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Coverage Pointers - Volume XI, No. 4

Dear Coverage Pointers Subscribers:

A special welcome to our new subscribers and we've added another dozen or so since our last issue.  Also, a tip of the hat to my friends in the Flower City who were kind enough to invite me to speak on the topic:  "Making Mediation Meaningful - the 'Getting to Yes' Approach to Mediation".  Hope you enjoyed the imported oranges.  One more thank you and that goes out to Jenny Waley, our long-time MIS who has been my technical backbone and computer guru for many years.  She'll be spending a little more time at home and will be sorely missed.

Please do not consider this issue a typical one.  Its paucity of cases is a reflection of the summer vacation schedule in New York's appellate courts.  With the exception of decisions that impact on primary election ballots, the Court of Appeals is on hiatus until September and the four appellate departments are on summer schedule until Labor Day.  So we continue to report on every appellate decision in New York involving insurance coverage, but every year we face this same annual drought.

We are in what some call the Dog Days of summer.  Soon, the cooler air will begin to stream in, already darkness is beginning to hide the beach just a little earlier each night and the dawn is beginning to take its sweet time in welcoming the morning. Frankly, I prefer that summer would hang until spring.

Editor's note:  Actually, there is a debate on whether we're really in the Dog Days, which are supposed to be the summer's most sultry time. They are so named because of the ancient belief that Sirius, the Dog Star, is in close proximity to the sun and responsible for the hot weather.  The Book of Common Prayer and the Old Farmers Almanac have the Dog Days ending earlier in the summer but other sources continue to count them through the end of August.

No Fault Reform

It just isn't happening this year.  Sad.  The Legislature had all the right parties at the table to enact meaningful legislation that could have reduced the significant fraud that dramatically impacts on all insurers and policyholders.  However, there are interest groups that have too much at stake in the present system and too much influence in legislative circles.  Accordingly, the status quo continues.

Which interest groups have influence?  Well, Audrey reports on one piece of No Fault legislation that was signed into law.  Isn't it nice to know that the burden of the costs of hospital care for an intoxicated driver is now shifting from the hospitals to the insurance industry?  Do we need to wonder who pushed that bill through?

Ninety Years Ago Today:  "Be a Good Boy, Harry."

Do you know of Harry T. Burn?  They remember him fondly down in Tennessee and women throughout the United States ought to salute him this week.

Ninety years ago this week, it was hot and muggy at the Tennessee state capitol.  Harry Burn was 24, the youngest legislator ever elected in the state.  He hailed from the Town of Niota (population 400) and sat in the Senate chambers wearing a rose in his lapel.  The State Legislature had decided to take up the debate on the 19th Amendment granting suffrage - granting women the right to vote.

Harry opposed this radical proposal, and while 35 states had approved it, the Amendment could not be ratified without three quarters of the 48 states supporting it, so there was a need for a 36th.  They had the votes counted in the Volunteer State and everyone who had enough fingers and toes to count knew that the ratification would be defeated by one vote.   The rose in the lapel was the symbol of the "anti's" and Harry wore it proudly.

But earlier that day, Harry had received a letter from his mother, Febb Esnminger Burn.  Mrs. Burn was a farmer and a widow and when not milking cows and churning butter, was following the suffrage debate in newspapers and magazines.  Mrs. Burn recounted later:  

Suffrage has interested me for years. I like the suffrage militants as well as the others." But after having read a barrage of bitter "anti" speeches published in the papers and realizing that her son's constituents in McMinn County were fiercely in opposition to woman suffrage, Mrs. Burn maintained that she felt compelled to force the issue. "I sat down on [my] little chair on the front porch and penned a few lines to my son.

In the seven page letter, she included this statement (among the family gossip and weather reports):

Hurray and vote for Suffrage and don't keep them in doubt. I noticed Chandlers' [the Speaker's] speech, it was very bitter. I've been waiting to see how you stood but have not seen anything yet.. Don't forget to be a good boy and help Mrs. Catt with her "Rats." Is she the one that put rat in ratification, Ha! No more from mama this time.

With lots of love, Mama."

After the two votes to table the Amendment were on a dead-even 48-48 ballot, the "antis" made a move to kill the bill by calling for a vote on the Amendment itself.

Burn faced a dilemma - to vote against the Amendment and remain faithful to his "anti" constituents in light of his upcoming re-election campaign or remain faithful to the wishes of his mother. When the clerk called his name, Burn voted "Aye.".

He had cast his ballot for woman suffrage, and thus, posting the key ballot in

the 49-47 vote that made the 19th Amendment the supreme law of the land.

The "anti's" accused Burn of accepting bribes and other wrongdoing but the charges of criminality did not stick.  He later inserted a personal statement in the House Journal, explaining his decision to cast his vote for the suffragists based on morality, justice, his mother, and the glory of the Republican Party.

Burn, one of the true heroes of suffrage, had a long career in public service and died in 1977.  We salute him on the 90th anniversary of Suffrage. You can read mom's letter here.

Because I know you were curious, all 48 states eventually approved the Nineteenth Amendment, the last one being Mississippi which approved it on March 22, 1984, only 64 years after being rejected by that state's Senate on March 29, 1920 by a vote of 94 - 23.

Editor's Note:  I tried to reach Harry's son, Harry, Jr., who is 73 and living just a few miles from Niota, but alas, the calls went unanswered.

From Audrey Seeley, the No Fault Queen:

We have some similar issues to report again - ensuring peer review report is sufficient on durable medical equipment denials.  Again, if anyone would like some training we are at your disposal.  Also, there is an interesting decision on the value of a by report CPT code.  It may seem like a technical case but this is the third one I have seen in Western New York on the same issue where a medical provider is billing five figures for one CPT code.  It is worth the read together with some suggestions on addressing an issue like a report CPT code.

Please be sure to read the legislative section on the amendment to the intoxication exclusion that applies to all policies issued, renewed, amended, modified, or altered on or after January 26, 2011.

Enjoy the rest of the summer and if I do not hear from you before, you will hear from me Labor Day weekend.

Audrey

One Hundred Years Ago Today:

On August 20, 1910, the Great Fire of 1910, also known as the Big Burn or the Big Blowup was ignited and destroyed about three million acres of northeast Washington, northern Idaho and western Montana, an area about the size of Connecticut.  The firestorm lasted two days and killed some 87 people including 78 firefighters.  It is still believed to be the largest, although not the deadliest, fire recorded in US history.

From Steve Peiper, the Purveyor Property and Potpourri

The summer slumber continues again this week.  For the second issue in a row we've got nuttin' to offer under the property heading.

However, we've definitely have something noteworthy under the potpourri banner.  The Second Department has split from a 2007 decision offered by the First Department.  The source of the tension is what is required to trigger the 21-day pay rule under CPLR 5003-a.  What's the split?  Take a look at my column.

Steve

This Week's Highlights

 KOHANE'S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Insurance Agent Liable for Failure to Provide Notice to Excess Carrier When Special Relationship Established

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

[email protected]

  • Plaintiff's Opposition to Showing of Degenerative Conditions Must Be Factually Based
  • Taxicab Showdown on Third Avenue
  • Bus Accident Was Not "a Substantial Factor" in Causing Plaintiff's Compression Fracture 

AUDREY'S ANGLES ON NO-FAULT
Audrey A. Seeley

ARBITRATION

  • Peer Reviewer's Failure to Adequately Address Rebuttal Insufficient to Support Denial of Durable Medical Equipment
  • Another Award Fully Reimbursing for Artificial Disc Replacement
  • Another Award Fully Reimbursing for Artificial Disc Replacement
  • Legislation

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Meritorious Defense is Not Required When Opposing a Motion for Default
  • Per the Second Department, Requesting a W-9 Form DOES NOT Toll Twenty-One Day Pay Requirements of CPLR 5003-a

FIJAL'S FEDERAL FOCUS
Katherine A. Fijal

[email protected]

  • Applying Missouri Law - Defining Insurable Interest in a Building

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

  • Additional Insured Provision Sufficiently Broad to Encompass an Employee's Injury While Exiting the Bathroom
  • Court Finds Sufficient Ambiguity in Relation to the Employment-Related Practices Exclusion to Deny Summary Judgment
  • Additional Insured Provided a Defense, but it would have to Await the Determination of Ultimate Liability in the Underlying Action for a Decision on Indemnity

EARL'S PEARLS
Earl K. Cantwell

[email protected]

Breach of the Duty to Defend

 Well, that's all that is going on in the wonderful world of NY insurance.   Thanks for all your kind comments

 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
Diane F. Bosse

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
Diane F. Bosse


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]


8/10/10 Abetta Boiler, et al v. American Intern’l Specialty, et al
Appellate Division, First Department
Insurance Agent Liable for Failure to Provide Notice to Excess Carrier When Special Relationship Established
When Abetta had insurance claims, it referred all questions to Amerisc, its agent. Amerisc handled all of Abetta’s insurance needs and that course of conduct established the kind of special relationship necessary to impose upon Amerisc a duty on the part of the agent to exercise a reasonable degree of care in notifying the appropriate primary or excess insurer of any claim reported to it by Abetta
In this case, Amerisc forwarded information about an accident to the wholesale broker but it failed to determine whether or not the excess insurer actually received notice. The excess carrier did not and the court found that Amerisc thereby breached its duty to Abetta. Amerisc is liable to Abetta for any amount above the limits of the primary policy that Abetta may be required to pay to the personal injury plaintiffs up to the limits of the excess coverage.
With respect to a separate action, a wrongful death case, questions of facts exist as to whether Amerisc had a duty to give notice of lawsuits (rather than claims). It was unclear whether Amerisc had a duty to monitor pending claims to determine whether they gave rise to lawsuits.
Amerisc had a cross claim for contribution and indemnity against the wholesale broker. The court dismissed those claims. With regard to the indemnity claim, the court found that since Amerisc was negligent, indemnity could not be obtained. With respect to the cross-claim for contribution, the court found that such a claim was unavailing because one cannot seek contribution for economic loss resulting exclusively from breach of contract.

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

8/17/10 Thomas v. Booker
Appellate Division, First Department
Plaintiff’s Opposition to Showing of Degenerative Conditions Must Be Factually Based

On appeal, the trial court is unanimously reversed and the complaint is dismissed in its entirety because Defendants’ experts showed that the plaintiff’s injuries were not caused by the accident but rather by preexisting, degenerative conditions. In opposition, the plaintiff’s experts did not address the defendants’ evidence of preexisting degenerative spinal disease with factually based medical opinions that rule out the degenerative conditions as the cause of the plaintiff’s restrictions, nor did they establish causation between the injury and the accident.

8/10/10 Kouyate v. Chowdhury
Appellate Division, Second Department

Taxicab Showdown on Third Avenue
The court’s decision provides no details other than to reverse, for failure to meet their prima facie burden, the trial court’s grant of summary judgment to the defendants in this action arising out of the collision of two taxicabs on Third Avenue in Manhattan, resulting in a right knee surgery for the plaintiff.

8/3/10 Courbertier v. Academy Bus, LLC
Appellate Division, Second Department

Bus Accident Was Not “a Substantial Factor” in Causing Plaintiff’s Compression Fracture
At trial, a jury dismissed the plaintiff’s complaint and, on appeal, the decision was affirmed in an action where the plaintiff was injured when the bus in which she was traveling left the road and rolled over. She claimed she sustained a compression fracture at L5. However, she had pre-existing conditions, including a congenital spinal disorder, had experienced pain for years, and had had spinal reconstructive surgery, all prior to the accident. This history resulted in the jury determining that the bus accident was not a substantial factor in causing the compression fracture and the appellate court found the jury’s verdict was not contrary to the weight of the evidence.

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley


ARBITRATION
8/16/10 Elite Medical Supply v. Respondent
Arbitrator Kent L. Benziger, Erie County
Peer Reviewer’s Failure to Adequately Address Rebuttal Insufficient to Support Denial of Durable Medical Equipment

The eligible injured person (“EIP”) was involved in a September 25, 2009, motor vehicle accident resulting in injuries to his neck and right ankle. Within a week, the EIP treated with for complaints of neck, low back and right ankle pain.

By October 5, 2009, Scott Croce, D.C. began treating the EIP’s complaints of neck and back pain. On November 9, 2009, Mr. Croce prescribed an inferential unit for home use on the cervical and lumbar spine. The EIP was also diagnosed with a C4/5 disc bulge and annular tears after diagnostic imaging.

The insurer denied the durable medical equipment based upon a peer review conducted by Jeffrey Passick, DC. Mr. Passick, relying upon medical journals, opined that a TENS unit is not curative and should be used when other more effective alternatives, such as EMS units, are absent.

Mr. Croce rebutted the peer review opining that based upon a review of the medical evidence for this EIP the TENS unit was needed for pain and muscle spasm relief. Further, the TENS unit provided adjunctive therapy for continued chiropractic care. Also, the cost for the TENS unit was less than a regime of prescription medication for the EIP.

Mr. Passick responded, citing to a review by the California Technology Assessment Forum which could not endorse the use of a TENS unit for pain treatment.

The assigned arbitrator did not find the peer reviewer’s, Mr. Passick, opinion persuasive. There was no thorough review or discussion of the EIP’s medical records. The assigned arbitrator noted how Mr. Croce discussed the significance of his clinical and diagnostic findings, how the TENS unit was cost effective, and furthered chiropractic care. The assigned arbitrator noted how Mr. Passick failed to discuss the MRI findings or address Mr. Croce’s specific arguments on rebuttal. Rather, Mr. Passick apparently relied upon “inconclusive findings” from a review.

08/10/10          WM Capicotto MD (Applicant) and Allstate Insurance Company (Respondent)
American Arbitration Association

ARBITRATION AWARD

I, Thomas J. McCorry, Esq., the undersigned arbitrator, designated by the American

Arbitration Association pursuant to the Rules for New York State No-Fault Arbitration,

adopted pursuant to regulations promulgated by the Superintendent of Insurance, having been duly sworn, and having heard the proofs and allegations of the parties make the following

 AWARD:

Injured Person(s) hereinafter referred to as: Eligible Injured Person [EIP]

 1. Hearing(s) held on

11/03/09

01/06/10

and declared closed by the arbitrator on 6/22/10.

 Vinal& Vinal by Greg Vinal Esq. participated in person for the Applicant.

Matt Murray Esq. participated in person for the Respondent.

 2. The amount claimed in the Arbitration Request, $26,439.86, was NOT AMENDED at the

oral hearing.

 STIPULATIONS were not made by the parties regarding the issues to be determined.

 3. Summary of Issues in Dispute

Whether the Respondent, based on a Nurse Manager's Review appropriately reduced the fee

for a Lumbar Artificial Disc replacement at two levels?

 4. Findings, Conclusions, and Basis Therefor

 DISCUSSION:

Dr. Capicotto, M.D. an orthopedic surgeon, on 2/23/09 performed a Lumbar Artificial Disc replacement - 2 levels assisted by a Co- Surgeon Dr. Pell.

 A bill in the amount of $32,959.52 was submitted for the procedure and was paid in the amount of $ 6,519.66 following a Nurse Case Managers Review. According to the Nurse Managers report, she calculated the amount to be paid in accordance with the New York Workers Compensation No -fault Fee Schedule.

 In the reports submitted in support of the claim, Dr. Capicotto indicates that the Synthes-

Prodisc-l total disk replacement is an FDA- approved alternative to a circumferential (anterior and posterior) spinal fusion . His operative report states in part "It should be noted that diskectomy performed for a total disk replacement is far different than any other diskectomy performed in spinal surgery. The entire anterior annulus, entire posterior annulus, the posterior and longitudinal and the lateral annuli, have to be removed in their entirety.

Applicant's Counsel and the Applicant's billing manager argued at the hearing that this

is a 'By report' procedure and should not be calculated using standard CPT codes. The big number in dispute was the $20,000.00 billed under code 0163 T modifier 62 and paid at $1558.68.

 This is not in my opinion the usual run of the mill fee dispute, where you can just look at the NY Workers Compensation Medical Fee Schedule.

 The fee schedule "Guidelines" states that " Because the Medical Fee Schedule is applicable to all of NY State, a large and diverse geographical area, the unit values contained herein do not reflect the charges of an individual physician or the pattern of charges in any specific area of New York.

Some services do not have a relative value, according to the guidelines, because they are too variable or new. These services are identified with a BR or by report. Dr. Capicotto argues the procedure performed by him is a 'By Report' procedure.

 To counter that argument, I believe you would need a Peer Review report or a report of an

IME.

 Respondent did submit a post hearing document from Dr. Andrew Cappuccino, M.D. which indicated that the '' Total allowed amount for Dr. Capicotto's claim $6,913.98." However it provided no narrative, no medical rationale, no explanation as to how the amount was arrived at.

 Documentation was provided at the hearing which indicated that the balance owed for the bills that were submitted, is the sum of $14,329.77.

 Billing with dates of service of 10/05/09 through 12/0709 apparently was not submitted.

 DECISION:

I FIND FOR THE APPLICANT IN THE SUM OF $14,329 .77 WITH INTEREST FROM THE DATE OF FILING FOR THIS ARBITRATION..


8/10/10 Applicant v. State Farm Ins. Co.
Arbitrator Thomas J. McCorry, Erie County
Another Award Fully Reimbursing for Artificial Disc Replacement

This decision is a friendly reminder that the arbitrator cannot award future benefits but can only decide issues regarding billing that has been submitted and denied. In this case, the applicant challenged a blanket denial based upon an independent medical examination. Without any bills being incurred the assigned arbitrator would not determine whether the reliance upon the independent medical examination was appropriate.

LEGISLATION

On July 30, 2010, Governor Patterson signed into law an amendment to Insurance Law §5103(b)(2) which requires No-Fault insurance coverage for necessary emergency health services rendered in a general hospital and ambulance services together with related medical screening in situations where the eligible injured person is injured due to operation of a vehicle in an intoxicated condition or under the impairment of the use of a drug.

The full provision with the amendment in italics provides:

(2) Is injured as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug within the meaning of section eleven hundred ninety-two of the vehicle and traffic law; provided, however, that an insurer shall not exclude such person from coverage with respect to necessary emergency health services rendered in a general hospital, as defined in subdivision ten of section two thousand eight hundred one of the public health law, including ambulance services attendant thereto and related medical screening. Notwithstanding an other law, where the covered person is found to have violated section eleven hundred ninety two of the vehicle and traffic law, the insurer has a cause of action for the amount of first party benefits paid or payable on behalf of such covered person against such covered person.

This amendment will take effect January 26, 2011. Keep in mind that the amendment will affect any policy that is issued, renewed, modified, altered or amended on or after January 26, 2011.

In terms of what is a “general hospital,” Public Health Law §2801(10) provides the definition as:

a hospital engaged in providing medical or medical and surgical services primarily to in-patients by or under the supervision of a physician on a twenty-four hour basis with provisions for admission or treatment of persons in need of emergency care and with an organized medical staff and nursing service, including facilities providing services relating to particular diseases, injuries, conditions or deformities. The term general hospital shall not include a residential health care facility, public health center, diagnostic center, treatment center, out-patient lodge, dispensary and laboratory or central service facility serving more than one institution.

Finally, it is noted that the statute provides the insurer with the ability to recover from the eligible injured person, only if he or she has been found in violation of Vehicle and Traffic Law §1092, the amount of benefits it paid out.

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

7/17/10 Arrington v Bronx Jean Company, Inc.
Appellate Division, Second Department
Meritorious Defense is Not Required When Opposing a Motion for Default
Plaintiff moved for a default judgment shortly after defendant’s time to appear in this matter had expired. In response, some twenty-two days later, defendant appeared by service of a Notice of Motion to Dismiss plaintiff’s Complaint. Upon hearing both motions, the trial court granted plaintiff’s motion for a default; thereby giving rise to the instant appeal.
In overturning the default judgment, the Second Department noted that counsel’s delay in appearing was only minimal, and such appearance was made prior to the entry of the default. Moreover, the fact that defense counsel interposed a defense motion within twenty-two days indicated that the defendant intended to appear and litigate the matter to a conclusion. Finally, the Court noted that defense counsel was not required to establish a meritorious defense at this stage because defendant’s attempted appearance occurred before the default was entered. Accordingly, the judgment was overturned and the matter remanded back to the trial court for further proceedings.

7/10/10 Klee v. Americas Best Bottling Co., Inc.
Appellate Division, Second Department
Per the Second Department, Requesting a W-9 Form DOES NOT Toll Twenty-One Day Pay Requirements of CPLR 5003-a
In this matter, plaintiff and defendant resolved a personal injury action for the sum of $400,000. The very next day, plaintiff tendered a Release and Stipulation of Discontinuance to defendant thereby triggering defendant’s obligation to remit settlement proceeds within twenty-one days. In addition to the Release and Stipulation, plaintiff’s counsel also provided what it purported to be its tax identification number. In response, defendant requested that plaintiff’s counsel attest to the accuracy of the purported tax identification number by providing a duly executed W-9 form. At some point thereafter, plaintiff’s counsel provided a W-9 and the settlement proceeds were released by defendant.

However, in the interim, plaintiff’s counsel executed a judgment against defendant pursuant to CPLR 5003-a which, as we know, requires payment of settlement proceeds within twenty-one days after a Release and Stipulation are tendered to defendant. By unilaterally executing the judgment, plaintiff was then entitled to accrued interest, as well as statutory fees and disbursements. Armed with the judgment and an accounting of fees and disbursements, plaintiff demanded a sum in excess of the agreed to $400,000.

Defendant brought a motion to vacate the default therein arguing that it had no obligation to render payment until the plaintiff’s counsel complied with the relevant IRS regulations (ie., verify his tax identification number). In holding for the defendant, the trial court relied upon the First Department’s decision in Cely v O’Brien & Krietzberg (45 AD3d 368). In that case, the First Department noted that a request for a W-9 form was sufficient to toll the provisions of CPLR 5003-a.

However, on appeal, the Second Department reversed. Essentially, the Second Department held that the CPLR only requires a Release and Stipulation be tendered to trigger the protections afforded by Section 5003-a. Absent anything else in the statute, the Court refused to tack on additional requirements which could delay settlement payments; thereby hindering the purpose of the section in the first place. In doing so, it is noteworthy that the Second Department when out of its way to acknowledge the decision reached by the First Department in Cely v O’Brien & Kreitzberg. However, the Second Department clearly stated that it did not agree with the First Department’s ruling, and declined to follow it.

Peiper’s Point: Surely, a trip to the Court of Appeals is in the future, and we will be there to report on it at that time. However, in the interim, to avoid an unwelcome trip to the Appellate Division we would suggest that you make receipt of the W-9 form a condition of the Release. Both the First and Second Departments appear to imply that making the W-9 form part of the settlement agreement would protect against the imposition of 5003-a sanctions.

FIJAL’S FEDERAL FOCUS
Katherine A. Fijal

[email protected]

8/12/10 Beckon, Inc. v. AMCO Insurance Co.
United States Court of Appeals for the Eighth Circuit
Applying Missouri Law – Defining Insurable Interest in a Building
This appeal involves an insurance coverage dispute over the validity of an insurance policy AMCO Insurance Company issued to Beckon, Inc., insuring the latter’s business operations as well as the building it occupied but did not own.

The building at issue was owned by Rosalinda Rosemann, the widow of the founder of Roto-Die Company, Inc. Roto-Die had a 20 year lease which began in 1977. Roto-Die moved to a new location in 1990, and the lease allowed Roto-Die to sub-let the building.

In or around September 1992 Roto-Die reached an oral agreement with Beckon’s owner, John Herbst, allowing Beckon to occupy the building in exchange for acting as its caretaker. The agreement also required that Beckon pay utilities for the building, while Roto-Die continued to pay the real estate taxes and sewer bills. Roto-Die instructed Herbst to “treat the building as your own”. Herbst understood this to mean that he should insure the building, which he did, unaware that Roto-Die also continued to insure the building.

Although Herbst inquired as to the possibility of purchasing the building, the building was never sold or formally leased to Beckon because Rosemann’s interest in the building was limited to a life tenancy, and the remaindermen who jointly own the building upon her death were embroiled in litigation.

After taking possession, Beckon treated the building as his own, making numerous improvements. Staring in 1992, and throughout its occupancy of the building, Beckham purchased insurance covering the building, the contents of the building and its own business operations. In 2004, Beckham began insuring with AMCO. The underwriting report AMCO obtained wile considering the application list Beckon as a renter – “Rents 15,000 sq. ft. in one story brick building”. The policy issued by AMCO insured Beckham against damage to the building and its contents, i.e., business personal property. The policy listed various additional coverages for loss of business income, extra expenses, equipment breakdown, etc. Separate premiums were charged for the building and the business personal property. AMCO renewed in October 2005 and October 2006, and Beckon paid all premiums.

Between 1992 and 2006 Beckham had no insurance claims. In 2007, however, two events occurred within a span of months: (1) a fire which damaged the work areas of the building and damaged or destroyed many of the building’s contents; (2) the buildings roof blew off during a windstorm and rain damaged the interior office area.

Between the time of the fire and the wind storm, AMCO investigated Beckon’s ownership interest in the building. After determining that Beckon did not own the building AMCO did not cancel the policy or claim it was void based on material misrepresentation. Instead, in April 2007, AMCO continued to provide insurance to Beckon, and issued a Change of Declarations Endorsement to the policy which added Rosemann and Roto-Die as additional insureds. AMCO charged Beckon an increased premium for adding additional insureds, which Beckon paid.

Later, AMCO denied Beckon’s claim for fire damage to the building on the grounds the Beckon lacked an insurable interest in the building; and, shortly thereafter denied Beckon’s claim for wind damage to the building on the same grounds. About a month later, AMCO paid over $530,000 under a separate coverage Beckon had purchased for the business personal property damage in the fire.

Beckon filed a declaratory judgment action against AMCO, and AMCO counterclaimed seeking to recoup the monies paid Beckon for losses caused by the fire and covered under the business personal property section of the policy.

The district court concluded that the entire policy was void on the grounds that Beckon lacked an insurable interest in the building. On appeal the Eighth Circuit Court of Appeals reversed.

Citing Missouri Law the Court rejected AMCO’s contention that the lack of an insurable interest in one of several classes of property insured under a single policy is grounds for voiding the entire policy. Fager v. Commercial Union Assurance Co., 176 S.W.1064 (Mo.Ct.App 1915). The Court determined that the policy’s limits for replacement costs of the building were separate from its limits for the business personal property.

There was no dispute that Beckon had an insurable interest in its own personal property. Therefore, even if it were assumed that there was no insurable interest in the building, it does not follow that the validity of the insurance Beckon purchased for its own business person property was impaired.

The Court therefore concluded that the district court erred when it granted summary judgment on AMCO’s counterclaim and ordered Beckon to return more than $530,000 paid under the business personal property section of the policy.

Next, the Court addressed whether Beckon had and insurable interest in the building. In analyzing this issue the court pointed out that Missouri strongly favors finding an insurable interest, indicating its courts should make every effort to find insurable interest, and sustain coverage, where there is any substantial possibility that the insured will suffer loss from the destruction of the property. Dimmitt v. Progressive Cas. Ins. Co., 92 S.W.3d 789 (Mo. 2003).

In general, a person has an insurable interest in the subject matter insured where he has such a relation or concern in the subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination, or injury by happening of the event insured against. Id. Under Missouri law, lack of title is immaterial to determining whether a party has an insurable interest.

The Court determined that under the facts of this case, Beckon had an insurable interest in the building. As a result of the fire Beckon temporarily lost its use of the building and had to rent space in another location to carry on business operations incurring costs of approximately $10,000 a month for two years. In addition, Beckon made numerous improvements to the building.

The Court also rejected AMCO’s argument that a policy could be voided as an illegal gambling contract when an insured only holds a limited or qualified insurable interest, and yet the policy provides coverage for the entire property. The Court cited to Missouri law which placed the risk of overinsurance on the insurer rather than the insured. G.M. Battery & Boat Co. v. L.K.N. Corp., 747 S.W.2d 624 (Mo. 1988). The insurer may protect itself by strictly defining the interest covered by its policy, or by obtaining representations or warranties about the state of the title, if it deems this information important. What it cannot do is issue a policy, collect the premiums, and then argue that the value of the insured’s insurable interest in the property is less than the coverage it underwrites.

Absent fraud, misrepresentation or collusion the valuation in the policy is conclusive upon the parties. An insurer has an obligation to attempt to ascertain the basis of an insured’s interest in the property prior to contracting to insure the property.

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

8/13/10 Lehr Construction Co. and 40 West 53rd Associates LP v. Continental Casualty Co.
Supreme Court, New York County
Additional Insured Provision Sufficiently Broad to Encompass an Employee’s Injury While Exiting the Bathroom
On March 22, 2004, Thomas Murphy, an employee of Forest Electric Corp. (“Forest”), was injured on a construction site when he tripped on a tarp while exiting the restroom. Lehr Construction (“Lehr”) was the general contractor hired by 40 West 53rd Associates, the owner, to renovate the premises. Pursuant to the agreement between Forest and Lehr, Forest agreed to provide indemnity for Lehr and to name it as an additional insured on its insurance policy issued by defendant, Continental Casualty.

The insurance provided that an insured was any person or organization required by contract, but only with respect to liability arising out of Forest’s work. Accordingly, following suit, plaintiffs tendered to defendant and defendant accepted.

In a separate matter, Lehr instituted a third-party action against Forest for contractual indemnification, which was dismissed by the court. In the separate action, the court held that the indemnification provision violated the GOL as it anticipated indemnifying Lehr for its own negligence. Likewise, the court also determined that Forest did not place or maintain the tarp over which the employee tripped. It even noted that the injury was not caused by Forest’s work.

Accordingly after this decision was rendered, defendant disclaimed coverage. Plaintiffs then commenced this action and moved for summary judgment. The court granted plaintiffs’ motion as to the defense obligation. In making its determination, the court held that it was not bound by the prior decision because the provisions of this insurance policy were not before that court. Additionally, according to the court, the plaintiffs qualified as additional insureds because the language of the additional insured endorsement was sufficiently broad to encompass an employee’s use of the restrooms while at a job site. Thus, this accident arose out of this unavoidable activity related to his employment.

7/29/10 Kelleher v. Admiral Indem. Co.
Supreme Court, New York County
Court Finds Sufficient Ambiguity in Relation to the Employment-Related Practices Exclusion to Deny Summary Judgment
Defendant issued a commercial general liability policy to Northmoore Condominium (“Northmoore”). Plaintiff was a member of the board of directors of Northmoore. In December 2005, while returning to the Northmoore accompanied by this wife and kids, plaintiff saw an independent security guard sitting behind a desk in the lobby and speaking on the phone. Upset that the security guard did not open the door for him and his wife, who were carrying their kids along with Christmas presents, he entered into a verbal dispute with the guard concerning his job duties. Thereafter, plaintiff dialed the board president to complain about the guard. Somehow, in the course of this commotion, the guard attempted to knock the phone away and, in return, plaintiff pushed the guard causing the guard to fall. An action was then commenced by the guard against plaintiff.

Plaintiff placed defendant, Northmoore’s insurer, on notice of the suit and demanded that it defend and indemnify him. The basis for the demand was that he was an insured under the policy pursuant to a provision which provided that the named insured’s directors were also insureds, but only with respect to their duties as the named insured’s directors. Defendant denied coverage citing several exclusions including the “Employment-Related Practices Exclusion”, which read “[t]his insurance does not apply to…“Bodily Injury” to… a person arising out of any…[e]mployment related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination directed at that person…”

This action was then brought and both parties moved for partial summary judgment. Defendant contended that the exclusion applied to bar coverage because the bodily injury to the security guard arose from plaintiff’s discipline of the guard during the course of the guard’s employment at Northmoore. Additionally, it contended that plaintiff was not an insured under the policy because he was not acting within the scope of his employment. In denying both parties’ motions, the court held that while the guard’s injuries arose from the type of employment-related practice contemplated in the exclusion, there was ambiguity regarding whether the exclusion applied if the injured party was an employee of the insured. Specifically, the court reasoned that the exclusion listed practices commonly associated with an employer interacting with an employee. Accordingly, it was reasonable to interpret the exclusion as being inapplicable to injuries suffered by an independent contractor. Further, the court also held that there was a question of fact as to whether the plaintiff even qualified as an insured under the policy.

7/29/10 W&W Glass Sys., Inc. v. Admiral Ins. Co.
Supreme Court, New York County
Additional Insured Provided a Defense, but it would have to Await the Determination of Ultimate Liability in the Underlying Action for a Decision on Indemnity
Plaintiff moved for summary judgment seeking a declaration that defendant was obligated to defend and indemnify it in the underlying action. This motion arose out of an injury to an employee of Metal Sales Co., Inc. (“Metal Sales”), defendant’s insured. The injury occurred while the employee was installing a curtain wall, a job which plaintiff had subcontracted to Metal Sales.

The purchase order between plaintiff and Metal Sales provided that Metal Sales would procure additional insured coverage on plaintiff’s behalf. Defendant’s policy included an additional insured endorsement which provided coverage to persons and organizations as required by written contract “with respect to liability caused by your [Metal Sales] ongoing operations performed for that insured [plaintiff].”

In support of its motion, plaintiff presented the employee’s deposition testimony which in its opinion demonstrated that the accident occurred “during and as a result of” Metal Sales operations. In response, defendant argued that summary judgment was premature because discovery was still outstanding.

The court separately considered the two duties owed to an insured. With regard to the duty to defend, it held that this duty was triggered. The court reasoned, primary relying on the Court of Appeals case BP Air Conditioning, that liability does not need to be determined in the underlying action before an additional insured is entitled to a defense. According to the court, the allegation of potential liability against plaintiff was sufficient. Notably, the court rejected defendant’s argument that the holding in BP Air Conditioning did not apply because plaintiff was named as a third-party defendant as opposed to being named as a direct defendant. However, with respect to the duty to indemnify, the court denied this portion of plaintiff’s motion holding that plaintiff would have to await the determination of ultimate liability in the underlying action.

EARL’S PEARLS
Earl K. Cantwell

[email protected]
Breach of the Duty to Defend

In Travelers Property Casualty Company of America v. Continental Casualty Company, 2010 Conn. Super. LEXIS 1169 (May 27, 2010), the Court entered into and resolved an intramural scrum between two insurance companies with the result that one insurance company was left liable both for costs of defense and the costs of settlement.

Tucker Mechanical was a subcontractor to a construction manager on a hospital project. As part of its subcontract, Tucker was required to obtain a comprehensive general liability insurance policy listing the construction manager and the owner as additional insureds. As ill luck would have it, a worker for the HVAC sub-sub-subcontractor to Tucker sued the construction manager and the owner for negligence when he fell in a parking lot at the job site.

The construction manager’s insurance company, Travelers, defended the suit but also sought defense and indemnification from Tucker Mechanical’s insurance company, Continental Casualty. Continental refused the defense and indemnification tender, asserting that the alleged negligence claim did not involve Tucker.

In court, Travelers argued that Tucker was “involved” even if the injured worker did not name Tucker specifically in his complaint because the worker alleged he was injured while carrying out his duties for the sub-sub-subcontractor which was part of Tucker’s scope of work on the project. The court agreed based upon its reading of Tucker’s policy with Continental. The court also cited the maxim that an insurer must defend a claim if it knows of any facts which might indicate the claim falls within the scope of the coverage.

The sub-subcontractor and employer of the injured worker was hired to perform HVAC work for Tucker, the subcontractor. Tucker’s policy with Continental included an endorsement that it extended coverage to contractors with respect to liability arising out of Tucker’s work. Because the injured worker claimed he was injured essentially while performing Tucker’s work, the court held that Continental had a duty to defend the claim against the construction manager and the owner.

The court further held that when an insurer breaches its duty to defend, it becomes liable for the cost of defending the action, and any resulting settlement amount up to the policy limits. By not defending the claim, Continental lost its ability to control the defense of the case and, for example, to prove it was not responsible for paying the claim.

This case is a typical construction site injury scenario. The injured worker here basically claimed to have been injured within the course and scope of the subcontractor’s work. The additional insurance endorsement here apparently was a relatively broad form endorsement extending coverage with respect to potential liability “arising out of” the subcontractor’s work. This case further confirms the importance of obtaining and confirming the correct additional insured endorsements and scope of additional coverage on construction projects.

Another possible issue is whether Travelers could have recovered the costs and fees of enforcing the indemnity/additional insured obligation. Continental did take a major risk in deciding not to defend the underlying negligence suit with the result that it eventually had to pay for a defense which it did not control and settlement of the action. However, most indemnity clauses do not include costs or fees of suit to enforce indemnity or additional insured rights. Contract drafters may want to add a liquidated damages provision or include a right to recover costs and attorneys’ fees in the event of a successful indemnity or additional insured claim or suit since absent specific contract provisions they may not be otherwise recoverable.

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

8/04/10 Stewart Enterprises, Inc. v. RSUI Indemnity Company
United States Court of Appeals for the Fifth Circuit
Excess Liability Policy Covers Damage Caused by Flood Due to Hurricane Katrina
Prior to Katrina, Stewart insured its properties and businesses with three layers of insurance. The primary layer, issued by Lexington Insurance Company, provided all risk coverage up to $10 million, including $10 million in flood coverage. The first excess layer, issued by Lloyd’s of London, provided $15 million of all risk coverage, also including $15 million in flood coverage, excess to the first $10 million provided by Lexington. The second excess layer, issued by RSUI, provided a coverage limit of $225 million, excess to the $25 million provided by the first two layers. Both the Lloyd’s and RSUI policy contained “following form” clauses adopting the terms and conditions of the Lexington primary policy. During and after the storm, Stewart’s properties suffered heavy damage from wind and flood. It was not easily determinable what portions of the damage were caused by wind, flood, or some combination of the two. After Katrina, Stewart sought to recover from all three insurers for damage caused by wind and flood. Both Lexington and Lloyd’s paid the full balance of their policies, but RSUI and Stewart were unable to resolve the claims.

The Court found that central to their dispute was whether the RSUI policy covered damage caused in whole or in part by flood. RSUI contended that the policy excluded liability for all flood damage and that to the extent the policy covers any flood damage, it was limited by the anti-concurrent causation clause to damage caused exclusively by flood and not in conjunction with another peril, such as wind. Stewart claimed that the RSUI policy adopted the limits set forth in the Lexington and Lloyd’s policies, covering any of the $25 million in flood coverage unpaid by Lexington and Lloyd’s and that the clause only operated above the $25 million limit. The district court found that the RSUI policy covered by to $25 million in flood damage, subject to reduction based on payments for flood damage by either Lexington or Lloyd’. The district court then found the clause barred any recovery for damage jointly caused by wind and flood, although the policy permitted recovery for damage caused by wind or flood exclusively (up to the $25 million limit for flood damage). The Court found that the RSUI policy was an excess layer insurance policy with a following form provision. This provision made RSUI subject to the same warranties, terms and conditions as are contained in the primary insurance policy which covers for flood. The Court held that the district court erred in finding that the clause barred any recovery for damage jointly caused by wind and flood, although the policy permitted recovery for damage caused by wind or flood exclusively (up to the $25 million limit for flood damage). It held that in the clause at issue, such clauses permit parties to contract around common-law causation rules such as efficient proximate causation. Under this causation rule, an insured may recover for damage caused jointly by an included and excluded peril if the included peril is the dominant and efficient cause of the loss.
Submitted by: Amy Kempfert and Jeffrey Hensley (Best & Sharp, P.C.)

REPORTED DECISIONS
Abetta Boiler & Welding Service, Inc. v. American Intern’l Specialty, et al


Ohrenstein & Brown, LLP, Garden City (Matthew Bryant of
counsel), for appellant-respondent.
Keidel, Weldon & Cunningham, LLP, White Plains (April
Forbes of counsel), for respondent-appellant.
Silver and Silver, LLP, Somerset, NJ (Nancy J. Silver of
counsel), for respondent.
Orders, Supreme Court, New York County (Marcy S. Friedman, J.), entered February 13, 2009 and March 12, 2009, respectively, which, to the extent appealed from, denied wholesale insurance broker defendant Program Brokerage Corp.'s motion for summary judgment dismissing retail broker defendant Amerisc Corp. Insurance and Financial Services' cross claim against it for contribution arising out of Program's and Amerisc's alleged failure to give notice of the underlying personal injury and wrongful death actions to plaintiff Abetta Boiler & Welding Service, Inc.'s excess insurance carrier, defendant American International Specialty Lines Insurance Company (AISLIC), denied Amerisc's motion for summary judgment dismissing Abetta's complaint and Program's cross claim for contribution against it, and granted Program's motion for summary judgment dismissing Amerisc's cross claim against it for indemnification, unanimously modified, on the law, Program's motion for summary judgment dismissing Amerisc's cross claim against it for contribution granted and Program's cross claim against Amerisc dismissed in its entirety as moot, and otherwise affirmed, with costs to Abetta and Program. The clerk is directed to enter judgment in favor of Program dismissing the complaint and all cross claims as against it. Appeal from order, same court and Justice, entered June 4, 2009, which denied Program's motion for reargument and renewal, unanimously dismissed, without costs, as taken from a nonappealable paper.
The evidence that as a matter of routine Abetta referred all questions regarding its insurance claims to Amerisc and Amerisc handled all Abetta's insurance needs, including referring its claims to insurers, establishes a special relationship between the two that imposed upon Amerisc a duty to Abetta to exercise a reasonable degree of care in notifying the appropriate primary or excess insurer of any claim reported to it by Abetta (see Murphy v Kuhn, 90 NY2d 266 [1997]; Martini v Lafayette Studio Corp., 273 AD2d 112 [2000]; Stevens v Hickey-Finn & Co., 261 AD2d 300 [1999]). The evidence further establishes that, although Amerisc forwarded to Program, the wholesale broker, the information in its possession concerning the personal injury claim, it failed to follow up either with Program or with AISLIC, the excess insurer, to ascertain that AISLIC actually received notice of the claim and the action, as required by the policy to invoke coverage. Amerisc thereby breached its duty to Abetta, and its attempt to shift the blame onto Program on the ground that ultimately it was Program that failed to pass the claim on to the insurer is unavailing. As a matter of law, Amerisc is liable to Abetta for any amount above the limits of the primary policy that Abetta may be required to pay to the personal injury plaintiffs up to the limits of the excess coverage.
The record does not permit a determination as a matter of law that Amerisc is liable to Abetta for its failure to give AISLIC notice of the wrongful death action. The AISLIC policy required timely notice to the insurer of occurrences, claims, and lawsuits to trigger coverage. Amerisc provided Program with all the information in its possession concerning the wrongful death claim. However, it never received notice of the action from Abetta or any other source. The issue of fact presented by the record is whether, in addition to the duty to transmit all the information in its possession concerning Abetta's claims, Amerisc had a duty to monitor Abetta's pending claims to ascertain whether they had given rise to lawsuits to be reported to the insurer.
Program was properly granted summary judgment dismissing Amerisc's cross claim against it for indemnification, since the determination that Amerisc is liable to Abetta for its own negligence precludes Amerisc from seeking indemnification for such liability (see Bleecker St. Health & Beauty Aids, Inc. v Granite State Ins. Co., 38 AD3d 231, 233 [2007]). However, Amerisc's claim against Program for contribution also should have been dismissed because it seeks recovery for economic loss resulting exclusively from breach of contract (CPLR 1401; see Board of Educ. of Hudson City School Dist. v Sargent, Webster, Crenshaw & Folley, 71 NY2d 21 [1987]; Bleecker St. Health & Beauty Aids, 38 AD3d at 233). Since Abetta has not appealed the granting of Program's motion for summary judgment dismissing the complaint as against it, our modification to dismiss Amerisc's cross claim against Program in its entirety terminates Program's involvement in this action and renders moot Program's cross claim against Amerisc and Amerisc's appeal from the denial of its motion for summary judgment dismissing that cross claim.
Although the foregoing renders the matter academic, Program concedes that its motion for renewal was in fact a nonappealable motion for reargument (see Parker v Marglin, 56 AD3d 374, 374-375 [2008]).
Kouyate v. Chowdhury


Orlow & Orlow, P.C., Flushing, N.Y. (Brian S. Orlow, Alexander
A. Orlow, and Louis A. Badolato of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York,
N.Y. (Stacy R. Seldin of counsel), for
respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Nelson, J.), entered November 6, 2009, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is denied.
On August 16, 2007, while traveling northbound on Third Avenue in the vicinity of East 45th Street in Manhattan, the plaintiff, who was driving a taxicab owned by a nonparty entity, collided with a taxicab driven by the defendant Saifu Chowdhury and owned by the defendant Maheer Taxi, Inc. (hereinafter Maheer). As a result of this accident, the plaintiff allegedly sustained injuries to his right knee, shoulders, neck, and back. The plaintiff underwent surgery on his right knee in May 2008.
The plaintiff commenced this action against Chowdhury and Maheer. The defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The Supreme Court granted the motion, and the plaintiff appeals.
Contrary to the determination of the Supreme Court, the defendants did not 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; Daly-Caffrey v Licausi, 70 AD3d 884, 885; McMillian v Naparano, 61 AD3d 943; see also Burrowes v New York City Tr. Auth., 71 AD3d 714).
In light of the defendants' failure to meet their prima facie burden, we need not address the sufficiency of the plaintiff's papers submitted in opposition to the defendants' motion (see Perez v Johnson, 72 AD3d 777; Safer v Silbersweig, 70 AD3d 921).
Courbertier v. Academy Bus, LLC


Duffy & Duffy (Pollack, Pollack, Isaac & De Cicco, New York,
N.Y. [Brian J. Isaac], of counsel), for appellant.
Christopher P. Di Giulio, P.C., New York, N.Y. (William
Thymius of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Kings County (Battaglia, J.), entered November 20, 2008, which, upon a jury verdict, is in favor of the defendants and against her, dismissing the complaint.
ORDERED that the judgment is affirmed, with costs.
On February 3, 2006, the plaintiff was a passenger on a bus bound for Atlantic City, which left the roadway of the Garden State Parkway, fell down an embankment, and turned over at least once. The bus was owned by the defendant Academy Bus, LLC, or the defendant Academy Express, LLC, and was being operated at the time of the occurrence by the defendant Rory Youman. At trial, the plaintiff attempted to establish that she had sustained a serious injury within the meaning of Insurance Law § 5102(d) based on the existence of a compression fracture at the L5 vertebra. It was undisputed, however, that the plaintiff suffered from a congenital spinal disorder, had been experiencing pain in her spine since 1979, and had undergone reconstructive surgery of her spine in 1984. At trial, the jury determined that the accident on February 3, 2006, was not a substantial factor in bringing about the compression fracture.
The standard for determining whether a jury verdict is contrary to the weight of the evidence is whether the evidence so preponderated in favor of the unsuccessful party that the verdict could not have been reached on any fair interpretation of the evidence (see Lolik v Big V Supermarkets, 86 NY2d 744, 746; Chery v Souffrant, 71 AD3d 715; Ashby v Mullin, 56 AD3d 588). "Where the verdict can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view" (Torres v Esaian, 5 AD3d 670, 671). Here, the jury's finding that the subject motor vehicle accident was not a substantial factor in bringing about the compression fracture was based on a fair interpretation of the evidence and, thus, was not contrary to the weight of the evidence (see Lolik v Big V Supermarkets, 86 NY2d at 744).
The plaintiff's remaining contentions are either unpreserved for appellate review or without merit.
Thomas v. Booker


Morgan Melhuish Abrutyn, New York (Erin A. O'Leary of
counsel), for Adrian Booker, appellant.
Baker, McEvoy, Morrissey & Moskovitz, P.C., New York
(Stacy R. Seldin of counsel), for Moazzam Ahmed and Sancho
Cab Corp., appellants.
Goldstein & Handwerker LLP, New York (Steven Goldstein of
counsel), for respondent.
Order, Supreme Court, New York County (Paul Wooten, J.), entered October 29, 2009, which, to the extent appealed from, denied the motion by defendants Ahmed and Sancho Cab and the cross motion by defendant Booker for summary judgment dismissing the complaint except with respect to the 90/180 day category under Insurance Law § 5102, unanimously reversed, on the law, without costs, the motion and cross motion granted in full, and the complaint dismissed in its entirety.
Defendants made a prima facie showing that plaintiff's injuries were caused by preexisting, degenerative conditions
rather than the accident (Ortiz v Ash Leasing, Inc., 63 AD3d 556, 557 [2009]). Plaintiff's submissions were insufficient to defeat summary judgment not only because her experts failed to raise an issue of fact addressing the evidence of her preexisting cervical spine disease with "factually based medical opinions ruling out . . . degenerative conditions as the cause of her limitations" (Rose v Citywide Auto Leasing, Inc., 60 AD3d 520 [2009], but also because her experts failed to demonstrate a causal nexus between the accident and plaintiff's injury in the first instance (Jimenez v Rojas, 26 AD3d 256, 257 [2006]).
Arrington v Bronx Jean Company, Inc.


Carol R. Finocchio, New York (Lawrence B. Goodman of
counsel), for appellant.
Laurence M. Savedoff, P.L.L.C., Bronx (Laurence M. Savedoff
of counsel), for respondent.
Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered September 1, 2009, which, to the extent appealed from, adhered, upon reargument, to so much of a prior order granting plaintiff's cross motion for a default judgment on her cause of action for negligence, unanimously reversed, on the facts, without costs, the cross motion denied and default judgment vacated. Order, same court and Justice, entered December 23, 2009, which denied the corporate defendant's motion to vacate the note of issue and strike the complaint for failure to comply with discovery, unanimously modified, on the law, the motion granted to the extent of vacating the note of issue, and otherwise affirmed, without costs.
Although the corporate defendant served its motion to dismiss approximately 22 days late, the delay was minimal, given that defense counsel received the complaint from defendant's insurance carrier only six days prior to serving the motion, and there was no prejudice to plaintiff (see Siwek v Phillips, 71 AD3d 469 [2010] [default not warranted where counsel for defendant did not receive complaint from carrier until after time to serve answer had expired, delay was minimal and plaintiff claimed no prejudice]; Rodriguez v Dixie N.Y.C., Inc., 26 AD3d 199 [2006]] [insurance carrier's delay in assigning counsel may constitute reasonable excuse for default in answering complaint]). Notably, five days prior to the statutory deadline for service of the answer, plaintiff's counsel fowarded a copy of the summons and complaint and an affidavit of service to defendant's insurance carrier via fax with a note requesting that an answer be served "as soon as possible." Defense counsel's understanding that he had additional time to answer was not unreasonable, as the request hardly alerted defense counsel that plaintiff's counsel was insisting on service of an answer by the imminent deadline. Moreover, service of the motion to dismiss in lieu of an answer shortly thereafter, on August 13, evidenced an intent to defend. Although in opposing the motion for a default judgment defendant did not provide an affidavit of merit, none is required where no default order or judgment has been entered (Lamar v City of New York, 68 AD3d 449 [2009]). Under these circumstances, and in view of the strong public policy favoring resolution of cases on their merits, the court improvidently exercised its discretion in granting a default judgment.
In view of the foregoing, the note of issue scheduling an assessment of damages, filed in connection with the negligence cause of action, is vacated.
Klee v. Americas Best Bottling Co., Inc.


Thomas D. Wilson, P.C., Brooklyn, N.Y., for appellant.
Lewis Brisbois Bisgaard & Smith, LLP, New York, N.Y.
(Gregory S. Katz and Jennifer Oxman of
counsel), for respondents.


DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Kurtz, J.), dated October 27, 2009, which granted the defendants' motion, inter alia, to vacate a judgment of the same court entered August 11, 2009 pursuant to CPLR 5003-a(e).
ORDERED that the order is reversed, on the law, with costs, the defendants' motion is denied, and the judgment is reinstated.
The plaintiff was crossing the street within a crosswalk when he was struck by a vehicle owned and operated by the defendants. More than two years after the accident, on July 14, 2009, the plaintiff agreed to settle his personal injury claim for the sum of $400,000. It is undisputed that the plaintiff's attorney promptly mailed a general release and a stipulation of discontinuance to the defendants' attorney, and that these settlement documents were received on July 15, 2009. The settlement documents were accompanied by a cover letter in which the plaintiff's attorney disclosed his taxpayer identification number. However, the defendants also requested, on behalf of their insurance carrier, that the plaintiff's attorney certify that he had provided his correct taxpayer identification number on an Internal Revenue Service Form W-9 (hereinafter Form W-9). Form W-9 facilitates compliance with the Internal Revenue Code by requiring the recipient of certain types of payments to certify his or her taxpayer identification number to the entity making payment, and to indicate whether he or she is subject to backup withholding. The plaintiff's attorney did not initially comply with the defendants' request to complete Form W-9.
When the defendants failed to pay the sum due under the settlement agreement within 21 days of tender of the release and stipulation of discontinuance, the plaintiff sought to enter judgment against them in accordance with CPLR 5003-a. On August 11, 2009, a judgment was entered in favor of the plaintiff in the agreed-upon settlement amount, together with interest, costs, and disbursements. Shortly thereafter, the defendants moved, inter alia, to vacate the judgment, arguing that the Internal Revenue Code required the plaintiff's attorney to comply with their request for a completed Form W-9, and that the plaintiff had procured the judgment by misrepresenting that he had provided them with all necessary settlement documents. While the motion was pending, the plaintiff's attorney completed Form W-9, and the defendants paid the sum of $400,000 required by the settlement agreement. The plaintiff opposed vacatur of the judgment, contending that the defendants' failure to pay the settlement proceeds within 21 days after his tender of the release and stipulation of discontinuance entitled him to recover interest, costs, and disbursements pursuant to CPLR 5003-a. The plaintiff also noted that his attorney had provided the defendants with his taxpayer identification number in the cover letter accompanying the settlement documents, and argued that an attorney receiving "gross proceeds" had no obligation to certify his or her taxpayer identification number to the payor on Form W-9. The Supreme Court granted the defendants' motion, relying upon the decision of the Appellate Division, First Department, in Cely v O'Brien & Kreitzberg (45 AD3d 368) to conclude, in essence, that the plaintiff's attorney was required to provide the defendants with a completed Form W-9 as a condition precedent to payment of the settlement proceeds. We disagree.
CPLR 5003-a was enacted in 1992 to encourage prompt payment of settlements (see Cunha v Shapiro, 42 AD3d 95, 101; Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5003-a: 121). To this end, the statute requires any settling defendant, subject to certain exceptions not applicable here (see CPLR 5003-a[b], [c], [d]), to pay all sums due to any settling plaintiff "within twenty-one days of tender, by the settling plaintiff to the settling defendant[s], of a duly executed release and a stipulation discontinuing [the] action executed on behalf of the settling plaintiff"(CPLR 5003-a[a]). Where, as here, the release and stipulation of discontinuance are tendered by mail, the 21-day period is measured from receipt of the documents (see Leipold v Arnot Ogden Med. Ctr., 46 AD3d 1299, 1300; Cunha v Shapiro, 42 AD3d at 101). If the settling defendant fails to pay the sum due under the settlement agreement within 21 days of tender of the required documents, the statute authorizes the plaintiff to enter, without further notice, a judgment in the amount of the settlement, which is to include interest, costs, and disbursements (see CPLR 5003-a[e]).
Here, the plaintiff fulfilled his obligations under CPLR 5003-a by tendering a duly executed release and stipulation of discontinuance to the defendants' attorney. Neither CPLR 5003-a, nor the parties' stipulation of settlement, imposed any additional requirement on the plaintiff or his attorney. Regardless of whether the defendants' request that the plaintiff's attorney complete Form W-9 certifying his tax identification number was reasonable, as they contend, there is no statutory authority for elevating the completion of this form to a condition precedent for payment of the sum due in settlement of a personal injury claim (see In re Emergency Beacon Corp., 52 B.R. 828, 830; cf. Liss v Brigham Park Coop. Apts. Sec. No. 3, 264 AD2d 717).
Although we are aware that the Appellate Division First Department, reached a contrary conclusion in Cely v O'Brien & Kreitzberg (45 AD3d 368), we do not find the rationale of that case persuasive. Compensation for personal injuries does not generally constitute gross income (see 26 USC § 104[a][2]), and the defendants made no showing that the portion of the personal injury settlement which the plaintiff's attorney may be entitled to retain as a legal fee is actually a "reportable payment" subject to the reporting requirements of the Internal Revenue Code (see 26 USC § 3406). Moreover, even assuming that the defendants' insurance carrier is mandated to report payment of the settlement proceeds to the plaintiff's attorney, the defendants have not demonstrated that the provision of Form W-9 is the sole means by which the carrier can comply with its reporting obligations. Under these circumstances, we decline to effectively amend the terms of the parties' stipulation of settlement by conditioning payment of the settlement proceeds upon completion of the form. Granting settling defendants the unilateral right to withhold payment in these circumstances would significantly undercut the statutory goal of CPLR 5003-a to ensure the prompt payment of settlement proceeds upon tender of the statutorily prescribed documents. Accordingly, the defendants' failure to timely pay the sum due under the settlement agreement entitled the plaintiff to enter judgment including interest, costs, and disbursements pursuant to CPLR 5003-a(e) (see Leipold v Arnot Ogden Med. Ctr., 46 AD3d 1299; Sealey v Jamaica Buses, Inc., 39 AD3d 526, 527; Hadier v Remington Place Assoc., 302 AD2d 428).
The defendants' contention that this appeal is barred by the doctrine of accord and satisfaction because the plaintiff cashed the settlement check while their motion to vacate the judgment was pending is without merit (see Merrill Lynch Realty/Carll Burr, Inc. v Skinner, 63 NY2d 590, 596; Pepe v Tannenbaum, 279 AD2d 620).

Arrington v Bronx Jean Company, Inc.

Carol R. Finocchio, New York (Lawrence B. Goodman of
counsel), for appellant.
Laurence M. Savedoff, P.L.L.C., Bronx (Laurence M. Savedoff
of counsel), for respondent.
Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered September 1, 2009, which, to the extent appealed from, adhered, upon reargument, to so much of a prior order granting plaintiff's cross motion for a default judgment on her cause of action for negligence, unanimously reversed, on the facts, without costs, the cross motion denied and default judgment vacated. Order, same court and Justice, entered December 23, 2009, which denied the corporate defendant's motion to vacate the note of issue and strike the complaint for failure to comply with discovery, unanimously modified, on the law, the motion granted to the extent of vacating the note of issue, and otherwise affirmed, without costs.
Although the corporate defendant served its motion to dismiss approximately 22 days late, the delay was minimal, given that defense counsel received the complaint from defendant's insurance carrier only six days prior to serving the motion, and there was no prejudice to plaintiff (see Siwek v Phillips, 71 AD3d 469 [2010] [default not warranted where counsel for defendant did not receive complaint from carrier until after time to serve answer had expired, delay was minimal and plaintiff claimed no prejudice]; Rodriguez v Dixie N.Y.C., Inc., 26 AD3d 199 [2006]] [insurance carrier's delay in assigning counsel may constitute reasonable excuse for default in answering complaint]). Notably, five days prior to the statutory deadline for service of the answer, plaintiff's counsel fowarded a copy of the summons and complaint and an affidavit of service to defendant's insurance carrier via fax with a note requesting that an answer be served "as soon as possible." Defense counsel's understanding that he had additional time to answer was not unreasonable, as the request hardly alerted defense counsel that plaintiff's counsel was insisting on service of an answer by the imminent deadline. Moreover, service of the motion to dismiss in lieu of an answer shortly thereafter, on August 13, evidenced an intent to defend. Although in opposing the motion for a default judgment defendant did not provide an affidavit of merit, none is required where no default order or judgment has been entered (Lamar v City of New York, 68 AD3d 449 [2009]). Under these circumstances, and in view of the strong public policy favoring resolution of cases on their merits, the court improvidently exercised its discretion in granting a default judgment.
In view of the foregoing, the note of issue scheduling an assessment of damages, filed in connection with the negligence cause of action, is vacated.
Klee v. Americas Best Bottling Co., Inc.

Thomas D. Wilson, P.C., Brooklyn, N.Y., for appellant.
Lewis Brisbois Bisgaard & Smith, LLP, New York, N.Y.
(Gregory S. Katz and Jennifer Oxman of
counsel), for respondents.


DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Kurtz, J.), dated October 27, 2009, which granted the defendants' motion, inter alia, to vacate a judgment of the same court entered August 11, 2009 pursuant to CPLR 5003-a(e).
ORDERED that the order is reversed, on the law, with costs, the defendants' motion is denied, and the judgment is reinstated.
The plaintiff was crossing the street within a crosswalk when he was struck by a vehicle owned and operated by the defendants. More than two years after the accident, on July 14, 2009, the plaintiff agreed to settle his personal injury claim for the sum of $400,000. It is undisputed that the plaintiff's attorney promptly mailed a general release and a stipulation of discontinuance to the defendants' attorney, and that these settlement documents were received on July 15, 2009. The settlement documents were accompanied by a cover letter in which the plaintiff's attorney disclosed his taxpayer identification number. However, the defendants also requested, on behalf of their insurance carrier, that the plaintiff's attorney certify that he had provided his correct taxpayer identification number on an Internal Revenue Service Form W-9 (hereinafter Form W-9). Form W-9 facilitates compliance with the Internal Revenue Code by requiring the recipient of certain types of payments to certify his or her taxpayer identification number to the entity making payment, and to indicate whether he or she is subject to backup withholding. The plaintiff's attorney did not initially comply with the defendants' request to complete Form W-9.
When the defendants failed to pay the sum due under the settlement agreement within 21 days of tender of the release and stipulation of discontinuance, the plaintiff sought to enter judgment against them in accordance with CPLR 5003-a. On August 11, 2009, a judgment was entered in favor of the plaintiff in the agreed-upon settlement amount, together with interest, costs, and disbursements. Shortly thereafter, the defendants moved, inter alia, to vacate the judgment, arguing that the Internal Revenue Code required the plaintiff's attorney to comply with their request for a completed Form W-9, and that the plaintiff had procured the judgment by misrepresenting that he had provided them with all necessary settlement documents. While the motion was pending, the plaintiff's attorney completed Form W-9, and the defendants paid the sum of $400,000 required by the settlement agreement. The plaintiff opposed vacatur of the judgment, contending that the defendants' failure to pay the settlement proceeds within 21 days after his tender of the release and stipulation of discontinuance entitled him to recover interest, costs, and disbursements pursuant to CPLR 5003-a. The plaintiff also noted that his attorney had provided the defendants with his taxpayer identification number in the cover letter accompanying the settlement documents, and argued that an attorney receiving "gross proceeds" had no obligation to certify his or her taxpayer identification number to the payor on Form W-9. The Supreme Court granted the defendants' motion, relying upon the decision of the Appellate Division, First Department, in Cely v O'Brien & Kreitzberg (45 AD3d 368) to conclude, in essence, that the plaintiff's attorney was required to provide the defendants with a completed Form W-9 as a condition precedent to payment of the settlement proceeds. We disagree.
CPLR 5003-a was enacted in 1992 to encourage prompt payment of settlements (see Cunha v Shapiro, 42 AD3d 95, 101; Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5003-a: 121). To this end, the statute requires any settling defendant, subject to certain exceptions not applicable here (see CPLR 5003-a[b], [c], [d]), to pay all sums due to any settling plaintiff "within twenty-one days of tender, by the settling plaintiff to the settling defendant[s], of a duly executed release and a stipulation discontinuing [the] action executed on behalf of the settling plaintiff"(CPLR 5003-a[a]). Where, as here, the release and stipulation of discontinuance are tendered by mail, the 21-day period is measured from receipt of the documents (see Leipold v Arnot Ogden Med. Ctr., 46 AD3d 1299, 1300; Cunha v Shapiro, 42 AD3d at 101). If the settling defendant fails to pay the sum due under the settlement agreement within 21 days of tender of the required documents, the statute authorizes the plaintiff to enter, without further notice, a judgment in the amount of the settlement, which is to include interest, costs, and disbursements (see CPLR 5003-a[e]).
Here, the plaintiff fulfilled his obligations under CPLR 5003-a by tendering a duly executed release and stipulation of discontinuance to the defendants' attorney. Neither CPLR 5003-a, nor the parties' stipulation of settlement, imposed any additional requirement on the plaintiff or his attorney. Regardless of whether the defendants' request that the plaintiff's attorney complete Form W-9 certifying his tax identification number was reasonable, as they contend, there is no statutory authority for elevating the completion of this form to a condition precedent for payment of the sum due in settlement of a personal injury claim (see In re Emergency Beacon Corp., 52 B.R. 828, 830; cf. Liss v Brigham Park Coop. Apts. Sec. No. 3, 264 AD2d 717).
Although we are aware that the Appellate Division First Department, reached a contrary conclusion in Cely v O'Brien & Kreitzberg (45 AD3d 368), we do not find the rationale of that case persuasive. Compensation for personal injuries does not generally constitute gross income (see 26 USC § 104[a][2]), and the defendants made no showing that the portion of the personal injury settlement which the plaintiff's attorney may be entitled to retain as a legal fee is actually a "reportable payment" subject to the reporting requirements of the Internal Revenue Code (see 26 USC § 3406). Moreover, even assuming that the defendants' insurance carrier is mandated to report payment of the settlement proceeds to the plaintiff's attorney, the defendants have not demonstrated that the provision of Form W-9 is the sole means by which the carrier can comply with its reporting obligations. Under these circumstances, we decline to effectively amend the terms of the parties' stipulation of settlement by conditioning payment of the settlement proceeds upon completion of the form. Granting settling defendants the unilateral right to withhold payment in these circumstances would significantly undercut the statutory goal of CPLR 5003-a to ensure the prompt payment of settlement proceeds upon tender of the statutorily prescribed documents. Accordingly, the defendants' failure to timely pay the sum due under the settlement agreement entitled the plaintiff to enter judgment including interest, costs, and disbursements pursuant to CPLR 5003-a(e) (see Leipold v Arnot Ogden Med. Ctr., 46 AD3d 1299; Sealey v Jamaica Buses, Inc., 39 AD3d 526, 527; Hadier v Remington Place Assoc., 302 AD2d 428).
The defendants' contention that this appeal is barred by the doctrine of accord and satisfaction because the plaintiff cashed the settlement check while their motion to vacate the judgment was pending is without merit (see Merrill Lynch Realty/Carll Burr, Inc. v Skinner, 63 NY2d 590, 596; Pepe v Tannenbaum, 279 AD2d 620).
SKELOS, J.P., ENG, HALL and LOTT, JJ., concur.

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