Coverage Pointers - Volume XI, No. 9

Dear Coverage Pointers Subscribers:

Program Alert -- DRI Insurance Practice and Claims Symposium

What is undoubtedly the best educational program of the year for insurance claims professionals is right around the corner.  In times of diminishing funds for coverage training, you have to choose wisely when considering educational programming.  A wise choice would bring you to New York for this educational opportunity

The DRI Insurance Practice and Claims Symposium will be held in New York City on December 3-4 in the Sheraton New York Hotel and Towers.  Please take a moment to view the brochure and we urge you to sign up quickly to secure a room in the room block.  To view the program material, click here: http://www.dri.org/open/event_brochures/20090140.pdf

Audrey and I will be there and we look forward to seeing you there.  If you plan on attending, let us know and hopefully we can meet you for an adult beverage or some similar refreshment.

Autumnal Wishes
We hope and trust that your pumpkins are carved and your clocks are ready to be set back an hour and that you have all of your leaves raked. 

Your friends at H&F are here to bring you a few treats and teach you a few tricks.

We welcome half a dozen new Coverage Pointers subscribers to our family.  We thank those who have shared our newsletters with their colleagues and are always pleased to share our little vignettes with those who enjoy being up-to-date on the latest decisions.

This week’s issue contains another eclectic array – the scorecard favors the insurer this week, as four of the five cases reported in my Coverage Corner were supportive of the insurer’s position.  Including a case from our Court of Appeals, our highest court, there are lots of good lessons to be learned in the decisions reported, including the importance of documenting late notice investigations and the significance of maintaining good mailing practices for policy cancellation. 

We gets lots of calls from our subscribers on the meaning of some of these decisions and do feel free to e-mail or call, if you can help you put these decision in perspective.  Our educational goal, of course, is to provide good tools for claims and coverage handling and any way we can assist, whether it be individual training or through group interaction, we are here for you.

 

On Saturday night the 18th, I had some difficulty making dinner reservations, when I learned that it was “Sweetest Day,” a celebration I’ve generally ignored (Generally?  Nah.  Always).  I assumed, of course, that this was another Hallmark Hall of Fame holiday, created by the card companies to sell more products.

An immediate household discussion ensued and the consensus was that the holiday was created in the 70’s, because the 60’s wouldn’t tolerate it.  We then turned to Wikipedia, the source of all information, and Wiki advised that Sweetest Day was created in Cleveland by a candy manufacturer, in 1921.

We dove into this vat of chocolate ourselves, searching the newspaper archives for our own version of history.  Wiki was close, but not completely accurate.  Sweetest Day was originally Candy Day.  Candy Day seems to have had its beginning in 1916, when a candy company in Ohio proposed having one day set aside as "the sweetest day in the year," a day on which everybody should buy a supply of candy to take home to "the folk" to the orphans or otherwise to make someone happy by such a remembrance.  Originally celebrated on October 8th, it was later changed to October 18th.

It was pointed out that, for example:

• New Year's Day is merely the celebration of the arrival of a certain important date on the calendar, but that it does not necessarily involve expressions of kindness or friendship universally;
• Lincoln's and Washington's birthdays celebrate the birth of great national characters, and while sacred and momentous, do not of necessity, touch the hearts of those who celebrate;
• St. Valentine's Day is of interest to children and youths only;
• St. Patrick's Day has an appeal restricted largely to a nationality;

But it was pointed out that America has no holiday devoted entirely to expressions of happiness, sweetness and kindly acts, with none of the features of other great days which prevent them from being a universally accepted day of real joy and felicitation.

And so National Candy Day came into being, originally celebrated on Saturday, October 8, 1916.  Expressions of friendship, appreciation, devotion and kindly acts can be no better made than on Candy Day, Saturday, October 8.

As one newspaper reported, “certain it is that the one who sees the sun go down on Saturday, October 8, without buying someone else a gift of confectionery will
have to hunt up a real alibi or be forever looked upon as having contributed nothing to the success of "The Sweetest Day in the Year."

A few years later, in 1921, the holiday’s name was change to reflect that gifts of candy made the holiday the “Sweetest Day.” 

One Hundred Years Ago:
Last week, we brought you a story about the illegality of auto insurance in Iowa a century ago, the insurance regulators concerned that permitting such policies would discourage safe driving.  Air travel was also in its infancy in 1909, with Wilbur Wright quoted as saying this week, 100 yeas ago, that the greatest air flight accomplishment in 1909, described by him as “the most daring and spectacular aeronautical feat ever accomplished” was Count de Lambert flying over the Eifel Tower.  However, the insurance policies were not far behind:

The Decatur (Illinois)  Daily Review
October 30, 1909
Page 1, Column 3

INSURANCE FOR AVIATORS.
Scotch Company Puts Out Policies for
'Navigation of Air”

Washington, Oct. 30—Insurance for those who go up in flying machines is the latest form of policy brought out by an enterprising Scottish casualty insurance company. Maxwell Flake, United States consul at Dumferdine, Scotland, reports to the department of commerce and labor that the corporation in question has recognized the need for insuring aviators.  The innovation is looked upon with distrust by other insurance concerns of Great Britain Lloyds declining to issue such Insurance on the operators, machinery, or structure of aeroplanes or dirigible balloons

Another phase of insurance relative to the new science of aeronauts has been put out by a well-known marine Insurance company In England.  This policy appears to be considerably in advance of the time, for it contemplates protection of the lives and property of innocent persons who may be individually injured or whose possessions may be damaged by falling aeroplanes

In This Week’s Issue:

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

• Prior Reasonable Subjective Knowledge of Possibility of Suit Triggers Obligation to Inform Carrier Coming Onto the Risk Under “Prior Knowledge” Exclusion (New York Court of Appeals)
• School District Entitled to Coverage Under Youth League’s Policy; Failure of Carrier to Disclaim Based on Policy Exclusions and Conditions Waives those Defenses
• Where the Insured’s Executive Officer Knew of the Accident, it had an Obligation to Give Prompt Notice; Late Disclaimer is Timely where Carrier Did Not have Knowledge of Reason to Disclaim at Earlier Time
  Public Policy Does Not Preclude “Employee Injury” Exclusion in CGL Policy; Delay Is Disclaim Excused When Carrier Conducting Active Investigation
• Carrier Established that “Independent Contractor” Exclusion Defeated Coverage
• Good Mailing Practice Creates Presumptions of Proper Cancellation

.

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

Margo M. Lagueras
[email protected]

• MRI and Two Examinations Two Years Apart = Triable Issue of Fact
• Two Experts Are No Better Than One Where Both Find Significant Restrictions
• Conclusion That Limitations Are “Self-Restricted” Needs Objective Support
• Defendant’s Motion Must Be Denied Where His Examining Expert Reports Significant Range-of-Motion Limitations
• Affirmed Report Fails to Address Medical Records Indicating That Plaintiff Had Full Range of Motion within Three Months After Accident
• Conclusions Based on Contemporaneous and Recent Physical Examinations Are Sufficient to Raise Triable Issue of Fact Even if Portions of Report Must Be Disregarded
• Plaintiff’s Affidavit Must Include Competent Medical Evidence to Sustain Claim under 90/180-Day Category

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

• Massage Therapist’s Higher Charge Accepted Over Lower Established Rate for Massage by Physical Therapist
• Surface EMGs Not Reimbursable Under No-Fault.

Litigation

• Plaintiff Waived Evidentiary Argument as Raised for First Time on Appeal.
• Insurer Established Failure to Appear for Scheduled EUO and Case Dismissed

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

• Delay in Conducting an EUO, Where there is a Pattern of Good Faith Compliance, Does Not Breach the Cooperation Clause in a Commercial Property Policy
• Failure to Disclosure a Pre-Existing Condition Unrelated to the Cause of Death Still Qualifies as a Material Misrepresentation
• Failing to Accept Something that Does Not Exist is Not Legal Malpractice

EARL’S PEARLS

Earl K. Cantwell
[email protected]
Additional Thoughts on Additional Insureds

We are continuing to schedule training through year’s end and into the first part of 2010.  Let us know if we can visit you.

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

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

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

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

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

Index to Special Columns

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

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

10/20/09         Executive Risk Indemnity Inc. v. Pepper Hamilton LLP
New York State Court of Appeals
Prior Reasonable Subjective Knowledge of Possibility of Suit Triggers Obligation to Inform Carrier Coming Onto the Risk Under “Prior Knowledge” Exclusion
In Volume X, No. 7 of Coverage Pointers, we reported on the Appellate Division Decision:
9/23/08            Executive Risk Indemnity Inc. v. Pepper Hamilton LLP
Appellate Division, First Department
Legal Malpractice Coverage Restored – Knowledge That Client May Be Sued for Misconduct and Suspicion That Someone Might Sue Law Firm as Well, Does Not Require Notice Prior to Policy Inception
Here, while evidence suggested that members of the law firm  subjectively either believed or feared that the firm might be subjected to professional liability claims by entities claiming injury as a result of its client’s conduct the firm's subjective belief that a suit may ensue based upon is not enough to require law firm to provide prior notice to carrier about to sign onto risk. The knowledge of its client’s actions, and of its own legal work related to those operations, may have provided objective evidence that client might be sued and supported a concomitant suspicion that those with claims against client might seek relief against the law firm as well. But there was nothing in the record constituting objective evidence permitting a reasonable professional to conclude that the law firm did anything that would subject it to suit or other claim.
 The Court of Appeals modified the Appellate Division Order and found that the lawyer’s subjective belief was in fact enough to require the law firm to provide prior notice to the carrier about to sign on to the risk, since that belief, although subjective, was reasonable. A “reasonable attorney with the law firm’s knowledge should have anticipated the possibility of a lawsuit.”  The high court found, however, that under Pennsylvania law, the insurer did not establish a right to rescind the policy since there was no evidence of the “heightened standard” of proof necessary to justify that remedy.
10/29/09         Stillwater Central School District v. Great American E & S Ins. Co.
Appellate Division, Third Department
School District Entitled to Coverage Under Youth League’s Policy; Failure of Carrier to Disclaim Based on Policy Exclusions and Conditions Waives those Defenses
Stillwater CSD sought a determination that Great American had a duty to defend it in an action brought against the District by a spectator who fell from bleachers owned by the District. Stillwater Battle (“Battle”) a youth football team is a member of the Northeast Youth Football League (“NYFL”).  The NYFL asked to use the District’s field and the request was granted, contingent upon proof of insurance. Battle provided a Certificate of Insurance identifying Great American as the insurer and the District as an additional insured for one year. Later, another NYFL team, the Red Raiders, asked to use the field and again, the District wanted proof of insurance. The Raiders' coach responded that the District should already have a certificate of insurance from defendant, the NYFL carrier, because Battle is a member of the NYFL.  The District agreed, and a second certificate of insurance was neither sought by the school district nor provided by the Raiders. Of course, the injury occurred during Red Raiders game, an action was commenced and it was claimed the District was responsible.
The District sought coverage from Great American. Since there was no response from Great American, one way or the other, the District brought a third party action against the NYFL. The NYFL and the school district settled directly with the spectator and then sued Great American seeking defense costs and the amount spent in settlement.
Great American contended that Battle’s application for coverage limited NYFL’s coverage only to games involving Battle. he insurance policy issued by defendant names as insureds the "association and its member teams, [and] leagues." The NYFL is a league and the team playing on the day of the incident was a member of the NYFL.  At best, there is an ambiguity which favors coverage for the team.
As to the District’s coverage, an AI endorsement extends coverage to “owners and/or lessors of the premises leased, rented, or loaned to [the NYFL …”  
There were two policy exclusions, one for “design defect or structural maintenance of the premises” and another for “sole negligence of the additional insured.” The insurer having failed to disclaim promptly loses its right to deny coverage based on exclusions, or on late notice. An oral disclaimer over the phone was not enough.
10/29/09         QBE Insurance Corporation v. D. Gangi Contracting Corp.
Appellate Division, First Department
Where the Insured’s Executive Officer Knew of the Accident, it had an Obligation to Give Prompt Notice; Late Disclaimer is Timely where Carrier Did Not have Knowledge of Reason to Disclaim at Earlier Time
QBE issued a policy to Gangi.  The policy required Gangi, the insured, to give QBE notice of an occurrence as soon as reasonably practicable, and provided that "Knowledge . . . by Gangi’s agent, servant or employee shall not in itself constitute knowledge of you unless the Corporate Risk Manager of Your corporation shall have received notice of such Occurrence."
Gangi's Corporate Risk Manager did not know of the accident, he claimed. However, Gangi's president, vice-president, secretary and sole shareholder and officer admitted contemporaneous knowledge of D'Ambrosi's accident and the severity of his injuries. As Gangichiodo was an "executive officer" as defined by the policy, and not merely an "agent, employee or servant" of Gangi, his knowledge was properly imputed to Gangi.
Where the plaintiff in the underlying suit had sustained serious injuries and been removed from the scene by ambulance, and the insured was subject to potential strict liability under the Labor Law, the court would not accept the excuse that the insured could have a “good faith belief in non-liability.”  QBE's disclaimer of coverage was not issued right after it received notice of the accident but was issued two days after QBE learned of the insured’s concurrent knowledge and thus the denial was timely issued.
Editor’s Note:  The insured was asked when by the insurer when it learned of the accident.  Apparently it advised the carrier that the Corporate Risk Manager didn’t know of it.  Later, when the insurer learned that the President knew of it immediately, the insurer promptly disclaimed.  The insurer did a good job in establishing that it was vigorously investigating and thus it was excused
10/20/09         Utica First Insurance Company v. Santagata
Appellate Division, Second Department
Public Policy Does Not Preclude “Employee Injury” Exclusion in CGL Policy; Delay Is Disclaim Excused When Carrier Conducting Active Investigation
The insurer was successful in establishing that its delay in disclaiming coverage was reasonable because it needed to understand the relationship between the parties to a construction accident.   The policy contained an “employee exclusion” which excluded coverage in cases of bodily injury to an employee of the insured or an employee of a contractor hired by the insured if it occurs in the course of employment.  It was argued that such an exclusion violated public policy but the Second Department disagreed, there being no statute or regulation prohibiting such an exclusion.
The carrier was permitted to secure a default judgment against the parties who did not appear in the declaratory judgment action because the insurer proved not only that they did not appear and contest the litigation but there was substantive proof offered that they did not provide timely notice of the accident (and the employee exclusion was applicable, in addition).
10/20/09         Outlook Realty, LLC v. U.S. Underwriters Insurance Company
Appellate Division, Second Department
Carrier Established that “Independent Contractor” Exclusion Defeated Coverage
The defendant carrier established with documentary evidence that a policy exclusion for “independent contractors” performing operations for the plaintiff applied to defeat coverage. Accordingly, the carrier was not obligated to defend or indemnify the plaintiff in the underlying action.
Editor’s Note:  Unfortunately, the decision did not report on the wording of the exclusion or the nature of the claim beyond that.

10/13/09         In the Matter of Eveready Insurance Company v. France
Appellate Division, Second Department
Good Mailing Practice Creates Presumptions of Proper Cancellation
Application made to stay uninsured motorist arbitration.  Eveready contended Nationwide, insurer for tortfeasor, did not properly cancel its policy so that car was not uninsured.  Nationwide established at framed issue hearing that it followed an office practice and procedure geared to ensure that a notice of cancellation is properly addressed and mailed.  That gave rise to a presumption of receipt and thus policy was deemed properly canceled.

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

Margo M. Lagueras
[email protected]

10/20/09         Valeus v. Sanon
Appellate Division, Second Department
MRI and Two Examinations Two Years Apart = Triable Issue of Fact
Although the defendants here did meet their prima facie burden, the plaintiff defeated their motion with the submission of his treating neurologist’s reports of examinations performed in 2007 and 2009.  In both reports the neurologist noted significant range-of-motion limitations to the plaintiff’s lumbar spine, and in the 2009 report he reviewed a 2005 MRI, which revealed herniated and bulging discs in the lumbar spine, and causally related the injuries and limitations to the accident.

10/20/09         Buono v. Sarnes
Appellate Division, Second Department
Two Experts Are No Better Than One Where Both Find Significant Restrictions
The defendant retained two experts, an orthopedic surgeon and a neurologist, only to fail to meet his prima facie burden, times two.  The orthopedic surgeon examined both plaintiffs and found significant range-of-motion limitations in their lumbar and cervical spines, respectively.  This alone required the denial of the defendant’s motion.  Not to be out-done, the defendant’s retained neurologist also reported significant range-of-motion restrictions in both plaintiffs’ cervical and lumbar spines but attempted to attribute these findings to preexisting osteoarthritis and degenerative disc disease.  He failed, however, as he did not set forth the foundation for his conclusions.  Again, no need to look at the plaintiffs’ submissions.

10/20/09         Delacruz v. Ostrich Cab Corp.
Appellate Division, Second Department
Conclusion That Limitations Are “Self-Restricted” Needs Objective Support
And here the defendants did not have more than their orthopedic surgeon’s conclusions, without any objective medical evidence to substantiate that the plaintiff’s limitations were “self-restricted.”  The Appellate Court did not bite anymore than the trial court had.

10/20/09         Loor v. Lozado
Appellate Division, Second Department
Defendant’s Motion Must Be Denied Where His Examining Expert Reports Significant Range-of-Motion Limitations
The Appellate Court agreed that the defendant did not meet his prima facie burden with the submission of the affirmed medical report of his examining orthopedist where that report noted significant range-of-motion limitations of the plaintiff’s lumbar spine.  As usual, in such a case the court does not even review the plaintiff’s opposing submission.

10/13/09         Shaji v. City of New Rochelle
Appellate Division, Second Department
Affirmed Report Fails to Address Medical Records Indicating That Plaintiff Had Full Range of Motion Within Three Months After Accident
The defendants win a reversal on appeal, in part because the plaintiff’s physician failed to address notations in the plaintiff’s medical records which indicated that the plaintiff had full range-of-motion in her back and neck within three months after the accident.  In addition, the physician’s affirmed reports also failed to relate the limitations in cervical and lumbar range-of-motion to the accident.  For her part, the plaintiff also submitted inadmissible unaffirmed reports, failed to explain her cessation of treatment, or offer competent medical evidence to support her claim under the 90/180-day category of serious injury. 

10/13/09         Casiano v. Zedan
Appellate Division, Second Department
Conclusions Based on Contemporaneous and Recent Physical Examinations Are Sufficient to Raise Triable Issue of Fact Even if Portions of Report Must Be Disregarded
The plaintiff’s treating neurologist’s affirmed report, based on both contemporaneous and recent examinations which revealed significant limitations, stated that the plaintiff sustained a serious injury to her cervical spine under the significant limitation and/or permanent consequential limitation of use categories,.  He concluded that the injuries were permanent, significant, and causally related to the accident.  His conclusions thus supported were sufficient to raise a triable issue of fact even though portions of his report, which had to be disregarded by the court, recited unsworn findings by other medical providers.

10/13/09         Spence v. Mikelberg
Appellate Division, Second Department
Plaintiff’s Affidavit Must Include Competent Medical Evidence to Sustain Claim Under 90/180-Day Category
As we see so often, the plaintiff’s affidavit was insufficient because she failed to submit any competent medical evidence to show that the injuries she allegedly sustained prevented her from performing substantially all her usual and customary activities.  In addition, the plaintiff’s only medical submission was insufficient because, while noting limitations, her orthopedist failed to set forth any of the objective tests he performed.  Result: plaintiff fails on appeal.

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

TRAINING ALERT:    
The National Business Institute is conducting a seminar entitled Effective No-Fault Strategies in Buffalo on November 18 and in Syracuse on November 19.  The cost is $319.00 for the first registrant and $309.00 for each additional registrant.  Please note that if you have a group of three or more that there are group discounts available.  This seminar is a pure no-fault seminar and will have participation from the American Arbitration Association as well as the plaintiff and defense bars.  I have been told that there will be two arbitrators present at the Buffalo location and one at the Syracuse location.  If you would like the brochure please email me at [email protected]

Arbitration

10/20/09         Applicant v. GEICO Ins. Co.
Arbitrator Kent L. Benziger, Esq. (Erie County)
Massage Therapist’s Higher Charge Accepted Over Lower Established Rate for Massage by Physical Therapist.
Massage therapy bills were at issue in this arbitration as a result of an August 12, 2008, motor vehicle accident.  The sole issue in the arbitration was the proper fee schedule.

The Applicant, medical provider, billed under CPT code 97799 – “unlisted physical medicine/rehabilitation service or procedure.”  The treatment description was a 60 minute massage therapy session 4x15 minutes.

The insurer’s partial denial based upon fee schedule provided that there is no fee schedule for massage therapy because the treatment is best described in the physical therapy section of the fee schedule.  The reimbursement should have been equal to massage therapy performed by a registered physical therapist.  Therefore, the bill was re-coded to CPT 97214 – physical medicine for massage.

The assigned arbitrator held that the Applicant properly coded its bill as the CPT code proposed by the insurer can only be used by a licensed physical therapist or occupational therapist.

Since the fee schedule contains no schedule for massage therapy the rule is that the prevailing fee in the geographic location of the provider is used.  This is subject to the insurer’s review for consistency with charges permissible for similar procedures under schedules already adopted or established.

The Insurance Department also issued an opinion on this issue which explained that while the fee schedule does not exist the insurer can reduce the bill to ensure that it is consistent with similar procedures in an established fee schedule.

Here, the insurer did not submit evidence in the form of an affidavit, for example, that the service Applicant rendered is similar and consistent to the service rendered in CPT code 97214 by a physician or physical therapist.  Likewise, there was no evidence offered that the education, training and expertise of massage therapist is similar or comparable to a physical therapist.  Also, there was no proof on the length of time it takes under CPT code 97214 to render the service by a physical therapist.

Accordingly, the Applicant’s fee as billed was upheld. 

10/19/09         Applicant v. Nationwide Ins. Co.
Arbitrator Kent L. Benziger, Esq. (Erie County)
Surface EMGs Not Reimbursable Under No-Fault.
The Applicant, medical provider, sought reimbursement for surface level EMG studies performed upon the eligible injured person.  The insurer denied the claim based upon:

666 – NY – Per the Workers’ Compensation Board decision of 3/13/93”. (sic) Surface EMGs have no medical efficacy and are not reimbursable under No-Fault.

The Insurance Department issued a June 11, 2001, opinion that specifically held that surface EMGs are non-reimbursable as a matter of law.

The assigned arbitrator determined that an Insurance Department Opinion is afforded great weight as the Court of Appeals pointed out in LMK Psychological.  The assigned arbitrator also relied upon the fact that this treatment was rendered more than six years post accident with Applicant failing to document intervening treatment or that this treatment was foreseeable as well as failing to provide recent or thorough studies regarding medical necessity.

Accordingly, the claim was denied.

Litigation
10/13/09         Med-Tech Products, Inc. a/a/o Lavly Rahman v. GEICO Ins. Co.
Appellate Term, Second Department
Plaintiff Waived Evidentiary Argument as Raised for First Time on Appeal.
The plaintiff’s summary judgment motion was properly granted as the insurer’s opposition of lack of medical necessity based upon a peer review created an issue of fact.  The plaintiff’s argument that the peer review was not offered in admissible form was waived on appeal as it was raised for the first time on appeal.

10/6/09           A.B. Med. Services, PLLC a/a/o Joel Michel v. American Transit Ins. Co.
Appellate Term, Second Department
Insurer Established Failure to Appear for Scheduled EUO and Case Dismissed.
The insurer’s cross-motion for summary judgment on failure to appear for scheduled EUOs was properly granted.  The insurer established, under Residential Holding Corp. v. Scottsdale Ins. Co., that its EUO notices were mailed and that the eligible injured person failed to appear.

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

10/29/09         Erie Insurance Company v JMM Properties, LLC
Appellate Division, Third Department
Delay in Conducting an EUO, Where there is a Pattern of Good Faith Compliance, Does Not Breach the Cooperation Clause in a Commercial Property Policy

JMM consisted of three principals (Mssrs. Orr, Froncek and Truman) who owned a premises in Oneida, New York.  Said premises was insured by plaintiff, Erie, under commercial property policy.  The insured premises burned in November of 2006.
After the fire, Erie almost immediately obtained a recorded statement from Mr. Truman. Thereafter, Erie requested Examination Under Oaths of all three principals in JMM. 

Before the EUOs were conducted, Mr. Truman was arraigned on criminal charges related to the fire loss.  With the criminal case pending, Mr. Truman’s criminal counsel refused to permit Mr. Truman to participate in an EUO. 

Mr. Truman, as well as Mr. Orr, finally agreed to participate in an EUO in May of 2007. 
At that time, Mr. Truman did not appear at the correct location.  However, it was later adduced that his failure to show was apparently due to a scheduling mix-up with Erie’s counsel’s office.  When Mr. Truman did not appear at the scheduled EUO, Erie’s counsel refused to proceed with the EUO of Mr. Orr.  This was the case even though Mr. Orr was present, and prepared to proceed.

When an alternative date for the EUOs could not be arranged, Erie disclaimed coverage on the basis of that the insureds failed to submit to an EUO and otherwise failed to cooperate with the investigation of the fire loss.  The Trial Court conditionally granted Erie’s motion, and held that the EUO’s must occur within 30 days of the service of Order.

Erie then sought a stay of the 30 day Conditional Order, and appealed to the Third Department.  The Third Department agreed that the delay occasioned in conducting the EUOs of Mr. Truman and Mr. Orr was not so substantial as to warrant the extraordinary sanction of dismissing their claim for fire damage.  Further, the Court noted the fact that Erie could have taken the EUO of Mr. Orr, and previously obtained a recorded statement of Mr. Truman.

10/20/09         Swinton v New York Life Insurance Company
Appellate Division, Second Department
Failure to Disclosure a Pre-Existing Condition Unrelated to the Cause of Death Still Qualifies as a Material Misrepresentation
Plaintiff commenced this action as the beneficiary of a term life insurance policy that had been procured by her late husband.  After the insured’s death in a boating accident, plaintiff presented a claim for coverage.  NYIC denied the request on the basis that the decedent/insured had made material misrepresentations in the application process. 
Among the alleged misrepresentations, NYIC alleged that the decedent failed to indicate that he had been diagnosed with sarcoidosis and that he had undergone multiple diagnostic tests. Finding that the carrier established that it would not have underwritten the risk had it known of the pre-existing condition, the Second Department NYIC was entitled to void the policy. 

10/13/09         Santiago v Fellows, Epstein & Hymowitz, P.C., et al.
Appellate Division, Second Department
Failing to Accept Something that Does Not Exist is Not Legal Malpractice
Simply put, the plaintiff commenced a claim of malpractice which was premised upon his counsel’s alleged failure to settle an underlying lawsuit with parties insured by Selective Insurance Company for $1,000,000.

However, the defendant established that Selective never actually offered $1,000,000 to settle the claim.  When the defendant established that it could not have accepted an offer because such offer never existed, the legal malpractice claim was dismissed accordingly.

FIJAL’S FEDERAL FOCUS

Katherine A. Fijal
[email protected]

Sorry folks, once again the Second Circuit has been silent with respect to insurance coverage and insurance related decisions.  We continue to monitor the court and will report as relevant decisions are published.

EARL’S PEARLS

Earl K. Cantwell
[email protected]

ADDITIONAL THOUGHTS ON ADDITIONAL INSUREDS

The most commonly used additional insured coverage form is CG 20 10, which makes a project owner an insured under a contractor’s liability policy, or a general contractor an insured under a subcontractor’s insurance policy.  This endorsement was historically much broader under policies issued prior to 2004 when the standard form of the endorsement was revised.  Prior to 2004, courts consistently held there only needed to be a very casual connection between the work being done by the named insured and the liability of the additional insured.  For example, the fact that the named insured was performing work for the additional insured was enough to invoke coverage, even if the injury causing action was solely that of the additional insured. 

In 2004, changes were made to the CG 2010 endorsement which restricts coverage in two specific ways.  First, an additional insured may be covered only if liability is caused “in whole or in part” by “your acts or omissions”.  This means, for example, that suits alleging fault only against the additional insured may not be covered.  Just as importantly, the coverage may also exclude injuries or damage after the work is completed or put into intended use. 

A number of questions have arisen in litigation with respect to this endorsement.  Most courts appear to take an expansive view traditionally associated with making coverage as broad as possible.  Coverage may extend beyond the acts of the named insured and include coverage for acts of negligence by the additional insured that involve no fault on the part of the named insured.

One issue that is typically litigated is determining the scope of “arising out of” the named insured’s work.  The majority of courts have construed this language broadly, and held that coverage is not limited to vicarious liability, but also find coverage for liability arising out of the named insured’s work irrespective of whether the injury was caused by the named insured or the additional insured.  The important issue is that the version of the endorsement in effect may determine what activities “arise out of” the named insured’s operations. 

Another important issue is whether the additional insured endorsement covers completed operations.  An owner or contractor who seeks additional insured endorsement generally believes they will receive coverage for claims that arise during a project as well as any that arise after substantial completion – but not all endorsements provide both types of coverage.  Several courts that have considered this language have found no problem in restricting coverage to an additional insured only through periods of ongoing operations.  Courts have found that the additional insured endorsement ends once the named insured completes its work on the project at issue. 

A third issue that typically arises is coordination of coverage.  Generally, a general contractor’s liability policy has language that makes it excess to any coverage the general contractor receives as an additional insured.  If such an excess clause is not in place, then the general contractor’s insurance and the subcontractor’s insurance making the general contractor as an additional insured may be obligated to provide coverage on some proportional or pro rata basis. 

Based on these additional insured issues, the following are some practical considerations for underwriters, contractors, subcontractors, and adjusters either in procuring or reviewing additional insured endorsements:

• Check the actual additional insured endorsement and determine what version is employed and whether it satisfies contractual language and expectations. 
• If the endorsement limits coverage to where the general contractor is covered if liability is caused in whole or in part by the subcontractor’s acts or omissions, the general contractor or their agent and underwriter should require the subcontractor to determine if it can obtain insurance without this “sole negligence” exclusion.  As a practical matter, the “sole negligence” endorsement is very problematic for owners and contractors since it provides very little leverage to compel, at an early stage, the subcontractor’s insurance company to provide defense and indemnification if the claimant in one way or another is arguing that the owner or general contractor may have some culpability for the claim. 
• Third, in conjunction with the additional insured clause, the contract language should include the broadest form of indemnification possible without violating the state’s anti-indemnification law.  This will help provide another level of rights and safeguards in the event of an occurrence and litigated claim. 

 

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

10/22/09         American Modern Home Insurance Company v.Corra
United States District Court for the Southern District of West Virginia
Knowingly Permitting an Underage Person to Consume Alcoholic Beverages on the Homeowners Property Does Not Constitute an “Occurrence” under a Homeowner’s Policy
American Modern Home Insurance Company (“American”) issued a homeowners policy to Jeff Corra (“Corra”). Several underage teenagers had attended a social gathering at Corra’s house, in which they drank alcohol. The teenagers left Corra’s residence to purchase more alcohol and were involved in a fatal automobile accident while returning to his house. Corra was initially indicted on criminal charges of knowingly furnishing “alcoholic liquors” to underage persons, but the appellate court overturned that conviction because the teenagers drank only beer. The policy provided coverage for an “occurrence,” which was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions. . .” The appellate court found that the policy did not provide coverage where the injury or damage was allegedly caused by the homeowner’s conduct in knowingly permitting an underage adult to consume alcoholic beverages on the property. The court reasoned that this conduct does not constitute an “occurrence” under the policy and found that American had no duty to defend or indemnify Corra based on the teenagers’ consumption of alcohol on his property. The district court affirmed the ruling and granted American’s motion for summary judgment on the duty to defend and indemnify Corra. The court denied motions for summary judgment on American’s duty to pay medical expenses and apply criminal acts exclusion because the record did not clearly show that Corra acted intentionally, recklessly or negligently.
Submitted by: Bruce D. Celebrezze and Kori-Renee Hart (Sedgwick,Detert, Moran & Arnold LLP)

10/21/09         Watkins v. Southern Farm Bureau Cas. Ins. Co.
Court of Appeals of Arkansas
An Insurer is not Required to Indemnify an Insured for an Unsuccessful Claim of Self-Defense in an Assault and Battery Action
 Southern Farm Bureau Casualty Insurance Company (“Farm Bureau”) issued to Cleo and Brenda Watkins (“Watkins”) a homeowners insurance policy and a general liability policy. Watkins was sued for assault and battery arising from a dispute in which Watkins allegedly beat his opponent with the opponent’s pistol during a confrontation. Farm Bureau denied coverage based on the “intentional acts” exclusion in the homeowners policy and the “intentional design” exclusion in the general liability policy. Farm Bureau negotiated a release from liability with Watkins' attorney, who stated in writing that Watkins understood Farm Bureau did not have a duty to defend or indemnify Watkins for intentional acts. After a jury returned a verdict against Watkins, Watkins filed a malpractice claim against his attorney. Farm Bureau sought a declaratory action that it was not required to defend or indemnify either the underlying case or the malpractice action. Watkins counterclaimed for coverage, attorneys’ fees and bad faith against Farm Bureau for filing the declaratory action. The trial court declared that because neither policy afforded coverage, Farm Bureau did not have a duty to defend, and Watkins had failed to state a claim for bad faith. On appeal, the Court of Appeals of Arkansas found that the insurer had a duty to defend, if Watkins acted in self-defense. However, a jury found that Watkins was the aggressor, rather than the victim, and collateral estoppel prevented Watkins from re-litigating the self-defense issue with the insurer. The Court of Appeals therefore affirmed the trial court’s grant of summary judgment on the issue of coverage, and remanded to the trial court the issue of Watkins’ attorneys’ fees because Watkins had notified the insured of his intent to argue self-defense in court. The court further affirmed that Farm Bureau did not act in bad faith by seeking a declaratory action. The court reasoned that Farm Bureau did not take an unreasonable position, as there is a split of authority concerning the application of an intentional design exclusion when the insured asserts self-defense. The court held that an insurer’s refusal to pay a claim cannot constitute wanton or malicious conduct when an actual controversy exists as to liability under the policy. The court affirmed the order of summary judgment on the bad-faith claim.
Submitted by: Bruce D. Celebrezze and Kori-Renée Hart (Sedgwick, Detert, Moran & Arnold LLP).
REPORTED DECISIONS

In the Matter of Eveready Insurance Company v. France

Wollerstein & Futoran (Shapiro, Beilly, Rosenberg & Aronowitz,
LLP, New York, N.Y. [Roy J. Karlin] of counsel), for appellant.
Epstein, Harms & McDonald, New York, N.Y. (Michael A.
Buffa of counsel), for proposed
additional respondent.

DECISION & ORDER
In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Kings County (Archer, Ct. Atty. Ref.), dated October 10, 2008, which, after a framed-issue hearing, determined that Nationwide Mutual Insurance Company validly cancelled its insurance policy prior to the subject accident and, in effect, denied the petition.
ORDERED that the order is affirmed, with costs.
The petitioner Eveready Insurance Company commenced this proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim on the ground that the vehicle involved in the subject accident was insured by Nationwide Mutual Insurance Company (hereinafter Nationwide) on the date of the accident. A framed-issue hearing was subsequently held on the issue of whether Nationwide validly cancelled the policy covering the vehicle prior to the accident. Contrary to the petitioner's contention, Nationwide established at the hearing that it followed an office practice and procedure geared to ensure that a notice of cancellation is properly addressed and mailed, which gave rise to a presumption of receipt (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829-830; Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230; Matter of Murphy, 248 AD2d 475). Accordingly, the Supreme Court properly determined that Nationwide validly cancelled its insurance policy prior to the subject accident and, in effect, denied the petition.
The petitioner's remaining contentions are without merit.
Executive Risk Indemnity Inc. v. Pepper Hamilton LLP

 
William B. Pollard, III, for appellant Executive Risk
Indemnity Inc.
Kevin M. Mattessich, for third-party appellant
Continental Casualty Company.
Catherine E. Stetson, for third-party appellant Twin
City Fire Insurance Company.
Charles A. Gilman, for respondents Pepper Hamilton
LLP and Gagne.
Robert P. Conlon, for respondent Westport Insurance
Corporation.
Philadelphia Bar Association, amicus curiae.

JONES, J.:
We are asked to determine, under Pennsylvania law, whether excess insurers Executive Risk Indemnity Inc. and Twin City Fire Insurance Company, based upon their prior knowledge exclusions, and Continental Casualty Company, based upon rescission of its policies, were entitled to summary judgment declaring that they have no obligation to indemnify defendants Pepper Hamilton LLP and one of its members W. Roderick GagnÉ (collectively, the law firm defendants) in actions asserted against them for, among other claims, professional malpractice. We conclude that the prior knowledge exclusions apply and modify the order of the Appellate Division by granting summary judgment to Executive Risk and Twin City. We also conclude that Continental Casualty is not entitled to summary judgment on the basis of rescission.
Facts and Procedural History
The underlying actions arose out of the law firm defendants' representation of non-parties Student Finance Corporation (SFC), its principal, Andrew Yao, and Royal Indemnity Company. In 1992, Yao founded SFC, a company that serviced the vocational portion of the student loan market. SFC financed loans to students attending vocational schools and acquired student loans from other lenders. It pooled those loans into certificates and sold them to investors. Defendant GagnÉ, then an associate of a non-party law firm, assisted with SFC's formation in 1992 and its securitization in 1996. In 1996, GagnÉ became a member of Pepper Hamilton, a law firm based in Philadelphia, and brought Yao and SFC with him as clients. In the course of Pepper Hamilton's representation of SFC, the law firm prepared eight Private Placement Memoranda (PPMs) in 2000 and 2001, which SFC used in connection with the sale of certificates totaling more than $465 million. GagnÉ also participated in discussions concerning SFC's operations with Yao. Royal Indemnity, a client of Pepper Hamilton, provided SFC with credit risk insurance for the pooled loans from 1999 to 2001.
From April 27, 2001 to October 27, 2002, Pepper Hamilton had two policies, $20 million of primary coverage under the Westport policy and $30 million of excess coverage under the Continental Casualty policy. In October 2002, the law firm decreased its coverage from $50 million to $40 million and obtained policies with two additional insurers, Executive Risk and Twin City. In the subsequent years, from October 27, 2002 to October 27, 2003 and October 27, 2003 to October 27, 2004, Westport issued a $10 million primary coverage policy to Pepper Hamilton, and Twin City, Executive Risk and Continental Casualty each issued Pepper Hamilton $10 million of excess coverage. Each excess policy substantially incorporated the terms, conditions, warranties and exclusions of the Westport policy.
The Westport policy [FN1] excludes:
"any act, error, omission, circumstance or PERSONAL INJURY occurring prior to the effective date of this POLICY if any INSURED at the effective date knew or could have reasonably foreseen that such act, error, omission, circumstance or PERSONAL INJURY might be the basis of a CLAIM. This exclusion does not apply to any INSURED who had no knowledge or could not have reasonably foreseen that such act, error, omission, circumstance or PERSONAL INJURY might be the basis of a claim."
In March 2002, months before Executive Risk and Twin City issued their respective policies to Pepper Hamilton, the law firm defendants learned that SFC had been involved in securities fraud in failing to disclose the forbearance payments. Yao informed GagnÉ that SFC was inaccurately representing its default rate to make its certificates appear more attractive to investors, underwriters and credit risk insurers. Specifically, SFC made forbearance payments from its reserve accounts on student loans that were more than 90 days past due. Pepper Hamilton continued to represent SFC until April 2002.
On July 22, 2002, Chubb Wilcox, Pepper Hamilton's general counsel and insurance procurer, sent a memorandum to Pepper Hamilton attorneys regarding the firm's insurance application and inquired whether any person was "aware of any fact or circumstance, act, error, omission or personal injury which might be expected to be the basis of the claim or suit for lawyers professional liability." On August 6, 2002, GagnÉ responded: "I am aware [of] the Student Finance Corporation transactions of which you are familiar . . . two law suits have been filed in two different states and to date, we have not been named in either action. I am not certain as to whether we will be joined in the future." On September 6, 2002, Pepper Hamilton submitted a signed and dated insurance application to Westport, which did not include information concerning SFC, and in a letter to Twin City, dated October 25, 2002, Pepper Hamilton warranted that it had no material changes to its application. Pepper Hamilton did not disclose information concerning SFC to any of its insurers.
Eventually, SFC was forced into bankruptcy. In April 2004, Pepper Hamilton received a proposed tolling agreement from SFC's bankruptcy trustee, which advised that valid claims and causes of action could be brought against Pepper Hamilton "on behalf of the estate and/or creditors of" SFC. Pepper Hamilton immediately contacted its primary insurer Westport and excess insurers Executive Risk, Twin City and Continental Casualty and informed them of the potential claims.
In 2005, the bankruptcy trustee and Royal Indemnity brought separate actions against the law firm defendants, alleging, among other claims, breach of fiduciary duty, negligent misrepresentation and professional malpractice. Pepper Hamilton's primary insurer, Westport, did not contest its obligation to defend. However, the excess insurers denied coverage.
Executive Risk commenced this action against the law firm defendants and Westport, seeking a declaration that it had no obligation to indemnify defendants in the underlying actions. The law firm defendants counterclaimed for a declaration in their favor and brought third-party claims against Twin City and Continental Casualty. Executive Risk and Twin City relied upon Westport's prior knowledge exclusion, expressly incorporated into their policies, and Continental Casualty cross-claimed for rescission of its excess policies for 2002-2003 and 2003-2004.
Supreme Court granted summary judgment in favor of the excess insurers. The court declared that, based on the policies' prior knowledge exclusions, which deny professional liability coverage for undisclosed acts that were known to the insured prior to the inception of the policies and exposed the insured to professional liability claims, Executive Risk and Twin City had no obligation to indemnify the law firm defendants in the underlying actions. Additionally, Supreme Court rescinded the law firm defendants' 2002-2003 and 2003-2004 Continental Casualty professional liability policies because they did not disclose information, during the renewal periods of those policies, concerning known acts that exposed them to the underlying professional liability claims. The court further declared that the underlying actions were not covered under the 2001-2002 Continental Casualty policy. The Appellate Division reversed the Supreme Court order and denied all motions and cross motions for summary judgment. The Appellate Division granted the excess insurers leave to appeal and certified the following question to this Court: "Was the order of this Court, which reversed the order of the Supreme Court, properly made?" We now modify and answer the certified question in the negative.
Analysis

Prior Knowledge Exclusions
Under Pennsylvania law, the insured has the burden of proving that "its claim falls within the policy's affirmative grant of coverage" (Koppers Co., Inc. v Aetna Cas. and Sur. Co., 98 F3d 1440, 1446 [3d Cir 1996]). The insurer, however, carries "the burden of proving the applicability of any exclusions or limitations on coverage" (id.). A court must consider the following two-pronged test when determining whether a prior knowledge exclusion applies. It must "first consider the subjective knowledge of the insured and then the objective understanding of a reasonable attorney with that knowledge" (Coregis Insurance Company v Baratta & Fenerty, LTD, 264 F3d 302, 306 [3d Cir 2001]). Specifically, "it must be shown that the insured knew [prior to effective date of the policy] of certain facts" that occurred prior to that effective date (id., quoting Selko v Home Ins. Co., 139 F3d 146, 152 [3d Cir 1998]). Then, a court must determine that a "reasonable attorney in possession of such facts would have a basis to believe that the insured" might expect such facts to be the basis of a claim against the insured (id.).
Here, it is undisputed that the law firm defendants knew of SFC's securities fraud months prior to the effective dates of the Executive Risk and Twin City policies. The courts below noted that GagnÉ subjectively believed, and informed Mr. Wilcox at least one month prior to the submission of one of the law firm's insurance applications, that he and the law firm could be subject to a lawsuit from their representation of SFC. Such a belief, although subjective, was also reasonable, but Pepper Hamilton did not provide that information to its insurers. Given the law firm defendants' role in the securitization of the loans and GagnÉ's close involvement with SFC, a reasonable attorney with the law firm defendants' knowledge should have anticipated the possibility of a lawsuit, particularly when millions of dollars may have been lost from activities of which they were aware. Here, the law firm's knowledge of its client's fraudulent payments prior to its application for excess coverage coupled with the fact that a reasonable attorney would have concluded that the law firm defendants would likely be included in the litigation because of their role in their client's business satisfy the test of Coregis and create an obligation for the law firm to inform its insurers of this potential litigation.
Contrary to the Appellate Division's holding, the prior knowledge exclusion in this case does not require the known of act, error, omission or circumstance to be "wrongful conduct on the part of the insured" (Executive Risk Indem. Inc. v Pepper Hamilton LLP, 56 AD3d 196, 204 [1st Dept]). It excludes coverage of "any act, error, omission, circumstance . . . occurring prior to the effective date of the [policy] if any [insured] at the effective date knew or could have reasonably foreseen that such act, error, omission, circumstance . . . might be the basis of a [claim]." Here, on October 27, 2002, the effective date of the Executive Risk and Twin City policies, the law firm defendants knew of acts that occurred prior to that date, which they could have foreseen to be the basis of a claim. Thus, the prior knowledge exclusions apply to those policies.
Recission
It is well-settled under Pennsylvania law that rescission of an insurance policy may occur only if the (1) applicant made a false statement, (2) the false statement was material to the risk, (3) the applicant knew the statement was false and (4) the statement was made in bad faith (Allstate Ins Co v Stinger, 163 A2d 74, 78 [Pa 1960]). The insurer must prove all elements by clear and convincing evidence (Justofin v Metropolitan Life Insurance Co., 372 F3d 517, 521 [3d Cir 2004]). Pennsylvania recognizes an omission as a false representation in the context of insurance applications (id. at 522).
We agree with the Appellate Division that, even if the law firm defendants' omission of the SFC incident is a known false statement, Continental Casualty failed to establish as a matter of law that the false statement was material to the reinsurance determination and that the false statement was made in bad faith. Here, the self-serving affidavit of Continental Casualty's underwriter — that Pepper Hamilton's renewal application would have been treated differently had it disclosed the underlying circumstances which led to the denial of coverage — is insufficient to meet the insurer's heightened burden of proof. The Appellate Division correctly denied summary judgment on the issue of rescission.
Accordingly, the order of the Appellate Division should be modified, without costs, in accordance with the opinion herein and, as so modified, affirmed, and the certified question answered in the negative.
* * * * * * * * * * * * * * * * *
Order modified, without costs, in accordance with the opinion herein and, as so modified, affirmed, and certified question answered in the negative. Opinion by Judge Jones. Chief Judge Lippman and Judges Ciparick, Graffeo, Read and Pigott concur. Judge Smith took no part.
Decided October 20, 2009
Casiano v. Zedan

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Feinman & Grossbard, P.C. [Steven N. Feinman], of counsel),
for appellant.
Argyropoulos & Bender, Astoria, N.Y. (Susan E. Paulovich of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Martin, J.), dated December 17, 2008, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
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). In opposition, the plaintiff raised a triable issue of fact through the affirmed medical reports of Dr. Aric Hausknecht, the plaintiff's treating neurologist, as to whether she sustained a serious injury to her cervical spine under the significant limitation of use or permanent consequential limitation of use category of Insurance Law § 5102(d) as a result of the subject accident (see Su Gil Yun v Barber, 63 AD3d 1140; Pearson v Guapisaca, 61 AD3d 833; Williams v Clark, 54 AD3d 942; Casey v Mas Transp., Inc., 48 AD3d 610; Acosta v Rubin, 2 AD3d 657; see also McNeil v New York City Tr. Auth., 60 AD3d 1018). In these reports, Dr. Hausknecht noted that he had conducted both contemporaneous and recent examinations of the plaintiff, which revealed significant limitations in the plaintiff's cervical spine. Dr. Hausknecht concluded in his most recent report, dated June 19, 2008, that the injuries to the plaintiff's cervical spine and observed range-of-motion limitations were significant, permanent, and causally related to the subject accident. He further concluded that the plaintiff's injuries amounted to a permanent consequential limitation of use of her cervical spine. While portions of Dr. Hausknecht's June 2008 affirmed medical report must be disregarded because they recite unsworn findings of other doctors (see McNeil v New York City Tr. Auth., 60 AD3d 1018), Dr. Hausknecht found, on the basis of his physical examination of the plaintiff contemporaneously with the subject accident and at the time of his most recent examination of her, that she had a decreased range of motion in her cervical spine. Thus, Dr. Hausknecht's conclusion that the plaintiff's injuries constituted a permanent consequential limitation of use of her cervical spine was sufficient to raise a triable issue of fact as to whether the plaintiff sustained a serious injury under the significant limitation of use or the permanent consequential limitation of use category of Insurance Law § 5102(d) as a result of the subject accident (see McNeil v New York City Tr. Auth., 60 AD3d 1018).
Contrary to the defendant's contention, the plaintiff adequately explained any lengthy gap in her treatment.
Shaji v. City of New Rochelle

Kathleen E. Gill, New Rochelle, N.Y., for appellants.
Richard L. Giampa, Esq., P.C., Bronx, N.Y., for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Westchester County (Liebowitz, J.), entered February 2, 2009, which denied their motion for summary judgment dismissing the complaint on the ground, inter alia, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, that branch of the defendants' motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury is granted, and the motion is otherwise denied as academic.
The Supreme Court properly determined that the defendants, in support of their motion, met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The Supreme Court erred, however, in finding that the plaintiff's submissions were sufficient to raise a triable issue of fact as to whether the plaintiff sustained a serious injury within the meaning of the no-fault statute.
In opposition to the defendants' motion on the issue of serious injury, the plaintiff improperly relied on, inter alia, the unaffirmed medical reports from "Physical Performance Testing of New York" (see Grasso v Angerami, 79 NY2d 813; Maffei v Santiago, 63 AD3d 1011; Niles v Lam Pakie Ho, 61 AD3d 657; Uribe-Zapata v Capallan, 54 AD3d 936; Patterson v N.Y. Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; Pagano v Kingsbury, 182 AD2d 268). The affirmed medical reports of Dr. Richard Harvey from 2008 failed to raise a triable issue of fact because while Dr. Harvey noted limitations in the plaintiff's cervical and lumbar spine ranges of motion, he failed to set forth any conclusion that the limitations noted therein were caused by the subject accident (see Morris v Edmond, 48 AD3d 432; Itskovich v Lichenstadter, 2 AD3d 406). Furthermore, Dr. Harvey failed to account for notations in the plaintiff's medical records indicating that the plaintiff had full range of motion in her neck and back within three months after the subject accident (see Maffei v Santiago, 63 AD3d 1011; Kaplan v Vanderhans, 26 AD3d 468; Brown v Tairi Holding Corp., 23 AD3d 325). Moreover, the plaintiff failed to explain the cessation of her treatment after March 2006 (see Pommells v Perez, 4 NY3d 566; Ponciano v Schaefer, 59 AD3d 605; Garcia v Lopez, 59 AD3d 593; Pompey v Carney, 59 AD3d 416; Sapienza v Ruggiero, 57 AD3d 643).
The plaintiff also failed to provide any competent medical evidence that the injuries allegedly sustained by her in the subject accident rendered her unable to perform substantially all of her usual and customary daily activities for not less than 90 days of the first 180 days subsequent to the subject accident (see Washington v Mendoza, 57 AD3d 972; Rabolt v Park, 50 AD3d 995; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569).
The defendants' remaining contention has been rendered academic in light of our determination.
Spence v. Mikelberg

Jonathan Silver, Kew Gardens, N.Y., for appellant.
Morris, Duffy, Alonso & Faley, New York, N.Y. (Anna J.
Ervolina of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Satterfield, J.), dated November 17, 2008, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
The defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. The only medical submission by the plaintiff in opposition to the defendant's motion was the affirmation of Dr. Dov Berkowitz, the plaintiff's treating orthopedist. However, Dr. Berkowitz's affirmation failed to raise a triable issue of fact. While Dr. Berkowitz noted limitations during testing of the plaintiff, he failed to set forth any objective testing he did in order to arrive at those conclusions (see Sapienza v Ruggiero, 57 AD3d 643; Budhram v Ogunmoyin, 53 AD3d 640, 641; Piperis v Wan, 49 AD3d 840, 841; Murray v Hartford, 23 AD3d 629; Nelson v Amicizia, 21 AD3d 1015, 1016).
In addition, the plaintiff's affidavit was insufficient to raise a triable issue of fact (see Maffei v Santiago, 63 AD3d 1011; Thomas v Weeks, 61 AD3d 961; Luizzi-Schwenk v Singh, 58 AD3d 811; Gochnour v Quaremba, 58 AD3d 680). The plaintiff failed to submit competent medical evidence demonstrating that the injuries she allegedly sustained in the subject accident rendered her unable to perform substantially all of her usual and customary daily activities for not less than 90 days of the first 180 days subsequent to the subject accident (see Sutton v Yener, 65 AD3d 625; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569).
Outlook Realty, LLC v. U.S. Underwriters Insurance Company

Mitchell & Incantalupo, Forest Hills, N.Y. (Thomas V. Incantalupo
of counsel), for appellant.
Milber Makris Plousadis & Seiden, LLP, Woodbury, N.Y.
(Lorin A. Donnelly of counsel), for
respondents.


DECISION & ORDER
In an action for a judgment declaring that the defendants are obligated to defend and indemnify the plaintiff in an underlying action entitled City of New York v Outlook Realty, LLC, pending in the Supreme Court, New York County, under Index No. 400100/05, the plaintiff appeals from an order of the Supreme Court, Queens County (Cullen, J.), dated September 3, 2008, which granted those branches of the defendants' motion which were pursuant to CPLR 3211(a)(1) and to declare that they were not obligated to defend or indemnify the plaintiff in the underlying action.
ORDERED that the order is affirmed, with costs.
"Generally, it is [the burden] for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage" (Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218; see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311; Essex Ins. Co. v Pingley, 41 AD3d 774, 776). In the instant case, the defendants conclusively established with documentary evidence that the policy exclusion for "independent contractors" "performing operations" for the plaintiff applied to defeat coverage for the instant loss (see Metropolitan Heat & Power Co., Inc. v AIG Claims Servs., Inc., 47 AD3d 621, 622; Brooklyn Hosp.-Caledonia Hosp. v Medical Malpractice Ins. Assn., 286 AD2d 410, 411). The plaintiff failed to refute that documentary showing. Accordingly, the Supreme Court properly granted those branches of the defendants' motion which were pursuant to CPLR 3211(a)(1) and to declare that they were not obligated to defend or indemnify the plaintiff in the underlying action.
Utica First Insurance Company v. Santagata

Wilson, Elser, Moskowitz, Edelman & Dicker LLP, New York, N.Y.
(Richard E. Lerner, Robyn J. Gellert, Jamie C. Kulovitz, and Gregory
Katz of counsel), for appellants Robert Santagata, Stephen Santagata,
and Denise Hopkins Santagata.
Finkelstein & Partners, LLP, Newburgh, N.Y. (George A. Kohl
II of counsel), for appellant Arthur
Kelly.
Farber Brocks & Zane LLP, Mineola, N.Y. (Audra S. Zane and
Sherri Pavloff of counsel), for
respondent.


DECISION & ORDER
In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendants Glenn Foote, Glenn Foote, d/b/a Mr. Metal, Mr. Metal, Mr. Metal Company, Inc., Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata in an underlying personal injury action entitled Kelly v Santagata, et al., pending in the Supreme Court, Ulster County, under Index No. 3425/05, or in connection with the construction accident which occurred on July 1, 2005, involving the defendant Arthur Kelly, the defendant Arthur Kelly appeals from (1) an order of the Supreme Court, Orange County (Owen, J.), dated April 3, 2008, which granted the plaintiff's motion, which was opposed by him, for summary judgment against the defendants Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata, and for leave to enter a default judgment against the defendants Glenn Foote, Glenn Foote, d/b/a Mr. Metal, Mr. Metal, and Mister Metal Company, Inc., and denied the cross motion of the defendants Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata, in which the defendant Arthur Kelly joined, for summary judgment declaring that the plaintiff is obligated to defend and indemnify the defendants Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata in the underlying action, and (2) a judgment of the same court dated June 4, 2008, which, upon the order, declared that the plaintiff has no obligation to defend or indemnify the defendants Glenn Foote, Glenn Foote, d/b/a Mr. Metal, Mr. Metal, Mr. Metal Company, Inc., Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata in the underlying action, or in connection with the construction accident which occurred on July 1, 2005, involving the defendant Arthur Kelly, and the defendants Robert Santagata, Stephen Santagata, and Denise Hopkins Santagata separately appeal, as limited by their brief, from so much of (1) the order dated April 3, 2008, as granted that branch of the plaintiff's motion which was for summary judgment against them, and denied their cross motion for summary judgment, and (2) the judgment dated June 4, 2008, as, upon the order, declared that the plaintiff has no obligation to defend or indemnify them in the underlying action or in connection with the construction accident which occurred on July 1, 2005, involving the defendant Arthur Kelly.
ORDERED that the appeals from the order are dismissed; and it is further,
ORDERED that the judgment is affirmed; and it is further,
ORDERED that one bill of costs is awarded to the plaintiff payable by the appellants appearing separately and filing separate briefs.
The appeals 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 appeals from the order are brought up for review and have been considered on the appeals from the judgment (see CPLR 5501[a][1]).
The Supreme Court properly found that the plaintiff insurer's delay in issuing a disclaimer, which was occasioned by the insurer's need to investigate the claim to determine the relationship among the parties and when its insureds received notice of the accident, was reasonable under the circumstances (see Hermitage Ins. Co. v Arm-ing, Inc., 46 AD3d 620, 621; Halloway v State Farm Ins. Cos., 23 AD3d 617, 618; Farmbrew Realty Corp. v Tower Ins. Co. of N.Y., 289 AD2d 284, 285; cf. Continental Cas. Co. v Stradford, 11 NY3d 443, 449).
Contrary to the appellants' assertion, the employee exclusion in the subject insurance policy, which excludes coverage in cases of bodily injury to an employee of the insured or an employee of a contractor hired by the insured if it occurs in the course of employment, does not violate public policy (cf. Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337, 340). "[W]hen statutes and Insurance Department regulations are silent, [courts] are reluctant to inhibit freedom of contract by finding insurance policy clauses violative of public policy" (Slayko v Security Mut. Ins. Co., 98 NY2d 289, 295). There is no statutory requirement for commercial liability coverage which would prohibit insurers from limiting their contractual liability in the manner done so here (cf. Slayko v Security Mut. Ins. Co., 98 NY2d at 295; Joseph R. Loring & Assoc. v Continental Cas. Co., 56 NY2d 848, 850; Miller v Continental Ins. Co., 40 NY2d 675, 679).
Finally, the Supreme Court properly found that the plaintiff was entitled to a default judgment against the defendants Glenn Foote, Glenn Foote, d/b/a Mr. Metal, Mr. Metal, and Mister Metal Company, Inc., because, in addition to their having defaulted, the plaintiff established that it was entitled to a judgment declaring that it had no obligation to defend or indemnify those defendants inasmuch as they failed to provide timely notice of the accident, and the employee exclusion precluded coverage for the injuries allegedly sustained by the defendant Arthur Kelly (cf. New York Mut. Underwriters v Baumgartner, 19 AD3d 1137, 1141; Merchants Ins. Co. of N.H. v Long Is. Pet Cemetery, 206 AD2d 827, 828; Levy v Blue Cross & Blue Shield of Greater N.Y., 124 AD2d 900, 901).
Buono v. Sarnes

Richard T. Lau, Jericho, N.Y. (Kathleen E. Fioretti of counsel),
for appellant.
Morici & Morici, LLP, Garden City, N.Y. (William B. Baier
of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., the defendant appeals from an order of the Supreme Court, Kings County (Schmidt, J.), dated March 11, 2009, which denied his motion for summary judgment dismissing the complaint on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
The Supreme Court properly determined that the defendant failed to meet his prima facie burden of showing that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). With respect to the plaintiff Vito Buono (hereinafter Vito), the defendant, in support of his motion, relied on, inter alia, the affirmed medical reports of Dr. Edward Toriello and Dr. Naunihal Sachdev Singh. Dr. Toriello, the defendant's retained orthopedic surgeon, examined Vito on September 11, 2008, and found a significant limitation in lumbar spine range of motion. This finding alone was sufficient to deny the defendant's motion as addressed to Vito's injuries (see Held v Heideman, 63 AD3d 1105; Torres v Garcia, 59 AD3d 705; Bagot v Singh, 59 AD3d 368; Hurtte v Budget Roadside Care, 54 AD3d 362; Jenkins v Miled Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555, 556; Zamaniyan v Vrabeck, 41 AD3d 472, 473). Dr. Singh, the defendant's retained neurologist, also examined Vito on September 11, 2008. On that date, Dr. Singh noted significant limitations of motion in the cervical and lumbar regions of Vito's spine during examination. Although Dr. Singh averred that Vito had preexisting osteoarthritis and degenerative disc disease, he failed to set forth the foundation for that conclusion (see Franchini v Palmieri, 1 NY3d 536; see also Luciano v Luchsinger, 46 AD3d 634).
With respect to the plaintiff Eleonora Buono (hereinafter Eleonora), the defendant relied on the affirmed medical reports of, inter alia, Dr. Toriello and Dr. Singh. Dr. Toriello examined Eleonora on September 11, 2008. On that date, Dr. Toriello noted a significant limitation in her lumbar spine range of motion and a significant limitation in her cervical spine range of motion. These findings alone were sufficient to deny the defendant's motion as addressed to Eleonora's injuries (see Alvarez v Dematas, 65 AD3d 598; Landman v Sarcona, 63 AD3d 690; Bagot v Singh, 59 AD3d 368; Hurtte v Budget Roadside Care, 54 AD3d 362; Jenkins v Miled Hacking Corp., 43 AD3d 393). Dr. Singh also examined Eleonora on September 11, 2008. He also found significant limitations in the range of motion of her lumbar spine when he examined her. While Dr. Singh concluded that Eleonora suffered from preexisting osteoarthritis and degenerative disc disease, he failed to set forth the foundation for that conclusion (see Franchini v Palmieri, 1 NY3d 536; Luciano v Luchsinger, 46 AD3d 634).
Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint without considering the sufficiency of the plaintiffs' opposition papers (see Alvarez v Dematas, 65 AD3d 598; Held v Heideman, 63 AD3d 1105; Coscia v 938 Trading Corp., 283 AD2d 538).
Delacruz v. Ostrich Cab Corp.

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

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Saitta, J.), dated March 5, 2009, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, without costs or disbursements.
The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). During his examination of the plaintiff, the defendants' orthopedic surgeon found restrictions in the range of motion of the plaintiff's lumbar spine, which he described as "self-restricted." However, he failed to explain or substantiate with any objective medical evidence the basis for his conclusion that the limitations that were noted were self-restricted (see Cuevas v Compote Cab Corp., 61 AD3d 812; Colon v Chuen Sum Chu, 61 AD3d 805; Torres v Garcia, 59 AD3d 705; Busljeta v Plandome Leasing, Inc., 57 AD3d 469). Accordingly, the Supreme Court properly denied the defendants' motion for summary judgment without considering the sufficiency of the plaintiff's opposition papers (see Cuevas v Compote Cab Corp., 61 AD3d 812; Coscia v 938 Trading Corp., 283 AD2d 538).
Loor v. Lozado

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellant.
Mallilo & Grossman, LLP, Flushing, N.Y. (Steven Barbera of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Queens County (Flaherty, J.), dated April 23, 2009, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
While we affirm the order appealed from, we do so on a ground other than that relied upon by the Supreme Court. The defendant did not meet 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). In support of his motion, the defendant relied on the affirmed medical report of Dr. Raz Winiarsky, his examining orthopedic surgeon. Dr. Winiarsky examined the plaintiff on September 24, 2008, and, on that date, Dr. Winiarsky noted significant range-of-motion limitations to the plaintiff's lumbar spine. Such a finding required the denial of the defendant's motion (see Alvarez v Dematas, 65 AD3d 598; Landman v Sarcona, 63 AD3d 690; Bagot v Singh, 59 AD3d 368; Hurtte v Budget Roadside Care, 54 AD3d 362). Accordingly, since the defendant failed to meet his prima facie burden, it is unnecessary to consider the sufficiency of the evidence submitted by the plaintiff in opposition to the motion (see Alvarez v Dematas, 65 AD3d at 600; Landman v Sarcona, 63 AD3d 690).
Valeus v. Sanon

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(The Sullivan Law Firm [Timothy M. Sullivan], of counsel), for
appellants.
Harmon, Linder, & Rogowsky, New York, N.Y. (Mitchell
Dranow 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 (Schack, J.), dated March 6, 2009, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed, with costs.
The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, however, the plaintiff raised a triable issue of fact as to whether he sustained a serious injury to his lumbar spine under the permanent consequential limitation or significant limitation category of Insurance Law § 5102(d) as a result of the subject accident (see Wagenstein v Haoli, 64 AD3d 584; Su Gil Yun v Barber, 63 AD3d 1140; Pearson v Guapisaca, 61 AD3d 833; Williams v Clark, 54 AD3d 942; Casey v Mas Transp., Inc., 48 AD3d 610; Acosta v Rubin, 2 AD3d 657). Dr. Aric Hausknecht, the plaintiff's treating neurologist, stated in his affirmed medical reports that during his examinations of the plaintiff in 2007 and 2009, the plaintiff had significant range-of-motion limitations to his lumbar spine. Dr. Hausknecht noted in his 2009 report that he reviewed the plaintiff's 2005 magnetic resonance imaging films, which revealed the existence of, inter alia, herniated and bulging discs in his lumbar spine. Dr. Hausknecht opined in his 2009 report that the plaintiff's injuries and limitations were caused by the subject accident, and were permanent and significant in nature.
Contrary to the defendants' assertion on appeal, the plaintiff adequately explained in his affidavit the lengthy gap in his treatment (see Jules v Barbecho, 55 AD3d 548; Francovig v Senekis Cab Corp., 41 AD3d 643; Black v Robinson, 305 AD2d 438).

Stillwater Central School District v. Great American E & S Ins. Co.

Calendar Date: September 9, 2009
Before: Peters, J.P., Rose, Lahtinen, Kane and Malone Jr., JJ.


O'Connor, O'Connor, Bresee & First, P.C., Albany
(George J. Hoffman Jr. of counsel), for appellant.
Bartlett, Pontiff, Stewart & Rhodes, P.C., Glens Falls
(Eileen M. Haynes of counsel), for respondents.
MEMORANDUM AND ORDER


Kane, J.
Appeal from an order of the Supreme Court (Williams, J.), entered September 4, 2008 in Saratoga County, which, among other things, granted plaintiffs' motion for summary judgment.
Plaintiffs initiated this action seeking a declaration that defendant had a duty to defend and indemnify plaintiff Stillwater Central School District in an underlying action. The original action arose out of a spectator's fall from bleachers on a football field owned by the school district. Stillwater Battle, a youth football team which is a member of the Northeast Youth Football League (hereinafter NYFL), applied to use the school district's football field. The school district granted Battle's request contingent upon proof of insurance. Battle provided the school district with a certificate of insurance listing defendant as the insurer and the school district as an additional insured for one year. At a later date, Mechanicville Junior Red Raiders, another team also a member of the NYFL, requested to use the school district's field. The school district granted the Junior Red Raiders' request contingent upon proof of insurance. The Junior Red Raiders' coach responded that the school district should already have a certificate of insurance from defendant, the NYFL carrier, because Battle is a member of the NYFL. The school district agreed, and a second certificate of insurance was neither sought by the school [*2]district nor provided by the Junior Red Raiders. The injured spectator attributed her fall at a Junior Red Raiders game to the negligence of the school district, and commenced a suit against it to recover for her injuries.
Relying on the certificate of insurance, the school district issued a letter, through its own insurance carrier, demanding that defendant defend and indemnify the school district against the injured spectator's claim. Defendant's failure to defend or issue a written disclaimer or denial of coverage led the school district to implead the NYFL in the underlying action. Subsequently, the NYFL and the school district settled directly with the spectator. Thereafter, plaintiffs commenced the instant action and moved for summary judgment on the ground that defendant was contractually obligated to defend and indemnify the school district in the underlying action. Defendant cross-moved for summary judgment seeking a declaration that it had no duty to defend the school district. Supreme Court granted plaintiffs' motion and denied the cross motion. Defendant now appeals.
Defendant contends that Battle's application to the school district limits NYFL's insurance coverage to the individual team listed on the application. As "[t]he party claiming insurance coverage," the school district has the burden of proving entitlement to the coverage (National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 570, 570 [2006]; see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218, 220 [2002]). The insurance policy issued by defendant names as insureds the "association and its member teams, [and] leagues." The NYFL is a league within a larger group known as the National Recreation and Park Association, which is the association referenced in the policy. The team playing on the day of the incident was a member of the NYFL, as was the team listed on the original application. Neither the policy nor the certificate of insurance specifically lists or excludes any particular team. Any ambiguity as to which team or teams the certificate of insurance covers must be resolved in favor of the insured and against the insurer (>I< Ins. Natl. Guaranty v Assoc. Westview>, 95 NY2d 334, 340 [2000]; Matter of Progressive Ins. Cos. [Nemitz], 39 AD3d 1121, 1122 [2007]). Therefore, the ambiguity in coverage of NYFL teams is construed in favor of plaintiffs to include the teams playing on the day of the underlying incident.
An endorsement within the policy issued by defendant satisfies the school district's burden of proving its entitlement to coverage. The endorsement modifies the policy "to include as an additional insured any person or organization . . . [who is or are] 1. Owners and/or lessors of the premises leased, rented, or loaned to [the NYFL]," subject to certain exclusions. The school district is the owner of the football field and bleachers that were loaned to a youth football team that was a member of the NYFL. Therefore, according to this endorsement, the school district is an additional insured under the NYFL policy.
An exclusion within the aforementioned endorsement states that "[t]his insurance does not apply to any design defect or structural maintenance of the premises by or on behalf of the owner and/or lessor." The next sentence states that "this insurance does not apply to the sole negligence of such 'Additional Insured.'" In the underlying complaint, the injured spectator alleged that her injuries were attributable solely to the school district's negligent design defects and structural maintenance. These allegations trigger the above exclusions, but do not preclude the school district from coverage under the circumstances here. Because the school district is an additional insured, in order for the design defect or sole negligence exclusions to preclude coverage the insurer was required to send written notice to plaintiffs, within a reasonable time, disclaiming coverage due to those exceptions (see Insurance Law § 3420 [d]; Markevics v [*3]Liberty Mut. Ins. Co., 97 NY2d 646, 649 [2001]; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 190 [2000]). Here, defendant orally disclaimed coverage over the phone to plaintiffs' counsel, without specifically mentioning the grounds for noncoverage. Without a written disclaimer referencing the specific reasons for the denial, defendant waived any reliance on the policy exclusions it now raises.
Likewise, by failing to send a disclaimer citing the timeliness of plaintiffs' notices, defendant waived its right to a defense based on the allegedly late notices (see Insurance Law § 3420 [d]; One Beacon Ins. v Travelers Prop. Cas. Co. of Am., 51 AD3d 1198, 1200 [2008]; Hermitage Ins. Co. v Arm-ing, Inc., 46 AD3d 620, 621 [2007]). Defendant's remaining arguments have been reviewed and found to be unavailing.
Peters, J.P., Rose, Lahtinen and Malone Jr., JJ., concur.
QBE Insurance Corporation v. D. Gangi Contracting Corp.

Shayne, Dachs, Corker, Sauer & Dachs, LLP, Mineola
(Norman H. Dachs of counsel), for appellant.
Abrams, Gorelick, Friedman & Jacobson, P.C., New York
(James E. Kimmel of counsel), for respondent.
Order, Supreme Court, New York County (Marylin G. Diamond, J.), entered December 22, 2008, which, upon motions for summary judgment, insofar as appealed from, declared that plaintiff insurer (QBE) is not obligated to defend and indemnify defendant-appellant general contractor (Gangi) in an underlying action for personal injuries sustained by a worker (D'Ambrosi) on a construction site, unanimously affirmed, with costs.
QBE properly disclaimed coverage on the ground of late notice of the underlying accident. The subject insurance policy required Gangi, the insured, to give QBE notice of an occurrence as soon as reasonably practicable, and provided that "Knowledge . . . by Your [i.e., Gangi's] agent, servant or employee shall not in itself constitute knowledge of you unless the Corporate Risk Manager of Your corporation shall have received notice of such Occurrence." The claimed lack of knowledge of the accident on the part of Gangi's Corporate Risk Manager did not relieve Gangi of the obligation to provide QBE with notice within a reasonable period of time, where Mr. Gangichiodo, Gangi's president, vice-president, secretary and sole shareholder and officer, admitted contemporaneous knowledge of D'Ambrosi's accident and the severity of his injuries. As Gangichiodo was an "executive officer" as defined by the policy, and not merely an "agent, employee or servant" of Gangi, his knowledge was properly imputed to Gangi and triggered its duty to notify QBE of the accident. Nor was Gangi's failure to notify QBE of the accident until three years after its occurrence excusably based on a reasonable, good-faith belief of nonliability (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742 [2005]), when Giangichiodo was aware that D'Ambrosi had sustained serious injuries and been removed from the scene by ambulance (see SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583 [1998]) and Gangi was subject to potential strict liability under the Labor Law (see Zadrima v PSM Ins. Cos., 208 AD2d 529, 530 [1994], lv denied 85 NY2d 808 [1995]). QBE's disclaimer of coverage to Gangi, issued within two days of its discovery of the ground therefor, i.e., Gangi's [*2]contemporaneous knowledge of the accident, was given "as soon as [wa]s reasonably possible" (Insurance Law § 3420[d][2]). Indeed, much of the complained of delay by QBE was attributable to Gangi's delay in responding to QBE's requests for information and the originally inaccurate information it gave QBE about when and how it first learned of the accident. Since QBE's disclaimer of coverage addressed to Gangi was copied to D'Ambrosi's counsel, it was effective as against D'Ambrosi even though no mention was made therein of D'Ambrosi's own failure to give QBE timely notice (see Schlott v Transcontinental Ins. Co., Inc., 41 AD3d 339 [2007], lv denied 9 NY3d 817 [2008]). We have considered Gangi's other arguments and find them to be unavailing.
Swinton v New York Life Insurance Company

Paykin Mahon Rooney & Krieg LLP, New York, N.Y. (Christopher
S. Rooney of counsel), for appellant.
Young & Bartlett, LLP, White Plains, N.Y. (Francis X. Young of
counsel), for respondent.


DECISION & ORDER
In an action to recover damages for breach of a "Conditional Temporary Coverage Agreement" and for a judgment declaring that the defendant is obligated to honor the terms of that agreement, the defendant appeals from an order of the Supreme Court, Westchester County (Lefkowitz, J.), entered August 19, 2008, which denied its motion for summary judgment dismissing so much of the complaint as sought to recover damages for breach of the subject agreement, and declaring that the defendant is not obligated to honor the terms of the agreement.
ORDERED that the order is reversed, on the law, with costs, the defendant's motion for summary judgment dismissing so much of the complaint as sought to recover damages for breach of the "Conditional Temporary Coverage Agreement" is granted, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the defendant is not obligated to honor the terms of the "Conditional Temporary Coverage Agreement."
In May 2006 the plaintiff's late husband, Jeremiah Swinton (hereinafter Swinton), submitted an application to the defendant for a five-year term life insurance policy in the face amount of $250,000. Upon payment of the first premium, Swinton was issued a receipt and a "Conditional Temporary Coverage Agreement" (hereinafter CTCA), which entitled him to temporary life insurance coverage for up to 90 days coverage. While Swinton's application was pending, Swinton died in a boating accident. The plaintiff, as the named beneficiary, submitted a claim to recover benefits under the CTCA. The defendant denied the claim, asserting that Swinton's responses in the application were not "complete and true," as required by the CTCA, because Swinton failed to disclose "material information." Specifically, the defendant claimed that Swinton failed to disclose that he had been previously diagnosed, inter alia, with "sarcoidosis" and that he had undergone multiple diagnostic tests. Thereafter, the plaintiff commenced the instant action to recover damages for breach of the CTCA and for declaratory relief . The defendant moved for summary judgment dismissing so much of the complaint as sought to recover damages for breach of the CTCA and for a judgment declaring that it was not obligated to honor the terms of the CTCA. The Supreme Court denied the motion. We reverse.
The defendant made a prima facie showing of its entitlement to judgment as a matter of law (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 325). In this regard, the defendant proffered evidence sufficient to establish, as a matter of law, that the statements contained in the application were not "complete and true," as required under the CTCA, inasmuch as Swinton failed to disclose, inter alia, that he had been diagnosed with sarcoidosis and that he had undergone multiple diagnostic tests. Moreover, the defendant established that Swinton's misrepresentations were material so as to entitle the defendant to void the CTCA (see 1A Couch on Ins. § 13:5 [3d ed]; 16 Williston on Contracts § 49:53 [4th ed]; Insurance Law § 3105[a], [b]). In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court should have granted the defendant's motion for summary judgment.
Since this is, in part, a declaratory judgment action, the matter must be remitted to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the defendant is not obligated to honor the terms of the CTCA (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
RIVERA, J.P., FLORIO, ENG and LEVENTHAL, JJ., concur.
ERIE INSURANCE COMPANY v JMM PROPERTIES, LLC

Calendar Date: September 9, 2009
Before: Peters, J.P., Rose, Lahtinen, Kane and Malone Jr., JJ.


Rupp, Baase, Pfalzgraf, Cunningham & Coppola,
L.L.C., Buffalo (Marco Cercone of counsel), for appellant.
Wilkofsky, Friedman, Karel & Cummins, New York
City (Mark L. Friedman of counsel), for respondent.
MEMORANDUM AND ORDER


Peters, J.P.
Appeal from an order of the Supreme Court (Garry, J.), entered September 12, 2008 in Madison County, which conditionally granted plaintiff's motion for summary judgment.
Defendant, a limited liability company, owned a premises in the City of Oneida, Madison County that was insured by a commercial insurance policy issued by plaintiff. In November 2006, the premises was damaged by a fire. At the time of the fire, Michael Orr, Michael Froncek and Jeffrey Truman were the sole members of defendant.
After defendant submitted a claim to recover insurance proceeds, plaintiff investigated the fire, including conducting a recorded interview with Truman on December 7, 2006. The following day, plaintiff wrote to Orr, Froncek and Truman requesting that they furnish a variety of documentation and demanding that Truman and Orr appear for an examination under oath (hereinafter EUO). Over the course of the next few months, the EUOs were postponed on several occasions due to the conflicting schedules of counsel. During this time, criminal charges were brought against Truman in connection with the fire. Although the EUOs were ultimately scheduled to take place in March 2007, Truman's criminal attorney advised plaintiff that Truman would not be available for examination until the conclusion of the criminal action. As a result, plaintiff cancelled the EUOs, advised defendant that Truman's refusal to submit to an EUO could result in the denial of its claim, and sent a letter to Truman's criminal attorney requesting Truman's availability.
The following month, plaintiff informed both defendant and Truman's criminal attorney that it was prepared to hold EUOs of Truman and Orr at a specified location on May 16, 2007. In response, Truman's criminal attorney confirmed Truman's attendance and defendant advised plaintiff that Orr and Truman would be attending the examinations on the scheduled date. Two days before that date, plaintiff advised defendant's counsel, with no notice to Truman or his criminal attorney, that the EUOs would be conducted in a different location. When Truman did not appear, plaintiff refused to conduct the EUO of Orr in Truman's absence [FN1]. After continued efforts by both counsel for plaintiff and defendant to produce Truman failed, plaintiff denied defendant's claim on the ground that, among other things, Truman failed to appear for an EUO or answer any questions relating to the fire.
Plaintiff then commenced this action seeking a declaration that its denial was proper and that there was no coverage for the loss under the insurance policy due to defendant's breach of the cooperation clause. Supreme Court granted the motion unless, within 30 days of service of the order, defendant made Truman, Orr and Froncek available for an EUO. Plaintiff's motion for a stay pending resolution of this appeal was granted by Supreme Court.
Upon appeal, plaintiff argues that since defendant willfully violated the cooperation clause of the insurance policy, Supreme Court erred in providing defendant with a final opportunity to comply. "The purpose of a cooperation clause in a fire insurance policy is to enable the insurer to obtain all knowledge and facts concerning the cause of the fire and the loss involved while the information is fresh in order to protect itself from fraudulent and false claims" (Weissberg v Royal Ins. Co., 240 AD2d 733, 733-734 [1997] [internal quotation marks and citations omitted]; see Ashline v Genesee Patrons Coop. Ins. Co., 224 AD2d 847, 849 [1996]; Davis v Allstate Ins. Co., 204 AD2d 592, 594 [1994]). Willful failure of an insured to submit to an examination under oath may amount to a material breach of the insurance contract which would bar recovery under the policy (see Ingarra v General Acc./PG Ins. Co. of N.Y., 273 AD2d 766, 767 [2000]; Baerga v Transtate Ins. Co., 213 AD2d 217, 217 [1995]). An insurer's burden of proving lack of cooperation, however, is a "heavy one" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168 [1967]; see Matter of St. Paul Travelers Ins. Co. [Kreibich-D'Angelo], 48 AD3d 1009, 1010 [2008]; Ingarra v General Acc./PG Ins. Co. of N.Y., 273 AD2d at 767) and requires a showing that "the insured's attitude was one of willful and avowed obstruction involving a pattern of noncooperation for which no reasonable excuse [is] offered" (Turkow v Erie Ins. Co., 20 AD3d 649, 651 [2005] [internal quotation marks and citations omitted]; see Matter of New York Cent. Mut. Fire Ins. Co. [Bradfield], 61 AD3d 1139, 1141 [2009]).
Supreme Court properly found that Truman's refusal to submit to an EUO was a breach of the insurance policy (see Marmorato v Allstate Ins. Co., 226 AD2d 156, 156 [1996]; Baerga v Transtate Ins. Co., 213 AD2d at 217), and the fact that criminal proceedings were pending against him in connection with the fire did not provide him with a valid excuse for noncompliance (see 2423 Mermaid Realty Corp. v New York Prop. Ins. Underwriting Assn., 142 AD2d 124, 131, 133 [1988], lv denied 74 NY2d 607 [1989]; Azeem v Colonial Assur. Co., 96 AD2d 123, 124 [1983], affd 62 NY2d 951 [1984]; Dyno-Bite, Inc. v Travelers Cos., 80 AD2d 471, 476 [1981], appeal dismissed 54 NY2d 1027 [1981]). In assessing whether defendant's noncompliance was so willful as to justify excusing plaintiff from liability, however, our inquiry is focused on the totality of the conduct of defendant's principals, since business entities such as defendant "necessarily co-operate or fail to do so because of the actions of their agents . . . [and i]t is only through them that the [entities] may assist in the investigation" (Dyno-Bite, Inc. v Travelers Cos., 80 AD2d at 475; see e.g. Rudolph v Federal Ins. Co., 264 AD2d at 725). We agree with Supreme Court's conclusion that defendant's noncompliance was not so willful as to warrant the "extreme penalty" of excusing plaintiff from liability without giving defendant one last chance to perform in accordance with the policy's provisions (Pogo Holding Corp. v New York Prop. Ins. Underwriting Assn., 73 AD2d 605, 606 [1979]; see Rudolph v Federal Ins. Co., 264 AD2d at 725; Marmorato v Allstate Ins. Co., 226 AD2d at 156; R & L Realty Dev. v New York Cent. Mut. Fire Ins. Co., 219 AD2d 702, 703 [1995]; Yerushalmi v Hartford Acc. & Indem. Co., 158 AD2d 407, 407 [1990]).
Here, defendant initially made all three of its principals available to plaintiff for EUOs and Truman submitted to a recorded interview with plaintiff's investigator shortly after the fire. All of the documentation demanded by plaintiff was provided, as were sworn proof of loss statements. Although Truman's criminal attorney refused to make him available following his arraignment, there is evidence that Truman did in fact appear for his May 2007 EUO at the location originally designated by plaintiff. Moreover, the record reflects that defendant continuously attempted to secure Truman's attendance for an EUO and repeatedly offered the unrestricted cooperation of Orr and Froncek, an offer which plaintiff consistently refused (compare Dyno-Bite, Inc. v Travelers Cos., 80 AD2d at 473-475). To that end, any prejudice plaintiff may have sustained as a result of the delay in the investigation is due, at least in part, to its own conduct in refusing to examine Orr and Froncek prior to conducting an EUO of Truman. Had plaintiff proceeded with the EUO of Orr, who was allegedly with Truman on the day of the fire, material and relevant information pertinent to its investigation may have been adduced. Thus, under the specific facts of this case, it was not improper for Supreme Court to grant summary judgment to plaintiff on a conditional basis (see Rudolph v Federal Ins. Co., 264 AD2d at 725; Marmorato v Allstate Ins. Co., 226 AD2d at 156; Pogo Holding Corp. v New York Prop. Ins. Underwriting Assn., 73 AD2d at 606).
Rose, Lahtinen, Kane and Malone Jr., JJ., concur.
ORDERED that the order is affirmed, with costs.
Footnotes


Footnote 1: It appears that Truman presented himself at the first scheduled location.

Terry Santiago v Fellows, Epstein & Hymowitz, P.C., et al.

David M. Kert (Pollack, Pollack, Isaac & De Cicco, New York, N.Y.
[Brian J. Isaac and Michael H. Zhu], of counsel), for appellant.
Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F.
Korman, Peter R. Chatzinoff, and Harris
J. Zakarin of counsel), for respondents.


DECISION & ORDER
In an action to recover damages for legal malpractice, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Orange County (McGuirk, J.), dated April 14, 2008, as denied her motion for summary judgment on the complaint and granted that branch of the defendants' cross motion which was for summary judgment dismissing the complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
To establish a cause of action to recover damages for legal malpractice, "a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301-302). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Fireman's Fund Ins. Co. v Farrell, 57 AD3d 721). "To succeed on a motion for summary judgment dismissing a cause of action alleging legal malpractice, the attorney must establish, through the submission of evidentiary proof in admissible form, that the plaintiff is unable to prove at least one of the essential elements of the cause of action" (Fireman's Fund Ins. Co. v Farrell, 57 AD3d at 722; see Velie v Ellis Law, P.C., 48 AD3d 674; McCormack & Phillips v Krim, 283 AD2d 464, 465).
In support of that branch of their cross motion which was for summary judgment, the defendants established, prima facie, that during their representation of the plaintiff in the underlying action, Selective Insurance Company (hereinafter Selective), the insurer of two of the four defendants in the underlying action, did not offer to settle the matter on behalf of its insureds for the $1,000,000 policy limit. The defendants submitted an affidavit from the individual defendant Robert L. Fellows, who categorically denied that Selective ever made a $1,000,000 settlement offer to the defendants or to the plaintiff during the defendants' representation of the plaintiff. Rather, he explained that by letter dated August 6, 2002, from Selective to Travelers Insurance Company (hereinafter Travelers), the insurer of one of the defendants in the underlying action, Selective "tendered its $1 million single limit policy to Travelers. Selective requested that Travelers assume the handling and defense of the action. On August 15, 2002, a mere nine days after Selective's letter tender to Travelers of its policy limits, Selective retracted the tender." According to Fellows, it was not until June 2003 that the plaintiff directed him to settle the underlying action with Selective for a total sum of $1,000,000. However, Selective never made such an offer, and thus, Fellows could not possibly have acted on the plaintiff's behalf to settle the case, and his failure to do so cannot be deemed malpractice. In opposition, the plaintiff failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562-563).
In light of our determination, we need not address the plaintiff's remaining contentions.
RIVERA, J.P., FLORIO, BELEN and AUSTIN, JJ., concur.
ENTER: