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Coverage Pointers - Volume XI, No. 25

Dear Coverage Pointers Subscribers, 

 

We are reaching the beginning of the summer recess for most of the appellate courts, so we can expect to see a last flurry of judicial expression over the next very few weeks.  Once the courts go into vacation mode, there is a dramatic slowdown in the number of decisions until shortly after Labor Day. 

 

Nice to be home.  Travels since last issue, besides Albany (see below) included Dallas and Charleston.   

 

Serious Injury Threshold Legislation - the Hangnail Bill

 

I had the opportunity to participate in a legislative roundtable with the chairs of the Assembly and Senate Insurance Committees as the No Fault legislation, presently under consideration, was debated.  The bill, along with our analysis, is reported in our April 30th edition and deserves your closest attention.  If adopted, the No Fault Serious Injury threshold is, for all intents and purposes, reduced to nothing.  A single suture, the removal of a splinter and virtually any other injury would be serious enough to qualify for a pain and suffering award.  Indeed, summary judgment motions would no longer be allowed and every case asserting such an injury would become a jury question.

 

It's an awful piece of legislation, guaranteed to dramatically increase the cost of litigation as virtually every case, no matter how small, would be tried to a jury rather than screened by a judge in a motion for summary judgment.

 

This is not a pro-consumer bill.  Litigants with real disputes will be faced with unfortunate and needless delays as smaller personal injury cases fill up the dockets.  Consumers will surely see an increase in insurance premiums as more and more cases need to be resolved by jury verdict rather than motion and virtually every personal injury will meet the threshold.  Our over-crowded and unpaid judiciary will be flooded with lawsuits without the tools necessary to even pare down the few that might be subject to dismissal on motion.

 

There are approximately 200 threshold appeals a year among the four judicial Departments, an average of 50 per Department or 4 ½ per month.  Considering the that there are over 100,000 personal injury auto accidents a year, very, very few need appellate review.  We suggest that the threshold is not broken, but has provided a very workable framework for over three decades.

 

I commend State Farm, Progressive and the trade organizations who are doing their level best to assure that accurate information is provided to our state legislators.  No Fault reform is necessary to protect us from the cheaters and hucksters who seek to abuse the system.  However, this bill is a turn in the wrong direction.

 

We hope and believe that our legislators understood the criticisms levied against this unfortunate offering by the trade organizations and your editor.  We urge all our readers to stay abreast of this proposal as the Legislature moves towards the end of the legislative session.  Strange and scary things can occur in Albany in the final days of the legislative session and this bill has surely not been put to rest yet.

 

The Two to Read, Maybe Three (I'll see you two Additional Insured Decisions and Raise you a Bi-Economy)

 

If you are going to read two decisions this week, I'd draw your attention to the first two decisions reported in this week's newsletter, the June 3rd Court of Appeals opinion in Regal Construction and the June 8th Second Department opinion in Stellar Mechanical.  They both have to do with the breadth of coverage afforded to additional insureds. 

 

The high court's decision in Regal is another examination of the push and pull between B.P. Air Conditioning broad provision of defense to the AI and the limitations on AI coverage outlined in Worth Construction.  No real surprises in the decision but a good refresher.

 

The Stellar Mechanical decision is an instructive outline of the same questions but deals with both defense and indemnity.  It took a complaint, an amended complaint and a second amended complaint before the allegations in the underlying lawsuit were broad enough to trigger the defense of a party claiming additional insured status.  However, all the party received was a defense, because even in a case eventually settled, indemnity was not awarded because the injuries did not arise out of the named insured's work.

 

As to the third, Jennifer Ehman reports on a lower court case that confuses an insurer's indemnity obligations to an additional insured with insured contract provisions and obligations owing to a named insured.  However, the court, citing Bi-Economy v. Harleysville does award "consequential damages" for breach of contract under a liability policy.  This is one of the first reported decisions that does so. 


One Hundred Years Ago Today

Life requires balance, and the yin and yang in life are reflected in our century look back.  When we think of opposites and balances, we consider hot and cold, dark and light, up and down, good and evil.  One hundred years ago, it was the juxtaposition of wet and dry.

 

Jacques Cousteau's birthday

On the moist side, we celebrate the 100th birthday of the late Jacques-Yves Cousteau, born June 11, 1910.  When we think of the late undersea explorer, we picture the great environmentalist in his ship, the Calypso,  involved in an underwater research project, swimming with the dolphins or some such thing.  Captain Cousteau died in 1997, leaving a great legacy of scientific research and many good memories to those who followed his distinguished career.

 

Oklahoma City Crowns New Capital

On the dry side, we can picture tumbleweeds, the dust bowl and the desert southwest.  On June 11, 1910, the territory Oklahoma, not yet admitted into the union as our 48th state (that happened in 1912), voted to establish a new capital city.  I asked my good friend and great Oklahoma State lawyer, John R. Woodard¸ III of the Tulsa, Oklahoma firm of Feldman, Franden, Woodard & Farris, a past president of the Federation of Defense & Corporate Counsel and a long time Coverage Pointers subscriber, to offer us a little perspective on this rather monumental occasion:

 

As most students of history know, June 11, 2010 is a day in Oklahoma history that will be forever remembered, for it is the 100th anniversary of the time when leaders in Oklahoma City traveled to Guthrie, the then state capital, and "took the great seal" back to Oklahoma City and proclaimed the town the state's capital. After 100 years, folks in Guthrie still remember the event, just as folks from the South remember the "war of northern aggression". The "relocation" of the state capital did allow Guthrie to be out from under the close eye of Oklahoma legislators and it has become well known as a town seen in the movie, Rainman, and now home to about 25-40 B & Bs and the Oklahoma International Bluegrass Festival (held each October and presented by one of Oklahoma's true treasures, Byron Berline, fiddler extraordinaire).

 

Even though Oklahoma City became the capital of Oklahoma, by the same way some would say the "Sooners" took advantage of the "Boomers" (look it up!), other events in Oklahoma occurred before the state capital changed zip codes. Troop 1 Boy Scouts began in Tulsa in March of 1910 and has been continuously chartered by the BSA ever since, making it one of if not the oldest continuously chartered Boy Scout troop in America. My granddad (also a lawyer) assisted in the chartering of Troop One and the Woodard family had four generations of scouts associated with the troop. Also, oil had been discovered near Tulsa and it was on its way to becoming the "Oil Capital of the World"-- even better than being the state capital of Oklahoma.

 

John R. Woodard, III

 

Thanks to John for his kind offering and should you even need good counsel in the Great State of Oklahoma or just want to talk about Oklahoma, military history (or the US Marines), you can contact John  at 918-583-7129 or by e-mail at  [email protected] .

 

P.S. for grammarian wannabees everywhere who struggle with the use of capital v. capitol: Capital is the city that serves as the seat of government, wealth in the form of money or property and the type of letter used at the beginning of a sentence.  Capitol refers to the building in which a legislative assembly meets.

 

Word of Wisdom from Audrey Seeley:

 

There is a pattern to the decisions in this edition and the last - perhaps a change is underway in upstate arbitrations on Hobby and more insurer's summary judgment motions are being granted due to the plaintiff's failure to specifically rebut the peer reviewer's conclusion.

 

I suggest that perhaps a change is underway upstate on how Hobby is applied to IME reports that contain phrases such as "plateau of treatment" and "endpoint of care."  There have been a few decisions coming from one of the three Western New York arbitrators tackling this issue.  This edition, Arbitrator Benziger has offered yet again a well-reasoned decision as well as a framework to analyze this issue.  A close review of the decision reveals that it provides a logical approach to whether the treatment sought is necessary and not to rely upon buzz words that could fit within the Hobby case.  Further, this approach permits the arbitrator to reach the heart of the issue - necessity of treatment -instead of deciding the case on a technical issue attributed to word choice.  We will be sure to report as to whether this officially becomes a trend. 

 

With regard to summary judgment motions in the insurer's favor, there is a considerable and growing body of case law coming from the Appellate Term, Second Department addressing the burden-shifting scheme on medical necessity when the insurer moves for summary judgment.  The standard is that the insurer must demonstrate that it issued a timely denial and offer, in admissible form, the peer review or IME report with sufficient factual and medical rationale for lack of medical necessity.  The burden then shifts to the plaintiff to specifically rebut the peer review or IME report's conclusions to raise a triable issue of fact. 

 

If you would like a copy of any of the decisions or cases please send me an email at [email protected].

 

Answer to Trivia Question:

 

Neither candidate was born in a US State.

 

Article II, Section 1 of the Constitution provides that: No person except a natural born citizen ..shall be eligible to the office of President; neither shall any person be eligible to that office who shall not have attained to the age of thirty-five years, and been fourteen years a resident within the United States.

 

John McCain was born in the Panama Canal Zone.  Barry Goldwater was born on January 1, 1909 in Phoenix, in the Territory of Arizona, three years before Arizona attained statehood.

 

Being born in either made them both natural born citizens.

 

Highlights of This Week's Issue:

KOHANE'S COVERAGE CORNER
Dan D. Kohane

[email protected]

Court of Appeals 

  • Court of Appeals Gives Another Nod to BP Air

Appellate Division

  • Once Complaint Amended to Allege that Claims Arise out of Named Insured's Work, Obligation Exists to Defend Additional Insured.  However, Obligation to Indemnify is Separately Determined.  No Obligation to Indemnify Exists if Loss Does Not Arise Out of Named Insured's Work
  • Malpractice Action Against Broker Fails
  • Uninsured Motorists Coverage Unavailable under Father's Policy When Son Driving His Own Uninsured Car
  • Sufficient Proof of Binding Authority
  • Uncertainty Over Intention of the Parties for Right to Defense and Indemnification Leads to Denial of Summary Judgment
  • No Proof of Insured or Additional Insured Status
  •  Another Late Notice Case Won by Tower - Bar's Failure to Investigate On-Premises Assault and Five Month Delay in Giving Notice - Results in Loss of Coverage
  • Three Years Late Reporting Without Excuse is Simply Too Late

MARGO'S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT
Margo M. Lagueras

[email protected]

  • "Serious Injury" Does Not Apply to NJ Accident
  • Claims under the Permanent Consequential or Significant Limitation of Use Categories Reinstated
  • Instruction to Limit Physical Activities for 4 Months Is Too General to Support 90/180-Day Claim
  • Contradictory Reports Make Causation of Fractured Nose an Issue of Fact
  • Examining Orthopedist Notes Significant ROM Limitations One Year After Accident
  • Plaintiff's Expert Fails to Raise Issue of Fact Where Conclusions May Have Been Different if Unsworn Reports Were Not Considered
  • Dates on Which Examinations Are Conducted Must Be Stated
  • Motion to Renew Is Granted
  • AUDREY'S ANGLES ON NO-FAULT
    Audrey Seeley
    [email protected]

    ARBITRATION

    • Yet Again, Focus Should Be on "Necessity" of Treatment and Not Buzz Words.

    LITIGATION

    • Insurer Prevails On Failure to Appear for EUO and Denials Not Subject to Business Record Exception to Hearsay
    • Insurer's Cross-Motion Granted For Failure to Rebut Peer Review
    • Plaintiff's Failure to Rebut Peer Review Results In Summary Judgment for Insurer

    PEIPER ON PROPERTY (and POTPOURRI)
    Steven E. Peiper

    [email protected]

     Of Property

    • Rain Water That Soaks into the Soil Qualifies as "Water Below the Surface", As Such Plaintiff's Claim was Properly Denied 

    and Potpourri 

    • Where a Landowner does not Contract for, or Otherwise Authorize, Work, It will Not be Deemed an Owner under Labor Law § 241(6)
  • Settlement Agreement Negotiated by Counsel Appointed by the Carrier Obligates that Carrier, Alone, to Promptly Issue the Settlement Draft
  • A General Contractor's Charges to a Subcontractor for Increased Insurance Costs After the Commencement of Work at Construction Site Were in Violation of Insurance Law § 2505
  • FIJAL'S FEDERAL FOCUS
    Katherine A. Fijal

    [email protected]

    • Defendant Entitled to Rescind Fidelity Bond on Basis of Material Misrepresentation
  • Court Holds that Pollution Exclusion Applies in Construction Dust Case
  • JEN'S GEMS
    Jennifer A. Ehman
    [email protected]

    • Court Denies Summary Judgment on Late Notice where Defendant Established a Question of Fact as to his Good Faith Belief in Non-Liability
  • Court Awards Consequential Damages for Insurance Company's Alleged Breach of Contract
  • EARL'S PEARLS
    Earl K. Cantwell

    [email protected]

    WHAT INSURANCE IS INSURANCE?

     

    All the best and keep those kind comments coming in.  We appreciate them.

     

    Dan

     

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

    NEWSLETTER EDITOR
    Dan D. Kohane

    [email protected]

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

    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
    Jennifer A. Ehman

    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
    Jen’s Gems
    Earl’s Pearls
    Across Borders

    KOHANE’S COVERAGE CORNER
    Dan D. Kohane

    [email protected]

    Court of Appeals

     

    6/3/10             Regal Construction Corporation v. National Union Fire Ins. Co.
    Court of Appeals

    Court of Appeals Gives Another Nod to BP Air

    In Volume 11, No. 2 of Coverage Pointers, we reviewed this decision at the Appellate Division level:


    7/14/09            Regal Construction Corp. v. National
    Appellate Division, First Department
    First Department “Tees Up” Next Court of Appeals Decision on Breadth of “Additional Insured” Clause.  The Ongoing
    Battle of Yin and Yang, BP Air Conditioning and Worth Construction, Continues
    The City of New York hired URS as a construction manager for the Rikers Island Renovation Project.  URS hired Regal as prime contractor.  INSCORP issue a GGL policy to Regal.

    As prime contractor, Regal engaged subcontractors and coordinated the subcontractors’ work.  Under Regal’s supervision, Regal was supervising the demolition of a bathing area when Ronald LeClair, Regal’s project manager, was injured.  He claimed that an employee of URS was negligent.  When LeClair sued the City and URS, URS demanded defense as an additional insured under the INSCORP policy.  INSCORP eventually accepted URS's tender.

    The issue in this declaratory judgment action appeal is whether INSCORP has an obligation to defend and indemnify URS.  INSCORP's policy provided for additional insured coverage "only with respect to liability arising out of [Regal's] ongoing operations performed for that [additional] insured."

    Hence, there was a causal connection between LeClair's injury and Regal's work as a prime contractor, the risk for which coverage was provided.
    Two dissenting judges disagreed.  They observed that INSCORP alleges that discovery in the underlying action "has shown that the liabilities alleged therein do not arise out of Regal's operations performed for
    URS at the jobsite."  

    Discussing BP Air Conditioning, the seminal case on the subject, (8 NY3rd 708), the dissent acknowledged that under the Court of Appeals holding in that case, it isn’t necessary to prove the negligence of the named insured, when ascertaining whether additional insured status is awarded. However, there ought to be SOME allegations that the named insured, in this case Regal, committed some conduct that led to the accident.

    The dissent compared this case to the decision in Worth Constr. Co., Inc. v Admiral Ins. Co. (10 NY3d 411 [2008]). Here, according to the dissent, the accident arises solely out of
    URS’ operations, not Regal’s operations.  
    Editor’s Note:  A 3-2 vote is a free pass to the Court of Appeals.

    The pass was used and the Court of Appeals considered the appeal and affirmed.

    The Court of Appeals looked favorable to the ­BP Air Conditioning case, repeating that mantra that a “insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage. If a complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend and the rules apply to additional insureds and named insureds.

    The additional insured endorsement at issue here provides that URS is an additional insured under the CGL policy issued by INSCORP to Regal "only with respect to liability arising out of [Regal's] operations." That terms means "originating from, incident to, or having connection with"  and "only that there be some causal relationship between the injury and the risk for which coverage is provided".

    Here, Regal's employee, LeClair, was walking through the work site to indicate additional walls that needed to be demolished by Regal's subcontractor when he slipped on a recently-painted metal joist. Although Regal and INSCORP contended that LeClair's injury did not arise from Regal's demolition and renovation operations performed for URS, it was URS employees who painted the joist on which LeClair slipped.  The focus of the inquiry is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained.

    The Court found that this case is factually distinct from Worth. Here, there was a connection between the accident and Regal's work, as the injury was sustained by Regal's own employee while he supervised and gave instructions to a subcontractor regarding work to be performed.
    Editor’s Note:  This decision does not consider the newer, 2005 AI endorsement.  Do not forget that since 2004, the ISO “additional insured” endorsement that has been in common use is narrower than the “operations” language.  The newer endorsement adds language requiring that the liability arise out of the named insured’s “acts or omissions:

    A. Section II - Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily injury," "property damage" or "personal and advertising injury" caused, in whole or in part, by:

    1. Your acts or omissions; or

    2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above
    .

    Appellate Division

    6/8/10             Stellar Mechanical Services, et al ,v. Merchants Ins. Of N.H.
    Appellate Division, Second Department
    Once Complaint Amended to Allege that Claims Arise out of Named Insured’s Work, Obligation Exists to Defend Additional Insured.  However, Obligation to Indemnify is Separately Determined.  No Obligation to Indemnify Exists if Loss Does Not Arise Out of Named Insured’s Work

    By contract dated 5/12/03, Stellar Mechanical (“Stellar”) agreed to install an HVAC building under construction.  American Empire Surplus Lines Insurance Company (“American”) provided CGL coverage.

    Two weeks later, Stellar subcontracted the duct work to Serge and Serge agreed, in a separate contract, to indemnify Stellar, to the “fullest extent permitted by law” provided any such claim, damage, loss or expense [was] attributable to," inter alia, "bodily injury," and was "caused in whole or in part by any act or omission of" Serge's.

    Merchants insured Serge and added, as “additional insureds” any person or organization" that Serge was "required by a written contract, agreement or permit to name as an insured . . . but only with respect to liability arising out of," inter alia, "work" Serge "performed for" the person or organization "at the location designated in the contract, agreement or permit."

    Marsalona, an employee of another subcontractor working on the project, fell through an opening in the building's roof, and allegedly was injured and sued various entities (not Serge or Stellar) and then later amended his pleading to include Stellar as a defendant in that action.

    Stellar demanded coverage from Merchants but Merchants disclaimed, contending that the loss did not arise out of work performed by Serge. It also claimed that Stellar’s notice was late.

    In a second amended complaint, Marsalona sued Serge; Stellar then retendered, alleging that the new pleading contained allegations that the loss arose out of Serge’s work. Again Merchants disclaimed, American defended Stellar, settled the case and brought this lawsuit seeking coverage.

    The court found that from the time of the second amended complaint, when it was specifically alleged that the damages arose out of Serge’s work, the obligation to defend Stellar existed. Those allegations suggested, for the first time, a reasonable possibility of coverage in the underlying action for Stellar under Serge's insurance policy. On the late notice issue, Merchants did not raise the issue timely, so it was waived. .

    However, Merchants had not obligation to indemnify Stellar because it established that the loss did not arise out of Serge’s work.

    6/8/10             Trans High Corporation v. Pollack Associates, LLC
    Appellate Division, First Department

    Malpractice Action Against Broker Fails

    Even if, as plaintiff alleges, defendants failed to satisfy their common-law duty to procure the coverage that plaintiff had requested plaintiff's receipt and retention of the policy for three months before the fire without objection to the missing coverage waived any right of action it might have had against defendants.  Here, there was proof that insured not only retained policy but assented to its terms and even requested that limits be increased.

     

    Action against broker fails without proof of a special relationship.

     

    6/1/10             New York Central Mutual Fire Insurance Company v. Polyakov

    Appellate Division, Second Department

    Uninsured Motorists Coverage Unavailable under Father’s Policy When Son Driving His Own Uninsured Car

    On 9/1/07, Polyakov was operating a motorcycle when he rear-ended a car operated by Tsismanakis while that car was stopped at a red light in Brooklyn. Polyakov reported to the police officer who responded to the scene that an unidentified vehicle struck his motorcycle causing him to swerve and hit the Tsismanakis vehicle in the rear. The police accident report did not list any insurance information for either the Tsismanakis vehicle or the motorcycle. Polyakov’s father (“Dad”) had a policy of automobile insurance issued by New York Central Mutual Fire Insurance Company which insured a 2001 Nissan Maxima.

     

    Three weeks after the accident, Polyakov’s lawyer advised New York Central that Polyakov was involved in the subject accident while he "occupied [an] uninsured vehicle." Polyakov advised the petitioner of his intent to file a claim for no-fault first-party benefits under Dad’s policy as the son of the named insured who was a member of the same household. Polyakov also advised of his intent to pursue claims "under the hit and run provisions of the [subject] policy." Notably, in the application for no-fault benefits signed by Polyakov, he asserted, inter alia, that the owner of the motorcycle he was driving was "unknown at this time."

    On October 12, 2007, NY Central denied the claim asserting that Polyakov was the titled owner of the motorcycle which he was riding at the time of the accident and not insured under the NY Central policy.

    A demand for arbitration was filed and an application to stay was timely filed. .

    This language is not ambiguous and the terms must be construed according to their plain and ordinary meaning. This policy exclusion unambiguously excluded from SUM coverage compensation for bodily injuries sustained by an insured when injured in a motor vehicle accident with an uninsured vehicle, while occupying a motor vehicle he or she owns, which vehicle was not covered under the policy (see Matter of USAA Cas. Ins. Co. v Hughes, 35 AD3d at 488; Matter of Utica Mut. Ins. Co. v Reid, 22 AD3d 127, 129; Matter of New York Cent. Mut. Fire Ins. Co. [Prehoda], 231 AD2d 829, 829-830). There is no dispute that Polyakov, at the time of the accident, was occupying a vehicle, the motorcycle that he owned but that was not covered under the subject policy.

    6/1/10             3094 Brighton, LLC, v. Zurich Specialties (London), Limited

    Appellate Division, Second Department
    Sufficient Proof of Binding Authority
    Proof was submitted, by affidavits of an insurance broker, that the agent had the power to bind Zurich on the policy and there was sufficient proof that the plaintiff was an insured under the policy.  There were few facts in the decision to provide further detail.

     

    6/1/10             Galvan v. 9519 Third Avenue Restaurant Corp.

    Appellate Division, Second Department

    Uncertainty Over Intention of the Parties for Right to Defense and Indemnification Leads to Denial of Summary Judgment
    The Policy issued by GNY to 9519 Third Ave and the lease between third party plaintiff and insured failed to establish that that the third-party plaintiffs were not intended third-party beneficiaries entitled to a defense and indemnification from GNY under the Policy.  Summary judgment not granted.

     

    6/1/10             Essex Insurance Co. v. Michael Cunningham Carpentry

    Appellate Division, Second Department

    No Proof of Insured or Additional Insured Status
    Essex established that it did not provide coverage to a contractor under a subcontractor’s policy, either as a named insured or additional insured.  Coverage was therefore not available.

     

    6/1/10             Tower Insurance Company v. Miles
    Appellate Division, First Department

    Another Late Notice Case Won by Tower – Bar’s Failure to Investigate On-Premises Assault and Five Month Delay in Giving Notice – Results in Loss of Coverage
    The insured, a tavern, knew approximately one week after the incident, that a patron assaulted another patron on the premises.  That was enough to establish a reasonable possibility of a claim being made against it and should have triggered a reasonable inquiry into the circumstances.  Instead, the tavern waited five months before notifying its liability carrier, that delay being unreasonable as a matter of law.  The excuse proffered – that none of the employees were involved in the incident – was unreasonable under the circumstances.

    5/25/10           Bigman Brothers, Inc. v. QBE Insurance Corporation

    Appellate Division, Second Department
    Three Years Late Reporting Without Excuse is Simply Too Late

    In a pre-notice prejudice case, the Second Department had no trouble dispatching, without coverage, an insured that failed to report an accident for three years following its occurrence.  The insured had the burden of proving a good faith belief in non-liability and did not.  Enough said.

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

    [email protected]

    6/8/10             Ofori v. Green
    Appellate Division, First Department
    “Serious Injury” Does Not Apply to NJ Accident

    On appeal, the trial court’s ruling is unanimously affirmed in a case involving New York residents and vehicles registered in New York, but an accident occurring in New Jersey.  The court makes clear that New York’s no-fault law only applies to injuries occurring in this state.  Therefore, where the injuries were not sustained in New York, § 5102(d) does not apply and there is no requirement to prove “serious injury.” 

     

    The court additionally rejected the defendants’ backup argument that New Jersey’s no-fault law, which also limits non-economic loss, should apply.  The court found that New Jersey law only applies if the vehicle is “registered or principally garaged” in New Jersey, which was not the case here. 

     

    6/8/10             Garvey v. Talukder
    Appellate Division, First Department
    Claims under the Permanent Consequential or Significant Limitation of Use Categories Reinstated

    Defendants’ experts were experts in not addressing what needed to be addressed.  They did not address the plaintiff’s MRI showing lateral and medial tears in the plaintiff’s menisci and straightening of the cervical lordosis.  They also did not address the EMG results showing bilateral C5-6 radiculitis, nor did they set forth the objective tests, if any, used to come to their conclusion that the plaintiff had full range-of-motion of the cervical spine and right knee.  The complaint was dismissed with regard to the 90/180-day claim because the plaintiff did not proffer the required competent medical evidence in support.

     

    6/3/10             Mercado-Arif v. Garcia
    Appellate Division, First Department
    Instruction to Limit Physical Activities for 4 Months Is Too General to Support 90/180-Day Claim

    On appeal, the denial of defendants’ motion for summary judgment is affirmed except as to the 90/180-day claim, which is dismissed.  Plaintiff admitted in her deposition that she was confined to her home for only one week following the accident.  In addition, her treating chiropractor’s stated that plaintiff was told to limit her physical activities for 4 months.  This statement, however, is too general and does not fill the requirement of providing competent medical proof in support of the claim.

     

    The concurring opinion in this decision raised an interesting point with regards to an unsworn MRI.  Defendants attacked plaintiff’s chiropractor’s reliance on the unsworn MRI but, as the court pointed out, the chiropractor’s opinion was sworn and therefore, competent evidence.  However, the MRI report did not address the causation of the herniations nor did they make mention of degenerative changes.  The chiropractor insisted that, because degenerative changes were not noted on the report, the herniations were caused by the accident.  The concurring judges, however, pointed out that the chiropractor did not provide any factual support for his assertion that the radiologist would have noted degenerative changes in the report had he seen any.  The judge authoring the concurring opinion stated: “I do not understand how the very silence of the radiologist can be used to remedy the failure to provide an affidavit from the radiologist.”

    There are two lessons here.  First, plaintiff: get an affidavit from the radiologist particularizing his report.  Second, defendant: challenge the affidavit that makes such an assertion without providing the clarifying affidavit or any other factual support.  Because the defendants did not challenge, the denial of their motion was affirmed with regard to the “permanent consequential limitation of use” or the “significant limitation of use” categories.

     

    6/1/10             Estaba v. Quow
    Appellate Division, Second Department
    Contradictory Reports Make Causation of Fractured Nose an Issue of Fact

    The trial court’s decision is modified to deny the plaintiff’s cross-motion on the issue of serious injury, but otherwise affirmed denying the defendants’ motion.  Defendants’ examining otolaryngologist found the plaintiff’s nasal cavity was normal.  In addition, the hospital records from the date of the accident revealed the plaintiff never complained about her nose, and a CT scan of her head was unremarkable.  However, in opposition the plaintiff submitted the affirmation of her surgeon who asserted that, during surgery, he noted a fracture of the nose and concluded that it had been caused by the accident.  Whether the fracture was caused by the accident was, therefore, an issue of fact precluding summary judgment for either party.

     

    6/1/10             Fields v. Hildago
    Appellate Division, Second Department
    Examining Orthopedist Notes Significant ROM Limitations One Year After Accident

    The denial of their motion is affirmed where the defendants failed to meet their burden when they relied on affirmed medical reports of their examining orthopedic surgeon who, upon examining the plaintiff more than a year after the accident, found significant range-of-motion limitations in the cervical and lumbar areas of the spine.

     

    6/1/10             Kreimerman v. Stunis
    Appellate Division, Second Department
    Plaintiff’s Expert Fails to Raise Issue of Fact Where Conclusions May Have Been Different if Unsworn Reports Were Not Considered

    Plaintiff’s expert’s, Dr. Pang’s, affirmation relied upon his own examination, diagnostic testing and medical reports.  However, the diagnostic testing and the medical reports were disregarded by the court as they were not affirmed.  The court therefore found that there was no basis to conclude that Dr. Pang’s diagnosis was made independently of those unsworn reports, or that it would have been the same had those reports been excluded.  In addition, while Dr. Pang noted significant limitations in cervical range-of-motion during a contemporaneous examination, and significant lumbar restriction upon recent examination, there were no recent cervical or contemporaneous lumbar examinations.  As such, Dr. Pang’s affirmation failed to raise an issue of fact to defeat summary judgment.

     

    6/1/10             Robinson-Lewis v. Grisafi
    Appellate Division, Second Department
    Dates on Which Examinations Are Conducted Must Be Stated

    Plaintiff’s opposition to the defendant’s motion failed because, although both the affirmation of her treating physician and the affidavit of her chiropractor noted range-of-motion limitations of her neck, back and left arm, neither examination stated the date on which performed.  In addition, both failed to quantify the observed limitations or provide a qualitative assessment, or set forth the objective testing performed.

     

    6/1/10             Vaco v. Arellano
    Appellate Division, Second Department
    Motion to Renew Is Granted

    On appeal, the plaintiff’s motion to renew is granted on the law, on the facts and in the exercise of discretion.  Unfortunately, the decision does not provide us with any detail other than to state that the plaintiff offered a reasonable excuse for not previously including an affidavit of his treating physician which demonstrated that triable issues existed.  Plaintiff also explained that he stopped physical therapy because he had reached maximum medical improvement.

     

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

    ARBITRATION

    6/7/10 Michael D. Deangelo, DC v. Allstate Ins. Co.

    Arbitrator Kent Benziger, Erie County
    Yet Again, Focus Should Be on “Necessity” of Treatment and Not Buzz Words

    The Applicant’s assignor was involved in a May 13, 2006, accident and came under chiropractic care shortly thereafter three times per week for approximately one year.    The Applicant did not begin providing chiropractic care to the assignor until January 2008, with complaints of cervical and mid-thoracic spine pain.  Within two months of treatment the assignor only reported a slight increase in movement and decrease in pain.  By May 2008, the pain was reportedly slightly worse.  The Applicant’s records further reflected that from June 2008 until September 2008 there was little improvement in the assignor’s condition.

     

    The Applicant sought payment of chiropractic services rendered from July 10, 2008 through January 14, 2009.  The Applicant testified at the No-Fault arbitration that his treatment provided no curative benefit but did provide a palliative benefit.  The Applicant concluded that his patient would need treatment forever to increase joint mobility.

     

    The assignor underwent an independent chiropractic examination with Gary Kostek, DC on April 22, 2008, which revealed positive objective findings in the cervical, thoracic, and lumbar spine.  He opined the assignor had a cervical and thoracic sprain/strain, a thoracic disc herniation, and thoracic compression fracture related to the accident.  Yet, he further determined that that there were some pre-existing degenerative changes which the accident aggravated.  Mr. Kostek recommended an additional eight weeks of care.

     

    Mr. Kostek re-examined the assignor on July 8, 2008, wherein some improvement was noted regarding the thoracic spine.  The assignor still had multiple positive objective findings and Mr. Kostek’s diagnosis was unchanged from the initial exam.  He recommended another eight week course of care.

     

    On September 23, 2008, Mr. Kostek re-examined the assignor wherein it was reported that the assignor had increased back pain.  The objective findings were similar to those in the prior examinations.  Mr. Kostek opined that the assignor had undergone eight months of chiropractic care with no significant improvement.  The assignor’s condition was found to be stationary from a chiropractic point and any further care would only be palliative and not curative.  Therefore, Mr. Kostek concluded that no further chiropractic care would be warranted.

     

    The Applicant argued that Mr. Kostek’s conclusion was MMI which is not recognized as a valid defense under Hobby v. CNA.  The assigned arbitrator declined to construe Mr. Kostek’s opinion as being MMI and reasoned that more recent decisions hold that treatment is no longer necessary is it does not improve or otherwise benefit the assignor.

     

    The Applicant as well as Mr. Kostek agree that the chiropractic care is only palliative.  The Applicant can prevail on necessity for palliative care if he can demonstrate that the degree of palliative care justifies reimbursement.  The assigned arbitrator suggested that if an applicant can objectively quantify that the treatment provided relief for a significant period of time to enable the assignor to work or perform activities of daily living then the treatment is necessary.  It is noted that the assigned arbitrator indicated objective quantification is needed.  The assigned arbitrator further reasoned that if the evidence presented demonstrates that the relief provided is minimal, cannot be quantified, or provides no greater relief than some self-administered modality then the treatment is not necessary.

     

    Upon review of the Applicant’s evidence, the assigned arbitrator determined that there was no evidence that specified pain relief, increased range of motion, or decreases in objective findings.  Also, the alleged palliative benefit was not quantified in any objective

    manner that significantly impacted the assignor’s life.

     

    Mr. Kostek’s reports were determined to be more thorough and credible that the Applicant’s.  Also, the assigned arbitrator noted that it was only after Mr. Kostek’s third examination that the treatment was determined to have reached a stationary point.

     

    LITIGATION

    6/4/10             Five Boro Psycho. Services, P.C. a/a/o Midzaila Reid v. Progressive Northeastern Ins. Co.

    Appellate Term, Second Department
    Insurer Prevails On Failure to Appear for
    EUO and Denials Not Subject to Business Record Exception to Hearsay

    The insurer’s summary judgment motion was properly granted as it demonstrated that the assignor failed to appear for scheduled examinations under oath (“EUO”) in violation of a condition to coverage under the policy.  The insurer established that the EUO notices were properly mailed by the law firm retained to conduct the EUO and that the assignor failed to appear.  The fact that the assignor’s retained counsel contacted the insurer’s counsel to reschedule the EUO or confirm same only reaffirmed that the assignor had received the notices and has counsel acting on her behalf.

     

    The court further rejected plaintiff’s argument that the insurer failed to establish its denial of claim forms were in admissible form pursuant to the business records exception to the hearsay rule.  The court held that the denial of claim forms were not offered to establish the truth of the matter asserted therein – failure to appear for scheduled EUOs.  Rather, the purpose of offering the denials was to establish that the denials were sent and the claims denied.  Therefore, the insurer was not required to qualify them under the business record exception.

     

    6/4/10             Innovative Chiropractic, P.C. a/a/o Yolanda Torres v. Travelers Ins. Co.

    Appellate Term, Second Department
    Insurer’s Cross-Motion Granted For Failure to Rebut Peer Review

    The insurer’s cross-motion for summary judgment should have been granted as it established through the affidavit of its peer reviewer and peer review report the lack of medical necessity, which the plaintiff failed to rebut. 

     

    6/4/10             Ortho-Med Surg. Supply, Inc. a/a/o Linda McCollum v. Progressive Cas. Ins. Co.

    Appellate Term, Second Department
    Plaintiff’s Failure to Rebut Peer Review Results In Summary Judgment for Insurer

    The insurer’s motion for summary judgment was proper.  The insurer established that it timely denied the claims submitted and submitted the affirmed peer review of its doctor.  The peer review report contained a factual basis and medical rationale for the conclusion of lack of medical necessity.  The plaintiff in opposition to the insurer’s summary judgment motion failed to raise any trial issue of fact.  The court further rejected the plaintiff’s argument that it did not possess all of the documents the peer reviewer relied upon to properly oppose the motion.  The court held that the plaintiff failed to demonstrate that the discovery of these documents was needed in order to create a triable issue of fact.

    PEIPER ON PROPERTY (and POTPOURRI)
    Steven E. Peiper

    [email protected]

    Of Property

     

    6/08/10           Neuman v United States Auto Assoc.

    Appellate Division, Second Department

    Rain Water That Soaks into the Soil Qualifies as “Water Below the Surface”, As Such Plaintiff’s Claim was Properly Denied

    Plaintiffs in this case sought to recover under their homeowners’ policy for water damage sustained in the insured’s basement.  Importantly, the homeowners’ own expert offered that the water likely “originated from the outside, in other words it was rain water.”  As with most homeowners’ policies, plaintiff’s policy excluded loss caused by “water below the surface of the ground…which exerts pressure on or seeps or leaks through a building.”

     

    Relying on this language, and the fact that the water damage was caused by water seeping through an external basement wall, USAA denied the claim.  In affirming USAA’s denial letter, the Second Department noted that it was clear that the water originated from the soil outside of the home, and seeped through the basement walls.  Further, the Court noted that “water below the ground” clearly included water that entered the soil due to rain fall. Finally, the Court rejected plaintiff’s unfounded arguments that the cause of the damage was due to corrosion, condensation or through the basement windows as unduly speculative.

     

    and Potpourri

     

    6/08/10           Morton v State of New York

    Court of Appeals

    Where a Landowner does not Contract for, or Otherwise Authorize, Work, It will Not be Deemed an Owner under Labor Law § 241(6)

    Plaintiff commenced this action seeking recovery under Labor Law § 241(6) for injuries he sustained when a trench in which we was working collapsed.  Importantly, the New York State Industrial Code (upon which violations of Labor Law § 241(6) are based) required “sheeting, shoring and bracing” for trenches like the one at issue in this case.  Where there is a violation of the Industrial Code liability under Labor Law § 241(6) will attach. 

     

    Further, it is well accepted that Labor Law § 241(6) applies to owners of the premise.  In the instant case, the “owner” of the roadway where plaintiff was working is the State of New York.  The State argued that although it was the “owner” of the parcel, because plaintiff’s employer did not have permission to conduct work at the project site, it was essentially a trespasser and the protections afforded under Labor Law § 241(6) did not apply.  Bolstering the State’s argument is the fact that under Highway Law § 52 no one is permitted to work on a state road without first receiving approval from the NYSDOT.  Here, no such authority was given, and as such, plaintiff (and his employer) should not have been working at the time of the accident.

     

    In finding for the State, the Court of Appeals noted that for liability to attach under the Labor Law the injured party must establish more than simple ownership of the premises.  Rather, according to the Court of Appeals, where the owner did not, itself, arrange for the work, the injured party must also establish a nexus between owner and worker through a “lease agreement, easement or other property interest.”  Where, as here, no work permit was secured to create the nexus, the State was not liable under the Labor Law.

     

    In dissent, however, Chief Judge Lippman argues that the Labor Law has no such requirement that the owner, here the State, grant permission for the work to be performed at the project site.  Per Chief Judge Lipmann’s reasoned dissent, where the owner’s identity is clear, it has a non-delegable duty under the Labor Law to ensure proper safety protections are provided.  The dissent argues that the majority’s decision simply creates a condition to what was otherwise intended to be a strict liability statute.

     

    6/08/10           Jankoff Joint Venture II, LLC v Bayside Fuel Oil Corp.

    Appellate Division, Second Department

    Settlement Agreement Negotiated by Counsel Appointed by the Carrier Obligates that Carrier, Alone, to Promptly Issue the Settlement Draft

    Plaintiff commenced the instant action to enforce a stipulated settlement against Bayside.  It appears that Bayside was originally insured by the now insolvent Reliance Insurance Company.  However, Reliance, through the NYS Insurance Department’s Liquidation Bureau, provided a defense to Bayside.  Plaintiff’s counsel and Bayside’s counsel (as appointed by the Reliance/NYSLB) entered into a Stipulated Settlement Agreement which was reduced to an Order by the Trial Court. 

     

    At some point, plaintiff moved for an Order to enforce the settlement against Bayside.  As noted by the Court, however, Bayside did not, personally, participate in the settlement negotiations.  Rather, the negotiations were handled by appointed defense counsel.  Further, it was unequivocally understood by all parties that the Liquidation Bureau, and not Bayside, would be paying the settlement. 

     

    In light of the above, given the parties understanding that the Liquidation Bureau was paying the settlement, the Second Department noted that it was error to enter judgment against Bayside personally.  Rather, again, the payment was due to be made by the Liquidation Bureau per the settlement agreement.  Understanding the delays inherent with the payment of claims by the Liquidation Bureau, the Court also noted that the settlement agreement is not governed by the general rule that all settlements must be paid within twenty-one (21) days of the receipt of closing papers.  Accordingly, where plaintiff was unable to force Bayside to pay the settlement, it must wait until the Liquidation Bureau issues the settlement draft. 

     

    6/01/10           East Hills Metro, Inc. v Jeffrey Brown Associates, Inc.

    Appellate Division, Second Department 

    A General Contractor’s Charges to a Subcontractor for Increased Insurance Costs After  the Commencement of Work at Construction Site Were in Violation of Insurance Law § 2505

    This case involves the construction of a new Target department store in the Bronx.  As part of the construction project, Target created what is referred to as an “Owner Controlled Insurance Program” (“OCIP”).  The Target OCIP permitted Target to ensure that proper and adequate coverage was procured for all parties engaged in construction.  To cover the costs of the OCIP, Target requested that all parties include a deduction in their bids which was to be based upon the fact that insurance for the project was provided by the owner (Target).

     

    At the conclusion of the bid process, Target entered into an agreement with Jeffery Brown Associates, Inc. (“Brown”) whereby Brown agreed to serve as the project’s general contractor.  Brown thereafter entered into a series of subcontracts with East Hills Metro (“East”).  As part of these subcontracts, East offset its total bid by approximately $36,000 to cover fees incurred as a result of the OCIP instituted by Target.

     

    However, throughout the course of the project, East’s work at the jobsite greatly increased from the work that it originally agreed to perform in the earlier subcontracts.  As a result, Brown sought to increase the amount of deductions owed by East.  The theory being that more work performed by East created a greater risk of a claim arising from East’s work.  Therefore, Brown reasoned that East should contribute more to the OCIP.  Indeed, Brown sought a set off of $167,187 (the original set of was $36,536)

     

    East commenced this action seeking a ruling that Brown’s increased deductions were in violation of Insurance Law § 2505.  For its part, Insurance Law § 2505 prohibits an owner or general contractor from forcing a subcontractor to pay premiums for insurance coverage.  However, Section 2505 does allow for premium calculations to be included in the initial bid for a construction project. 

     

    Thus, the Second Department affirmed that Trial Court’s ruling that the offsets for the OCIP at the bid stage were appropriate under the Insurance Law. However, any subsequent changes to the offset/deductions after the commencement of the project are violative of the protections mandated by Insurance Law § 2505.  As such, the court ruled that the initial $36,000 was the appropriate measure for an offset in the instant case.

    FIJAL’S FEDERAL FOCUS
    Katherine A. Fijal

    [email protected]

    6/7/10 Federal Deposit Ins. Corp. v. Great American Ins. Co.

    United States Court of Appeals for the Second Circuit  (Connecticut Law)

    Defendant Entitled to Rescind Fidelity Bond on Basis of Material Misrepresentation

    In 1999, Connecticut Bank of Commerce [“CBC”], entered into a Purchase and Assumption Agreement [“Agreement”] to acquire MTB Bank [“MTB”], a New York Bank.  CBC purchased substantially all of MTB’s assets, including its factoring unit.  This transaction required Federal Deposit Insurance Corporation [“FDIC”] approval.  Approval was obtained on February 4, 2000.  At the time MTB had a 15 year insurance relationship with Lloyds of London and was covered by a Lloyd’s fidelity bond set to expire on June 10, 2000

     

    Prior to finalization of the Agreement several events occurred which are relevant to the current dispute.  First, in September 1999 MTB management discovered one or more of MTB’s agents advanced $950,000 based on fraudulent invoices under a factoring agreement with a company called Harmony Designs, Inc.  In addition, in March 2000, the president and several officers of MTB were indicted in an alleged conspiracy involving the importation of Argentinean minerals.  The Agreement was finalized on March 31, 2000. Claims were made on the Lloyd’s policy.

     

    After completion of the Agreement, CBC was added to MTB’s insurance policy with Lloyds.  Since the bond was set to expire on June 30, 2000, CBC began to seek renewal of the Lloyds policy.  Lloyd’s, however, was concerned about the two claims made by MTB and refused to renew coverage unless CBC representatives went to Lloyd’s headquarters in London for a meeting.  No one from CBC went to London. CBC requested a 30 day extension of coverage but Lloyd’s declined.

     

    CBC then used an insurance broker to procure fidelity insurance to replace the Lloyd’s policy.  CBC’s Chief Financial Officer [“CFO”]  filled out an application for insurance from Reliance Insurance Company [“Reliance Application”], on behalf of CBC.  The CFO signed the application on June 19, 2000 and gave the application to CBC’s insurance broker, who submitted the application to several insurers to receive quotes.  On June 30, the application was submitted to Great American Insurance Co. 

     

    There were three questions on the Reliance Application which form the basis for this controversy:  (1) List all losses sustained during the past three years, whether reimbursed or not?; [Answer:  None]; (2) Does CBC have any knowledge of or information concerning any occurrence or circumstance whatsoever which might materially affect this insurance proposal?; [Answer:  No]; (3) Has any insurance of this nature been declined or canceled during the past three years? [Answer: No].

     

    In late June, General Accident issued a quote based on information contained in the Reliance Application and on July 19, 2000 issued a fidelity bond to CBC with coverage retroactive to June 30, 2000.  CBC also completed a General Accident Insurance Application and just as in the Reliance Application the CBC CFO stated that CBC had not sustained any losses and no insurance had been declined or canceled within the past three years. Unlike the Reliance Application the General Accident Application did not contain a question regarding any knowledge or information which might materially affect the insurance proposal.

     

    CBC went into FDIC receivership on June 26, 2002.  On January 18, 2006, the FDIC, standing in the shoes of CBC, brought the present action claiming that General accident breached its contractual duty dishonoring claims for coverage under the fidelity bond for losses sustained by CBC related to a loan scheme that was used to fund the acquisition of MTB

     

    The district court granted summary judgment to General Accident on the ground that it properly rescinded the fidelity bond due to omission and misstatements made by CBC in its application for the fidelity bond. The Court determined that at the time the applications were completed, CBC knew about both the Harmony Designs claim and the indictment of MTB’s officers.  CBC also knew that Lloyd’s had declined to renew or extend coverage of its fidelity bond. 

     

    The relevant question is whether CBC’s failure to report the Harmony Designs loss, the indictments of the MTB officers, and Lloyd’s decision not to renew or extend its fidelity bond were in fact material misrepresentations.

     

    Under Connecticut law a fact is material if it would so increase the degree or character of the risk of the insurance as to substantially influence its issuance, or substantially affect the rate of premium.  Moreover, where the representation is contained in an answer to a question contained in the application which is made a part of the policy, the inquiry and answer are tantamount to an agreement that the matter inquired about is material. 

     

    With respect to CBC’s failure to report the $950,000 advanced by MTB agents based on fraudulent invoices under the factoring agreement with Harmony Designs, the court saw no ambiguity in the question and no reason to construe it, as the CFO allegedly did, to refer to losses sustained by CBC but not MTB.  At the time the application was completed, the relevant applicant was the newly expanded CBC.  The court held that since prior losses were the subject of specific inquiry in the application, CBC’s response is presumptively material.

     

    With respect to CBC’s failure to disclose the indictments of MTB’s officers the court rejected the FDIC’s argument that the indictments had no bearing on its insurance risk profile because CBC did not purchase the precious metals business or employ the indicted officers.  The court stated that the after-the-fact justification does not diminish the materiality of the disclosures.  As already established, information about previous losses is presumptively material. It follows that the information that losses were incurred under a cloud of criminal suspicion is also material.  The court recognized that the determination of risk is one properly left to the insurer, not the insured, and the insurer cannot make an accurate risk assessment without full disclosure from the applicant.

     

    Finally, the court considered the issues of CBC’s failure to disclose Lloyd’s decision not to renew or extend its fidelity coverage.  The FDIC argued that CBC walked away from Lloyd’s and not vice versa, thus CBC did not interpret the question to require information regarding coverage it chose not to renew.  The court held that the FDIC’s reading of the question was narrow and overly literal.  Both terms used in the Reliance Application – “declined” or “canceled” – seek information regarding another company’s unwillingness to insure.  Knowledge of Lloyd’s initial reluctance and ultimate refusal to continue its bond would have alerted General Accident to potential red flags, prompting a careful review of CBC’s application to accurately appraise the risks to be insured. 

     

    The Court affirmed the decision of the district court holding that the CFO’s representations in the applications for insurance were material and General Accident was therefore, entitled to rescind the fidelity bond.

     

    6/8/10  Devcon International Corporation v. Reliance Insurance Co.

    United States District Court of Appeals for the Third Circuit (Virgin Islands)

    Court Holds that Pollution Exclusion Applies in Construction Dust Case

    This case arises from an alleged nuisance caused by Virgin Islands Cement [“V.I. Cement”], a subsidiary of Devcon, at the Henry E. Rohlsen Airport on the island of St. Croix. As a result of the construction large quantities of dust drifted over property belonging to underlying plaintiffs. The dust allegedly contaminated the plaintiffs’ drinking water and cisterns and caused breathing disorders and other unspecified physical, emotional, and psychological damage.  The plaintiffs also alleged that the construction vehicles were causing similar problems and that the noise from the project deprived them of the quiet enjoyment of their properties. 

     

    V.I. Cement tendered the plaintiffs’ claims to Reliance which issued a commercial general liability policy its parent company, Devcon. Because of the pollution exclusion Reliance expressed doubt that coverage would be available, but later agreed to defend Devcon under a reservation of rights asserting the right to withdraw from the matter at any future date if Reliance discovered that the plaintiffs’ injuries were outside the scope of the insurance policy.  Devcon then commenced this declaratory judgment action.

     

    The district court found that the pollution exclusion removed coverage for the plaintiffs’ injuries and that Devcon had no reasonable expectation of coverage. 

     

    The Third Circuit addressed both the pollution exclusion and the Reasonable Expectations Doctrine in its decision.

     

    The pollution exclusion removes coverage for “any bodily injury and property damage which would not have occurred in whole or part but for the actual, alleged or threatened discharged, dispersal, seepage, migration, release or escape of pollutants at any time.  “Pollutants” are defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including, but not limited to, smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”

     

    According to Devcon, the exclusion is ambiguous, not because a particular term in the policy is susceptible to multiple interpretations, but because the exclusion, if read literally, would remove coverage for a large number of harms that do not implicate the environmental catastrophes that the exclusion was supposedly intended to address.

     

    The Third Circuit found no ambiguity in the exclusion stating that the trouble with Devcon’s approach was that, instead of asking whether the contractual language is clear and then applying the exclusion’s unambiguous meaning, it looks at the effects of the exclusion and concludes that the language must be unclear because it produces, in Devcon’s view, bad results.  The court stated that that was an unduly intrusive way to evaluate the relationship between two sophisticated commercial entities bargaining at arm’s length.  The court opined that it was no stretch to consider that injuries caused by clouds of dust and diesel fumes generated constantly over a period of several months many represent the type of harm from which Reliance sought to shield itself when drafting the pollution exclusion.  Devcon accepted the insurance policy with full knowledge of the exclusion’s broad language. 

    Devcon’s alternative argument is that even if the pollution exclusion removes plaintiffs’ alleged injuries from coverage, the court should nevertheless conclude that the doctrine of reasonable expectations requires Reliance to defend and indemnify it in the underlying action. The Court disagreed, pointing out that the doctrine applies only when a term in a policy is ambiguous.

     

    The court held that Reliance carried its burden to show that the plain language of the pollution exclusion remove coverage, and affirmed the district court order.

    JEN’S GEMS
    Jennifer A. Ehman
    [email protected]

    6/4/10             Progressive Northeastern Ins. Co. v. William E. Fitzmaurice

    Supreme Court, Greene County

    Court Denies Summary Judgment on Late Notice where Defendant Established a Question of Fact as to his Good Faith Belief in Nonliability

    On June 29, 2008, Defendant and his wife were boating on the Hudson River, when Defendant’s wife was injured by one of the boat’s gates.  Thereafter, they commenced a personal injury action against the boat manufacturer.  The manufacturer then asserted a counterclaim against Defendant.  On June 8, 2009, approximately eleven months after the accident, Defendant sought a defense and indemnification from Plaintiff, the insurer of his boat.  Plaintiff disclaimed coverage based on late notice of occurrence. 

     

    Plaintiff then commenced this action and promptly moved for summary judgment.  The court held that Defendant’s notice was late as a matter of law.  However, the court denied summary judgment finding a question of fact as to whether Defendant had a good faith belief in nonliability.  This determination was based on an affidavit submitted by Defendant alleging that his wife’s injury, while it occurred on a boat that he owned and was operating, was not caused by this operation.  Prior to the injury, the gate was closed and the Defendant had no prior notice of its dangerously sharp condition or its propensity to spring open. 

     

    5/28/10           J.M. Electrical Corp. v. Nationwide Mutual Fire Ins. Co.

    Supreme Court, New York County

    Court Awards Consequential Damages for Insurance Company’s Alleged Breach of Contract

    Rockefeller University undertook a renovation project.  It hired Barr & Barr to serve as the general contractor.  Barr & Barr then hired Siemens to perform electrical work.  In turn, Siemens subcontracted a portion of the work to J. M. Electrical Corp. (“JMEC”).  Pursuant to the contract between Siemens and JMEC, JMEC agreed to indemnify Siemens for any losses, including attorneys’ fees and costs, arising from JMEC’s negligence, and to procure insurance naming Siemens. 

     

    Thereafter, another subcontractor’s employee was injured and commenced an action against Rockefeller and Barr & Barr.  These entities then commenced a third-party action against Siemens.  In turn, Siemens brought a separate third-party action against JMEC.  The complaint cited negligence, common law contribution and indemnity, contractual indemnification and breach of contract for failing to purchase insurance naming Siemens as an additional insured.

     

    Nationwide issued a CGL policy to JMEC.  Accordingly, Siemens tendered its defense to Nationwide and JMEC.  Nationwide disclaimed coverage to Siemens on the grounds that Siemens was not an additional insured under the policy. 

     

    Thereafter, JMEC brought this action.  The court held that as the agreement between Siemens and JMEC was an “insured contract” within the policy definition, and not subject to any policy exclusion, Nationwide was obligated to defend and indemnify Siemens in the underlying action.   Accordingly, it was required to pay JMEC the $60,000 it spent in settling Siemens’s indemnification claim.  Interestingly, the court, citing Bi-Economy, also held that JMEC was entitled to consequential damages arising from Nationwide’s breach of contract.  The consequential damages identified were the legal fees incurred by JMEC defending against Siemens’s breach of contract claim.  

     

    Note:  This is one of the first cases to extend Bi-Economy to the area of liability.  However, it appears that the court misinterpreted the “insured contract” provision.  This provision provides the insured coverage for liability it assumes in an “insured contract.”  In other words, all benefits of this section flow to the insured, not an indemnitee.  What this section does, on the most basic level, is provide reimbursement to the insured for amounts it paid as a result of obligations it assumed in an “insured contract.”  The provision does not create an affirmative duty to defend the indemnitee.  With that said, it is sometimes in the insurer’s best interest to control the indemnitee’s defense, but is it not required.  Accordingly, the fact that the court appears to award JMEC damages for its legal fees in defending the breach of contract suit brought by Siemens misinterprets the insurer’s obligation under this section.     

    EARL’S PEARLS
    Earl K. Cantwell

    [email protected]

    WHAT INSURANCE IS INSURANCE?

     

    The importance of contractual terms and definitions of insurance was underscored in a recent case which might allow a contractor to recover more than $800,000 from two design subcontractors for structural damage that occurred (or at least manifested itself) several years after completion of construction.  Tellepsen Builders L.P. v. Kendall/ Heaton Associates, Inc. and CBM Engineers, Inc., 2010 Texas App. Lexis 2729 (April 15, 2010).

    Tellepsen was the general contractor for construction work on a conference center in Texas.  Tellepsen hired Kendall/Heaton to provide architectural design work, and CBM to perform structural engineering and design assistance.  Both subcontracts included a “waiver of subrogation” clause which stated that the parties waved all rights against each other “for loss or damage to the extent covered by property or equipment insurance.” 

    Of course, a few years after construction, the owner noticed structural damage and demanded that Tellepsen repair the defects.  Tellepsen did so, obtained $841,000 in reimbursement from its commercial general liability carrier, and then sued the subs  Kendall and CBM for breach of contract, negligence and breach of warranty.  The subcontractors claimed that, because Tellepsen’s insurer paid the claim, the waiver of subrogation clause applied and protected them from liability.

    On appeal, the Texas appellate court reversed an earlier summary judgment decision and found that the waiver of subrogation clause was ambiguous.  “Ambiguity” leads to issues of fact which leads to denial of summary judgment which leads to trial.  The crux of the issue was how to interpret the phrase and meaning of “property or equipment insurance.” 

    The appellate court noted that, under Texas law, property and liability insurance are two distinct types of insurance.  Property insurance is first party insurance that protects the insured’s own assets; liability insurance is essentially insurance that may cover an insured’s loss resulting from legal liability to a third party. 

    The subcontractors argued that the words “property or equipment insurance” included any policy that covered property damage at the project.  They reasoned that the liability insurer paid for the cost of repairing the property damage, so the waiver of subrogation clause “must apply”.  The court rejected this reasoning on several grounds.

    First, the subcontractors’ interpretation ignored or certainly blurred the distinctions between liability insurance and property insurance.  In addition, it went against other provisions of the subcontracts where the parties intended that they should have rights of indemnity in the event of a claim arising from the other party’s negligence.  The court held that a trial should determine whether “property and equipment insurance” included or excluded liability insurance.  One can imagine with breathless excitement such a trial possibly involving such esoteric issues and testimony by experts in the insurance field, construction contracting, underwriting and even linguistics on the meaning of the contract terms.

    From a further practical legal perspective, another issue that arose was within the control of the lawyers and the parties.  Since the term “property or equipment insurance” was not defined in the contract, both parties apparently made reference to extrinsic evidence on the meaning of that phrase, probably by reference to items such as standard contract forms, ISO insurance endorsement language, etc., even though the contract contained a broad integration and merger clause.  Since both parties attempted to make reference to and use extra-contractual evidence on the meaning of the words and phrase, the court deemed this to be at least some evidence that the contract language was ambiguous.

    The first lesson to be learned from the Tellepsen case is to be as specific as possible on insurance requirements in contracts, coverages, additional insureds, and Certificates of Insurance.  A second practical lesson for counsel is to be careful about whether and when to use extrinsic outside evidence to assist in contractual interpretation since that may lead to more opportunity for confusion, and a court finding disputed issues of fact requiring a trial or hearing. 

    ACROSS BORDERS
    Courtesy of the
    FDCC Website
    www.thefederation.org

    6/02/10           Hudson v. AIG National Insurance Company

    Court of Appeal of Louisiana, Third Circuit
    “Satisfactory Proof of Loss” Under La.R.S. 22:1973 May Exist Despite the
    Insured’s Failure to Give a Recorded Statement as Required by the Policy

    Renia Hudson, an AIG National Insurance Company (“AIG”) insured under a policy providing a limit of $25,000.00 in uninsured/underinsured motorist (“UM”) coverage, was involved in an automobile accident with Kasarah Sayer, who was driving a vehicle owned by Timmy Sayer, a State Farm Mutual Insurance Company (“State Farm”) insured under a policy providing a $10,000.00/$20,000.00 liability limit. On December 9, 2008, Hudson demanded the $25,000.00 UM limit from AIG and provided AIG with “Hudson’s medical profile, a certificate of coverage from State Farm stating that the limits on Sayer’s policy of insurance were ‘10/20/25,’ an affidavit of coverage from Timmy Sayer stating that he had ‘no other liability insurance . . . which would provide insurance benefits to [Hudson] for damages sustained as a result of the collision on 03-20-08,’ and a release executed by Hudson in favor of Timmy Sayer, Kasarah Sayer, and State Farm in exchange for the policy limits of ten thousand dollars.” AIG at first refused to pay under the policy, asserting that it first needed to receive Hudson’s recorded statement. Hudson then filed suit against AIG on January 9, 2009, alleging that she was entitled to policy benefits and statutory penalties under La.R.S. 22:1220 and 22:658, re-codified as La.R.S. 22:1892 and 22:1973, respectively. After AIG deposed Hudson on May 14, 2009, it made an unconditional tender of $11,744.00 to her on May 21, 2009, which it placed in the registry of the court after Hudson rejected it. A bench trial was held, and the trial court awarded Hudson the UM policy benefits and penalties under La.R.S. 22:1973, which requires an insurer to “pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.” AIG appealed, arguing, inter alia, that the trial court erred in finding that AIG had received “satisfactory proof of loss” on December 9, 2008, based “on the fact that Hudson had not yet given it her recorded statement as required by the contract between them.” The Court rejected this argument, holding that while “the language of the policy between [AIG] and Hudson necessitated that Hudson give AIG her recorded statement, Hudson’s lack of cooperation in this regard does not prohibit her from proving that AIG received ‘satisfactory proof of loss’ without that statement.”
    Submitted by: Joseph Gill and Joanna Gomez

     

    5/28/10           Texas Health Insurance Risk Pool v. Sigmundik

    Texas Supreme Court

    The Equitable “Made Whole” Doctrine Cannot be Used to Circumvent a Party’s Contractual Right to Subrogation
    The Texas Health Insurance Risk Pool (“the Risk Pool”) paid $336,874.71 in medical expenses for its insured, Thomas Sigmundik, who was injured and subsequently died as a result of an oilfield explosion. After Sigmundik’s death, his wife filed a negligence action on behalf of herself, her children, and Sigmundik’s estate. The Risk Pool intervened, asserting that it was subrogated to the rights of the estate pursuant to a subrogation provision in Sigmundik’s policy. The negligence action settled for $800,000.00, and the trial court held a bench trial in order to allocate the funds of the settlement between the plaintiffs. The trial court awarded the entirety of the settlement funds to the Sigmundik family and none to the estate, finding that the family “had not been ‘made whole’ by the settlement.” The Court of Appeals affirmed the trial court’s decision, but the Supreme Court reversed. According to the Supreme Court of Texas, “the ‘made whole’ doctrine does not apply where, as here, ‘the parties’ agreed contract provides a clear and specific right of subrogation.’” (quoting Fortis Benefits v. Cantu, 234 S.W.3d 642, 651 (Tex. 2007)). The Court held that “the trial court could not cut the estate completely out of the settlement just because the estate’s main beneficiary is an insurance company or, more to the point, because the trial court believed the surviving family needed the money more than the insurer.”

    Submitted by: Joseph Gill and Joanna Gomez - Posted: 06/03/2010

    REPORTED DECISIONS

    Bigman Brothers, Inc. v. QBE Insurance Corporation


    Abrams, Gorelick, Friedman & Jacobson, P.C.,
    New York, N.Y.
    (Jay Weintraub of counsel), for respondent.

    DECISION & ORDER

    In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Pfister v 44 Crosby Street Realty, LLC, pending in the Supreme Court, Kings County, under Index No. 36660/06, the plaintiff appeals from an order of the Supreme Court, Queens County (McDonald, J.), dated February 23, 2009, which granted the defendant's motion for summary judgment declaring that it is not so obligated.

    ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying action entitled Pfister v 44 Crosby Street Realty, LLC, pending in the Supreme Court, Kings County, under Index No. 36660/06.

    Where an insurance policy requires that notice of an occurrence be given "as soon as practicable," notice must be given within a reasonable time in view of all of the circumstances (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d 596, 597; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d 719, 721; Genova v Regal Mar. Indus., 309 AD2d 733, 734). "The insured's failure to satisfy the notice requirement constitutes a failure to comply with a condition precedent which, as a matter of law, vitiates the contract'" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 743, quoting Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339; see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689). "[C]ircumstances may exist that will excuse or explain the insured's delay in giving notice, such as a reasonable belief in nonliability" (Genova v Regal Mar. Indus., 309 AD2d at 734; see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 743-744; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d 304, 305). The burden of demonstrating the reasonableness of the excuse lies with the insured (see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Genova v Regal Mar. Indus., 309 AD2d at 734).

    In general, the existence of a good faith belief that the injured party would not seek to hold the insured liable, and the reasonableness of such belief, are questions of fact for the fact-finder (see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Genova v Regal Mar. Indus., 309 AD2d at 734; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d at 305). Nevertheless, summary judgment may be awarded to the insurer if, construing all inferences in favor of the insured, the evidence establishes, as a matter of law, that the insured's belief in nonliability was unreasonable or in bad faith (see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at 734).

    Here, the defendant established its prima facie entitlement to judgment as a matter of law by demonstrating that it was not notified of the accident until more than three years had elapsed (see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d at 689-690; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721).

    Consequently, the burden shifted to the plaintiff to raise a triable issue of fact as to whether there existed a reasonable excuse for its delay in notifying the defendant (see Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689; see also Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597). Under the circumstances here, construing all inferences in favor of the plaintiff, the evidence established, as a matter of law, that the plaintiff's asserted belief in nonliability was unreasonable (see Scordio Constr., Inc. v Sirius Am. Ins. Co., 51 AD3d 768; Macro Enters., Ltd. v QBE Ins. Corp., 43 AD3d 728; see also Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721). Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment.

    Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 598).

    Tower Insurance Company v. Miles

     

    Mound Cotton Wollan & Greengrass, New York (Scott J.
    Sheldon of counsel), for appellant.

    Order, Supreme Court, New York County (Michael D. Stallman, J.), entered December 8, 2009, which, insofar as appealed from as limited by the brief, denied plaintiff's motion for summary judgment declaring that it had no duty to defend or indemnify defendants Bruce Miles and 143 Selye Terrace, Inc. in an underlying personal injury action, unanimously reversed, on the law, without costs, the motion granted and it is declared that plaintiff has no duty to defend or indemnify Miles and 143 Selye Terrace.

    Where, as here, the contract of insurance requires the insured to notify its liability carrier of a potential claim "as soon as practicable," such requirement acts as a condition precedent to coverage (Great Canal Realty Corp. v Seneca Ins. Co., Inc, 5 NY3d 742, 743 [2005]), and the insured's failure to provide timely notice of an occurrence vitiates the contract as a matter of law (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]). Here, Miles became aware approximately one week after the incident that a patron of his bar had potentially assaulted another patron on his premises. Because defendants were knowledgeable of facts that suggested a reasonable possibility of a claim against them and failed to conduct a sufficient inquiry into the circumstances, their five-month delay in notifying plaintiff of the incident was unreasonable as a matter of law (see e.g. Tower Ins. Co. of N.Y. v Christopher Ct. Hous. Co., 71 AD3d 500 [2010]; SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583 [1998]). Miles' claimed belief of nonliability on the basis that none of his employees were involved in the incident was not reasonable under the circumstances (see e.g. Tower Ins. Co. of N.Y. v Lin Hsin Long Co., 50 AD3d 305, 308 [2008]).

    Mercado-Arif v. Garcia


    Baker, McEvoy, Morrissey & Moskovits, P.C.,
    New York
    (Steven N. Feinman of counsel), for appellants.
    DeAngelis & Hafiz, Mount Vernon (Talay Hafiz of counsel),
    for respondent.

    Order, Supreme Court, Bronx County (Wilma Guzman, J.), entered February 3, 2009, which denied defendants' motion and cross motion for summary judgment dismissing the complaint, modified, on the law, to grant the motion and cross motion as to plaintiff's 90/180-day claim, and otherwise affirmed, without costs.

    Defendants-appellants (hereinafter defendants) made a prima facie showing that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). While one of their experts, Dr. Schwartz, found limitations in plaintiff's ranges of motion, he did not causally relate these limitations to the accident (cf. Glynn v Hopkins, 55 AD3d 498 [2008]); on the contrary, he found that plaintiff was deliberately restricting her movements (see Santos v Taveras, 55 AD3d 405 [2008]). Moreover, another of defendants' experts, Dr. Tantleff, found degenerative changes in plaintiff's spine. In any event, to warrant a finding of serious injury, a limitation must be "consequential" or "significant" (see Insurance Law § 5102[d]; Licari v Elliott, 57 NY2d 230, 236 [1982]).

    Contrary to plaintiff's contention, defendants addressed her MRIs, via Dr. Tantleff. Defendants raised the 90/180-day issue by pointing to plaintiff's deposition testimony that she was only confined to her home for one week after the accident (see e.g. Cruz v Aponte, 60 AD3d 431, 432 [2009]).

    In opposition, plaintiff's chiropractor's affidavit was sufficient to raise a triable issue of fact, and plaintiff's limitations cannot be deemed minor as a matter of law (see e.g. Toure v Avis Rent A Car Sys., 98 NY2d 345, 352-353 [2002]; Hernandez v Rodriguez, 63 AD3d 520, 520-521 [2009]).

    Plaintiff's chiropractor relied, inter alia, on range of motion tests, the MRIs, the nerve conduction studies, and observation of spasm, and not solely on plaintiff's subjective complaints of pain (see e.g. Cruz v Castanos, 10 AD3d 277, 279 [2004]; Brown v Achy, 9 AD3d 30, 31, 33 [2004]; Arjona v Calcano, 7 AD3d 279 [2004]; Adetunji v U-Haul Co. of Wis., 250 AD2d 483 [1998]). Contrary to defendants' contention, the nerve conduction studies were affirmed. Although the MRIs were unsworn, plaintiff's chiropractor's opinion relying on them was "sworn and thus competent evidence" (Pommells, 4 NY3d at 577 n 5).

    The conflicting opinions of defendants' expert, Dr. Tantleff, and plaintiff's chiropractor as to whether the MRIs show degenerative changes present issues of fact and credibility for a jury to resolve.

    Plaintiff adequately explained the gap in her treatment between January 25, 2006 and July 29, 2008 by submitting her own affidavit, saying that no-fault had stopped her benefits (see Wadford v Gruz, 35 AD3d 258, 259 [2006]), and her chiropractor's affidavit, stating that plaintiff had reached maximum medical improvement and that any further treatment would be palliative (see e.g. Pommells v Perez, 4 NY3d 566, 577 [2005]).

    As to her 90/180-day claim, however, plaintiff failed to raise an issue of fact. Her chiropractor's statement that plaintiff was told to limit her physical activities for approximately four months was too general to constitute the requisite competent medical proof to substantiate the claim (see Cruz, 60 AD3d at 432; Gorden v Tibulcio, 50 AD3d 460, 463 [2008]). Although defendant Santiago has not appealed, the 90/180-day claim should be dismissed as against her, too (see e.g. Brewster v FTM Servo, Corp., 44 AD3d 351, 353 [2007]).

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


    McGUIRE, J. (concurring)

    The majority states that "[a]lthough the MRIs were unsworn, plaintiff's chiropractor's opinion relying on them was sworn and thus competent evidence.'" While it is true that the chiropractor's opinion was sworn, neither it nor the reports on which it relies offer any evidence that the herniations suffered by plaintiff did not result from degenerative changes. Rather, the MRI reports are silent as to the cause of the herniations. The chiropractor makes great hay of that silence, for he asserts that because no degenerative changes were noted on the MRIs (and because plaintiff was asymptomatic prior to the automobile accident), plaintiff's injury was caused by the motor vehicle accident. The chiropractor, however, provides no factual support for the implicit assertion that the radiologist would have noted degenerative changes had any been revealed. I do not understand how the very silence of the radiologist can be used to remedy the failure to provide an affidavit from the radiologist. Nonetheless, because defendants did not argue that the chiropractor's affidavit was insufficient for this reason, I agree with the majority that we should affirm the denial of that portion of defendants' motions seeking summary judgment on the issue of whether plaintiff suffered a personal injury that resulted in "permanent consequential limitation of use of a body organ or member" or "significant limitation of use of a body function or system" within the meaning of Insurance Law § 5102(d).

    Estaba v. Quow


    Baker, McEvoy, Morrissey & Moskovits, P.C.,
    New York, N.Y.
    (Stacy R. Seldin of counsel), for appellants.
    Robert C. Fontanelli, P.C. (Arnold E. DiJoseph, P.C.,
    New
    York
    , N.Y. [Arnold E. DiJoseph III],
    of counsel), for respondent.

    DECISION & ORDER

    In an action, inter alia, to recover damages for personal injuries, the defendants Kev-Ra Limo, Inc., and Luis Alfredo Ruiz appeal from an order of the Supreme Court, Kings County (F. Rivera, J.), dated December 4, 2009, which denied their motion 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), and granted the plaintiff's cross motion for summary judgment on the issue of serious injury.

    ORDERED that the order is modified, on the law, by deleting the provision thereof granting the plaintiff's cross motion for summary judgment on the issue of serious injury and substituting therefor a provision denying the cross motion; as so modified, the order is affirmed, without costs or disbursements.
    The Supreme Court properly denied the appellants' motion, although not on the ground relied upon in the order appealed from. Contrary to the Supreme Court's determination, the appellants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of the Insurance Law § 5102(d) as a result of the subject accident. In support of their motion, the appellants relied upon the affirmed medical reports of their examining otolaryngologist and neurologist, as well as the plaintiff's hospital records and deposition testimony. The appellants' examining neurologist concluded, upon his examination of the plaintiff, that the plaintiff had full range of motion in the lumbar and cervical regions of her spine, was without disability, and was capable of performing the activities of daily life without any restrictions. The appellants' examining otolaryngologist noted, upon his examination of the plaintiff, that the plaintiff had normal external auditory canals and tympanic membranes, and that her nasal cavity was normal as well. The otolaryngologist concluded that the plaintiff's nose was normal. The plaintiff's own hospital records revealed that she never complained about her nose to hospital personnel upon her examination in the emergency room on the date of the subject accident, and a CT scan of her head performed at that time was "unremarkable." The appellants further relied upon the plaintiff's deposition testimony, in which she averred that she missed approximately two weeks of work as a result of the subject accident. These submissions were sufficient to show 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).

    However, in opposition to the appellants' motion, the plaintiff raised a triable issue of fact as to whether she sustained a serious injury in the form of a fracture to her nose as a result of the subject accident. Specifically, in his affirmation, Dr. Richard W. Westreich, the plaintiff's surgeon, asserted that, upon performing surgery upon the plaintiff, he noted a fracture of her nose, which he concluded had been caused by the subject accident (see Gould v Ombrellino, 57 AD3d 608; Bonner v Hill, 302 AD2d 544).

    Nonetheless, the Supreme Court erred in granting the plaintiff's cross motion for summary judgment on the issue of serious injury. In support of the plaintiff's cross motion, she relied upon, inter alia, Dr. Westreich's affirmation, which was sufficient to meet her prima facie burden of showing that she sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, inasmuch as she sustained a fractured nose. In opposition, the appellants raised a triable issue of fact as to the existence of a fracture on the day of the accident and, thus, whether the accident caused a fractured nose. In this respect, the appellants relied upon, inter alia, the plaintiff's hospital records, which revealed that the CT scan of her head on the day of the accident was "unremarkable."

    Fields v. Hildago


    Molod Spitz & DeSantis, P.C.,
    New York, N.Y. (Marcy
    Sonnenborn and Salvatore J. DeSantis of counsel), for appellants.
    Bartlett, McDonough, Bastone & Monaghan, LLP,
    White
    Plains
    , N.Y. (Warren J. Roth of
    counsel), for respondent.

    DECISION & ORDER

    In an action to recover damages for personal injuries, the defendants Jose Hildago and Calvery Center Church appeal from an order of the Supreme Court, Westchester County (Colabella, J.), entered September 29, 2009, which denied their motion 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).

    ORDERED that the order is affirmed, with costs.

    The appellants 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 appellants relied on, inter alia, the affirmed medical report of Dr. Martin Barschi, their examining orthopedic surgeon. Dr. Barchi noted significant limitations in the cervical and lumbar regions of the plaintiff's spine during active range-of-motion testing when he examined the plaintiff more than a year post-accident.

    Since the appellants failed to meet their prima facie burden, we need not address the question of whether the plaintiff's submissions raised a triable issue of fact (see Smith v Hartman,AD3d, 2010 NY Slip Op 03899, *1[2d Dept 2010]; Quiceno v Mendoza, 72 AD3d 669; Kjono v Fenning, 69 AD3d 581, 582; Coscia v 938 Trading Corp., 283 AD2d 538).

    Kreimerman v. Stunis


    Baker, McEvoy, Morrissey & Moskovits, P.C.,
    New York, N.Y.
    (Stacy R. Seldin of counsel), for appellants.
    Mallilo & Grossman,
    Brooklyn, N.Y. (Olayemi Oladapo of
    counsel), for respondent.

    DECISION & ORDER

    In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Kramer, J.), dated June 24, 2009, which denied their motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Nela Yukobov on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

    ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Nela Yukobov is granted.

    Contrary to the determination of the Supreme Court, the defendants met their prima facie burden of showing that the plaintiff Nela Yukobov (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 support of their motion, the defendants relied on the affirmed medical reports of Dr. Wendy Cohen and Dr. David A. Fisher, as well as a copy of the plaintiff's deposition testimony. The plaintiff testified at her deposition that she missed, in total, two weeks of work as a result of the subject accident. In her affirmed medical report, Dr. Cohen, the defendants' examining neurologist, concluded that, as of April 30, 2008, the plaintiff had full quantified range of motion in the cervical and lumbar regions of her spine, as compared with the stated norms. Dr. Cohen further diagnosed the plaintiff with resolved cervical and lumbar strains and sprains, concluded that the plaintiff was not disabled, and deemed the plaintiff capable of performing the activities of daily life without restrictions.

    Upon his review of the magnetic resonance imaging films of the cervical and lumbar regions of the plaintiff's spine dated April 20, 2004, and May 5, 2004, Dr. Fisher, the defendants' retained radiologist, noted in his affirmed reports that the plaintiff had diffuse degenerative changes throughout the cervical and lumbar regions of her spine, including bulging discs in the cervical spine. Dr. Fisher concluded that the observed bulging discs were degenerative in nature, and were unrelated to and predated the subject accident.

    The Supreme Court erred in concluding that the defendants did not meet their prima facie burden because Dr. Cohen failed to address the plaintiff's claims, made at her examination by Dr. Cohen, of right shoulder, bilateral hip, and foot pain, since the plaintiff neither claimed such injuries in her complaint or bill of particulars, nor moved to amend her bill of particulars to add such injuries (see generally Felix v Wildred, 54 AD3d 891; Ifrach v Neiman, 306 AD2d 380).

    The plaintiff's submissions failed to raise a triable issue of fact. Initially, the magnetic resonance imaging reports of Dr. John T. Rigney and the medical reports of Dr. Renan Macias failed to raise a triable issue of fact because they were not affirmed and, thus, not in proper form (see Grasso v Angerami, 79 NY2d 813; Chanda v Varughese, 67 AD3d 947; Sutton v Yener, 65 AD3d 625; McNeil v New York City Tr. Auth., 60 AD3d 1018; Sapienza v Ruggiero, 57 AD3d 643).

    The affirmation of Dr. Teodoro Y. Pang failed to raise a triable issue of fact as well, since it failed to adequately rebut the findings of the defendants' physicians relating to the lumbar and cervical spine conditions (see Barry v Future Cab Corp., 71 AD3d 710). Dr. Pang stated in his affirmation that he rendered his diagnosis upon "consideration of [his] examination, the diagnostic testing [of Dr. John T. Rigney] and the reports from Dr. Renan Macias." Dr. Pang clearly relied upon the unsworn reports of Dr. Rigney and Dr. Macias in reaching his conclusions, thus rendering those conclusions inadmissible (see Magid v Lincoln Servs. Corp., 60 AD3d 1008; 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). In light of Dr. Pang's express reliance on the reports of Drs. Rigney and Macias, there is no basis in the record to conclude that Dr. Pang's diagnosis was made independent of those unsworn reports, or that his diagnosis would have been the same had the inadmissible diagnostic and medical reports been excluded.

    Moreover, while Dr. Pang noted that his findings of significant limitations in the range of motion of the cervical region of the plaintiff's spine were based on an examination performed contemporaneously with the subject accident, neither he nor the plaintiff proffered any competent objective medical evidence based on a recent examination that revealed the existence of any restrictions of cervical spine range of motion (see Rivera v Bushwick Ridgewood Props., Inc., 63 AD3d 712; Diaz v Lopresti, 57 AD3d 832; Carrillo v DiPaola, 56 AD3d 712; Landicho v Rincon, 53 AD3d 568, 569; Cornelius v Cintas Corp., 50 AD3d 1085; Young Hwan Park v Orellana, 49 AD3d 721; Amato v Fast Repair Inc., 42 AD3d 477).

    Conversely, while Dr. Pang's affirmation noted limitation of motion in the lumbar region of the plaintiff's spine, based on the recent examination of March 10, 2009, neither he nor the plaintiff proffered any objective medical evidence that revealed the existence of a significant limitation of motion in the lumbar region of the plaintiff's spine contemporaneous with the subject accident (see Stevens v Sampson, 72 AD3d 793; Keith v Duval, 71 AD3d 1093; Rivera v Bushwick Ridgewood Prop., Inc., 63 AD3d 712; Leeber v Ward, 55 AD3d 563; Ferraro v Ridge Car Serv., 49 AD3d 498; D'Onofrio v Floton, Inc., 45 AD3d 525).

    Finally, the plaintiff failed to raise a triable issue of fact as to whether she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d), since she admitted at her deposition that she was out of work for only two weeks after the subject accident, and thereafter returned to her employment. Accordingly, the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff.

    Robinson-Lewis v. Grisafi


    Joseph B. Fruchter,
    Hauppauge, N.Y., for appellant.
    Richard T. Lau,
    Jericho, N.Y. (Keith E. Ford of counsel), for
    respondent.

    DECISION & ORDER

    In an action to recover damages for personal injuries, the plaintiff appeals from (1) an order of the Supreme Court, Nassau County (Palmieri, J.), entered September 2, 2009, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2) a judgment of the same court entered September 29, 2009, which, upon the order, is in favor of the defendant and against her dismissing the complaint.

    ORDERED that the appeal from the order is dismissed; and it is further,

    ORDERED that the judgment is affirmed; and it is further,

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

    The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

    Contrary to the plaintiff's contentions, the Supreme Court correctly concluded that the defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Kublo v Rzadkowski, 71 AD3d 831). In opposition, the plaintiff failed to raise a triable issue of fact.

    The affirmation of Dr. William Sonstein, one of the plaintiff's treating physicians, was insufficient to raise a triable issue of fact. While Dr. Sonstein stated that, upon his examination of the plaintiff, the date of which is not noted in the affirmation, she had limitations of motion in her neck, back, and left arm, he failed to set forth any objective medical testing he performed in order to arrive at those conclusions (see Knopf v Sinetar, 69 AD3d 809; Spence v Mikelberg, 66 AD3d 765; Sapienza v Ruggiero, 57 AD3d 643; Budhram v Ogunmoyin, 53 AD3d 640, 641; Piperis v Wan, 49 AD3d 840, 841). Furthermore, Dr. Sonstein failed to quantify any such limitations or provide a qualitative assessment of those regions of the plaintiff's body in his affirmation (see Toure v Avis Rent A Car Sys., 98 NY2d at 350; Ortiz v Ianina Taxi Servs., Inc.,AD3d, 2010 NY Slip Op 03888, *1 [2d Dept 2010]; Acosta v Alexandre, 70 AD3d 735; Giannini v Cruz, 67 AD3d 638, 639; Taylor v Flaherty, 65 AD3d 1328; Barnett v Smith, 64 AD3d 669, 671). The same analysis applies to the affidavit of Dr. Charles Aronica, the plaintiff's treating chiropractor, who stated that, upon some undated examination he performed on the plaintiff, she had limitations of motion in the cervical region of her spine and her left arm. Dr. Aronica never set forth the objective medical testing he performed in order to arrive at those conclusions, and never quantified any limitations or provided a qualitative assessment of those regions of the plaintiff's body in his affidavit.

    The affidavit of the plaintiff was insufficient, on its own, to raise a triable issue of fact (see Villante v Miterko,AD3d, 2010 NY Slip Op 03913, *1 [2d Dept 2010]; Shvartsman v Vildman, 47 AD3d 700; Fisher v Williams, 289 AD2d 288), since she failed to submit competent medical evidence sufficient to raise a triable issue of fact as to whether the injuries she allegedly sustained in the subject accident rendered her unable to perform substantially all of her daily activities for not less than 90 days of the first 180 days subsequent to the subject accident (see Sainte-Aime v Ho, 274 AD2d 569).

    Thus, the Supreme Court properly granted the defendant's motion and dismissed the complaint.

    Vaco v. Arellano


    Harmon, Linder, &
    Rogowsky, New York, N.Y. (Mitchell
    Dranow of counsel), for appellant.
    Baker, McEvoy, Morrissey & Moskovits, P.C.,
    New York,
    N.Y. (Stacy R. Seldin of counsel), for
    respondents Cedric Kenville Jack and
    Veronica Charles.

    DECISION & ORDER

    In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Schneier, J.), dated July 31, 2009, which denied his motion for leave to renew his opposition to the motion of the defendants Edgar Arellano and Campuzano Car Service, and the separate motion of the defendants Cedric Kenville Jack and Veronica Charles, for summary judgment dismissing the complaint insofar as asserted against them on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d), which had been granted in an order of the same court dated March 13, 2009.

    ORDERED that the order dated July 31, 2009, is reversed, on the law, on the facts, and in the exercise of discretion, with one bill of costs, the motion for leave to renew is granted, and, upon renewal, the order dated March 13, 2009, is vacated, and the defendants' motions for summary judgment are denied.

    A motion for leave to renew "shall be based upon new facts not offered on the prior motion that would change the prior determination" (CPLR 2221[e][2]) and "shall contain reasonable justification for the failure to present such facts on the prior motion" (CPLR 2221[e][3]; see Gonzalez v Vigo Constr. Corp., 69 AD3d 565). The plaintiff offered a reasonable excuse for not including an affidavit from his treating physician in opposition to the original motion (see Gonzalez v Vigo Constr. Corp., 69 AD2d 565; Ralat v New York City Housing Auth., 265 AD3d 185), which established that there were triable issues of fact which precluded the granting of summary judgment.

    The plaintiff adequately explained the cessation of his physical therapy on the ground that he reached maximum medical improvement (see Pommells v Perez, 4 NY3d 566; Eusebio v Yannetti, 68 AD3d 919; Shtesl v Kokoros, 56 AD3d 544).

    Trans High Corporation v. Pollack Associates, LLC

    Cuomo LLC, New York (Matthew A. Cuomo of counsel), for
    appellant.
    Cullen and Dykman LLP,
    New York (Deborah A. Bryant of
    counsel), for respondents.

    Judgment, Supreme Court, New York County (Edward H. Lehner, J.), entered May 28, 2009, dismissing the complaint pursuant to an order which, in an action against insurance brokers for failure to procure insurance, granted defendants' motion pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint, and denied plaintiff's cross motion to amend the complaint, unanimously affirmed, without costs.

    Even if, as plaintiff alleges, defendants failed to satisfy their common-law duty to procure the coverage that plaintiff had requested (see Murphy v Kuhn, 90 NY2d 266, 270 [1997]), plaintiff's receipt and retention of the policy for three months before the fire without objection to the missing coverage waived any right of action it might have had against defendants (see Busker on Rood Ltd. Partnership Co. v Warrington, 283 AD2d 376, 376-377 [2001]). Indeed, more was involved here than mere passive receipt, retention, and presumptive knowledge of and assent to the policy's terms; as evidenced by plaintiff's post-procurement request to defendants to increase the policy limits, it is clear that plaintiff actually reviewed the policy and had actual knowledge of its terms.

    Nor is a special relationship, such as might have imposed on defendants an additional duty to advise plaintiff that the policy did not contain the coverage in question (see generally Murphy, 90 NY2d at 270-272), made out by plaintiff's allegations concerning defendants' efforts to retain plaintiff as a customer following the discovery that another policy containing the coverage had lapsed (cf. Busker, 283 AD2d at 377 [that broker discouraged client from hiring an insurance advisor, and assured client that its services would meet client insurance needs, not so exceptional as to support imposition of a special duty]). Moreover, plaintiff's own account of its interactions with defendant — to the effect that it specifically requested the coverage in question, that it otherwise actively discussed with defendant the procurement, type and amount of coverage, and that it actively reviewed the procured policy — effectively admits that it was not relying on defendants' expertise (see Murphy, 90 NY2d at 272).

    Regal Construction Corporation v. National Union Fire Ins. Co.

    Louis G. Adolfsen, for appellants.
    William J. Cleary, for respondent.

    CIPARICK, J.:

    Once again, we are asked to determine the obligation of an insurer to defend and indemnify an additional insured for potential liability arising out of the operations of the primary insured (see e.g. Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d 411 [2008]). The City of New York engaged URS Corporation (URS) as the construction manager for a renovation project at Rikers Island. By written agreement dated March 22, 1999, URS hired plaintiff Regal Construction Corporation (Regal) to serve as a prime contractor for general construction at the project, including demolition and renovation. The written agreement between Regal and URS required Regal to procure a commercial general liability (CGL) insurance policy naming URS as an additional insured. Accordingly, Regal obtained a CGL insurance policy from plaintiff Insurance Corporation of New York (INSCORP), which named URS as an "additional insured." The policy provided that Regal's insurance covered URS "only with respect to liability arising out of [Regal's] ongoing operations performed for [URS]" (emphasis added).

    In March 2001, Regal's project manager, Ronald LeClair, was walking through the facility with Regal's superintendent and an employee of Regal's demolition subcontractor. Because the area was in the process of demolition, the flooring consisted of temporary sheets of plywood spread over steel floor joists. LeClair stepped from the plywood onto a floor joist to indicate a wall that needed to be demolished. According to LeClair, the joist on which he stepped had been recently painted and the paint caused him to slip, resulting in a back injury. LeClair claimed that an unnamed person from URS told him that URS employees had painted the joist.

    In 2003, LeClair commenced a personal injury action against the City and URS. While LeClair did not name his employer, Regal, as a defendant, URS forwarded a copy of the complaint to Regal and its insurer, INSCORP, demanding a defense and indemnification based on the additional insured clause of the CGL policy. In April 2003, INSCORP informed URS by letter that it was reviewing the incident, and reserved its right to disclaim coverage at a later date if it determined that URS was not entitled to coverage under the policy. INSCORP thereafter accepted URS's tender of its defense [FN1] . Subsequently, however, Regal and INSCORP commenced this declaratory judgment action against URS and its insurer, National Union Fire Insurance Company, seeking a declaration that URS was not entitled to coverage as an additional insured under the INSCORP policy.

    Supreme Court granted judgment in favor of URS and its insurer, concluding that LeClair's injury arose out of Regal's work. Regal and INSCORP appealed [FN2] . The Appellate Division affirmed, with two Justices dissenting (64 AD3d 461), and we now affirm.

    An insurer's duty to defend its insured is "'exceedingly broad'" (BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714 [2007], quoting Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]). An "insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage" (id., quoting Cook, 7 NY3d at 137 [quotation marks omitted]). "If [a] complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend" (id., quoting Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73 [1989] [quotation marks omitted]). This standard applies equally to additional insureds and named insureds (see id. at 714-715, citing Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 393 [2003]).

    The additional insured endorsement at issue here provides that URS is an additional insured under the CGL policy issued by INSCORP to Regal "only with respect to liability arising out of [Regal's] operations." We have interpreted the phrase "arising out of" in an additional insured clause to mean "originating from, incident to, or having connection with" (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005] [internal quotations marks and citations omitted]). It requires "only that there be some causal relationship between the injury and the risk for which coverage is provided" (id.).

    Here, Regal's employee, LeClair, was walking through the work site to indicate additional walls that needed to be demolished by Regal's subcontractor when he slipped on a recently-painted metal joist. Although Regal and INSCORP contend that LeClair's injury did not arise from Regal's demolition and renovation operations performed for URS, but that it was URS employees who painted the joist on which LeClair slipped, the focus of the inquiry "is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained" (Worth, 10 NY3d at 416 [internal quotation marks and citation omitted]). Accordingly, the injury "ar[ose] out of" Regal's operations notwithstanding URS's alleged negligence, and fell within the scope of the additional insured clause of the insurance policy.

    Regal and INSCORP's reliance on Worth to argue otherwise is misplaced. In that case, a subcontractor, Pacific Steel, Inc. (Pacific), hired to install stairs at a construction project, obtained a CGL policy naming the general contractor, Worth Construction Co. (Worth), as an additional insured (id. at 413). After Pacific completed the initial installation, it turned the project over to Worth, who hired a different subcontractor to pour cement over the steel stair "pans." After the cement was poured, Pacific was to return to install handrails. However, prior to Pacific's return to the job site, an employee of a different subcontractor slipped and fell on fireproofing which had been installed by yet a third subcontractor (see id. at 413-414). Pacific played no role in the installation of the fireproofing. Worth sought to invoke the protection of the additional insured clause of the CGL policy procured by Pacific, but we rejected Worth's argument that the injury arose out of Pacific's operations. Specifically, we explained that it was "evident that the general nature of Pacific's operations involved the installation of a staircase and handrails. An entirely separate company was responsible for applying the fireproofing material. At the time of the accident, Pacific was not on the job site, having completed construction of the stairs, and was awaiting word from Worth before returning to affix the handrails" (id. at 416).

    We went on to characterize the staircase as "merely the situs of the incident," concluding that there was no connection between the accident and Pacific's work (id.).

    This case is factually distinct from Worth. Here, there was a connection between the accident and Regal's work, as the injury was sustained by Regal's own employee while he supervised and gave instructions to a subcontractor regarding work to be performed. That the underlying complaint alleges negligence on the part of URS and not Regal is of no consequence, as URS's potential liability for LeClair's injury "ar[ose] out of" Regal's operation and, thus, URS is entitled to a defense and indemnification according to the terms of the CGL policy.

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

    * * * * * * * * * * * * * * * * *
    Order affirmed, with costs. Opinion by Judge Ciparick. Chief Judge Lippman and Judges Graffeo, Read, Smith, Pigott and Jones concur.
    Decided
    June 3, 2010

    Footnotes


    Footnote 1: A third party action commenced by
    URS against Regal was discontinued in March 2004.

    Footnote 2: During the pendency of this action, the parties to the underlying personal injury action reached a settlement.

     

    New York Central Mutual Fire Insurance Company v. Polyakov


    Smith & Laquercia, LLP,
    New York, N.Y. (Robert W. Napoles
    of counsel), for appellant.
    Goidel & Siegel, LLP,
    New York, N.Y. (Andrew B. Siegel of
    counsel), for respondent Vitaly
    Polyakov.

    DECISION & ORDER

    In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for supplementary uninsured motorist benefits, New York Central Mutual Fire Insurance Company appeals from an order of the Supreme Court, Kings County (Balter, J.), dated June 17, 2009, which denied the petition and directed the parties to proceed to arbitration.

    ORDERED that the order is reversed, on the law, with costs, the petition is granted, and the arbitration is permanently stayed.

    On September 1, 2007, the respondent Vitaly Polyakov (hereinafter Polyakov) was involved in a motor vehicle accident while driving a motorcycle which he owned. Polyakov's motorcycle hit the rear end of the automobile of the respondent P. Tsismanakis while that automobile was stopped at a traffic light on Coney Island Avenue in Brooklyn. Polyakov reported to the police officer who responded to the scene that an unidentified vehicle struck his motorcycle causing him to swerve and hit the Tsismanakis vehicle in the rear. The police accident report did not list any insurance information for either the Tsismanakis vehicle or the motorcycle. However, at the time of the accident, the respondent Mikhail Polyakov (hereinafter the named insured), Polyakov's father, had a policy of automobile insurance issued by the petitioner, New York Central Mutual Fire Insurance Company. The only vehicle named under that policy as a covered vehicle was a 2001 Nissan Maxima owned by the named insured.

    By letter dated September 28, 2007 (hereinafter the notice of accident), Polyakov's counsel advised the petitioner that Polyakov was involved in the subject accident while he "occupied [an] uninsured vehicle." Polyakov advised the petitioner of his intent to file a claim for no-fault first-party benefits under the subject policy as the son of the named insured who was a member of the same household. Polyakov also advised of his intent to pursue claims "under the hit and run provisions of the [subject] policy." Notably, in the application for no-fault benefits signed by Polyakov, he asserted, inter alia, that the owner of the motorcycle he was driving was "unknown at this time."

    By letter dated October 12, 2007 (hereinafter the denial of claim), from the petitioner's counsel to Polyakov's counsel, Polyakov was advised that his claim for benefits under the supplementary uninsured/underinsured motorists endorsement (hereinafter the SUM endorsement) of the subject policy was denied. The petitioner averred that its investigation revealed that Polyakov was the titled owner of the motorcycle which he was riding at the time of the accident. In addition, the motorcycle was not an insured vehicle under the subject policy. Consequently, the petitioner advised Polyakov that his claim for SUM benefits must be denied because the SUM endorsement excluded coverage for bodily injury to an insured while occupying a motor vehicle owned by that insured which was not insured under the subject policy. The petitioner also reserved its rights to deny coverage for any additional reasons that later came to its attention.

    By demand for arbitration dated March 5, 2009, submitted to the American Arbitration Association, New York State Sum Arbitrational Tribunal, Polyakov made a demand on the petitioner for arbitration of his claim for SUM benefits. On or about March 23, 2009, the petitioner commenced this proceeding pursuant to CPLR article 75 to permanently stay arbitration of Polyakov's claim. The Supreme Court denied the petition and directed the parties to proceed to arbitration. We reverse.

    The policy language in question was not ambiguous, and the petitioner was entitled to have the provisions it relied on to disclaim coverage enforced (see Matter of USAA Cas. Ins. Co. v Hughes, 35 AD3d 486, 487-488; see generally Baughman v Merchants Mut. Ins. Co., 87 NY2d 589, 592; Government Empls. Ins. Co. v Kligler, 42 NY2d 863, 864-865). The SUM endorsement under the subject policy provided, in relevant part, that "This SUM coverage does not apply . . . [t]o bodily injury to an insured incurred while occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM coverage by the policy under which a claim is made." This language is not ambiguous and the terms must be construed according to their plain and ordinary meaning. This policy exclusion unambiguously excluded from SUM coverage compensation for bodily injuries sustained by an insured when injured in a motor vehicle accident with an uninsured vehicle, while occupying a motor vehicle he or she owns, which vehicle was not covered under the policy (see Matter of USAA Cas. Ins. Co. v Hughes, 35 AD3d at 488; Matter of Utica Mut. Ins. Co. v Reid, 22 AD3d 127, 129; Matter of New York Cent. Mut. Fire Ins. Co. [Prehoda], 231 AD2d 829, 829-830). There is no dispute that Polyakov, at the time of the accident, was occupying a vehicle, the motorcycle, that he owned but that was not covered under the subject policy.

    In addition, contrary to Polyakov's contention, the exclusion from coverage also would have been applicable under the mandatory uninsured motorists provision of the policy, which similarly provides that the petitioner does "not provide Uninsured Motorists Coverage for bodily injury' sustained: 1. By an insured while occupying', or when struck by, any motor vehicle owned by that insured' which is not insured for this coverage under this policy." However, as the petitioner correctly argues, the mandatory uninsured motorists provision was removed from the subject policy by amendment pursuant to Section III of the Amendment of Policy Provisions - New York, and the SUM endorsement was added (see generally 11 NYCRR 60-2.3[e]).

    Accordingly, the petition should have been granted (see Matter of USAA Cas. Ins. Co. v Hughes, 35 AD3d at 488; Matter of Utica Mut. Ins. Co. v Reid, 22 AD3d at 129; Matter of New York Cent. Mut. Fire Ins. Co. [Prehoda], 231 AD2d at 829-830; cf. Matter of Metropolitan Prop. & Liab. Co. v Feduchka, 135 AD2d 715; see generally Government Empls. Ins. Co. v Kligler, 42 NY2d at 864-865).

    The parties' remaining contentions either are without merit or have been rendered academic.

    3094 Brighton, LLC, v. Zurich Specialties (London), Limited

     

    Goldberg Segalla, LLP, Buffalo, N.Y. (Brian R. Biggie, Sharon
    Angelino, and Matthew S. Lerner of counsel), for appellant.
    The Feinsilver Law Group, P.C.,
    Brooklyn, N.Y. (David
    Feinsilver and H. Jonathan Rubinstein of
    counsel), for respondent.

    DECISION & ORDER

    In an action, inter alia, for a judgment declaring that the defendant Zurich Specialties (London), Limited, is obligated to defend and indemnify the plaintiff in an underlying action entitled Haidear v 3094 Brighton, LLC, pending in the Supreme Court, Kings County, under Index No. 5125/01, the defendant Zurich Specialities (London), Limited, appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Knipel, J.), dated February 9, 2009, as granted that branch of the plaintiff's motion which was for partial summary judgment on the first and second causes of action insofar as asserted against it.

    ORDERED that the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Kings County, for the entry of an appropriate interlocutory judgment, inter alia, declaring that the defendant Zurich Specialities (London), Limited, is obligated to defend and indemnify the plaintiff in the underlying action entitled Haidear v 3094 Brighton, LLC, pending in the Supreme Court, Kings County, under Index No. 5125/01.

    In support of its motion for partial summary judgment on the first and second causes of action, the plaintiff made a prima facie showing of entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324), by submitting the affidavits of its insurance broker, as well as of the agent of the defendant Zurich Specialties (London), Limited (hereinafter Zurich). The agent had the authority to bind Zurich on the subject policy, and also served as Zurich's agent for service of claims against the policy. These affidavits established that the plaintiff was a named insured under the subject policy and that Zurich was given timely notice of the underlying action against the plaintiff. In opposition, Zurich failed to raise a triable issue of fact as to either of those issues (see Zuckerman v City of New York, 49 NY2d 557, 562).

    Accordingly, the Supreme Court properly granted that branch of the plaintiff's motion which was for partial summary judgment on the first and second causes of action insofar as asserted against Zurich.

    Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Kings County, for the entry of an appropriate interlocutory judgment, inter alia, declaring that Zurich is obligated to defend and indemnify the plaintiff in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

    Essex Insurance Company v. Michael Cunningham Carpentry

     

    Catalano Gallardo & Petropoulos, LLP, Jericho, N.Y. (James P.
    Connors and Katherine A. Giovacco of counsel), for appellant.
    Methfessel & Werbel, P.C.,
    New York, N.Y. (Fredric Paul
    Gallin of counsel), for respondent.

    DECISION & ORDER

    In an action for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendant Michael Cunningham Carpentry or the defendant Andreassen & Bulgin Construction, Inc., in certain underlying personal injury actions brought by the defendants Marcelo Espana and Carmita Alvarez, the defendant Andreassen & Bulgin Construction, Inc., appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Kerins, J.), dated December 9, 2008, as granted that branch of the plaintiff's motion which was for summary judgment declaring that it was not obligated to defend or indemnify the defendant Andreassen & Bulgin Construction, Inc.

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

    In support of its motion for summary judgment, the plaintiff submitted evidence establishing that the defendant Andreassen & Bulgin Construction, Inc. (hereinafter Andreassen), was not named as an insured or additional insured party on the commercial general liability insurance policy (hereinafter the subject policy), the plaintiff issued to the defendant Michael Cunningham Carpentry (hereinafter Cunningham) and, thus, was not entitled to coverage thereunder (see American Cleaners, Inc. v American Intl. Specialty Lines Ins. Co., 68 AD3d 792; Sixty Sutton Corp. v Illinois Union Ins. Co., 34 AD3d 386, 388-389; Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337, 339). The plaintiff also established that the third-party claims brought by Andreassen against Cunningham were not within the scope of the subject policy, as the employee exclusion provision in the subject policy "precluded coverage for the injuries allegedly sustained by the defendant [Marcelo Espana]" (Utica First Ins. Co. v Santagata, 66 AD3d 876, 879; see Sixty Sutton Corp. v Illinois Union Ins. Co., 34 AD3d at 388-389). Thus, the plaintiff was not obligated to defend Cunningham against the claims (see Fortress Ins. Co., v Kollander, 41 AD3d 423; cf. Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443; Bovis v Crab Meadow Enters., Ltd., 67 AD3d 846, 848; Labate v Liberty Mut. Fire Ins. Co., 19 AD3d 652, 653). In opposition, Andreassen failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 ).

    Andreassen's contention that the motion for summary judgment was premature is without merit. It failed to offer any evidentiary basis to suggest that discovery may lead to relevant evidence. The hope and speculation that evidence sufficient to defeat the motion might be uncovered during discovery was an insufficient basis to deny the motion (see Peerless Ins. Co. v Micro Fibertek, Inc., 67 AD3d 978, 979; Tedesco v Tedesco, 64 AD3d 583, 584; Conte v Frelen Assoc., LLC, 51 AD3d 620, 621).

    In light of our determination, we need not address Andreassen's remaining contention.


    Galvan v. 9519 Third Avenue Restaurant Corp.


    Thomas D. Hughes,
    New York, N.Y. (Richard C. Rubinstein and
    David D. Hess of counsel), for third-party defendant-appellant.
    Miranda Sambursky Slone Sklarin Verveniotis, LLP,
    Elmsford,
    N.Y. (Michael V. Longo of counsel),
    for defendants third-party plaintiffs-
    respondents.

    DECISION & ORDER

    In an action to recover damages for personal injuries, the third-party defendant appeals, as limited by its notice of appeal and brief, from so much of an order of the Supreme Court, Kings County (Saitta, J.), dated March 31, 2009, as denied that branch of its motion which was pursuant to CPLR 3211(a)(1) to dismiss the third-party complaint.

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

    The Supreme Court properly denied that branch of the motion of the third-party defendant (hereinafter GNY), which was pursuant to CPLR 3211(a)(1) to dismiss the third-party complaint. "A party seeking to dismiss pursuant to CPLR 3211(a)(1) on the ground that its defense is based on documentary evidence must submit documentary evidence that resolves all factual issues as a matter of law and conclusively disposes of the plaintiff's claim" (Elow v Svenningsen, 58 AD3d 674, 675; see Leon v Martinez, 84 NY2d 83, 88; Martin v New York Hosp. Med. Ctr. of Queens, 34 AD3d 650). The documentary evidence submitted by GNY, namely, an insurance policy (hereinafter the Policy) between GNY and the defendant second third-party defendant, 9519 Third Avenue Restaurant Corp. (hereinafter 9519), and a lease between the third-party plaintiffs and 9519, failed to resolve all factual issues as a matter of law and to conclusively dispose of the third-party plaintiffs' claims for a defense and indemnification from GNY in the main action. Contrary to GNY's contention, those documents did not establish that the third-party plaintiffs were not intended third-party beneficiaries entitled to a defense and indemnification from GNY under the Policy (see State of New York v American Mfrs. Mut. Ins. Co., 188 AD2d 152, 155; I.S.A. In N.J. v Effective Sec. Sys., 138 AD2d 681, 682; Stainless, Inc. v Employers Fire Ins. Co., 69 AD2d 27, 33, affd 49 NY2d 924; cf. Binasco v Break-Away Demolition Corp., 256 AD2d 291, 292).

    Ofori v. Green


    Stockschlaeder, McDonald & Sules, P.C.,
    New York (Richard
    T. Sules of counsel), for appellants.
    Greenstein & Milbauer, LLP,
    New York (Andrew Bokar of
    counsel), for respondent.

    Order, Supreme Court, Bronx County (Cynthia S. Kern, J.), entered on or about December 22, 2008, which denied defendants' motion for summary judgment, unanimously affirmed, without costs.

    This personal injury action arose out of a 2006 automobile accident in New Jersey. It is undisputed that the parties were residents of New York, where their vehicles were registered. The sole issue on appeal is whether the fortuitous circumstance that the accident happened in New Jersey should negate the requirement of plaintiff having to prove a "serious injury" under Insurance Law § 5102(d). It does.

    By its express terms, New York's no-fault law applies only to "injuries arising out of negligence in the use or operation of a motor vehicle in this state" (Insurance Law § 5104[a], emphasis added). In this regard, it has consistently been held that the statute is not to be given extraterritorial effect (see Matter of McHenry v State Ins. Fund, 236 AD2d 89, 91 [1997], citing Morgan v Bisorni, 100 AD2d 956 [1984]). Since the statute abrogates a common law right, it must be strictly construed, "and as so construed, the section does not purport to regulate actions for personal injury arising out of the negligent use or operation of a vehicle outside this State" (id. at 956).

    We reject defendants' alternative argument that even if § 5102(d) is inapplicable, the matter should be remanded to the motion court to determine whether the New Jersey no-fault law, which similarly limits noneconomic loss, applies, since that law applies only to a vehicle "registered or principally garaged" in New Jersey (NJ Stat Ann § 39:6A-3; see Zabilowicz v Kelsey, 200 NJ 507, 509, 984 A2d 872, 873 [2009]), which was not the case here.

    Garvey v. Talukder


    Mallow, Konstam & Nisonoff, P.C.,
    New York (Mirra
    Khavulya of counsel), for appellant.
    Baker, McEvoy, Morrissey & Moskovits, P.C.,
    New York
    (Stacy R. Seldin of counsel), for respondents.

    Order, Supreme Court, New York County (Paul Wooten, J.), entered July 23, 2009, which granted defendants' motion for summary judgment dismissing the complaint for lack of a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, the motion denied to the extent of reinstating that portion of the complaint premised on allegations of serious injury involving permanent limitation of use of a body member and permanent limitation of use of a body function or system, and otherwise affirmed, without costs.

    Defendants' experts did not address MRIs indicating that plaintiff had suffered lateral and medial tears in her menisci and straightening of the lordosis in her cervical spine. Similarly, none of those experts addressed the EMG results, which showed evidence of bilateral C5-6 radiculitis. Defendants' experts also failed to state what, if any, objective tests they used to lead them to the conclusions that plaintiff had full ranges of motion in her cervical spine and right knee and that the alleged injuries to those body parts had fully resolved. Accordingly, defendants failed to establish prima facie that plaintiff did not sustain a permanent consequential or significant injury in accordance with the statutory threshold (see Wadford v Gruz, 35 AD3d 258 [2006]).

    To the extent the complaint alleges serious injury by reason of plaintiff's incapacity to perform substantially all of her daily activities for 90 of the first 180 days following the accident, this has not been substantiated by competent medical evidence (see Uddin v Cooper, 32 AD3d 270, 272 [2006], lv denied 8 NY3d 808 [2007]), and that portion of the complaint was properly dismissed.

    Stellar Mechanical Services of New York, Inc.,v. Merchants Insurance of New Hampshire

    Landman Corsi Ballaine & Ford P.C., New York, N.Y. (Jerry A.
    Cuomo and Craig H. Rothenberg of counsel), for appellants.
    Hiscock & Barclay, LLP,
    Rochester, N.Y. (Joseph A. Wilson,
    Mark T. Whitford, Jr., and John Casey
    of counsel), for respondent Merchants
    Insurance of New Hampshire.
    Baxter Smith & Shapiro, P.C.,
    Hicksville, N.Y. (Arthur J. Smith
    of counsel), for defendant Serge Duct
    Design.


    DECISION & ORDER

    In an action, inter alia, for a judgment declaring that the defendant Merchants Insurance of New Hampshire is obligated, as the primary insurer, to defend and indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in an underlying personal injury action entitled Marsalona v Brighton Development, LLC, commenced in the Supreme Court, Queens County, under Index No. 26333/03, the plaintiffs appeal from so much of an order and judgment (one paper) of the Supreme Court, Queens County (Cullen, J.), dated January 8, 2009, as denied that branch of their cross motion which was, in effect, for summary judgment declaring that the defendant Merchants Insurance of New Hampshire is obligated, as the primary insurer, to defend and indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action, granted the motion of that defendant, inter alia, for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action, and declared that the defendant Merchants Insurance of New Hampshire is not obligated to defend and indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action.

    ORDERED that the order and judgment is modified, on the law, (1) by deleting the provision thereof denying that branch of the plaintiffs' cross motion which was, in effect, for summary judgment declaring that the defendant Merchants Insurance of New Hampshire is obligated, as the primary insurer, to defend the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action, and substituting therefor a provision granting that branch of the cross motion which was, in effect, for summary judgment declaring that the defendant Merchants Insurance of New Hampshire is obligated, as the primary insurer, to defend the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action only from the time the plaintiff Stellar Mechanical Services of New York, Inc., was served with the second amended complaint in the underlying action, and otherwise denying that branch of the cross motion; (2) by deleting the provision thereof granting that branch of the motion of the defendant Merchants Insurance of New Hampshire which was for summary judgment declaring that it is not obligated to defend the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action, and substituting therefor a provision denying that branch of the motion, and (3) by deleting the provision thereof declaring that the defendant Merchants Insurance of New Hampshire is not obligated to defend and indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action, and substituting therefor a provision declaring that Merchants Insurance of New Hampshire is obligated, as the primary insurer, to defend the plaintiff Stellar Mechanical Services of New York, Inc., in that action from the time the plaintiff Stellar Mechanical Services of New York, Inc., was served with the second amended complaint in that action, and to reimburse the plaintiff American Empire Surplus Lines Insurance Company for the costs incurred in connection with the defense of the plaintiff Stellar Mechanical Services of New York, Inc., in that action from the time the plaintiff Stellar Mechanical Services of New York, Inc., was served with the second amended complaint in that action, but is not obligated to indemnify the plaintiff Stellar Mechanical Services of New York, Inc., in that action; as so modified, the order and judgment is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Queens County, for an assessment of the costs incurred by the plaintiff American Empire Surplus Lines Insurance Company in connection with the defense of the plaintiff Stellar Mechanical Services of New York, Inc., in the underlying action from the time the plaintiff Stellar Mechanical Services of New York, Inc., was served with the second amended complaint in that action, and the entry of an appropriate amended judgment thereafter.

    In a contract dated May 12, 2003, the plaintiff Stellar Mechanical Services of New York, Inc. (hereinafter Stellar), agreed to install a heating, ventilation, and air conditioning system in a particular building that was being constructed. Stellar was insured under a commercial general liability insurance policy issued by the plaintiff American Empire Surplus Lines Insurance Company (hereinafter American).

    In a subcontract dated May 24, 2003, Stellar subcontracted the duct work to the defendant Serge Duct Design (hereinafter Serge). At the time Serge's owner executed the subcontract, he also executed an "Indemnity Agreement and Agreement to Maintain Certain Insurance" (hereinafter the indemnity agreement), which, Stellar's "recording secretary" explained, "belong[ed] to" the subcontract. As the subcontract effectively did, the indemnity agreement, in effect, obligated Serge to name Stellar Mechanical Services of NY II, a trade name often used by Stellar, as an "additional insured" on Serge's insurance policies on "a primary and non-contributory basis." In addition, as the subcontract did, the indemnity agreement also obligated Serge, "to the fullest extent permitted by law," to "indemnify, hold harmless and defend" Stellar "from and against all claims, damages, losses and expenses including but not limited to attorney's fees arising out of or resulting from the work of [Serge] provided any such claim, damage, loss or expense [was] attributable to," inter alia, "bodily injury," and was "caused in whole or in part by any act or omission of" Serge's.

    Serge was insured under a commercial general liability insurance policy issued by the defendant Merchants Mutual Insurance Company, sued herein as Merchants Insurance of New Hampshire (hereinafter Merchants). Serge's policy specified that an "additional insured" included "[a]ny person or organization" that Serge was "required by a written contract, agreement or permit to name as an insured . . . but only with respect to liability arising out of," inter alia, "work" Serge "performed for" the person or organization "at the location designated in the contract, agreement or permit."

    After the subcontract and indemnity agreement were executed, Serge provided Stellar with a certificate of insurance. The certificate indicated that Stellar was an additional insured under Serge's insurance policy.

    On July 11, 2003, the defendant Michael Marsalona, an employee of another subcontractor working on the project, fell through an opening in the building's roof, and allegedly was injured. The insurance policies of Stellar and Serge were effective on the date of the accident.

    On or about November 6, 2003, Marsalona commenced a personal injury action (hereinafter the underlying action) against certain entities, alleging that their employees were negligent, violated Labor Law §§ 200, 240, and § 241, and caused his injuries. He did not name Stellar or Serge as defendants in that action. On or about August 17, 2005, Marsalona served an amended complaint in the underlying action naming, among others, Stellar as a defendant in that action.

    In a letter to Merchants dated February 22, 2006, Stellar demanded that Merchants defend and indemnify Stellar in the underlying action. However, in a letter written in response, Merchants, which had conducted an investigation, disclaimed coverage. First, Merchants asserted that its investigation revealed that the "loss" did "not arise out of the work performed by Serge." In addition, Merchants, noting that a provision in Serge's insurance policy required that Merchants be given notice of an "occurrence" or a "suit" as soon as practicable, asserted that "notice of [the] loss by Stellar[ ], as an additional insured, was not provided timely."

    On or about March 27, 2006, Marsalona, who obtained leave of court, served a second amended complaint in the underlying action, naming, among others, Serge as a defendant in that action.

    In a letter to Merchants dated June 28, 2006, Stellar, which enclosed the second amended complaint in the underlying action, pointed out that the pleading "contain[ed] allegations that [the] accident arose out of Serge's work." Although Stellar, in effect, again demanded that Merchants defend and indemnify Stellar in the underlying action, Merchants refused to do so. American then provided Stellar with a defense in the underlying action, which eventually settled.

    Stellar and American commenced this action against Merchants and others, seeking, inter alia, a judgment declaring that Merchants is obligated, as the primary insurer, to defend and indemnify Stellar in the underlying action. After the completion of discovery, Merchants moved, inter alia, for summary judgment declaring that it is not obligated to defend and indemnify Stellar in the underlying action. Stellar and American then cross-moved, inter alia, in effect, for summary judgment declaring that Merchants is obligated, as the primary insurer, to defend and indemnify Stellar in the underlying action.

    In the order and judgment appealed from, the Supreme Court, inter alia, granted Merchants' motion, denied that branch of Stellar's and American's cross motion which was, in effect, for summary judgment, and declared that Merchants is not obligated to defend and indemnify Stellar in the underlying action. We modify, however, because Merchants is obligated, as the primary insurer, to defend Stellar in the underlying action, although it is not obligated to indemnify Stellar in that action.

    On their cross motion, Stellar and American submitted the subcontract and the indemnity agreement, pursuant to which Serge was obligated to name Stellar as an additional insured under Serge's insurance policy. Stellar and American also submitted Serge's insurance policy, which provided that "[a]ny . . . organization" that Serge was "required by a written contract . . . to name as an insured" was an additional insured under the policy "with respect to liability arising out of" any "work" Serge "performed for" the organization "at the location designated in the contract." Finally, Stellar and American submitted the certificate of insurance reflecting that Serge named Stellar as an additional insured under Serge's insurance policy. Based on these submissions, Stellar and American established, prima facie, that Stellar qualified as an additional insured under Serge's policy (cf. Superior Ice Rink, Inc. v Nescon Contr. Corp., 52 AD3d 688, 690-692). In opposition, Merchants failed to raise a triable issue of fact.

    In addition, on their cross motion, Stellar and American established, prima facie, that Merchants was obligated to defend Stellar in the underlying action (see Sandy Cr. Cent. School Dist. v United Natl. Ins. Co., 37 AD3d 812, 813-814; Baron v Home Ins. Co., 112 AD2d 391, 392), but only from the time Stellar was served with the second amended complaint in that action. An insurer must defend its insured whenever the allegations of a complaint in an underlying action suggest a reasonable possibility of coverage (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714; Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65-66). Here, the second amended complaint in the underlying action, which Stellar and American submitted on their motion, amended the first amended complaint so as to include allegations to the effect that the accident was caused by the negligence of Serge's employees. Those allegations suggested, for the first time, a reasonable possibility of coverage in the underlying action for Stellar under Serge's insurance policy. Therefore, the second amended complaint triggered Merchants' duty to defend Stellar in that action, as an additional insured, regardless of whether the allegations concerning Serge were ultimately shown to be groundless (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d at 714-715). In opposition, Merchants failed to raise a triable issue of fact as to whether it was obligated to defend Stellar in that action from the time Stellar was served with the second amended complaint. Although Merchants asserted that it properly disclaimed coverage on the ground that it was not notified as soon as practicable of the accident and the underlying action, Stellar and American established that Merchants failed to timely disclaim coverage on these grounds and, hence, that Merchants is precluded from disclaiming coverage on those grounds (see Insurance Law § 3420[d]; Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772, 774-775; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-70; Matter of Allstate Ins. Co. v Swinton, 27 AD3d 462, 462-463).

    Finally, on their cross motion, Stellar and American established, prima facie, that as between American and Merchants, Merchants is the primary insurer, and the coverage provided to Stellar under Stellar's insurance policy is excess to the coverage provided to Stellar under Serge's insurance policy (see William Floyd School Dist. v Maxner, 68 AD3d 982, 986-987). In opposition, Merchants failed to raise a triable issue of fact.

    Thus, the Supreme Court should have, inter alia, granted that branch of Stellar's and American's cross motion which was, in effect, for summary judgment declaring that Merchants is obligated, as the primary insurer, to defend Stellar in the underlying action from the time Stellar was served with the second amended complaint in that action. However, the Supreme Court properly granted that branch of Merchants' motion which was for summary judgment declaring that Merchants is not obligated to indemnify Stellar in the underlying action.

    Even in cases of negotiated settlements, there can be no duty to indemnify unless a determination is made that there was a covered loss (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 423-425; Hotel des Artistes, Inc. v General Acc. Ins. Co. of Am., 9 AD3d 181, 193). The insurer has the burden of establishing that the loss was not within the policy coverage (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d at 425). On its motion, Merchants submitted certain evidence supporting a determination that any loss of Stellar's was not within the coverage of Serge's insurance policy because Stellar's "liability" did not "aris[e] out of" any "work . . . performed" by Serge. In this regard, Merchants submitted certain deposition testimony showing that Serge's employees did not create the opening through which Marsalona fell, and were not responsible for protecting construction workers from falling through that opening. In opposition, Stellar and American failed to raise a triable issue of fact.

    Neuman v  United Services Automobile Association


    Robert M. Spadaro,
    New York, N.Y., for appellant-respondent.
    Havkins Rosenfeld Ritzert & Varriale, LLP,
    New York, N.Y.
    (Tara C. Fappino and James E.
    Neuman of counsel), for respondents-
    appellants.


    DECISION & ORDER

    In an action, inter alia, to recover damages for breach of an insurance policy, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Scheinkman, J.), entered July 6, 2009, as denied that branch of its motion which was for summary judgment dismissing so much of the complaint as asserted a claim for losses caused by water damage, and the plaintiffs cross-appeal, as limited by their brief, from so much of the same order as denied that branch of their cross motion which was for summary judgment on the issue of liability with respect to their claim for losses caused by water damage.

    ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the defendant's motion which was for summary judgment dismissing so much of the complaint as asserted a claim for losses caused by water damage, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, with one bill of costs payable to the defendant.

    The plaintiffs' basement was damaged as a result of water penetration through the exterior wall in one corner of the basement. According to the plaintiffs' expert, the water originated "from the outside," in other words, it was "rain water." The plaintiffs' homeowner's insurance policy, issued by the defendant, contained an exclusion for "loss caused directly or indirectly by . . . water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure."

    In support of its motion for summary judgment, the defendant established that the loss was caused by rain water that seeped from the soil through the basement wall. Thus, the defendant made a prima facie showing that an excluded peril was the dominant and proximate cause of the water damage (see Album Realty Corp. v American Home Assur. Co., 80 NY2d 1008, 1110-1111; Kannatt v Valley Forge Ins. Co., 228 AD2d 564, 564-565).

    In opposition, the plaintiffs failed to raise a triable issue of fact as to whether an excluded peril, i.e., rain water that had soaked into the soil, was the dominant and proximate cause of the water damage to their basement (cf. Novick v United Servs. Auto. Assn., 225 AD2d 676, 677). "As read by the ordinary and reasonable business person" (Album Realty Corp. v American Home Assur. Co., 80 NY2d at 1010), a loss caused by "water below the surface of the ground" would certainly be found to encompass water that entered the soil from above, i.e., in the form of rain water, as posited by the plaintiffs in their bill of particulars. The plaintiffs' speculative assertions that the water damage to the basement could have been caused by any of a number of factors, such as corrosion, entry of water through the basement windows, or condensation, were entirely unsupported by the conclusions of their own expert, as well as their admission in their motion papers that the water entered the basement by seeping through the basement walls. Accordingly, their opposition was insufficient to defeat the defendant's motion (see Zuckerman v City of New York, 49 NY2d 557, 562; Kannatt v Valley Forge Ins. Co., 228 AD2d at 565), and the Supreme Court should have granted the defendant's motion in its entirety.

    In light of our determination, we need not address the parties' remaining contentions.


    Jankoff Joint Venture II, LLC v Bayside Fuel Oil Corp.

    Roy A. McKenzie, New York, N.Y., for appellant.
    Wenig Saltiel LLP,
    Brooklyn, N.Y. (Meryl L. Wenig of
    counsel), for respondent.


    DECISION & ORDER

    In an action, inter alia, to recover damages for breach of contract, the defendant Bayside Fuel Oil Corp. appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings Court (Schmidt, J.), dated September 18, 2009, as granted that branch of the plaintiff's motion which was to enforce a stipulation of settlement to the extent of directing the entry of judgment against it and in favor of the plaintiff in the principal sum of $10,000, and (2) a judgment of the same court dated November 9, 2009, which, upon the order, is in favor of the plaintiff and against it in the principal sum of $10,000.

    ORDERED that the appeal from the order is dismissed; and it is further,

    ORDERED that the judgment is reversed, on the law, that branch of the plaintiff's motion which was to enforce a stipulation of settlement to the extent of directing the entry of judgment against the defendant Bayside Fuel Oil Corp. and in favor of the plaintiff in the principal sum of $10,000 is denied, and the order is modified accordingly; and it is further,

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

    The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

    Where the record as a whole unequivocally establishes that it was the intent and understanding of the parties that a settlement would be paid out of funds of the Liquidation Bureau of the New York State Department of Insurance that were set aside for the payment of claims against insolvent insurance carriers, and there is no indication that the defendant personally participated in negotiation of the settlement in any way, entry of judgment against the defendant personally is improper (see Potenzieri v Basilio, 300 AD2d 557; Kergaravat v Hampton Coach, 298 AD2d 432, 433-434; Cobrin v DeLuna, 143 AD2d 723, 725; see also Countryman v Breen, 241 App Div 392, affd 268 NY 643; cf. Canino v Electronic Tech. Co., 49 AD3d 1050).

    Here, the parties all were aware before entering into a so-ordered stipulation of settlement (hereinafter the stipulation) that Reliance Insurance Company (hereinafter Reliance), the insurer of the defendant Bayside Fuel Oil Corp. (hereinafter Bayside), was insolvent. Indeed, in support of the plaintiff's motion to enforce the stipulation, the plaintiff's counsel averred that Bayside was represented by Reliance, "a company now in liquidation with the State of New York, Insurance Department, Liquidation Bureau [hereinafter the DOI]," and that "[c]ounsel representing the Liquidation Bureau participated in the negotiation and execution of the stipulation" before the Supreme Court. Further, the plaintiff served its notice of motion to enforce the stipulation on the DOI as well as on Bayside's counsel, who averred in his affirmation in opposition that he was counsel to the attorney designated as counsel to the DOI's attorney of record in Reliance's liquidation proceedings. Moreover, the stipulation was signed by Bayside's counsel, not Bayside.

    Thus, the record reveals that Bayside did not personally participate in the negotiation and execution of the stipulation (cf. Nuccio v Me & the Gang, 204 AD2d 289, 290). In addition, the plaintiff was placed on notice that the stipulation was entered into by an attorney who was acting as counsel to the attorney appointed by court order to represent Reliance, the insolvent insurance carrier. Accordingly, the record as a whole establishes that it was the intent and understanding of the parties that the settlement would be paid out of Liquidation Bureau funds set aside for the payment of claims against insolvent insurance carriers (see Potenzieri v Basilio, 300 AD2d at 557; Kergaravat v Hampton Coach, 298 AD2d at 433-434; Cobrin v DeLuna, 143 AD2d at 725; see also Countryman v Breen, 241 App Div at 394). Moreover, in recognition of the delays inherent in the liquidation process, and the mandatory statutory procedure for payment of claims to be paid from State funds, CPLR 5003-a, which provides for the prompt payment of settlements, specifically excludes settlements, such as the one in dispute, that are subject to article 74 of the Insurance Law (see CPLR 5003-a[f]; see e.g. Asseng v Arbacas, 181 Misc 2d 816, 818).

    In view of the foregoing, entry of judgment against Bayside was improper (see Potenzieri v Basilio, 300 AD2d at 557; Kergaravat v Hampton Coach, 298 AD2d at 434; Cobrin v DeLuna, 143 AD2d at 725; see also Countryman v Breen, 241 App Div at 394; cf. Canino v Electronic Tech. Co., 49 AD3d 1050).

    The plaintiff's remaining contentions are without merit.
    MASTRO, J.P., MILLER, LEVENTHAL and BELEN, JJ., concur.

     

     

    Morton v. State of New York

     

    Claimant Alan Morton was injured on the morning of April 3, 1997 while working for his employer, New York Water Service Corporation (the water company), a private company that furnishes water to portions of Nassau County. On that date, he was a member of a four-person work crew, including a foreman, dispatched with a backhoe to fix a break reported in a company-owned water main installed in 1928 beneath Carman Mill Road, Massapequa, New York, a part of the State of New York's highway system (see Highway Law § 341 [29] [1]).

    Upon arrival at the job site, the work crew notified affected customers and shut off water service, excavated test holes to pinpoint the leak's origin, and placed traffic cones to alert motorists to the presence of the backhoe, which occupied a portion of the northbound travel lane. Using the backhoe and shovels, the crew dug up blacktop in the roadbed and created a hole or trench, exposing the 12-inch water main buried several feet underground. When claimant climbed down into this trench to clean around the main and apply a repair clamp, a side wall caved in, burying his right leg and foot.

    In June 1997, claimant, with his wife suing derivatively, brought this action against the State. He asserted common-law negligence and violations of Labor Law §§ 200, 240 and 241 (6), and sought $5.5 million in damages. In 2002, claimant moved for partial summary judgment as to liability on his Labor Law § 241 (6) and negligence claims. He premised liability in the former on violation of Industrial Code Rule 23 (12 NYCRR subpart 23-4), which requires banked or sloped sides (12 NYCRR 23-4.2 [a]) or "sheeting, shoring and bracing" (12 NYCRR 23-4.4 [a]) of excavations that are five feet or more deep. The State opposed the motion and cross-moved for summary judgment dismissing the complaint.

    The State argued that it was not liable under Labor Law § 241 (6) because the water company failed to obtain a work permit from the New York State Department of Transportation (DOT), as mandated by Highway Law § 52, prior to repairing the water main, which was situated within the State highway right-of-way. Section 52 provides that

    "[e]xcept in connection with the construction, reconstruction, maintenance or improvement of a state highway, no person, firm, corporation, municipality, or state department or agency shall . . . lay or maintain [within the State highway right-of-way] underground wires or conduits or drainage, sewer or water pipes, except in accordance with the terms and conditions of a work permit issued by the commissioner of transportation" (see also Vehicle and Traffic Law

    § 1220-c ["[e]xcept in connection with the construction, reconstruction, maintenance, or improvement of a state highway, no person shall work on a state highway without a work permit issued by the state commissioner of transportation"]; 17 NYCRR 126.2 [a],[b] [a work permit must be secured "to temporarily obstruct or to install, construct, maintain or operate any facilities within the bounds of a State highway right-of-way," including "excavating . . . or work of a like nature under, or over or along the highway"]).

    By decision and order dated October 21, 2002, the Court of Claims dismissed claimant's negligence claims because the State lacked actual or constructive notice of any dangerous condition and did not exercise supervision or control over the worksite. The court also denied claimant's motion and the State's cross motion for summary judgment on the Labor Law
    § 241 (6) claim. The judge concluded that Highway Law § 52 did not insulate the State from liability under Labor Law § 241 (6) because this provision "imposed a nondelegable duty upon 'owners' to provide reasonable and adequate protection and safety to persons employed in excavation work regardless of the absence of control, supervision or direction of the work." He did find, however, that material questions of fact existed as to soil composition and the excavation's depth, which implicated the applicability of the Industrial Code sections relied upon by claimant.

    After the ensuing nonjury trial, the Court of Claims on April 9, 2003 found that the excavation was not protected by sloped or banked sides or by sheeting, shoring or bracing, and that it was more than five feet deep. The judge decided that claimant had therefore proven violations of sections of the Industrial Code specific enough to support Labor Law § 241 (6) liability; and that these violations proximately caused the accident, and thus contravened the State's nondelegable duty to claimant under Labor Law § 241 (6). The judge also found that the State had not proven claimant's comparative negligence by a preponderance of the credible evidence. Accordingly, on May 7, 2003, an interlocutory judgment determining the State to be negligent and 100% liable for claimant's injuries was entered in the Court of Claims. The State appealed from both the order denying its cross motion for summary judgment on the section 241 (6) claim, and the interlocutory judgment.

    In December 2004, the Appellate Division dismissed the State's appeal from the interlocutory judgment as academic; reversed, on the law, the portion of the Court of Claims' order that denied the State's cross motion for summary judgment dismissing the section 241 (6) claim; granted the State summary judgment on and dismissed that claim; and vacated the interlocutory judgment (13 AD3d 498 [2d Dept 2004]). Citing Abbatiello v Lancaster Studio Assoc. (3 NY3d 46, 51 [2004]), the court reasoned that the

    "State is not liable . . . under Labor Law § 241 (6) because the claimant was not within the class of persons afforded protection under the statute. Since [the water company] failed to obtain a highway work permit in violation of state law . . . [the water company] and the claimant trespassed on the State's property in performing excavation and repairs on the state highway . . . Since the claimant was performing work without the State's permission or knowledge, he was not a person 'employed' at a work site within the meaning of the Labor Law, which defines such an individual as one 'permitted or suffered to work' (Labor Law § 2 [7])" (13 AD3d at 500 [citations omitted]).


    We granted claimant permission to appeal,[FN1] and now affirm.

    Labor Law § 241 (6) provides that

    "[a]ll contractors and owners and their agents . . ., when constructing or demolishing buildings or doing any excavating in connection therewith, shall comply with the following requirements:

    . . .

    "All areas in which construction, excavation or demolition work is being performed shall be so constructed, shored, equipped, guarded, arranged, operated and conducted as to provide reasonable and adequate protection and safety to the persons employed therein or lawfully frequenting such places. The [New York State Commissioner of Labor] may make rules to carry into effect the provisions of this subdivision, and the owners and contractors and their agents for such work . . . shall comply therewith."


    Thus, Labor Law § 241 (6) imposes a nondelegable duty [FN2] on owners and contractors to comply with the Commissioner of Labor's regulations (see Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494, 502 [1993]). And "to the extent that [a] plaintiff . . . assert[s] a viable claim under Labor Law § 241 (6), he need not show that defendants exercised supervision or control over his worksite in order to establish his right of recovery" (id.).

    But we have consistently held that ownership of the premises where the accident occurred - standing alone - is not enough to impose liability under Labor Law § 241 (6) where the property owner did not contract for the work resulting in the plaintiff's injuries; that is, ownership is a necessary condition, but not a sufficient one. Rather, we have insisted on "some nexus between the owner and the worker, whether by a lease agreement or grant of an easement, or other property interest" (Abbatiello, 3 NY3d at 51; see also Scaparo v Village of Ilion, 13 NY3d 864, 866 [2009] ["In cases imposing liability on a property owner who did not contract for the work performed on the property, this Court has required 'some nexus between the owner and the worker, whether by a lease agreement or grant of an easement, or other property interest'"], quoting Abbatiello, 3 NY3d at 51).

    We found no nexus in Abbatiello where the plaintiff, a cable television repair man, was injured at a building owned by the defendant while responding to the complaint of a tenant who was a cable television subscriber. The plaintiff's employer had sent the plaintiff to the defendant's building to respond to the complaint. We emphasized that the "injured plaintiff was on the owner's premises not by reason of any action of the owner but by reason of provisions of the Public Service Law," which precludes landlords from interfering with the installation of cable television facilities on their property (Abbatiello, 3 NY3d at 51). Moreover, the owner was "powerless to determine which cable company [was] entitled to operate, repair or maintain the cable facilities on its property, since [pursuant to Public Service Law § 219] such decision lies with the municipality - the franchisor" (id. at 52). As we elaborated,

    "but for Public Service Law § 228, plaintiff would be a trespasser upon [the defendant's] property and [the defendant] would neither owe a duty to plaintiff nor incur liability. Any permission to work on the premises was granted upon compulsion and no relationship existed between [the defendant] and [the plaintiff's employer] or the plaintiff" (id.).


    We contrasted Abbatiello with three earlier cases in which there was a nexus between the owner and the injured worker: Celestine v City of New York (86 AD2d 592, 593 [2d Dept 1982], affd 59 NY2d 938 [1983] [in action under Labor Law § 241 (6), owner granted an easement to entity contracting for work leading to plaintiff's accident]); Gordon v Eastern Ry. Supply (82 NY2d 555, 559 [1993] [in action under Labor Law § 240 (1),[FN3] owner leased property to contractor who performed work leading to plaintiff's accident]); and Coleman v City of New York (91 NY2d 821, 823 [1997] [in action under Labor Law § 240 (1), owner leased property to injured employee's employer]).

    We next applied the nexus test in Sanatass v Consolidated Inv. Co., Inc. (10 NY3d 333, 341 [2008]), where a mechanic was injured while installing an air conditioning unit for a tenant of a commercial building owned by the defendant landlord. The tenant had agreed by lease not to make any changes to the premises without the owner's written consent, but nevertheless hired the plaintiff's employer without notifying the landlord. There, a nexus arose from the owner's lease of the premises to the tenant who, in turn, hired the plaintiff's firm to install the air conditioning unit. Further, the tenant's breach of the lease agreement requiring the owner's written consent for alterations "did not sever the nexus" (id. at 341-342). We distinguished Abbatiello, pointing out that although the owner in that case "was unaware of and did not consent to the plaintiff's presence on the property, these facts alone were not determinative of our affirmance of the dismissal of the complaint" - i.e., "Abbatiello did not announce a new notice requirement for section 240 (1) cases" (id. at 341). Rather, the difference between Abbatiello and Sanatass was the absence of a nexus in the former and its presence in the latter (id.). And we again explained that in "Celestine and its progeny . . . a nexus existed between the out-of-possession owner and the plaintiff, be it by lease, easement or some other property interest" (id.). Finally, we observed that "[u]nlike the cable technician in Abbatiello, the plaintiff in [Sanatass] . . . cannot conceivably be viewed as a 'trespasser'" (id. at 342).

    Scaparo is our most recent decision discussing the nexus prerequisite. There, the injured plaintiffs, employees of the Village of Frankfort, were connecting a sewer lateral from a newly constructed cemetery chapel owned by a church to the sewer main at a street intersection in the Village (see 64 AD3d 1209, 1211 [4th Dept 2009]). The Herkimer County Industrial Development Agency (HCIDA) owned the property where the sewer lateral was installed; that property was within the Village's utility right-of-way (see id.). Affirming the Appellate Division, we determined that HCIDA was not liable under Labor Law § 241 (6) because there was no nexus between HCIDA and the injured plaintiffs. As we explained,

    "although the accident occurred on HCIDA's property, HCIDA did not contract with the Village of Frankfort to have the sewer lateral installed, it had no choice but to allow the Village to enter its property pursuant to a right-of-way, and it did not grant the Village an easement or other property interest creating the right- of-way" (Scaparo, 13 NY3d at 866).

    Here, there was no lease agreement or grant of an easement or other property interest creating a nexus between claimant and the State. Claimant was performing excavation work on the State's premises "not by reason of any action of the [State] but by reason" of the water company's obligation to repair a break in its water line (Abbatiello, 3 NY3d at 51). And although claimant protests that the water company's repairs took care of the damage caused to the State-owned roadway by the leak and removed a traffic hazard in an emergency situation,[FN4] we long ago concluded that whether a property owner benefits in any sense from the injury-related work is "legally irrelevant" to determining whether the Labor Law imposes a nondelegable duty (see Gordon, 82 NY2d at 560).

    Claimant also urges that he "did not simply trespass on another's property," and tags the statutory requirement for a highway work permit as "[a] mere formality." But we have recognized that the "terms and conditions [of these permits] are not meaningless or optional; the permitee agrees to abide by them in order to obtain DOT's permission to work in the highway right-of-way" (Brothers, 11 NY3d at 260). The permit requirement allows DOT to inspect the worksite to insure the safety of motorists, pedestrians and others in the work zone, and to safeguard the roadway's integrity. And as we indicated in Brothers, DOT may revoke a highway work permit at any time if necessary to protect the public (see id. at 259; see also 17 NYCRR 129.3 [b] [the DOT Commissioner "reserves the right to revoke or annul the (state highway) permit at any time and at his discretion without a hearing or the necessity of showing cause"]; 17 NYCRR 131.21 [c] [DOT "reserves the right to modify and to revoke or annul" a highway work permit issued for utility facilities occupying a State right-of-way "upon a determination within its sole discretion, and without a hearing, that continued operation under the permit will cause or continue a threat to the public or to the operation of the highway"]). In addition, the permit requirement allows the State to verify that the permittee has liability insurance in place to protect the State's interests (see 17 NYCRR 129.3 [f]; 17 NYCRR part 127).[FN5]

    Finally, claimant suggests that a highway work permit may not have been necessary here because of the "emergency situation." DOT's regulations, however, make clear that the water company was required to have in hand either a job-specific or an annual permit before undertaking excavation of the roadway, notwithstanding any exigency (see 17 NYCRR 126.2; 129.1). There are simply different requirements for notifying DOT, depending on whether or not an emergency exists (compare 17 NYCRR 129.3 [a] [1] with 17 NYCRR 129.3 [a] [2]; see also 17 NYCRR 126.6 [specifying instructions to obtain highway work permits that apply to, among other things, "emergency repairs and public utilities"]). Additionally, even if it were true that the water company was entitled to enter the State highway right-of-way without a work permit in order to make emergency repairs, the State still would not be liable. In that circumstance, "[a]ny permission to work on the premises [would have been] granted upon compulsion and no relationship [would have] existed between [the State] and [the water company] or [claimant]" (Abbatiello, 3 NY3d at 52).

    The outcome of this case would be different - as the State concedes - if the water company had secured a highway work permit before excavating in the State highway right-of-way. In that event, the work permit would have created the nexus between the claimant, the injured worker, and the State, the property owner. Without the permit, though, claimant was a trespasser to whom the State owed no duty under Labor Law § 241 (6).

    Although acknowledging that we have always "required as a condition of owner liability [under Labor Law § 241 (6)] no more than some connection, or 'nexus,' between the owner and the plaintiff," the dissent never suggests how this minimal standard was met - i.e., what the nexus might have been - in this case (dissenting op at 4; cf. n 4, supra). All we are told is that "[t]here is . . . no issue . . . as to whether" this unspecified nexus "was attenuated by out-of-possession status" as was purportedly the question in Sanatass (dissenting op at 6). Of course, in Sanatass there was a clear nexus - a lease - and the issue, as we articulated it, was not whether this nexus was "attenuated by [the landlord's] out-of-possession status," but whether it had been "sever[ed]" by the tenant's breach of a clause in the lease prohibiting the hiring of a contractor to make alterations in the premises without the landlord's written prior consent (see Sanatass, 10 NY3d at 341-342). We decided, of course, that this clause did not sever the nexus created by the lease.

    Under the dissent's apparent analysis of our prior cases, a property owner who did not contract for the injury-inducing work is liable under Labor Law § 241 (6) unless the plaintiff's employer's entry onto the premises results from compulsion - i.e., permission unrelated to a lease, easement or some other property interest granted by the owner. This is certainly contrary to the way in which we have consistently explained and reconciled our precedents, and effectively eliminates the nexus requirement. More to the point, there is no reason to believe that this is what the Legislature intended. Indeed, such a liability scheme would do away with any motive or means for a property owner "to assure that only financially responsible and safety-conscious subcontractors are engaged so that a high standard of care might be maintained throughout the entire construction site"; and to "furnish[] an additional incentive to both insurer and insured to maintain safety standards necessary to avoid increased exposure to liability" (Allen v Cloutier Constr. Corp., 44 NY2d 290, 301 [1978]).

    Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.
    Morton v State of New York
    No. 103


    LIPPMAN, Chief Judge(dissenting) :

    Claimant Alan Morton was injured when, after being "dispatched" by his water company employer to the site of a broken water main located beneath a state owned roadway, the unshored sides of the area excavated to facilitate the repair fell upon him. He sought to recover for his injuries pursuant to Labor Law § 241 (6), and in the ensuing litigation established that his injuries were attributable to a violation of that statute's requirement that "[a]ll areas in which construction, excavation or demolition work is being performed shall be so constructed, shored, equipped, guarded, arranged, operated and conducted as to provide reasonable and adequate protection and safety to the persons employed therein." He is now told, however, that he may not recover because the party against whom recovery is sought - and, indeed, the only party potentially answerable in damages under the present circumstances - the State, had not given permission for the repair. It is not disputed that the State would otherwise be statutorily liable by reason of its ownership of the accident site.

    The question, then, is whether the failure of claimant's employer to obtain permission should operate to deprive claimant of the remedy the Legislature has provided in enacting Labor Law § 241 "to achieve the purpose of protecting workers by placing 'ultimate responsibility for safety practices at building construction jobs where such responsibility actually belongs, on the owner and general contractor' (1969 NY Legis Ann, at 407), instead of on workers, who 'are scarcely in a position to protect themselves from accident' (Koenig v Patrick Constr. Co., 298 NY 313, 318)" (Zimmer v Chemung County Performing Arts, 65 NY2d 513, 520 [1985]). Because the strict liability statute at issue nowhere conditions an owner's liability upon consent to the injury producing work, and because we have expressly held that an owner may not avoid responsibility under the strict liability provisions of the Labor Law by interpolating such a requirement as a condition of recovery, I respectfully dissent.

    The strict liability provisions of the Labor Law, sections 240 and 241, do not contain any provision conditioning the liability of an owner or any other statutorily responsible party upon that party's consent to, permission for, control, or even knowledge, of the injury producing activity. The precautionary obligations imposed under those statutes are absolute andnon-delegable and, accordingly, their discharge cannot depend upon whether in a particular case the owner, contractor or agent had notice of or allowed the work (see Gordon v Eastern Ry. Supply, 82 NY2d 555, 560 [1993]; Coleman v City of New York, 91 NY2d 821 [1997]); the imperative behind these enactments is that someone, other than the worker, must bear ultimate responsibility for worksite safety. The onus is placed on owners, contractors and their agents not because they are invariably situated and apprised to assure the safety of the workplace, but because, generally, they are the parties best positioned and equipped to meet that essential objective (Allen v Cloutier Constr. Corp., 44 NY2d 290, 301 [1978]).

    Abbatiello v Lancaster Studio Assoc. (3 NY3d 46 [2004]) should not be read to alter the Labor Law's essential allocation of responsibility. There, liability was sought against a building owner for injuries sustained by a technician in the course of a cable television service call for which access to the owner's building was compelled by statute. In deciding that the owner could not in those particular circumstances be held strictly accountable under the Labor Law, the Court observed,
    "Lancaster [the owner] cannot be charged with the duty of providing the safe working conditions contemplated by Labor Law § 240 (1) for cable television repair people of whom it is wholly unaware. Supreme Court correctly noted that, but for Public Service Law § 228, plaintiff would be a trespasser upon
    Lancaster's property and Lancaster would neither owe a duty to plaintiff nor incur liability. Any permission to work on the premises was granted upon compulsion and no relationship existed between Lancaster and Paragon or the plaintiff."
    (id. at 52). After Abbatiello, there was some belief that an owner's knowledge of and permission for the work in the course of which the sued upon injuries were sustained were generally necessary conditions of owner liability under the Labor Law's strict liability statutes (see e.g. Sanatass v Consolidated Inv. Co., Inc., 38 AD3d 332 [2007], revd 10 NY3d 333 [2008]); Morales v D & A Food Serv., 41 AD3d 352 [2007], revd 10 NY3d 911 [2008]), but we addressed this misconception in Sanatass, where we reiterated,
    "our precedents make clear that so long as a violation of the statute proximately results in injury, the owner's lack of notice or control over the work is not conclusive-this is precisely what is meant by absolute or strict liability in this context. We have made perfectly plain that even the lack of 'any ability' on the owner's part to ensure compliance with the statute is legally irrelevant (see Coleman, 91 NY2d at 823)"
    (10 NY3d at 340 [internal citation omitted]). We at the same time clarified that Abbatiello, properly understood in light of the governing statutes, their often acknowledged protective purposes and our consistent precedents, required as a condition of owner liability no more than some connection, or "nexus," between the owner and the plaintiff (id. At 341).

    While we had noted in Abbatiello that the required nexus might be supplied by the circumstance that an out-of-possession owner had granted a property interest in the premises to the party who had afforded the consequently injured worker access, our decision in Abbatiello turned not upon the absence of a connective property interest, or even upon the absence of permission, but upon the legal incapacity of the owner to withhold access for the injury producing work (3 NY3d at 52). Similarly, in the subsequently decided case of Scaparo v Village of Ilion (13 NY3d 864 [2009]), we upheld the dismissal of a Labor Law § 241 (6) claim upon the ground that the owner "had no choice but to allow the Village [the employer of the injured plaintiffs] to enter its property pursuant to a right-of-way" (id. at 866).

    Our decision in Sanatass, by contrast, addressed the situation only hypothetically adverted to in Abbatiello - whether an out-of-possession owner "by a lease agreement or grant of an easement, or other property interest" (Abbatiello, 3 NY3d at 51) retained a sufficient nexus with the property and the plaintiff's work upon it to qualify as an "owner" under the Labor Law's strict liability statutes. We held that the out-of-possession owner there did retain the requisite connection, since it had leased the premises to the party that had afforded access to the workers subsequently injured upon the premises in the course of performing alterations. In so holding, we acknowledged that the lease in fact contained a provision, allegedly violated by the lessee, requiring the owner's written permission for the work. Clearly differentiating between nexus and permission, we rejected the contention that violation of the lease provision requiring permission for the work could vitiate the nexus necessary to sustain the strict liability claim against the owner (Sanatass, 10 NY3d at 341-342). We recognized that the injured worker's right of recovery could not, consistent with the Labor Law's dominant protective purpose, be made to depend upon legal claims the owner might have over against third parties (id.).

    The majority now, ignoring the crucial distinction made in Sanatass, equates nexus with permission and, in so doing, affords the nexus requirement a dimension incompatible with the strict liability provisions at issue and their remedial purpose.

    There is, of course, no issue in this case as to whether defendant's nexus to the work site and claimant was attenuated by out-of-possession status; defendant owned and was in possession of the roadway where the accident took place. The only remaining nexus issue, then, if Abbatiello and its progeny are to be followed, is whether defendant's ownership interest in the work site was rendered nugatory by some countervailing legal compulsion effectively divesting defendant of its right to exclude claimant's employer from its premises. Obviously, there was no such compulsion. It is, to the contrary, defendant State's strenuous contention that, pursuant to Highway Law § 52, access for the work performed by claimant's employer was legally contingent upon defendant's issuance of a permit. This provision in the owner's favor, like the lease provision in Sanatass, may well have been violated by the worker's unpermitted access of the property, but there is no reason why this defendant any more than the defendant in Sanatass should therefore avoid the responsibilities of ownership under the Labor Law.

    Labeling claimant a "trespasser" - one whose presence on the premises was not permitted - is only another way of importing into the Labor Law a coverage condition of owner permission at variance with the statutory scheme. What is relevant is, rather, whether the worker is "employed" to do work otherwise falling within the statutory coverage criteria (see Labor Law § 241 [6]). There is no question that claimant was legitimately employed to do the very work he was doing at the time of his injury, or that he was present upon defendant's roadway at the direction of his employer, or that defendant, although empowered to deny access, did not. That defendant may have been unable to exercise its power to do so by reason of the water company's failure to seek a permit for the work, cannot be determinative of claimant's right to the Labor Law's protection, particularly where there is no reason to suppose that defendant would have denied access for the emergently necessary repairs [FN6] . Under the holding now embraced by the majority no worker will know as he or she sets off to a work site at the direction of his or her employer whether he or she will be covered under the Labor Law's umbrella; there will always be the possibility of a subsequent claim by the owner that permission for the work was not given - that the worker was in the eyes of the owner and pursuant to some agreement or enactment about which the employee cannot be expected to have been aware, a "trespasser."

    The Court does today precisely what it said would be impermissible in Sanatass: it has permitted an owner to "engraft" onto the Labor Law a limitation upon the Law's coverage at odds with the statutory scheme (see Sanatass, 10 NY3d at 342). True, here it is the State relying upon an enactment in its favor, and not a private party relying upon a contract, that seeks to benefit from the proposed limitation, but there is no evidence that the Legislature, in enacting the statute upon which the defendant bases its claim of non-coverage, intended to truncate the protections of the Labor Law. And, in the absence of such evidence, the State's dependence upon Highway Law § 52, an apparently modestly intended provision, should be as unavailing as the owner's reliance upon the lease provision in Sanatass. If the protections of the Labor Law are to be abridged that is a matter to be frankly undertaken by the Legislature; it should not be accomplished, as it is now, by judicial invention.

    Pervading the majority opinion is the very basic misunderstanding, nowhere encouraged in the governing statute or our case law, that in every strict liability Labor Law action "nexus" must be separately demonstrated as an element of the claim. This has never been true. Ordinarily, all that is necessary to demonstrate the liability of an "owner" under the subject provisions is a showing of a statutory violation and causation. Ownership itself ordinarily suffices to establish any connection with the property and the work upon it necessary to sustain liability. An additional showing of connection has only been deemed necessary where an owner is out-of-possession [FN7] - but we have never actually found a lack of nexus on that ground - or where there is some relevant legal impediment to the owner's assertion of his ownership prerogatives, as in Abbatiello and Scaparo, where access to the premises is statutorily or otherwise legally compelled notwithstanding any right of exclusion the owner might otherwise have. There has never, until today, been a case in which an in-possession fee owner in no way legally disabled from the assertion of its ownership rights has been held to have an insufficient connection to those working upon the property to support statutory liability under the Labor Law. This is a significant and unwarranted departure that the Legislature may well wish to curtail.

    Strict liability statutes invariably produce some harsh outcomes, but that is not a reason to deny them effect. The Legislature has determined to impose extensive duties upon owners to assure worker safety and provide reliable recourse in the event of construction related injury. Plainly, defendant was not at fault in connection with claimant's harm; it was held accountable simply by reason of its ownership of the premises where the accident occurred. Owners, however, are not helpless to protect themselves from the exposure created by the Labor Law. They can purchase insurance to guard against the risk of statutory liability, and can require contractors to do the same and name them as additional insureds [FN8] . They can, in addition, seek through third-party litigation to place financial responsibility for liability incurred on purely statutory grounds with the party actually at fault. What they should not be permitted to do, however, is to unilaterally tinker with the Labor Law's basic protective ambit and thereby leave an injured worker, otherwise deserving of the Law's protection, without recourse. Accordingly, I dissent from the Court's determination to afford such permission and would reverse and rule in claimant's favor.
    * * * * * * * * * * * * * * * * *
    Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs. Opinion by Judge Read. Judges Graffeo, Smith, Pigott and Jones concur. Chief Judge Lippman dissents and votes to reverse in an opinion in which Judge Ciparick concurs.
    Decided
    June 8, 2010

    Footnotes



    Footnote 1: Claimant first moved for leave to appeal in 2005. We dismissed that motion for lack of finality because his claim under Labor Law § 240 remained pending in the lawsuit (5 NY3d 783 [2005]). In May 2009, however, the parties stipulated to discontinue the section 240 claim.

    Footnote 2:As we noted in Brothers v New York State Elec. & Gas Corp. (11 NY3d 251, 256 n 1 [2008]), "[i]n tort law, the term 'nondelegable duty,' although widely used, is somewhat misleading. The question is not so much whether a defendant can or has delegated to another party a duty owed by that defendant to a particular plaintiff, but whether the defendant owes the plaintiff a duty in the first place."

    Footnote 3: Like Labor Law § 241 (6), Labor Law § 240 (1) imposes a nondelegable duty on owners.

    Footnote 4: Claimant articulates the nexus that he asserts in this case as follows: "At bar, the nexus between claimant's work and the State's ownership is clear - the emergency situation blocked traffic and the road was buckling, and the State had a non-delegable duty to maintain the road; [the water company's] work was designed to assist the State." In fact, the water company did not repair the leak to help the State maintain its roadway; its repairs simply eliminated or mitigated damages otherwise owing the State for the harm to State-owned property caused by the leak, which the water company was obligated to fix to maintain service to its customers.

    Footnote 5: For some unexplained reason, the water company purchased protective liability insurance naming DOT as an additional insured, which was in force at the time of claimant's accident, even though there was no job-specific or annual work permit requiring it. Although the State impleaded the insurance carrier after learning about the policy during discovery, the Court of Claims dismissed the third-party complaint for failure to provide the insurer with timely notice of the claim.

    Footnote 6: Indeed, it appears from the trial testimony that a permit would have routinely issued.

    Footnote 7: While in our affirming memorandum in Scaparo we without explanation glossed "out-of-possession" as without contractual relationship (13 NY3d at 866), it does not appear that any departure from Abbatiello was intended and the substituted language now read as broadening the separate nexus requirement was, in any event, dicta.

    Footnote 8: Defendant, presumably not out of any charitable impulse on the part of the water company was, in fact, named as additional insured in the water company's liability policy. While the State, and now the majority, suggest that defendant's failure to realize the benefit of that coverage in this case is attributable to the water company's noncompliance with the State permitting law, the suggestion is belied by express findings in the underlying insurance litigation that the State failed to make reasonable efforts to ascertain the existence of such coverage and unreasonably delayed in filing a claim, even after it had learned of the coverage.

    East Hills Metro, Inc. v Jeffrey M. Brown Associates, Inc.


    Torre, Lentz, Gamell, Gary & Rittmaster, LLP,
    Jericho, N.Y.
    (Sean P. Kelley of counsel), for appellant.
    Rivelis, Pawa & Blum, LLP,
    New York, N.Y. (Howard
    Blum of counsel), for respondent.


    DECISION & ORDER

    In an action to recover damages for breach of contract and unjust enrichment, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated April 27, 2009, as denied that branch of its motion which was for summary judgment on that portion of the complaint which sought to recover the principal sum of $130,651 withheld by the defendant pursuant to the "change orders" corresponding to the subject subcontracts.

    ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the plaintiff's motion which was for summary judgment on that portion of the complaint which sought to recover the principal sum of $130,651 withheld by the defendant pursuant to the "change orders" corresponding to the subject subcontracts is granted.

    Target Corporation (hereinafter Target), a nonparty, undertook to open a new Target store in the Riverdale section of the Bronx. In conjunction with the construction of the store, Target instituted an "Owner Controlled Insurance Program" (hereinafter OCIP), a comprehensive insurance program pursuant to which all contractors and subcontractors working on the project would be insured. In exchange for the insurance coverage provided to them by this program, contractors and subcontractors were required to include in their contracts and subcontracts credits or deductions of amounts to be withheld from the sums due to them to offset the costs of their proportionate share of the OCIP coverage.

    Target entered into an agreement with the defendant pursuant to which the defendant was to serve as the general contractor on for the construction of the store. The plaintiff entered into three subcontracts with the defendant to perform various work on the store. As the construction advanced, the scope of the plaintiff's work expanded. Therefore, according to the defendant and the provisions of the OCIP, the amounts to be withheld from the plaintiff to offset insurance costs increased. Thus, upon completion of the store, when the defendant paid the plaintiff, the defendant, pursuant to three "change orders" corresponding to each of the three subcontracts, withheld significantly greater sums to offset the cost of the OCIP to the plaintiff than what was originally reflected in the three subcontracts.

    The plaintiff commenced this action to recover the sums withheld by the defendant. The defendant asserted that, pursuant to the subcontracts, as well as the terms of the OCIP, withholding sums to compensate for the cost of the OCIP to the plaintiff was proper, and it was permitted to increase the amounts charged back to the plaintiff to reflect the increased cost of the OCIP attributable to the work performed by the plaintiff.

    The plaintiff moved for summary judgment on the complaint, asserting that the "back charges" included in the change orders violated Insurance Law § 2505. The Supreme Court determined that, while the provisions of the OCIP and the subcontracts purported to allow for the recalculation and increase of amounts due to cover the cost of a subcontractor's proportionate share of the OCIP, these provisions violated Insurance Law § 2505. Nonetheless, the Supreme Court denied the plaintiff's motion for summary judgment, determining that "an issue of equitable estoppel . . . precludes the grant of summary judgment." In the order appealed from, the Supreme Court essentially determined that an issue of fact existed as to whether the plaintiff benefitted from the insurance protection afforded by the OCIP while not bearing the cost of that protection, or had secured its own insurance coverage in connection with the project. We reverse the order insofar as appealed from.

    The Supreme Court correctly concluded that, to the extent that the provisions of the OCIP and the subcontracts permit the post-completion recalculation of, and increase in the amounts to be withheld to offset, the plaintiff's proportionate share of the OCIP, they violated Insurance Law § 2505. Pursuant to that section, owners and general contractors are prohibited from requiring a subcontractor on a nonpublic construction project to pay a premium or related charges for a policy of insurance (see Insurance Law § 2505[a]). An owner or general contractor may provide such a policy "without reimbursement from the contractor or subcontractor," and may require, as essentially was done here, that the subcontractor provide a credit in its bid reflecting the amount the subcontractor "would otherwise add if [it] provided [its] own insurance as required in the bid specifications" (Insurance Law § 2505[b]). Thus, the provisions of the OCIP which allowed for the post-completion adjustment and increase in the credit violate Insurance Law § 2505 because, unlike the credit in the subcontracts, they require the plaintiff to reimburse the defendant for the cost of insurance provided by Target through the defendant. Based on the evidence provided by the plaintiff in support of its motion, the plaintiff established its prima facie entitlement to judgment as a matter of law. In opposition, the defendant failed to raise a triable issue of fact.

    Contrary to the Supreme Court's determination, the doctrines of equitable estoppel (see generally Matter of John Robert P. v Vito C., 23 AD3d 659, 661) and unclean hands (see generally Kopsidas v Krokos, 294 AD2d 406, 407) are inapplicable to the facts and circumstances of this case.

    Accordingly, the Supreme Court should have granted that branch of the plaintiff's motion which was for summary judgment on that portion of the complaint which sought to recover the principal sum of $130,651. This amount represents the difference between the amount withheld by the defendant pursuant to the change orders corresponding to the subcontracts dated May 3, 2005 ($167,187), and the amount of the credit originally set forth in the subcontracts that the plaintiff agreed to have withheld by the defendant ($36,536).

     

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