Coverage Pointers - Volume XI, No. 11

Dear Coverage Pointers Subscribers:

From our family to yours, we surely hope you had a joyous and peaceful Thanksgiving holiday and spent some great times with your family and friends.  We had a wonderful holiday here, enjoying the near and extended families that make our lives complete.  Chris and I spent nine of the last fourteen days in Spain, visiting her youngest daughter who is fortunate enough to be studying in Barcelona for a semester.  We then traveled 1000 miles in the Opel to Valencia (home of paella), Granada (put a visit to the Alhambra on your “bucket list”), Cordoba, Sevilla and along the Costa del Sol.  Out of cultural necessity (of course) we experienced Sangria of different regions, several brands of cerveza, lots of tapas coupled with challenging city driving.  It is good to be home for Thanksgiving.

Forgive the length of this letter, but hopefully you have been fortified by a delightful family dinner, before digging in for your just desserts.  We include a summary of, and some early insights into New York legislative changes just signed into law by Governor Patterson.

NY LEGISLATIVE ALERT – NEW GENERAL OBLIGATIONS LAW § 5-335:
MAJOR CHANGES IN HEALTH INSURERS SUBROGATION RIGHTS
We thank Earl Cantwell for his good work in summarizing that portion of Chapter 494 of the Laws of 2009, signed into law on November 13.  These changes have the potential of fundamentally impacting New York personal injury litigation. It is a poorly drafted statute and will require some strategic choices to be made by defense and plaintiff’s counsel alike.  While we would normally include a summary of this length as an attachment, it was important enough to include in the body of this letter to assure maximum readership.

General Obligations Law § 5-335 was adopted as part of this legislative change. The new law has an immediate effect on pending litigation since it prohibits a plaintiff who has settled with one or more defendants from being charged with violating a health insurer’s alleged equitable or contractual subrogation rights.  The New York State Trial Lawyers Association, representing the plaintiffs’ bar, pressed hard for these amendments.  According to the sponsors, the new law seeks to prevent health insurers from complicating cases and delaying settlements, and conclusively “presumes” that the settlement does not include compensation for medical expenses (except those subject to statutory liens or are Additional Personal Injury Protection under NY No Fault. 

The new law essentially detracts from and overrules two Court of Appeals decisions, Teichman v. Community Hosp. of Western Suffolk, 87 N.Y.2d 514 (1996), and Fasso v. Doerr, 12 N.Y.3d 80 (2009), to the extent they recognized health coverage subrogation.  The relevant section of the new statute reads, with emphasis added by bold letters:

§ 5-335. Limitation of non-statutory reimbursement and subrogation claims in personal injury and wrongful death actions. (a) When a plaintiff settles with one or more defendants in an action for personal injuries, medical, dental, or podiatric malpractice, or wrongful death, it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services, loss of earnings or other economic loss to the extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit provider, except for those payments as to which there is a statutory right of reimbursement.  By entering into any such settlement, a plaintiff shall not be deemed to have taken an action in derogation of any nonstatutory right of any benefit provider that paid or is obligated to pay those losses or expenses; nor shall a plaintiff's entry into such settlement constitute a violation of any contract between the plaintiff and such benefit provider.  Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider.

Now, the new statute does not allow double recovery of these expenses.  If the jury awards medical expenses and they have been covered by health insurance, the court will reduce the award based on that collateral source.  This does not impact Workers Compensation or Social Services liens, which are statutory and there is another section of the bill that preserves APIP subrogation.

The new law seeks to remedy the proliferation of health insurers attempting to intervene in cases to assert equitable or contractual subrogation claims.  Further, the health insurance carrier was also able to recover medical expenses through subrogation rights even though the plaintiff was unable to recover under CPLR § 4545(c) due to the collateral source rule.  The new legislation ends insurance subrogation rights to settlements unless there is a statutory right to reimbursement

The Questions are Already Coming In …
Let me offer a few personal observations and predictions, based on our reading of the statute:

  • The statute ONLY applies to settlements.  It does not apply to verdicts and judgments. 
  • Health care insurers can still bring lawsuits to recover for payments made, if the policy provides a subrogation right.  However, a literal reading of the statute instructs that if the plaintiff settles his or her personal injury suit, the defendant is free and clear of any later claim for health insurance subrogation claims.  Note the words of the statute:


Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider.

  • This oddity guarantees mischief, but may provide some strategic advantage for a settling defendant.  Take this hypothetical. 

Trip and fall in a supermarket with an arm injury; assume full liability on the defendant, Health insurer pays $25,000 in medical expenses.  Matter is scheduled for trial. Parties disagree of value of case.  Plaintiff wants $100,000 while defendant wants to pay $75,000.  The judge tells the parties that the case can be settled at $85,000, but nobody wants to budge.

What happens if defendant is right, and the jury returns verdict of $75,000? The defendant and its carrier would still be subject to a $25,000 subrogation claim by the health insurer so would end up paying a total of $100,000.  Instead, if the carrier sweetens its settlement offer to $85,000 and the case is settled at that number, the $25,000 subrogation claim is eliminated.  By paying $10,000 more, the carrier has saved $15,000.

  • It is unclear whether the settlement need be pre-verdict for the statutory protection to apply.  If the jury rendered a verdict of $75,000, could the defendant offer to settle the case then for $80,000 to eliminate the health insurer’s subrogation claim?  We will have to wait and see.
  • As mentioned earlier, the statute does not suggest double recovery by the plaintiff of medical expenses. Old CPLR 4545(c), now 4545(a) still calls for a reduction of recovery for collateral sources.  If there is a settlement, nobody pays the health care provider, so there is no double recovery.
  • If the parties settle, it is presumed that the settlement does not include any non-statutory recovery that would have been paid by a health carrier, e.g., amount paid by a health insurer, NOT a workers compensation carrier, social services agency, etc.] and therefore, the health insurer is out of luck.
  • ERISA – how this statute will be impacted by the federal ERISA law is yet unclear.  If there is an ERISA policy, you can be certain that someone will challenge that statute on federal pre-emption grounds, suggesting (understandably so) that a statute cannot overturn a federal statute.  It’s simply too early to predict, but our crystal ball suggests some fairly aggressive challenges that will occur sooner than later.
  • Effective date: Section “8” of Part F of the bill, the section that creates these new rules, shall apply to any action commenced prior to or after the effective date of the act where  (a) a trial of the issues has not  yet commenced, or (b) the parties have not yet  entered  into  a  stipulation of settlement.  In other words, to any case not yet resolved.  Accordingly, the challenges will come early and often.

 

 Stay tuned.

One Hundred Years Ago Today:
The United States ratified the 1907 Hague Convention which, along with its 1899 predecessor, was one of the first formal statements of “ethical” war-time protocols.

From Audrey Seeley, the Queen of No Fault:
I hope that everyone had a Happy Thanksgiving!!  I also wanted to thank those that attend the NBI No-Fault seminar on November 18 and 19th.  There was a nice group assembled for the Buffalo program and it was wonderful to have the participation of the American Arbitration Association. 

The next training opportunity is DRI's Insurance Coverage and Practice Symposium December 2-4 in New York City.  My partner, Dan, and I will be there.  If you plan on attending please let us know so that we can catch up with you.

This edition has a well reasoned Appellate Division Second Department decision on an insurer's timing on verification.  In the reported case, the insurer's second request for verification was a sent a few days too early but was not insufficient to delay the claim, particularly when the plaintiff ignored the verification requests.

Audrey
[email protected]

From Steve Peiper, the Prince of Property and Potpourri:
Greetings and Happy Thanksgiving to all.  In keeping with the season, we are pleased to present a bountiful harvest for your enjoyment.  Serving as the pumpkin pie in this cornucopia of coverage, please save room to digest Peiper on Property (and Potpourri)'s offering this week.  We review the Fourth Department's lengthy decision of the home exception to the Labor Law, as well as the drastic impacts of delayed discovery in a bad faith claim.  Cheers, and best wishes to all.

Steve
[email protected]

Black Friday
Why is the day after Thanksgiving known as “Black Friday,” a term that dates back to an 1869 financial crisis?  According to sources, Philadelphia police denominated the day after Thanksgiving “Black Friday” in 1965, as the official opening of the Christmas shopping season.  It was so named because of the massive traffic jams and over-crowded sidewalks that occurred downtown as the stores are mobbed from opening to closing
Philadelphia police and bus drivers call it "Black Friday" - that day each year between Thanksgiving Day and the Army–Navy Game. It is the busiest shopping and traffic day of the year in the Bicentennial City as the Christmas list is checked off and the Eastern college football season nears conclusion.
We knew that you wanted proof, so we dug it up. The Titusville (PA) Herald, on Saturday, November 20, 1975 carried this “page 1” story:
Folks on Buying Spree Despite Down Economy
PHILADELPHIA (AP) - Store aisles were jammed. Escalators were nonstop people. It was the first day of the Christmas shopping season and despite the economy, folks here went on a buying spree. Tens of thousands in search of Christmas gifts left harried sales clerks in their wake on the day after Thanksgiving, the starting bell for the holiday shopping crush.

It didn't matter which of the city's department stores you went to. Bus after bus unloaded shoppers who fought their way through sidewalk crowds moving at a snail's pace…

"Everyone's worried about the economy, but you can't get too uptight about money at Christmas," said Marvin Weidner, a shopper at Gimbels. "I want to enjoy myself like when I was a kid."

From frivolous to practical, virtually every department was attracting its share of shoppers. The jewelry, books and toy counters were surrounded by shoppers, and as many as 12 persons were lined up at clothing counters, waiting to make their purchases. "That's why the bus drivers and cab drivers call today 'Black Friday,'" a sales manager at Gimbels said as she watched a traffic cop trying to control a crowd of jaywalkers. "They think in terms of the headaches it gives them.”

And now you know.
Editor’s Note:  The term “jay-walk” is a compound word derived from the word “jay” meaning an inxperienced person and “walk.” Contrary to popular myth, the “jay” is not a description of the course taken by the pedestrian in crossing the street.  In studying its use, the earliest newspaper article we found using the term was a June 21, 1913 piece appearing on page “7” of Fort Wayne (IN) Daily News, which contained an article entitled Safety First.  It warned:

Never be a jay-walker. A jay-walker is an alleged human being who crosses the street at points other than the regular crossings, who stands in the middle of the sidewalk and blocks the traffic or who passes to the left instead of the right.

Love that “alleged human being …”

In This Week’s Coverage Pointers:

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

  • Carrier Fails to Establish Grounds for Denying Coverage
  • Determination of Employment Status at Workers Compensation Board Is Binding in Subsequent Coverage Action on Parties That Had Opportunity to Participate
  • Carrier Fails to Establish Its Entitlement to Enforce Endorsement Allowing It to Deny Coverage to Its Insured for Failing to Secure Protection by Subcontractors
    Until Indemnity Obligations Are Resolved in Carrier’s Favor, Defense Obligations Continue Based on Complaint Allegations
  • Rules for Measuring Lateness of Disclaimer Reviewed
  • Failure to Raise Workers Compensation Defense and Assumption of Position as Main Line Defendant Leaves Employer Liable Directly to Defendant
  • Defensive Posture Means Defensive Posture.  Legal Fees Not Recoverable in Prosecuting Declaratory Judgment Action, Even if Carrier Appeals

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

Margo M. Lagueras
[email protected]

  • Expert’s Opinion that Further Testing is Required to Determine Causation Contradicts His Opinion that Condition is Not Related to Accident
  • Determination on Issue of Serious Injury Is Reversed and Finding of Liability Is Vacated
  • Plaintiff’s Submissions are Sufficient to Refute Issue of Degeneration
  • Affidavit Based on Unsworn Report Fails to Raise a Triable Issue of Fact
  • Neurologist Should Have Opined as to Causal Relationship of Headaches to Accident
  • Plaintiff’s Orthopedist’s Explanations are Ruled Hearsay
  • Affidavits “Based Solely on Plaintiff’s Subjective Complaints of Pain” Fail
  • Defendant’s Affidavit Is Not an “Attempt to Raise a Feigned Issue of Fact” Where Questioning During Defendant’s Deposition Did Not Concern the Subject Matter of the Affidavit
  • “Financial Issues” Do Not Explain 15-Month Gap in Treatment of Claimant Who Remained Employed
  • Examining Neurologist’s Conclusion that Decreased Ranges-of-Motion Are “Voluntary” Must be Substantiated

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

  • Applicant Awarded Some Lost Wages Based Solely Upon His Statement In The Application.

LITIGATION

  • Insurer Not Penalized for Sending Second Request a Few Days Too Early When Plaintiff Ignored Verification Requests.
  • Chiropractor Who Administers Acupuncture Entitled to Fee of Licensed Acupuncturist and Not Licensed Chiropractor

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

  • Not Bad Faith, But Continued Violations of Discovery Orders Leads to BAD RESULTS
  • Question of Fact Regarding Whether Non-Licensed Employee, Billed as an Attorney, Amounts to Breach of the Retainer Agreement
  • Homeowner Exception Applies to Construction of Pole Barn

EARL’S PEARLS

Earl K. Cantwell
[email protected]
Insurance Companies and Agents May Assume Special Duties

If you haven’t started your brick-and-mortar store shopping on Black Friday, we know that some of you will be doing your online shopping on Cyber Monday.  We’re delighted that you have taken time out of your busy day to spend a little of it with us.

We look forward to seeing some of you in NYC for the DRI Insurance program next week.

All the best.

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of
New York
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

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

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

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Tasha Dandridge-Richburg
Margo M. Lagueras

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Scott M. Duquin

Index to Special Columns

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

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

11/24/09         Peerless Insurance v. Micro Fibertek, Inc.
Appellate Division, Second Department
Carrier Fails to Establish Grounds for Denying Coverage
The decision is not replete with the factual underpinnings of this claim.  Apparently, Peerless denied coverage to a party that claimed additional insured status on the basis of an exclusion and on the basis of late notice.  The additional insured moved for summary judgment and the carrier, according to the court, failed to demonstrate the applicability of the exclusion or a breach of the notice provisions.  The court did not take kindly to a delay by the carrier in responding promptly to discovery demands, including production of the policy.

11/19/09         Malmon v. East 84th Apartment Corporation
Appellate Division, First Department
Determination of Employment Status at Workers Compensation Board Is Binding in Subsequent Coverage Action on Parties That Had Opportunity to Participate
Party who was on notice and had opportunity to contest employment determination at Workers Compensation Board could not relitigate that question is subsequent declaratory judgment action.  In a separate holding, court, citing B.P. Air, restates general rule that obligation to defend is based on allegations in complaint and even though insurer eventually be successful in establishing that the obligation to indemnify does not exist, determination of defense is based on complaint, even if allegations are groundless, false or fraudulent.
Editor’s Note:  The courts are reminding the carriers, sometimes directly and sometimes more subtly, that the defense obligation will be there until some court, somewhere, determines that there cannot be an obligation to indemnify.  Once that is determined, then the defense responsibilities come to an end.  Accordingly, the strategic choice is often to undertake the insured’s defense and immediately commence and aggressively prosecute a declaratory judgment action to resolve the indemnity question early.  Yet another example in the Rhodes decision from the Second Department reported on 11/17/09 and reviewed in this issue.

11/18/09         Bovis v. Crab Meadows Enterprises, Ltd.
Appellate Division, Second Department
Carrier Fails to Establish Its Entitlement to Enforce Endorsement Allowing It to Deny Coverage to Its Insured for Failing to Secure Protection by Subcontractors
Bovis, an employee of Picone, was injured when he fell from a scaffold. Picone was a subcontractor of the Crab Meadow defendants who were insured by Sirius America Insurance Co. Bovis sued the Crab Meadow defendants  and Crab Meadows sued Picone for contractual and common law indemnification.  Sirius America insured Crab Meadows directly and denied a defense to Crab Meadows alleging that coverage was unavailable to it because it failed to enter into an indemnification agreement with Picone prior to the loss.
It appears that the Sirius policy issued to its insured contained an endorsement that removed coverage to its insured if it failed to secure the protection of an indemnity agreement from a subcontractor.
Picone moved to dismiss the third-party action.  The court denied that application, holding that Picone failed to establish that it did not enter into a contract that required defense and indemnification.
The court held that Sirius was not entitled to a judgment declaring that it was not required to defend the Crab Meadow defendants since it failed to establish the absence of the signed indemnity agreement.
Editor’s Note:  There have been very few New York cases where the Contractors Condition Endorsement has been considered.  There is a growing trend among certain carriers to include an endorsement in a CGL policy issued to contractors and others which punish that insured if it fails to secure subcontracts with valid and enforceable indemnity agreements.  The punishment is often a reduction or elimination of coverage.  In this case, it appears Sirius has such an endorsement in its policy and sought to enforce it.  To do so successfully, it would have had to establish that its insured did not secure the protection of an indemnity agreement from its subcontractors.  Sirius failed to present enough proof to convince the court – at this state – that there was an absence of such an agreement,

11/17/09         Rhodes v. Liberty Mutual Insurance Company
Appellate Division, Second Department
Until Indemnity Obligations Are Resolved in Carrier’s Favor, Defense Obligations Continue Based on Complaint Allegations
This case appears to involve a drunken brawl between and among teenagers at a house party.  The insured’s son, Rhodes, alleged committed some act of violence leading to injuries by another partygoer and a lawsuit ensued.  The allegations against Rhodes included claims of negligence.  The insurer believed that the injuries arose out of an assault.  The court set forth the rules of engagement:

  • Generally, it is the insured's burden to establish coverage and the insurer's burden to prove the applicability of an exclusion;
  • An insurer's duty to defend is broader than its duty to indemnify, and arises whenever the allegations in the complaint in the underlying action, construed liberally, suggest a reasonable possibility of coverage, or where the insurer has actual knowledge of facts establishing such a reasonable possibility;
  • The duty to defend arises if the claims against the insured arguably arise from a covered event, even if the claims may be meritless or not covered, either because the insured is not liable or because the event is later determined outside the policy's scope of coverage
  • An insurer can be relieved of its duty to defend only "if it establishes as a matter of law that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision"

In “assault” cases, the Court of Appeals has made it particularly difficult for insurers in its decision a few years back in Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131.  In a previous issue of Coverage Pointers, we wrote extensively about the Cook case and negligence/assault cases generally: see: Ouch, That Hurts.
11/17/09         Felice v. Chubb & Son, Inc.
Appellate Division, Second Department
Rules for Measuring Lateness of Disclaimer Reviewed
It is unclear from the decision what explanation the carrier offered for what might have been considered a late disclaimer.  Under New York law, if a disclaimer based on a condition of coverage (notice of accident, claim or suit or lack of cooperation) or based on a policy exclusion, is late (generally, beyond 30 – 45 days after the insurer receives notice, the liability carrier must provide an explanation for the delay.  Here, the court reviews the standards for measuring the timeliness of that disclaimer and set us the “bullet points” for consideration:

  • An insurance carrier must give timely notice of a disclaimer "as soon as is reasonably possible" after it first learns of the accident or grounds for disclaimer of liability (Insurance Law § 3420[d][2];
  • It is the insurance carrier's burden to explain the delay in notifying the insured or injured party of its disclaimer, and the reasonableness of any such delay must be determined from the time the insurance carrier was aware of sufficient facts to disclaim coverage;
  • The issue of whether a disclaimer was unreasonably delayed is generally a question of fact, requiring an assessment of all relevant circumstances surrounding a particular disclaimer;
  • Cases in which the reasonableness of an insurer's delay may be decided as a matter of law are exceptional and present extreme circumstances

 

11/17/09         Miraglia v. H & L Holding Corp
Appellate Division, First Department
Failure to Raise Workers Compensation Defense And Assumption of Position As Main Line Defendant Leaves Employer Liable Directly to Defendant
In our March 6, 2009 edition, we reported on the First Department’s opinion in this case.  The First Department granted leave to the employer (and the State Insurance Fund) to reargue, and while it clarified its previous decision, basically reaffirmed it while denying leave to appeal to the Court of Appeals.  In our earlier review we said:
03/03/09            Miraglia  v H & L Holding Corp
Appellate Division, First Department
Where Not Timely Raised, Workers’ Compensation Bar Was Waived
A little bit of background on this one first.  Plaintiff was an employee of Lane & Sons Construction Corp., when he sustained serious injuries while in the course of his employment.  Plaintiff then commenced an action against the owner of the premises, H&L Holding, under the Labor Law.  Prior to trial, H&L obtained an order of indemnification against Lane & Sons, and Lane & Sons’ carrier assumed the defense of H&L at the trial.  Finally, H&L filed for dissolution and effectively vanished from the picture. 
Importantly, the judgment H&L obtained against Lane & Sons provided that plaintiff could also enforce it.  At that time, Lane & Sons raised no objection to plaintiff being provided a right to enforce an indemnity provision to which it was never a party.  In any event, plaintiff now seeks to enforce this indemnity right against Lane & Sons. 
In response, Lane & Sons argues that the exclusivity protections of the Workers’ Compensation Law bar any claim made by the plaintiff.  The First Department ruled that because Lane & Sons never raised the defense prior to the trial, it had effectively waived the exclusivity protections offered by the Workers’ Compensation Law.  In so holding, the Court also swatted down Lane & Sons arguments that the trial court did not possess subject matter jurisdiction or personal jurisdiction over the claim.
11/13/09         Thomas Johnson, Inc. v. The State Insurance Fund
Appellate Division, Fourth Department
Defensive Posture Means Defensive Posture.  Legal Fees Not Recoverable in Prosecuting Declaratory Judgment Action, Even If Carrier Appeals
Plaintiff was successful in establishing its right to coverage.  That not being enough, it tried to secure the costs of prosecuting the declaratory judgment action.  New York courts have long held that a successful insured that has prosecuted a DJ action, may not recover the costs of prosecuting it.  An insured put in a defense posture and forced to respond to a declaratory judgment action can get those costs paid if coverage had been established.

The insured argued that it should be entitled to recover the costs of prosecuting the DJ action because the defendant carrier appealed an adverse decision against it.  The Fourth Department properly denied that application.  Defense posture means defense posture. 
Editor’s Note:  What is that old saying about pigs and hogs? 

 

MARGO’S MUSINGS ON SERIOUS INJURY UNDER NEW YORK

Margo M. Lagueras
[email protected]

11/17/09         Spanos v. Harrison
Appellate Division, Second Department
Expert’s Opinion That Further Testing Is Required to Determine Causation Contradicts His Opinion That Condition Is Not Related to Accident
The plaintiff was diagnosed with erectile dysfunction and claimed it as one of the injuries sustained in the accident in his bills of particulars.  The defendant’s examining urologist stated that the condition was not causally related to the accident but failed to set forth any foundation for that conclusion.  Furthermore, he opined that further testing was required to determine the cause of the dysfunction.  This, together with the insufficient report of the defendant’s examining neurologist, made unnecessary the consideration of the plaintiff’s opposing papers.

11/17/09         Scarnici v. Jean-Louis
Appellate Division, Second Department
Determination on Issue of Serious Injury Is Reversed and Finding of Liability Is Vacated
Here two defendants filed motions on the issue of serious injury and a third appeared separately filing both on the issue of serious injury and on the issue of liability.  On appeal, the Court held that the plaintiff raised triable issues of fact which should have warranted the dismissal of the defendants’ motions with respect to serious injury.  However, with respect to the third defendant’s motion to dismiss based on his assertion of non-liability, the Court vacated and remitted for a determination on that issue. 

11/17/09         Modeste v. Mercier
Appellate Division, Second Department
Plaintiff’s Submissions Are Sufficient to Refute Issue of Degeneration
The plaintiff submitted affirmations of his treating physicians, orthopedic surgeon and radiologist which addressed and refuted the findings of degeneration by the defendant’s radiologist and raised a triable issue of fact with regard to his claims of serious injury to the cervical and lumbar spines under the permanent consequential limitation and/or significant limitation of use categories.

11/17/09         Ayala v. Katsionis
Appellate Division, Second Department
Affidavit Based on Unsworn Report Fails to Raise a Triable Issue of Fact
The trial court is reversed on appeal and the complaint is dismissed because the affidavit and report of the plaintiff’s treating chiropractor were based on another physician’s unsworn report and were, therefore, insufficient to raise a triable issue of fact.  In addition, neither the plaintiff nor his chiropractor explained the more than two and a half year gap in treatment.

11/17/09         Sanchez v. Ahmed
Appellate Division, First Department
Neurologist Should Have Opined As To Causal Relationship of Headaches to Accident
The infant plaintiff was struck while crossing the street.  During depositions and again to the defendants’ examining physician, both the child and his mother reported that he began suffering headaches three weeks after the accident.  The defendants’ examining orthopedist and plastic surgeon reported that the plaintiff did not have any either an orthopedic disability or a disability from scarring on the forehead.  However, the defendants did not submit a report from a neurologist who could have opined whether or not the plaintiff’s headaches were related to the accident.  Because they failed to do this, the trial court’s denial of their motion was affirmed without need to consider the plaintiffs’ opposing papers.

11/17/09         Whisenant v. Farazi
Appellate Division, First Department
Plaintiff’s Orthopedist’s Explanations Are Ruled Hearsay
The plaintiff alleged serious injury to his left ankle.  His orthopedist’s finding of range-or-motion limitations was not probative because it was not contemporaneous with the accident, and his opinion that the ligament tears were related to the accident was not medically supported.  In addition, the orthopedist’s reference to the plaintiff’s physical therapy attendance was hearsay, as was his explanation that the admitted gaps in treatment were due to the plaintiff’s lack of insurance and financial issues. 

The plaintiff’s own testimony, as well as his failure to offer any medical proof, defeated his claim under the 90/180-day category as he testified that he was confined at home for only two days, missed only three days of work, and had some pain when playing tennis, swimming or walking long distances.  This did not equate with an inability to engage in substantially all his daily activities.

11/13/09         Sierson v. Gacek
Appellate Division, Fourth Department
Affidavits “Based Solely on Plaintiff’s Subjective Complaints of Pain” Fail
Here the trial court granted the defendants motion only with respect to the plaintiffs’ 90/180-day claim.  On appeal, the Court found that the motion should have been granted in its entirety and the complaint dismissed as the affidavits of the plaintiff and his neurologist were “based solely on plaintiff’s subjective complaints of pain” and numbness and the neurologist did not set forth any tests or results to support his conclusion that the plaintiff sustained an injury that would make conceiving children difficult.

11/13/09         Schwartz v. Vukson
Appellate Division, Fourth Department
Defendant’s Affidavit Is Not An “Attempt to Raise a Feigned Issue of Fact” Where Questioning During Defendant’s Deposition Did Not Concern the Subject Matter of The Affidavit
The plaintiff moved for partial summary judgment on the issues of liability and serious injury, but only addressed two of the four categories of serious injury alleged in her complaint.  The trial court granted the motion but without addressing either of the two categories.  The holding was reversed on appeal.

As regards the issue of liability, the plaintiff’s deposition testimony stated that the decedent backed his vehicle out of his son’s driveway into the street and in front of her oncoming vehicle which she was operating in the proper lane of traffic and at a reasonable speed.  The defendant, in his affidavit, stated that the decedent’s vehicle never exited the driveway and that the plaintiff’s tire tracks showed she was traveling on the shoulder of the road.  The court disagreed with the plaintiff who argued that the defendant’s affidavit in opposition to her motion was an attempt to raise a feigned issue of fact.  The court determined that the defendant’s deposition did not contradict his affidavit because the questioning during the deposition did not concern the same subject matter as the affidavit.

The Appellate Court also found that the trial court erred in granting the plaintiff’s motion with regard to the two categories of serious injury because there was evidence on the record to raise issues of fact as to whether the injuries were the result of a preexisting degenerative condition and the plaintiff’s obesity, and whether the injuries were fully healed.

11/12/09         Cruz v. Lugo
Appellate Division, First Department
“Financial Issues” Do Not Explain 15-Month Gap in Treatment of Claimant Who Remained Employed
After examining the plaintiff and reviewing MRIs taken a short time after the accident, the defendants’ experts diagnosed resolved strain/sprain of the cervical and lumbar spines, resolved sprain of the left shoulder, full range-of-motion in both areas, and degenerative disc disease with mild desiccation and unrelated mild annual bulging. 

In opposition, only one of the plaintiff’s experts addressed whether the bulging shown in the MRI was degenerative and he opined that the plaintiff did suffer from degenerative disc disease.  In addition, sic months after the accident the plaintiff’s own treating doctor discharged him from care as he found that there were no problems with the plaintiff’s neck or shoulder and only minimal range-of-motion restriction of the lower back.  The plaintiff’s attempt to explain the 15-month gap in treatment by citing “financial issues” simply was inadequate because he remained employed throughout that period.

11/10/09         Hi Ock Park-Lee v. Voleriaperia
Appellate Division, Second Department
Examining Neurologist’s Conclusion That Decreased Ranges-of-Motion Are “Voluntary” Must Be Substantiated
Once again an examining neurologist notes significant range-of-motion limitations but opines that the noted restrictions are “voluntary.”  Without substantiation in the form of objective medical evidence, there is no basis for that conclusion and the defendants will fail to meet their prima facie burden on the motion.

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

11/23/09         Applicant v. New South Ins. Co.
Arbitrator Thomas J. McCorry, Esq. (Erie County)
Applicant Awarded Some Lost Wages Based Solely Upon His Statement In The Application.
The assigned arbitrator was asked to decide the issues of whether the Applicant, eligible injured person (“Applicant”), complied with the insurer’s verification requests for a lost wage claim as well as whether the insurer’s subsequent denial based upon failure to substantiate a lost wage and substitute services claim was appropriate.

It is noted that there were four hearings held on this matter and the arbitrator indicated that the type of claim presented was one that leaves both parties frustrated and without understanding of the other party’s position.

The Applicant’s position was that he was injured in a May 30, 2008, accident leaving him unable to operate his lawn landscaping business.  Therefore, he asked his brother-in-law to assist him. 

The Applicant submitted documentary evidence demonstrating he was out of work until July 28, 2008.  He also submitted his no-fault application indicating his gross wages were $400 to $500 per week.  He also claimed he paid his brother-in-law $110.00 a week as substitute wages.

The insurer’s position was that the Applicant could not substantiate that the Applicant actually lost wages from his business or that he paid his brother-in-law.  The insurer requested verification in the form of cancelled checks and income tax returns for the last two years.  The insurer also conducted an EUO of the Applicant.

The Applicant testified at his EUO that he would not release the names of the people that worked for him as substitute workers without their consent.  He also testified that he had a problem with his brother-in-law collecting and keeping the money he received from cutting lawns.

At the hearing, the Applicant testified that he could not produce tax returns and cancelled checks.  Further, he testified that the insurer did not understand how business was conducted in the “inner city of Rochester.”  He claimed that his business is a cash business and everything is conducted via handshake without written contracts. 

Applicant’s brother-in-law testified that the Applicant already paid his wife $800.00 but that he was owed an additional $1,800.00 for work that he performed.

The assigned arbitrator concluded that the insurer’s denial was defective because it was based upon the Applicant failure to respond to verification requests, which is not a recognized basis under the regulations.  However, this does not mean that the Applicant can recover whatever amount of money he requests.

The arbitrator awarded two months of lost wages based upon a $400.00 per week income which equals, without consideration of any statutory offsets, $3,200.00.

LITIGATION

11/17/09         Infinity Health Products, Ltd. a/a/o Jermaine Thomson v. Eveready Ins. Co.
Appellate Division, Second Department
Insurer Not Penalized For Sending Second Request A Few Days Too Early When Plaintiff Ignored Verification Requests.
On March 14, 2001, the plaintiff submitted a bill for medical supplies it provided to the assignor as a result of a November 15, 2000, motor vehicle accident.  The insurer issued a verification request seven days later, on March 21, 2001, to the plaintiff, which received no response from plaintiff.  On April 17, 2001, 27 days after the verification request was sent the insurer issued a follow up second request for the verification.  The plaintiff did not respond to the second request and instead filed suit.

The lower court determined that the insurer failed to timely delay the claim and ultimately owed the claim as the second request for verification was sent before the expiration of 30 calendar days after the initial request was sent.

On appeal, the Court reviewed the issue and held that the insurer was entitled to summary judgment.  The Court reasoned that the initial verification request was timely mailed thereby delaying the 30 days to pay or deny the claim.  The Court recognized that while the insurer did not strictly comply with the time limitation set forth in sending out the second request for verification and sent it too early, in this case, should not permit the plaintiff to contend that the insurer is precluding from asserting any defense to the claim.  The Court stated that it would be inequitable to reward the plaintiff who ignored two verification requests merely because the insurer send the second verification request a few days too early. 

11/17/09         Infinity Health Products, Ltd. a/a/o Jermaine Thomson v. Eveready Ins. Co.
Appellate Term, Second Department
Chiropractor Who Administers Acupuncture Entitled to Fee of Licensed Acupuncturist and Not Licensed Chiropractor
The issue in this case was whether the insurer properly applied to workers’ compensation fee schedule rate for a licensed acupuncturist when a licensed chiropractor performed the acupuncture.  The Appellate Term held that the insurer applied the proper fee schedule as to a licensed acupuncturist even though a chiropractor performed the service.  This is because the plaintiff testified at trial that the training for a license in chiropractic and acupuncture are the same.

11/13/09         Innovative Chiropractic, P.C. a/a/o Lucitania Rosado v. Mercury Ins. Co.
Appellate Term, Second Department
Carrier Should have Won this One
The insurer’s summary judgment motion should have been granted as the plaintiff’s chiropractor’s affidavit failed to meaningfully refer to or discuss the independent chiropractor’s conclusion.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

11/24/2009    Diamond State Insurance Co. v. Utica First Insurance Co.
Appellate Division, First Department
Not Bad Faith, But Continued Violations of Discovery Orders Leads to BAD RESULTS

As faithful readers of Coverage Pointers may recall, this decision amounted to a day of reckoning for, what we tabbed at the time, as a dangerous Trial Court decision.  As we noted in our January 23, 2009 edition of Coverage Pointers:

1/09/09           Diamond State Ins. Co. v. Utica First Ins. Co.
Supreme Court, New York County
Trial Court Strikes Answer, which in Turn Results in Bad Faith
Yet another subrogation action; this one involving everyone’s favorite topic – bad faith. This case has a long and tortured past, which we will only briefly re-cap here.  Basically, Diamond State paid a property damage claim on behalf of its own insured, and commenced a subrogation action against Utica First’s named insured.  When Utica First’s insured defaulted, Diamond State obtained a judgment and made a demand for payment from Utica First pursuant to the Insurance Law.  When the demand went unpaid, Diamond State commenced the current action alleging therein that Utica First’s failure to proffer settlement funds within thirty days amounted to bad faith. 

In the course of this action, Diamond State sought discovery of all claims files maintained by Utica First, or any other material maintained by Utica First, which involved the application of a certain roofing exclusion from October 10, 2002 – February 20, 2005.  Upon appeal to the First Department, the court agreed the request was appropriate in a bad faith claim, and ordered that Utica First was to provide all materials related to the roofing exclusion at issue to Diamond State.

After two compliance conferences with the trial court, Utica First maintained that the task was simply too large to undertake, and that, in any event, it had not located any responsive documents.  Indeed, Utica First provided an affidavit from its claims manager which said that there was a possible 6,000 policies to review, and that Utica First did not have the capability to search to determine if a coverage issue regarding the roofing exclusion had come up in any of those cases.  Utica First did review the 184 policies that resulted in litigation, and again noted that it had found no responsive documents. 

Unfortunately for Utica First, Diamond State located a 2004 Second Department decision which held that Utica First’s roofing exclusion did not bar the claimant’s request for a defense.  Strike One!

Diamond State also found two trial court decisions which again addressed the application of the roofing exclusion, and which fell within the period of time defined by the First Department’s previous ruling.  Strike Two!

Finally, Utica First withheld production of a relevant pleading which also fell within the period of discovery.  Strike Three!

In an attempt to avoid having its answer struck, Utica First argued that its failure to comply was not willful and contumacious, and that it would produce all of the requested material.  The trial court was not persuaded, and noted that Utica First did not review all 6000 claims files as it had been ordered by the First Department.  Further damning was the fact that the Second Department case that Utica First did not produce was handled by the same defense firm that was representing Utica First in the current action, and likewise the same claims professional at Utica First was also assigned to both cases.

Just as arguing balls and strikes in baseball gets you thrown out of the game, so to does arguing about failure to comply with discovery orders.  Indeed, the trial court struck Utica First’s answer, and it too is out…out of arguments, out of options, and out of the case. 

Peiper’s Take - For its part, we note that Utica First raises some good points with respect to its attempts to comply and we doubt we’ve heard the last of this one.  Such a drastic remedy for errors when sifting through some 6,000 files is an onerous and dangerous trend to set.  As always, we will keep you posted. 

It is also important to note that although this resulted in bad faith, such an outcome was not based upon the merits of Utica First’s coverage position.  Rather, the matter was resolved upon a violation of discovery procedure which is governed by the CPLR and not the Insurance Law.  As a result, we still have not seen a finding of bad faith, on the merits, at any time in the last three years.   

In affirming the Trial Court’s ruling, the First Department noted, well, I’ll let you read it for yourself….
Defendant's behavior was particularly reprehensible because defendant not only violated the motion court's conference orders, but also endeavored to undermine an appellate order by limiting its search to only a small percentage of its potentially relevant files. … But in light of defendant's multiple delays and violations of repeated court orders, its numerous improper objections to practically every demand for disclosure made by plaintiff, its unjustifiable limitation of the search of its files, its continued refusal to produce responsive documents and its utter failure to account for its behavior, the motion court, under the unique facts of this case, appropriately found it would have been futile to compel plaintiff to confer once more with defendant as a condition for moving to strike its pleadings (see Carrasquillo v Netsloh Realty Corp., 279 AD2d 334 [2001]).
Wow!  If there is anything good to come of the decision, the First Department appears to note that the remedy of striking a party’s pleading is drastic and limited to the unique circumstances of this case.  We, again, note that this decision does not impact the established law of bad faith.  However, it underscores the problems of voluminous discovery requests which often accompany claims of bad faith.
11/17/2009    Natural Organics Inc. v Anderson Kill & Olick, P.C.,
Appellate Division, First Department
Question of Fact Regarding Whether Non-Licensed Employee, Billed as an Attorney, Amounts to Breach of the Retainer Agreement
Plaintiff’s malpractice claim was based upon what he believed to have been an unfair and unreasonable settlement of a lengthy insurance dispute wherein he was represented by the defendant.  Plaintiff’s chief complaint appears to have been his acceptance of $750,000 in settlement of claim that he had estimated to be approximately $1.3 million in value.  Plaintiff based his malpractice on the fact that the defendant law firm later discovered that the employee handling the underlying insurance lawsuit was not licensed to practice law. 

As such, plaintiff commenced the instant case alleging causes of action in legal malpractice, a violation of the General Business Law § 349’s prohibition of deceptive business practices, as well as breach of contract.  The Trial Court denied defendant’s motion to dismiss which gave rise to the instant appeal.

In reversing the Trial Court, the First Department noted that plaintiff could not establish a causal relationship between the work product of the non-licensed employee and the allegedly diminished settlement value.  Where plaintiff was unable to establish proximate cause, his claim of legal malpractice was not viable.  Likewise, plaintiff’s GBL § 349 was dismissed where plaintiff was unable to demonstrate how the facts of this scenario had a “broad impact on consumers at large.”

However, the First Department preserved plaintiff’s breach of contract action.  In so holding, the court noted that the defendant law firm had billed plaintiff for more than $70,000 in fees for time recorded by the non-licensed employee.  As the time was billed at attorney rates, the First Department noted that the defendant law firm may have breached the retainer arrangement it had entered into with plaintiff.

11/13/2009    Dineen v. Rechichi
Appellate Division, Fourth Department
Homeowner Exception Applies to Construction of Pole Barn

In this case, the Fourth Department conducts a lengthy and in-depth analysis of the so called “homeowner” exception to Labor Law § 240(1) and Labor Law §241(6).  In so doing, the court spends a significant amount of time reviewing the history of the exception, as well as the purpose behind its inclusion into the Labor Law. 

The facts of this case are fairly straight-forward.  Defendant purchased a large tract of land in Hammondsport, New York where he planned on constructing a residence, a pole barn and a large pond.  In the initial phase of construction, defendant retained plaintiff to perform the construction of the on-site pole barn.  Unfortunately, plaintiff was injured when he fell from the roof of the barn while inspecting it for leaks.  (As an aside, we note that the Court did not address whether plaintiff was performing a covered task at the time he sustained injury).  

In any event, plaintiff commenced the instant action therein alleging Causes of Action in Labor Law § 240(1), Labor Law § 241(6) and Labor § 200/common law negligence.  Thereafter, defendant moved to dismiss the Section 240(1) and Section 241(6), Causes of Action, respectively.  The Trial Court granted defendant’s motion on the “homeowner exception,” and the instant current appeal followed. 

As an initial matter, the Fourth Department noted that a barn qualified as a “dwelling” under the terms of the Labor Law.  Accordingly, the exception was applicable in the current instance.  Moreover, the Fourth Department noted the Court of Appeals’ instruction that the “homeowner exception” requires an analysis which rests upon a determination of the “site and purpose of the work” being performed. 

In holding that the purpose of the current case was strictly residential, and that the barn was a qualifying structure, the Fourth Department affirmed the Trial Court’s Order dismissing plaintiff’s Labor Law § 240(1) and Labor Law § 241(6) claims.  In so holding, the Court noted that defendant produced a series of sketch plans and blueprints which all identified the site of a future residence on the parcel.  Moreover, the Court noted that defendant’s act of arranging for the excavation of a driveway which would lead to the future residence was further evidence of a residential purpose at the parcel.  Finally, the Court also referenced defendant’s application for a subdivision permit which would enable the construction of residence, the fact that defendant had sought financing for the construction of a new home, and the fact that defendant had entered into a contract to sell his existing home, all as additional evidence establishing a purely residential purpose. 

 

FIJAL’S FEDERAL FOCUS

Katherine A. Fijal
[email protected]
No new insurance decisions from the Second Circuit over the past two weeks. 

 

EARL’S PEARLS

Earl K. Cantwell
[email protected]
Insurance Companies and Agents May Assume Special Duties

A California court has held that an insurance agent who held herself out as a “specialist” may be held liable for negligently failing to procure proper insurance coverage notwithstanding that the insured failed to read or take note of its policy.  Williams v. Hilb, Rogal & Hobbs Insurance Services of California, Inc., 2009 WL 2872403 (Cal. App. 2d Dist. 11/9/09). 

Williams and another gentleman were partners in a Rhino Linings USA, Inc. dealership which installed spray-on linings on truck beds.  Rhino USA referred Williams and his partner to an insurance agent Thaw who held herself out as an “expert” in insurance needs of Rhino dealerships.  Thaw faxed Williams a blank application form, Williams filled in information and returned it to Thaw who selected the coverages. Critically, the form had a section for Workers’ Compensation insurance, but Thaw did not select comp coverage.  After completing the form, Thaw did not send it back to Williams but submitted it to Travelers Insurance Company.  Thaw also knew that in California Workers’ Compensation insurance was mandatory.  Travelers issued a one year policy covering the dealership, which did not provide Workers’ Compensation insurance.  Thaw did provide a copy of the policy to Williams, who admittedly did not read it.

When that policy expired, Thaw was working for another insurance company, HRH, so Thaw created a new insurance package and obtained coverage from Hartford Insurance Company.  This package too did not contain Workers’ Comp insurance.  Hartford issued a policy for the dealership and a year later it was renewed, once again without Workers’ Comp coverage.

As these things happen, an employee of the dealership was severely burned by a fire on the premises.  Williams then learned for the first time that the dealership did not have Workers’ Compensation insurance.  A jury awarded the employee $11.2 Million and found Rhino USA and the dealership each 50% at fault.  Hartford paid the $1 Million limits of its general liability policy leaving a $5.8 Million outstanding judgment against Williams and his partner.

Williams and his partner then sued HRH for negligently failing to procure the Workers’ Compensation coverage for the dealership.  This case was tried to the Court, which found in favor of the plaintiffs.  The Court awarded damages in the amount of the judgment that remained outstanding in the underlying suit brought by the worker.  This decision was affirmed on appeal.  As a general rule, an insurance agent’s duty is to procure coverage requested by the insured without necessarily suggesting or warranting additional coverages.  This case stands for the proposition that when an agent, or perhaps an insurance company, holds itself out as an expert, additional and extra duties may be assumed. 

The Appellate Court held that the evidence supported a finding that Thaw held herself out as an expert in insurance for these dealerships which should have included Workers’ Comp coverage.  The application contained a section for Workers’ Comp coverage and the agent knew that such coverage was required in California.  The Appellate Court agreed that the agent breached her duty by failing to advise Williams of the necessity of obtaining Workers’ Compensation insurance and the fact that it was not included in the application or the coverage package for the dealership.

HRH argued that the insured had a duty to read the policy and was thus bound to its terms, but the court disagreed because the agent held herself out as an expert, so the language and reading of the policy was not determinative. 

HRH also argued that an insurance agent’s duty is defined by the insurance contract, which in this case obviously did not include Workers’ Comp coverage.  In effect, HRH argued that Williams agreed to an insurance contract that did not have  Workers’ Compensation coverage.  Again, the Appellate Court shot down this argument ruling that liability could exist for negligent breach of a “special duty” taken on by the insurance agent.

HRH next argued that the suit was barred by a two-year statute of limitations, but again the court disagreed finding that there was no cause of action until the insured was exposed to a judgment in excess of available insurance coverage.  Here, Williams did not incur injury and did not have a complete cause of action until judgment was entered against him for uninsured losses. 

The Appellate Court also approved the trial court assigning no fault to Williams, rejecting an argument that the insured was liable either as a matter of law or at least to some extent for failing to read the policy.  In the circumstances, the Appellate Court ruled that the insured’s failure to read the policy was not necessarily a requirement, or at least was understandable, again citing reliance on the “insurance expert”. 

As businesses become more and more complex and specialized, it is not unusual for brokers, agents, and even some departments in insurance companies to advertise or hold themselves out as “experts” for a particular type of coverage or business.  This case demonstrates the potential danger in being classified as “expert” in such coverages.  Obviously, great care should be taken in formulating documents, application forms and programs for such specialized industries.  Forms, applications and policies should be double checked to make sure that any specialized requirements of the business are being satisfied.  Insureds should be required to read or at least certify that they have read, approved and are satisfied with the coverages.  Lastly, renewals should not be taken lightly, and each renewal should trigger a new process of review, assessment and thoroughness which may help pick up or limit any mistakes or omissions made in the past.  If insurance companies, brokers, and agents seek to advertise and hold themselves out as “experts”, the courts may be prone to holding them to higher levels of care and diligence such as the Trial Court and the Appellate Court clearly did in this instance.

ACROSS BORDERS
Please visit the Hot Cases Section of the Federation of Defense & Corporate Counsel website: www.thefederation.org

11/12/09         Berry v. Murphy, P.C. and Carolina Casualty Co.
Tenth Circuit Court of Appeals

Insurer Had No Duty to Defend Insured Because of Late Notice
Murphy, who was the plaintiff’s former law partner, left the plaintiff’s firm in 2006. On January 10, 2007, Murphy received a letter from the attorney of one of Murphy’s former clients. The letter notified Murphy that the attorney was planning on filing a legal malpractice lawsuit against Murphy and the plaintiff’s law firm on behalf of Murphy’s former clients. The plaintiff’s “claims made” insurance policy with the defendant was effective from February 6, 2008 to February 6, 2009. On July 23, 2008, the plaintiff received the Malpractice Lawsuit that was the subject of the letter sent to Murphy in 2007. The district court found and the court of appeals affirmed that the letter sent in 2007 was a “claim” within the definition of claims under the terms of the insurance policy. Under the policy, a “claim” included “wrongful acts which are logically or causally connected by reason of any common fact, circumstance, situation, transaction, casualty, event or decision.”

Additionally, any claim “shall be deemed to have been made when notice was first given to the Insurer.” Therefore, the letter in 2007 was notice of the “wrongful acts” that gave rise to the Malpractice lawsuit that was received in 2008, and thus the claim was first made in 2007. Since the claim was made in 2007 and the policy with the defendant was not in effect until February 2008, the court of appeals held that the claim was made outside of the policy period. Consequently, the defendant did not have a duty to defend or indemnify the plaintiff. The court of appeals recognized the harshness of this ruling. Murphy was not on speaking terms with the plaintiff when he left the law firm in 2006 and did not give the plaintiff notice of the 2007 letter by which the plaintiff could notify his insurance carrier. However, the court noted that an insurance policy “is a contract which should be interpreted consistently with the well settled principles of contractual interpretation.” The insurance contract was a mutual agreement ratified by both the insured and insurer and thus both parties are bound by its provisions. Additionally, the court recognized the utility of “claims-made” insurance policies—the notice provisions in “claims made” policies provide the insurer with a date after which the insurer knows it is no longer liable and allows the insurer to more accurately fix its reserves for future liabilities.
Submitted by: Marc H. Harwell and Mi W. Belvin of Leitner, Williams, Dooley & Napolitan, PLLC.

REPORTED DECISIONS

Thomas Johnson, Inc. v. The State Insurance Fund

Appeal from a judgment (denominated order and judgment) of the Supreme Court, Niagara County (Ralph A. Boniello, III, J.), entered August 26, 2008 in a declaratory judgment action. The judgment, among other things, granted judgment in favor of plaintiff declaring that defendant is obligated to pay all costs and fees incurred by plaintiff in the defense of a prior appeal taken by defendant.

GREGORY J. ALLEN, ALBANY, HERZFELD & RUBIN, P.C., NEW YORK CITY (DAVID B. HAMM OF COUNSEL), FOR DEFENDANT-APPELLANT.
SLIWA & LANE, BUFFALO (KEVIN A. LANE OF COUNSEL), FOR PLAINTIFF-RESPONDENT. It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by vacating the declaration and granting judgment in favor of defendant as follows: It is ADJUDGED and DECLARED that defendant is not obligated to pay the costs and fees incurred by plaintiff in the defense of the prior appeal taken by defendant and as modified the judgment is affirmed without costs.
Memorandum: We agree with defendant that Supreme Court erred in granting judgment in plaintiff's favor declaring that defendant is obligated to pay all costs and fees incurred by plaintiff in the defense of an appeal taken by defendant from a prior judgment (Thomas Johnson, Inc. v State Ins. Fund, 50 AD3d 1544). The prior judgment, inter alia, granted that part of plaintiff's cross motion seeking summary judgment declaring that plaintiff is entitled to an attorney of its own choosing, at defendant's expense, in the underlying personal injury action. "[I]t is well settled that an insured may not be awarded attorney fees incurred in the prosecution of a declaratory [judgment] action against the insurer to determine coverage" (Penn Aluminum v Aetna Cas. & Sur. Co., 61 AD2d 1119, 1120), unless the insured was "cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations" (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21), and that is not the case here. Moreover, the fact that defendant took an appeal in a declaratory judgment action commenced by plaintiff is of no moment (see generally Crouse W. Holding Corp. v Sphere Drake Ins. Co., 248 AD2d 932, affd 92 NY2d 1017). We therefore modify the judgment accordingly.
We have examined defendant's remaining contention and conclude that it is without merit.
Miraglia v. H & L Holding Corp

Mauro Goldberg & Lilling LLP, Great Neck (Matthew W.
Naparty of counsel), for appellant-respondent.
Pollack, Pollack, Isaac & DeCicco, New York (Brian J. Isaac
of counsel), for respondent-appellant.
Order, Supreme Court, Bronx County (George D. Salerno, J.), entered October 9, 2007, which, to the extent appealed from as limited by the briefs, denied third-party defendant's motion for an amended judgment providing recovery by plaintiff only from defendant, and amended judgment, same court and Justice, entered October 29, 2007, awarding plaintiff damages against both defendant and third-party defendant in the principal amount of $18,097,112.15, affirmed, without costs.
Plaintiff was employed by third-party defendant contractor. As noted on prior appeals (306 AD2d 58 [2003]; 36 AD3d 456 [2007], lv denied 10 NY3d 703), he was working on a residential structure on land owned by defendant when he fell from planks used to span a trench and provide access to foundation walls, and was impaled by a steel bar from the scrotum to L2 on his spinal cord, resulting in paraplegia and associated complications. In a separate action, plaintiff recovered over $6 million from defendant's insurer, with defendant retaining the right to contractual indemnification.
After the 2007 appeal, third-party defendant asserted for the first time that since it was plaintiff's employer, the court could not enter a judgment in which plaintiff was granted a right to recover directly against it because the worker's compensation paid to plaintiff was his exclusive remedy. The first judgment, affirmed in the 2007 appeal except for future pain and suffering damages (for which plaintiff stipulated to a reduction), also provided plaintiff with a direct recovery against third-party defendant, which failed to raise any objection based on worker's compensation exclusivity at that time.
A defense of worker's compensation exclusivity is waived if the employer ignores the issue "to the point of final disposition itself" (Murray v City of New York, 43 NY2d 400, 407 [1977]), especially where belated assertion of the defense will prejudice the party opposing the assertion (see Shine v Duncan Petroleum Transp., 60 NY2d 22, 27-28 [1983]). Here, not only did third-party defendant fail to raise this objection to the judgment on the 2007 appeal (see Harbas v Gilmore, 214 AD2d 440 [1995], lv dismissed 87 NY2d 861 [1995]), but it assumed defense of the direct defendant at trial, after the latter had successfully moved in limine for contractual indemnification while instructing its accountant — unbeknownst to plaintiff — to file for dissolution. Plaintiff was thus denied the opportunity to object to third-party defendant's representation of the direct defendant while reserving its worker's compensation exclusivity defense, or to otherwise protect his position. This is unacceptable. Worker's compensation exclusivity is important as a matter of state public policy, but so is the finality of the result when a party charts its own course.
It does not avail third-party defendant to assert that it could not have waived this argument because it goes to jurisdiction. While lack of subject matter jurisdiction can be raised at any time, it is still within a New York court's power "to entertain the case before it" (Matter of Fry v Village of Tarrytown, 89 NY2d 714, 718 [1997]; see also Matter of Rougeron, 17 NY2d 264, 271 [1966], cert denied 385 US 899 [1966]). Here, third-party defendant is not arguing that Supreme Court "never had power to hear a particular type of proceeding in the first place" (see Security Pac. Natl. Bank v Evans, 31 AD3d 278, 280 [2006], appeal dismissed 8 NY3d 837 [2007]). Waiver of an argument will be recognized where, as here, "the court had jurisdiction of the general subject matter but a contention is made after judgment that the court did not have power to act in the particular case or as to a particular question in the case" (see Rougeron, 17 NY2d at 271). Nor is third-party defendant persuasive in arguing — for the first time on appeal — that Supreme Court lacked personal jurisdiction over it because plaintiff never named it as a direct defendant. Supreme Court has always had the power to render an adjudication over third-party defendant (see Security Pac. Natl. Bank, 31 AD3d at 280), which surely would not have assumed the defense of the direct defendant at trial if it believed the court lacked personal jurisdiction over it. Moreover, by first actively participating in the litigation as if it were a direct defendant, and then by failing to raise the issue on appeal, third-party defendant waived its right to rely on Klinger v Dudley (41 NY2d 362 [1977]), in which the Court of Appeals held that a plaintiff may not recover directly from a third-party defendant over which it has no direct claim (see Harbas v Gilmore, supra, 214 AD2d 440 [1995], lv dismissed 87 NY2d 861 [1995]).
Because we are not granting relief to third-party defendant on the main appeal, we need not address any of the arguments with respect to plaintiff's conditional cross appeal.
The Decision and Order of this Court entered herein on March 3, 2009 is hereby recalled and vacated (see M-1611 decided simultaneously herewith).
All concur except McGuire, J. who concurs in a separate memorandum as follows:

McGUIRE, J. (concurring)
Lane & Sons Construction Corp. seeks leave to reargue its appeal. Alternatively, it seeks leave to appeal to the Court of Appeals. While I agree with the majority that reargument should be granted and leave to appeal should be denied, a brief discussion of both motions is warranted.
Plaintiff was injured while working on a construction project on property owned by defendant H & L Holding Corp. (306 AD2d 58 [2003]). Plaintiff commenced a personal injury action against H & L, which subsequently impleaded Lane, plaintiff's employer. H & L was granted summary judgment on its claim for indemnification against Lane, and Lane assumed defense of the main action.
After a jury trial, H & L was found liable for plaintiff's injuries and plaintiff was awarded damages. The judgment, however, permitted plaintiff to recover the damages from H & L (the defendant in the main action) and Lane (the defendant in the third-party action). On defendant Lane's appeal from the judgment, we modified the judgment to the extent of, inter alia, setting aside the award for future pain and suffering unless plaintiff stipulated to reduce the award (36 AD3d 456 [2007], lv denied 10 NY3d 703 [2008]). Lane did not argue on that appeal that it was not liable to plaintiff but only to H & L.
Plaintiff stipulated to reduce the awards and sought to settle the amended judgment. The proposed amended judgment, like the original judgment, allowed plaintiff to recover from both H & L and Lane. Lane objected to the proposed amended judgment and offered another amended judgment, one that permitted plaintiff to recover only from H & L. Lane then moved to amend the original judgment to reflect that plaintiff could only recover from H & L; plaintiff sought entry of the amended judgment that he had proposed. Supreme Court denied Lane's motion to amend the original judgment and signed plaintiff's proposed amended judgment.
We affirmed the order denying Lane's motion and permitting plaintiff to enter his amended judgment. We stated
After the 2007 appeal, [Lane] asserted for the first time that since it was plaintiff's employer, the court could not enter a judgment in which plaintiff was granted a right to recover directly against it because the worker's compensation paid to plaintiff was his exclusive remedy. The first judgment, affirmed in the 2007 appeal except for future pain and suffering damages (for which plaintiff stipulated to a reduction), also provided plaintiff with a direct recovery against third-party defendant, which failed to raise any objection based on worker's compensation exclusivity at that time.
A defense of worker's compensation exclusivity is waived if the employer ignores the issue to the point of final disposition itself, especially where belated assertion of the defense will prejudice the party opposing the assertion. Here, not only did [Lane] fail to raise this objection to the judgment on the 2007 appeal, but it assumed defense of [H & L] at trial, after the latter had successfully moved in limine for contractual indemnification while instructing its accountant — unbeknownst to plaintiff —to file for dissolution. Plaintiff was thus denied the opportunity to object to [Lane's] representation of [H & L] while reserving its worker's compensation exclusivity defense, or to otherwise protect his position. This is unacceptable. Worker's compensation exclusivity is important as a matter of state public policy, but so is the finality of the result when a party charts its own course.

It does not avail [Lane] to assert that it could not have waived this argument because it goes to jurisdiction. While lack of subject matter jurisdiction can be raised at any time, it is still within a New York court's power to entertain the case before it. Here, [Lane] is not arguing that Supreme Court never had power to hear a particular type of proceeding in the first place. Waiver of an argument will be recognized where, as here, the court had jurisdiction of the general subject matter but a contention is made after judgment that the court did not have power to act in the particular case or as to a particular question in the case. Nor is [Lane] persuasive in arguing — for the first time on appeal — that Supreme Court lacked personal jurisdiction over it. Supreme Court has always had the power to render an adjudication over [Lane], which surely would not have assumed the defense of [H & L] at trial if it believed the court lacked personal jurisdiction over it (60 AD3d 407, 407-408 [internal quotation marks and citations omitted]).
Lane now argues that we misapprehended the facts and the law in deciding its appeal because we focused on whether it had waived any argument that plaintiff could not recover against it because of the exclusivity provision of Workers' Compensation Law § 11. Lane asserts that its argument supporting amending the original judgment was that it could not be liable to plaintiff because it was never a defendant in the main action — Lane was impleaded by H & L and was only a third-party defendant. Because it was never a defendant in the main action, Lane argues that no judgment could be entered in plaintiff's favor against it, and that it is liable only to H & L for indemnification.
I agree with Lane that we misapprehended the material issue on its appeal from the order denying its motion to amend the original judgment and permitting plaintiff to enter his amended judgment. We did indeed focus on the issue of whether Lane waived the defense afforded by Workers' Compensation Law § 11. We should have focused instead on whether Lane, a third-party defendant, could be held directly liable to plaintiff despite the fact that Lane was never a defendant in the main action. Even assuming we were correct in stating that plaintiff was prejudiced by being denied the opportunity to object to Lane's representation of H & L, we missed the mark in discussing the point.
Lane's position finds support in Klinger v Dudley (41 NY2d 362 [1977]), where the Court of Appeals determined that the plaintiffs in the main actions could not recover from a third-party defendant against whom the plaintiffs did not assert any claims. The case before us is distinguishable from Klinger, however, because the third-party defendants in Klinger raised the argument that they were not liable to the plaintiffs on the appeals from the judgments. Here, Lane, on its appeal from the judgment, did not raise the argument that it is not liable to plaintiff because plaintiff asserted no claims against it. Rather, Lane raised that argument for the first time on a motion to amend the judgment after this Court had remanded for merely a reduction in the award for future pain and suffering or a trial solely on the issue of future pain and suffering. Thus, the order denying Lane's motion to amend the original judgment should be affirmed on the ground that Lane waived that argument by not raising it on the appeal from the judgment.
Whether the rule in Klinger should be expanded to permit a third-party defendant to raise the argument at any time and whether the defense afforded by Klinger is one that cannot be waived are issues that the Court of Appeals can address if it wishes, as our order deciding this appeal is "final" under CPLR 5611 and thus the Court of Appeals can grant leave if it sees fit (see CPLR 5602[a][1][I]).
Cruz v. Lugo


Mitchell Dranow, Mineola, for appellant.
Cheven, Keely & Hatzis, New York (Mayu Miyashita of
counsel), for Sandra Lugo, respondent.
Richard T. Lau & Associates, Jericho (Keith E. Ford of
counsel), for Pedro Martinez and Pentecostal Church Freed by Jesus
Christ, respondents.
Order, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered July 16, 2008, which granted defendants' motions 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 affirmed, without costs.
Defendants met their initial burden of establishing prima facie that plaintiff did not sustain a serious injury by submitting the reports of experts who, after examining plaintiff and reviewing MRI studies taken shortly after the accident, diagnosed resolved strain or sprain of the cervical and lumbar spine and resolved sprain of the left shoulder, with full range of motion in both areas. One of the experts reported that an MRI study of plaintiff's lumbar spine taken three months after the accident showed degenerative disc disease with mild disc desiccation and mild posterior annual bulging unrelated to the accident.
In opposition, plaintiff submitted reports by a number of experts who opined that he suffered, inter alia, from lumbosacral and cervical sprain or strain, disc bulge, shallow central disc herniation and that he had limited ranges of motion in his cervical and lumbar spine and left shoulder. However, he failed to raise an issue of fact as to the cause of these injuries, since only one of his experts addressed the issue whether the disc bulging or herniation noted in the MRIs was the result of a degenerative condition, and he opined that plaintiff suffered from degenerative disc disease (see Valentin v Pomilla, 59 AD3d 184, 186 [2009]). Moreover, six months after the accident, plaintiff was discharged from the care of his treating doctor, who at that time found nothing wrong with plaintiff's neck or left shoulder and only a minimal to mild restriction of the range of motion of plaintiff's lower back. Plaintiff's reference to "financial issues" is an inadequate explanation for the 15-month gap in his treatment in view of the fact that he remained employed (see Pommells v Perez, 4 NY3d 566, 574 [2005]).
Hi Ock Park-Lee v. Voleriaperia

Sim & Park, LLP, New York, N.Y. (Sang J. Sim of counsel), for appellant.
Kelly, Rode & Kelly, LLP, Mineola, N.Y. (John J. Morris of
counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Cullen, J.), dated September 29, 2009, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is denied.
The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of their motion, the defendants relied upon, inter alia, the affirmed medical report of their examining neurologist, Dr. Monette G. Basson. In her report, Dr. Basson noted that the plaintiff had a significant limitation in her lumbar spine range of motion, and concluded that the decreased range of motion was "voluntary." However, she failed to explain or substantiate, with objective medical evidence, the basis for her conclusion that the limitation was voluntary (see Cuevas v Compote Cab Corp., 61 AD3d 812; Colon v Chuen Sum Chu, 61 AD3d 805; Torres v Garcia, 59 AD3d 705; Busljeta v Plandome Leasing, Inc., 57 AD3d 469).
Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law, it is unnecessary to determine whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Cuevas v Compote Cab Corp., 61 AD3d at 812; Colon v Chuen Sum Chu, 61 AD3d at 805; Coscia v 938 Trading Corp., 283 AD2d 538).
Whisenant v. Farazi


Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Robert D. Grace of counsel), for appellants.
Frekhtman & Associates, Brooklyn (Arkady Frekhtman of
counsel), for respondent.
Order, Supreme Court, New York County (Paul Wooten, J.), entered March 17, 2009, which denied defendants' motion for summary judgment dismissing the complaint, unanimously reversed, on the law, and the motion granted. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.
Defendants met their initial burden of establishing prima facie that plaintiff did not sustain a serious injury to his left ankle through their examining orthopedist's affirmed report, which showed quantified range-of-motion findings within normal limits, and plaintiff's deposition testimony which indicated little or no restriction of his daily activities due to the hospital-diagnosed ankle sprain. The burden having shifted, plaintiff's orthopedist's finding of range-of-motion limitations in plaintiff's left ankle was not sufficiently contemporaneous with the accident to be probative of the claim (see e.g. Valentin v Pomilla, 59 AD3d 184, 185 [2009]; Thompson v Abbasi, 15 AD3d 95, 97-98 [2005]). Plaintiff's testimony as to physical therapy attendance was unsupported by any documentation, and references by plaintiff's orthopedist to such therapy in his affirmed report constituted impermissible hearsay (see e.g. Toulson v Young Han Pae, 13 AD3d 317, 319 [2004]). There were admitted gaps in treatment, and plaintiff's orthopedist's offer of an explanation regarding the gaps, grounded, in part, on plaintiff's lack of insurance and lack of financial means, was hearsay, and did not satisfactorily explain the cessation of treatment under the circumstances (see generally Pommells v Perez, 4 NY3d 566 [2005]). Plaintiff's MRI scan, which, according to the radiologist, evidenced partial tears to two ligaments in plaintiff's left ankle, was taken three years post-accident, too remote to be probative of plaintiff's accident-related claim, particularly since the radiologist offered no opinion as to a causal connection between the ligament tears and the accident (see e.g. Dembele v Cambisaca, 59 AD3d 352 [2009]). Plaintiff's orthopedist's opinion that the ligament tears were caused by the accident was not medically explained.
Plaintiff's serious injury claim predicated on an alleged inability to engage in substantially all his daily activities for 90 of the first 180 days post-accident was refuted by his own testimony. Plaintiff testified that he was confined to the house for two days, missed only three days of work and had some ankle pain when walking long distances, playing tennis and swimming. Further, plaintiff failed to offer the requisite competent medical proof to substantiate his serious injury under the 90/180 day category (see DeSouza v Hamilton, 55 AD3d 352 [2008]).
Plaintiff's belated claim of serious injury under the significant disfigurement category of Insurance Law § 5102(d) was not pled, and is therefore waived. In any event, the photographic evidence in the record, allegedly showing the abrasion scar, is unclear and of no probative value.
Sanchez v. Ahmed


Mead, Hecht, Conklin & Gallagher, LLP, Mamaroneck
(Elizabeth M. Hecht of counsel), for appellants.
The Law Office of RenÉ Myatt, Hollis (RenÉ Myatt of counsel),
for respondents.
Order, Supreme Court, New York County (Paul Wooten, J.), entered March 9, 2009, which, insofar as appealed from as limited by the briefs, denied defendants' motion for summary judgment dismissing the claims that infant plaintiff sustained a permanent loss of use of a body organ, member, function or system, a permanent consequential limitation of use of a body organ or member and/or a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.
Defendants did not meet their burden of establishing prima facie that infant plaintiff did not sustain permanent loss or permanent consequential or significant limitations as a result of being struck by defendants' vehicle as he was crossing the street. Both the infant and his mother testified at their depositions on May 29, 2007, and reported to defendants' examining physician, that the child began having headaches three weeks after the accident for which his doctors prescribed 400 milligrams of ibuprofen, and that the headaches continued, particularly in the summertime. Thereafter, defendants referred the infant plaintiff to an orthopedic surgeon and a doctor specializing in plastic and reconstructive surgery for examination. Defendants submitted the doctors' letters opining that the infant had no disabilities from an orthopedic point of view or from the scarring on his forehead. However, defendants failed to submit an opinion from a neurologist who could have opined whether the infant's headaches and other symptoms were causally related to the accident.
It is thus irrelevant whether plaintiffs presented sufficient evidence in opposition.
Schwartz v. Vukson


Appeal from an order of the Supreme Court, Erie County (Joseph R. Glownia, J.), entered October 30, 2008 in a personal injury action. The order granted the motion of plaintiff for partial summary judgment on liability.

BAXTER SMITH & SHAPIRO, P.C., WEST SENECA (LOUIS B. DINGELDEY, JR., OF COUNSEL), FOR DEFENDANT-APPELLANT.
BERGEN & SCHIFFMACHER, LLP, BUFFALO (JOSEPH R. BERGEN OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs and the motion is denied.
Memorandum: Plaintiff commenced this action to recover damages for injuries she allegedly sustained when the vehicle driven by her collided with the vehicle driven by defendant's decedent. The complaint, as amplified by the bill of particulars, alleges that plaintiff sustained a serious injury under four specified categories of serious injury (see Insurance Law § 5102 [d]). Plaintiff thereafter moved for partial summary judgment on liability, specifically addressing the issues of negligence and serious injury (see generally Ruzycki v Baker, 301 AD2d 48, 51-52). In her motion, however, plaintiff addressed only two of the four categories of serious injury set forth in the bill of particulars, i.e., the permanent consequential limitation of use and the significant limitation of use categories of serious injury and, in granting the motion, Supreme Court did not address either of the two statutory categories.
We agree with defendant that the court erred in granting that part of plaintiff's motion with respect to the issue of negligence. Plaintiff met her initial burden with respect to that issue by submitting her deposition testimony in which she testified that the accident occurred when decedent backed his vehicle out of his son's driveway into the street and in front of her vehicle, which she was operating at a reasonable speed in the proper lane of travel. Plaintiff was " entitled to anticipate that other vehicles [would] obey the traffic laws that require them to yield' " (Rak v Kossakowski, 24 AD3d 1191, 1192). Defendant raised a triable issue of fact, however, by submitting an affidavit in which he stated that decedent's vehicle never left the driveway, and that the tire tracks left by plaintiff's vehicle prior to the accident were on the shoulder of the street, outside the proper lane of travel. Contrary to plaintiff's contention, the questioning of defendant during his deposition did not concern the subject matter addressed in his affidavit. Thus, under the circumstances of this case, we conclude that the statements of defendant in his affidavit do not contradict his deposition testimony, and the submission of defendant's affidavit in opposition to the motion is not merely an attempt to raise a feigned issue of fact (cf. Shpizel v Reo Realty & Constr. Co., 288 AD2d 291; see generally Hernandez v Bethel United Methodist Church of N.Y., 49 AD3d 251, 253).
We also agree with defendant that the court erred in granting that part of plaintiff's motion with respect to serious injury under the permanent consequential limitation and significant limitation of use categories of serious injury. Although plaintiff established that she sustained a herniated disc and has a significant limitation of use of her spine, on the record before us there is an issue of fact whether plaintiff's injuries were the result of a preexisting degenerative condition and plaintiff's morbid obesity (see generally Covert v Samuel, 53 AD3d 1147, 1148-1149; Chmiel v Figueroa, 53 AD3d 1092, 1093). Finally, there is a further issue of fact whether plaintiff's injuries are fully healed (see generally Dann v Yeh, 55 AD3d 1439, 1440; Frizzell v Giannetti, 34 AD3d 1202, 1203; Sandt v New York Racing Assn., 289 AD2d 218, 219).
Sierson v. Gacek


Appeal from an amended order of the Supreme Court, Oneida County (John W. Grow, J.), entered January 2, 2009 in a personal injury action. The amended order, insofar as appealed from, denied in part the motion of defendants for summary judgment.

COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (JENNIFER L. NUHFER OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
LAW OFFICES OF GUSTAVE J. DETRAGLIA, JR., ESQ., UTICA (GUSTAVE J. DETRAGLIA, III, OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the amended order insofar as appealed from is unanimously reversed on the law without costs, the motion is granted in its entirety and the complaint is dismissed.
Memorandum: Plaintiffs commenced this action seeking damages for injuries allegedly sustained by Brian E. Sierson (plaintiff) when the vehicle he was operating was rear-ended by a vehicle operated by defendant John J. Gacek and owned by defendants. Defendants moved 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). Supreme Court granted the motion only insofar as plaintiffs alleged that plaintiff sustained a serious injury with respect to the 90/180 category. We conclude that the court should have granted the motion in its entirety, thus determining that plaintiff did not sustain a serious injury with respect to the permanent loss of use, permanent consequential limitation of use or significant limitation of use categories, which were the remaining categories of serious injury set forth in the bill of particulars. Defendants met their burden on the motion "by establishing through competent medical evidence that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d)" under those three remaining categories (Cullen v Treen, 30 AD3d 1086, 1087; see generally Zuckerman v City of New York, 49 NY2d 557, 562), and plaintiffs failed to raise an issue of fact by submitting the affidavits of plaintiff and plaintiff's neurologist. The affidavits were "based solely on plaintiff's subjective complaints of pain" and numbness (Cullen, 30 AD3d at 1087; see Meyer v Carney, 187 AD2d 931; see also Toure v Avis Rent A Car Sys., 98 NY2d 345, 350). Furthermore, plaintiff's neurologist "did not set forth the tests he conducted or their results to support his conclusions" that plaintiff sustained an injury to the pudendal nerve and that plaintiff would have difficulty conceiving children (Burke v Carney, 37 AD3d 1107, 1108).
Bovis v. Crab Meadow Enterprises, Ltd

Andrea G. Sawyers, Melville, N.Y. (David R. Holland and
Dominic P. Zafonte of counsel), for third-party defendant-
appellant Picone Energy Systems.
Brody, O'Connor & O'Connor, Northport, N.Y. (Scott A.
Brody and Patricia A. O'Connor of counsel),
for third-party defendant-appellant
Sirius America Ins. Co.
Sanders, Sanders, Block, Woycik, Vieener & Grossman, P.C.,
Mineola, N.Y. (Belinda R. Boone of
counsel), for plaintiffs-respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., and a third-party action for indemnification and contribution from the third-party defendant Picone Energy Systems and for a judgment declaring that the third-party defendant Sirius America Ins. Co. is obligated to defend and indemnify the defendants third-party plaintiffs in the main action, (1) the third-party defendant Sirius America Ins. Co. appeals from so much of an order of the Supreme Court, Suffolk County (Spinner, J.), dated January 18, 2008, as denied its motion for summary judgment declaring that it is not obligated to defend and indemnify the defendants third-party plaintiffs Crab Meadow Enterprises, Ltd., D. Kummer Construction Co., and Kummer Construction Co. in the main action, and the third-party defendant Picone Energy Systems separately appeals, as limited by its brief, from so much of the same order as denied its cross motion for summary judgment dismissing the third-party complaint insofar as asserted against it, and (2) the third-party defendant Sirius America Ins. Co. appeals from so much of an order of the same court dated July 21, 2008, as, upon reargument, adhered to the original determination denying its motion for summary judgment, and the defendant Picone Energy Systems separately appeals, as limited by its brief, from so much of the same order as, upon reargument, adhered to the original determination denying its cross motion for summary judgment.
ORDERED that the appeals from the order dated January 18, 2008, are dismissed, without costs or disbursements, as that order was superseded by the order dated July 21, 2008, made upon reargument; and it is further,
ORDERED that the order dated July 21, 2008, is affirmed insofar as appealed from, without costs or disbursements.
On October 22, 2002, the plaintiff Gianni Bovis (hereinafter the injured plaintiff), an employee of the third-party defendant Picone Energy Systems (hereinafter Picone), allegedly was injured when he fell from a scaffold while working for Picone. Picone was a subcontractor of the defendants third-party plaintiffs Crab Meadow Enterprises Ltd., D. Kummer Construction Co., and Kummer Construction Co. (hereinafter collectively the Crab Meadow defendants). The Crab Meadow defendants' insurer was the third-party defendant Sirius America Insurance Co. (hereinafter Sirius). The injured plaintiff and his wife, suing derivatively, commenced an action against, among others, the Crab Meadow defendants, alleging common-law negligence and violations of Labor Law §§ 200, 240(1), and 241(6). The Crab Meadow defendants commenced a third-party action seeking indemnification and contribution from Picone, and a judgment declaring that Sirius was obligated to defend and indemnify them in the main action.
The Supreme Court properly denied Picone's cross motion for summary judgment dismissing the third-party complaint insofar as asserted against it. "Workers' Compensation Law § 11 bars a third-party action for contribution or indemnification against an employer when its employee is injured in a work-related accident unless the employee has sustained a grave injury' or the claim for contribution or indemnification is based upon a provision in a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution to or indemnification of the claimant or person asserting the cause of action for the type of loss suffered'" (Fischer v Waldbaum's, Inc., 7 AD3d 756, 756, quoting Workers' Compensation Law § 11; see Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 585; Guijarro v V.R.H. Constr. Corp., 290 AD2d 485, 486; Potter v M.A. Bongiovanni, Inc., 271 AD2d 918, 919).
Here, the third-party defendant Picone failed to establish, prima facie, its entitlement to judgment as a matter of law. Specifically, Picone failed to establish that it did not enter into an indemnification agreement with the Crab Meadow defendants in 2002 prior to the injured plaintiff's accident.
Further, the court properly denied Sirius's motion for summary judgment declaring that it is not obligated to defend and indemnify the Crab Meadow defendants in the main action. An insurer's obligation to defend is broader than its obligation to indemnify, and arises whenever the allegations in a complaint against the insured fall within the scope of the risk undertaken by the insurer (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310). "To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175; see Fortress Ins. Co. v Kollander, 41 AD3d 423, 424). Here, Sirius, the insurer of the Crab Meadow defendants, failed to establish, prima facie, its entitlement to judgment as a matter of law. Sirius failed to submit any evidence establishing that there was no possible basis upon which it may be obligated to indemnify the Crab Meadow defendants since there was no evidence that Picone and the Crab Meadow defendants did not enter into an indemnification agreement in 2002. Accordingly, Picone's and Sirius's failure to make a prima facie showing of entitlement to judgment as a matter of law required a denial of their respective motions regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853) and, thus, upon reargument, the Supreme Court correctly adhered to its determinations denying their motions.
SKELOS, J.P., COVELLO, SANTUCCI and BALKIN, JJ., concur.
Felice v. Chubb & Son, Inc.


Goodman & Jacobs LLP, New York, N.Y. (Judith F. Goodman
and Lester Chanin of counsel), for appellants-respondents.
Goidel & Siegel, LLP, New York, N.Y. (Andrew B. Seigel of
counsel), for respondents-appellants.

DECISION & ORDER
In an action for a judgment declaring that the defendants are obligated to defend and indemnify the plaintiffs in an underlying wrongful death action entitled Zaccaria v Plagianakos, pending in the Supreme Court, Kings County, under Index No. 30675/07, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Ruchelsman, J.), dated March 18, 2008, as denied their motion for summary judgment, and the plaintiffs cross-appeal from so much of the same order as denied their motion for summary judgment.
ORDERED that the order is affirmed, without costs or disbursements.
An insurance carrier must give timely notice of a disclaimer "as soon as is reasonably possible" after it first learns of the accident or grounds for disclaimer of liability (Insurance Law § 3420[d][2]; see Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d 595, 595; Mount Vernon Hous. Auth. v Public Serv. Mut. Ins. Co., 267 AD2d 285, 285-286). It is the insurance carrier's burden to explain the delay in notifying the insured or injured party of its disclaimer, and the reasonableness of any such delay must be determined from the time the insurance carrier was aware of sufficient facts to disclaim coverage (see Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d at 595; Prudential Prop. & Cas. Ins. v Persaud, 256 AD2d 502, 504). Further, the issue of whether a disclaimer was unreasonably delayed is generally a question of fact, requiring an assessment of all relevant circumstances surrounding a particular disclaimer (see Continental Cas. Co. v Stradford, 11 NY3d 443, 449; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 69; Mount Vernon Hous. Auth. v Public Serv. Mut. Ins. Co., 267 AD2d at 286). Cases in which the reasonableness of an insurer's delay may be decided as a matter of law are exceptional and present extreme circumstances (see Continental Cas. Co. v Stradford, 11 NY3d at 449; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1030; Allstate Ins. Co. v Gross, 27 NY2d 263, 270). We agree with the Supreme Court that there is a question of fact as to whether the defendants' disclaimer was unreasonably delayed (see Pawley Interior Contr., Inc. v Harleysville Ins. Cos., 11 AD3d at 596; Mount Vernon Hous. Auth. v Public Serv. Mut. Ins. Co., 267 AD2d at 286). 
Malmon v. East 84th Apartment Corp

Lawrence, Worden, Rainis & Bard, P.C., Melville (Roger B.
Lawrence of counsel), for appellants.
Devereaux Baumgarten, New York (Michael J. Devereaux of
counsel), for respondent.
Order, Supreme Court, New York County (Louis B. York, J.), entered October 22, 2008, which, to the extent appealed from, denied third-party defendants Marble Unique, LLC and Hartford Insurance Company of the Midwest's motions for summary judgment dismissing the declaratory judgment action of third-party plaintiffs Concord Restoration Inc. and Liberty International a/s/o Concord Restoration Inc. for indemnification and a declaration of their duty to defend and which, inter alia, granted Concord Restoration Inc. and Liberty International a/s/o Concord Restoration Inc.'s cross motions for summary judgment to the extent of declaring that Hartford had a duty to defend them in the underlying action, unanimously modified, on the law, to declare as well that the aforementioned third-party defendants had no obligation to indemnify, and otherwise affirmed, without costs.
We find that Concord had notice of the Workers' Compensation Board hearing and that its worker's compensation carrier appeared and presented testimony therein. As such, Concord was bound by the WCB determination that Hi Tech, and not Marble, was the underlying plaintiff's employer at the time of the accident (see Liss v Trans Auto Sys., 68 NY2d 15, 21 [1986]). Even without regard to the WCB determination, summary judgment on this issue should have been granted to Marble. The evidence that Hi Tech was on the work site at the time of the accident and that Marble was not on site, had ceased work months before and did not resume work until months after the accident established movant's entitlement to judgment. Concord presented no evidence to the contrary that would require a trial. However, because the claim against Marble, ultimately unavailing, on its face fell within the ambit of its insurance, Hartford had the duty to defend. As such, summary judgment was properly granted to Concord on that part of its claim (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708 [2007]; Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663 [1981]).
THIS CONSTITUTES THE DECISION AND ORDER
Rhodes v. Liberty Mutual Insurance Company


Jaffe & Asher, LLP, New York, N.Y. (Marshall T. Potashner of
counsel), for appellant.
Richard A. Fogel, P.C., Islip, N.Y., for respondents.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the defendant Liberty Mutual Insurance Co. is obligated to defend and indemnify the plaintiff Devon Rhodes in an underlying personal injury action entitled David v Robins, pending in the Supreme Court, Suffolk County, under Index No. 08-16360, the defendant Liberty Mutual Insurance Co. appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Molia, J.), dated April 27, 2009, as granted that branch of the plaintiffs' cross motion which was for summary judgment on so much of the first cause of action as sought a judgment declaring that the defendant Liberty Mutual Insurance Co. is obligated to defend the plaintiff Devon Rhodes in the underlying personal injury action in accordance with the terms of the subject homeowner's insurance policy.
ORDERED that the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendant Liberty Mutual Insurance Co. is obligated to defend the plaintiff Devon Rhodes in the underlying personal injury action in accordance with the terms of the subject homeowner's insurance policy.
Preliminarily, the Supreme Court did not err in considering the plaintiffs' cross motion for summary judgment, which was made before issue was joined, since the parties charted a summary judgment course by treating the motion as if issue had been joined (see Becher v Feller, 64 AD3d 672, 676-677; Roche v Claverack Co-op. Ins. Co., 59 AD3d 914, 916; Kline v Town of Guilderland, 289 AD2d 741, 741 n 1).
Generally, it is the insured's burden to establish coverage and the insurer's burden to prove the applicability of an exclusion (see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218-220; Barkan v New York Schools Ins. Reciprocal, 65 AD3d 1061). Moreover, an insurer's duty to defend is broader than its duty to indemnify, and arises whenever the allegations in the complaint in the underlying action, construed liberally, suggest a reasonable possibility of coverage, or where the insurer has actual knowledge of facts establishing such a reasonable possibility (see Frontier Insulation Contrs., v Merchants Mut. Ins. Co., 91 NY2d 169, 175; Burlington Ins. Corp. v Guma Constr. Corp.,AD3d, 2009 NY Slip Op. 07216 [2d Dept 2009]; City of New York v Insurance Corp. of N.Y., 305 AD2d 443). As such, the duty to defend arises if the claims against the insured arguably arise from a covered event, even if the claims may be meritless or not covered, either because the insured is not liable or because the event is later determined outside the policy's scope of coverage (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137; Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65-66; Physicians' Reciprocal Insurers v Loeb, 291 AD2d 541, 542). An insurer can be relieved of its duty to defend only "if it establishes as a matter of law that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision" (Allstate Ins. Co. v Zuk, 78 NY2d 41, 45; see Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652; Physicians' Reciprocal Insurers v Giugliano, 37 AD3d 442, 444).
Here, the plaintiffs established that Devon Rhodes (hereinafter Rhodes) was entitled to coverage under the homeowner's insurance policy issued to her parents (see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d at 218, 220; Barkan v New York Schools Ins. Reciprocal, 65 AD3d 1061). In contrast, the defendant Liberty Mutual Insurance Co. (hereinafter Liberty) failed to establish that "there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision" (Allstate Ins. Co. v Zuk, 78 NY2d at 45). The complaint in the underlying action alleges, inter alia, that while attending a teenage party at which alcohol was served, Rhodes' "recklessness, carelessness, and negligence" caused serious personal injuries to Alava David, the plaintiff in the underlying action. Construing the complaint liberally, a possible legal or factual basis exists by which Rhodes's conduct may be deemed accidental and, therefore, a covered "occurrence" under the subject Liberty policy, and not excluded from coverage on the ground that the personal injuries allegedly sustained by David were expected or intended by Rhodes (see Frontier Insulation Contrs., v Merchants Mut. Ins. Co., 91 NY2d 169, 175; City of New York v Insurance Corp. of N.Y., 305 AD2d 443; see also Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137-138; Merchants Ins. of N.H., Inc. v Weaver, 31 AD3d 945).
Liberty's argument that obligating it to defend Rhodes in the underlying action raises a conflict of interest is not properly before this Court, as Liberty failed to raise it before the Supreme Court (see Granderson v City of White Plains, 29 AD3d 739; Kohilakis v Town of Smithtown, 167 AD2d 513).
Since the complaint asserts a cause of action for a declaratory judgment, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring that Liberty is obligated to defend Rhodes in the underlying personal injury action pursuant to the subject homeowner's insurance policy (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
Ayala v. Katsionis


Richard T. Lau, Jericho, N.Y. (Keith E. Ford of counsel), for
appellant.
Siben and Siben LLP, Bay Shore, N.Y. (Alan G. Faber of
counsel), for respondent and plaintiff.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals from so much of an order of the Supreme Court, Suffolk County (Weber, J.), dated December 11, 2008, as denied that branch of his motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Jose Ayala on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the defendant's motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Jose Ayala on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is granted.
The defendant met his prima facie burden of showing that the plaintiff Jose Ayala (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957).
In opposition, the plaintiff failed to raise a triable issue of fact. The affidavit of the plaintiff's treating chiropractor, Dr. Craig Selzer, along with his annexed report, were insufficient to raise a triable issue of fact, since it is clear that Dr. Selzer based his conclusions on the unsworn report of Dr. Robert Diamond concerning the plaintiff's lumbar spine (see Sorto v Morales, 55 AD3d 718; 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). Moreover, neither the plaintiff nor Dr. Selzer explained the two-year and seven-month gap in the plaintiff's treatment between March 13, 2006 and October 3, 2008 (see Pommells v Perez, 4 NY3d 566, 574; see also Rivera v Bushwick Ridgewood Props., Inc., 63 AD3d 712; Dantini v Cuffie, 59 AD3d 490; Caracci v Miller, 34 AD3d 515; Cohen v City of New York, 8 AD3d 320).
Modeste v. Mercier


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellant.
Morrison & Wagner, LLP, New York, N.Y. (Eric Morrison of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant Jean B. Mercier appeals from an order of the Supreme Court, Kings County (Ambrosio, J.), dated December 8, 2008, which denied her motion for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
The appellant made a prima facie 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; Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). In opposition, the plaintiff submitted, inter alia, affirmations from one of his treating physicians, his treating orthopedic surgeon, and a radiologist. These submissions raised a triable issue of fact as to whether he sustained a serious injury to the cervical and/or lumbar regions of his spine as a result of the subject accident under the permanent consequential limitation of use category and/or the significant limitation of use category of Insurance Law § 5102(d) (see Wagenstein v Haoli, 64 AD3d 584; Su Gil Yun v Barber, 63 AD3d 1140; Pearson v Guapisaca, 61 AD3d 833; Williams v Clark, 54 AD3d 942; Casey v Mas Transp., Inc., 48 AD3d 610; Acosta v Rubin, 2 AD3d 657).
Contrary to the appellant's contention on appeal, the plaintiff, via his submissions in opposition, addressed and refuted the findings of the appellant's radiologist concerning the issue of degeneration.
Scarnici v. Jean-Louis


Beck & Strauss, PLLC, Uniondale, N.Y. (Leland S. Beck of
counsel), for appellant.
Mead, Hecht, Conklin & Gallagher, LLP, Mamaroneck, N.Y.
(Elizabeth M. Hecht of counsel), for
respondents Matthew Jean-Louis and
Jacob Levy.
Mendolia & Stenz, Westbury, N.Y. (Stuart M. Kurland of
counsel), for respondent Kevin D. Sexton.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Agate, J.), dated May 13, 2009, as granted the motion of the defendants Matthew Jean-Louis and Jacob Levy, and that branch of the separate motion of the defendant Kevin D. Sexton, which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs payable to the plaintiff by the defendants appearing separately and filing separate briefs, the motion of the defendants Matthew Jean-Louis and Jacob Levy, and that branch of the separate motion of the defendant Kevin D. Sexton, which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) are denied, and so much of the order as denied, as academic, that branch of the motion of the defendant Kevin D. Sexton which was for summary judgment dismissing the complaint insofar as asserted against him on the ground of no liability, is vacated, and the matter is remitted to the Supreme Court, Queens County, for a determination of that branch of the motion on the merits.
There are triable issues of fact with respect to whether the plaintiff sustained a serious injury under Insurance Law § 5102(d). Consequently, the Supreme Court should have denied the motion of the defendants Matthew Jean-Louis and Jacob Levy, and that branch of the separate motion of the defendant Kevin D. Sexton, which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Trigg v Gradischer, 6 AD3d 525).
In light of our determination, we remit the matter to the Supreme Court, Queens County, for a determination on the merits of that branch of Sexton's motion which was for summary judgment dismissing the complaint insofar as asserted against him on the ground of no liability.
Spanos v. Harrison


Richard T. Lau, Jericho, N.Y. (Kathleen E. Fioretti of counsel),
for appellant.
Scott D. Sklar, Hicksville, N.Y., for respondents.

DECISION & ORDER
In two related actions to recover damages for personal injuries, etc., the defendant Thomas R. Harrison appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Spinola, J.), entered February 3, 2009, as denied that branch of his motion which was for summary judgment dismissing the complaint in Action No. 2 insofar as asserted against him on the ground that the plaintiff Markus Berke did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed insofar as appealed from, with costs.
The defendant Thomas R. Harrison failed to meet his prima facie burden of demonstrating on his motion for summary judgment that Markus Berke, a plaintiff in Action No. 2 (hereinafter the injured plaintiff), did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of his motion, Harrison relied upon, among other things, the affirmed medical reports of Dr. Steven Ender and Dr. Charles J. Kandler. Initially, in the report of Dr. Ender, Harrison's examining neurologist, he set forth a range of motion finding concerning the injured plaintiff's lumbar spine but failed to compare that finding to what is normal (see Giammanco v Valerio, 47 AD3d 674; Nociforo v Penna, 42 AD3d 514; McNulty v Buglino, 40 AD3d 591; Osgood v Martes, 39 AD3d 516; McLaughlin v Rizzo, 38 AD3d 856; Bluth v WorldOmni Fin. Corp., 38 AD3d 817; Harman v Busch, 37 AD3d 537). While Dr. Ender noted that the injured plaintiff was able to bend over, pick up his sneakers and tie them, he failed to correlate that to his finding that the injured plaintiff was only able to forward flex to "approximately 70 degrees" upon examination (see Gibson-Wallace v Dalessandro, 58 AD3d 679).
Moreover, in the report of Dr. Kandler, Harrison's examining urologist, the injured plaintiff was actually diagnosed with erectile dysfunction, one of the injuries he alleged in his bill of particulars to have sustained in the subject accident. While Dr. Kandler did not feel that the erectile dysfunction he diagnosed was causally related to the subject accident, he failed to set forth the foundation for that conclusion, especially since he opined that further testing was required to determine the cause (see Franchini v Palmieri, 1 NY3d 536).
Since Harrison failed to meet his prima facie burden, it is unnecessary to consider whether the papers submitted by the injured plaintiff in opposition were sufficient to raise a triable issue of fact (see Giammanco v Valerio, 47 AD3d at 675; Coscia v 938 Trading Corp., 283 AD2d 538).

Diamond State Insurance Company, as Subrogee v. Utica First Insurance Company.


Farber Brocks & Zane L.L.P., Mineola (Audra S. Zane of
counsel), for appellant.
Steven G. Fauth, New York, for respondent.
Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered January 13, 2009, which, to the extent appealed from as limited by the briefs, granted plaintiff's cross motion to strike the answer for failure to comply with disclosure obligations, unanimously affirmed, with costs.
This is a subrogation action involving a roof fire. Plaintiff sought to obtain other roofing exclusion claim files in defendant's possession. Defendant insurer has exhibited a pattern of repeated noncompliance with orders in this case and by this Court in a prior appeal (see 37 AD3d 160), giving rise to an inference that its conduct has been willful and contumacious (see Olmstead v Pizza Hut of Am., Inc., 61 AD3d 1238, 1240-1241 [2009]). Defendant's behavior was particularly reprehensible because defendant not only violated the motion court's conference orders, but also endeavored to undermine an appellate order by limiting its search to only a small percentage of its potentially relevant files. Defendant contends that the striking of its pleadings was unwarranted because plaintiff had not submitted proof of any good faith effort to resolve its disagreement with defendant (see 22 NYCRR 202.7[a][2]). But in light of defendant's multiple delays and violations of repeated court orders, its numerous improper objections to practically every demand for disclosure made by plaintiff, its unjustifiable limitation of the search of its files, its continued refusal to produce responsive documents and its utter failure to account for its behavior, the motion court, under the unique facts of this case, appropriately found it would have been futile to compel plaintiff to confer once more with defendant as a condition for moving to strike its pleadings (see Carrasquillo v Netsloh Realty Corp., 279 AD2d 334 [2001]).
Peerless Insurance Company v. Micro Fibertek, Inc.


Goldberg Segalla LLP, Mineola, N.Y. (Jeffrey L. Kingsley and Joanna
M. Roberto), for appellant.
Andrea G. Sawyers, Melville, N.Y. (David R. Holland of counsel),
for respondent.


DECISION & ORDER
In an action, inter alia, for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendant Micro Fibertek, Inc., in an underlying personal injury action entitled Wallerstein v Crown Royal Ventures, LLC, pending in the Supreme Court, Suffolk County, under Index No. 36142/06, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Weber, J.), dated May 29, 2008, which, inter alia, granted the separate motions of the defendant Crown Royal Ventures, LLC, for leave to amend its answer and for summary judgment declaring that the plaintiff is obligated to defend and indemnify the defendant Micro Fibertek, Inc., in the underlying action.
ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the plaintiff is obligated to defend and indemnify Micro Fibertek, Inc., in the underlying action.
Initially, we reject the plaintiff's contention that the Supreme Court erred in considering the motion of the defendant Crown Royal Ventures, LLC (hereinafter Crown Royal), for summary judgment by virtue of a prior order granting the plaintiff's motion for a default judgment against the defendant Micro Fibertek, Inc. (hereinafter Micro Fibertek). The prior order did not determine the merits of the issues raised, and did not constitute the law of the case (see Allstate Ins. v Liberty Lines Tr., Inc., 50 AD3d 712, 713; Meekins v Town of Riverhead, 20 AD3d 399, 400; see also Kaufman v. Eli Lilly & Co., 65 NY2d 449, 457).
The Supreme Court properly awarded summary judgment to Crown Royal as an additional insured under the relevant insurance policy. In response to Crown Royal's prima facie showing of entitlement to judgment as a matter of law, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Zuckerman v City of New York, 49 NY2d 557, 562), as to whether a policy exclusion precluded coverage, or as to whether notice of the claim was timely given.
Furthermore, Crown Royal's motion for summary judgment was not premature, since the plaintiff failed to offer an evidentiary basis to suggest that discovery might lead to relevant evidence (see Lauriello v Gallotta, 59 AD3d 497, 499; Conte v Frelen Assoc., LLC, 51 AD3d 620, 621;  Kimyagarov v Nixon Taxi Corp., 45 AD3d 736, 737).
The Supreme Court also properly granted Crown Royal's motion for leave to amend its answer. Leave to amend pleadings should be freely given provided that the amendment is not palpably insufficient, does not prejudice or surprise the opposing party, and is not patently devoid of merit (see Gitlin v Chirinkin, 60 AD3d 901, 902). A determination whether to grant such leave is within the Supreme Court's broad discretion, and the exercise of that discretion will not be lightly disturbed (id.). Here, Crown Royal's proposed amendment was neither palpably insufficient nor patently devoid of merit, and the plaintiff did not demonstrate that it would suffer prejudice or surprise if leave to amend were granted. Further, in light of Crown Royal's allegation that the plaintiff delayed in complying with its discovery demand by forwarding it a copy of the relevant insurance policy almost a year after it had initially requested it, the Supreme Court providently exercised its discretion in rejecting the contention that Crown Royal's motion for leave to amend the answer was untimely (see e.g. Gitlin v Chirinkin, 60 AD3d at 902; cf Peteroy v St. Vincent's Med. Ctr. of Richmond, 278 AD2d 295).
The plaintiff's remaining contention is without merit.
Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the plaintiff is obligated to defend and indemnify Micro Fibertek in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
Natural Organics Inc. v Anderson Kill & Olick, P.C.,


Hinshaw & Culbertson LLP, New York (John Richard Supple
of counsel), for appellant.
Ropers, Majeski, Kohn & Bentley, New York (Jung H. Park of
counsel), for respondent.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered June 24, 2009, which, to the extent appealed from, denied defendants' CPLR 3211 motion to dismiss the legal malpractice and breach of contract causes of action, and permitted plaintiff leave to replead its unfair business practice cause of action, unanimously modified, on the law, the motion granted to the extent of dismissing the legal malpractice cause of action with prejudice, dismissing the breach of contract cause of action in part as indicated herein, withdrawing permission to replead the unfair business practice cause of action, and otherwise affirmed without costs.
Plaintiff alleged that it retained defendant law firm to bring an action against an insurance company. After several years of litigation, plaintiff agreed to settle the matter for $750,000, which was less than the $1.3 million claimed value of the lawsuit. Several years after the settlement, the law firm informed plaintiff that Brian Valery, who had held himself out as an attorney and worked on plaintiff's case, was in fact not licensed to practice law. Plaintiff then brought this action, alleging it would have obtained a more favorable result in the insurance litigation if the firm had exercised more care with regard to Valery's employment. The complaint sought damages for the difference between the purported $1.3 million value of plaintiff's insurance claim and the $750,000 settlement amount, as well as all of the legal fees billed by the law firm for the entire matter.
Allegations in support of a claim of legal malpractice must at least "permit the inference that, but for defendants' [alleged negligence], plaintiff would not have sustained actual, ascertainable damages" (Pyne v Block & Assoc., 305 AD2d 213 [2003]). Since plaintiff failed to allege facts that "sufficiently demonstrate a causal relationship between purported conduct on the part of defendants and damages suffered by plaintiff" (Gall v Summit, Rovins & Feldesman, 222 AD2d 225, 226 [1995], lv dismissed 88 NY2d 919 [1996]), the malpractice claim is dismissed. The dismissal is with prejudice, since repleading would be barred by the statute of limitations (see CPLR 214[6]; Byron Chem. Co., Inc. v Groman, 61 AD3d 909, 910 [2009]).
That part of the breach of contract cause of action alleging a breach of professional standards and seeking damages for the alleged shortfall from the settlement and all of plaintiff's legal fees is dismissed as duplicative of the malpractice claim (see Rivas v Raymond Schwartzberg & Assoc., PLLC, 52 AD3d 401 [2008]). However, to the extent that plaintiff's breach of contract claim rests on the fees it paid for Valery's services, plaintiff has pleaded sufficient facts to state a claim. The complaint alleges that the law firm continuously held out Valery as a licensed attorney and billed in excess of $70,000 for his services, even though it is undisputed that he was, in fact, not an attorney. At this early stage of the proceedings, it cannot be said that these particular damages are too speculative (see Fielding v Kupferman, 65 AD3d 437, 442 [2009]).
Plaintiff should not be permitted to replead its unfair business practice cause of action to assert a claim under General Business Law § 349 because it cannot show that defendants, by employing Valery, engaged in acts or practices having a broad
impact on consumers at large (see New York Univ. v Continental Ins. Co., 87 NY2d 308, 320 [1995]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: NOVEMBER 17, 2009
DINEEN v RECHICHI


Appeal from an order of the Supreme Court, Steuben County (Peter C. Bradstreet, A.J.), entered July 1, 2008 in a personal injury action. The order granted the motion of defendants Daniel Rechichi and Christine Rechichi for summary judgment dismissing the complaint against them and denied the cross motion of plaintiff for partial summary judgment.


PULOS AND ROSELL, LLP, HORNELL (WILLIAM W. PULOS OF COUNSEL), FOR PLAINTIFF-APPELLANT.
JAECKLE FLEISCHMANN & MUGEL, LLP, BUFFALO (BEVERLEY S. BRAUN OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.


It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.


Opinion by Peradotto, J.: In this appeal, we are asked to determine whether Daniel Rechichi and Christine Rechichi (defendants) are entitled to the exemption from liability afforded to owners of one- and two-family dwellings under Labor Law § 240 (1) and § 241 (6) where plaintiff seeks damages for injuries he sustained while repairing a barn on defendants' property, which did not contain a single-family dwelling at the time of the accident. Under the circumstances of this case, we conclude that Supreme Court properly determined that the homeowner exemption applies to defendants because they intended to build a single-family residence on the property at the time of the accident and the barn was used solely for residential purposes.

Facts and Procedural History

Defendants and two other defendants who are not parties to this appeal are the joint owners of approximately 130 acres of property bordering County Route 113 in Hammondsport. When defendants purchased the undeveloped property in 2001, they planned to build a home, a barn and a pond on a six-acre parcel of the property. In February 2003, defendants hired plaintiff, a self-employed carpenter, to construct a pole barn on the property. On June 17, 2003, plaintiff fell from a ladder while inspecting the roof of the barn for leaks. At the time of the accident, the barn was the only structure located on the property, although defendants subsequently constructed a single-family home on the property.
Plaintiff commenced this action asserting causes of action for violations of Labor Law §§ 200, 240 (1) and § 241 (6), as well as common-law negligence. Defendants moved for summary judgment dismissing the complaint against them on the grounds that they are entitled to the homeowner exemption under Labor Law § 240 (1) and § 241 (6) and that they are not liable under the Labor Law § 200 and common-law negligence causes of action because they did not direct or control plaintiff's work. Plaintiff cross-moved for partial summary judgment on the Labor Law § 240 (1) cause of action and consented to dismissal of the section 200 cause of action. The court granted defendants' motion and denied plaintiff's cross motion. The court determined with respect to sections 240 (1) and 241 (6) of the Labor Law that defendants were entitled to the homeowner exemption therein because the record established that they intended to use the barn as storage for their personal belongings, not for any commercial purpose, and that the barn was part of defendants' plan to construct a personal residence. We note at the outset, inasmuch as plaintiff does not challenge the dismissal of his common-law negligence cause of action, any issue with respect thereto is deemed abandoned (see Ciesinski v Town of Aurora, 202 AD2d 984).
Discussion
Sections 240 (1) and 241 of the Labor Law both exempt from liability "owners of one[-] and two-family dwellings who contract for but do not direct or control the work . . . ." Here, it is undisputed that defendants did not direct or control plaintiff's work, and defendants concede that plaintiff is a covered worker under Labor Law § 240 (1) and § 241 (6). Thus, the sole question presented on this appeal is whether defendants are entitled to the benefit of the statutory exemption for owners of one- and two-family dwellings (see § 240 [1]; § 241 [6]), despite the fact that plaintiff was injured during the construction of a barn and defendants' residence had not yet been constructed at the time of the accident. Although this case involves somewhat novel facts, we conclude that the court properly determined that defendants are entitled to the benefit of the homeowner exemption and are therefore exempt from liability under Labor Law § 240 (1) and § 241 (6).
The homeowner exemption, which was added to Labor Law § 240 (1) and § 241 in 1980, was "intended by the Legislature to shield homeowners from the harsh consequences of strict liability under the provisions of the Labor Law[ and] reflect[s] the legislative determination that the typical homeowner is no better situated than the hired worker to furnish appropriate safety devices and to procure suitable insurance protection" (Bartoo v Buell, 87 NY2d 362, 367). The Memorandum of the Law Revision Commission states in support of the amendments that:
"It is unrealistic to expect the owner of a one[-] or two[-]family dwelling to realize, understand and insure against the responsibility sections 240 and 241 now place upon him [or her] . . . [S]uch owners ought to be secure in the reasonable assumption that if they have no direction or control over the work, they cannot be held strictly liable" (Mem of Law Rev Commn, Bill Jacket, L 1980, ch 670).

The Law Review Commission summarized its position with respect to the amendments in its Recommendation to the 1980 Legislature:
"In short, owners of one[-] and two[-]family dwellings cannot be expected to be in a position, as respects the work, which is dominant over that of the person doing the work . . . This should be true even in the extreme case where the injured worker is a [*3]self-employed, self-proclaimed contractor' without insurance" (Recommendation of Law Rev Commn, Bill Jacket, L 1980, ch 670).
The statutes do not define "dwelling." In light of the remedial purpose of the amendments, however, the Court of Appeals has cautioned against applying "an overly rigid interpretation of the homeowner exemption and [instead has] employed a flexible site and purpose' test to determine whether the exemption applies" (Bartoo, 87 NY2d at 367-368). Under that test, "whether the exemption is available to an owner in a particular case turns on the site and purpose of the work" (Cannon v Putnam, 76 NY2d 644, 650; see also Trala v Egloff, 258 AD2d 924).
As an initial matter that, although plaintiff's accident occurred during the construction of a barn rather than a residence, that fact does not by itself bar application of the homeowner exemption. The courts have not limited the application of the homeowner exemption solely to work performed on the residential structure itself. Indeed, a barn, a garage, or other ancillary structure located on property that also contains a residence clearly falls within the definition of a "dwelling" as interpreted by the courts, so long as the structure serves a residential purpose (see e.g. Lista v Newton, 41 AD3d 1280, 1281-1282 [barn used to store the property of the defendant and to shelter horses owned by her daughter]; Crowningshield v Kim, 19 AD3d 975, 975-977, lv denied 5 NY3d 711 [barn used to store, inter alia, the personal items of the defendants unrelated to their farm business]; Lyon v Kuhn, 279 AD2d 760, 761 [outbuilding used as a garage to store the defendant's possessions]; Farrell v Okeic, 266 AD2d 892 [barn used to store the personal belongings of the defendant, including tools and equipment, and his mother's household furniture]). As the Court of Appeals reasoned in Bartoo, "the fact that the work was performed on the barn and not on the residential home itself does not alter the analysis; the barn, located on [the defendant's] property and used in part for personal storage purposes, is akin to a garage and should be considered an extension of the dwelling within the scope of the homeowner exemption" (87 NY2d at 369). Here, defendant husband testified at his deposition that he used the barn to store household goods, a tractor, an all-terrain vehicle (ATV) and other personal items unrelated to his upholstery business.
Here, however, the issue before us is whether the homeowner exemption applies to property that is intended for use as a single-family residence but on which no dwelling has yet been constructed at the time of the plaintiff's accident, and the plaintiff is injured during the construction of an ancillary structure. Although defendants have not cited, nor has our research uncovered, any case law addressing facts similar to those presented here, we conclude that "the remedial purposes and protective goals underlying the 1980 amendments to Labor Law § 240 (1) and § 241 are best served by extending the dwelling-owner exemption to defendant[s'] situation" (Cannon, 76 NY2d at 651). In our view, the fact that defendants hired plaintiff to build the barn prior to building their home does not deprive them of the benefit of the homeowner exemption inasmuch as the record establishes that defendants intended to build a single-family dwelling on the property and had taken steps to effectuate that plan prior to plaintiff's accident.
It is well established that the "site and purpose" test "must be employed on the basis of the homeowners' intentions at the time of the injury underlying the action" (Allen v Fiori, 277 AD2d 674, 675; see Davis v Maloney, 49 AD3d 385; Pastella v R.S. Hulbert Bldrs., 305 AD2d 998, 999; Moran v Janowski, 276 AD2d 605, 606). Here, defendant husband testified at his deposition that, when he and defendant wife purchased the property in 2001, they planned to construct a home, a barn, and a pond on the property. That plan is documented in a February 2003 application for a building permit to construct the barn, which contains a diagram depicting a barn, a pond, and a circular driveway leading to a structure labeled "[h]ouse in future." Similarly, a March 2003 application for sketch plat review lists the pole barn as the only existing structure and lists "[r]esidential [h]ouse" as the proposed structure. The accompanying survey map depicts the six-acre parcel on County Route 113 containing, inter alia, the site of defendants' future home. Moreover, prior to plaintiff's accident, defendants installed a driveway to provide access to their future house, applied for a proposed subdivision to construct a residence on the property, sought financing for their new home, and entered into a contract to sell their existing residence. We thus conclude that defendants met their burden of establishing the applicability of the homeowner exemption under the facts of this case (see Cansdale v Conn, 63 AD3d 1622, 1623; see generally Zuckerman v City of New York, 49 NY2d 557, 562).
In opposition to the motion, plaintiff failed to raise a triable issue of fact with respect to the residential character of the property or the use of the barn for non-residential purposes (see Cansdale, 63 AD3d at 1623; see generally Zuckerman, 49 NY2d at 562). To the contrary, plaintiff submitted evidence of the actions of defendants subsequent to the accident, which were wholly consistent with their expressed intent to build a home on the property. On July 15, 2003, defendants applied for a permit to build a two-story residential home on the property. Construction of the home commenced in September 2003, and defendants moved into their home in spring 2004. Plaintiff submitted no evidence that any portion of the property was utilized for commercial purposes at the time of the accident, let alone that the barn was used " exclusively for commercial purposes' " (see Cansdale, 63 AD3d at 1623, quoting Bartoo, 87 NY2d at 368). Plaintiff's assertion in an affidavit that, because defendants "had a tractor, loader and ATV with a pond nearby, it made sense this might be a barn for agricultural, commercial or recreational use" was purely speculative and thus was insufficient to raise a triable issue of fact concerning the applicability of the homeowner exemption (see generally Judith M. v Sisters of Charity Hosp., 93 NY2d 932, 934).
To the extent that plaintiff contends that the status of defendant husband as a small business owner removes him from the class of unsophisticated persons that the homeowner exemption is designed to
protect, we note that there is no "separate degree of sophistication' "
analysis under Labor Law §§ 240 and 241 (Sweeney v Sanvidge, 271 AD2d 733, 735, lv dismissed 95 NY2d 931). In any event, that contention lacks merit (see Allen, 277 AD2d at 675).
Conclusion
Accordingly, based on our determination that defendants are entitled to the benefit of the homeowner exemption under Labor Law § 240 (1) and § 241 (6), we conclude that the order should be affirmed.
Entered: November 13, 2009 

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