Coverage Pointers - Volume X, No. 9

Dear Coverage Pointers Subscribers:

 

Happy Halloween.

 

Networking:

Thanks to the 300 of you who signed up on the LinkedIn professional networking site, in response to my invitation last week.  It's an interesting new way of networking and to add me to your professional network, and to join mine, simply click on my profile http://www.linkedin.com/in/kohane?goback=%2Eaas.

 

Question:

What do Bill Shakespeare, Orson Welles, late notice, indemnity agreements, purchased testimony, white hair, financial statements, the Court of Appeals and mediation all have in common?

 

Answer:

They each make a cameo appearance in this week's issue of Coverage Pointers.

 

Welcome to Coverage Pointers:

It's the 70^th Anniversary of the "War of the Worlds" broadcast which sent the nation into a state of mad hysteria.  This week's issue is not likely to cause the same reaction, and Orson Welles is not a current subscriber, but what an issue it is!  Do we have interesting cases to review!  Pour yourself a glass of Pinot Noir, soften the lights, put on some intoxicating music and spend a quiet morning with this issue of Coverage Pointers.

 

Insurance Coverage Arbitration & Mediation
Resolving the Complex without the Substantial Costs of Litigation or the Risk of Adverse Precedent

 

There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent.  We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.

 

Hurwitz & Fine, P.C. offers both mediation and arbitration services through attorney Dan D. Kohane.  Why spend the money and the time to litigate these questions when resolution by mediation or arbitration can bring closure to hotly contested matters in relatively short order for substantially reduced costs.

 

Dan D. Kohane has been handling complex insurance coverage matters for over 25 years.  For over 20 years, he has served as an Adjunct Professor of Insurance Law at the Buffalo Law School and is frequently retained as an expert witness in insurance coverage matters throughout the United States, Canada and in the London market.  He is well-schooled as an arbitrator and mediator and lectures regionally, nationally and internationally on insurance coverage issues. Mr. Kohane served as President of the Federation of Defense & Corporate Counsel, an international organization of over 1300 merit-selected lawyers and regional and national insurance claims professionals and is the past chair of the FDCC's Insurance Coverage Section.

 

Mr. Kohane is also an experienced trial lawyer, handling insurance coverage and extra-contractual matters of behalf of insurers and policyholders. He brings years of experience, scholarship, practicality and common sense to the table.

 

For information, contact Dan Kohane at [email protected] or 716.849.8942.

 

Bi-Economy and Consequential Damages:

Concerned whether the consequential damage award allowed by the Court of Appeals in Bi-Economy is an action involving business interruption insurance may be extended to liability insurance claims?  You know that I am.  Here's the first example, a Nassau County Supreme Court (lower court) case, Silverman v. State Farm decided October 8^th with respect to denial of coverage under a liability policy:

 

However, in view of the recent Court of Appeals decisions cited above, and the very early stage of the instant litigation, the plaintiffs may serve an amended complaint seeking consequential damages, as sought in counsel's request to replead.

 

Since we do not include lower court decisions in Coverage Pointers, you'll have to work a little bit to find this one, by clicking here: http://www.nycourts.gov/reporter/pdfs/2008/2008_32859.pdf

 

Earl's Pearl:

Earl Cantwell provides you with a very interesting look at ways of computing business interruption claims in the real word, in his column this week.   How he continues to come up with interesting topic about which to write is quite remarkable.

 

The Court of Appeals Speaks:

Our highest court, the Court of Appeals, hands down only the fewest of interesting insurance opinions during the year and surely they are worth reviewing.  In this week's issue, you will see that the high court has accepted review of two "rogue" SUM cases, Rivera and Nunez where we took issue with the Appellate Division decisions.  They deal with coverage triggers and settlements and we're reprised our review within

 

You'll also find a Court of Appeals late notice decision, in Sorbara Construction that affirms long-standing but often challenged rules relating to the legal principle that unless the parties have identical interests, notice by one insured is NOT notice by another.

 

And in the attached issue, PLEASE read Steve Peiper's Potpourri review of the very important Court of Appeals decision relating to the enforceability indemnity agreements in construction contracts where the party seeking indemnity is itself negligent.  [Steve thinks that some people never read down that far].

 

It Was 100 Years Ago Today:

From the October 31, 1908 front page of the New York Times, we find that testimony was for sale, even then:

 

JAIL RECORD PROVES

WITNESS PERJURER

Nolan Was in Sing Sing When

He Said He Saw Boy Killed by an Auto.

Investigator for Transportation Company Admits Giving Witness $25 to Testify in Accident Suit

 

Supreme Court Justice Ford, sitting as a committing Magistrate, began an investigation yesterday of a charge of perjury made in connection with a suit brought by Morris Schultz against the New York Transportation Company to recover $20,000 for the death of his 5-year-old son, Louis, who was run down and killed on Aug. 3, 1905, by an automobile belonging to the defendant company.

 

Among the witnesses called for the defense was Thomas Nolan. He said the accident was the direct result of the boy's negligence in running out from behind a wagon and in front of the automobile. The case was closed and the jury was all ready to give its verdict adverse to the plaintiff, .it is said, when Louis J. Vorhaus, counsel for Schultz, told the court that it had come to his knowledge that Nolan was an ex-convict and was actually in Sing Sing at the time of the accident. .He submitted to the court pictures of Nolan taken from 'the Rogues' Gallery at Police Headquarters.

 

Arthur K. Wing, chief counsel for the New York Transportation Company, explained to Justice Ford that he had absolutely no knowledge of Nolan's record.  He said that Nolan was found by one of the company's investigators and that he did not know what testimony Nolan would when, called to the stand.

 

Charles Black, who has charge of the Investigation department of the New York Transportation Company testified.  Black said Nolan was sent to him . and told a straightforward story, he thought, of the accident. Mr. Black admitted paying Nolan $15 for attendance at court and $10 for expenses.

Editor's Note:  $10 for expenses? Hmm. Gasoline cost 11 cents a gallon back in 1908 so Mr. Nolan could have used that $10 to buy about 91 gallons of gas for his Model "T".  

 

From Audrey Seeley, the Queen of No Fault and the Star of Stage, Screen and Buffalo Law Journal (see her picture in this week's Buffalo Law Journal: http://www.buffalolawjournal.com):

 

We have a trend alert in the arbitration realm!!  It pertains to the sufficiency of IME's on lack of medical necessity.  Please make sure to review my column on this issue and feel free to contact me with any questions.  We routinely provide training on IME and peer review reports.  If you would like some training in this area do not hesitate to send me an email with the Subject line : TRAINING REQUEST at [email protected].

 

Also, it's not too late to sign up the NBI seminar on no-fault scheduled here in Buffalo for November 19th.  If you need a brochure, let me know.  It is expected to be a good program addressing litigation, arbitration, claims handling issues, and ethics.  Moreover, you will have the opportunity to meet not only defense counsel but also plaintiff's counsel in this area who routinely handle no-fault matters.  This is a great opportunity to meet them and ask them questions.

 

Finally, have a Happy Halloween! 

 

Audrey

 

Also, One Hundred Years Ago Today, the Oakland Tribune Reported:

 

GETS $19,000 FOR HER GRAY HAIR

Brown Locks Turn White After

Accident and Jury Awards Big Damages

 

CHICAGO, Oct., 31.-After a broken trolley pole fell on the head of Mrs. Julia Konold, her hair, a chestnut brown, was turned completely white in one day and the expression of her face changed from the bloom of middle age to that of a woman of fifteen years her senior.  The accident occurred on December 21, 1904. In Judge Tuthill's court yesterday a verdict for $19,000 was rendered in her favor against the Union Traction Company, owners of the line on which she was Injured. 

 

The verdict is one of the largest verdicts ever returned in favor of a woman in a personal injury case in the history of Chicago.

 

Editor's Note:  Judge Richard Stanley Tuthill presided over a more famous case in his career.  The page five story in the Kokomo Daily Tribune underscored Judge Tuthill's most notorious decision, one finding that Shakespeare was not all that he was cracked up to be:

 

CHICAGO COURT HANDS HOT ONE TO SHAKESPEARE

Holds That Alleged Bard of Avon Was a Piker and Fraud

 

SAYS BACON WROTE PLAYS

Goes on Theory That Shakespeare Was Just an Ignorant Stagehand

 

Chicago, April 22.-William Shakespeare, a poet and dramatist, late of Stratford, England, was found guilty of fraud yesterday by Judge Richard Tuthill in the Cook County Circuit Court. The court ruled, upon expert testimony, that the plans, sonnets, and poems heretofore generally attributed to Shakespeare are in fact the work of one Francis Bacon, a scholar of the period.

 

Judge Tuthill, in effect, found that Shakespeare was a sort of an ignorant super-stage hand, or, more properly a stage manager who afterward came into possession of a London theatre, and that Bacon was a man of high literary instincts, deep culture, and wide experience who, to shield himself from the ignominy that the period (1600) cast upon those who stooped to the low pursuits of education, used the name of Shakespeare.

 

In this week's banner issue, you'll find the following edible coverage morsels:

Court of Appeals

• High Court Accepts Review of SUM Cases
• State's Highest Court Affirms "No Prejudice" Rule.  Notice Under One Policy is Not Notice Under Another; Notice by One Insured, Not Notice by Other Adverse Insured

Appellate Division

• Question of Fact on Insured's Late Notice Excuse, Despite Knowledge of Accident
• The Race (to the Courthouse) Goes to the Swiftest: New Jersey Action Can Proceed First
• California Here I Come
• Until Coverage Issues are Resolved, Anti-Subrogation Motion Cannot Be
• Since Allegations Against Additional Insured Suggest Possibility of Coverage, Carrier Must Defend
• You Can Never Understand this One by Reading It:  Court Appears to Confuse Certificate of Insurance with Indemnity Agreement and Finds that Indemnity Language Placed in Certificate of Insurance by Producer and not Ratified by Subcontractor May Require Subcontractor to Indemnify Others
• No Valid Excuse?  Four Month Delay in Denying Coverage Unreasonable as a Matter of Law
• Named Insured Can Assign its Coverage Action to Another
• Second Arbitration Demand Gives Carrier Second Bite at the Apple

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

Margo M. Lagueras
[email protected]

 

• New York State Insurance Department Circular Letter No. 20
• Affidavit That Does Not Render an Opinion as to Causation Fails to Raise Triable Issue of Fact
• MRI Performed a Year After Accident is Too Remote to Relate Injury to Accident
• Without "Competent Medical Proof", the Plaintiff's Testimony Fails to Establish Serious Injury
• Reinstatement of the Complaint Meets With Strenuous Dissent
• Restrictions Based on Subjective Complaints of Pain Will Not Support 90/180 Allegation 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

• TREND ALERT!!

Litigation

• Summary Judgment Denied On Issue Whether Assignor Entitled To Benefits Through MVAIC
• Petitioner's Paper's Insufficient To Support Petition To Vacate Master Arbitration Award
• Plaintiff's Papers Insufficient to Establish Business Record Rule Exception to Hearsay 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected] 
 

• It is What We Thought it Was:  Contractual Waiver of Subrogation Means What it Said
• Motion to Dismiss Denied Where the Policy Specifically Covered Claims for "Lack of Access"
• No Quid Pro Quo under the Labor Law:  Barter System Doesn't Satisfy the "Employee" Requirement of Labor Law § 240(1)
• Fullest Extent Permitted by Law Language Saves em' All:
• Court Upholds Claims for Partial Indemnification, and Avoids the Application of GOL § 5-322.1 

EARL'S PEARLS

Earl K. Cantwell, II
[email protected]

 

Pardon the Interruption! 

Anyway, enough of that.  Hope you enjoyed our missive and let us know how we can be of service.

 

Dan

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

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Audrey A. Seeley
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

 

Margo’s Musings on “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property and Potpourri
Earl’s Pearls

Across Borders

 

Court of Appeals
 [Note, two non-insurance high court cases can be found in Steve Peiper’s column, below]

10/23/08          In the Matter of Allstate Insurance Company v. Rivera
                        In the Matter of Clarendon National Insurance Company v. Nunez
New York State Court of Appeals
High Court Accepts Review of SUM Cases
We have recently review two SUM cases where we took issue with the Appellate Division decisions.  Upon application of skilled coverage practitioner Jonathan Dachs, the Court of Appeals has accepted review of both.  Here’s my April summary of the Rivera decision which incorporate my February comments on the Nunez opinion as well.

Appellate Division, Second Department
SUM Claim Fails Because of Failure to Trigger Coverage, Despite Our Critique of Recent Precedent
On July 15, 2005, Nydia Rivera, Lisa Rivera, Nadine Valoy, Charisse Mercado, and Sasha Quintanilla (hereinafter the appellants) were passengers in an automobile owned and operated by Petra Mercado (hereinafter the Mercado vehicle), when it was involved in an accident with the Rodriguez car. The Mercado vehicle was insured by Allstate, Rodriguez by GMAC Insurance..

Under the Allstate policy, the limits for both third-party bodily injury and for the supplementary uninsured/underinsured motorists endorsement (hereinafter the SUM endorsement) were in the amount of $25,000 for each person and $50,000 for each accident, the same limits as in the GMAC policy. GMAC had a 25/50 liability policy as well. GMAC paid the sum of $25,000 to Mercado and the sum of $5,000 to each of the five appellants, thereby exhausting the $50,000 per-accident limit under the GMAC policy. The appellants thereafter sought additional benefits under the SUM endorsement of Mercado's Allstate policy. 

In accordance with 11 NYCRR 60-2.3(f), the SUM endorsement of Mercado's Allstate policy provides, in pertinent part, that "[t]he term uninsured motor vehicle' means a motor vehicle that, through its ownership, maintenance or use, results in bodily injury to an insured, and for which . . . there is a bodily injury liability insurance coverage . . . applicable to such motor vehicle at the time of the accident, but . . . the amount of such insurance coverage . . . is less than the third-party bodily injury liability limit of this policy . . . or . . . the amount of such insurance coverage . . . has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy."

The Court held that the appellants were not entitled to underinsurance benefits because the bodily injury liability insurance coverage provided by the GMAC policy was equal to, and thus not "less than," the third-party bodily injury liability limit of the Allstate policy.

The court was right here to consider whether there was a trigger of coverage.  But the court determined, as did the Second Department a few months earlier in Matter of Clarendon v. Nunez, that payments to occupants of the Mercado vehicle are not payments to “others.” Accordingly, the court concluded that the SUM coverage did not trigger.

Editor’s Note:  When we review Nunez in our February 8^th issue we disagreed with the holding and stand by our position.  We said then, and we say again:

Frankly, we think this case is just wrongly decided.  The court lumps the plaintiffs’ together and should have considered each claim separately. 

The mandatory language prescribed in the regulation provides:

(c) Uninsured Motor Vehicle. The term "uninsured motor vehicle" means a motor vehicle that, through its ownership, maintenance or use, results in bodily injury to an insured, and for which:

* * *

(3) there is a bodily injury liability insurance coverage or bond applicable to such motor vehicle at the time of the accident, but;

* * *

(ii) the amount of such insurance coverage or bond has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy …

I will stand corrected if I receive a valid argument telling me that I’ve lost my mind.

10/21/08          Sorbara Construction Corporation v. AIU Insurance Company

New York State Court of Appeals

State’s Highest Court Affirms “No Prejudice” Rule.  Notice Under One Policy is Not Notice Under Another; Notice by One Insured, Not Notice by Other Adverse Insured

The Court of Appeals holds that notice to an insurer under a Workers Compensation policy is NOT considered notice under a separate CGL policy.  Accordingly, that an insurer has received notice of an accident and has paid the plaintiff workers compensation benefits does not serve to satisfy its named insured’s separate obligation to provide notice under a Commercial General Liability policy.  Similarly, that the carrier had notice from an additional insured does not excuse the named insured from providing notice, particularly where the additional insured and named insured are not united in interest.

 

Appellate Division

 

10/30/08          426-428 West 46th St. Owners, Inc v. Greater New York Mut. Ins.Co.
Appellate Division, First Department
Question of Fact on Insured’s Late Notice Excuse, Despite Knowledge of Accident
The personal injury plaintiff was hurt when she fell down a staircase within an apartment she rented from 426-428 West 46^th St. Owners, Inc. (Owners).  Another insured, 426-428 West 46^th St. Associates, Inc (Associates) was a shareholder of Owners and was managing agent for the building. Plaintiff Robert Gottesman was the president of Owners and a member of its board of directors, and was also a general partner of Associates.

The accident occurred in August 2002, and although the insurer was not notified until June of 2003. The excuse, offered by the insured and accepted by the court was that  the insureds’ failure to timely notify defendant was based on a good-faith, reasonable belief of nonliability even though the superintendent of the building was the one who discovered the injured plaintiff in her apartment.

There was proof from the insured and the tenant that she did not mention the details of what had happened or the nature of her condition. Plaintiffs therefore had no way of knowing that the tenant had fallen due to an allegedly defective staircase in her home, particularly in light of her previous claims to have suffered from a medical condition that prevented her from paying her rent in a timely manner for several months.
Editors Note:  The court held that plaintiffs had some justification for assuming that the tenant's hospitalization was attributable to a continuing medical illness or condition such as would raise a question of fact as to whether it was reasonable for them not to undertake any further inquiry into how she had come to be lying on her floor.  Sorry, we don’t buy it.  Carriers are not permitted to assume anything, why should an insured?  “Investigate,” insured.  Investigate!

10/30/08          Ace Property & Casualty Insurance Company v. Federal-Mogul Corporation
Appellate Division, First Department
The Race (to the Courthouse) Goes to the Swiftest: New Jersey Action Can Proceed First
Insurers tried to convince the NY courts that despite the rule that the action filed first between or among the same parties to the same transaction, in this case, an insurance dispute should be resolved in New York and not New Jersey (where the earliest-in-time lawsuit was filed).  The court found that insurers failed to show that the first-filed New Jersey action is vexatious, oppressive or was instituted to obtain some unjust advantage, that New York's interests in this dispute predominate over New Jersey's, or other reason for deviating from the generally followed first-in-time rule.  According, NJ will be the place of resolution,

 

10/30/08          Kinder Morgan Energy Partners, L.P., v. Ace American Insurance Company
Appellate Division, First Department
California Here I Come
There was a pipeline explosion in California. All of the activity occurred in California.  The plaintiff resided in California. The insurance procurement contract was negotiated in California. None of the parties to the declaratory judgment action arising out of that loss were NY residents. While the policies were issued in NY, California is the place to litigate this case and the court determined that it was the more convenient forum for the litigation to be resolved.

 

10/28/08          Kielar v. The Metropolitan Museum of Art

Appellate Division, First Department
Until Coverage Issues are Resolved, Anti-Subrogation Motion Cannot Be.

The plaintiff fell through a skylight while working on a construction project on a City owned building which was leased to the Museum. American International Specialty Lines Insurance Company (AISLIC), the plaintiff employer's excess insurance carrier, was required to extend coverage to the museum and the City and in fact had agreed to do so in a confidential agreement which was a result of a separate declaratory judgment action.

 

The question then before the court was a ruling on the employer’s application to dismiss the Museum and City’s claim for contractual indemnification as violative of the anti-subrogation rule, to the extent of the full coverage provided by its primary and excess insurance policies. Since both Admiral Insurance Company, the employer's primary insurance carrier, and AISLIC are denying coverage to the employer, and since the employer has commenced a separate declaratory judgment action to determine the issue of coverage, it is premature to determine whether the anti-subrogation rule bars the City's and the museum's claims. If coverage is established, the claims will be dismissed to the extent of coverage.

Since the anti-subrogation claim cannot be resolved, the Museum and the City were entitled to summary judgment on their contractual indemnity claims in view of the employer's indemnification agreement with the museum and the City. However, in light of the fact that AISLIC agreed to cover the museum, the court found that summary judgment on the contractual indemnity claim can only be upheld insofar as both the Admiral and the AISLIC policies are exhausted.
Editor’s Note:  The Anti-Subrogation Rule prohibits a carrier, on behalf of one of its insureds, seeking to recover against another insured under the same or similar policy.

10/23/08          Chunn v. New York City Housing Authority

Appellate Division, First Department

Since Allegations Against Additional Insured Suggest Possibility of Coverage, Carrier Must Defend
National Casualty (NCC) issued a CGL policy to American Security Systems, Inc. (ASS)) which provided for additional insured status for the New York City Housing Authority (NYCHA) with respect to liability for, inter alia, bodily injury caused, in whole or in part, by ASSI's "acts or omissions." The complaint asserts that plaintiff's injury was caused, in whole or in part, by ASSI's acts or omissions with respect,  Therefore, NYCHA is entitled to a defense under the policy . The contended that there was no possible factual or legal basis on which they might eventually be obligated to indemnify NYCHA but an affidavit submitted indicating that the ntercom had been broken for several months before the incident presented an issue of credibility that precludes summary judgment.

NYCHA is also entitled to a defense under the excess policy issued to ASSI by Scottsdale Insurance Company, because that policy follows the form of NCC's CGL policy, under which NYCHA is an additional insured.  A late notice defense raised with respect to an OCP policy failed because delays in notifying were cause by misleading statements by the NCC claims department, hiding the policy.
Editor’s Note:  Why would excess carrier have to defend?  Perhaps loose language.

10/21/08          Mantovani v. Whiting-Turner Contracting Company

Appellate Division, Second Department
You Can Never Understand this One by Reading It:  Court Appears to Confuse Certificate of Insurance with Indemnity Agreement and Finds that Indemnity Language Placed in Certificate of Insurance by Producer and not Ratified by Subcontractor May Require Subcontractor to Indemnify Others

My special thanks to Leonard Cascone and Olympia Rubino of Cascone & Kluepfel, who took the time to give me a “behind the scenes” look at this one, because the Opinion did not do it justice.

Mantovani was an employee of ADCO. ADCO was a subcontractor to Martin.  Mantovani was hurt while working on a hydraulic lift.  He sues ADCO and ADCO impleads Martin.

 

So far, so good.  The rules are quite clear, of course, that the impleader against the employer, Martin, can only go forward if (a) there is a written contract of indemnity or (b) the plaintiff suffered a grave injury.  He didn’t suffer a grave injury, so the only issue was the indemnity agreement.

 

What confused us was the court holding that there was sufficient evidence of a written contract between ADCO and Martin, in the form of a Certificate of Liability Insurance, providing that ADCO would, under certain circumstances, indemnify Martin, to warrant denial of that branch of ADCO's motion which was for summary judgment dismissing the third-party cause of action for contractual indemnification.  There were, the court said, triable issue of fact as to whether, under the circumstances of this case, the terms of the Certificate of Liability Insurance obligated ADCO to indemnify Martin.

 

Attorney Rubino was kind enough to send me a copy of the Certificate of Insurance.  The Certificante, issued by the producer Fleet Insurance Services (and not signed by any parties) contained (in the “Description of Operations” box) classic contractual indemnity language.

 

“To the fullest extent permitted by law …(and to the extent claims …. Are not covered by Subcontractor’s Liability Insurance) … Subcontractor shall indemnify and hold harmless [the GC and Owner …}

 

Now that’s an odd place to find an indemnity agreement, in an unsigned and unendorsed Certificate of Insurance issued by a producer.  The subcontractor moved to dismiss the contractual indemnity claim arguing that the deposition transcripts of all parties acknowledged that the parties had NOT agreed on an indemnity agreement as part of the contractual relationship.

 

Inexplicably, the Court decided to ignore that testimony and find that there was a question of fact as to whether the Certificate of Insurance obligated the subcontractor to indemnify the GC, etc.).

10/23/08          Saitta v. New York City Transit Authority

Appellate Division, First Department

No Valid Excuse?  Four Month Delay in Denying Coverage Unreasonable as a Matter of Law
Insurer knew enough when it received insured’s notice of the accident, that it should have denied coverage on late notice.  It conduct a four-month late notice evaluation – apparently only on the late notice issue – before denying and that is simply too long.

 

10/14/08          Home Depot U.S.A., Inc., v. National Fire & Marine Insurance Company

Appellate Division, Second Department
Named Insured Can Assign its Coverage Action to Another
The injured worker in the underlying action, was an employee of the subcontractor Westward and was hurt while performing work in a project in which Home Depot (Home) was the general contractor. The worker sued Home and Home started a third-party action against Westward for indemnification and a defense. By contract, Westward had agreed to obtain insurance naming Home Depot as an additional insured under a commercial general liability policy which it obtained from the defendant, National Fire. Westward did not appear and Home took a default judgment against Westward in the third-party action.

National Fire had disclaimed coverage to Westward and to Home claiming that Home was not named as an additional insured under the policy. Thereafter, Home Depot and Westward entered into an assignment agreement under which Westward agreed to assign its claims against National Fire to Home in consideration for Home’s agreement "limit any levy or execution or any process of any kind, relating to the Default Judgment against Westward . . . solely to any and all claims or causes of action of whatever nature or kind which Westward might have or possess against" National Fire.

Home, individually and as assignee of Westward, then sued this action against National Fire, for a judgment declaring that National Fire was required (a) required to indemnify Westward in the underlying third-party action and (b) that National Fire was obligated to defend and indemnify Home because Home was an additional insured

The court held that Home was not an additional insured under the policy and the Certificate of Insurance that suggested otherwise did not alter the policy.  However, the court allowed the Home claims, in its capacity as assignee of Westwood, to challenge the denial of coverage to Westward.  Under New York law, claims are typically transferable.   

National Fire also argued that the assignment and release granted by its named insured relieved it from its obligation to indemnify Westward.  “Not so,” holds the court, since the assignment did not relieve the named insured of liability in the underlying lawsuit.
Editor’s Note:  Since Home had a judgment against the named insured, Westwood, it had a statutory right to challenge the disclaimer anyway, without an assignment, under the “Direct Action” statute.  Why the hubbub?

10/14/08          Matter of Travelers Indemnity Company v. Fernandez
Appellate Division, Second Department
Second Arbitration Demand Gives Carrier Second Bite at the Apple
The first time an uninsured motorist arbitration demand was filed, Travelers did not move to stay arbitration timely – within 20 days of the demand -- and its claim that State Farm insured the other car was never adjudicated.  However, that arbitration was abandoned and the AAA advised the claimant that if it wanted to pursue UM benefits, it would have to file an arbitration demand anew.  The claimant did and this time, Travelers moved to stay within 20 days.  “Too late,” cried State Farm.  “You missed the filing deadline on the first arbitration.”  “No so,” responds the court.  This was a whole new arbitration and a whole new 20 days begins to run and since the question of State Farm’s coverage was never resolved on the merits, State Farm cannot rely on the earlier Travelers miscue to its benefit.

 

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

Margo M. Lagueras
[email protected]

 

10/16/08          New York State Insurance Department Circular Letter No. 20

Just in time for Halloween – a brief detour off our usual “serious injury” roadmap. 

Perhaps in part provoked by the six years of litigation produced by the World Trade Center tragedy, or perhaps in response to the fact that apparently New York is one of 15 States that do not have statutes governing this area, but the Insurance Department has issued Circular Letter No. 20 setting forth its expectations regarding “contract certainty”.

 

“‘Contract certainty’ refers to the complete and final agreement of all terms to an insurance policy or reinsurance contract by the date of inception, and the issuance and delivery of the policy before, at, or promptly after inception.”  The Letter refers specifically to large commercial policies written on a manuscript basis, special risk policies written pursuant to Insurance Law Article 63, the surplus or “excess” lines market, and reinsurance.  It does not apply to policies written on standardized forms.  In essence, the insured is to have the complete and finalized terms of his policy “promptly after inception”.  And, to clarify, “promptly” means within 30 days.  The stated purpose is to ensure that policyholders know the agreed-upon terms and conditions of their coverage from the inception which, ideally, will lead to reduced complex litigation.

 

The time frame is 12 months from the date of the Letter within which to “develop and implement practices to assure that policy documentation is delivered to the insured before, at, or promptly after inception”.  The Department will be watching!

 

10/14/08          Sorto v. Morales

Appellate Division, Second Department

Affidavit That Does Not Render an Opinion as to Causation Fails to Raise Triable Issue of Fact

The plaintiff relied, to her detriment, on the unaffirmed affidavit of her chiropractor and the affirmed affidavit of her neurologist based on the unaffirmed reports of others.  In addition, none of her medical proof was contemporaneous with the accident and, therefore, none had any probative value.  Even the affidavit of her treating radiologist failed to raise a triable issue of fact because it only set forth his observations based on MRI films, but did not render an opinion as to the causation of his findings.  And, where the medical submissions fail, a plaintiff’s “self-serving” affidavit will not save the complaint from dismissal.

 

10/21/08          Santos v. Taveras

Appellate Division, First Department

MRI Performed a Year After Accident is Too Remote to Relate Injury to Accident

The physician affirmation submitted by the defendant reported a normal range-of-motion of the cervical spine and a mild “self-imposed” range-of-motion limitation of the lumbar spine.  In opposing, the plaintiff did not offer any objective medical evidence of lumbar spine injury.  The only MRI was performed a year after the accident and the first report documenting any limitations was made over two years after the accident.  As such, both were so remote from the time of the accident that no inference could be raised linking the limitation to the accident.

 

10/28/08          Lattan v. Gretz Transit Inc.

Appellate Division, First Department

Without “Competent Medical Proof”, the Plaintiff’s Testimony Fails to Establish Serious Injury

This plaintiff’s jaw injuries survive dismissal, but not her cervical, lumbar or knee injuries.  The defendants submitted affirmed reports of an orthopedic surgeon and a neurologist to establish that the plaintiff had normal range-of-motion and no evidence of disability as regards her alleged cervical and lumbar injuries, and an affirmed report of a radiologist establish the pre-existing degenerative condition of the cervical spine and no trauma to the knee.  The plaintiff’s doctor, who only reported on the cervical injury, did not address the degenerative condition and did not makes any comparisons to normal ranges or identify any objective tests.  Given the absence of any “competent medical proof”, the plaintiff’s testimony that she spent four months out of work and in bed did not serve to establish a serious injury for purposes of the 90/180 category.

 

10/30/08          Glynn v. Hopkins

Appellate Division, First Department

Reinstatement of the Complaint Meets With Strenuous Dissent

In a brief decision, the dismissal was reversed, on the law, finding, among other things, that the defendant’s own neurologist found limitations which he quantified and causally related to the accident, and that defendant’s radiologist’s statements regarding degenerative changes was “too equivocal”.  Notably, the plaintiff sustained neck injuries in a previous motor vehicle accident, and knee injuries in a prior slip and fall.

 

The two-judge dissent disagreed in a lengthy memorandum pointing out that the plaintiff’s own deposition testimony, which was submitted by the defendant, established prior herniations and other injuries sustained in the other incidents.  Quoting the Court of Appeals in Matott v. Ward, the dissent specifically noted that “[t]he key inquiry in gauging whether an expert has expressed sufficient certainty in her opinion for it to have probative value is ‘whether it is reasonably apparent that the doctor intends to signify a probability supported by some rational basis’”.  Not only did the dissent disagree with the majorities assessment of the radiologist’s statements, they would have found that the plaintiff’s expert failed to relate her current medical problems to the motor vehicle accident, particularly in light of her medical history.

 

10/30/08          Nowak v. Breen

Appellate Division, Third Department

Restrictions Based on Subjective Complaints of Pain Will Not Support 90/180 Allegation

The plaintiff, a waitress, claimed she was unable to return to work for four months, and unable to do household chores for a year, following a three-car rear-ender.  Her medical records, however, indicated that her present complaints were virtually identical to prior complaints (from four prior accidents).  In fact, the day before the subject accident she had treated for similar complaints and was told by her doctor to stop working as a waitress and to avoid lifting things.  Although the plaintiff’s treating doctor stated that this accident aggravated the pre-existing cervical and lumbar problems, he never identified a specific injury caused by the present accident, nor did he explain how the prior injuries were aggravated.  Without objective medical evidence showing an injury from the present accident, the plaintiff’s restrictions “on her activities were based solely upon subjective complaints of pain” and the complaint was properly dismissed.

 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

 

TREND ALERT!!

 

Recently we have seen a few decisions from Arbitrator McCorry that indicate a shift in his analysis of an independent medical examination report (“IME”).  In some of the decisions Arbitrator McCorry issued he determined that the reports were insufficient as they did not either state or reflect that continued care was not medically necessary.

 

In one decision, the care at issue was chiropractic which was denied based upon an IME after one re-evaluation.  The IME report indicated that the applicant had improved since the last IME but had not reached pre-accident status.  Further, the applicant was determined to have plateaued with chiropractic care.  The applicant underwent 14 months of chiropractic care without complete resolution to which the IME chiropractor opined resulted in the applicant reaching an “end point in improvement.”  Arbitrator McCorry determined that this report did not reflect an assessment that continued chiropractic care was not medically necessary.

 

In a second decision, which also involved chiropractic care, the IME chiropractor’s report revealed that the applicant was “essentially orthopedically, neurologically, and chiropractically intact.”  This was the conclusion despite the determination that the applicant did have a small disc herniation at C3/4 without evidence of nerve root compression.  The chiropractor concluded that the applicant had received extensive chiropractic care without any resolution or substantial improvement which indicated continued care would not have a significant change on her condition.  Therefore, the applicant reached “full benefit from chiropractic treatment and no further treatment was indicated.”  Arbitrator McCorry determined that this report was deficit because it did not clearly stated that chiropractic care was not medically necessary.

 

So here’s the angle, insurer’s need to review their IME reports as it may be difficult to prevail in arbitration on the report alone.  If the report is deficit and is assigned to Arbitrator McCorry some consideration should be given to calling the IME chiropractor to testify at the hearing. 

 

Litigation

 

10/27/08          Rombon, Ph.D., P.C. a/a/o Ruiz-Diaz v. MVAIC

Appellate Term, Second Department

Summary Judgment Denied On Issue Whether Assignor Entitled To Benefits Through MVAIC

An issue of fact precluded summary judgment on whether plaintiff’s assignor was a qualified person under Insurance Law §5202, which required New York State residency, for purposes of entitlement to benefits under Insurance 5221 through MVAIC. 

 

10/27/08          Avanessov, Physician, P.C. a/a/o Sabovic v. State-Wide Ins. Co.

(Appellate Term, Second Department

Petitioner’s Paper’s Insufficient To Support Petition To Vacate Master Arbitration Award

Petitioner’s papers were insufficient to warrant vacation of a master arbitration award.  The papers submitted by counsel in an affirmation form were not affirmed to be true under the penalties of perjury as required by CPLR §2106. 

 

10/14/08          Art of Healing Medicine, P.C. v. Travelers Home and Marine Ins. Co. Appellate Division, Second Department

Plaintiff’s Papers Insufficient to Establish Business Record Rule Exception to Hearsay

The plaintiff’s summary judgment was properly denied as it failed to submit in admissible form the billing records under the business record rule exception to the hearsay rule.  Since the plaintiff failed to establish a prima facie case entitlement to summary judgment it was irrelevant whether the opposing papers were deficient.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 Of Property….and

 

10/21/08          State Farm Ins. Co v. J.P. Spano Construction, Inc.

Appellate Division, Second Department

It is What We Thought it Was:  Contractual Waiver of Subrogation Means What it Said

In this action plaintiff, as a subrogee of its named insured, sought to recover for losses allegedly caused as a result of the negligence of defendant JP Spano.  However, where the contract between the carriers named insured and JP Spano clearly waived all subrogation claims where the subject loss was covered by property insurance, the Second Department reasoned that carriers action was barred.  It was particularly unhelpful that plaintiffs policy specifically included an acknowledgment which permitted the named insured to waive all subrogation rights. 

 

10/14/08          Uzzle v. Nunzie Court Homeowners Association, Inc.

Appellate Division, Second Department

Motion to Dismiss Denied Where the Policy Specifically Covered Claims for “Lack of Access”

In this action, plaintiff made a claim for coverage under a title insurance policy after it was determined he did not have access to a parcel of land that he had recently purchased.  The claim was subsequently denied because the policy excluded coverage for claims arising from certain declarations set forth in the purchase contract.

 

However, carriers motion to dismiss failed  where it was determined that (a) the policy specifically covered claims arising out of a lack of access and (b) the carrier did not provide sufficient proof that the claim was excluded as a result of the aforementioned declaration. 

 

Potpourri

 

10/21/08          Stringer v. Musacchia

Court of Appeals

No Quid Pro Quo under the Labor Law:  Barter System Doesn’t Satisfy the “Employee” Requirement of Labor Law § 240(1)

In this case, plaintiff was injured when he fell while in the course of constructing a utility shed on defendants land.  As a result of the fall, plaintiff commenced an action, principally, under Section 240(1) of the Labor Law.  When it was determined that plaintiff did not qualify as an employee under the Labor Law, however, his claim failed to fall within the proscriptions of the statute.

 

In determining that plaintiff did not qualify as worker or employee, the Court of Appeals first noted that the term employee implied that the work was being performed for some economic motivation.  In addition, the Court referred to previous decisions which have established that an individual does not qualify under the Labor Law where the work was being performed voluntarily or gratuitously.

 

Here, because plaintiff only agreed to construct the shed so that he could hunt turkeys on the property, the Court noted that this indicated a recreational motivation rather an economic.  As such, because plaintiff was acting as a volunteer and not an employee his Labor Law 240(1) claim was dismissed. 

 

10/21/08          Brooks v. Judlau Construction, Inc.

Court of Appeals

Fullest Extent Permitted by Law Language Saves em’ All:

Court Upholds Claims for Partial Indemnification, and Avoids the Application of GOL § 5-322.1

Your author admits that he was surprised by this decision.  Not at the ruling, but that the Court of Appeals felt that we all needed some direction on the issue.

 

In this case, plaintiff was injured as a result of a workplace fall.  Not surprisingly, he commenced an action under Labor Law § 240(1) of the Labor Law against the general contractor on the site (Judlau).  Judlau, as you can imagine, immediately commenced third-party practice against plaintiffs employer (Thunderbird) for contractual indemnification.

 

Importantly, the contract between Judlau and Thunderbird contained an indemnification clause which began [t]he Subcontractor [Thunderbird] shall, to the fullest extent permitted by law,  hold the Contractor [Judlau]…harmless.  Thunderbird argued that this clause contemplated Judlau being indemnified for losses which arose from its own negligence which would have been in violation of General Obligations Law § 5-322.1s prohibition of the same. 

 

The Court of Appeals noted that the fullest extent permitted by law language actually implied the exact opposite when it came to the breadth of the indemnity agreement at issue. In so holding, the Court of Appeals acknowledged that a party may be entitled to partial indemnity for any percentage of liability that was not attributable to the direct negligence of the party seeking indemnification. 

 

Thus, for example, in this case, if Judlau was held 20% negligent in the underlying action, it would still be entitled to be indemnified for 80% of the total verdict. 

 

 

EARL’S PEARLS

Earl K. Cantwell, II
[email protected]

 

Pardon the Interruption!

 

            Following a disaster, businesses that resume normal operations as quickly as possible are more likely to survive.  At the other end of the spectrum, some 40% of companies that experience a major disaster will be out of business within five years, according to research studies.  Therefore, immediately after a loss, it is important for the insured to assemble a multi-disciplinary team to launch its recovery plan.  Such a team might include an attorney, appraisers, forensic accountants with insurance experience, and experts to assist with resumption of manufacturing, supply and technology operations.

 

            One issue that frequently occurs is how to analyze a company’s financial statements.  It is not unusual for many small companies, for example, to record income on a cash basis but expenses on an accrual basis.  This creates a discrepancy when trying to determine income for the pre-restoration period and then for the restoration period itself. Therefore, one rule is to try to measure income and expenses to arrive at a net income figure which compares cash or accrued income to cash or accrued expenses, or some acceptable hybrid.

 

            The next step is to measure “lost business income.” This involves analyzing the company’s financial performance prior to the loss; estimating what the company would have earned during the recovery period had no loss occurred (based on historical trends and reasonable pre-loss business plans and projections); and analyzing the company’s fixed and variable costs to identify continuing and non-continuing expenses.

 

            A related issue is whether an insured can calculate its lost profits based on an increased demand for its products and services – i.e., a business opportunity -- caused by the disaster itself. The answer to this question depends on the specific policy language and its interpretation by the courts. 

 

For example Prudential-LMI Commercial Insurance Company v. Colleton Enterprises, Inc., 976 F.2d 727 (4^th Cir. 1992), measured the operations of a Florida hotel that had been losing money for several years before Hurricane Hugo.  The insured argued that had the property not been lost to use, it would have profited from the influx of construction workers and other temporary residents after the hurricane.  However, the court denied the claim, interpreting the term “loss” to mean the covered peril: that is, the hurricane. The insured was only allowed to recover profits it would have earned if the hurricane had not happened.

 

            Other cases, including a dissent in Prudential-LMI  v. Colleton, claim that “loss” refers to the insured’s loss, and not the overall disaster.  In Stamen v. Cigna Property and Casualty Co.,  (Southern District of Florida 1994), several of the insured’s grocery stores were damaged by Hurricane Andrew.  The insured claimed business interruption losses based on profits it would have earned had the stores stayed open after the hurricane.  Rejecting the insurer’s “windfall” argument, the court distinguished between the “loss” and the “occurrence” and allowed an enhanced profit recovery theory. However, insurance policies and forms are beginning to address this issue, and recent ISO forms exclude any net income that would have likely been earned as a result of increase in business due to favorable business conditions caused by covered cause of loss.

 

            The next issue is determining a fair period of restoration or “POR.”  The period of restoration has an enormous impact on a company’s potential recovery under a business interruption policy.  Generally, the test is recovery of lost income during the time it would take, with due diligence, to repair or replace the damaged property and resume operations under the same or equivalent conditions that existed before the loss.

 

            One issue in determining the POR is location.  Some policies have redefined the POR as the time it takes to repair or replace the damaged property, or, if less, the time it takes to resume operations at a new, permanent location.  For example, Duane Reade, Inc. v. St. Paul Fire & Marine Insurance Company, 411 F.3d 384 (2d Cir. 2005), concerned a drug store chain which operated a retail outlet at the World Trade Center.  The appellate court ruled that the POR was the time required to build an equivalent store in a reasonably equivalent location, not resume operations at the WTC itself.  The court also found that because the policy was a blanket policy covering many stores, it was inappropriate to tie the POR to one specific site. 

 

            Other cases, however, have reached a different conclusion.  Zurich American Insurance Co. v. ABM Industries, 265 F.Supp. 2d 302 (S.D.N.Y. 2003), aff’d in part, 397 F.3d 158 (2d Cir. 2005), involved a company that maintained facilities at the WTC.  The court distinguished this case, noting that ABM could not simply relocate to another building and carry on its business, which was fundamentally connected to use of the common spaces at the WTC.  The court concluded that the appropriate POR was a “hypothetical” length of time required to rebuild the WTC. 

 

            Another issue is the scope of the coverage. Traditionally, business interruption coverage was triggered by direct damage to the insured property.  Modern policies, however, can provide broader protection, such as coverage which compensates the insured when damage to a third party’s property prevents access to or use of the insured’s business.  “Contingent” business interruption insurance protects a business resulting from losses resulting from property damage suffered by a key supplier or customer. 

 

            Another issue frequently encountered is loss mitigation.  It is important for a business that has suffered a disaster to identify and take action to mitigate its losses.  For example, a business might be able to shift production or sales to another facility, or to an outside contractor.  In many cases, an insurer may be willing to pay extra initial expenses resulting in such a transfer because it will reduce overall losses and lessen the POR. 

 

            Regardless of the technical issues and specific case, however, all issues and calculations should be based on the fundamental goal of actual or assumed resumption of business operations at the earliest practicable date.

 

ACROSS BORDERS

 

10/23/08          Mut. Of Enumclaw Ins. Co, v. T&G Construc. Inc

Washington Supreme Court
An Insurer is Entitled to a Final Determination of Coverage but Can be Found by Factual Findings of a Good Faith Settlement
 Mutual of Enumclaw Insurance Company(MOE), the insurer, vigorously defended its insured, a construction corporation, almost to the end. However, MOE declined to participate in the final round of settlement talks. After the talks concluded, MOE challenged the settlement at the reasonableness hearing. Now, in this separate coverage action, MOE challenges its obligation to pay. MOE's principal argument is that under the insurance policy, it is obligated to pay only damages that its insured is legally obligated to pay. It believes its insured should have prevailed on an affirmative defense in the liability case. The judge in the underlying liability case rejected the proffered affirmative defense several times, including at summary judgment and at the reasonableness hearing. In this coverage dispute, the insurer seeks to raise the issue again. The Court held that while MOE is correct that its insured's affirmative defense was never litigated to absolute finality, it was substantially resolved in the underlying liability case. The Court held that if a coverage question turns upon the same facts or law at issue in the underlying dispute between the claimant and the insured, the insurer will be bound by the results of a trial or settlement judicially approved as reasonable, absent a showing of collusion or fraud. The Court reversed the Court of Appeals to the extent it holds otherwise. However, the Court was unable to determine on the briefing or record whether two policy exclusions apply. Therefore, the Court remanded the case to the trial court to reconsider consistent with this opinion the applicability of those two exclusions and to decide attorney fees.

Submitted by: Meloney Cargil Perry (Meckler Bulger Tilson Marick & Pearson LLP)

 

10/23/2008      Southern County Mutual Ins. Co v. Surety Bank, N.A.

Texas Court of Appeals, Second District.
Upon Timely Notice of Cancellation, Premium Finance Company Entitled to Refund of All Unearned Premiums Regardless of Who Makes Premium Payment
Scotts Temple obtained an automobile liability insurance policy through its agent, United National Insurance Agency (“United National”) from Southern County Mutual Insurance (“Southern County”). United National obtained the policy through Southern County’s managing agent, U.S. Risk Underwriters, Inc. (“U.S. Risk”). Scotts Temple entered into a premium finance agreement (“PFA”) with Surety Bank under which Surety Bank would finance $34,293.00 of the total premium of $45,999.00 while Scotts Temple was obligated to pay the remaining $11,706.00 by down payment. Through the PFA, Scotts Temple assigned to Surety Bank as security for the total amounts payable, any and all unearned premiums and dividends which may become payable under the policy and granted Surety Bank full authority upon any default to cancel the policy and receive all sums resulting therefrom. In the PFA, Scotts Temple and United National represented that the $11,706 down payment had been made by Scotts Temple. However, Scotts Temple did not make the down payment, U.S. Risk did. Surety Bank issued a check for $34,293 to U.S. Risk and sent Southern County a notice of financed premium. When Scotts Temple failed to make any installment payments due under the PFA, Surety Bank first provided Scotts Temple with notice of its intent to cancel the policy and eventually cancelled the policy. Surety Bank sent a notice of cancellation to Southern County, placing Southern County on notice that unearned premiums must be returned to Surety Bank within sixty days of cancellation. Instead of sending the total unearned premiums to Surety Bank, which amounted to $38,685.00, Southern County sent $31,721.20, which represented the unearned premiums minus the unearned commissions of U.S. Risk and United National, to U.S. Risk. U.S. Risk added $3,094.80, its unearned commissions a the time of cancellation, to the amount Southern County sent, then took out $7,133.60, claiming this amount was its pro rata share of the portion of unearned premium it paid when Scotts Temple failed to make the down payment. Surety Bank received the remaining balance of $27,682.90. Surety Bank sued Southern County to recover the difference between the total unearned premiums and the amount it received from U.S. Risk claiming it was entitled to receive the total amount of unearned premiums. The trial court awarded Surety Bank $11,002, the difference between the total unearned premiums and the amount Surety Bank received from U.S. Risk. Southern County appealed claiming it was not required to refund to Surety Bank the down payment portion of the unearned premiums because Scotts Temple never paid the down payment. In affirming the trial court’s decision, the Court of Appeals, citing to Fuller v. Security Union Ins. Co., 37 S.W.2d 235, determined “any payment of premiums to the insurer constitutes a payment of the premium as between the insured and the insurance company” regardless of who makes the payment. Under the Texas statutory and regulatory scheme, if a premium finance company has timely notified the insurer of the existence of a premium finance agreement and to whom the premium was paid, can establish that it has authority under such agreement to collect any refund, gives timely notice of the insured’s default and requests cancellation, an insurer is required to make a proper refund of all unearned premiums to the premium finance company within sixty days.

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

 

REPORTED DECISIONS

 

Home Depot U.S.A., Inc., v. National Fire & Marine Insurance Company

Melito & Adolfsen P.C., New York, N.Y. (Ignatius John Melito,
Tania A. Gondiosa, and Paul F. McAloon of counsel), for
appellant-respondent.
Lester Schwab Katz & Dwyer, LLP, New York, N.Y. (Joshua
Zimring and Steven B. Prystowsky of
counsel), for respondent-appellant.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant, National Fire & Marine Insurance Company, is obligated to defend and indemnify the plaintiff, Home Depot U.S.A., Inc., in an underlying action entitled Galicia v Home Depot U.S.A., Inc., pending in Supreme Court, Kings County, under Index No. 3587/04, as an additional insured under a certain policy of insurance issued by the defendant to Westward Contracting, Inc., and that the defendant is obligated to indemnify Westward Contracting, Inc., in the third-party action related to the underlying action, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated September 5, 2007, as denied that branch of its cross motion which was, in effect, for summary judgment dismissing the first, second, and third causes of action on the ground that the plaintiff, in its capacity as assignee of Westward Contracting, Inc., lacks standing to assert them, or in the alternative, for summary judgment in its favor on those causes of action declaring that it is not obligated to indemnify Westward Contracting, Inc., in the third-party action related to the underlying action, and the plaintiff cross-appeals, as limited by its brief, from so much of the same order as, in effect, denied that branch of its motion which was to compel discovery pursuant to CPLR 3216 and granted that branch of the defendant's cross motion which was, in effect, for summary judgment in its favor on the fourth, fifth, and sixth causes of action declaring that it was not an additional insured under the subject policy of insurance.

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

The injured worker in the underlying action, an employee of the subcontractor Westward Contracting, Inc. (hereinafter Westward), allegedly was injured while performing work on a project in which the plaintiff, Home Depot U.S.A., Inc. (hereinafter Home Depot), was the general contractor. The injured worker commenced the underlying action against, among others, Home Depot. In response, Home Depot commenced a third-party action against Westward for indemnification and a defense. By contract, Westward had agreed to obtain insurance naming Home Depot as an additional insured under a commercial general liability policy which it obtained from the defendant, National Fire & Marine Insurance Company (hereinafter National Fire). Home Depot obtained a default judgment against Westward in the third-party action. National Fire disclaimed coverage to Westward in the underlying action and disclaimed coverage to Home Depot, contending that Home Depot was not named as an additional insured under the policy. Thereafter, Home Depot and Westward entered into an assignment agreement under which Westward agreed to assign its claims against National Fire to Home Depot in consideration for Home Depot's agreement to "limit any levy or execution or any process of any kind, relating to the Default Judgment against Westward . . . solely to any and all claims or causes of action of whatever nature or kind which Westward might have or possess against" National Fire.

Home Depot, individually and as assignee of Westward, commenced the instant action against National Fire, inter alia, for a judgment declaring that National Fire was required to indemnify Westward in the underlying third-party action and that National Fire was obligated to defend and indemnify Home Depot in the underlying action because Home Depot was named as an additional insured under the policy. Following motion practice, the Supreme Court, inter alia, in effect, denied that branch of Home Depot's motion which was to compel discovery pursuant to CPLR 3216, granted that branch of National Fire's cross motion which was, in effect, for summary judgment in its favor on the fourth, fifth, and sixth causes of action declaring that Home Depot was not an additional insured under the subject policy of insurance, and denied that branch of National Fire's cross motion which was, in effect, for summary judgment dismissing the first, second, and third causes of actions on the ground that Home Depot, in its capacity as Westward's assignee, lacks standing to assert them, or in the alternative for summary judgment in its favor on those causes of action declaring that it is not obligated to indemnify Westward in the underlying third-party action. We affirm the order insofar as appealed and cross-appealed from.

National Fire established, prima facie, that Home Depot was not entitled to coverage as an additional insured under the policy of insurance as it was not named as an additional insured in the policy. In opposition to National Fire's prima facie showing, Home Depot failed to raise a triable issue of fact. The certificate of insurance, relied upon by Home Depot and which expressly stated that "it is issued as a matter of information only and confers no rights upon the certificate holder," was insufficient to support Home Depot's contention that it was an additional insured under the policy (see Cendant Car Rental Group v Liberty Mut. Ins. Co., 48 AD3d 397, 398; Metropolitan Heat & Power Co., Inc. v AIG Claims Servs., Inc., 47 AD3d 621, 623; Trapani v 10 Arial Way Assoc., 301 AD2d 644, 647; Penske Truck Leasing Co. v Home Ins. Co., 251 AD2d 478, 479; American Ref-Fuel Co. of Hempstead v Resource Recycling, 248 AD2d 420, 423, 424). Accordingly, the Supreme Court properly granted that branch of National Fire's cross motion which was, in effect, for summary judgment in its favor on the fourth, fifth, and sixth causes of action declaring that Home Depot was not an additional insured under the policy.

The Supreme Court properly denied that branch of National Fire's cross motion which was, in effect, for summary judgment dismissing the first, second, and third causes of action on the ground that Home Depot, in its capacity as assignee of Westward, lacks standing to assert those causes of action pursuant to Insurance Law § 3420. Home Depot, as assignee of Westward, was permitted to commence the instant action seeking a determination of coverage issues as they applied to Westward. Under New York law, claims are typically transferable (see Quantum Corporate Funding, Ltd. v Westway Indus. Inc., 4 NY3d 211, 216), and National Fire has failed to support its contention that such an assignment was prohibited by Insurance Law * 3420 (see General Obligations Law § 13-101; Grand Crossing, L.P. v U.S. Underwriters Ins. Co., 2007 WL 4591989, 2007 US Dist LEXIS 94244 [SD NY 2007]).

Similarly, the Supreme Court properly rejected National Fire's contention that it was relieved from its obligation to indemnify Westward in the underlying third-party action because of the assignment agreement. Since "an insurer's obligation to indemnify extends only to those damages the insured is legally obligated to pay, it naturally follows that a release discharging an insured from all liability relieves the insurer from the duty of indemnification because it effectively eliminates any factual or legal grounds on which the duty to indemnify may be based" (Westchester Fire Ins. Co. v Utica First Ins. Co., 40 AD3d 978, 980, quoting McDonough v Dryden Mut. Ins. Co., 276 AD2d 817, 818). Nonetheless, the assignment agreement did not constitute a release of Westward's liability in the underlying personal injury action (compare Westchester Fire Ins. Co. v Utica First Ins. Co., 40 AD3d at 980 with Westervelt v Dryden Mut. Ins. Co., 252 AD2d 877; Erdman v Eagle Ins. Co., 239 AD2d 847, 849). Since National Fire failed to meet its prima facie burden, the sufficiency of the opposing papers need not be considered (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Accordingly, the Supreme Court properly denied that branch of National Fire's cross motion which was, in effect, for summary judgment in its favor on the first, second, and third causes of action declaring that it is not obligated to indemnify Westward in the underlying third-party action.

Home Depot's remaining contentions are without merit.

Matter of Travelers Indemnity Company v. Fernandez

Michael S. Lamonsoff (Arnold E. DiJoseph, P.C., New York, N.Y.
[Arnold E. DiJoseph III], of counsel), for appellants.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits, the appeal is from an order of the Supreme Court, Kings County (Ruchelsman, J.), dated April 23, 2007, which granted that branch of the petition which was for a temporary stay of arbitration pending a hearing to determine whether the other offending vehicle maintained insurance.

ORDERED that the order is affirmed, without costs or disbursements.

The appellants were involved in a two-car accident on April 27, 2003, and thereafter made a claim under the uninsured motorist benefits provision of the insurance policy issued by Travelers Indemnity Company (hereinafter Travelers) covering the vehicle they occupied at the time of the accident. The appellants made a demand for arbitration with the American Arbitration Association (hereinafter AAA) on their claim. After more than 20 days elapsed, Travelers filed a petition to stay the arbitration on the ground that uninsured motorist benefits were unavailable since the other offending vehicle, owned by Luciano Garcia, was insured at the time of the accident by State Farm Mutual Automobile Insurance Company (hereinafter State Farm). In an order dated August 21, 2006, the Supreme Court, inter alia, denied, as untimely, that branch of the petition which was for a permanent stay of arbitration since Travelers had not filed its petition within 20 days of being served with the appellants' arbitration demand, as required by CPLR 7503(c).

Thereafter, AAA closed its arbitration file, apparently because the appellants had not pursued arbitration for several months. Pursuant to the AAA's directive to the appellants' counsel, the appellants filed a new arbitration demand with AAA and served it on Travelers on February 21, 2007. Less than 20 days later, Travelers filed the instant (second) petition seeking to permanently stay arbitration on the ground that the Garcia vehicle had been insured by State Farm. Alternatively, Travelers sought a temporary stay of arbitration pending a framed-issue hearing on whether the Garcia vehicle had been insured. In support, Travelers relied on the police accident report which indicated that the Garcia vehicle had been insured by State Farm. State Farm opposed, contending that it had validly disclaimed coverage for the Garcia vehicle because its investigation revealed that the accident had been fraudulently staged. In the order appealed from, the Supreme Court held that the untimeliness of the first petition had no bearing on the instant petition, and granted that branch of Travelers' petition which was for a temporary stay pending a hearing. We affirm.

A party seeking a stay of arbitration must make such an application "within twenty days after service upon him of the [arbitration] notice or demand, or he shall be so precluded" (CPLR 7503[c]; see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082, 1084; Matter of State Farm Ins. Co. v Williams, 50 AD3d 807; Matter of United Servs. Auto. Assn. Prop. & Cas. Ins. Co. v DeRosa, 36 AD3d 925; Matter of Government Empls. Ins. Co. v Castillo-Gomez, 34 AD3d 477, 478). Where the parties' agreement to arbitrate is not at issue, the 20-day limitation is treated as a statute of limitations such that a petition seeking a stay must be dismissed if it was filed more than 20 days after the arbitration notice or demand had been served upon that party (see Matter of Steck [State Farm Ins. Co.], 89 NY2d at 1084; Matter of Matarasso [Continental Cas. Co.], 56 NY2d 264, 267; Matter of State Farm Mut. Auto. Ins. Co. v Scudero, 33 AD3d 927). Further, the 20-day limitation requires compliance with CPLR 7503(c), not with the rules promulgated by the AAA (see Government Empls. Ins. Co. v Castillo-Gomez, 34 AD3d at 478).

Here, the appellants' second arbitration demand dated February 21, 2007, supplanted their original demand for arbitration, which was the subject of the Supreme Court's August 21, 2006, order (cf. Matter of Allstate Ins. Co. [Pasternack], 121 Misc 2d 196, 199). As such, Travelers' instant (second) petition for a stay of arbitration was timely filed, as it was made within 20 days after the appellants served their February 21, 2007, demand upon it (see CPLR 7503[c]; see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082, 1084; Matter of State Farm Ins. Co. v Williams, 50 AD3d 807). Further, since the issue of whether the Garcia vehicle was insured by State Farm was not adjudicated in the prior proceeding, the instant petition is not barred by the doctrine of res judicata (cf. Matter of Allstate Ins. Co. v Williams, 29 AD3d 688, 690). As to the merits, the court properly granted that branch of Travelers' motion which was for a temporary stay of arbitration pending a framed-issue hearing to determine whether State Farm's disclaimer of coverage for the Garcia vehicle was proper since State Farm's proof of fraud was not conclusive.

The appellants' remaining contentions are either without merit or not properly before this Court.

Sorbara Construction Corporation v. AIU Insurance Company

David B. Hamm, for appellant.
Kevin D. Szczepanski, for respondent.

MEMORANDUM:

The order of the Appellate Division should be affirmed, with costs.

It is well settled that when a policy of liability insurance requires that notice of an occurrence be given "as soon as practicable," such notice must be provided within a reasonable period of time; failure to give such notice relieves the insurer of its obligations under the contract, regardless of whether the insurer was prejudiced by the delay (Great Canal Realty Corp. v Seneca Insurance Company, Inc., 5 NY3d 742, 743 [2005]; Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]).

Contrary to the insured's contention in this case, notice provided under the worker's compensation policy at the time of the incident did not constitute notice under the liability policy even though both policies were written by the same carrier (see generally Nationwide Ins. Co. v Empire Ins. Co, 294 AD2d 546, 548 [2d Dept 2002]; 57th Street Management Corp v Zurich Ins. Co., 208 AD2d 801, 802 [2d Dept 1994]). Each policy imposes upon the insured a separate, contractual duty to provide notice. Similarly, an additional insured's notice to the carrier under a different policy does not excuse the insured's obligation to provide timely notice under its policy (see Travelers Ins. Co. v Volmar Const. Co., Inc., 300 AD2d 40 [1st Dept 2002]).

Here, the insured did not give notice to the insurer until it was sued in a third party action—some five and one-half years after the accident. Under the circumstances of this case, such notice was unreasonable as a matter of law and relieved the insurer of its obligation to defend or indemnify the insured.

The insured's remaining contention is without merit.

STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

David A. Paterson                                                                                            Eric R. Dinallo
Governor                                                                                                         Superintendent

 

Circular Letter No. 20 (2008)

October 16 , 2008

 

TO:                 All insurers, reinsurers and insurance producers

RE:                 Contract certainty

STATUTORY REFERENCE: N.Y. Insurance Law §§ 107, 201, 301, 308, 1114, 2110, 2118, and 3103; and Arts. 23, 31, 34, 61, 63, 64, 65, 66, 67, and 69.

This circular letter sets forth the New York State Insurance Department’s position and expectations regarding contract certainty with respect to property/casualty insurance policies and all reinsurance contracts.

Contract certainty” refers to the complete and final agreement of all terms to an insurance policy or reinsurance contract by the date of inception, and the issuance and delivery of the policy or contract before, at, or promptly after inception.  Contract certainty provides greater clarity among insurers (including reinsurers), insureds (including ceding insurers), and producers as to the nature and scope of coverage provided.

Since most policies are written on standardized forms and are subject to prior approval of the Superintendent, this circular letter focuses on those policies where, because of the unique nature or size of the risk, issues regarding contract certainty are most apt to surface.  Such policies include those issued to: (1) large commercial insureds, written on a manuscript basis; (2) the special risk market, written pursuant to Insurance Law Article 63; (3) policyholders in the excess line market; and (4) other insurers via reinsurance.

A lack of contract certainty affects participants in two distinct ways:

(i) Uncertainty ensues when all terms and conditions have not been clearly agreed upon between the insurer and the insured before coverage commences; and

(ii) The lack of appropriate evidence or documentation of coverage that contains the terms, conditions, and date upon which coverage commences, particularly when the evidence or documentation is not issued before, at, or promptly after the inception of the coverage.

Thus, a lack of contract certainty may give rise to situations where insureds do not know what coverage they have actually obtained, and may assume that they are covered for certain risks when, by the terms of the final contract, they are not.  A lack of contract certainty also can result in insureds having broader coverage than they had identified, needed, or desired.  In such situations, insureds and insurers alike bear unintended risks and costs.

This uncertainty exposes insureds, insurers, and producers to increased legal risk and complex litigation, the resolution of which may require significant resources that might be directed better toward the resumption of normal and productive business activity.  The situation regarding the payment of insurance proceeds in connection with destruction of the World Trade Center is illustrative.  There, more than six years of contentious and costly litigation ensued because, in part, there was uncertainty about the scope and intent of the coverage that was bound.  The matter was resolved only after significant intervention and mediation by the Insurance Department.

In the resolution of the World Trade Center matter, the Insurance Department became aware that various widespread practices give rise to transactions the material terms of which, for significant periods after the inception of coverage, can be determined only by reference to extrinsic evidence of circumstances surrounding, and correspondence relating to, the negotiations and drafting of the agreement.  That material matters might remain open and render contracts uncertain for months after inception is unwarranted.  

Recognizing the potentially harmful effects that can arise from contract uncertainty, in 2004 the United Kingdom’s Financial Services Authority (“FSA”) called upon industry in the London Market to provide greater certainty at inception of the contract, with full policy documentation promptly thereafter.  The London Market was given two years to provide that solution.  The Department is given to understand that in the wake of the FSA’s directive, significant progress has been made.

This Department, too, expects the industry in New York to adhere to a set of reasoned principles and practices to enhance contract certainty.  Accordingly, all terms of a policy should be complete and finalized, memorialized, executed, and provided to the insured before, at, or promptly after inception.  For the purposes of this Circular Letter, “promptly” should be generally interpreted to mean within thirty (30) days, and any extensions beyond that period should be carefully documented by insurers.  Licensees should strive for contract certainty in at least ninety (90) percent of the policies that are not already subject to a more stringent requirement, such as policy forms subject to approval under the New York Insurance Law and regulations promulgated thereunder.

Insurers and producers doing business in the State of New York should, no more than twelve months after the date of this circular letter, develop and implement practices to assure that policy documentation is delivered to the insured before, at, or promptly after inception.  The Department will verify industry’s progress toward contract certainty through the examination process, inquiries to licensees, or information obtained from insureds or other parties affected by the transactions.

Any principles and practices established by insurers to ensure contract certainty must comply with all existing statutory or regulatory provisions concerning the content, timing, or delivery of insurance policies.

Please direct any comments or questions regarding the content of this circular letter to:

James Everett
New York State Insurance Department
One Commerce Plaza
Albany, NY 12257
518 408-1593 or email at [email protected].

Very Truly Yours,

Eric R. Dinallo
Superintendent

Santos v. Taveras

Joseph T. Mullen, Jr. & Associates, New York (Neil A. Zirlin
of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for respondent.

Order, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered May 21, 2007, which granted defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

The motion court properly granted defendant's motion for leave to move for summary judgment more than 120 days after the filing of the note of issue (CPLR 3212[a]; see Pippo v City of New York, 43 AD3d 303, 303-304 [2007]).

Defendant established prima facie that plaintiff did not sustain a "serious injury" within the meaning of Insurance Law § 5102(d), by submitting a physician's affirmation reporting findings of a normal range of motion of the cervical spine and a mild "self-imposed" limitation of range of motion of the lumbar spine (see Style v Joseph, 32 AD3d 212, 214 n [2006]). In opposition, plaintiff failed to raise a triable factual issue. She presented no objective medical evidence of any injury to her lumbar spine. The only MRI study thereof was performed in July 2005, nearly one year after the accident, and the first documentation of any limitation corresponding to the findings of that study was made in December 2006, two years and four months after the accident and thus too remote to raise an inference that the limitation was caused by the accident (see Lopez v Simpson, 39 AD3d 420, 421 [2007]). Moreover, plaintiff failed to explain adequately the cessation of her treatment (see Pommells v Perez, 4 NY3d 566, 574-575 [2005]). Plaintiff's small, well-healed scars do not constitute a "significant disfigurement" within the meaning of the statute (see Hutchinson v Beth Cab Corp., 207 AD2d 283, 283-284 [1994]).

Plaintiff also failed to submit competent medical evidence substantiating her 90/180-day claim.

Sorto v. Morales

Sanders, Sanders, Block, Woycik, Viener & Grossman, P.C.,
Mineola, N.Y. (Mark R. Bernstein of counsel), for appellant.
Richard T. Lau, Jericho, N.Y. (Marcella Gerbasi Crewe of
counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Nassau County (Parga, J.), entered June 26, 2007, which, upon an order of the same court dated March 6, 2007, granting 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), dismissed the complaint.

ORDERED that the judgment is affirmed, with costs.

The defendants, in support of their motion, 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 Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456; Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff failed to submit any medical proof contemporaneous with the subject accident which showed initial range of motion limitations in her spine or right knee (see Perdomo v Scott, 50 AD3d 1115; see also Ferraro v Ridge Car Serv., 49 AD3d 498). The chiropractic reports of Hills Chiropractic were unaffirmed and therefore without any probative value (see Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; see also Grasso v Angerami, 79 NY2d 813; Pagano v Kingsbury, 182 AD2d 268).

The affirmed medical report of Dr. Kerin Hausknecht, the plaintiff's treating neurologist, was also without any probative value since Dr. Hausknecht clearly relied on the unaffirmed reports of others in coming to his conclusions that the plaintiff sustained permanent consequential limitation of functioning in her lumbar spine as a result of the subject accident (see Malave v Basikov, 45 AD3d 539; Verette v Zia, 44 AD3d 747; Furrs v Griffith, 43 AD3d 389; see also Friedman v U-Haul Truck Rental, 216 AD2d 266, 267).

The affidavit of Dr. John Rigney, the plaintiff's treating radiologist, merely established that he observed, based upon his review of the plaintiff's magnetic resonance imaging films (hereinafter MRIs), a bulging disc at L5-S1 and a "possible" partial tear of the anterior cruciate ligament in the right knee. This affidavit, however, did not render an opinion on causation of the findings made in his affirmation concerning those MRIs (see Collins v Stone, 8 AD3d 321, 322) and therefore did not raise a triable issue of fact as to these injuries.

The plaintiff's admissible medical submissions were insufficient to establish that she sustained a medically-determined injury of a nonpermanent nature which prevented her from performing her usual and customary activities for 90 of the 180 days following the subject accident (see Casas v Montero, 48 AD3d 728, 730; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569).

The plaintiff's self-serving affidavit failed to raise a triable issue of fact (see Casas v Montero, 48 AD3d 728; Shvartsman v Vildman, 47 AD3d 700; Tobias v Chupenko, 41 AD3d 583).
FISHER, J.P., LIFSON, COVELLO, BALKIN and BELEN, JJ., concur.

 

Saitta v. New York City Transit Authority

 

Gibbons P.C., Newark, N.J. (Verne A. Pedro of counsel), for
appellant.
Smith Mazure Director Wilkins Young & Yagerman, P.C.,
New York (Joel M. Simon of counsel), for respondents.

Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered January 9, 2008, which, in a third-party action seeking a declaration that third-party defendant insurer (Allianz) is obligated to defend and indemnify third-party plaintiffs additional insureds (collectively the Transit Authority) in the main action for personal injuries brought by an employee of Allianz's named insured, granted the Transit Authority's motion for summary judgment, unanimously affirmed, with costs.

It should have been apparent to Allianz that all of the information it needed to issue a denial of coverage was contained in the enclosures forwarded by the Transit Authority along with its notice of the accident, including that the Transit Authority's claim arose out of the work of Allianz's named insured, that the injured person was an employee of the named insured, and that the Transit Authority's notice of the accident was untimely. Accordingly, Allianz's nearly four-month delay in disclaiming coverage, measured from its receipt of the Transit Authority's notice of the accident, was unreasonable as a matter of law, absent a reasonable explanation for the delay (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69, 70 [2003]). It does not avail Allianz to argue that it was not required to limit its investigation to the Transit Authority's delay, where its claims examiner could not say, at her deposition, what other grounds for denying coverage were investigated.

 Chunn v. New York City Housing Authority

Kral, Clerkin, Redmond, Ryan, Perry & Girvan, LLP, New
York (Rhonda D. Thompson of counsel), for American Security
Systems, Inc., appellant.
Ahmuty, Demers & McManus, Albertson (Brendan T.
Fitzpatrick of counsel), for National Casualty Company and Scottsdale
Insurance Company, appellants.
Herzfeld & Rubin, P.C., New York (David B. Hamm of
counsel), for respondent.

Order, Supreme Court, New York County (Louis B. York, J.), entered March 11, 2008, which granted the motion of defendant/third-party plaintiff New York City Housing Authority (NYCHA) for summary judgment declaring that third-party defendants American Security Systems, Inc. (ASSI) and National Casualty Company (NCC) are obligated to defend and indemnify it in the underlying personal injury action and denied ASSI's cross motion to sever the second third-party action and for a declaration that the indemnification provision of the service contract between NYCHA and ASSI is void and unenforceable pursuant to General Obligations Law § 5-322.1, unanimously modified, on the law, NYCHA's motion for summary judgment denied as to the obligation of ASSI and NCC to indemnify it in the underlying action and ASSI's motion to sever granted, and otherwise affirmed, without costs.

The comprehensive general liability (CGL) policy issued by NCC to ASSI provides for insurance for NYCHA as an additional insured with respect to liability for, inter alia, bodily injury caused, in whole or in part, by ASSI's "acts or omissions." The complaint asserts that plaintiff's injury was caused, in whole or in part, by ASSI's acts or omissions with respect to the NYCHA building's systems. Therefore, NYCHA is entitled to a defense under the policy (see Santos v BRE/Swiss, LLC, 9 AD3d 303 [2004]). Contrary to the insurers' contention that they have demonstrated as a matter of law that "there is no possible factual or legal basis on which [they] might eventually" be obligated to indemnify NYCHA (quoting Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 312 [1984] [omitting internal quotation marks and citation]), the affidavit by plaintiff's sister, a tenant in the building, which asserts that the intercom had been broken for several months before the incident in which plaintiff was assaulted, presents an issue of credibility that precludes summary judgment.

NYCHA is also entitled to a defense under the excess policy issued to ASSI by Scottsdale Insurance Company (SIC), because that policy follows the form of NCC's CGL policy, under which NYCHA is an additional insured (see Cheektowaga Cent. School Dist. v Burlington Ins. Co., 32 AD3d 1265, 1266-1267 [2006]).

The insurers' ground for disclaiming coverage under the owners and contractors protective (OCP) policy issued by SIC, i.e., late notice, is belied by the record, as is their contention that notice to NCC did not constitute notice to SIC as well. However, in any event, any delay in notice was due to misleading statements by the NCC claims department concealing the existence of the OCP policy (see Cicero v Great Am. Ins. Co., 53 AD3d 460 [2008]).

While the duty to defend is clear, issues of fact as to liability in the underlying personal injury action render premature the conclusion that the insurers have a duty to
indemnify NYCHA (see e.g. 79th Realty Co. v X.L.O. Concrete Corp., 247 AD2d 256 [1998]).

The second third-party action should be severed to avoid the prejudice to the second third-party defendants that would result from the jury's awareness of the existence of liability insurance (see Kelly v Yannotti, 4 NY2d 603 [1958]).

It would be premature to declare that the indemnification provisions of the contract between NYCHA and ASSI are void and unenforceable under General Obligations Law § 5-322.1 (see Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co., 89 NY2d 786, 795 n 5 [1997]).

Mantovani v. Whiting-Turner Contracting Company

Cascone & Kluepfel, LLP, Garden City, N.Y. (Leonard M. Cascone
and Olympia Rubino of counsel), for appellant-respondent.
Morris, Duffy, Alonso & Faley, New York, N.Y. (Anna J.
Ervolina and Andrea Alonso of counsel), for
respondent-appellant.

DECISION & ORDER

In an action to recover damages for personal injuries, the third-party defendant, ADCO Electrical Corp., appeals, as limited by its notice of appeal and brief, from so much of an order of the Supreme Court, Westchester County (Giacomo, J.), entered May 18, 2007, as denied that branch of its motion which was for summary judgment dismissing the third-party cause of action for contractual indemnification, and the defendant third-party plaintiff, Herbert G. Martin, Inc., cross-appeals, as limited by its notice of appeal and brief, from so much of the same order as denied that branch of its cross motion which was for summary judgment on that cause of action.

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

The plaintiff was an employee of ADCO Electrical Corp. (hereinafter ADCO), which was the subcontractor of Herbert G. Martin, Inc. (hereinafter Martin), the electrical contractor on an improvement project at the Yonkers Public Library. The plaintiff, who had been assigned to "light duty" as the result of a previous back condition, was injured while standing on a hydraulic lift operating a gunpowder-actuated tool to drill holes in a cement ceiling. 

The Workers' Compensation Law generally bars claims against employers for indemnification or contribution arising out of injuries sustained by an employee acting within the scope of employment. An exception exists where there is a provision in a written contract entered into prior to the accident or occurrence, pursuant to which the employer expressly agreed to contribution or indemnification with respect to the person or entity asserting a right to contribution or indemnification (see Workers' Compensation Law § 11; Rodrigues v N & S Bldg. Contrs., Inc., 5 NY3d 427; Flores v Lower E. Side Serv. Ctr. Inc., 4 NY3d 363, 369 ; Falkowski v Krasdale Foods, Inc., 50 AD3d 1091; Martelle v City of New York, 31 AD3d 400; Portelli v Trump Empire State Partners, 12 AD3d 280).

Here, there was sufficient evidence of a written contract between ADCO and Martin, in the form of a Certificate of Liability Insurance, providing that ADCO would, under certain circumstances, indemnify Martin, to warrant denial of that branch of ADCO's motion which was for summary judgment dismissing the third-party cause of action for contractual indemnification (see Spiegler v Gerken Bldg. Corp., 35 AD3d 715; Martelle v City of New York, 31 AD3d 400; Gilbert v Albany Med. Ctr., 21 AD3d 677). The Supreme Court also properly denied that branch of Martin's cross motion which was for summary judgment on the issue of ADCO's obligation to indemnify it. Martin's submissions revealed the existence of a triable issue of fact as to whether, under the circumstances of this case, the terms of the Certificate of Liability Insurance obligated ADCO to indemnify Martin (see Matter of Heimbach v Metropolitan Transp. Auth., 75 NY2d 387, 392; Daries v Haym Solomon Home for Aged, 4 AD3d 447).
SKELOS, J.P., FISHER, DICKERSON and BELEN, JJ., concur.

Kielar v. The Metropolitan Museum of Art

Bivona & Cohen, P.C., New York (Curtis B. Gilfillan of
counsel), for appellants and appellant-respondent.
Petrocelli & Christy, New York (Peter Basil N. Christy of
counsel), for respondent-appellant.
Pollack, Pollack, Isaac & DeCicco, New York (Brian J. Isaac
of counsel), for respondents.

Order, Supreme Court, New York County (Leland G. DeGrasse, J.), entered January 3, 2008, which, in an action for personal injuries and wrongful death arising out of plaintiff's decedent's fall through a tempered glass skylight while working on the roof of a building owned by defendant City and leased by defendant museum, inter alia, awarded plaintiff summary judgment on her Labor Law § 240(1) claim; dismissed plaintiff's Labor Law § 200 and common-law negligence claims against the museum and the City; awarded third-party defendant, plaintiff's employer, summary judgment dismissing the museum's and the City's claims for indemnification against it "to the extent of coverage provided for them as additional insureds under the [employer's primary] policy"; and awarded the museum and the City summary judgment "to the extent that liability is determined in their favor with respect to their respective contractual indemnification [claims] against [the employer] only insofar as their additional insured coverage under the [employer's primary] policy is exhausted, unanimously modified, on the law, to the extent of (1) denying the employer's motion to dismiss the museum's and the City's indemnification claims against it in its entirety pending the outcome of a separate declaratory judgment action bearing New York County index number 102177/08, with leave to re-submit the motion at the conclusion of such action, (2) granting the museum and the City summary judgment on their claims for contractual indemnification to the extent coverage under the employer's primary and excess insurance policies are exhausted, (3) awarding the museum and the City summary judgment on their claims for common-law indemnification to the extent of finding liability in their favor, and otherwise affirmed, without costs. Appeals from order, Supreme Court, New York County (Walter B. Tolub, J.), entered June 2, 2008, unanimously dismissed, without costs, as taken from a nonappealable insofar as it denied reargument, and as academic insofar as it denied renewal.

Evidence entitling plaintiffs to summary judgment on the Labor Law § 240(1) claim establishes that her decedent, pursuant to the employer's contract with the museum to, among other things, re-caulk and seal glass skylights on the museum roof, was working on the roof 60 feet above the ground; that he and his co-workers had to move counterweights across the roof in order to utilize the swing-stage scaffolding; that the safety lines on the roof could not reach the area of the skylights; that the decedent's foreman decided that they should move the counterweights over the skylights and not over the area near the edge of the roof because that area was wet and it was awkward to move the counterweights there; that when the employer's workers were caulking the skylights they were tied off to cables that the employer had installed and stretched along the skylights, but that such safety cables were not in place at the time of the accident; and that foam and plywood should have been placed down over the skylights on the roof for the transfer of counterweights and that a manlift could have been used for the work, as was done following the accident; and that OSHA concluded that serious violations had taken place at the work site, including that employees on the roof did not have protection while moving counterweights over skylights (see Carpio v Tishman Constr. Corp. of N.Y., 240 AD2d 234, 236 [1997]). No issues of fact are raised as to whether the decedent's actions were the sole proximate cause of the accident. In moving the counterweights over the skylights he was following the directions of his foreman and could not utilize the safety rope system since the rope did not reach to the area of the skylights. "[T]he Labor Law does not require a plaintiff to have acted in a manner that is completely free from negligence. It is absolutely clear that if a statutory violation is a proximate cause of an injury, the plaintiff cannot be solely to blame for it'" (Hernandez v Bethel United Methodist Church of N.Y., 49 AD3d 251, 253 [2008], quoting Blake v Neighborhood Hous. Servs. of N.Y. City, 1 NY3d 280, 290 [2003]).

The motion court erred in finding that American International Specialty Lines Insurance Company (AISLIC), the employer's excess insurance carrier, was not required to extend coverage to the museum and the City. Indeed, as a result of a separate declaratory judgment action, the parties had entered into a confidential agreement in which AISLIC agreed to extend coverage to the museum and the City.

The employer seeks to dismiss the museum's and the City's claims for indemnification, as violative of the anti-subrogation rule, to the extent of the full coverage provided by its primary and excess insurance policies (see Washington v New York City Indus. Dev. Agency, 215 AD2d 297 [1995]). The motion court improperly granted the employer's motion in part. Indeed, since both Admiral Insurance Company, the employer's primary insurance carrier, and AISLIC are denying coverage to the employer, and since the employer has commenced a separate declaratory judgment action to determine the issue of coverage, it is premature to determine whether the anti-subrogation rule bars the City's and the museum's claims. Accordingly, the employer's summary judgment motion is denied in its entirety pending the outcome of the separate declaratory judgment action, with leave to re-submit the motion at that time.

The motion court properly granted the museum and the City summary judgment on their contractual indemnity claims in view of the employer's indemnification agreement with the museum and the City. Contrary to the employer's assertions on appeal, the
record establishes that the museum did not have actual or constructive notice of any unsafe practices, and no issues of fact as to whether the museum was affirmatively negligent are otherwise raised (see Correia v Professional Data Mgt., 259 AD2d 60 [1999]; Rizzuto v L.A. Wenger Contr. Corp., 91 NY2d 343, 352 [1998]).

However, in light of the fact that AISLIC agreed to cover the museum, we modify the order to grant summary judgment on the contractual indemnity claim only insofar as both the Admiral and the AISLIC policies are exhausted.

The motion court failed to address the museum's and the City's common-law indemnification claims. As noted, since there was no evidence of affirmative negligence on the part of the museum and the City, they, as property owners liable vicariously under the Labor Law, are entitled to common-law indemnification from the employer (Aragon v 233 W. 21st St., 201 AD2d 353 [1994]). Accordingly, we modify to grant summary judgment to the museum and the City on their common-law indemnification claims against the employer to the extent of determining liability in their favor.

Lattan v. Gretz Transit Inc.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for appellants.
Victor Tsai, New York, for respondents.

Order, Supreme Court, New York County (Deborah A. Kaplan, J.), entered January 28, 2008, which denied defendants' motion for summary judgment dismissing the complaint 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 the claims based on cervical, lumbar and right knee injuries, and otherwise affirmed, without costs.

Defendants demonstrated prima facie that plaintiff did not sustain a serious injury to her cervical or lumbar spine or right knee, by submitting the affirmed reports of an orthopedic surgeon and a neurologist finding normal cervical and lumbosacral ranges of motion and no evidence of disability and a radiologist's affirmed report finding a preexisting degenerative condition of the cervical spine and no evidence of recent trauma to the right knee. Thus, the burden shifted to plaintiff (Franchini v Palmieri, 1 NY3d 536 [2003]; Smith v Brito, 23 AD3d 273 [2005]). In opposition, plaintiff's doctor addressed the cervical injury only and failed to raise a triable issue of fact, since he failed to quantify his findings at each plane of motion, to identify any objective tests, to compare his findings to normal ranges, and to address the degenerative changes found (see Rodriguez v Abdallah, 51 AD3d 590, 592 [2008]; Smith v Cherubini, 44 AD3d 520 [2007]).

Plaintiff's testimony that she was confined to bed and out of work for four months was insufficient to establish a serious injury, in the absence of "competent medical proof" of an injury or impairment that prevented her from performing substantially all her daily activities for at least 90 of the first 180 days following the occurrence of the injury (see Rossi v Alhassan, 48 AD3d 270 [2008]).

Defendants' failure to make a prima facie showing as to plaintiff's jaw injuries, including temporomandibular dysfunction, required the denial of that aspect of their motion, regardless of the claimed insufficiency of plaintiff's opposition (see Winegrad v New York University Medical Center, 64 NY2d 851, 853 [1985]).

Ace Property & Casualty Insurance Company v. Federal-Mogul Corporation

Orders, Supreme Court, New York County (Herman Cahn, J.), entered November 1, 2007, which, in a declaratory judgment action involving plaintiffs insurers' coverage obligations for bodily injury claims arising out of alleged exposure to asbestos-containing products that were manufactured, sold or distributed by defendants-respondents' predecessor in interest, insofar as appealed from, granted the motions of defendants Federal-Mogul Corporation and Federal-Mogul Products, Inc. (Federal-Mogul) and Magnetek, Inc. to stay the action to abide an action in New Jersey involving the same subject matter and many of the same parties, unanimously affirmed, without costs.

The insurers fail to show that the first-filed New Jersey action is vexatious, oppressive or was instituted to obtain some unjust advantage, that New York's interests in this dispute predominate over New Jersey's, or other reason for deviating from the generally followed first-in-time rule (see White Light Prods. v On The Scene Prods., 231 AD2d 90, 96-97 [1997]), under which "the court which has first taken jurisdiction is the one in which the matter should be determined and it is a violation of the rules of comity to interfere" (id. at 96 [internal quotation marks and citations omitted]). We have considered the insurers' other arguments and find them unavailing.

426-428 West 46th St. Owners, Inc v. Greater New York Mutual Insurance Company

Thomas D. Hughes, New York (Richard C. Rubinstein of
counsel), for appellant.
Fried & Epstein LLP, New York (John W. Fried of counsel),
for respondents.

Order, Supreme Court, New York County (Bernard J. Fried, J.), entered July 26, 2007, which denied defendant's motion for summary judgment dismissing the complaint and declaring that it need not defend or indemnify plaintiffs in an underlying personal injury action, unanimously affirmed, without costs.

The plaintiff in the underlying personal injury action (tenant) was injured when she fell down a staircase within the apartment she rented in a building owned by plaintiff 426-428 West 46th St. Owners, Inc. (Owners). Plaintiff 46th Street Associates, L.P. (Associates) was a shareholder of Owners and held proprietary leases on a number of the units in the building, including the tenant's apartment, and was also the managing agent for the building. Plaintiff Robert Gottesman was the president of Owners and a member of its board of directors, and was also a general partner of Associates.

The record shows that the tenant's accident occurred in August 2002, and although defendant was not notified of the occurrence until June 2003, the motion court appropriately concluded that there are triable issues of fact as to whether plaintiffs' failure to timely notify defendant was based on a good-faith, reasonable belief of nonliability (see e.g. Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743-744 [2005]). The superintendent of the building discovered the tenant lying on the floor inside her apartment, and there is evidence, supported by the tenant's affidavit, that she did not mention the details of what had happened or the nature of her condition. Plaintiffs therefore had no way of knowing that the tenant had fallen due to an allegedly defective staircase in her home, particularly in light of her previous claims to have suffered from a medical condition that prevented her from paying her rent in a timely manner for several months. Under these circumstances, plaintiffs had some justification for assuming that the tenant's hospitalization was attributable to a continuing medical illness or condition such as would raise a question of fact as to whether it was reasonable for them not to undertake any further inquiry into how she had come to be lying on her floor (see D'Aloia v Travelers Ins. Co., 85 NY2d 825, 826 [1995]; Aviles v Dryden Mutual Ins. Co., 278 AD2d 829 [2000].

The motion court also properly denied defendant's motion for summary judgment as against Associates and Gottesman on the basis that they were not covered under the policies defendant issued to Owners. It cannot be determined, as a matter of law, that the broad allegations advanced as against Associates and Gottesman in the underlying complaint did not encompass their status as insureds under the subject policies (see e.g. Morales v Allstate Ins. Co., 170 AD2d 419 [1991]).

Kinder Morgan Energy Partners, L.P., v. Ace American Insurance Company

O'Melveny & Myers LLP, New York (Paul R. Koepff of
counsel), for appellant.
Baker & McKenzie LLP, Chicago, Il (Lindsay A. Philiben, of
the Illinois Bar, admitted pro hac vice, of counsel), for
respondents.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered February 5, 2008, which denied defendant's motion to the extent it sought dismissal or a stay of this declaratory judgment action on grounds of forum non conveniens, unanimously reversed, on the law, the facts and in the exercise of discretion, without costs, the motion granted and the complaint dismissed on condition that defendants waive any statute of limitations defense in California.

Plaintiffs seek a declaration of rights under insurance policies issued by defendant in connection with coverage for a pipeline explosion in California. In determining whether to dismiss an action on the ground of forum non conveniens, "[a]mong the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit. The court may also consider that both parties to the action are nonresidents and that the transaction out of which the cause of action arose occurred primarily in a foreign jurisdiction" (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479 [1984, citations omitted], cert denied 469 US 1108 [1985]).

The explosion caused physical damage in California, involved the alleged negligence of plaintiffs and nonparties there, and all of the underlying actions are pending in California, the residence of plaintiff SFPP. These facts support deference to California's stronger interest (see Flintkote Co. v American Mut. Liab. Ins. Co., 103 AD2d 501 [1984], affd 67 NY2d 857 [1986]). That the subject policies were issued in New York is but one factor to be considered (see Continental Ins. Co. v AMAX Inc., 192 AD2d 391 [1993], lv denied 82 NY2d 835 [1993]).

Moreover, plaintiffs' claims are based on a contract allegedly requiring the procurement of insurance. The existence and terms of that contract are relevant to a determination of coverage, and the location of witnesses and documents concerning the contract, which was negotiated in and subject to the laws of California, is relevant.

Glynn v. Hopkins

David Samel, New York, for appellants.
Koors & Jednak, Bronx (Sally Ann Zullo of counsel), for
respondent.

Order, Supreme Court, Bronx County (Mary Ann Brigantti- Hughes, J.), entered November 24, 2006, which granted defendant's motion for summary judgment dismissing the complaint, reversed, on the law, without costs, the motion denied and the complaint reinstated.

Defendant failed to make a prima facie showing that plaintiff Dena S. Glynn did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Defendant's own examining neurologist reported finding limitations in plaintiff's ability to use the cervical area of her spine, which he quantified and causally related to the accident (see generally Toure v Avis Rent A Car Sys., Inc., 98 NY2d 345, 350 [2002]; see Korpalski v. Lau, 17 AD3d 536, 537 [2005]). In addition, defendant's examining neurologist failed to set forth the objective tests performed supporting his claims that there was no limitation of range of motion of the lumbar spine (see id. at 351; Lamb v Rajinder, 51 AD3d 430 [2008]). Also, defendant's radiologist's statement that "there are underlying degenerative changes suggesting that [a small central disk herniation at C4-C5] may be chronic in nature" is too equivocal to satisfy defendant's prima facie burden to show that such herniation was not caused by a traumatic event. In view of the foregoing, we need not consider plaintiff's opposition to the motion (see Caballero v Fev Taxi Corp., 49 AD3d 387 [2008]).

All concur except Catterson and McGuire, JJ. who dissent in a memorandum by McGuire, J. as follows:

McGUIRE, J. (dissenting)

Plaintiff Dena Glynn sustained personal injuries when the motor vehicle she was driving was struck by a vehicle driven by defendant. Plaintiff commenced this negligence action, predicated on multiple serious injury categories (Insurance Law § 5102[d]), against defendant to recover damages for disc injuries she allegedly sustained as a result of that accident.

Defendant moved for summary judgment dismissing the complaint, arguing, among other things, that plaintiff's injuries were not caused by the car accident. In support of his motion, defendant submitted plaintiff's deposition testimony in which she stated that she had sustained neck injuries in a 1993 car accident. Notably, plaintiff testified that she sustained a herniated disk at C5-C6 as a result of that prior accident. Plaintiff also injured her left knee in a 2001 slip and fall incident. Additionally, defendant also submitted the affirmation of a neurologist who noted both of the prior accidents, and a radiologist who reviewed MRI films taken of plaintiff's spine approximately four months after the accident involving defendant's vehicle. The radiologist noted that plaintiff had a herniated disk at C4-C5 and a bulging disk at C5-C6, and opined that:
"There is evidence of disc desiccation at both the C4-C5 and C5-C6 levels. Disc desiccation indicates that the disc has dried out and lost its normal water content. A very small disc herniation is present at the C4-C5 level. The association of this disc herniation with underlying disc desiccation suggests that it is probably chronic in nature. Acute disc herniations usually occur in well-hydrated discs. It is the central, gelatinous portion of the disc which insinuates itself through the outer fibers of the disc to result in an acute disc herniation. Once this central, gelatinous portion dries up, the incidence of acute disc herniation rapidly diminishes.
"There are classic degenerative changes present at the C5-C6 level. There is disc space narrowing and disc bulging. Disc bulging is unrelated to trauma. Disc bulging occurs as the outer fibers of the disc ... lose their normal elasticity. This allows the central, more gelatinous portion of the disc to bulge circumferentially. This is the commencement of degenerative disc disease. Disc space narrowing occurs when there is loss of the internal architecture of the disc allowing it to collapse upon itself. There are anterior and posterior osteophytes. Osteophytes represent bony spurs which form off of the vertebral bodies. This represents actual bone formation and is chronic in nature. This is an attempt by the spine to stabilize itself in the setting of the degenerative process.

"In my opinion, [plaintiff] does have a small central disc herniation at the C4-C5 level. There are underlying degenerative changes suggesting that this may be chronic in nature. Classic degenerative changes unrelated to trauma are present at the C5-C6 level."

In opposition, plaintiff submitted the affirmation of her treating neurosurgeon. This physician noted that plaintiff "advised me that she had a history of some occasional neck pain and approximately 10 years ago was diagnosed with a herniated disc at C5-C6." The physician found that plaintiff had several bulging discs and opined that her spinal injuries were "substantially caused" by the motor vehicle accident involving defendant.

Supreme Court granted defendant's motion and dismissed the complaint. The majority reverses and reinstates the complaint, finding that defendant did not meet his initial burden on his motion. Since I disagree with that conclusion and believe that Supreme Court correctly granted the motion, I respectfully dissent.

Defendant submitted evidence, including plaintiff's own deposition testimony, that she had sustained a neck injury to her C5-C6 disc several years before the accident giving rise to this action, and plaintiff now seeks to recover damages for disc injuries. Evidence of plaintiff's prior cervical spine injury coupled with the affirmation of defendant's radiologist, who opined that plaintiff's cervical spine injuries are degenerative, was sufficient to establish defendant's prima facie showing of entitlement to judgment as a matter of law (see Becerril v Sol Cab Corp., 50 AD3d 261, 261 [2008] ["Defendants established a prima facie entitlement to summary judgment by submitting, inter alia, the affirmed report of a radiologist who opined that plaintiff's MRI films revealed degenerative disc disease, and no evidence of post-traumatic injury to the disc structures"]; see also Ronda v Friendly Baptist Church, 52 AD3d 440, 441 [2008] ["Defendants carried their initial burden of showing that plaintiff's shoulder tendon tear and other injuries were not proximately caused by the subject accident, by submitting reports of plaintiff's previous line-of-duty injuries and the opinion of their examining orthopedist, based in part on the MRI report describing arthritic changes in the shoulder joint as degenerative, that the shoulder injury was among plaintiff's preexisting conditions"] [internal citation omitted]; Figueroa v Castillo, 34 AD3d 353, 353-354 [2006] ["Defendants' submissions included excerpts from plaintiff's deposition, as well as medical reports by plaintiff's doctors, and described another automobile accident one month before the subject accident, wherein she sustained similar knee and back injuries, and a fall on the same knee subsequent to the latest accident. These established additional contributing factors, interrupting the chain of causation between the subject accident and claimed injury, thereby shifting the burden of proof to plaintiff"]).

I disagree with the majority's conclusion that defendant's radiologist's opinions were equivocal. With respect to the C5-C6 disc, the expert clearly and unequivocally stated that "[c]lassic degenerative changes unrelated to trauma are present at the C5-C6 level." With respect to the C4-C5 disc, the radiologist asserted that "[t]he association of th[e] [C4-C5] disc herniation with underlying disc desiccation suggests that it is probably chronic in nature," and that "[t]here are underlying degenerative changes [to that disc] suggesting that th[e] [injury] may be chronic in nature." While the radiologist did not state that her opinion in this regard was to a reasonable degree of medical certainty, her opinion has probative value nonetheless. The key inquiry in gauging whether an expert has expressed sufficient certainty in her opinion for it to have probative value is "whether it is reasonably apparent' that the doctor intends to signify a probability supported by some rational basis'" (Matott v Ward, 48 NY2d 455, 461 [1979], quoting Matter of Miller v Natl. Cabinet Co., 8 NY2d 277, 282 [1960]). Based on the quoted language above from the radiologist's affirmation, it is reasonably apparent that she intended to signify that it was more likely than not that the C4-C5 disc injury was a degenerative condition. Unquestionably, moreover, she outlined her reasons for that conclusion, thereby providing a rational basis for it (see McGrath v Irving, 24 AD2d 236, 238 [1965], lv denied 17 NY2d 419 [1966] ["courts have come to permit . . . words such as possible' and probable' by the medical profession in expressing an opinion, providing, of course, there is a reasonable basis" for the opinion]).

In opposition, plaintiff failed to raise a triable issue of fact since her expert failed to address how her "current medical problems, in light of her past medical history, are causally related to the subject accident" (Style v Joseph, 32 AD3d 212, 214 [2006]). The most glaring deficiency in plaintiff's opposition is that her expert did not discuss the prior cervical spine injury at all except to note that she had sustained it (see Becerril, 50 AD3d at 261-262 ["plaintiff conceded at his deposition that he sustained injuries to his neck and back in a prior accident, and an MRI conducted shortly after the subject accident showed degenerative disc disease. In these circumstances, it was incumbent upon plaintiff to present proof addressing the asserted lack of causation"]; Brewster v FTM Servo, Corp., 44 AD3d 351, 352 [2007] ["Once a defendant has presented evidence of a pre-existing injury, even in the form of an admission made at a deposition, it is incumbent upon the plaintiff to present proof to meet the defendant's asserted lack of causation"] [internal citation omitted]).

Accordingly, I would affirm the order.

Nowak v. Breen

Calendar Date: September 9, 2008
Before: Peters, J.P., Rose, Lahtinen, Kane and Kavanagh, JJ.

Duncan & Duncan, Albany (Sara A. Duncan of
counsel), for appellants-respondents.
Law Office of Mary Audi Bjork, Albany (Craig P.
Niederpruem of counsel), for respondents.
Thuillez, Ford, Gold, Johnson & Butler, L.L.P.,
Albany (Kelly M. Monroe of counsel), for respondents-appellants.

MEMORANDUM AND ORDER
Kavanagh, J.

Cross appeals from an order of the Supreme Court (Doyle, J.), entered March 26, 2007 in Albany County, which granted the motion of defendants Lawrence Raffalovich and Gloria Purinton for summary judgment dismissing the complaint against them.

In October 2003, plaintiff Mary Jane Nowak (hereinafter plaintiff) was involved in a three-car accident on Wolf Road in the Town of Colonie, Albany County. Defendant Kaitlin Breen, while driving a vehicle owned by her father, defendant Michael Breen, struck a vehicle driven by defendant Lawrence Raffalovich in the rear. Raffalovich struck plaintiff's vehicle in the rear. Rafflovich and his wife, defendant Gloria Purinton (hereinafter collectively referred to as defendants), moved for summary judgment dismissing the complaint againt them claiming that there were no questions of fact on the issue of defendants' liability for the accident, and that plaintiff had not sustained a serious injury as defined by Insurance Law § 5102 (d). Supreme Court found that while questions of fact exist regarding who was legally responsible for the cause of the accident, plaintiff had failed to rebut defendants' prima facie showing that she did not sustain a serious injury, and dismissed the complaint. Plaintiffs appeal and defendants cross appeal from Supreme Court's order.

In support of a motion for summary judgment, a defendant must submit competent medical evidence that the plaintiff did not sustain a serious injury (see CPLR 3212 [b]; Motrie v Reid, 45 AD3d 941, 942 [2007]; Felton v Kelly, 44 AD3d 1217, 1218 [2007]; Snow v Harrington, 40 AD3d 1237, 1238 [2007]). Upon such a showing, the burden then shifts to the plaintiff to submit objective medical evidence sufficient to raise a triable issue of fact regarding the existence of a serious injury (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]; Alteri v Benson, 50 AD3d 1274, 1275-1276 [2008]; Snow v Harrington, 40 AD3d at 1238).

Here, plaintiffs claimed that the injuries plaintiff sustained in the accident fell within the 90/180-day category of serious injury. Plaintiffs were obligated to submit competent, objective evidence of "'a medically determined injury or impairment of a non-permanent nature which prevent[ed] [plaintiff] from performing substantially all of the material acts which constitute [her] usual and customary daily activities' for at least 90 out of the 180 days immediately following the accident" (Hildenbrand v Chin, 52 AD3d 1164, 1166 [2008], quoting Insurance Law § 5102 [d]; see Marks v Brown, 3 AD3d 648, 650 [2004]). In this regard, plaintiff states that after the accident, she could not return to the restaurant where she worked as a waitress until February 2004, and that, when she returned, she was restricted to work as a hostess. She also claims to have been unable to perform household chores for almost a year following the date of the accident.

Based upon his review of plaintiff's medical records, defendants' expert physician, Richard Byrne, found that plaintiff's complaints of neck and back pain made after the accident were nearly identical to complaints she made prior to the accident. Plaintiff, by her own admission, was involved in at least four prior automobile accidents the most recent occurring nine months prior to this accident and has a documented medical history of persistent complaints of neck and back pain that go back to July 2002. In fact, she was treated by her physician for such complaints on the day prior to this accident and was advised at that time not only to stop working as a waitress, but also to avoid lifting objects because both activities served to aggravate her existing injuries and increase her pain.

Supreme Court properly determined that defendants had made a prima facie showing that plaintiff had not sustained a serious injury (see Hildenbrand v Chin, 52 AD3d at 1165; Pugh v DeSantis, 37 AD3d 1026, 1027 [2007]) and that, in response, plaintiffs failed to submit competent, objective medical evidence to establish that a question of fact existed on this issue (see Pommells v Perez, 4 NY3d 566, 574 [2005]; Coston v McGray, 49 AD3d 934, 935 [2008]). While plaintiff's treating physician, Shankar Das, stated that the subject accident aggravated "the pre-existing problem which [plaintiff] had in the form of cervical and lumbar strain," he never explained how the accident served to aggravate these injuries or identify a specific injury, if any, that was caused by this accident. While spasms were noted during a medical exam of plaintiff after the accident, no evidence was offered by plaintiff that connected these spasms to the subject accident or to the cervical and lumbar strain as noted by Das. In fact, Das failed to identify any objective medical evidence that established the existence of an injury after the subject accident. While plaintiff did not work for about one week after the accident, all subsequent restrictions on her activities were based solely upon subjective complaints of pain. In short, plaintiffs have failed to submit any objective medical evidence sufficient to raise a triable issue of fact regarding the existence of a serious injury causally related to this accident, and complaint was thus properly dismissed (see Buster v Parker, 1 AD3d 659, 661 [2003]).

As a result of our finding, we need not address the cross appeal regarding Supreme Court's denial of defendants' motion regarding liability.

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

State Farm Insurance Company, as subrogee of James and Joan Reiher

 

v

J.P. Spano Construction, Inc.

Cozen O'Connor, New York, N.Y. (Michael J. Sommi and Robert W.
Phelan of counsel), for appellant.
Breen & Clancy, Hauppauge, N.Y. (Anne Marie Caradonna of
counsel), for respondent J.P. Spano
Construction, Inc., a/k/a J.P. Spano &
Co., Inc.
Baxter, Smith, Tassan & Shapiro, P.C., Hicksville, N.Y. (David L.
Rosinsky of counsel), for respondent
J.R. Spano Electric, Inc.

DECISION & ORDER

In a subrogation action to recover insurance benefits paid to the plaintiff's insureds, the plaintiff appeals from an order of the Supreme Court, Suffolk County (R. Doyle, J.), entered February 2, 2007, which granted the separate motions of the defendants for summary judgment dismissing the complaint insofar as asserted against each of them.

ORDERED that the order is affirmed, with one bill of costs.

Contrary to the plaintiff's contention, the defendants were not required to plead the waiver-of-subrogation clause as an affirmative defense. The plaintiff's complaint was based, in part, on the very contract in which the waiver-of-subrogation clause appeared; the plaintiff cannot claim to be surprised that the defendants would use it as a defense (see CPLR 3018[b]; Bello v Transit Auth. of N.Y. City, 12 AD3d 58, 61; Carlson v Travelers Ins. Co., 35 AD2d 351, 353-354).

Subrogation is an equitable doctrine that allows an insurer to " stand in the shoes' of its insured to seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse" (North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294; see Dillion v Parade Mgt. Corp., 268 AD2d 554, 555). While parties to an agreement may waive their insurer's right of subrogation, waiver-of-subrogation clauses, which "reflect the parties' allocation of the risk of liability between themselves to third parties through the device of insurance" (Liberty Mut. Ins. Co. v Perfect Knowledge, 299 AD2d 524, 526), are to be strictly construed and cannot be enforced beyond the scope of the specific context in which they appear (see Kaf-Kaf, Inc. v Rodless Decorating, 90 NY2d 654, 660). Where a party has waived its right to subrogation, its insurer has no cause of action (id.).

By the subject waiver-of-subrogation clause, the plaintiff's insureds and the defendant J.P. Spano Construction, Inc., a/k/a J.P. Spano & Co., Inc., waived subrogation for all claims "for damages caused by fire or other causes of loss to the extent covered by property insurance obtained" (emphasis added). Additionally, the policy of insurance issued by the plaintiff to its insureds "acknowledged the right of the insured[s] to waive the insurer's subrogation rights" (id. at 661). Thus, the Supreme Court properly determined that this clause bars recovery in the instant action (see Mu Ch. of Sigma Di Fraternity of U.S. v Northeast Constr. Servs., 273 AD2d 579, 581-582).

In view of the foregoing, we do not address the parties' remaining contentions.
FLORIO, J.P., ANGIOLILLO, McCARTHY and DICKERSON, JJ., concur.

Stringer v Musacchia

Ralph C. Lewis, Jr., for appellant.
Thomas J. Johnson, for respondents.


GRAFFEO, J.:

The strict liability provisions of Labor Law § 240 (1) apply to employees but not to persons who volunteer to work on a project. In this case, we are asked to decide whether plaintiff was entitled to section 240 (1) protection when he built a shed for an acquaintance while on a hunting trip. Based on the facts of this case, we conclude that plaintiff was not covered under the statute.

In 2001, defendant Barbara Musacchia was the sole trustee of the John Musacchia Residual Trust B-1 that owned property in Greene County. Her son, John Musacchia, Jr., held hunting excursions on the land, including an annual turkey hunt in May. Frequently invited were celebrity guests who were filmed for television productions. Certain friends of Musacchia were invited as well, but these hunters were asked to do chores around the property in the afternoons following the morning hunts. All of the guests slept and ate in the residence located on the property.

Plaintiff Eric Stringer, a resident of Georgia, was an avid archer who met Musacchia at an archery exhibition. Stringer had experience in the construction industry and Musacchia hired him to construct a trade show display for the family's archery company. Stringer was interested in joining the turkey hunt in May 2001 and Musacchia realized that extending the invitation could be beneficial - for some time he had wanted to erect an implement shed on the Greene County property to house machinery but an earlier $6,000 estimate from a local contractor had been rejected by his mother as too costly. After discussing the project with Stringer, Musacchia told him that he could participate in the hunt if he was willing to build the shed in the afternoons. Stringer agreed and purchased a plane ticket to New York, arriving in Greene County on or about May 1, 2001.

For more than a week after his arrival, Stringer hunted on the property and worked on the shed. Then, on May 10th, as he was standing on an extension ladder attempting to install a rafter, the ladder "kicked out" beneath him and he fell 8 to 10 feet to the ground onto a bag of concrete. Musacchia later found Stringer injured and drove him to a hospital, where doctors discovered that his Achilles tendon had been severed. Stringer returned home to Georgia for a series of surgeries.

Stringer commenced this action against Barbara Musacchia, individually and as trustee of the family trust, and the trust itself, asserting causes of action premised on common-law negligence and Labor Law sections 200, 240 (1) and 241. The parties cross-moved for summary judgment. Supreme Court granted defendants' motion, in part, by dismissing the negligence and section 200 and 241 claims, but granted plaintiff summary judgment as to liability on the section 240 (1) cause of action, concluding that Stringer was entitled to the statute's strict liability protections because he was acting as an "employee" when he was building the shed ^[FN1]. The Appellate Division, with two Justices dissenting, modified by dismissing the section 240 (1) claim, ruling that Stringer was a volunteer because he was not obligated to complete the shed and did not receive any monetary compensation. Plaintiff appeals as of right on the two-Justice dissent, and we now affirm.

The primary purpose of Labor Law § 240 (1) is to extend special protections to "employees" or "workers" (see Mordkofsky v V.C.V. Dev. Corp., 76 NY2d 573, 577 [1990]; Zimmer v Chemung County Performing Arts, 65 NY2d 513, 520 [1985]). Inclusion in this "special class for whose benefit absolute liability is imposed" requires a plaintiff to "demonstrate that 'he was both permitted or suffered to work on a building or structure and that he was hired by someone, be it [the] owner, contractor or their agent'" (Abbatiello v Lancaster Studio Assoc., 3 NY3d 46, 50-51 [2004], quoting Whelen v Warwick Val. Civic & Social Club, 47 NY2d 970, 971 [1979]). As a result, we have held that the statute does not apply to a volunteer who performs a service gratuitously (see Whelen v Warwick Val. Civic & Social Club, 47 NY2d at 971; Mordkofsky v V.C.V. Dev. Corp., 76 NY2d at 577). Aside from these references in Whelen and Mordkofsky, however, we have not had the opportunity to elaborate on what differentiates an employee from a volunteer.

Analysis of this issue requires consideration of the traditional parameters of employer-employee relationships in conjunction with the Legislature's intent in enacting Labor Law § 240 (1)^[FN2]. The term "employee" is statutorily defined as a "mechanic, workingman or laborer working for another for hire" (Labor Law § 2 [5] [emphasis added]). When a person has been hired, at least three factors are usually present. First, there is the voluntary undertaking of a mutual obligation - the employee agrees to perform a service in return for compensation (usually monetary) from the employer, thereby revealing an economic motivation for completing the task (see Black's Law Dictionary 565 [8th ed] [an "employer" is the person who "pays the worker's salary or wages"]). Second, although not an essential factor, an employer may exercise authority in directing and supervising the manner and method of the work (see e.g. Daniello v Holy Name Church, 286 AD2d 268, 269 [1st Dept 2001]; Black's Law Dictionary 564 [8th ed] [a person is an "employee" if "the employer has the right to control the details of work performance"]). Third, the employer usually decides whether the task undertaken by the employee has been completed satisfactorily.

Corresponding with these aspects of employer-employee relations is the purpose that underlies Labor Law § 240 (1). In enacting the statute, the Legislature "intended to place 'ultimate responsibility for safety practices at building construction jobs where such responsibility actually belongs, on the owner and general contractor' rather than on the workers themselves" (Sanatass v Consolidated Inv. Co., Inc., 10 NY3d 333, 338 [2008], quoting Mem of Senator Calandra and Assemblyman Amann, 1969 NY Legis Ann, at 407). In addition, the Appellate Divisions have recognized that section 240 (1) was not intended to make ownersstrictly liable to family members, acquaintances or neighbors who are injured while assisting in the completion of a home repair or improvement project without compensation because no true employment obligation arises in such situations (see e.g. Schwab v Campbell, 266 AD2d 840 [4th Dept 1999]; Tse Chin Cheung v G & M Hardware & Elec., 249 AD2d 28 [1st Dept 1998]; Alver v Duarte, 80 AD2d 182 [3d Dept 1981]; Yearke v Zarcone, 57 AD2d 457 [4th Dept 1977]; cf. Thompson v Marotta, 256 AD2d 1124 [4th Dept 1998] [employment relationship found because the plaintiff agreed to do work in exchange for the defendant's waiver of a security deposit and allowing the plaintiff to live in a home for two or three months without paying rent]). And even where the person who provides such assistance to a homeowner receives some ancillary, nonmonetary benefit in return and the homeowner is relieved of having to pay someone to complete the task, a formal employment relationship has not developed (see generally Howerter v Dugan, 232 AD2d 524 [2d Dept 1996]).

We believe that the reasoning of the Appellate Divisions is consistent with both the intent of the Labor Law and the plain meaning of the terms "employee" and "for hire." Consequently, we hold that an individual does not become an employee covered by Labor Law § 240 (1) by providing casual, uncompensated assistance to another person with a repair or construction project in an informal arrangement that does not give rise to mutual duties or obligations between them and bears none of the traditional hallmarks of an employment relationship.

Applying this standard, Stringer was not defendants' employee for purposes of section 240 (1) liability. Stringer was interested in pursuing a recreational activity - hunting turkeys - and in return for being allowed to participate in the hunt, he volunteered to construct a shed with no expectation of being paid a wage or salary. This was an informal arrangement between Stringer and Musacchia, and neither man assumed a contractual obligation to the other. Aside from paying for the materials used, Musacchia did not control or supervise Stringer's efforts. Thus, Stringer was acting as a volunteer and not as an employee when he was injured. Defendants were therefore entitled to summary judgment dismissing the Labor Law § 240 (1) cause of action.

Accordingly, the order of the Appellate Division should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Graffeo. Chief Judge Kaye and Judges Ciparick, Read, Smith, Pigott and Jones concur.

Decided October 21, 2008

Footnotes

Footnote 1: Labor Law § 240 (1) does not apply to "owners of one and two-family dwellings who contract for but do not direct or control the work" of the person(s) they hire. Defendants did not raise this as a defense so we have no occasion to determine its application to this case.

Footnote 2: The statute also applies to independent contractors, but it is not alleged here that Stringer acted in this capacity.

 

Brooks v Judlau Contracting, Inc.

Melissa Murphy-Petros, for third-party appellant.
Peter Riggs, for third-party respondent.

CIPARICK, J.:

This appeal asks us to determine the question left open in Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co. (89 NY2d 786 [1997]) as to whether section 5-322.1 of the General Obligations Law allows a general contractor - who has been found to be partially at fault - to enforce an indemnification provision against its subcontractor for that portion of damages attributable to the negligence of the subcontractor. We conclude that the statute does permit a partially negligent general contractor to seek contractual indemnification from its subcontractor so long as the indemnification provision does not purport to indemnify the general contractor for its own negligence. As such, the provision is enforceable and does not violate General Obligations Law § 5-322.1.^[FN1]

An action for damages was brought by plaintiff, Stephen J. Brooks, an ironworker, against general contractor, Judlau Contracting, Inc., for injuries sustained on the job while employed by subcontractor, third-party defendant Thunderbird Constructors, Inc. The construction project involved the renovation and restoration of a highway overpass. Upon grabbing onto a perimeter safety cable installed by defendant, Judlau, the cable came loose causing plaintiff to fall 18 feet to the pavement below and sustain injury. Judlau asserted a third-party claim for contractual indemnification against Thunderbird. The action was bifurcated - a damages trial as to the underlying tort was tried by a jury and the third-party contractual indemnification claim by the court. Following trial, Supreme Court granted Thunderbird's motion for a directed verdict dismissing Judlau's third-party claim holding that Judlau's installation of the safety cable in an "ineffective and unsafe manner" was a substantial factor in causing plaintiff's accident, that Judlau was accordingly actively negligent "at least to some degree" and that such negligence foreclosed Judlau's entitlement to contractual indemnification from Thunderbird.

The Appellate Division affirmed the dismissal of Judlau's third-party complaint against Thunderbird. It held that General Obligations Law § 5-322.1 bars contractual indemnification and that the contractual provision at issue was unenforceable, and further that the evidence in the underlying tort action established that Judlau negligently installed a safety cable causing plaintiff's injury. The court certified a question of law as to whether its order was properly made insofar as it affirmed the dismissal of the third-party claim for contractual indemnification. We now reverse and answer the question in the negative.^[FN2]

There appears to be no dispute that Judlau is prohibited from filing a common law contribution claim against Thunderbird because Thunderbird is plaintiff's employer and plaintiff did not sustain a grave injury within the meaning of Workers' Compensation Law § 11. Judlau asserts, however, that a claim for contractual indemnification lies since Thunderbird's negligence also contributed to plaintiff's injuries in that Thunderbird, having control of the workplace, failed to provide plaintiff with the necessary safety equipment to prevent his fall.

Unlike the indemnification provisions voided in Itri Brick, enforcement of the indemnification provision currently before us will not result in Judlau being indemnified for its own acts of negligence; rather, it is being indemnified only for those acts attributable to the subcontractor, Thunderbird. The indemnification provision of the agreement provides that
"[t]he Contractor shall not be liable for any loss or casualty incurred or caused by or to the Subcontractor. The Subcontractor shall maintain full and complete insurance on its work until final acceptance of the General Contract. The Subcontractor assumes all risk of loss for all of its work regardless of whether the Subcontractor had previously been paid for it. The Contractor is not responsible to provide any protective service for the Subcontractor's benefit. The Subcontractor shall, to the fullest extent permitted by law, hold the Contractor and the Owner, their agents, employees and representatives harmless from any and all liability, costs, damages, attorneys' fee, and expenses from any claims or causes of action of whatever nature arising from the Subcontractor's work, including all claims relating to its subcontractors, suppliers or employees, or by reason of any claim or dispute of any person or entity for damages from any cause directly or indirectly relating to any action or failure to act by the Subcontractor, its representatives, employees, subcontractors, or suppliers. The Subcontractor acknowledges that specific consideration has been received by it for this Indemnification . . . ."

Contrary to Thunderbird's assertion, this provision does not violate General Obligations Law § 5-322.1 as it does not require Thunderbird to indemnify Judlau for its own negligence. The provision is clear, obligating Thunderbird to indemnify Judlau only when it is shown that damages were caused by Thunderbird's own negligence.^[FN3]

As we stated in Itri Brick, the Legislature enacted General Obligations Law § 5-322.1 in order to:

"prevent a prevalent practice in the construction industry of requiring subcontractors to assume liability by contract for the negligence of others. The Legislature concluded that such 'coercive' bidding requirements unnecessarily increased the cost of construction by limiting the number of contractors able to obtain the necessary hold harmless insurance, and unfairly imposed liability on subcontractors for the negligence of others over whom they had no control. The agreements also needlessly created expensive double coverage for hold harmless or general liability insurance" (89 NY2d at 794).

Since "[o]ne should not be held to answer for the wrongful acts of another unless he is in the insurance business, assuming risks in return for payment of premiums" (Sponsor's Mem, Bill Jacket, L 1981, ch 964), for us to hold today that a partially negligent general contractor may never seek contractual indemnification for the wrongful actions attributable to its subcontractor would leave the general contractor liable for the negligent actions of its subcontractor. Such an outcome would be contrary to the intent of General Obligations Law § 5-322.1 that payment of damages be made according to fault.

Thunderbird asserts that the language "to the fullest extent permitted by law" broadens the subcontractor's liability to require full contractual indemnification, which includes indemnification for Judlau's negligence and is thus rendered void by General Obligations Law § 5-322.1. We disagree. That language contemplates partial indemnification and is intended to limit Thunderbird's contractual indemnity obligation solely to Thunderbird's own negligence.

Our holding that the phrase "to the fullest extent permitted by law" limits rather than expands a promisor's indemnification obligation is supported by the holdings of other courts that have likewise held that such phrases create a partial indemnification obligation on behalf of the subcontractor promisor ^[FN4]. Recognizing that these precedents are not binding on us, and that there likewise are many decisions negating partial indemnification - we adopt the broader interpretation as the more sound. Indeed, there is no language within General Obligations Law § 5-322.1 that prevents partial indemnification provisions such as the one currently before us from being enforced in a case where it is shown that both a general contractor and its subcontractor are joint tortfeasors.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, with costs, appellant Judlau's third-party complaint against third-party defendant Thunderbird should be reinstated and this case remitted to Supreme Court for further proceedings in accordance with this opinion, and the certified question answered in the negative.
* * * * * * * * * * * * * * * * *
Order, insofar as appealed from, reversed, with costs, third-party complaint reinstated, case remitted to Supreme
Court, Kings County, for further proceedings in accordance with the opinion herein and certified question answered in
the negative. Opinion by Judge Ciparick. Chief Judge Kaye and Judges Graffeo, Read, Smith, Pigott and Jones concur.
Decided October 21, 2008

Footnotes

Footnote 1: General Obligations Law § 5-322.1 provides that: "[a] covenant, promise, agreement or understanding in, or in connection with . . . a contract or agreement relative to the construction, alteration, repair or maintenance of a building . . . purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property contributed to, caused by or resulting from the negligence of the promisee, his agents or employees, or indemnitee, whether such negligence be in whole or in part, is against public policy and is void and unenforceable."

Footnote 2: Only an appeal from the dismissal of the third-party claim is before us. The direct action was remitted to Supreme Court for a new trial and has since settled for $3 million.

Footnote 3: See TAG 380, LLC v ComMet 380, Inc., 10 NY3d 507, 512-513 [2008] ("it is a basic contract principle that 'when parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms' quoting [Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004] quoting W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]).

Footnote 4: See Dutton v Pankow Bldrs., 296 AD2d 321, 322 [1st Dept 2002] (phrases "'to the fullest extent permitted by applicable law," and "'regardless of whether [the general contractor is] partially negligent. . . excluding only liability created by the [general contractors's] sole and exclusive negligence'" enforceable); Murphy v Columbia Univ., 4 AD3d 200, 202 [1st Dept 2004] (obligation was "'to the fullest extent permitted by applicable law'"); Jackson v City of New York, 38 AD3d 324, 324 [1st Dept 2005] [same]; Lesisz v Salvation Army, 40 AD3d 1050, 1051 [2d Dept 2007] [same]; Balladares v Southgate Owners Corp., 40 AD3d 667, 671 [2d Dept 2007] [same]; Bink v F.C. Queens Place Assoc., LLC., 27 AD3d 408, 409 [2d Dept 2006] [same]; Madeira v Affordable Hous. Found., Inc., 315 F Supp 2d 504, 508-509 [SD NY 2004] [contractual indemnification language "'[t]o the fullest extent permitted by law'" [and] "'to the extent caused in whole or part by the Subcontractor. . .'" is enforceable]).

Uzzle v Nunzie Court Homeowners Association, Inc.,

Bernard H. Fishman, New York, N.Y., for appellant.
DelBello Donnellan Weingarten Wise & Wiederkehr, LLP,
White Plains, N.Y. (Jacob E. Amir of
counsel), for respondents.
Kaufman Borgeest & Ryan LLP, New York, N.Y. (Ariel
Michael Furman and R. Evon Howard of
counsel), for defendant John C.
DiGiovanna.


DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from so much of an order of the Supreme Court, Richmond County (Gigante, J.), dated May 29, 2007, as granted the motion of the defendants United General Title Insurance Company and Newell & Talarico Title Insurance Agency, Inc., pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the motion of the defendants United General Title Insurance Company and Newell & Talarico Title Insurance Agency, Inc., pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them is denied.

The plaintiff retained the defendant John C. DiGiovanna to represent him in a purchase of real property (hereinafter the premises) located along a private road. The contract of sale specified that he would take title to the premises subject to a certain declaration of covenants, restrictions, easements, charges, and liens (hereinafter the declaration).

The plaintiff obtained title insurance from the defendant United General Title Insurance Company through its agent, the defendant Newell & Talarico Title Insurance Agency, Inc. (hereinafter together the respondents). The policy insured the plaintiff against, among other things, "unmarketability of the title" and lack of a right of access to and from the land. However, the policy excepted from coverage loss or damage arising from the declaration.

After the plaintiff closed title on the property, he brought this action asserting, among other things, that he did not have a legal means of access to his property. The respondents moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them.

When determining a motion to dismiss pursuant to CPLR 3211(a)(7), the pleading must be afforded a liberal construction (see CPLR 3026; Leon v Martinez, 84 NY2d 83, 87), the facts as alleged in the complaint are accepted as true, the plaintiff is accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d at 87-88; Cayuga Partners v 150 Grand, 305 AD2d 527). "In assessing a motion under CPLR 3211(a)(7) . . . a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint," and if the court does so, "the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (Leon v Martinez, 84 NY2d at 88 [internal quotations and citations omitted]).

"A party seeking dismissal on the ground that its defense is founded on documentary evidence under CPLR 3211(a)(1) has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim'" (Sullivan v State of New York, 34 AD3d 443, 445, quoting Nevin v Laclede Professional Prods., 273 AD2d 453; see Leon v Martinez, 84 NY2d at 88).

Construed liberally, the plaintiff's complaint states a valid cause of action against the respondents to recover damages for breach of contract since the title insurance policy explicitly covers losses arising from a lack of legal access to the premises and the plaintiff has asserted that he has incurred damages due to the fact that he has no legal right to access the premises (see CPLR 3211[a][7]; accord L. Smirlock Realty Corp. v Title Guar. Co., 52 NY2d 179, 184). Moreover, even though the declaration may be excepted from coverage under the title policy (see Hess v Baccarat, 287 AD2d 834, 836-837), the respondents did not provide documentary evidence that resolves all factual issues (see generally CPLR 3211[a][1]; Sullivan v State of New York, 34 AD3d at 445).

Given the limited scope of the plaintiff's notice of appeal, the issue of whether the Supreme Court erred in dismissing the causes of action asserted against the defendant John C. DiGiovanna is not properly before this Court (see CPLR 5515[1]; Spencer v Crothall Healthcare, Inc., 38 AD3d 527, 528; Yannotti v Four Bros. Homes at Heartland Condominium I, 24 AD3d 659, 660-661).

The parties' remaining contentions either have been rendered academic or are without merit.
MASTRO, J.P., ANGIOLILLO, CARNI and ENG, JJ., concur.