well
require a separate action within an action'
on the issue of the insurer's liability
whenever it is raised."
The third-party defendants have appealed, arguing that there are no issues of fact, and that Lloyd's has not shown that it paid the settlement "under compulsion."
It is well-settled that the voluntary payment doctrine "bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law" (Dillon v U-A Columbia Cablevision of Westchester, 100 NY2d 525, 526 [2003]; see also Barnan Assoc. v 196 Owners Corp., 56 AD3d 309, 311 [2008]. On the other hand, "when an insurer pays for losses sustained by its insured that were occasioned by a wrongdoer, the insurer is entitled to seek recovery of the monies it expended under the doctrine of equitable subrogation" (Fasso v Doerr, 12 NY3d 80, 86 [2009]). Equitable subrogation is premised on the concept "that the party who causes injury or damage should be required to bear the loss by reimbursing the insurer for payments made on behalf of the injured party" (id. at 87).
In a claim made pursuant to an insurer's right to subrogation, the insurer stands in the shoes of the insured (see e.g. Blue Cross and Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200, 206 [2004]); Winkelman v Excelsior Ins. Co., 85 NY2d 577, 581 [1995]). The insurer's right to recovery in subrogation is premised, not on a legal fabrication, such as an insurer's implied contract of indemnity with the tortfeasor, but, rather, by virtue of its succession to the position previously held by its insured (Blue Cross and Blue Shield, 3 NY3d at 206, citing Great Am. Ins. Co. v United States, 575 F2d 1031, 1033 [1978]).
Appellants urge that Lloyd's was not under any compulsion to pay for noncovered claims, and argue that if it paid $23,150,000 for the covered professional negligence claims, then they are not liable to reimburse Lloyd's because they performed no professional services.
The threshold issue, however, is not whether Lloyd's was a volunteer, but, rather whether its insured, McClier, had a cognizable claim against appellants. We need not determine the merits of any such claim to ascertain whether McClier has standing to pursue the third party claims. At this juncture of the litigation, there has not been any factual determination as to which of the parties were responsible for the losses suffered by NYP, nor any apportionment of responsibility. In the absence of the settlement funded by Lloyd's, there would not even be an issue as to whether McClier could pursue its claims for, inter alia, contractual and common law indemnification, as well as contribution. Like any other party charged with wrongdoing, it would be perfectly within its rights to seek recovery against those whom it contends are actually responsible, in whole or in part, for the damages incurred by NYP.
That there was a settlement does not, in the circumstances, alter any of these basic principles. Regardless of whether Lloyd's is the true party in interest, the claims belong to McClier, and they remain viable at this juncture.
Even if the focus were solely on whether Lloyd's was a volunteer, it is evident, as the motion court concluded, that there are questions of fact as to whether it lost its right of subrogation. The existing record does not support a determination that Lloyd's settled a claim on behalf of its insured for which another party was wholly, or even partially, responsible. Further, the settlement itself was for a small fraction of the damages alleged by NYP, and was made to forestall the possibility of a larger recovery after trial of the first-party action. These damages could potentially have been assessed against any or all of the defendants. It would be inequitable, on this record, for the appellants to escape responsibility without an adjudication of liability by a fact-finder, merely because they chose not to join in the settlement.
"Where property of one person is used in discharging an obligation owed by another . . . under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lienholder" (King v Pelkofski, 20 NY2d 326, 333 [1967], quoting Restatement of Restitution § 162). Regardless of whether Lloyd's is the actual party in interest, permitting appellants to escape liability if they are responsible for some of the damages, would be the unjust enrichment that the principle of equitable subrogation seeks to avoid.
Accordingly, the order of the Supreme Court, New York County (Herman Cahn, J.), entered July 25, 2008, which denied third-party defendants-appellants' and second third-party defendant's motions for summary judgment dismissing the third-party complaint and second third-party complaint, should be affirmed, with costs.
All concur.

Order, Supreme Court, New York County (Herman Cahn, J.), entered July 25, 2008, affirmed, with costs.
Opinion by Nardelli, J. All concur.
Gonzalez, P.J., Nardelli, Catterson, Moskowitz, Renwick, JJ.

 

Maffei v. Santiago


Reardon & Sclafani, P.C., Tarrytown, N.Y. (Michael V. Sclafani of
counsel), for appellants.
James J. Killerlane, P.C., New York, N.Y. (David Samel of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Westchester County (Nicolai, J.), dated November 25, 2008, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is granted.
The defendants met 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, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff principally relied on the affidavit of her treating neurologist, Dr. Michael Daras. Dr. Daras' affidavit was insufficient to raise a triable issue of fact. Neither the plaintiff nor Dr. Daras explained the 18-month gap in her treatment between March 2006 and September 2007 (see Pommells v Perez, 4 NY3d 566; Ponciano v Schaefer, 59 AD3d 605; Garcia v Lopez, 59 AD3d 593; Pompey v Carney, 59 AD3d 416; Sapienza v Ruggiero, 57 AD3d 643). Moreover, Dr. Daras failed to acknowledge in his affidavit that the plaintiff reinjured her back in a subsequent accident, and therefore his conclusion that the limitations he noted in the plaintiff's lumbar spine were caused by the subject accident was rendered speculative (see Barnes v Cisneros, 15 AD3d 514; Mooney v Edwards, 12 AD3d 424). Furthermore, Dr. Daras failed to account for notations in the plaintiff's medical records indicating that she had full range of motion in her neck, back, and ankles within two months of the subject accident (see Kaplan v Vanderhans, 26 AD3d 468; Brown v Tairi Hacking Corp., 23 AD3d 325).
The medical reports of Dr. James McWilliam were without any probative value in opposing the defendants' motion because they were unaffirmed (see Grasso v Angerami, 79 NY2d 813; Niles v Lam Pakie Ho, 61 AD3d 657; Uribe-Zapata v Capallan, 54 AD3d 936; Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; Pagano v Kingsbury, 182 AD2d 268).
Finally, the plaintiff's affidavit was insufficient to raise a triable issue of fact (see Thomas v Weeks, 61 AD3d 961; Luizzi-Schwenk v Singh, 58 AD3d 811; Gochnour v Quaremba, 58 AD3d 680).
Gonzalez v. MTA Bus Co.


Robert Washuta, P.C., New York, N.Y., for appellant.
Jeffrey Samel, New York, N.Y. (David Samel of counsel), for
respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Weiss, J.), entered July 28, 2008, 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 defendants' motion for summary judgment dismissing the complaint is denied.
The defendants met 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, 956-957). In opposition, the plaintiff raised a triable issue of fact as to whether he sustained a serious injury to his cervical and/or lumbar spine under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Williams v Clark, 54 AD3d 942; Casey v Mas Transp., Inc., 48 AD3d 610; Green v Nara Car & Limo, Inc., 42 AD3d 430; Francovig v Senekis Cab Corp., 41 AD3d 643, 644-645; Acosta v Rubin, 2 AD3d 657). In opposing the motion, the plaintiff relied on his own medical submissions, which included the initial examination report of Dr. Emil Stracar, one of the plaintiff's treating physicians. This report, which was based on an examination on August 9, 2006, established that the plaintiff had significant limitations in his cervical and lumbar ranges of motion as of that date, which were deemed by Dr. Stracar to be caused by the subject accident. In a recent examination, Dr. Aric Hausknecht, the plaintiff's examining neurologist, established that the plaintiff had significant limitations in his cervical and lumbar spine ranges of motion. Dr. Hausknecht concluded, based on a contemporaneous examination and his most recent examinations of the plaintiff, as well as upon his review of the plaintiff's magnetic resonance imaging films, which showed, inter alia, a herniated disc and bulging disc in the cervical spine, that the plaintiff's lumbar and cervical injuries and observed range of motion limitations were permanent and causally related to the subject accident. He further opined that the plaintiff sustained a permanent consequential limitation of use of his cervical and lumbosacral spine, and that the limitations noted were significant.
Contrary to the Supreme Court's determination, these submissions were sufficient to raise a triable issue of fact as to whether the plaintiff sustained a serious injury to his cervical and/or lumbar spine under the permanent consequential limitation of use and/or the significant limitation of use categories of Insurance Law § 5102(d) as a result of the subject accident.
Caraballo v. Kim


Antin, Ehrlich & Epstein, P.C., New York, N.Y. (Thomas P.
Kinney of counsel), for appellants.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York,
N.Y. (Stacy R. Seldin of counsel), for
respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., the plaintiffs appeal from (1) an order of the Supreme Court, Queens County (Weiss, J.), entered May 14, 2008, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Rosa J. Caraballo did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2) an order of the same court entered August 6, 2008, which denied their motion for leave to renew their opposition to the defendants' prior motion for summary judgment dismissing the complaint.
ORDERED that the orders are affirmed, with one bill of costs.
The Supreme Court correctly determined that the defendants met their prima facie burden of showing that the plaintiff Rosa J. Caraballo (hereinafter 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, 78 NY2d 955, 956-957; see also Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456). In opposition, the plaintiffs failed to raise a triable issue of fact.
The medical report of the injured plaintiff's treating chiropractor, Dr. Alan C. Berger, dated May 8, 2006, did not constitute evidence competent to oppose the defendants' motion because it was unaffirmed (see Grasso v Angerami, 79 NY2d 813; Niles v Lam Pakie Ho, 61 AD3d 657; Uribe-Zapata v Capallan, 54 AD3d 936; Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; Pagano v Kingsbury, 182 AD2d 268).
In any event, the affidavit of Dr. Berger failed to raise a triable issue of fact as to whether the injured plaintiff sustained a serious injury to her knees or spine as a result of the subject accident. While Dr. Berger set forth findings based on a recent examination of the injured plaintiff that revealed significant limitations in the ranges of motion of the cervical and lumbar regions of her spine, neither he nor the plaintiffs proffered competent medical evidence that revealed the existence of significant limitations in the cervical or lumbar regions of the injured plaintiff's spine that were contemporaneous with the subject accident (see DiLernia v Khan, 62 AD3d 644; Leeber v Ward, 55 AD3d 563; Ferraro v Ridge Car Serv., 49 AD3d 498; D'Onofrio v Floton, Inc., 45 AD3d 525). It appears from Dr. Berger's affidavit that he did not even examine the injured plaintiff's knees.
The affirmation of Dr. Stuart I. Springer, the injured plaintiff's treating physician, also failed to raise a triable issue of fact. Dr. Springer examined the injured plaintiff's knees in September and November 2005, and concluded that the injured plaintiff had "good" range of motion in September 2005, but made no findings concerning the injured plaintiff's range of motion in November 2005. Thereafter, on April 3, 2008, Dr. Springer noted an insignificant limitation in the range of motion of the injured plaintiff's knees. Even if Dr. Springer had found the limitations to be significant under the no-fault statute, neither Dr. Springer nor the plaintiffs proffered any competent medical evidence that revealed the existence of any significant limitations in the injured plaintiff's knees that were contemporaneous with the subject accident. In fact, the only range-of-motion findings made contemporaneous with the subject accident by Dr. Springer showed that range of motion of the injured plaintiff's knees was "good."
The affirmed magnetic resonance imaging reports of Dr. Mark Shapiro and Dr. Marc Liebeskind merely revealed the existence of disc bulges at L3-4 and L4-5, a disc herniation at L5-S1, possible tears in the posterior horns of the medial menisci of the right and left knees, and a possible tear (rupture) of the anterior cruciate ligament in the left knee. This Court has held that a herniated or bulging disc, or even a tear in a tendon, is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the injury and its duration (see Magid v Lincoln Servs. Corp., 60 AD3d 1008; Washington v Mendoza, 57 AD3d 972; Cornelius v Cintas Corp., 50 AD3d 1085, 1087; Shvartsman v Vildman, 47 AD3d 700; Tobias v Chupenko, 41 AD3d 583). A tendon is defined as "[t]he cord of tough connective tissue which forms the end of a muscle and which connects the muscle to the bone" (5-T-TG Attorneys' Dictionary of Medicine [2005 ed] at 974). Tendons "are bands of fibrous connective tissue" (5-15A Attorneys' Textbook of Medicine [3d ed] at 15A.10). A ligament is defined as "[a] band of tough but flexible tissue which serves to connect bones (as in the formation of a joint), to hold organs in place, etc." (3-L Attorneys' Dictionary of Medicine [2005 ed] at 2302). Ligaments, like tendons, are "bands of tough, fibrous connective tissue" (4-13 Attorneys' Textbook of Medicine [3d ed] at 13.10). Thus, injuries involving tendons and ligaments must be treated similarly under Insurance Law § 5102(d). Evidence of the extent and duration of any alleged limitation arising from injury to the plaintiff's discs or ligaments was clearly lacking here. The deposition testimony of the injured plaintiff was insufficient to supply such evidence (see Washington v Mendoza, 57 AD3d 972).
The plaintiffs failed to submit competent medical evidence that the injuries that the injured plaintiff allegedly sustained in the subject accident rendered her unable to perform substantially all of her usual and customary daily activities for not less than 90 days of the first 180 days subsequent to the subject accident (see Washington v Mendoza, 57 AD3d 972; Rabolt v Park, 50 AD3d 995; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569).
The Supreme Court providently exercised its discretion in denying the plaintiffs' motion for leave to renew their opposition to the defendants' motion for summary judgment (see Ramirez v Khan, 60 AD3d 748; Renna v Gullo, 19 AD3d 472). A motion for leave to renew "shall be based upon new facts not offered on the prior motion that would change the prior determination" (CPLR 2221[e][2]) and "shall contain reasonable justification for the failure to present such facts on the prior motion" (CPLR 2221[e][3]; see Ramirez v Khan, 60 AD3d 748; Dinten-Quiros v Brown, 49 AD3d 588; Madison v Tahir, 45 AD3d 744). While it may be within the court's discretion to grant leave to renew upon facts known to the moving party at the time of the original motion (see Ramirez v Khan, 60 AD3d 748; J.D. Structures v Waldbaum, 282 AD2d 434; Cronwall Equities v International Links Dev. Corp., 255 AD2d 354), a motion for leave to renew " is not a second chance freely given to parties who have not exercised due diligence in making their first factual presentation'" (Renna v Gullo, 19 AD3d at 472, quoting Rubinstein v Goldman, 225 AD2d 328, 329; see Ramirez v Khan, 60 AD3d 748; O'Dell v Caswell, 12 AD3d 492; Hart v City of New York, 5 AD3d 438; Carota v Wu, 284 AD2d 614). In this case, the plaintiffs failed to provide reasonable justification for the failure to include the findings in the supplemental affidavit of Dr. Berger on the original motion (see Ramirez v Khan, 60 AD3d 748; Renna v Gullo, 19 AD3d 472).

 

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