Coverage Pointers - Volume XII, No. 11

Dear Coverage Pointers Subscribers:

For those of you who are reading this issue on Black Friday, we hope and trust that you have returned safely with bargains galore. Your editor would rather avoid the crowds and click his way to credit-card heaven.

We know from your notes and comments that many of you print our issues and read them off-line. Just as a warning, and to do our part in protecting the environment, this week's issue of Coverage Pointers, attached, is 87 pages long. Surely, the courts are clearing out the cupboards in anticipation of the holiday season.

For the coverage aficionado, this week's issue will be a delight. For those who are concerned about the preservation of the environment, do understand that if each subscriber printed out this cover letter and attached issue, approximately 186,000 sheets of papers would be involved.

Now, you may wonder how many trees that would need to be sacrificed in the cause. Using statistics gleaned from www.conservatree.com, which bases it calculations on a mixture of softwoods and hardwoods, 40 feet tall and 6-8 inches in diameter, one tree makes 16.67 reams of copy paper or 8,333.3 sheets. Accordingly, 22.3 trees arecurrently in harm's way if each of you presses the print button. Al Gore is watching.

This issue contains several interesting reads, including an asbestos exclusion case that may leave you mystified, a "collapse" case that Steve suggests is our of kilter with established precedent, a life insurance policy assignment decision from our high court that sanctions wagering on people's lives, a notice case or two and one of the first "social media" discovery cases by a New York appellate court.

DRI Insurance Coverage and Practice Symposium
How delightful it was to see so many of you in NYC for the ICPS last week. We brought in over 450 for a very informative, innovative educational seminar. Thanks to the many who took the time to say "hello".

Happy Thanksgiving

There is no better holiday than Thanksgiving, in my book. We hope you have enjoyed yours and that you and your families have a peaceful and healthy holiday season.

Before Black Friday was Black Friday, Thanksgiving Sales Were Tempting

Last year, in this space, we provided a history of "Black Friday" and those who wish to reprise it, may remember that the term was coined in about 1965.

Earlier this year, a massive fire destroyed the Masonic Building in Dunkirk, New York (Chautauqua County). A beautiful and historic structure, it was just short of its 100th birthday. When it opened, besides providing a home for the Masons, it housed a department store called the Safe Store known as known as Dunkirk's Best and Western New York's Finest Department Store.

Long before Black Friday received its name, stores like The Safe Store boast about Thanksgiving Sales. One hundred years ago, the Safe Store advertised that "every department is going to do its best in offering you such remarkable values that this sale will go down in your memory as one of the greatest you have ever attended."

Offered for sale in the men's department were "Single Breasted Stock Suits" for $4.98, regularly $6.50 value, for the women "5 Styles of All Wool and Panama Worsted Skirts" for $4.98, reduced from $7.00 and for the home, "8 Wire Tapestry Rugs, Oriental Style" for $9.98, reduced from $12.50.

Bargains at twice the price.

Earl's Early Pearls: New Federal Rule on Experts Takes Effect on December 1 2010

A major change to Rule 26 of the Federal Rules of Civil Procedure takes effect December 1, 2010 with significant changes regarding expert witness disclosure and reports. FRCP 26 will now NOT require full discovery of

a) draft/preliminary expert reports; and

b) all communications between the expert and retaining counsel.

These have been powerful (and fruitful) areas of expert cross-examination for years (even decades).

Such communications will now be considered part of the "work product" doctrine, and the new rule will prohibit discovery of draft expert reports and some attorney-expert communications.

There is more to the new rule as well pertaining to exceptions (yes there are some), and non-litigation experts such as treating physicians and accident investigators. Look for an expanded treatment in a coming edition of Coverage Pointers.

Earl Cantwell

[email protected]

 

From Audrey Seeley, the Queen of No Fault:

Happy Thanksgiving!

Ahearty congratulations to Dan and his program Vice-Chair, Matt Foy, of Gordon Rees, as well as their Marketing Chair, Michelle Meyers, of Burnham Brown, on an amazing programandturnout at the DRI Insurance Coverage and Practice Symposium in NYC last week. The conference was moved up by a week or two and there was concern about attendance. Well there was clearly no need for concern as there were over 450 people in attendance.

This edition please be sure to check out the arbitration decisions, particularly the suggestion regarding an insurer stating in the denial a statute of limitations defense in order to properly assert it at arbitration.

Audrey Seeley

[email protected]

Steve Peiper's Pipings:

If you're a fan of what constitutes a covered cause of loss, and what is a damage and what is a cause of a damage (first party lawyers and claims professionals rejoice) the Khun v. Bay State decision will sweeter than the pecan pie you are no doubt devouring. If not, well, that's okay skip straight to our other offerings. Playing the role of apple and pumpkin pies, respectively, the Court of Appeals has offered two gems. The first interprets the role (and scope) of the Industrial Code when invoked under Labor Law 241(6). The second decision provides an in-depth look at the statute of limitations extension for latent injuries.

A hearty hello to all of you I had the pleasure of meeting last week at the Coverage Symposium in New York, and Happy Thanksgiving to all. See you in two weeks.

Steve Peiper

[email protected]

One Hundred Years Ago Today

Few have not heard of the 1911 Triangle Shirtwaist fire which occurred on March 25, 1911 in New York City, which led to the death of 146 garment workers, mostly young women and girls, who either perished in the conflagration or were unable to escape safely and ended up leaping to their death.

Triangle was not the first such disaster. There were appalling conditions for factory workers at that time and one tragedyoccurred in Newark just a few months earlier than Triangle, 100 years ago today. On Saturday, November 26, 1910, between nine and ten in the morning, a Newark factory went up in flames and despite the fact that there was a fire-engine across the street, and a truck and ladder around the corner, six young women were burned to death, and nineteen died as a result of leaping to the pavement from the fourth-story windows. They worked for the Wolf Muslin Undergarment Company.

This building, erected fifty yearsearlier was filled with women making paper boxes, lamps, and muslin night-gowns. On the day of the fire, there were 116 women working on the fourth floor. The building had but two fire escapes, both of which were difficult to reach, and which ended, one in the air and the other on the roof of a boiler-house. The building had no fire alarms and locked exits.

It was a horrible event and left many wondering whether the disaster could be repeated in other cities, like New York. In fact, the headline of the New York Times, on November 30, 1910, was an ominous foreboding of the Triangle Shirtwaist fire that would happen only a few months later:

Newark Fire Starts an Inquiry Here
Trade Unions Worried for Fear Factory Disaster
Could be Repeated in this City
Many Buildings Unsafe

How right they were.

Headline's from this Week's Edition, Attached:

KOHANE'S COVERAGE CORNER
Dan D. Kohane
[email protected]

• Immediate Assignment of Life Insurance Policy to Stranger Does Not Violate Life Insurance "Wagering" Rules
• New York is an "Injury-in-Fact" State
• No Hearing Required in Application to Stay Uninsured Motorist Arbitration When UM Carrier Established that Offending Motorist's Carrier Canceled Properly
• Even in Direct Action, Reduction of Recovery Allowed Based on Payment by Co-Defendant
• Named Insureds and Additional Insureds Each Have an Obligation to Give Notice and a Liability Carrier, Denying on Late Notice, Must Deny Timely as To Each
• Insurer Denying Claim for Underinsured Motorist Coverage Based on Exclusionary Language Must Do So as Soon as Possible
• Social Media Discovery: Facebook Access. Not Now. Maybe Later.
• Difference Between Self-Insured Retention and Deductible Underscored
• Policies Covering Different Risks for Same Insured Do Not Pro-Rate
  for Blanket Additional Insurance Protection Where "Executed Agreement" Required, Need Signed or Fully Performed Agreement
• Asbestos Exclusion Does Not Exclude Asbestos Claims. Thousands Flee
• Fiduciary Policy Provides Coverage ONLY for Breaches of Fiduciary (Not Ordinary Business) Duties

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

• Examining Doctor's Finding of Significant Limitations Defeats Defendant's Motion
• Examining Expert's Failure to Quantify Limitations Results in Inability to Conclude Limitations Are "Minor, Mild or Slight"
• Defendant's Experts Fail to Address 90/180-Day Claim in Plaintiff's Supplemental Bill of Particulars
• Again, Failure to Address 90/180-Day Claim in Bill of Particulars Dooms Defendants' Summary Judgment Motion
• Lack of Contemporaneous Objective Medical Evidence Results in Reversal
• Cessation of Treatment Five Months After Accident Establishes Infant's Lack of Serious Injury
• Asserted Lack of Causation Must Be Addressed in Opposition
• Conclusory Statements Regarding Alleged Post-Traumatic Stress Disorder and Traumatic Brain Injury Are Insufficient to Meet Defendants' Prima Facie Burden
• Plaintiff's Contemporaneous and Recent Evidence Raises Triable Issues of Fact to Defeat Summary Judgment
• Report Finding No Objective Evidence of a Disability Undermines Claim of Permanent Injury
• Expert's Failure to Examine Plaintiff Goes Only to Weight of Testimony, Not to Admissibility

AUDREY'S ANGLES ON NO-FAULT
Audrey A. Seeley
[email protected]

ARBITRATION

• Perhaps Statute of Limitations Defense Must Be Asserted In Claim Form To Be Viable?
• Concurrent Care Defense Fails Due To Lack of Treating Records Showing Same Type of Treatment Rendered
• Wording Akin to MMI Fatal to Denial of Chiropractic Treatment
• Wages Not Owed As A Result of Second Accident When Time Frame For Wages, As A Result of First Accident, Expired

LITIGATION

• Cross-Motion By Insurer Granted As Plaintiff Failed To Rebut Peer Review Report

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

• Evidence of Possible Improper Method of Cancellation Foils Liberty
• Caving In = Collapse According to Plaintiff; Structural Weakening = Cause of Loss and not the Result of a Cause of Loss; Chaos Ensues!
• ONLY Section 23 of the Industrial Code Can Lead to Liability Under Labor Law 241(6)
• Tick-Tock, Tick-Tock.Court of Appeals Weighs In on the Statute of Limitations for Latent Injuries

FIJAL'S FEDERAL FOCUS
Katherine A. Fijal
[email protected]

• Texas Law - No Coverage Available where Insurance Policy was Explicitly Excluded from Asset Transfer
• Applying Louisiana Law - the Protection and Indemnity Policy Exclusion
• Appeal from U.S.D.C. Maine - Assault and Battery Exclusion

JEN'S GEMS
Jennifer A. Ehman

[email protected]

• A Lesson in Procedure
• Court Upholds Regulation 194 Issued by the Insurance Department
• Insurers Required to Provide Owners with Counsel Separate from that Provided to Insured Subcontractor

EARL'S PEARLS
Earl K. Cantwell
[email protected]

More on Metadata

You can see how busy we were over the past two weeks. We extend a special welcome to our new subscribers. We're delighted to have you with us.

Dan

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

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

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

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

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

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

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

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

11/17/10       Kramer v. Phoenix Life Insurance Co.
New York State Court of Appeals
Immediate Assignment of Life Insurance Policy to Stranger Does Not Violate Life Insurance “Wagering” Rules
The Second Circuit Court of Appeals certified the following question for New York State highest court’s consideration:

"Does New York Insurance Law §§ 3205 (b) (1) and (b) (2) prohibit an insured from procuring a policy on his own life and immediately transferring the policy to a person without an insurable interest in the insured's life, if the insured did not ever intend to provide insurance protection for a person with an insurable interest in the insured's life?"

The Court held answered the question in the negative holding that New York law permits a person to procure an insurance policy on his or her own life and immediately transfer it to one without an insurable interest in that life, even where the policy was obtained for just such a purpose.
New York's insurable interest requirement is codified in Insurance Law § 3205 (b). Section 3205 (b) (1) addresses individuals obtaining life insurance on their own lives:
"Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation. Nothing herein shall be deemed to prohibit the immediate transfer or assignment of a contract so procured or effectuated" (Insurance Law § 3205 [b] [1]).

Section 3205 (b) (2) addresses a person's ability to obtain insurance on another's life and requires, in that circumstance, that the policy beneficiary be either the insured himself or someone with an insurable interest in his life:

"No person shall procure or cause to be procured, directly or by assignment or otherwise any contract of insurance upon the person of another unless the benefits under such contract are payable to the person insured or his personal representatives, or to a person having, at the time when such contract is made, an insurable interest in the person insured" (Insurance Law § 3205 [b] [2]).

A compelling two-judge dissent argued that “stranger-oriented life insurance” has always been condemned by courts and allowing the immediate assignment of a policy purchased by the policy owner is another form of life-gambling.
Editor’s Note:  We’re with the dissent on this one.  If a person cannot insure the life of a stranger, one for whom he or she has not insurable interest, allowing the immediate assignment of a policy purchased by the person whose life is being measured encourages what is no more than wagering.

11/12/10       Downey v. 10 Realty Co., LLC
Appellate Division, First Department
New York is an “Injury-in-Fact” State
This was a “mold exposure” claim.  According to the complaint, bill of particulars and deposition testimony in the underlying tort action, plaintiff sued for injuries that allegedly occurred in October — or, at the very earliest, August — of 2002, which was outside the insurance policy period that ended on July 1 of that year.  New York follows the "injury-in-fact" approach which rests on when the injury, sickness, disease or disability actually began and . . . requires the insured to demonstrate actual damage or injury during the policy period. Since the injury occurred outside the policy period, no coverage was available under the policy.

11/23/10       In re Progressive Preferred Insurance Company v. Williams
Appellate Division, First Department
No Hearing Required in Application to Stay Uninsured Motorist Arbitration When UM Carrier Established that Offending Motorist’s Carrier Canceled Properly
Progressive’s submissions established that the offending vehicle’s carrier, Esurance, had properly terminated the policy.  That being said, and there being no proof that the cancellation notice did not have the required 12-point type notice about the importance of maintaining liability coverage, no hearing was necessary to deny the claim to stay the UM arbitration.

11/19/10       Vitale v. Midrox Insurance Company
Appellate Division, Second Department
Even in Direct Action, Reduction of Recovery Allowed Based on Payment by Co-Defendant
Vitale sought to enforce against Midrox, a default judgment it had taken against Midrox’s insured, Mattina. Midrox contended that any recovery plaintiff received against Mattina, should be reduced by the $25,000 Vitale had received from a co-defendant in the action, Latina-Niagara Importing Co.  Midrox also argued that the offset should be based on Latina’s equitable share of damages. The court agreed and the recovery against Mattina would be reduced by $25,000.
Midrox was not entitled to such an offset based on Mattina's "equitable share of the damages" as Mattina defaulted in the underlying action (General Obligations Law § 15-108 [a].

11/16/10       233 East 17th Street LLC v. L.G.B. Devel. Inc. and Mt. Hawley Insurance Co.
Appellate Division, Second Department
Named Insureds and Additional Insureds Each Have an Obligation to Give
Notice and a Liability Carrier, Denying on Late Notice, Must Deny Timely as
To Each
233 East 17th Street (223) sought additional insured status under a Mt. Hawley policy as well as an order requiring Mt. Hawley to defend it in an action commenced by Rogowski. Mt. Hawley had issued a policy of insurance to 233’s construction manager as the primary insured. The court held that 233 was obligated to give timely notice of its claim to Mt. Hawley pursuant to the terms of the insurance policy as “any insured” was so required.  The fact that notice was given by the primary insured does not excuse the lack of notice by the additional insured.
When 233’s own insurance carrier placed Mt. Hawley on notice of the accident, Mt. Hawley denied on the two grounds, late notice by the named insured and late notice by 233, the additional insured. The first ground for denial was insufficient. Each individual additional insured must be treated as if it had a separate policy of its own with the insurer. Accordingly, denying on lateness by the named insured does not adequately respond to the notice given by the additional insured.
With regard to the second stated ground for Mt. Hawley's disclaimer, that 233 itself failed to give timely notice of the claim, the parties' submissions raise a triable issue of fact regarding the date when Mt. Hawley received the plaintiff's notice of claim.   233 claims to have given notice twice.  The first notice it claims to have given, Mt. Hawley denies having received.  If it had been received, a four month delay in denying would be untimely.  The second notice given led to an immediately denial.  There is, therefore, a question of fact as to when first notice by 233 was received.

11/16/10       Allen v. Allstate Insurance Company
Appellate Division, Second Department
Insurer Denying Claim for Underinsured Motorist Coverage Based on Exclusionary Language Must Do So as Soon as Possible
This was an action to recover underinsured motorists benefits.  The insurer denied coverage based on a policy exclusion. 
The court holds that Allstate was required to denied coverage a soon as reasonable possible, citing to Insurance Law Section 3420(d)(2).  However, as there was no evidentiary proof offered by the plaintiff as to when it in fact gave notice, the court would not rule against the insurer on a summary judgment motion.
Editor’s Note:  We have complained before – and do so again – about appellate decisions that apply Section 3420(d) notice requirements to claims other than those for liability insurance, but who listens? 

11/12/10       McCann v. Harleysville Insurance Company
Appellate Division, Fourth Department
Social Media Discovery: Facebook Access.  Not Now.  Maybe Later.
McCann commenced an automobile accident, settled the claim and then brought an action for underinsured motorist benefits against Harleysville. The insurer sought an order compelling plaintiff to disclose photographs and seeking access to the plaintiff’s Facebook account.  It was claimed that access was relevant on the issue of “serious injury” under the No Fault law.  The court concluded that the request was overbroad, granted a protective order, but gave leave to the insurer to file more narrowly tailored demands.   

In a second appeal, with more narrow demands, the application for discovery of Facebook access was still denied.  It was claimed that the insurer was seeking permission to conduct “a fishing expedition" into plaintiff's Facebook account based on the mere hope of finding relevant evidence.  However, the appellate court found that at some later date, if may be appropriate to allow access to plaintiff’s Facebook account. When?  Unclear.  What will make the access less of acceptable at a later date?  That is also unclear.

11/12/10       New York State Thruway Auth v. KTA-Tator Engineering, et al
Appellate Division, Fourth Department
Difference Between Self-Insured Retention and Deductible Underscored.  Policies Covering Different Risks for Same Insured Do Not Pro-Rate
Liberty Insurance Corporation (Liberty) disagreed with a lower court decision that it was the sole insurer for KTA-Tator Engineering (KTA) up to the $10,000 self-insured retention in a policy KTA had with Continental. Liberty also appealed from the lower court’s determination that Liberty and Continental share the costs of defense after the $10,000 SIR is exhausted.

The Fourth Department differentiated between a “deductible” and a “self-insured retention”. A SIR differs from a deductible in that a SIR is an amount that an insured retains and covers before insurance coverage begins to apply. Once a SIR is satisfied, the insurer is then liable for amounts exceeding the retention. In contrast, a deductible is an amount that an insurer subtracts from a policy amount, reducing the amount of insurance

While the Continental policy provided that the policy limit and $100,000 "deductible" included claim expenses, which were defined to include defense costs. The policy further provided that the policy limit "applies as excess over any deductible amount." Since the policy provided that the $100,000 would not reduce the policy limit, it was a self-insured retention and not a deductible, even though it was so-called in the policy. Therefore Liberty was obligated to provide sole primary coverage to KTA for its defense costs up to $100,000
The Liberty policy was a general liability policy while the Continental policy was a professional liability policy.  They covered the same insured but not the same risk. Accordingly, the “other insurance” clause direction of pro-ration of policy limits was not applicable and both policies had an equal obligation to defend.
Editor’s Note:  A good discussion on both issues.

11/9/10         Empire Builders & Developers, Inc. v. Delos Insurance Co.
Appellate Division, Second Department
for Blanket Additional Insurance Protection Where “Executed Agreement” Required, Need Signed or Fully Performed Agreement
Empire was the construction manager on a project for property owned by Realty.  An agent of Empire testified of an oral agreement with the subcontractor Lecapife to add Empire and Realty as an additional insureds on a policy purchased by the subcontractor. A personal injury action was commenced against Realty and Empire and additional insured status was sought under the Scottsdale policy issued to Lecapife.
The “blanket additional insured” endorsement on the Scottsdale policy required that Scottsdale add "any person or organization (called additional insured) whom you are required to add as an additional insured on this policy under a written contract, agreement or permit which must be . . . executed prior to the bodily injury.”
A requirement that the agreement be "executed" prior to the loss for which coverage is sought was not satisfied unless the agreement is reflected in a signed document or fully performed. No AI coverage here.

11/9/10         Great American Restoration Serv. Inc. v. Scottsdale Ins. Co.
Appellate Division, Second Department
Asbestos Exclusion Does Not Exclude Asbestos Claims.  Thousands Flee
In January 2005, Great American was hired to perform "emergency water damage service" at a facility owned by East Nassau Hebrew Congregation (“East Nassau”). Three years later, Church Mutual Insurance Company, as subrogee of East Nassau, commenced an action against Great American (hereinafter the underlying action), alleging Great American damaged it during the performance of the contract. The complaint against Great American alleged that Great American, hired to do asbestos work, caused asbestos to be dispersed through the building. Great American denied ever holding itself out as a company that performs asbestos removal or disposal and contends that it immediately ceased all work at the facility when it was informed that asbestos had been found.
Scottsdale insured Great American but Scottsdale denied coverage based on both asbestos and pollution exclusions
The asbestos exclusion provides that coverage does not apply to "bodily injury" or "property damage" arising out of the "inhal[ation]" or "prolonged physical exposure to" asbestos, the "use" of asbestos in construction, the "removal" of asbestos from products or structures. The pollution exclusion removed coverage for property damage arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants.'" "Pollutants" are defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."
Initially, the court rules that Scottsdale's disclaimer was timely. Scottsdale was required to notify Great American of its intent to disclaim as soon as reasonably possible, but only after it had "sufficient knowledge of facts entitling it to disclaim." It wasn’t until 2008, that Scottsdale first acquired knowledge of the fact that there was an asbestos claim and thereafter promptly disclaimed.  N.B., generally there is no duty to promptly disclaim in property damage cases, and a failure to promptly disclaim – generally – only is fatal to an insurer if the late disclaimer has prejudiced the insured..
Despite the timeliness of Scottsdale's disclaimer, the Supreme Court properly denied Scottsdale's motion for summary judgment, as neither of the particular exclusory provisions relied upon by Scottsdale negates its duty to defend under the facts in this case. Indeed, upon searching the record, we grant that branch of Great American's cross motion which was for summary judgment declaring that Scottsdale is obligated to defend it in the underlying action.
In a disturbing decision, the Second Department finds that the asbestos exclusion clause is inapplicable.  That exclusion states that no coverage is provided for property damage arising out of the "removal," "disposal," or "use" of asbestos, but there are “no terms indicating that coverage will not be provided for damages arising out of the unknowing or accidental release or dispersal of asbestos.”  The court also found that there was no evidence that asbestos was a pollutant, overlooking a long line of cases that have so held.

11/9/10         Federal Insurance Company v. IBM, Corp.
Appellate Division, Second Department
A Fiduciary Policy Provides Coverage ONLY for Breaches of Fiduciary (Not Ordinary Business) Duties
Federal issued an Executive Protection Excess Insurance Policy (“Federal Policy”) to the IBM Corp. (“IBM” IBM sponsored defendant IBM Personal Pension Plan (“Plan”), a defined benefit plan within the meaning of the ERISA.  The Federal Policy followed form provided coverage in excess of an underlying fiduciary liability policy issued by Zurich.
The Zurich policy provided “wrongful act” coverage, defined as "any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by the ERISA
Cooper filed a class action against IBM and the Plan, alleging that amendments to the Plan made by IBM in 1995 and 1999 violated various provisions of ERISA.  The case eventually settled and the settlement included payment of Cooper’s attorney’s fees.  
The court concluded that the violations of the age discrimination provisions of ERISA, which were at the heart of the lawsuit, were not duties imposed upon a fiduciary, but duties of a settlor of a plan.
Editor’s Note:  Not every function related to ERISA plans are fiduciary duties.  Violations of rules which are basically business judgments do not qualify as breaches of fiduciary duties.  For a good discussion about the basic differences, click here .  This case provides an important reminder to look closely at duties being challenged when considering the breadth of coverage under a fiduciary policy.

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

11/16/10       Charles v. Howard
Appellate Division, Second Department
Examining Doctor’s Finding of Significant Limitations Defeats Defendant’s Motion
Co-defendant Shun Choi Liu appealed the trial court’s denial of his motion for summary judgment and the appellate court affirmed because defendant’s examining neurologist noted significant range-of-motion limitations in plaintiff’s right shoulder.  Co-defendant therefore failed to meet his burden and consideration of the sufficiency of plaintiff’s opposing papers was unnecessary.

11/16/10       Sainnoval v. Sallick
Appellate Division, Second Department
Examining Expert’s Failure to Quantify Limitations Results in Inability to Conclude Limitations Are “Minor, Mild or Slight”
Defendant relied on affirmed medical reports, both of which were fatal to his motion.  The first noted range-of-motion limitations in plaintiff’s right knee but the extent of those limitations was unknown because the doctor did not quantify or compare with what is normal.  As such, it could not be concluded that such limitations were “minor, mild or slight” so as to be deemed insignificant.  With regard to the second expert, he noted significant range-of-motion restrictions in plaintiff’s right knee.  Therefore, defendant failed to establish entitlement to summary judgment.

11/16/10       Reynolds v. Wai Sang Leung
Appellate Division, Second Department
Defendant’s Experts Fail to Address 90/180-Day Claim in Plaintiff’s Supplemental Bill of Particulars
In his supplemental bill of particulars, plaintiff alleged that he was unable to return to work for more than 110 weeks following the accident in 2006.  Defendant’s examining neurologist and orthopedist examined plaintiff in 2009 and, while they addressed the categories of permanent consequential and/or significant limitation of use, plaintiff’s complaint survives because they did not relate their findings to the alleged 90/180-day category.

11/16/10       Palmeri v. Mizhquiri Transportation, Inc.
Appellate Division, Second Department
Again, Failure to Address 90/180-Day Claim in Bill of Particulars Dooms Defendants’ Summary Judgment Motion
Once again, defendants’ motion papers fail to address plaintiff’s claim, set forth in his bill of particulars, that he sustained injury under the 90/180-day category of serious injury.  As is always the case, defendants fail to meet their prima facie burden and plaintiff need not raise a triable issue of fact.

11/16/10       Torchon v. Oyezole
Appellate Division, Second Department
Lack of Contemporaneous Objective Medical Evidence Results in Reversal
Defendants appeal and are granted summary judgment where they proffered affirmed reports of an orthopedist and a radiologist, as well as plaintiff’s own deposition testimony, and plaintiff failed to submit any objective medical evidence of significant limitations in his right knee that was contemporaneous with the accident.

11/16/10       West v. Martinez
Appellate Division, Second Department
Cessation of Treatment Five Months After Accident Establishes Infant’s Lack of Serious Injury
The infant ceased medical treatment five months after the accident without sufficient explanation and additionally did not proffer competent medical evidence in support of the 90/180-day claim.  As a result, on appeal the trial court’s grant of summary judgment to defendants is affirmed.

11/16/10       Turner v. Benycol Transportation Corp.
Appellate Division, First Department
Asserted Lack of Causation Must Be Addressed in Opposition
Defendants met their prima facie burden by proffering affirmed reports of an orthopedic surgeon and a neurologist who examined plaintiff and enumerated the objective tests performed which resulted in normal ranges-of-motion in all the tested body parts.  The examining experts concluded that plaintiff’s injuries had resolved.  In addition, defendants’ radiologist unequivocally stated that plaintiff’s MRI revealed desiccation and narrowing of two mid-thoracic discs which conditions were pre-existing to the accident.  As regards plaintiff’s 90/180-day claim, during her deposition she admitted she did not lose any time from work and was not confined to her home.

In opposition, plaintiff’s chiropractor quantified her range-of-motion, concluded the restrictions were significant and related the injury to the accident.  He did not, however, address the MRI evidence of desiccation or the radiologist’s conclusion that the conditions were pre-existing.  As plaintiff admitted during her deposition that she sustained injury in a prior accident, it was necessary for her to present proof regarding the defendants’ claim of lack of causation given the results of the MRI.  Plaintiff’s 90/180-day claim also failed because she only offered subjective statements regarding her limitations rather than medical evidence.  As such, on appeal the trial court was reversed and the complaint dismissed.

11/12/10       Swartz v. Kalson
Appellate Division, Fourth Department
Conclusory Statements Regarding Alleged Post-Traumatic Stress Disorder and Traumatic Brain Injury Are Insufficient to Meet Defendants’ Prima Facie Burden
Plaintiff alleged a qualifying psychological injury under the permanent consequential limitation and significant limitation of use categories.  Defendants’ expert, although addressing the claim, made only a brief, conclusory statement concerning the alleged traumatic brain injury and post-traumatic stress disorder.  That conclusory report, together with defendants’ submissions of plaintiff’s medical records which actually indicated that plaintiff did indeed sustain such injuries, defeated defendants’ motion.

11/12/10       Howard v. Robb
Appellate Division, Fourth Department
Plaintiff’s Contemporaneous and Recent Evidence Raises Triable Issues of Fact to Defeat Summary Judgment
Plaintiff proffered evidence of treatment by a chiropractor shortly after the accident in which range-of-motions tests were performed revealing limitations in both the cervical and lumbar areas.  Further testing performed two years later showed plaintiff’s condition has worsened and her chiropractor concluded she suffered from a chronic, permanent and disabling injury to the cervical and lumbar spine caused by the accident.  In addition, plaintiff was also examined by another physician 2½ years after the accident and he concluded she sustained cervical and lumbar disc herniations caused by the accident.  The submission of contemporaneous and recent findings, together with objective, quantitative evidence regarding the range-of-motion limitations, was sufficient to defeat defendant’s motion.

11/09/10       Palma v. Rosa
Appellate Division, First Department
Report Finding No Objective Evidence of a Disability Undermines Claim of Permanent Injury
On appeal, the trial court’s decision is modified and plaintiff’s 90/180-day claim survives as defendants failed to address that claim.  However, plaintiff’s 2008 submissions from his chiropractor did not establish causal relationship between the current complaints and the accident in 2003, nor did the diagnosis or “residual cervical sprain with underlying herniated discs”, in of itself, support a serious injury claim.  Moreover, the chiropractor’s finding that plaintiff’s prognosis was good and that there was “currently no objective evidence of a disability” undermine plaintiff’s claim of permanent injury.

11/09/10       Rosenfeld v. Baker
Appellate Division, Second Department
Expert’s Failure to Examine Plaintiff Goes Only to Weight of Testimony, Not to Admissibility
Plaintiff appealed from several orders on various motions, as well as from a judgment and order denying her motion to set aside the jury verdict in favor of defendants and/or for a new trial.  On appeal, plaintiff’s appeals from the orders on motions were dismissed, and the judgment and order denying the motion to set aside or for a new trial was affirmed. 

The appellate court agreed that defendants’ experts were properly permitted to testify based upon their review of plaintiff’s medical records, and defendants’ psychiatric expert’s failure to examine plaintiff only goes to the weight of the expert’s testimony, not to its admissibility.  The court reiterated that where conflicting expert testimony is presented, a jury is free to credit one expert more than another, and that determination must be “afforded great deference”.

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

ARBITRATION
11/22/10       Chiropractic Care Of WNY LLC v. Respondent
Arbitrator Thomas J. McCorry, Erie County
Perhaps Statute of Limitations Defense Must Be Asserted In Claim Form To Be Viable?
The assigned arbitrator, in dicta, mentioned that the insurer attempted to argue in its conciliation position that the six year Statute of Limitations may apply with regard to the arbitration of treatment rendered in 2008 from a 2002 motor vehicle accident.  While the defense would not apply to treatment rendered in 2008 the assigned arbitrator suggested that in order for the insurer to rely upon the defense it must assert it in the denial of claim form.  It is noted that a potential problem could occur with this opinion, if adopted.  By way of example, let’s assume that treatment was rendered in 2002 and was denied in 2002.  Thereafter, the applicant waits until 2009 – seven years later to arbitrate that 2002 denial.  Does that mean the insurer cannot argue Statute of Limitations because it was not in the denial of claim form?  Surely the insurer should not have to anticipate any potential defenses such as this and raise them in a denial when they may never be invoked.  Would this not open up the insurer to criticism that its denials are not clear?

11/18/10       Sunrise Massage Therapy v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Concurrent Care Defense Fails Due To Lack of Treating Records Showing Same Type of Treatment Rendered.
The insurer denied massage therapy upon the theory of concurrent care with chiropractic treatment.  The denial was not upheld as the insurer did not provide treatment records and billings from the chiropractor to establish that the care was identical.

11/17/10       Chiropractic Care of WNY LLC v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Wording Akin to MMI Fatal to Denial of Chiropractic Treatment
The Applicant sought reimbursement for chiropractic care rendered to the eligible injured person arising out of an October 27, 2008, motor vehicle accident.  The insurer denied chiropractic treatment based upon the independent chiropractic examination conducted by Gary Kostek, D.C.

Mr. Kostek diagnosed the eligible injured person with a cervical and lumbar sprain/strain and multiple cervical and lumbar bulged discs.  The eligible injured person had a guarded prognosis because of her response to multiple forms of conservative care.  The assigned arbitrator determined that the failure to discuss whether the sprain/strain was resolved did not support termination of chiropractic treatment.  Also, Mr. Kostek’s report indicates that there was no likelihood for further improvement which the assigned arbitrator interpreted as stating maximum medical improvement.  This is not a viable defense under Hobby v. CNA Ins. Co.  Accordingly, the denial was not upheld.

11/15/10       Applicant v. Respondent
Arbitrator Thomas J. McCorry, Erie County
Wages Not Owed As A Result of Second Accident When Timeframe For Wages As A Result of First Accident Expired
The Applicant was involved in a May 12, 2006 and December 16, 2006 accident.  The Applicant sought lost wages as a result of the first accident which the insurer paid for a full three years.  The evidence demonstrated that the Applicant as a result of the first accident was disabled from a shoulder injury, which required surgery.  The Applicant had not returned to work before the second accident.

The Applicant sought a determination that the insurer was obligated to begin paying wages as a result of the second accident when the timeframe for wages expired as a result of the first accident.

The assigned arbitrator agreed with the insurer as there was no proof that the Applicant was able to return to work or was anticipating returning to work before the second accident occurred. 

LITIGATION

11/12/10       Richomnd Radiology, PC a/a/o Ruthie Jusino v. Travelers Ins. Co.
Appellate Term, Second Department
Cross-Motion By Insurer Granted As Plaintiff Failed To Rebut Peer Review Report
The insurer’s cross-motion for summary judgment was properly granted.  The insurer presented an affidavit and peer review report from a chiropractor that set forth the factually sufficient basis and medical rationale for the determination of lack of medical necessity.  The plaintiff failed to proffer an affidavit from a health care practitioner that meaningfully referred to and rebutted the conclusions in the peer review report. 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

11/16/10      Tobias v Liberty Mut. Fire Ins. Co.
Appellate Division, Second Department
Evidence of Possible Improper Method of Cancellation Foils Liberty
In support of its motion for summary judgment, Liberty Mutual established that its notice of cancellation had been properly mailed to, and received by, the insured.  Nonetheless, the Second Department affirmed the Trial Court’s ruling that a question of fact existed.  In support of this conclusion, the Court noted that the insured raised a triable issue of fact as to whether Liberty’s cancellation was valid under New York Insurance Law.

Thereafter, the Court addressed Liberty’s contention that the insured was barred by judicial estoppel from arguing that Liberty had failed to properly cancel the policy where the insured had previously argued that several other parties may have contributed to the “allegedly improper cancellation.”  The rarely seen judicial estoppel doctrine prohibits a party from asserting a new position that is in direct conflict with a position that was taken earlier in the litigation.  Here, however, the Court found that judicial estoppel did not apply to the insured arguing that several parties, including Liberty, improperly cancelled the policy at issue.

Peiper’s Point – The method and procedure for cancellation of insurance policies is set forth, in detail, under Insurance Law § 3425 and 3426, respectively.  Although not discussed by the Appellate Division, one must presume that the insured was able to raise an issue of fact regarding Liberty’s compliance with these sections.

11/12/10       Khuns v Bay State Insurance Company
Appellate Division, Fourth Department
Caving In = Collapse According to Plaintiff; Structural Weakening = Cause of Loss and not the Result of a Cause of Loss; Chaos Ensues!
In this case, plaintiff sought coverage under her homeowners’ policy for repairs to the foundation of her house.  Plaintiff apparently testified that immediate repairs were necessary after she noticed a “crack below the middle of the wall where light was visible from the outside and, more importantly, that the well ‘fell in to the point that [one] could see the outside in one portion’.” 

Upon receipt of the claim, Bay State declined to provide coverage by relying on the scope of collapse coverage as unambiguously stated in plaintiff’s policy.  As with most recent versions of first party coverage, the additional coverage – collapse section of the policy only provides coverage “where there is an abrupt falling down or caving in of a building.” However, immediately thereafter, as faithful first partiers will undoubtedly know, the additional coverage – collapse section provides “a building or any part of a building that is still standing is not considered to be in state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.”  Here, despite the fact that the building in question was undoubtedly still standing, the Fourth Department found that there was a question of fact as to whether it fell within the scope of collapse coverage under the policy.  It appears that the court focused on plaintiff’s own testimony that described the premises as “caving in.”  Apparently, caving in is synonymous with collapse even though it did not, as noted by Justice Carni’s dissent, fall down.

In addition to the collapse issue, Bay State also denied the claim on the basis that there is no coverage for losses occasioned by loss caused by “water pressure [including to freezing and thawing] a foundation.”  Bay State’s expert opined that hydrostatic ground water contributed to the damage sustained by the wall.  Plaintiff’s expert opined, however, that the loss was occasioned due to hidden decay (which is a covered peril under the policy).  Understandably, the court found a question of fact on this issue, and affirmed the trial court’s denial of summary judgment.

Lastly, Bay State denied plaintiff’s request for coverage on the basis of the exclusion for “water damage…including water which exerts pressure on or seeps or leaks through a building…foundation…or other structure.”  In support of its position, Bay State relied upon its expert’s opinion that the loss was caused due to hydrostatic ground water.  In response, plaintiff’s expert argued that the loss was caused due to structural weakening of the effected wall.  As such, the court found a question of fact and affirmed the trial court’s denial of summary judgment.  As aptly noted by Justice Carni’s dissent, however, the structural weakening was not the “cause of loss”, but rather it was the result of the water damage/pressure which was the cause of loss. 

Peiper’s Point – While I would respectfully disagree with the Court’s ruling on the collapse portion of this case, it appears to this commentator (and to Justice Carni) to be in direct conflict with the First Department’s decision in Rector St. Food Enterprises, Ltd. v Fire & Cas. Ins. Co. of Conn., 35 AD3d 177 (and its progeny).  A trip to the Court of Appeals may very well be in the offing, and if so, we’ll be here to report on it. 

11/18/10       Nostrom v A.W. Chesterton Co.
Court of Appeals
ONLY Section 23 of the Industrial Code Can Lead to Liability Under Labor Law § 241(6)
Here is one for creative lawyering.  In the end plaintiff’s idea didn’t work, but we certainly appreciate the effort.  Plaintiff was a boilermaker for several subcontractors through the 1970’s and 1980’s.  As a result of exposure to asbestos containing materials during that time, Mr. Nostrom developed mesothelioma.

However, instead of the traditional products liability path (or perhaps in addition to it), plaintiff asserted that certain owners and general contractors were liable under Labor Law § 241(6).  As most faith readers of Coverage Pointers already know, liability under Law Law § 241(6) is premised upon the violation of one of several regulations found within the New York State Industrial Code. 

 

Traditionally, liability under Section 241(6) accrues due to violations of Part 23 of the Industrial Code which governs the protection of workers in construction, demolition and excavation.  However, in this case, plaintiff cited to a violation of Part 12 of the Industrial Code which governs air contaminants in the work place.  Plaintiff reasoned that if there was a violation of the Industrial Code, no matter where, liability under Section 241(6) would have been triggered.

Not so fast said the Court of Appeals.  In affirming the Appellate Court, the Court of Appeals unequivocally held that violations of Part 12 of the Industrial Code did not give rise to the statutory protections provided under the Labor Law.    Indeed, a review of the legislative history of Parts 12 and 23, respectively, reveals references to Labor Law § 241(6) only found in Part 23 of the Code. 

11/18/10       Giordano v Market Am., Inc.
Court of Appeals
Tick-Tock, Tick-Tock…Court of Appeals Weighs In on the Statute of Limitations for Latent Injuries
Plaintiff sustained a series of strokes in 1999.  It is presumed that the strokes were caused due to plaintiff’s ingesting of the drug Ephedra which he had been regularly using for much of the previous two years.  Plaintiff filed suit against the distributor of the product in 2003 after hearing that professional baseball player’s death due to stroke may have been linked to the use of Ephedra. 

Immediately upon receipt of the lawsuit, defendant moved to dismiss it as beyond New York’s three year statute of limitations for bodily injury cases.  Plaintiff countered by arguing that his claim was saved by a provision of CPLR § 214-c. 

Essentially, CPLR § 214-c creates exceptions to the general three year statute of limitation.  Among the exceptions provided are statutory tolls for the time to commence suit where the injury is not discovered until years after initial exposure.  In addition, CPLR § 214-c (4) creates an exception where the cause of the injury is not discovered for up to five years after it manifests.  To qualify for the protections of Section 214-c (4), the plaintiff must establish that the scientific or medical knowledge to diagnose the cause of the injury did not exist until after the original three statue of limitations had expired.

After wrestling with the issue for years, the Second Circuit sent three queries to their brethren at the Court of Appeals for further explanation:

 

Question 1 – Is CPLR § 214-c limited to “latent effects”

In response to this question, the Court of Appeals held that the savings provision of Section 214-c (4) requires that the injury be latent in its discovery.  In so holding, the Court of Appeals noted that the entirety of Section 214-c was enacted by the Legislature to address problems arising from exposure to toxic substances.  Where the entire statutory scheme was to protect victims of toxic exposure from latent diseases, the Court noted that there was no authority in support of an argument that the “latency” requirement would not apply to all subsections of Section 214-c. 

Question 2 – Can effects that appear within hours after exposure be deemed “latent”

In response to this question, the Court held that, essentially, anything that did not have a “sudden,” “as soon as,” “at once,” or “immediate” impact on the injured party would be deemed to be a “latent effect.”  The Court reasoned that even the slightest latency in an injury manifesting could have a major impact on a physician’s ability to determine its cause.  As such, any measurable latency will be given the benefit of the statute.

In dissent, Judge Read understandably points out the inherent unreliability of an “as soon as” standard for latency.  In Judge Read’s opinion, the majority had extended the scope of the protection well beyond what was originally intended by the Legislature.

Question 3 – What standard should be applied to determine when “sufficient scientific or medical evidence existed to identify the course of the

Simply put, the Court of Appeals adopted the Frye test for determining when the cause of a latent injury should have been uncovered.  As applied in the current circumstances, courts are now instructed that there is scientific or medical knowledge of a cause of a latent injury as soon as there is “general acceptance of that relationship in the relevant technical, scientific or medical community.”

FIJAL’S FEDERAL FOCUS
Katherine A. Fijal
[email protected]

11/19/10  Keller Foundations, Inc. v. Wausau Underwriters Ins. Co.
United States Court of Appeals for the Fifth Circuit
Applying Texas Law – No Coverage Available where Insurance Policy was Explicitly Excluded from Asset Transfer
Wausau Underwriters insurance Company [“Wausau”] appeals the district court’s judgment holding Keller Foundations, Inc. and Suncoast Post-Tension, L.P. [collectively “Keller Companies”] are entitled to defense and indemnity under a commercial general liability policy Wausau issued to Travis International, Inc. [“Travis”], from whom the Keller Companies acquired certain assets. 

The purchase agreement between the Keller Foundation and Travis transferred all assets of Old Suncoast to New Suncoast except for the “Excluded Assets”, which included, among other things, all insurance policies other than certain employment benefit plans.  The purchase agreement also provided that new Suncoast would “assume and agree to perform, pay and discharge when due Assumed Obligations.  The purchase agreement also stated that “Seller shall retain and be solely responsible for all Retained Obligations, which included specific lawsuits listed in the agreement, as well as other defined liabilities.”

Wausau provided Old Suncoast with general liability insurance coverage.  Old Suncoast’s Wausau policy included a non-assignment clause providing, “Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.”  Old Suncoast never requested that Wausau transfer coverage under the policy to New Suncoast.

After the sale took place, several lawsuits were filed in Texas, California and Florida for defects and property damage allegedly arising from Old Suncoast’s work prior to the asset purchase and during the term of the Wausau insurance policy.   While the suits named various Suncoast entities as defendants, the Keller Companies assumed the defense of all of the them consistent with its assumption of liabilities in the purchase agreement.  The Keller Companies notified Wausau of the lawsuits, but Wausau refused to provide coverage.  The Keller Companies then brought suit against Wausau in Texas state court, alleging breach of contract, violation of the Texas Insurance Code, and breach of the duty of good faith a fair dealing.

Wausau removed the case to federal court.  The Magistrate held that Wausau’s coverage transferred from Old Suncoast to New Suncoast either as a chose in action with the general transfer of all assets in the purchase agreement or by operation of law.  The Magistrate also held that the non-assignment clause in the policy did not prohibit post-loss assignments.

Because the Keller Companies agreed to assume liability for the particular losses in question and explicitly excluded the Wausau policy from the asset transfer, the Fifth Circuit reversed.

The Fifth Circuit agreed with Wausau that the non-assignment clause bars any assignment of the coverage without Wausau’s approval, rendering invalid any transfer that might have taken place.  Although the court noted that the great majority of courts adhere to the rule that general stipulations in policies prohibiting assignments thereof except with the consent of the insurer apply only to assignments before loss, and do not prevent an assignment after loss, it recognized that Texas courts diverge from the majority and enforce non-assignment clauses even for assignments made post loss. 

Further, the court determined that the Keller Companies could not circumvent the non-assignment clause by casting the transfer of the insurance coverage as the transfer of a “chose in action”.  In support of its position the court referred to Conoco, Inc. v. Republic Ins. Co., 8198 F.2s 120 (5th Cir. 1987), where it rejected the argument that the non-assignment clause had no effect on the assignment of proceeds on insurance rather than a claim or demand.  The Court called the distinction specious, stating that Conoco cannot enlarge the Republic Insurance insured’s boots by putting the label “proceeds” on its claim – words cannot change a plugged nickel into a silver dollar.

The Fifth Circuit also rejected the Keller Companies’ contention that Wausau must show prejudice in order to enforce the non-assignment clause. 

Finally, the court addressed the question of whether insurance coverage for pre-acquisition liabilities transfers by operation of law to a purchasing company who assumed those liabilities by contract – an issue of first impression in Texas.  The Keller Companies argued that Texas courts would follow the rule set out in Northern Ins. Co. of New York v. Allied Mutual Ins. Co., 955 F.2d 1353 (9th Cir. 1992), i.e., that insurance coverage for pre-acquisition losses transferred by operation of law when the liabilities in question were transferred by operation of law.  After citing several subsequent California cases the Court was of the opinion that Texas courts would reject the Northern Insurance rule were, as in this case, the liabilities in question were assumed through a contract that also specifically excluded the transfer of the insurance policy covering those liabilities.  The court pointed out that Texas, unlike California, does not have a product-line successor liability rule.  Texas statutes specifically provide that a purchase of all or substantially all of the property or assets of another corporation “does not make the acquiring corporation . . . responsible or liable for any liability or obligation of the selling corporation that the acquiring corporation . . . did not expressly assume.

In concluding, the court stated that given its focus on contracts in the insurance context, it believed that Texas would enforce the contract between Old Suncoast and New Suncoast as written.  The purchase agreement between Old Suncoast and New Suncoast specifically excluded the Wausau policies covering the assumed liabilities from the transfer of assets.  The parties clearly intended for the insurance coverage to remain with Old Suncoast and Travis.

11/22/10  Cal Div Int’l Inc State National Ins. Co. v. Seabright Ins. Co.
United States Court of Appeals for the Fifth Circuit
Applying Louisiana Law – the Protection and Indemnity Policy Exclusion
This coverage dispute was triggered when David Brown was injured and filed a Jones Act suit against Coastal Catering and the vessel Horizon for failing to provide him with a reasonably safe place to workplace aboard the Horizon.

Coastal entered into a contract to provide catering services aboard the Horizon, and Coastal send Brown to work on the vessel pursuant to that contract.  In his complaint Brown alleged that both Coastal and Horizon were his employees. 

According to the Agreement between Coastal and Horizon, Coastal was obligated to defend Horizon, which Coastal did through it Maritime General Liability insurer, State National Insurance Company [“SNIC”].  Coastal also had in effect a Maritime Employer’s Liability policy with Seabright Insurance [“Seabright”], and Seabright defended Coastal in the Brown litigation.  After the Brown litigation was settled with both SNIC and Seabright paying 50%, SNIC sought reimbursement from Seabright for the costs SNIC incurred in defending Horizon.

SNIC argued that under the Alternate Employment Endorsement in Seabright’s policy, Seabright was obliged to provide a defense for Horizon as an Alternate Employer. 

Seabright refused to defend arguing that the allegations in Brown’s petition were not specific enough to trigger its duty to defend and alternatively, that a separate exclusion in its policy absolved it of defending Horizon even if Horizon were Brown’s Alternate Employer, i.e., an exclusion which precludes coverage for bodily injury covered by a Protection and Indemnity Policy. 

Because Horizon maintained a Protection and Indemnity Policy with AEGIS covering the crew on its vessel, Seabright argued that the exclusion unambiguously freed if from any duty to defend Horizon.

SNIC and Seabright filed cross motions for summary judgment and the district court granted SNIC’s motion and denied Seabright’s motion.  The district court reasoned that Brown’s allegations that both Coastal and Horizon were his employees were sufficient to assert a claim of Alternate Employer status under the policy’s endorsement triggering Seabright’s duty to defend.  The district court also found that the Alternate employer endorsement and the Protection and Indemnity Exclusion in Seabright’s policy were in conflict and created an ambiguity that had to be interpreted in favor of providing coverage for Horizon.

The Fifth Circuit reversed concluding that it did not need to decide whether Brown’s complaint should be read as sufficient to assert that Horizon was Brown’s alternate employer so as to trigger coverage for Horizon under the Seabright policy.  Assuming without deciding that Seabright’s coverage of Horizon was invoked under the policy’s Alternate Employer Endorsement, the court concluded that Seabright’s coverage of Horizon was nevertheless excluded under the Protection & Indemnity Exclusion in Seabright’s policy. 

The court also disagreed with SNIC’s argument that the Protection & Indemnity Exclusion only applies to Coastal, Seabright’s named insured, and the exclusion does not apply to additional insured’s like Horizon. The court noted that the policy as originally issued was designed to insure Coastal as a named insured.  But when endorsements such as the Additional Employer Endorsement add additional insured’s to the policy, these additional insureds enjoy the same benefits and are subject to the same restrictions as a named insured absent policy language to the contrary.  The court also pointed out that the Alternate Employer Endorsement provides that “this endorsement will apply as though the alternate employer is an insured”.  This satisfied the court that Horizon was to be treated as an insured and that the Protection and Indemnity Exclusion applies equally to Coastal and Horizon.

11/23/10  Eaton v. Penn-American Insurance Company
United States Court of Appeals for the First Circuit
Appeal from U.S.D.C. Maine – Assault and Battery Exclusion
On November 23, 2005, plaintiff, Zackary Eaton went to a nightclub in Orono, Maine.  Another patron in the nightclub, unrelated to Eaton, was unruly and was confronted by the club’s bouncer.  The patron resisted the bouncer’s attempts to eject him from the club and the bouncer resorted to force. 

In the course of the bouncer’s skirmish with the unruly patron the bouncer kicked open a glass and aluminum door, which struck and injured Eaton.  The parties agreed for purposes of the appeal that the bouncer’s actions with respect to the unruly patron involved an assault.

Mr. Eaton brought suit against the proprietor of the club, Albenco, Inc., and in due course Albenco submitted to judgment in the amount of $125,000, with the understanding that the plaintiff would not seek to satisfy the judgment against Albenco, but would look exclusively to Albenco’s insurer, Penn-America Insurance Company [“Penn-America”].  Mr. Eaton later filed suit against Penn-American.

The district court granted summary judgment to Penn-America find the Assault and Battery Exclusion dispositive.  In relevant part the exclusion eliminates coverage for “damages resulting from assault or battery or physical altercations” that occur in, on, or near the insured’s premises. The First Circuit Court of Appeals agreed.

The First Circuit affirmed for substantially the same reason, adding three comments.  First,  the Court disagreed with the Plaintiff’s argument that the bouncer’s action in kicking open the door was an independent act, separate from his assault on an unruly patron.  The court held that the Plaintiff’s “attempt to balkanize a single even by dividing it into two distinct parts distorts reality.”  The court determined that the altercation and the dislodgment of the door were not independent in any meaningful sense, and that the incident falls squarely within the exclusion, which by its terms pertains when an injury “arises out of” excluded conduct by the insured’s employees.

Second, although the Plaintiff argued that intent to inflict his injuries is a necessary element of an assault and battery, the court stated that this argument overlooks the language for the exclusion in two respects:  (1) the exclusion does not target assault and battery in the technical, criminal-law sense – it extends to “physical altercations” – a significantly broader phrase; and, (2) the text of the exclusion clearly states that it applies to negligent as well as intentional acts.  By its terms, the exclusion reaches injuries “caused by or arising out of negligent . . . conduct by the insured.” 

Third, in reviewing case law on other assault and battery exclusions, the significant difference with the Assault and Battery Exclusion in the Penn-America policy was the text of the exclusion which is substantially broader than other similar exclusions.

Editor’s Note:  The lesson to be learned from this case is that the language used in each policy should be reviewed carefully in order to determine whether coverage is triggered or excluded. 

 

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

11/18/10       Metcalf v. Progressive Ins.
Supreme Court, Kings County
A Lesson in Procedure
Plaintiff commenced this action on January 7, 2010 by the filing of a summons and complaint with the Kings County Clerk’s office.  Defendant then answered on February 22, 2010.  Thereafter, plaintiff served defendant with an amended complaint dated March 6, 2010.  There is no indication that defendant interposed an answer to the amended complaint. 

This decision arises out of defendant’s cross-motion for summary judgment on the issue of liability and dismissal of the complaint.  In denying the cross-motion, the court held that defendant did not take a position regarding the two complaints or specify whether it was seeking dismissal of the original or the amended complaint.  According to the court, defendant’s silence as to this issue left it guessing as to the relief sought.  Further, the court went on to explain that even if it treated the amended complaint as a nullity, defendant still could not meet its prima facie burden with respect to this cross-motion as it failed to include a complete copy of the complaint.  The complaint filed in the Kings County Clerk’s office annexed exhibits which were not included in defendant’s cross-motion.  Moreover, according to the court, in the alternative, even if the amended complaint was not a nullity, defendant still never included an answer to the amended complaint.  Thus, the cross-motion was procedurally defective.

11/17/10       Sullivan Fin. Group, Inc. v. Wrynn
Supreme Court, Albany County
Court Upholds Regulation 194 Issued by the Insurance Department
On January 25, 2010, the Insurance Department issued Regulation 194, entitled “Producer Compensation Transparency.”  Regulation 194 provided, among other things, that an insurance producer is required to disclose the following information to potential insureds, either orally or in a “prominent writing”, prior to the issuance of an insurance policy:  (1) a description of the producer’s role in the sale; (2) whether the producer will receive compensation from the insurer or other third-party based on the insurance contract that the producer sells; and (3) the fact that the producer’s compensation may vary depending upon a number of specified factors.  Further, purchasers must be advised that they may request detailed information about the compensation that their producer expects to receive from the insurer selected to provide coverage, as well as the incentive compensation associated with any alternative quotes presented by the producer. 

The court upheld the regulation stating that petitioners failed to demonstrate that the superintendent lacked the authority to promulgate this regulation or that it lacked factual predicate or rationality.

11/9/10         Forest City Daly House Mgt., LLC v. Zurich Am. Ins. Co.
Supreme Court, New York County
Insurers Required to Provide Owners with Counsel Separate from that Provided to Insured Subcontractor
This case arises out of a construction site incident in which Timothy Kapler sustained severe injuries.  He brought an action against the site’s owners, who then brought a third-party action against the injured party’s employer, Peter Scalamandre & Sons (“Scalamandre”). 

Previously, the owners had entered into a contract with Kajima Construction services (“Kajima”) to act as the project’s general contractor.  Kajima entered into a subcontract with Scalamandre. 

Both the general contract and the subcontract required that the owners be indemnified and added as primary additional insureds on Kajima’s and Salamander’s insurance policies. 

Virginia Surety, Scalamandre’s insurer, offered to assign the law firm representing Scalamandre to represent the owners, provided they discontinue the third-party action against Scalamandre.  Zurich, Kajima’s insurer, asserted that in order for it to indemnify the owners, Virginia Surety had to first exhaust its one million dollar maximum, after which, its own $500,000 deductible had to be exhausted before it was required to pay anything.  It also agreed that the same firm representing Scalamandre should represent the owners. 

The court held that Virginia Surety’s insistence that the owners use the same law firm as Scalamandre, and they discontinue their third-party action was an indication that Virginia Surety was putting its interests ahead of the interests of its insureds.  According to the court, where such a conflict exists, it is well established that, as between an insurer and its insured, a fiduciary relationship does exist, requiring good-faith by the carrier in its dealings with its insured.  Thus, the insured was entitled to choose separate counsel to be paid for by the insurer.  Moreover, the court disagreed with Zurich’s assertion that Virginia Surety was required to exhaust its policy and then the $500,000 deductible prior to having to make any payment.  According to the court, the language of the policy placed the burden on Kajima, not the owners, to pay the deductible.  Thus, as both policies recited that they were primary and that they would not seek contribution, the court required a dollar for dollar sharing of legal expenses.

EARL’S PEARLS
Earl K. Cantwell
[email protected]
MORE ON METADATA

Metadata is essentially “data about data”.  Metadata is imbedded in all Microsoft documents.  Word processing systems include such automated features to aid in document production and collaboration, and metadata can reveal the identity of those who edited the document, track the time, date and frequency of edits, reveal inserted comments or questions, and reveal other data employed to control the document’s text and format.  Metadata can reveal crucial information as to who was involved in preparing a document, what changes were considered and made, what edits were done, when changes were made to the document, etc.  The metadata is often present but hidden from view or display.

Each time a document is touched, metadata is added through the operating system.  Of course, these features are often essential to the document production process, so in normal course metadata is positive and useful. 

However, disclosure of metadata can be harmful if documents produced contain confidential, proprietary or potentially embarrassing information.  There have been several well-publicized instances where edits to documents and hidden comments have been inadvertently left in documents sent via email or the Internet.

Document features such as edits and tracked changes can easily be left in a document even if users see those changes disappear because they assume they are no longer there, and someone clicks the send button. 

Likewise, the names of each author or contributor to a document can remain with the document even as it is edited and revised by others.  Many word processing documents will save the names of authors and contributors if there are multiple collaborators on a document.  Word files can also contain history that reveals the real age of a document, when it was changed, and when it was finalized.  Such document history remains with document until it is “cleaned” using a metadata management tool. 

In short, it has been estimated that there may be more than 200 types of document metadata including field codes, bookmarks, routing slips and individual firm styles. 

Users of Microsoft products can be embarrassed, or worse, if metadata is not properly eliminated.  Law firm software should include a program and process that includes metadata management and elimination tools. 

For now, the New York State Bar Association’s Committee on Professional Ethics Opinions 749 and 782 currently provide that lawyers may not ethically surreptitiously examine and trace email and other electronic documents, while at the same time warning that lawyers must use reasonable care to prevent disclosure of confidences and secrets contained in “metadata” and documents which are transmitted electronically to opposing counsel or other third parties.  However, other State Bar opinions and policies are different, and some freely allow third parties, opposing lawyers, and opposing parties in litigation to dig down into documents and unearth potentially embarrassing metadata entries, names, timelines, etc. 

In short, before pressing the “send” button or copying documents for production, care should be taken to scrub documents being produced for hidden and attached metadata.  Lawyers in New York State have an ethical obligation to use reasonable care not to produce or transmit documents that may contain client confidences and secrets via metadata in documents.  Because of the widespread use of Microsoft office products, the problem of embedded metadata remains significant and ongoing.  Metadata management software should be readily available, automated and easy enough for users to understand and use on a daily, regular basis.  Before sending a document outside your electronic walls, consider whether metadata should be scrubbed from the item.

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

11/15/10       Volunteers of America Colorado Branch v. Gardenswartz
Colorado Supreme Court
Common Law Collateral Source Rule, and Double Recovery, Alive and Well in Colorado.  Personal Injury Plaintiff Can Recover Full Amount of Medical Expenses Incurred, Not the Discounted Amount Paid by Insurance Companies
Plaintiff suffered a slip and fall resulting in $72,242 of medical expenses to treat his injuries. Aetna, Plaintiff’s third party insurance company, satisfied the medical debts with a payment of $43,236, which reflected $31,006 in medical discounts the company negotiated with Plaintiff’s healthcare providers. Aetna indemnified Plaintiff for the medical expenses he incurred as a result of the tort committed against him. Plaintiff brought the instant action against Defendant for his injuries. The jury awarded Plaintiff $81,385 in economic losses and $60,000 in non-economic losses (total $141, 385). Plaintiff was found 49% at fault, and thus his total jury award would have been $72,106. The trial court ruled the jury verdict should be reduced to reflect the healthcare discounts secured by Aetna. Applying economic loss formulas as well as subtracting Plaintiff’s comparative fault, the trial court reduced Plaintiff’s damages to $54,290. The Court of Appeals reversed, holding healthcare discounts fell under the contract exception and was not a proper basis for reducing an award. The common law collateral source rule attempts to make the injured Plaintiff whole. Any third party benefits obtained by the injured accrue solely to the Plaintiff’s benefit and are not deducted from the amount of the tortfeasor’s liability. The Colorado Legislature enacted laws to partially offset part of the Collateral Source Rule, however, no offset is permitted if the benefits arise out of a contract entered into on the Plaintiff’s behalf. In those situations, and in the instant case, the common law collateral source rule remains fully in effect. The Supreme Court of Colorado affirmed the Court of Appeals decision, whereby Defendants cannot reduce their liability by the benefits Plaintiff received from his Aetna policy, including the healthcare provider discounts.
Submitted by: Sezen Z. Oygar of Neil, Dymott, Frank, McFall & Trexler, APLC

REPORTED DECISIONS
 McCann v. Harleysville Insurance Company

Appeal from an order of the Supreme Court, Erie County (James H. Dillon, J.), entered August 19, 2009 in a personal injury action. The order denied the motion of defendant to compel disclosure.

CHELUS, HERDZIK, SPEYER & MONTE, P.C., BUFFALO (CHRISTOPHER R. POOLE OF COUNSEL), FOR DEFENDANT-APPELLANT.
ANSPACH MEEKS ELLENBERGER LLP, BUFFALO (DAVID M. STILLWELL OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced an action seeking damages for injuries she sustained when the vehicle she was operating collided with a vehicle driven by defendant's insured. Plaintiff thereafter settled that action and commenced the instant action against defendant seeking "supplementary uninsured/underinsured motorist coverage." In appeal No. 1, defendant appeals from an order denying its motion to compel disclosure of photographs and seeking "an authorization for plaintiff's Facebook account." According to defendant, the information sought was relevant with respect to the issue whether plaintiff sustained a serious injury in the accident. We conclude in appeal No. 1 that Supreme Court properly denied defendant's motion "as overly broad," without prejudice "to service of new, proper discovery demands" (see generally Slate v State of New York, 267 AD2d 839, 841).
In appeal No. 2, defendant appeals from an order denying its subsequent motion seeking to compel plaintiff to produce photographs and an authorization for plaintiff's Facebook account information and granting plaintiff's cross motion for a protective order. Although defendant specified the type of evidence sought, it failed to establish a factual predicate with respect to the relevancy of the evidence (see Crazytown Furniture v Brooklyn Union Gas Co., 150 AD2d 420, 421). Indeed, defendant essentially sought permission to conduct "a fishing expedition" into plaintiff's Facebook account based on the mere hope of finding relevant evidence (Auerbach v Klein, 30 AD3d 451, 452). Nevertheless, although we conclude that the court properly denied defendant's motion in appeal No. 2, we agree with defendant that the court erred in granting plaintiff's cross motion for a protective order. Under the circumstances presented here, the court abused its discretion in prohibiting defendant from seeking disclosure of plaintiff's Facebook account at a future date. We therefore modify the order in appeal

New York State Thruway Authority v. KTA-Tator Engineering, et al

Appeal from a judgment (denominated decision and order) of the Supreme Court, Erie County (Patrick H. NeMoyer, J.), entered January 8, 2010. The judgment, insofar as appealed from, declared that Liberty Insurance Corporation is the sole insurer of the costs of the defense for KTA-Tator Engineering Services, P.C. in the main action up to the $100,000 deductible/SIR in the insurance policy issued by Continental Insurance Company.

JAFFE & ASHER LLP, NEW YORK CITY (MARSHALL T. POTASHNER OF COUNSEL), FOR THIRD-PARTY DEFENDANT-APPELLANT AND SECOND-THIRD-PARTY PLAINTIFF-APPELLANT.
COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (MAUREEN G. FATCHERIC OF COUNSEL), FOR SECOND-THIRD-PARTY DEFENDANT-RESPONDENT.
PHILLIPS LYTLE LLP, BUFFALO (WILLIAM D. CHRIST OF COUNSEL), FOR DEFENDANT-RESPONDENT AND THIRD-PARTY PLAINTIFF-RESPONDENT.

ROACH, BROWN, MCCARTHY & GRUBER, P.C., BUFFALO (ELIZABETH G. ADYMY OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the judgment so appealed from is unanimously affirmed without costs.
Memorandum: Third-party defendant and second-third-party plaintiff, Liberty Insurance Corporation (Liberty), contends on appeal that Supreme Court erred in granting that part of the cross motion of second-third-party defendant, Continental Insurance Company (Continental), seeking a declaration that Liberty is the sole insurer of the costs of the defense for defendant-third-party plaintiff, KTA-Tator Engineering Services, P.C. (KTA), "in the main action up to the $100,000 deductible/[self-insured retention (SIR)] set forth in the Continental [insurance] policy." Liberty further contends that the court erred in granting that part of Continental's cross motion seeking a declaration that Liberty and Continental "should share the costs of defense of KTA in the main action on an equal . . . basis following the exhaustion of that $100,000 deductible/SIR." At the outset, we agree with Liberty that the doctrine of law of the case does not apply based on the prior judgment that, inter alia, granted KTA's prior motion for partial summary judgment and granted in part Continental's prior cross motion seeking a declaration, nor does it apply based on our decision in the prior appeal affirming that judgment (New York State Thruway Auth. v KTA-Tator Eng'g Servs., P.C., 43 AD3d 1405). That doctrine "requires that once an issue is judicially determined, it is deemed to be conclusive as to courts of co-ordinate jurisdiction" (Metropolitan Package Store Assn. v Koch, 89 AD2d 317, 321, appeal dismissed 58 NY2d 1112, 464 US 802, reh denied 464 US 1003; see Emergency Enclosures, Inc. v National Fire Adj. Co., Inc., 68 AD3d 1658, 1663). Here, the issue whether Liberty was a coinsurer with Continental was not previously judicially determined, either explicitly or implicitly, and Liberty therefore may raise that issue on this appeal.
We nevertheless conclude that the court properly issued the declaration sought by Continental in its cross motion. Although the Continental policy refers to a "deductible," we conclude that the policy actually contains a SIR in the amount of $100,000. "A SIR differs from a deductible in that a SIR is an amount that an insured retains and covers before insurance coverage begins to apply. Once a SIR is satisfied, the insurer is then liable for amounts exceeding the retention. In contrast, a deductible is an amount that an insurer subtracts from a policy amount, reducing the amount of insurance" (Matter of September 11th Liab. Ins. Coverage Cases, 333 F Supp 2d 111, 124 n 7; see Tokio Mar. & Fire Ins. Co. v Insurance Co. of N. Am., 262 AD2d 103).
It is well settled that a contract must be read as a whole to give effect and meaning to every term (see Village of Hamburg v American Ref-Fuel Co. of Niagara, 284 AD2d 85, 89, lv denied 97 NY2d 603). Indeed, "[a] contract should be interpreted in a way [that] reconciles all [of] its provisions, if possible" (Green Harbour Homeowners' Assn., Inc. v G.H. Dev. & Constr., Inc., 14 AD3d 963, 965; see Village of Hamburg, 284 AD2d at 89). Here, the Continental policy provided that the policy limit and $100,000 "deductible" included claim expenses, which were defined to include defense costs. The policy further provided that the policy limit "applies as excess over any deductible amount." Inasmuch as the policy explicitly provided that the $100,000 would not reduce the policy limit, it cannot be said that the policy contained a deductible that would be subtracted from the policy limits. We thus conclude that the Continental policy contained a SIR and that Liberty was obligated to provide sole primary coverage to KTA for its defense costs up to $100,000 (see New York State Dormitory Auth. v Scottsdale Ins. Co., 27 AD3d 1102).
The court properly determined that Liberty and Continental should share equally in KTA's defense costs in excess of $100,000. The Liberty policy provided coverage for general liability and excluded coverage for professional liability, whereas the Continental policy provided coverage only for professional liability. "Thus, while the two policies provided coverage for the same insured, the policies did not insure the same risk" (Pennsylvania Manufacturers' Assn. Ins. Co. v Liberty Mut. Ins. Co., 39 AD3d 1161, 1162, lv denied 9 NY3d 810; see HRH Constr. Corp. v Commercial Underwriters Ins. Co., 11 AD3d 321, 323, lv denied 5 NY3d 705). We therefore reject Liberty's contention that the court should have ordered Liberty and Continental to share the defense costs on a pro rata basis pursuant to their different policy limits (cf. Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682, 687; Federal Ins. Co. v Empire Mut. Ins. Co., 181 AD2d 568, 569-570).

Empire Builders & Developers, Inc. v. Delos Ins. Co.

Cascone & Kluepfel, LLP, Garden City, N.Y. (Michael T. Reagan
of counsel), for appellant.
Smith, Buss & Jacobs, LLP, Yonkers, N.Y. (James R.
Anderson of counsel), for plaintiffs-
respondents.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the defendants are obligated to defend and indemnify the plaintiffs in an underlying action entitled Bermejo v 187 20th Realty, Inc., pending in the Supreme Court, Kings County, under Index No. 24851/06, the defendant Scottsdale Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Knipel, J.), dated March 16, 2010, as denied that branch of its motion which was, in effect, for summary judgment dismissing the causes of action to recover damages for breach of contract and all cross claims insofar as asserted against it, and declaring that it is not obligated to defend and indemnify the plaintiffs in the underlying action, and granted that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the complaint and declaring that it is so obligated.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the motion of the defendant Scottsdale Insurance Company which was, in effect, for summary judgment dismissing the causes of action to recover damages for breach of contract and all cross claims insofar as asserted against it, and declaring that it is not obligated to defend or indemnify the plaintiffs in an underlying action entitled Bermejo v 187 20th Realty, Inc., pending in the Supreme Court, Kings County, under Index No. 24851/06 is granted, that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the complaint insofar as asserted against the defendant Scottsdale Insurance Company and declaring that the defendant Scottsdale Insurance Company is so obligated is denied, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant Scottsdale Insurance Company is not obligated to defend or indemnify the plaintiffs in the underlying action.
The plaintiff Empire Builders & Developers, Inc. (hereinafter Empire), was the construction manager for a construction project that was undertaken on property owned by the plaintiff 187 20th Realty Corp. (hereinafter Realty). Although an agent of Empire testified at his deposition that he had a verbal understanding with an agent of one of the subcontractors, Lecapife Corp. (hereinafter Lecapife), that Lecapife would provide Empire with additional insurance, there was no written agreement requiring Lecapife to afford additional insured status to either Empire or Realty, and the insurance policy issued to Lecapife by the defendant Scottsdale Insurance Company (hereinafter Scottsdale) did not list either Empire or Realty as an additional insured. When a personal injury action was commenced against Empire and Realty by the estate of a Lecapife employee who was killed while working at the construction site, Empire and Realty sought to have Scottsdale defend and indemnify them in that action. Scottsdale, however, disclaimed coverage.
The plaintiffs commenced this action, alleging, inter alia, that Scottsdale was obligated to defend and indemnify them in the underlying action. The Supreme Court denied that branch of Scottsdale's motion which was, in effect, for summary judgment dismissing the causes of action to recover damages for breach of contract and all cross claims insofar as asserted against it, and declaring that it was not obligated to defend and indemnify the plaintiffs in the underlying action, and granted that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the complaint and declaring that Scottsdale was so obligated.
The insurance policy issued by Scottsdale to Lecapife contained a "Blanket Additional Insured Endorsement" (hereinafter the endorsement), which provided that the definition of an "insured" included "any person or organization (called additional insured) whom you are required to add as an additional insured on this policy under a written contract, agreement or permit which must be . . . executed prior to the bodily injury,' property damage,' personal injury,' or advertising injury.'" In support of its motion for summary judgment, Scottsdale made a prima facie showing that the plaintiffs did not qualify as additional insureds under the endorsement. Specifically, Scottsdale demonstrated that, even if the verbal understanding between Empire's agent and Lecapife's agent constituted an "agreement" to have the plaintiffs named as additional insureds within the meaning of the endorsement (see Superior Ice Rink, Inc. v Nescon Contr. Corp., 52 AD3d 688), the endorsement's further requirement that the agreement be "executed" prior to the loss for which coverage is sought was not satisfied, since the agreement was neither reflected in a signed document (see Burlington Ins. Co. v Utica First Ins. Co., 71 AD3d 712, 714; Nicotra Group, LLC v American Safety Indem. Co., 48 AD3d 253, 253-254) nor fully performed by the parties (see Burlington Ins. Co. v Utica First Ins. Co., 71 AD3d at 714). Concomitantly, the plaintiffs, in support of their cross motion for summary judgment, failed to make a prima facie showing that they were entitled to coverage under Lecapife's policy with Scottsdale, and in opposition to Scottsdale's prima facie showing, they failed to raise a triable issue of fact.
Accordingly, the Supreme Court should have granted that branch of Scottsdale's motion which was, in effect, for summary judgment dismissing the causes of action to recover damages for breach of contract and all cross claims insofar as asserted against it, and declaring that it is not obligated to defend or indemnify the plaintiffs in the underlying action, and should have denied that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the complaint and declaring that Scottsdale is so obligated.
Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that Scottsdale is not obligated to defend and indemnify the plaintiffs in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Great American Restoration Services, Inc. v. Scottsdale Ins. Co.

Milber Makris Plousadis & Seiden, LLP, Woodbury, N.Y. (Lorin
A. Donnelly and Sarah M. Ziolkowski of counsel), for appellant.
Adolph D. Seltzer, New York, N.Y., for respondent.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Church Mutual Insurance Company, as subrogee of East Nassau Hebrew Congregation v Great American Restoration Services, Inc., pending in the Supreme Court, Nassau County, under Index No. 9921/08, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Mahon, J.), entered October 6, 2009, as denied its motion for summary judgment without prejudice.
ORDERED that the order is affirmed insofar as appealed from, with costs, and, upon searching the record, that branch of the plaintiff's cross motion which was for summary judgment declaring that the defendant is obligated to defend the plaintiff in the underlying action in accordance with the terms of the subject commercial general liability insurance policy is granted, so much of the order as denied that branch of the cross motion is vacated, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that the defendant is obligated to defend the plaintiff in the underlying action.
In January 2005, the plaintiff, Great American Restoration Services, Inc. (hereinafter Great American), was retained to perform "emergency water damage service" at a facility owned by East Nassau Hebrew Congregation (hereinafter East Nassau). In January 2008, Church Mutual Insurance Company, as subrogee of East Nassau, commenced an action against Great American (hereinafter the underlying action), alleging that it was injured as a result of certain property damage caused by Great American during the performance of the contract. The complaint against Great American alleged that Great American held itself out as "possessing staff" trained in water damage cleaning and asbestos removal and that Great American, during its work, caused asbestos to be "dispersed throughout the building and premises." Great American denied ever holding itself out as a company that performs asbestos removal or disposal and contends that it immediately ceased all work at the facility when it was informed that asbestos had been found in the past.
Great American, which was insured under a commercial general liability policy issued by the defendant, Scottsdale Insurance Company (hereinafter Scottsdale), submitted the lawsuit to Scottsdale, seeking defense and indemnification. Scottsdale disclaimed coverage based upon the asbestos exclusion clause in the policy or based on the policy's pollution exclusion clause.
The asbestos exclusion provides that coverage does not apply to "bodily injury" or "property damage" arising out of the "inhal[ation]" or "prolonged physical exposure to" asbestos, the "use" of asbestos in construction, the "removal" of asbestos from products or structures, or the "manufacture, sale, transportation, storage, or disposal" of asbestos or products containing asbestos. The pollution exclusion states that coverage does not apply to " [b]odily injury' or property damage' arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants.'" "Pollutants" are defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."
Scottsdale moved for summary judgment in the declaratory judgment action and Great American cross-moved for summary judgment. The Supreme Court denied the motion and the cross motion without prejudice, concluding that triable issues of fact existed, including whether Great American had knowledge of the presence of asbestos and what acts were undertaken by Great American.
Initially, contrary to Great American's contention, Scottsdale's disclaimer was indeed timely. Scottsdale was required to notify Great American of its intent to disclaim as soon as reasonably possible, but only after it had "sufficient knowledge of facts entitling it to disclaim" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64 , 66; see Matter of New York Cent. Mut. Fire Ins. Co. v Steiert, 68 AD3d 1120 ). Even had Great American properly mailed Scottsdale a letter dated February 18, 2005, notifying Scottsdale of the occurrence, that letter made no reference to asbestos, provided no details as to how, when, or where the occurrence took place, and did not include the nature of the damages or the names of any witnesses, as required by the terms of the policy. Scottsdale first acquired knowledge of the facts entitling it to disclaim upon receiving the complaint and notice of loss in February 2008. Thereafter, it provided prompt notice of its intention to disclaim.
Despite the timeliness of Scottsdale's disclaimer, the Supreme Court properly denied Scottsdale's motion for summary judgment, as neither of the particular exclusory provisions relied upon by Scottsdale negates its duty to defend under the facts in this case. Indeed, upon searching the record, we grant that branch of Great American's cross motion which was for summary judgment declaring that Scottsdale is obligated to defend it in the underlying action.
In general, it is the insured's burden to establish coverage and the insurer's burden to prove the applicability of an exclusion (see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218; Rhodes v Liberty Mut. Ins. Co., 67 AD3d 881 , 882). An insurer's duty to defend, which is broader than its duty to indemnify, arises whenever the allegations in a complaint against the insured fall within the scope of the risk undertaken by the insured, regardless of how false or groundless those allegations might be (see Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443; Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310; Rhodes v Liberty Mut. Ins. Co., 67 AD3d at 882; Bovis v Crab Meadow Enters., Ltd., 67 AD3d 846 ). To be relieved of its duty to defend on the basis of a policy exclusion, "an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case" (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [internal quotation marks omitted]; see MIC Prop. & Cas. Corp. v Avila, 65 AD3d 1303 , 1305; Junius Dev., Inc. v New York Mar. & Gen. Ins. Co., 48 AD3d 426 , 427). An exclusion from coverage must be " specific and clear'" (Essex Ins. Co. v Pingley, 41 AD3d 774 , 776, quoting Seaboard Sur. Co. v Gillette Co., 64 NY2d at 311; see Lee v State Farm Fire & Cas. Co., 32 AD3d 902 , 903-904) and any ambiguity must be construed most strongly against the insurer (see Belt Painting Corp. v TIG Ins. Co., 100 NY2d at 383; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Breed v Insurance Co. of N. Am., 46 NY2d 351, 353; Nick's Brick Oven Pizza, Inc. v Excelsior Ins. Co., 61 AD3d 655 ). The test for ambiguity is whether the language is "susceptible of two reasonable interpretations," and the focus of the test is on the "reasonable expectations of the average insured" (MIC Prop. & Cas. Corp. v Avila, 65 AD3d at 1305 [internal quotation marks omitted]).
Here, Great American established, as a matter of law, that it is entitled to coverage under the subject commercial general liability policy. In contrast, Scottsdale failed to establish that "there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured" (Allstate Ins. Co. v Zuk, 78 NY2d 41, 45; see Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 74; Seaboard Sur. Co. v Gillette Co., 64 NY2d at 311-312; Rhodes v Liberty Mut. Ins. Co., 67 AD3d at 883; Junius Dev., Inc. v New York Mar. & Gen. Ins. Co., 48 AD3d at 427; Fortress Ins. Co. v Kollander, 41 AD3d 423 , 424).
Although the asbestos exclusion clause states that no coverage is provided for property damage arising out of the "removal," "disposal," or "use" of asbestos, the subject clause includes no terms indicating that coverage will not be provided for damages arising out of the unknowing or accidental release or dispersal of asbestos. On this point, the language is susceptible to two reasonable interpretations, and this ambiguity must be construed strongly against Scottsdale (see Belt Painting Corp. v TIG Ins. Co., 100 NY2d at 383).
Likewise, Scottsdale's interpretation of the pollution exclusion presents an ambiguity which must be resolved against it (see Village Mall at Hillcrest Condominium v Merrimack Mut. Fire Ins. Co., 309 AD2d 857, 858). Although asbestos may be a thermal irritant (see Belt Painting Corp. v TIG Ins. Co., 100 NY2d at 384; Village Mall at Hillcrest Condominium v Merrimack Mut. Fire Ins. Co., 309 AD2d at 858), the term "asbestos" is not specifically included within the definition of a "pollutant" as defined under the terms of the policy. Moreover, Scottsdale's position that damages from asbestos are excluded under the pollution exclusion would render the specific asbestos exclusion meaningless, in violation of settled canons of construction (see Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, affd 66 NY2d 1020).
Accordingly, upon searching the record (see CPLR 3212[b]), we grant that branch of Great American's cross motion which was for summary judgment declaring that Scottsdale is obligated to defend it in the underlying action.
Since the complaint sets forth a cause of action for declaratory relief, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that Scottsdale is obligated to defend Great American in the underlying action pursuant to the subject commercial general liability insurance policy (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Federal Insurance Company v. International Business Machines Corp.

Stroock & Stroock & Lavan LLP, New York, N.Y. (Michael F.
Perlis, Ernst H. Rosenberger, Richard Ray Johnson [pro hac vice],
and Rachel Shook [pro hac vice], of counsel), for appellant-
respondent.
Jones Day, New York, N.Y. (Thomas H. Sear, Howard F.
Sidman, and Victoria Dorfman of counsel),
for respondents-appellants.

DECISION & ORDER
In an action for a judgment declaring that the plaintiff has no obligation to indemnify the defendants for any amounts, including defense costs or settlement payments, that the defendants may have incurred in connection with an action entitled Cooper v IBM Personal Pension Plan (457 F3d 636, cert denied 549 US 1175), the plaintiff appeals, as limited by its brief, from (1) so much of an order of the Supreme Court, Westchester County (Rudolph, J.), entered June 30, 2009, as denied its motion for summary judgment and granted that branch of the defendants' cross motion which was for summary judgment on their counterclaim alleging breach of contract, and (2) a judgment of the same court (Scheinkman, J.), dated August 24, 2009, which is in favor of the defendants and against it in the principal sum of $25,000,000, and the defendants cross-appeal from so much of the judgment as, upon an order of the same court also dated August 24, 2009, in effect, denying their application for an award of an attorney's fee, failed to award them an attorney's fee. The plaintiff's notice of appeal from the order is deemed also to be a notice of appeal from the judgment (see CPLR 5501[c]).
ORDERED that the appeal from the order entered June 30, 2009, is dismissed; and it is further,
ORDERED that the judgment is reversed insofar as appealed from by the plaintiff, on the law, the plaintiff's motion for summary judgment is granted, that branch of the defendants' cross motion which was for summary judgment on their counterclaim alleging breach of contract is denied, and it is declared that the plaintiff Federal Insurance Company has no obligation to indemnify the defendants International Business Machines Corporation and IBM Personal Pension Plan for any amounts, including defense costs or settlement payments, that the defendants International Business Machines Corporation and IBM Personal Pension Plan may have incurred in connection with an action entitled Cooper v IBM Personal Pension Plan (457 F3d 636), and the order entered June 30, 2009, is modified accordingly; and it is further,
ORDERED that the defendants' cross appeal from the judgment is dismissed as academic; and it is further,
ORDERED that one bill of costs is awarded to the plaintiff.
The plaintiff's appeal from the order entered June 30, 2009, must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from that order are brought up for review and have been considered on its appeal from the judgment (see CPLR 5501[a][1]).
The plaintiff, Federal Insurance Company (hereinafter Federal), issued an Executive Protection Excess Insurance Policy (hereinafter the Federal Policy) to the defendant International Business Machines Corporation (hereinafter IBM). IBM is the sponsor of the defendant IBM Personal Pension Plan (hereinafter the Plan), a defined benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (hereinafter ERISA) (29 USC § 1001 et seq.). The Federal Policy provided coverage in excess of and in conformance with the underlying fiduciary liability policy issued by Zurich American Insurance Group (hereinafter the Zurich Policy).
The Zurich Policy's insuring clause provided coverage for "all Loss for which the Insured becomes legally obligated to pay on account of any Claim first made against the Insured . . . for a Wrongful Act." The term "Wrongful Act" is defined, in pertinent part, as "any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by the Employee Retirement Income Security Act of 1974 [ERISA], or by the common or statutory law of the United States, or [ERISA equivalent laws] in other jurisdiction[s] anywhere in the world."
A class action was filed in the United States District Court for the Southern District of Illinois (hereinafter the District Court) against IBM and the Plan, alleging that amendments to the Plan made by IBM in 1995 and 1999 violated various provisions of ERISA (see Cooper v IBM Personal Pension Plan, 2005 WL 1981501, 2005 US Dist LEXIS 17071 [SD Ill], revd in part 457 F3d 636, cert denied 549 US 1175). Specifically, the class action (hereinafter the Cooper action) challenged the amendments to the Plan as violative of the age discrimination provisions of ERISA. The parties to the Cooper action ultimately reached a settlement, which was approved by the District Court. The settlement provided, inter alia, for the payment of the Cooper plaintiffs' attorneys' fees by the Plan. Federal denied coverage for the award of attorneys' fees paid to the Cooper plaintiffs' counsel pursuant to the settlement, and commenced this action for a judgment declaring that IBM and the Plan were not entitled to indemnification for any amounts incurred by them in the Cooper action.
Contrary to the contention of IBM and the Plan, a breach of a fiduciary duty is required for a Wrongful Act to be committed under the Zurich Policy (see Mary Kay Holding Corp. v Federal Ins. Co., 309 Fed Appx 843, 849 [5th Cir]). This conclusion is supported by the plain meaning of the definition of Wrongful Act in the Zurich Policy, which requires that the responsibility, obligation, or duty that is allegedly breached be imposed upon a fiduciary of a Benefit Program by ERISA. Here, when IBM allegedly violated the age discrimination provisions of ERISA by making amendments to the Plan, it was acting in a settlor capacity, not in a fiduciary one (see Lockheed Corp. v Spink, 517 US 882, 890). The age discrimination provisions of ERISA, which IBM allegedly violated by enacting the amendments, are not responsibilities, obligations, or duties imposed upon a fiduciary of a Benefit Program by ERISA. Rather, they are obligations imposed on settlors of ERISA benefit plans. Thus, the Cooper action did not allege that IBM or the Plan committed a Wrongful Act, as that term is defined in the Zurich Policy. Federal, therefore, established its prima facie entitlement to judgment as a matter of law by demonstrating that IBM and the Plan were not entitled to coverage under the Zurich Policy and therefore, could not recover under the Federal Policy. In opposition, IBM and the Plan failed to raise a triable issue of fact.
Accordingly, Federal's motion for summary judgment should have been granted, that branch of the cross motion of IBM and the Plan which was for summary judgment on their counterclaim alleging breach of contract should have been denied, and Federal is entitled to a judgment declaring that it has no obligation to indemnify the defendants for any amounts, including defense costs or settlement payments, that the defendants may have incurred in connection with the Cooper action (see Lanza v Wagner, 11 NY2d 317, 324, appeal dismissed 371 US 74, cert denied 371 US 901).
In light of this determination, we need not reach Federal's remaining contentions. Moreover, the defendants' cross appeal from so much of the judgment as failed to award them an attorney's fee has been rendered academic.

Palma v. Rosa

Mitchell Dranow, Mineola for appellant.
Acito, Klein & Candiloros, P.C., New York (William N.
Candiloros of counsel), for respondent.
Order, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered March 11, 2009, which granted defendant's motion for summary judgment dismissing plaintiff's complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, to deny so much of defendant's motion as sought dismissal of plaintiff's 90/180-day claim, and otherwise affirmed, without costs.
On the issue of permanent injury, defendant's submissions, which included the affirmations of his orthopedist and radiologist, met his prima facie burden (see Brown v Achy, 9 AD3d 30, 31 [2004]), and the admissible evidence submitted by plaintiff in opposition to the motion (see Grasso v Angerami, 79 NY2d 813 [1991]) failed to raise an issue of fact. In particular, the findings contained in the August 2008 report and September 2008 affidavit of plaintiff's current chiropractor lack probative value as to any causal relationship between plaintiff's current complaints and the August 2003 accident (see Lopez v Abdul-Wahab, 67 AD3d 598, 599 [2009]; Kurin v Zyuz, 54 AD3d 902, 903 [2008]); in any event, the chiropractor's diagnosis of residual cervical sprain with underlying herniated discs is, by itself, insufficient to support a claim of serious injury (see Kearse v New York City Tr. Auth., 16 AD3d 45, 51-52 [2005]); and the claim of permanent injury is further undermined by the chiropractor's August 2008 "[g]ood" prognosis and findings that "there is currently no objective evidence of a disability" and that plaintiff "can continue to work." We modify to reinstate
plaintiff's 90/180-day claim because defendant's moving papers do not address that claim (see Loesburg v Jovanovic, 264 AD2d 301 [1999]).

Rosenfeld v. Baker

Gary P. Field, Huntington, N.Y., for appellant.
Ahmuty, Demers & McManus (Mead, Hecht, Conklin &
Gallagher, LLP, Mamaroneck, N.Y. [Elizabeth
M. Hecht], of counsel), for respondents
Jessica D. Goldberg and Lawrence J.
Goldberg.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals (1), as limited by her notice of appeal and brief, from so much of an order of the Supreme Court, Suffolk County (Jones, Jr., J.), dated September 8, 2008, as denied her motion in limine to preclude the defendants from offering a certain expert witness at trial and denied that branch of her separate motion in limine which was to preclude testimony at trial on the issue of Munchausen Syndrome, (2) an order of the same court (Jones, Jr., J.), dated January 12, 2009, which denied her motion, in effect, for leave to reargue, (3) a judgment of the same court (Whelan, J.), entered February 25, 2009, which, upon a jury verdict, is in favor of the defendants Jessica D. Goldberg and Lawrence J. Goldberg and against her dismissing the complaint, and (4) an order of the same court (Whelan, J.), dated April 17, 2009, which denied her motion pursuant to CPLR 4404 to set aside the jury verdict and for judgment as a matter of law or, in the alternative, for a new trial on the issue of whether the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d), on the ground that the verdict was contrary to the weight of the evidence.
ORDERED that the appeals from the orders dated September 8, 2008, and January 12, 2009, are dismissed; and it is further,
ORDERED that the judgment and the order dated April 17, 2009, are affirmed; and it is further,
ORDERED that one bill of costs is awarded to the defendants Jessica D. Goldberg and Lawrence J. Goldberg.
The appeal from the order dated September 8, 2008, must be dismissed because the portions of the order appealed from concern evidentiary rulings which, even when made in advance of trial on motion papers, are not appealable, either as of right or by permission (see CPLR 5701; Barnes v Paulin, 52 AD3d 754; Citlak v Nassau County Med. Ctr., 37 AD3d 640; Cotgreave v Public Adm'r of Imperial County [Cal], 91 AD2d 600, 601). The issues raised on the appeal from the order dated September 8, 2008, are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]). The appeal from the order dated January 12, 2009, must be dismissed, as no appeal lies from an order denying reargument.
Contrary to the plaintiff's contention, the defendants' medical experts were properly permitted to testify at trial, inter alia, based upon their review of the plaintiff's medical records (see Matter of Meyer v Board of Trustees of N.Y. City Fire Dept., Art. 1-B Pension Fund, 90 NY2d 139). The fact that the defendants' psychiatric expert did not examine the plaintiff goes only to the weight of his testimony, not to its admissibility (see Weigert v Baker, 217 AD2d 1011).
Moreover, the Supreme Court properly denied that branch of the plaintiff's motion pursuant to CPLR 4404 which was to set aside the jury verdict and for judgment as a matter of law. The proponent of a motion pursuant to CPLR 4404 to set aside a jury verdict as not supported by legally sufficient evidence must demonstrate that there is no valid line of reasoning and permissible inferences which would lead rational persons to the conclusions reached by the jury (see Cohen v Hallmark Cards, 45 NY2d 493). Here, the Supreme Court properly held that the evidence adduced at trial was sufficient as a matter of law since a valid line of reasoning could have led the jury to conclude that none of the injuries that were proximately caused by the subject accident constituted a serious injury as that term is defined in Insurance Law § 5102(d).
The Supreme Court also properly denied that branch of the plaintiff's motion pursuant to CPLR 4404 which was for a new trial on the issue of whether the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d), on the ground that the verdict was against the weight of the evidence. A jury verdict should not be set aside as against the weight of the evidence unless the verdict could not have been reached on any fair interpretation of the evidence (see Lolik v Big V Supermarkets, 86 NY2d 744). " Where, as here, conflicting expert testimony is presented, the jury is entitled to accept one expert's opinion, and reject that of another expert'" (Morales v Interfaith Med. Ctr., 71 AD3d 648, 650, quoting Ross v Mandeville, 45 AD3d 755, 757). It is for the jury to make determinations as to the credibility of the witnesses, and it is accorded great deference, as it had the opportunity to see and hear the witnesses (see Davison v New York City Tr. Auth., 63 AD3d 871). Here, a fair interpretation of the evidence supports the jury's conclusion that, based on the evidence before it, the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Handwerker v Dominick L. Cervi, Inc., 57 AD3d 615; Marino v Cunningham, 44 AD3d 912).

Swartz v. Kalson

Appeal from an order of the Supreme Court, Erie County (Diane Y. Devlin, J.), entered December 21, 2009 in a personal injury action. The order, insofar as appealed from, denied in part the motion of defendants for summary judgment.

CHELUS, HERDZIK, SPEYER & MONTE, P.C., BUFFALO (SCOTT R. ORNDOFF OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
WALSH, ROBERTS & GRACE, BUFFALO (MARK P. DELLA POSTA OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action seeking, inter alia, damages for injuries sustained by plaintiff Derrick A. Swartz (plaintiff) when the vehicle he was operating collided with a vehicle operated by defendant Victor F. Kalson. Contrary to the contention of defendants, Supreme Court properly denied those parts of their motion seeking summary judgment dismissing the complaint insofar as plaintiffs allege that plaintiff sustained a serious injury under the permanent consequential limitation of use and significant limitation of use categories set forth in Insurance Law § 5102 (d). In support of their motion, defendants relied on, inter alia, the affirmed medical report of the physician who examined plaintiff on defendants' behalf. Defendants' expert addressed the allegation that plaintiff sustained a qualifying psychological injury, i.e., posttraumatic stress disorder, in merely a conclusory fashion (see Brandt-Miller v McArdle, 21 AD3d 1152, 1154; cf. Taranto v McCaffrey, 40 AD3d 626; see generally Landman v Sarcona, 63 AD3d 690), and the brief statements of defendants' expert concerning plaintiff's alleged traumatic brain injury were similarly conclusory (see generally Landman, 63 AD3d 690; Hughes v Cai, 31 AD3d 385). Defendants thus failed to meet their initial burden on the motion with respect to those two categories of serious injury, based on both the conclusory statements in their expert's report and the medical records of plaintiff submitted by defendants in support of their motion indicating that plaintiff did in fact sustain injuries within the meaning of those two categories. Because defendants failed to meet their initial burden, we do not examine the sufficiency of plaintiffs' opposing papers (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324).

Howard v. Robb

Appeal from an order of the Supreme Court, Niagara County (Ralph A. Boniello, III, J.), entered November 12, 2009 in a personal injury action. The order, insofar as appealed from, denied the motion of defendant for summary judgment dismissing any claims of permanent consequential limitation of use of a body organ or member and significant limitation of use of a body function or system.

BURGIO, KITA & CURVIN, BUFFALO (HILARY C. BANKER OF COUNSEL), FOR DEFENDANT-APPELLANT.
DAVID J. PAJAK, ALDEN, FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Keiko Howard (plaintiff) when the vehicle she was operating was rear-ended by a vehicle operated by defendant. Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Contrary to defendant's contention, we conclude that Supreme Court properly denied the motion with respect to the serious injury categories of permanent consequential limitation of use and significant limitation of use. Although defendant met his initial burden on the motion, plaintiffs raised triable issues of fact with respect to the permanent consequential limitation of use and significant limitation of use categories (see Tai Ho Kang v Young Sun Cho, 74 AD3d 1328, 1329; Levin v Khan, 73 AD3d 991; Barry v Valerio, 72 AD3d 996).
In opposition to the motion, plaintiffs established that, shortly after the accident, plaintiff was treated by a chiropractor for pain in her neck and lower back. The chiropractor conducted range of motion (ROM) tests and concluded that plaintiff had reduced ROM in every category of flexion, extension and rotation in both her cervical and lumbar areas. The chiropractor also ordered a second MRI, which showed mild bulging of the cervical discs and a more severe asymmetrical bulge and annular tear of her lumbar disc at L4-5. Plaintiff continued treatments with the chiropractor and her condition improved somewhat, but another ROM test conducted two years after the accident established that the condition of plaintiff's cervical and lumbar area had further declined. The chiropractor concluded that plaintiff suffered from a chronic, permanent and disabling injury to her cervical and lumbar spine caused by the accident. Plaintiffs also submitted the affidavit of a physician who examined plaintiff and reviewed her medical records 2½ years after the accident. He concluded that plaintiff suffered from cervical and lumbar disc herniations caused by the accident. We thus conclude that plaintiffs submitted evidence of contemporaneous and recent findings with respect to plaintiff's injuries (see Tai Ho Kang, 74 AD3d at 1329; see generally Resek v Morreale, 74 AD3d 1043, 1044-1045; Vilomar v Castillo, 73 AD3d 758, 759;Carrillo v DiPaola, 56 AD3d 712; Chinnici v Brown, 295 AD2d 465), as well as objective and quantitative evidence concerning the limitation of use of plaintiff's cervical and lumbar spine (see generally Vargas v Tomorrow Travel & Tour, Inc., 74 AD3d 1626, 1627-1628; Charlie v Guerrero, 60 AD3d 570).

Turner v. Benycol Transportation Corp.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for Benycol Transportation Corp.
and Julio E. Delarosa, appellants.
Law Offices of Nancy I. Isserlis, Long Island City (Lawrence R.
Miles of counsel), for Pearl Two Inc. and G.E. Gorja-Crespo,
appellants.
Antin, Ehrlich & Epstein, LLP, New York (Frank Trief of
counsel), for respondents.
Order, Supreme Court, Bronx County (Dominic R. Massaro, J.), entered December 28, 2009, which denied defendants' motions for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motions granted. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.
Defendants established their prima facie entitlement to judgment as a matter of law by submitting evidence, including the affirmed reports of an orthopedic surgeon and a neurologist, who following examinations of plaintiff, specified the objective tests performed, reported normal ranges of motion in all tested body areas and concluded that plaintiff's injuries resolved without permanency (see DeJesus v Paulino, 61 AD3d 605, 606-607 [2009]). Moreover, a radiologist who reviewed plaintiff's MRI report concluded in unequivocal terms that plaintiff's spine showed dessication and mild narrowing of two of the mid-thoracic discs, which were all pre-existing to the subject accident. Defendants also made a prima facie showing that plaintiff did not sustain a serious injury under the 90/180-day prong of Insurance Law § 5102(d) by presenting plaintiff's deposition testimony in which she stated that following the accident, she did not lose any time from work and was not confined to her home (see e.g. Alloway v Rodriguez, 61 AD3d 591, 592 [2009]).
In opposition, plaintiff failed to raise a triable issue of fact. Although plaintiff's chiropractor quantified her limitations of motion, concluded that they were significant and related the injuries to the subject accident, he failed to address defendants' evidence that plaintiff's disc dessication was pre-existing. Notably, plaintiff conceded at her deposition that she sustained injuries to her neck and back in a prior accident, and based on the radiologic findings of pre-existing degenerative disease, it was incumbent upon plaintiff to present proof addressing the asserted lack of causation, which she failed to do (see Becerril v Sol Cab Corp., 50 AD3d 261 [2008]).
Plaintiff also failed to raise a triable issue of fact with respect to her 90/180-day claim. Her subjective statements that she was limited in her ability to exercise or perform personal maintenance were insufficient to defeat the motion (see Alloway, 61 AD3d at 592).

Kramer v. Phoenix Life Insurance Co.

John J. Tharp, for intervenor-appellant.
Patrick J. Feeley, for respondent Phoenix Life
Insurance Co.
Michael J. Miller, for respondent Lincoln Life &
Annuity Co. of New York.
Andrew A. Wittenstein, for respondent Kramer.
Tab K. Rosenfeld, for intervenor-respondent
Lockwood Pension Services, Inc. et al.
Andrea B. Bierstein, for respondents Berck and Life
Products Clearing, LLC.
Edward S. Bloomberg, for respondent T.D. Bank, N.A.
The Institutional Life Markets Association;
American Council of Life Insurers et al.; Life Insurance Settlement
Association, amici curiae.

CIPARICK, J.:
The United States Court of Appeals for the Second Circuit has certified the following question for our consideration:
"Does New York Insurance Law §§ 3205 (b) (1) and (b) (2) prohibit an insured from procuring a policy on his own life and immediately transferring the policy to a person without an insurable interest in the insured's life, if the insured did not ever intend to provide insurance protection for a person with an insurable interest in the insured's life?"

We now answer in the negative and hold that New York law permits a person to procure an insurance policy on his or her own life and immediately transfer it to one without an insurable interest in that life, even where the policy was obtained for just such a purpose.
This litigation involves several insurance policies obtained by decedent Arthur Kramer, a prominent New York attorney, on his own life, allegedly with the intent of immediately assigning the beneficial interests to investors who lacked an insurable interest in his life. In May 2008, Arthur's widow, plaintiff Alice Kramer, as personal representative of her husband's estate, filed an amended complaint in the United States District Court for the Southern District of New York seeking to have the death benefits from these insurance policies paid to her. She alleges that these policies, which collectively provide some $56,200,000 in coverage, violate New York's insurable interest rule because her husband obtained them without the intent of providing insurance for himself or anyone with an insurable interest in his life.
As alleged in the plaintiff's complaint, defendant Steven Lockwood, the principal of Lockwood Pension Services, Inc. ("Lockwood Pension"), approached Arthur, presumably a sophisticated investor, about participating in a "stranger-owned life insurance" ("SOLI" or "STOLI") scheme as early as 2003 [FN1] . They commenced such a scheme in June 2005, when Arthur established the first of two insurance trusts ("the June trust") and named two of his adult children, Andrew and Rebecca Kramer, as beneficiaries. A present Lockwood Pension employee was named as trustee, succeeded by defendant Jonathan Berck. In June and July 2005, defendant Transamerica Occidental Life Insurance Co. funded the trust with one or more insurance policies with a total death benefit of approximately $18,200,000. Andrew and Rebecca then assigned their beneficial interests in the trust to a stranger investor, defendant Tall Tree Advisors, Inc. ("Tall Tree"). In 2007, Berck, as trustee, sold the ownership interests in the policies to a non-party purchaser.
Arthur established a second trust in August 2005 ("the August trust") and named a third adult child, Liza Kramer, as beneficiary. Hudson United Bank ("Hudson") was named trustee,[FN2] also succeeded by Berck. In July 2005, defendant Phoenix Life Insurance Co. ("Phoenix") issued three insurance policies to fund the August trust, with a total death benefit of $28,000,000, and Liza likewise assigned her interest to Tall Tree. In November 2005, defendant Lincoln Life & Annuity Co. of New York ("Lincoln") also issued a policy to the August trust with a death benefit of $10,000,000, and Liza assigned her interest to another stranger investor, defendant Life Products Clearing, LLC ("Life Products"). Intervenor Lifemark alleges that it purchased the Phoenix policy from the August trust in August 2007, just over two years after its issuance. Allegedly both trust agreements were prepared by counsel for Lockwood Pension, neither Arthur Kramer nor his children ever paid premiums on the policies, and the Kramer children were never "true beneficiaries" of the trusts after the policies were issued. Phoenix and Lincoln allege that Lockwood served as broker pursuant to an "Independent Producer Contract" he had with Phoenix and a "Broker Agreement" he had with Lincoln.
Following Arthur's death in January 2008, Alice refused to turn over copies of the death certificate to investors holding beneficial interests in the policies. She filed this action alleging that these policies violated New York's insurable interest rule and so should be paid to her, as the representative of the decedent's estate. Defendants are the insurance companies that issued the policies, trustees, and various insurance brokers/investors. They filed counterclaims, cross-claims, and third-party complaints. As relevant here, Berck, as trustee, and Life Products filed nearly identical answers seeking to have the proceeds of the Lincoln policy awarded to them. Intervenor Lifemark, claiming to be a good faith purchaser for value, seeks to have the Phoenix policy proceeds paid to it. Phoenix and Lincoln brought claims against Lockwood for breach of contract and also seek a declaratory judgment declaring that the policies are void and that they are not required to pay policy proceeds to anyone.
District Court granted motions to dismiss many of the parties' claims, but denied Lockwood's motion to dismiss the insurers' claims against him. Relying primarily on District Court precedent, the court stated that, according to the alleged facts:
"Lockwood breached provisions of the New York Insurance Law in that he caused to be procured directly or through assignment or other means, a contract of insurance upon the life of the decedent [Kramer] for the benefit of strangers who did not have an insurable interest in his life at the time the policy was obtained" (Kramer, 653 F Supp 2d at 388 [internal quotation marks omitted]).

The court also permitted Alice, Life Products, and Berck's declaratory judgment claims, counterclaims, and cross-claims to go forward.[FN3]  
District Court certified its order to allow for an interlocutory appeal to the Second Circuit pursuant to 28 USC § 1292 (b), noting that "there is indeed substantial ground for difference of opinion on the application of New York Insurance Law to SOLI arrangements of this type" (653 F Supp 2d at 398), and that "[n]umerous claims in this suit, including but not limited to the initial Declaratory Judgment action by Plaintiff, turn on the interpretation of" New York Insurance Law § 3205 (id.). The Second Circuit granted Lifemark's petition for leave to appeal District Court's interlocutory order, and certified the question at issue to us.[FN4]
New York's insurable interest requirement is codified in Insurance Law § 3205 (b). Section 3205 (b) (1) addresses individuals obtaining life insurance on their own lives:
"Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation. Nothing herein shall be deemed to prohibit the immediate transfer or assignment of a contract so procured or effectuated" (Insurance Law § 3205 [b] [1]).

Section 3205 (b) (2) addresses a person's ability to obtain insurance on another's life and requires, in that circumstance, that the policy beneficiary be either the insured himself or someone with an insurable interest in his life:
"No person shall procure or cause to be procured, directly or by assignment or otherwise any contract of insurance upon the person of another unless the benefits under such contract are payable to the person insured or his personal representatives, or to a person having, at the time when such contract is made, an insurable interest in the person insured" (Insurance Law § 3205 [b] [2]).

An insurable interest is defined as, "in the case of persons closely related by blood or by law, a substantial interest engendered by love and affection" or, for others, a "lawful and substantial economic interest in the continued life, health or bodily safety of the person insured" (Insurance Law § 3205 [a] [1]).[FN5]
The insurable interest requirement at common law was designed to distinguish an insurance contract from a wager on someone's life (see Ruse v Mutual Benefit Life Ins. Co., 23 NY 516, 523 [1861] ["A policy, obtained by a party who has no interest in the subject of insurance, is a mere wager policy"]). From the first, an insurable interest was required only where a policy was "obtained by one person for his own benefit upon the life of another" (id.). This basic distinction between policies obtained on the life of another and those obtained on one's own life is reflected in the twin provisions of § 3205 (b) (1) and (b)(2). As we have explained:
"When one insures his or her own life, the wagering aspect is overridden by the recognized social utility of the contract as an investment to benefit others. When a third party insures another's life, however, the contract does not have the same manifest utility and assumes more speculative characteristics which may subject it to the same general condemnation as wagers (New England Mut. Life Ins. Co., 73 NY2d at 77-78)."
Plaintiff and the insurers urge us to find that an individual who procures insurance on his own life with the intent of immediately assigning the policy to one without an insurable interest is subject to the insurable interest requirement articulated in § 3205 (b) (2), despite the fact that § 3205 (b) (1) contains no such requirement. They make three basic arguments: (1) that a policy obtained with the intent to assign it to a party lacking an insurable interest violates § 3205 (b) (2); (2) that this scenario is precluded by a common law rule that an insured could only assign a policy to one without an insurable interest if the policy was obtained "in good faith" compliance with the insurable interest rule, not as a means of circumventing it; and (3) that one who obtains insurance on one's own life in accordance with a prior arrangement with a third party, as alleged here, does not act "on his own initiative" within the meaning of the statute. In response, Lifemark, Life Products, Berck, Lockwood, and Lockwood Pension argue that the language of § 3205 (b) (1) confers great freedom on an insured in assigning life insurance benefits, including the freedom to obtain insurance for any reason and to immediately assign a policy to an investor with no insurable interest, and that this freedom cannot be reconciled with any older common law "good faith" limitation.

The "starting point" for discerning statutory meaning is, of course, the language of the statute itself (see Roberts v Tishman Speyer Props., L.P., 13 NY3d 270, 286 [2009]). "[W]here the language of a statute is clear and unambiguous, courts must give effect to its plain meaning" (Matter of Crucible Materials Corp. v New York Power Auth., 13 NY3d 223, 229 [2009] [internal quotation marks omitted]).
Here, § 3205 (b) (1) clearly provides that, so long as the insured is "of lawful age" and acts "on his own initiative," he can "procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation" (Insurance Law § 3205 [b] [1]). This language is unambiguous and not limited by the statutory text. It thus codifies the common law rule that an insured has total discretion in naming a policy beneficiary (see Olmsted v Keyes, 85 NY 593 [1881]). Our lower courts have long held that, under § 3205 (b), "[w]here the deceased effects the insurance upon her own life, it is well-established law that she can designate any beneficiary she desires without regard to relationship or consanguinity" (Corder v Prudential Ins. Co., 42 Misc 2d 423, 424 [Sup Ct, Erie County 1964]; see also Gibson v Travelers Ins. Co., 183 Misc. 678 [Sup Ct, New York County 1944]).
It is equally plain that a contract "so procured or effectuated" may be "immediate[ly] transfer[ed] or assign[ed]" (Insurance Law § 3205 [b] [1]). The provision does not require the assignee to have an insurable interest and, given the insured's power to name any beneficiary, such restriction on assignment would serve no purpose. This freedom of assignment is not limited by § 3205 (b) (2), which addresses procurement of an insurance policy on another's life, "either directly or by assignment," because § 3205 (b)(2) requires an insurable interest only "at the time when such contract is made" (Insurance Law § 3205 [b] [2]), that is, when such insurance is initially procured. The statute therefore incorporates the common law rule that a policy valid at the time of procurement may be assigned to one without an insurable interest in the insured's life and, relatedly, no insurable interest is required when one holds a policy on another's life, so long as the policy was "valid in its inception" (Olmsted, 85 NY 598). As one appellate court has summarized, "Insurance Law § 3205 (b) permits any person of lawful age who has procured a contract of insurance upon his or her own life to immediately transfer or assign the contract, and does not require the assignee to have an insurable interest" (Hota v Camaj, 299 AD2d 453 [2d Dept 2002]).
There is simply no support in the statute for plaintiff and the insurers' argument that a policy obtained by the insured with the intent of immediate assignment to a stranger is invalid. The statutory text contains no intent requirement; it does not attempt to prescribe the insured's motivations. To the contrary, it explicitly allows for "immediate transfer or assignment" (Insurance Law § 3205 [b] [1]). This phrase evidently anticipates that an insured might obtain a policy with the intent of assigning it, since one who "immediately" assigns a policy likely intends to assign it at the time of procurement.
The statutory mandate that a policy must be obtained on an insured's "own initiative" requires that the decision to obtain life insurance be knowing, voluntary, and actually initiated by the insured. In common parlance, to act on "one's own initiative" means to act "at one's own discretion: independently of outside influence or control" (Merriam-Webster's Collegiate Dictionary, 10th ed., 602 [1996]). The key point is that the policy must be obtained at the insured's discretion. As the dissent acknowledges, common sense dictates that some outside influence is acceptable — advice from a broker or pension planner, for example. The notion of obtaining insurance and the details of the insurance contract need not spring exclusively from the mind of the insured. Rather, the insured's decision must be free from nefarious influence or coercion.
Contrary to the dissent's view, the initiative requirement, without more, does not prohibit an insured from obtaining a policy pursuant to a non-coercive arrangement with an investor (see dissenting op at 8). Under the dissent's interpretation, a sophisticated party who approaches an investor about such an arrangement, drafts necessary documents, procures insurance on his own life, and assigns it for compensation is not acting "on his own initiative." The language of the statute simply does not support such a reading.
Further, the insurable interest requirement of § 3205 (b) (2) does not alter our reading of § 3205 (b) (1) because it does not apply when an insured freely obtains insurance on his own life. Rather, it requires that when a person "procure[s] or cause[s] to be procured, directly or by assignment or otherwise" an insurance policy on another's life, the policy benefits must run, "at the time when such contract is made," to the insured or one with an insurable interest in the insured's life (Insurance Law § 3205 [b] [2]). Where an insured, "on his own initiative," obtains insurance on his or her own life, the validity of the policy at its inception is instead governed by § 3205 (b) (1).
Our reading of the statutory language is buttressed by the legislative history of § 3205 (b). A forerunner to the current provision appeared in the 1939 recodification of the Insurance Law as a single paragraph (1939 NY Laws ch. 882, art. 7, § 146),[FN6] and a 1984 recodification broke that single paragraph into the two provisions we have today. The sentence "[n]othing herein shall be deemed to prohibit the immediate transfer or assignment of a contract so procured or effectuated," however, was not added until 1991. It was prompted by a United States Internal Revenue Service private letter ruling suggesting that if a person obtained an insurance policy with the intent of transferring it to a charitable organization lacking an insurable interest in his life, the transaction would violate § 3205 (b) (2) (see Mem of Assemblyman Lasher, Bill Jacket, L 1991, ch 334, at 6; IRS Private Letter Ruling, March 1991, PLR 9110016). The Legislative aim was to "correct [this] erroneous interpretation" (Mem of Assemblyman Lasher, Bill Jacket, L 1991, ch 334, at 6). Thus, it not only added, in terms not limited to charitable organizations, that a policy may be "immediate[ly] transfer[red] or assign[ed]" (Insurance Law § 3205 [b] [1]), but it did so to clarify the legislative understanding that a policy might be assigned regardless of the insured's intent in procuring it.
In light of the overwhelming textual and historical evidence that the Legislature intended to allow the immediate assignment of a policy by an insured to one lacking an insurable interest, we are not persuaded by plaintiff and the insurers' argument that § 3205 (b) is limited by the common law requirement that an insured cannot obtain a life insurance policy with the intent of circumventing the insurable interest rule by immediately assigning it to a third party (see Steinback v Diepenbrock, 158 NY 24, 30-31 [1899]). To the extent that there is any conflict, the common law has been modified by unambiguous statutory language. We note further that if our Legislature had intended to impose such a limitation, it could easily have done so. The Legislature has been very active in this area, most recently in its redrafting of Article 78 of the Insurance Law.
Finally, we recognize the importance of the insurable interest doctrine in differentiating between insurance policies and mere wagers (see Caruso, 73 NY2d at 77-78), and that there is some tension between the law's distaste for wager policies and its sanctioning an insured's procurement of a policy on his or her own life for the purpose of selling it. It is not our role, however, to engraft an intent or good faith requirement onto a statute that so manifestly permits an insured to immediately and freely assign such a policy.
Accordingly, the certified question should be answered in the negative.


SMITH, J.(dissenting):
I would answer the certified question with a qualified yes: My view of New York law is that where, as in this case, an insured purchases a policy on his own life for no other purpose than to facilitate a wager by someone with no insurable interest, the transaction is unlawful.
I
"Stranger-originated life insurance" is a new name for an old idea. Transactions not basically different from the one before us have been known, and condemned, by courts for more than a hundred years.
In 1872, a young man named Henry Crosser took out a policy on his own life. On the same day, Crosser entered a contract with something called the Scioto Trust Association, in which Crosser agreed to assign the policy to Scioto, and Scioto agreed to pay the premiums on it. It was agreed that at Crosser's death, Scioto would get 90 percent of the insurance proceeds. When Crosser died the following year, his administrator sued Scioto, claiming all the proceeds, and the United States Supreme Court, applying pre-Erie federal common law (see Erie R.R. Co. v Tompkins, 304 US 64 [1938]), held the Crosser-Scioto contract invalid. The Court said that what it called "wager policies" were "independently of any statute on the subject, condemned, as being against public policy" (Warnock v Davis, 104 US 775, 779 [1882]).
Warnock also stated a broader rule: "The assignment of a policy to a party not having an insurable interest is as objectionable as the taking out of a policy in his name" (104 US at 779). That rule was too broad. New York, as the Warnock court recognized, had already rejected it (see id. at 781-82, citing Saint John v American Mut. Life Ins. Co., 13 NY 31 [1855]), and a few decades later the United States Supreme Court rejected it also (Grigsby v Russell, 222 US 149 [1911]). In Grigsby, Justice Holmes explained that a contract taken out by a third party with no insurable interest in the insured's life is generally more problematic than an assignment by the insured to such a person:
"A contract of insurance upon a life in which the insured has no interest is a pure wager that gives the insured a sinister counter interest in having the life come to an end. . . .

"But when the question arises upon an assignment it is assumed that the objection to the insurance as a wager is out of the case. . . . The danger that might arise from a general license to all to insure whom they like does not exist. Obviously it is a very different thing from granting such a general license, to allow the holder of a valid insurance upon his own life to transfer it to one whom he, the party most concerned, is not afraid to trust"

(222 US at 155).
Grigsby thus established the general rule, consistent with the New York common law of that day and with our current statutory law (Insurance Law § 3205 [b]), that while a third party without an insurable interest may not purchase a life insurance policy, an insured may do so and assign it to the third party, whether the third party has an insurable interest or not. That is the rule the majority applies here.
But this rule of free assignability has always had an exception — an exception for cases like Warnock, and like this case, where the insured, at the moment he acquires the policy, is in substance acting for a third party who wants to bet on the insured's death. Justice Holmes explained the exception in Grigsby, and thus distinguished Warnock, but did not overrule its narrow holding:
"[C]ases in which a person having an interest lends himself to one without any as a cloak to what is in its inception a wager have no similarity to those where an honest contract is sold in good faith . . .
"[Warnock v Davis] was one of the type just referred to, the policy having been taken out for the purpose of allowing a stranger association to pay the premiums and receive the greater part of the benefit, and having been assigned to it at once."

(222 US at 156).
There are good reasons why the common law, as reflected in both Warnock and Grigsby, invalidated stranger-originated life insurance. Even if we ignore the possibility that the owner of the policy will be tempted to murder the insured, this kind of "insurance" has nothing to be said for it. It exists only to enable a bettor with superior knowledge of the insured's health to pick an insurance company's pocket.
In a sense, of course, all insurance is a bet, but for most of us who buy life insurance it is a bet we are happy to lose. We recognize that the insurance company is more likely than not to make a profit on the policy, receiving more in premiums than it will ever pay out in proceeds, and that is the result we hope for; we pay the premiums in order to protect against the risk that we will die sooner than expected. But stranger-originated life insurance does not protect against a risk; it does not make sense for the purchaser if it is expected to be profitable for the insurance company. The only reason to buy such a policy is a belief that the insured's life expectancy is less than what the insurance company thinks it is. Thus, we may be confident that the Scioto Trust Association, which acquired a policy on the life of 27-year-old Henry Crosser, was not surprised when Crosser died before he was 30. And we may be equally confident that the purchasers in this case thought, probably with good reason, that they knew something about Arthur Kramer's health that the insurance companies did not know.
When Grigsby was decided, New York common law had anticipated the federal common law, adopting not only the rule of Grigsby — that life insurance policies are, in general, freely assignable — but also the exception recognized in Grigsby — that the assignment cannot be used as a "cloak to what is in its inception a wager." In Steinback v Diepenbrock (158 NY 24, 31 [1899]), answering an objection to the rule of free assignability, we observed:
"[I]t is said that if the payee of a policy be allowed to assign it, a safe and convenient method is provided by which a wagering contract can be safely made. The insured, instead of taking out a policy payable to a person having no insurable interest in his life, can take it out to himself and at once assign it to such person. But such an attempt would not prove successful, for a policy issued and assigned, under such circumstances, would be none the less a wagering policy because of the form of it. The intention of the parties procuring the policy would determine its character, which the courts would unhesitatingly declare in accordance with the facts, reading the policy and the assignment together, as forming part of one transaction."
Under New York common law, therefore, the purchasers of stranger-originated life insurance could not prevail in a case like this: the law would look through the form of the transaction, and "[t]he intention of the parties procuring the policy would determine its character." It hardly seems open to doubt, on the facts before us, that the intention of the purchasers here was to bet on Arthur Kramer's death, and that Kramer's intention was to be compensated for helping them do so.
II
The majority holds, in effect, that Insurance Law § 3205 (b) has displaced the common law, and eliminated the exception recognized in Grigsby and Steinback to the rule of free assignability. I think this is an incorrect reading of the statute. I see no reason to believe the Legislature ever intended to abolish the anti-wagering rule.
While statutes relating to the insurable interest requirement in New York date at least to 1892 (L. 1892, ch. 690 § 55), it is enough for present purposes to go back to 1984, when Insurance Law § 3205 (very similar to a predecessor statute, Insurance Law § 146) was enacted, containing the following language:
"(b)(1) Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation.
"(2) No person shall procure or cause to be procured, directly or by assignment or otherwise any contract of insurance upon the person of another unless the benefits under such contract are payable to the person insured or his personal representatives, or to a person having, at the time when such contract is made, an insurable interest in the person insured."
Thus the 1984 version of the statute protected the insured's right to buy a policy and name any beneficiary he or she liked, but otherwise prohibited life insurance where the beneficiary had no insurable interest. It did not specifically address the question of an assignment by the insured to a person lacking an insurable interest; it did not restate the long-standing common-law rule that, in general, life insurance contracts were freely assignable, even to such assignees.
This omission became a problem in 1991, when the United States Internal Revenue Service ruled that a plan to procure a policy on one's life with the intent to transfer the policy immediately to a charity would violate section 3205(b)(2), so that any such assignment could not be treated as a charitable gift for tax purposes (see IRS Ruling 9110016 [March 8, 1991]). The Legislature acted promptly to correct this "erroneous interpretation" of the New York Insurance Law (memorandum of Assemblyman Lasher on A 8586, Bill Jacket for L. 1991, ch. 334, at 6). It added a second sentence to Insurance Law § 3205 (b) (1), so that that subdivision now reads:
"Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation. Nothing herein shall be deemed to prohibit the immediate transfer or assignment of a contract so procured or effectuated."
The 1991 amendment gave statutory form to the long-established New York rule that life insurance contracts may be freely assigned, even to someone without an insurable interest. But there was also, as I have explained, a long-established exception to the rule: Assignability could not be used to cloak a third-party wagering transaction. I see no reason to think that the Legislature, in codifying the general rule, meant to abolish the exception. The majority opinion offers neither any reason for the Legislature to consider abolishing it, nor any evidence that the Legislature thought it was doing so. Indeed, nothing in the history of the statute suggests that the Legislature intended to alter the common law of insurable interest in any way: the sponsor's memorandum says its purpose was to "restate and clarify" it (id.).
As I read the 1991 amendment, it codified not only the free assignability rule, but also the anti-wagering exception to it — although I admit it could have expressed the exception much more clearly. The new second sentence of Insurance Law § 3205 (b) (1) refers, in the words "so procured or effectuated," to the words of the first sentence, which says that a person "may on his own initiative procure or effect a contract of insurance." "On his own initiative" is a rather mysterious phrase, which can hardly be taken literally. Life insurance does not become invalid because its purchase was initiated (in the sense of being proposed or suggested) by the insured's spouse or an insurance agent. Rather, I see in the words "on his own initiative" an echo of the rule recognized in Steinback and Grigsby — that an insured may not, in procuring a policy, act as an agent for a third-party gambler without an insurable interest. So read, Insurance Law § 3205 (b) (1) is completely consistent with the pre-existing common law of New York, and with the wise public policy underlying the common law.
The majority today rejects this analysis, and holds in substance that Insurance Law § 3205 (b) enacts the general rule of free assignability, while abolishing the "cloak for a wager" exception. For the reasons I have explained, I think this holding is unnecessary and unfortunate. I agree with the majority that there may be cases where a policy can be valid, even though the insured bought the policy intending to assign it to someone (perhaps a charity, or the insured's domestic partner) without an insurable interest in the insured's life. Thus, I would not answer with an unqualified yes the Second Circuit's question whether an insured must have intended to "provide insurance protection for a person with an insurable interest." But I think the answer should be yes when the question is limited to a case, like this one, in which the parties attempted the kind of wagering transaction forbidden by the common law.
The majority's negative answer to the Second Circuit's question, though I think it is wrong, may be of limited importance. Any harm done may have already been repaired by the 2009 enactment of a statutory prohibition on stranger-originated life insurance (see majority op at 7 n 5). The new statute may create its own problems; insurable interest rules, as our opinions in this case surely demonstrate, are tricky to handle. But I view the new statute as an attempt to implement what I think has always been the public policy of New York to condemn wagers on the early death of an insured.
* * * * * * * * * * * * * * * * *
Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.27 of the Rules of Practice of the New York State Court of Appeals, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the negative. Opinion by Judge Ciparick. Chief Judge Lippman and Judges Graffeo, Read and Jones concur. Judge Smith dissents in an opinion in which Judge Pigott concurs.
Decided November 17, 2010
Footnotes
Footnote 1: All facts here are drawn from allegations in the parties' complaints, and are discussed in greater detail in the District Court opinion (see Kramer v Lockwood Pension Servs., Inc., et al., 653 F Supp 2d 354 [SDNY 2009]).

Footnote 2: Lincoln alleges that, in January 2006, Hudson was acquired by and merged with TD Bank, N.A.

Footnote 3: Other claims that survived the District Court order include Life Products and Berck's counterclaims against Alice, in the alternative, for misrepresentation/breach of warranty; Life Products' third-party claims against Liza for breach of express warranty and breach of contract; and Life Products and Berck's cross-claims against Lincoln for breach of contract. Notably, District Court determined that the insurers could not attempt to void the policies, as they had been issued over two years earlier and so are incontestible (see Insurance Law § 3203 [a] [3]; New England Mut. Life Ins. Co. v. Caruso, 73 NY2d 74 [1989]). As a result, it dismissed the insurers' counterclaims and cross-claims for, among other things, fraud, fraudulent concealment, aiding and/or abetting fraud, and for a declaratory judgment.

Footnote 4: The Second Circuit denied Phoenix and Lincoln's petitions seeking to appeal District Court's order "because an immediate appeal concerning the issues presented therein is unwarranted." Nonetheless, the insurers urge us to expand the scope of the certified question and consider whether District Court properly dismissed their claims. We have considered Phoenix and Lincoln's arguments relating to the incontestability issue, but decline their request to expand the scope of the certified question. Thus, we are denying Alice and Lifemark's motions in this Court to strike the portions of the insurer's briefs addressing whether the incontestability rule should apply here ( __ NY3d __ [decided today]).

Footnote 5: In 2009, the Legislature added several new provisions to the Insurance Law regulating permissible "life settlement contracts," i.e. agreements by which compensation is paid for "the assignment, transfer, sale, release, devise or bequest of any portion of: (A) the death benefit; (B) the ownership of the policy; or (C) any beneficial interest in the policy, or in a trust . . . that owns the policy" (see Insurance Law § 7802 [k]). In addition to regulating the life settlement industry (see Insurance Law art 78), this new law prohibits "stranger-originated life insurance," defined as "any act, practice or arrangement, at or prior to policy issuance, to initiate or facilitate the issuance of a policy for the intended benefit of a person who, at the time of policy origination, has no insurable interest in the life of the insured under the laws of this state" (Insurance Law § 7815). It also prohibits anyone from entering a valid life settlement contract for two years following the issuance of a policy, with some exceptions (see Insurance Law § 7813 [j] [1]). Because these provisions did not go into effect until May 18, 2010, they do not govern this appeal.

Footnote 6: The 1939 statute read: "Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation, but no person shall procure or cause to be procured, directly or by assignment or otherwise any contract of insurance upon the person of another unless the benefits under such contract are payable to the person insured or . . . to a person having, at the time such contract is made, an insurable interest in the person insured" (L 1939, ch 882, § 146).

233 East 17th Street, LLC v. L.G.B. Devel. Inc. and Mt. Hawley Ins. Co.

Barry, McTiernan & Moore, New York, N.Y. (Laurel A.
Wedinger of counsel), for appellant.
Goldberg Segalla LLP, Mineola, N.Y. (Joanna M. Roberto of
counsel), for respondent.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the plaintiff is an additional insured under an insurance policy issued by the defendant Mt. Hawley Insurance Co. and that the defendant Mt. Hawley Insurance Co. is obligated to defend and indemnify the plaintiff in an underlying action entitled Rogowski v 233 East 17th Street, LLC, commenced in the Supreme Court, Queens County, under Index No. 16676/06, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County (Markey, J.), dated June 29, 2009, as denied its renewed motion for summary judgment declaring, inter alia, that the defendant Mt. Hawley Insurance Co. is obligated to defend and indemnify it in the underlying action, and granted the renewed cross motion of the defendant Mt. Hawley Insurance Co. for summary judgment declaring that it is not so obligated.
ORDERED that the order is modified, on the law, by deleting the provision thereof granting the renewed cross motion of the defendant Mt. Hawley Insurance Co. for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff in the underlying action, and substituting therefor a provision denying the renewed cross motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.
In this action, the plaintiff seeks indemnification as an additional insured under a policy issued by the defendant Mt. Hawley Insurance Co. (hereinafter Mt. Hawley) to the plaintiff's construction manager as the primary insured. The plaintiff was obligated to give timely notice of its claim to Mt. Hawley pursuant to the terms of the insurance policy (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440-441). The policy at issue here provides that any insured "must see to it that [Mt. Hawley] receive[s] written notice of the claim or suit' as soon as practicable." In accordance with the law in effect at the time the policy was issued, "the fact that an insurer may have received notice of the claim from the primary insured, or from another source, does not excuse an additional insured's failure to provide notice" (City of New York v St. Paul Fire & Mar. Ins. Co., 21 AD3d 978, 981; cf. Insurance Law § 3420[a][3]).
In support of its renewed motion for summary judgment, the plaintiff submitted evidence that, on June 5, 2006, it learned of the occurrence giving rise to its notice of claim, and that on October 3, 2006, its own insurance carrier wrote to Mt. Hawley on the plaintiff's behalf, requesting that Mt. Hawley defend and indemnify the plaintiff in the underlying action. After receiving no response, the plaintiff's insurer sent another such letter dated December 4, 2006. In opposition to the motion and in support of Mt. Hawley's renewed cross motion for summary judgment, Mt. Hawley submitted evidence that it never received the first letter, but had received and responded to the second letter on December 19, 2006, disclaiming coverage on the ground that the primary insured had breached a condition precedent under the policy which voided coverage for the claim, or alternatively, on the ground that the plaintiff failed to give timely notice of the claim.
Contrary to the reasoning of the Supreme Court, Mt. Hawley's first stated ground, that the primary insured had breached a condition precedent under the policy which voided coverage, was not sufficient for disclaiming coverage as to the plaintiff. Each individual additional insured must be treated as if it had a separate policy of its own with the insurer (see Greaves v Public Serv. Mut. Ins. Co., 5 NY2d 120, 124-125; BMW Fin. Servs. v Hassan, 273 AD2d 428, 429), and here there is no evidence that the plaintiff breached the particular condition precedent upon which Mt. Hawley relies.
With regard to the second stated ground for Mt. Hawley's disclaimer, that the plaintiff failed to give timely notice of the claim, the parties' submissions raise a triable issue of fact regarding the date when Mt. Hawley received the plaintiff's notice of claim. Even if Mt. Hawley received the first letter in October 2006, however, the plaintiff failed in its obligation to give timely notice. The plaintiff's delay of nearly four months after becoming aware of the claim against it, in the absence of an excuse or mitigating factors, is unreasonable as a matter of law (see Evangelos Car Wash, Inc. v Utica First Ins. Co., 45 AD3d 727, 727; Steinberg v Hermitage Ins. Co., 26 AD3d 426, 427; Figueroa v Utica Natl. Ins. Group, 16 AD3d 616, 617; cf. Insurance Law § 3420[a][5]).
Nevertheless, to effectively disclaim coverage, Mt. Hawley was required to give written notice of disclaimer "as soon as is reasonably possible" (Insurance Law § 3420[d][2]; see Handelsman v Sea Ins. Co., 85 NY2d 96, 99; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029). Contrary to Mt. Hawley's contention, it was required to give timely notice of disclaimer pursuant to Insurance Law § 3420(d), even though the letter requesting a defense and indemnity was sent by the plaintiff's insurance carrier on behalf of the plaintiff (see J.T. Magen v Hartford Fire Ins. Co., 64 AD3d 266, 269; Bovis Land Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD3d 84). Moreover, where, as here, the insured fails to provide timely notice of the underlying claim, the late notice of claim does not excuse the insurer's unreasonable delay in disclaiming coverage (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 67; New York City Hous. Auth. v Underwriters at Lloyd's, London, 61 AD3d 726, 727; Schulman v Indian Harbor Ins. Co., 40 AD3d 957, 958). "[T]he issue of whether a disclaimer was unreasonably delayed is generally a question of fact, requiring an assessment of all relevant circumstances" (Felice v Chubb & Son, Inc., 67 AD3d 861, 862; see Continental Cas. Co. v Stradford, 11 NY3d 443, 449). However, "an insurer's explanation [for the delay in disclaiming] is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of delay" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d at 69).
Here, a triable issue of fact exists regarding the timeliness of Mt. Hawley's disclaimer given the factual dispute concerning the date upon which Mt. Hawley received the plaintiff's notice of claim. Upon receipt of the notice, whether in October or December 2006, the grounds for disclaiming were apparent because the notice was untimely. The only excuse Mt. Hawley tendered for disclaiming coverage on December 19, 2006, was its claim that it did not receive the October notice, which remains a triable issue of fact. If it is ultimately determined that Mt. Hawley received the notice dated October 3, 2006, its unexplained delay in disclaiming coverage on December 19, 2006, would be untimely as a matter of law (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d at 70; Hartford Ins. Co. v County of Nassau, 46 NY2d at 1029; Matter of New York Cent. Mut. Fire Ins. Co. v Steiert, 68 AD3d 1120, 1121-1122). Accordingly, triable issues of fact preclude granting summary judgment in favor of either party, and the Supreme Court erred in granting Mt. Hawley's renewed cross motion for summary judgment declaring that it was not obligated to defend and indemnify the plaintiff in the underlying action.

Allen v. Allstate Insurance Company

Kujawski & Dellicarpini, Deer Park, N.Y. (Mark C. Kujawski of
counsel), for appellants.
Robert P. Macchia & Associates, Mineola, N.Y. (Ioannis P.
Gloumis of counsel), for respondent.

DECISION & ORDER
In an action to recover supplementary underinsured motorist benefits under a policy of automobile liability insurance, the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Spinner, J.), dated March 26, 2010, which denied their motion for summary judgment on the issue of liability.
ORDERED that the order is affirmed, with costs.
The plaintiffs correctly contend that the defendant was obligated to give notice of its disclaimer of coverage based on the proffered policy exclusion (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185), and that said notice was required to be given "as soon as [was] reasonably possible" under the circumstances (Insurance Law § 3420[d][2]; see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; Tex Dev. Co., LLC v Greenwich Ins. Co., 51 AD3d 775, 778). However, the plaintiffs failed to establish their prima facie entitlement to judgment as a matter of law, since they did not come forward with any evidence demonstrating whether and, if so, when, their claim letter was sent to the defendant. In this regard, the affirmation of counsel submitted in support of the motion lacked probative value because it was not based on personal knowledge (see CPLR 3212[b]; Shickler v Cary, 59 AD3d 700; Noel v L & M Holding Corp., 35 AD3d 681). Absent evidence of such notification, the plaintiffs did not show when the defendant first learned of the claim, and thus failed to establish, as a matter of law, that the defendant's notice of disclaimer was untimely. Accordingly, the plaintiffs failed to sustain their initial burden on the motion, requiring the denial of the motion without regard to the sufficiency of the defendant's opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Sarafolean v Accomplice N.Y., 74 AD3d 1310, 1311; Franco v Kaled Mgt. Corp., 74 AD3d 1142, 1143).
The plaintiffs' remaining contentions regarding the notice of disclaimer are without merit.

Vitale v. Midrox Insurance Company

Appeal from an order of the Supreme Court, Niagara County (Richard C. Kloch, Sr., A.J.), entered December 3, 2009 in a breach of contract action. The order, insofar as appealed from, granted defendant an offset of $25,000.

HOGAN WILLIG, AMHERST (ERIC B. GROSSMAN OF COUNSEL), FOR PLAINTIFFS-APPELLANTS.
WALSH, ROBERTS & GRACE, BUFFALO (THOMAS E. ROBERTS OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action pursuant to Insurance Law § 3420 (a) (2) seeking, inter alia, to recover payment on a default judgment that they obtained against defendant's insured, Salvatore Mattina, in the underlying personal injury action. Plaintiffs contend that Supreme Court erred in denying in part their motion for partial summary judgment and in granting in part defendant's cross motion for summary judgment by reducing its liability by $25,000, the amount of the settlement paid by Latina-Niagara Importing Co., Inc. (Latina), a codefendant in the underlying action. We reject that contention. Although we agree with plaintiffs that defendant was not entitled to such an offset based on Mattina's "equitable share of the damages" under CPLR article 14 inasmuch as Mattina defaulted in the underlying action (General Obligations Law § 15-108 [a]; see generally Whalen v Kawasaki Motors Corp., U.S.A., 92 NY2d 288, 292), the court properly "allowed an offset pursuant to section 15-108 (a) in the amount of plaintiff[s'] settlement with [Latina]" (Garcea v Battista, 53 AD3d 1068, 1070).

Charles v. Howard

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Mead, Hecht, Conklin & Gallagher, LLP [Elizabeth M. Hecht],
of counsel), for appellant.
Talisman & DeLorenz, P.C., Brooklyn, N.Y. (Richard Paul
Stone of counsel), for respondent.
Wilson Elser Moskowitz Edelman & Dicker, LLP, New York,
N.Y. (Richard Lerner and Patrick
Lawless of counsel), for defendant
Petrocelli Electric Co., Inc.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant Shun Choi Liu appeals, as limited by his brief, from so much of an order of the Supreme Court, Kings County (Velasquez, J.), dated March 2, 2010, as denied his motion for summary judgment dismissing the complaint insofar as asserted against him 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 insofar as appealed from, with costs to the respondent payable by the appellant.
The Supreme Court properly concluded that the appellant 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 for summary judgment, the appellant relied on, inter alia, the affirmed medical report of Dr. Edward Weiland, a neurologist who examined the plaintiff on May 20, 2009. During that examination, Dr. Weiland noted significant limitations in the plaintiff's right shoulder range of motion (see Ortiz v S & A Taxi Corp., 68 AD3d 734; Delayhaye v Caledonia Limo & Car Serv., Inc., 61 AD3d 814; Guzman v Joseph, 50 AD3d 741).
Since the appellant failed to establish his prima facie entitlement to judgment as a matter of law, it is unnecessary to reach the question of whether the plaintiff's papers were sufficient to raise a triable issue of fact (see Ortiz v S & A Taxi Corp., 68 AD3d at 734; Delayhaye v Caledonia Limo & Car Serv., Inc., 61 AD3d at 814; Guzman v Joseph, 50 AD3d at 741; Coscia v 938 Trading Corp., 283 AD2d 538).

Palmeri v. Mizhquiri Transportation, Inc.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Lazarowitz & Manganillo, LLP, Brooklyn, N.Y. (Thomas J.
Solomon 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 (Saitta, J.), dated April 29, 2010, 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.
While we affirm the order appealed from, we do so on a ground other than that relied upon by the Supreme Court. 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). The defendants' motion papers failed to adequately address the plaintiff's claim, clearly set forth in his bill of particulars, that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Udochi v H & S Car Rental Inc., 76 AD3d 1011; Strilcic v Paroly, 75 AD3d 542; Encarnacion v Smith, 70 AD3d 628; Alvarez v Dematas, 65 AD3d 598; Smith v Quicci, 62 AD3d 858; Alexandre v Dweck, 44 AD3d 597; Sayers v Hot, 23 AD3d 453, 454). Accordingly, we need not consider the sufficiency of the plaintiff's papers submitted in opposition (see Winegrad v New York Univ. Med. Ctr.. 64 NY2d 851, 853).

Reynolds v. Wai Sang Leung

Cheven, Keely & Hatzis, New York, N.Y. (William B. Stock of
counsel), for appellant.
Ornstein & Ornstein, P.C., Brooklyn, N.Y. (Anthony T. Santora
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 (Schack, J.), dated April 9, 2010, 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 failed to 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). The defendant's motion papers failed to adequately address the plaintiff's claim, clearly set forth in his bill of particulars, that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (hereinafter the 90-180 category of serious injury) (see Udochi v H & S Car Rental Inc., 76 AD3d 1011; Strilcic v Paroly, 75 AD3d 542; Bright v Moussa, 72 AD3d 859; Encarnacion v Smith, 70 AD3d 628; Negassi v Royle, 65 AD3d 1311; Alvarez v Dematas, 65 AD3d 598; Smith v Quicci, 62 AD3d 858; Alexandre v Dweck, 44 AD3d 597; Sayers v Hot, 23 AD3d 453).
The subject accident occurred on October 31, 2006. In his supplemental bill of particulars, the plaintiff alleged that, after the subject accident, he was unable to resume working for more than 110 weeks. In support of his motion, the defendant submitted affirmed medical reports of a neurologist who examined the plaintiff on April 29, 2009, and of an orthopedic surgeon who examined the plaintiff on April 28, 2009. Although both physicians addressed the issue of whether the plaintiff sustained a significant limitation of use of a body function or system or a permanent consequential limitation of use of a body organ or member, they failed to relate their findings to the 90-180 category of serious injury for the period of time immediately following the subject accident.
Since the defendant failed to meet his prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Strilcic v Paroly, 75 AD3d at 543; Coscia v 938 Trading Corp., 283 AD2d 538).

Sainnoval v. Sallick

Baker, McEvoy, Morrissey & Moskovits, P.C. (Sullivan Law Firm,
New York, N.Y. [Timothy M. Sullivan], of counsel), for appellant.
Dinkes & Schwitzer, New York, N.Y. (Robert S. Summer 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 May 3, 2010, 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.
Although we affirm the order appealed from, we do so on a ground not relied upon by the Supreme Court. Contrary to the defendant's contentions on appeal, he failed to 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 the defendant's motion, he relied upon, inter alia, the affirmed medical reports of Dr. Edward Weiland and Dr. Joseph Elfenbein. Both reports were fatal to the defendant meeting his prima facie burden.
Dr. Weiland examined the plaintiff on February 18, 2009, and examined, inter alia, the plaintiff's right knee range of motion. In doing so, he noted the existence of limitations in the plaintiff's right knee flexion and extension the extent of which is unknown, since he failed to compare those findings to what was normal (see Leopold v New York City Tr. Auth., 72 AD3d 906; Gaccione v Krebs, 53 AD3d 524; Iles v Jonat, 35 AD3d 537; McCrary v Street, 34 AD3d 768; Whittaker v Webster Trucking Corp., 33 AD3d 613; Yashayev v Rodriguez, 28 AD3d 651). Absent such comparative quantification, we cannot conclude, as a matter of law, that the decreased range of motion is "minor, mild or slight" so as to be considered insignificant within the meaning of the no-fault statute (Licari v Elliott, 57 NY2d 230, 236; Gaddy v Eyler, 79 NY2d at 957).
As to Dr. Elfenbein, he examined the plaintiff on February 18, 2008. In his report, Dr. Elfenbein noted the existence of a significant limitation in the plaintiff's right knee range of motion (see Sirma v Beach, 59 AD3d 611; Newberger v Hirsch, 49 AD3d 700; Tchjevskaia v Chase, 15 AD3d 389).
Since the defendant failed to meet his prima facie burden, it is unnecessary to address the question of whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).

Torchon v. Oyezole

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Ferro, Kuba, Mangano, Sklyar, P.C., New York, N.Y. (Kenneth E.
Mangano and Michael N. Manolakis of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Knipel, J.), dated April 16, 2010, as 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 reversed insofar as appealed from, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is granted.
The defendants established, prima facie, through the affirmed reports of their expert orthopedist and radiologist, as well as the plaintiff's deposition testimony, 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 plaintiff's submissions in opposition to the defendants' motion were insufficient to raise a triable issue of fact. The plaintiff failed to proffer competent objective medical evidence that was contemporaneous with the subject accident which revealed the existence of a significant limitation in his right knee (see Delarosa v McLedo, 74 AD3d 1012; Ferraro v Ridge Car Serv., 49 AD3d 498; Vickers v Francis, 63 AD3d 1150; Sorto v Morales, 55 AD3d 718). Accordingly, the defendants were entitled to summary judgment dismissing the complaint.

West v. Martinez

Joseph A. Faraldo, Kew Gardens, N.Y., for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for
respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Flaherty, J.), entered February 16, 2010, as granted the defendants' motion for summary judgment dismissing the complaint on the ground that the infant Paulette Darling did not sustain a serious injury within the meaning of Insurance Law 5102(d).
ORDERED that the order is affirmed insofar as appealed from, with costs.
The Supreme Court correctly determined that the defendants met their prima facie burden on their motion for summary judgment by showing that the infant Paulette Darling (hereinafter the infant) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether the infant sustained a serious injury within the meaning of the no-fault statute as a result of the subject accident. The plaintiff failed to adequately explain the cessation of the infant's medical treatment five months after the accident (see Pommells v Perez, 4 NY3d 566, 574; Vasquez v John Doe #1, 73 AD3d 1033; Haber v Ullah, 69 AD3d 796).
Furthermore, the plaintiff failed to submit competent medical evidence that the injuries allegedly sustained by the infant as a result of the subject accident rendered her unable to perform substantially all of her daily activities for not less than 90 days of the first 180 days following the accident (see Sainte-Aime v Ho, 274 AD2d 569).

In re Progressive Preferred Insurance Company v. Williams

Kaplan, Hanson, McCarthy, Adams, Finder & Fishbein,
Yonkers (Michael A. Zarkower of counsel), for appellant.
Law Offices of Curtis, Vasile P.C., Merrick (Roy W. Vasile of
counsel), for Esurance Insurance Company, respondent.
Order, Supreme Court, Bronx County (Lucy Billings, J.), entered on or about December 2, 2009, which, to the extent appealed from as limited by the briefs, denied without a hearing the petition to permanently stay an uninsured motorist arbitration, unanimously affirmed, without costs.
Petitioner's own submissions showed that the policy previously issued to the driver of the offending vehicle by Esurance had in fact been terminated before the accident, and that a hearing was not required to explore the possibility that such coverage was not properly canceled (see Matter of Allstate Ins. Co. v Holloway, 272 AD2d 539 [2000]). The notice of termination included "a statement that proof of financial security is required to be maintained continuously throughout the registration period" (Vehicle and Traffic Law § 313[1][a]). Petitioner was not entitled to a hearing based on its unsupported claim that the legend in the notice was printed in less than 12-point type, in violation of the statute (see Matter of Eagle Ins. Co. v Peguero, 299 AD2d 294 [2002]).

Downey v. 10 Realty Co., LLC

Curan, Ahlers, Fiden & Norris, LLP, White Plains (Charles B.
Norris of counsel), for appellant.
Thomas D. Hughes, New York (Richard Rubinstein of counsel),
for respondent.
Order, Supreme Court, New York County (Carol Robinson Edmead, J.), entered August 20, 2009, which granted the motion by third-party defendant Greater New York Mutual (GNYM) to dismiss the third-party complaint, unanimously affirmed, without costs.
GNYM had no duty to defend or indemnify its insured in the negligence action. According to the complaint, bill of particulars and deposition testimony in the underlying tort action, plaintiff sued for injuries that allegedly occurred in October — or, at the very earliest, August — of 2002, which was outside the insurance policy period that ended on July 1 of that year (see Allstate Ins. Co. v Zuk, 78 NY2d 41, 45 [1991]; Fire & Cas. Ins. Co. of Conn. v Solomon, 50 AD3d 340 [2008]). Plaintiff's alleged exposure to mold during the policy period did not trigger any duty to provide coverage thereafter, as New York follows the "injury-in-fact" test which "rests on when the injury, sickness, disease or disability actually began and . . . requires the insured to demonstrate actual damage or injury during the policy period" (Continental Cas. Co. v Employers Ins. Co. of Wausau, 60 AD3d 128, 148 [2008], lv denied 13 NY3d 710 [2009]); cf. American Home Prods. Corp. v Liberty Mut. Ins. Co., 748 F2d 760, 765 [2d Cir 1984], modfg 565 F Supp 1485, 1497 [SD NY 1983]).

Tobias v Liberty Mutual Fire Insurance Company

Jaffe & Asher, LLP, New York, N.Y. (Marshall T. Potashner of
counsel), for appellant.
Lloyd Somer, New York, N.Y., for respondent.


DECISION & ORDER
In an action, inter alia, to recover damages for breach of contract, the defendant Liberty Mutual Fire Insurance Company appeals, as limited by its brief, from so much an order of the Supreme Court, Kings County (Schmidt, J.), dated October 21, 2009, as denied its motion for summary judgment dismissing the complaint insofar as asserted against it.
ORDERED that the order is affirmed insofar as appealed from, with costs.
"The insurer has the burden of proving the validity of its timely cancellation of an insurance policy" (Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 229). In moving for summary judgment, the defendant Liberty Mutual Fire Insurance Company (hereinafter Liberty Mutual) demonstrated its prima facie entitlement to judgment as a matter of law by submitting evidence establishing that the plaintiff received a cancellation notice from Liberty Mutual (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829-830; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680; Matter of State-Wide Ins. Co. v Simmons, 201 AD2d 655, 656). However, in opposition, the plaintiff submitted evidence raising a triable issue of fact as to the validity of such cancellation—specifically, whether Liberty Mutual properly cancelled her policy for failure to pay the insurance premium (see Zurruz Realty Corp. v Calvert Ins. Co., 228 AD2d 267; Brody Truck Rental v Country Wide Ins. Co., 226 AD2d 205; see also Alvarez v Prospect Hosp., 68 NY2d 320, 324).
Further, contrary to Liberty Mutual's contention, the doctrine of judicial estoppel is inapplicable. Under the doctrine of judicial estoppel, or estoppel against inconsistent positions, a party is precluded from inequitably adopting a position directly contrary to or inconsistent with an earlier assumed position in the same action or proceeding (see Matter of Hartsdale Fire Dist. v Eastland Constr., Inc., 65 AD3d 1345, 1348). The plaintiff's contention that several parties may have contributed to the allegedly improper cancellation of her insurance policy did not constitute the adoption of inconsistent positions (see Bergman v Indemnity Ins. Co. of N. Am., 275 AD2d 675, 676; cf. Secured Equities Invs. v McFarland, 300 AD2d 1137).
Accordingly, the Supreme Court properly denied Liberty Mutual's motion for summary judgment dismissing the complaint insofar as asserted against it.
RIVERA, J.P., CHAMBERS, AUSTIN and SGROI, JJ., concur.

 Nostrom v A.W. Chesterton Company, et al.

Alani Golanski, for appellant.
William G. Ballaine, for respondent Sequoia Ventures,
Inc.
Guy Miller Struve, for respondent Orange &
Rockland Utilities, Inc.
Joseph B. Koczko, for respondent Central Hudson Gas
& Electric Corp.




GRAFFEO, J.:
The issue before us is whether vicarious liability under Labor Law § 241 (6) may be predicated solely on a violation of regulations contained in part 12 of the Industrial Code. We conclude that it may not.
During the 1970s and 1980s, decedent Donald Nostrom worked as a boilermaker for subcontractors on construction projects at various energy facilities, including those owned by defendants Orange & Rockland Utilities, Inc. (O & R) and Central Hudson Gas & Electric Corp. According to Nostrom, defendant Sequoia Ventures, Inc., f/k/a Bechtel Corporation, served as the general contractor for two of the projects. While working at these power plants, Nostrom was allegedly exposed to asbestos through airborne dust and contact with asbestos-containing materials. He subsequently contracted mesothelioma.
Nostrom and his wife, suing derivatively, commenced this action against more than 60 defendants, including O & R, Central Hudson and Sequoia [FN1]. As relevant here, Nostrom asserted a Labor Law § 200 claim against Central Hudson and a violation of Labor Law § 241 (6) against each of the three defendants involved in this appeal. The section 241 (6) claim was premised on violations of Industrial Code (12 NYCRR) part 12 regulations, which require the prevention of air contamination (12 NYCRR 12-1.4 [b] [3], [4]) and the removal of dangerous air contaminants (12 NYCRR 12-1.6 [a]). After discovery, defendants separately moved for summary judgment dismissing the complaint.[FN2]
Supreme Court granted the motions and dismissed the complaint insofar as asserted against defendants. Nostrom appealed the dismissal of the Labor Law § 241 (6) cause of action and the Appellate Division affirmed, reasoning that a violation of regulations from part 12 of the Industrial Code cannot sustain a section 241 (6) claim (59 AD3d 159 [1st Dept 2009]). Alternatively, the Appellate Division concluded that the two regulations invoked by Nostrom were not "sufficiently specific to support a section 241 (6) claim for asbestos-related injury" (id. at 160). We granted Nostrom leave to appeal (13 NY3d 880 [2009]).[FN3]
Because defendants did not direct or control decedent's work, they can be liable only if Labor Law § 241 (6) applies, imposing vicarious liability on owners and contractors for the conduct of others. Section 241 (6) provides:
"All areas in which construction, excavation or demolition work is being performed shall be so constructed, shored, equipped, guarded, arranged, operated and conducted as to provide reasonable and adequate protection and safety to the persons employed therein or lawfully frequenting such places. The commissioner may make rules to carry into effect the provisions of this subdivision, and the owners and contractors and their agents for such work, except owners of one and two-family dwellings who contract for but do not direct or control the work, shall comply therewith."
The second sentence of this provision, requiring owners and contractors to comply with the Commissioner of Labor's rules, creates a nondelegable duty "where the regulation in question contains a specific, positive command" (Morris v Pavarini Constr., 9 NY3d 47, 50 [2007] [internal quotation marks and citation omitted]). At issue is whether the section 241 (6) claim in this case may be based on the violation of Industrial Code part 12 regulations pertaining to the control of air contaminants in the workplace.
Nostrom argues that sufficiently specific regulations are set forth in part 12 of the Industrial Code and, like those found in part 23, these may be invoked to impose vicarious liability under Labor Law § 241 (6). Consequently, she asserts that O & R and Central Hudson, as owners, and Sequoia, as a general contractor, may be held liable for the alleged failures of various subcontractors to comply with sections 12-1.4 (b) and 12-1.6 (a) of the Code. Defendants respond that the Appellate Division correctly held that the relevant language and history underlying these regulations demonstrate that part 12 cannot support vicarious liability except to the extent that part 12 regulations are specifically incorporated into part 23.
In matters of statutory and regulatory interpretation, "legislative intent is the great and controlling principle, and the proper judicial function is to discern and apply the will of the enactors" (Matter of ATM One v Landaverde, 2 NY3d 472, 477 [2004] [internal quotation marks and citation omitted]). As we have noted, the text of a provision is the clearest indicator of the enactors' intent, "and courts should construe unambiguous language to give effect to its plain meaning" (Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653, 660 [2006]). Additionally, inquiry should be made into "the spirit and purpose of the legislation, which requires examination of the statutory context of the provision as well as its legislative history" (Landaverde, 2 NY3d at 477 [internal quotation marks and citation omitted]).
Part 23 of the Industrial Code governs the protection of workers in construction, demolition and excavation operations. Its "Application" provision expressly states that the rules [*4]in part 23 apply to "owners, contractors and their agents obligated by the Labor Law to provide such persons with safe working conditions and safe places to work" (12 NYCRR 23-1.3). Hence, it is clear that part 23 was promulgated pursuant to the authority granted by Labor Law § 241 (6) and that owners and contractors may be vicariously liable based on violations of part 23 regulations [FN4]. In contrast, the "Application" section of part 12 does not specify that its rules apply to owners, contractors and their agents. The absence of such wording suggests that part 12 was not created to give effect to the provisions of section 241 (6) and indicates an intent not to impose vicarious liability in connection with part 12 regulations.
Furthermore, the language of 12 NYCRR 23-1.7 (g) confirms that part 12 regulations, by themselves, were not intended to serve as a predicate for liability under Labor Law § 241 (6). Section 23-1.7 (g) makes any "unventilated confined area" where dangerous air contaminants may be present subject to the provisions of part 12. By incorporating the requirements of part 12 into this narrow subset of work sites governed by part 23 - unventilated confined areas - it is evident that the intent was to impose a nondelegable duty on owners and contractors in these limited circumstances. Consequently, a plaintiff may bring a section 241 (6) claim based on a violation of a part 12 rule only where the injury occurred in an unventilated confined area, thereby triggering section 23-1.7 (g)'s "pass-through" provision (see Rivera v Ambassador Fuel & Oil Burner Corp., 45 AD3d 275 [1st Dept 2007])[FN5]. Accepting Nostrom's position that vicarious liability may be grounded on a part 12 violation regardless of the location of the exposure would render section 23-1.7 (g) superfluous. And a construction that "renders one part meaningless should be avoided" (Rocovich v Consolidated Edison Co., 78 NY2d 509, 515 [1991]). 
Our conclusion that part 12 does not impose liability on owners and contractors under Labor Law § 241 (6), except insofar as it is expressly incorporated into part 23, is consistent with the regulatory history underlying the two parts. Industrial Code Bulletin No. 23, part 23's predecessor, was adopted by the State Industrial Commission in 1920. In 1941, the Board of Standards and Appeals replaced the original regulations with a new part 23, specifically referencing the rule-making authority vested in the Board by Labor Law § 241. The Board again invoked section 241 when it revised part 23 in 1963. Although the Board did not refer to section 241 when it completed its most recent substantive changes to part 23 in 1972, it is clear that part 23 continues to implement the authority granted by the Legislature under section 241 (6) because it explicitly applies to owners, contractors and their agents (see 12 NYCRR 23-1.3). On the other hand, although part 12's predecessor was redesignated as part 12 in 1954 and was thereafter substantially revised in 1956, 1961 and 1971, the Board did not cite section 241 as a basis for these enactments.
In short, the language and history of the relevant provisions establish that part 12 regulations do not provide a basis for liability under Labor Law § 241 (6) except to the extent that particular regulations are specifically incorporated into part 23. As a result, the Appellate Division correctly affirmed the dismissal of Nostrom's section 241 (6) claim, which was predicated solely on alleged violations of 12 NYCRR 12-1.4 (b) and 12 NYCRR 12-1.6 (a). We therefore need not reach the Appellate Division's alternative holding that the regulations in question are not specific enough to permit recovery under section 241 (6) for an asbestos-related injury.
Accordingly, the order of the Appellate Division, insofar as appealed from, should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order, insofar as appealed from, affirmed, with costs. Opinion by Judge Graffeo. Judges Ciparick, Smith, Pigott and Jones concur. Chief Judge Lippman and Judge Read took no part.
Decided November 18, 2010
Footnotes


Footnote 1: The other defendants include asbestos manufacturers and distributors. The claims against them are not before us.

Footnote 2: Donald Nostrom died during the pendency of this litigation. His wife, Judith Nostrom, pursues this action as the personal representative of his estate.

Footnote 3: We dismissed the motion for leave to appeal insofar as it sought leave to appeal against Consolidated Edison Company of New York, Inc. upon the basis that as to that party, the order did not finally determine the action within the meaning of the Constitution.

Footnote 4: Every Labor Law § 241 (6) case resolved by this Court in recent history has involved a part 23 regulation (see e.g. Misicki v Caradonna, 12 NY3d 511 [2009] [12 NYCRR 23-9.2 (a)]; Morris v Pavarini Constr., 9 NY3d 47 [2007] [12 NYCRR 23-2.2 (a)]; Nagel v D & R Realty Corp., 99 NY2d 98 [2002] [12 NYCRR 23-1.7 (d)]; Rizzuto v L.A. Wenger Contr. Co., 91 NY2d 343 [1998] [12 NYCRR 23-1.7 (d)]; Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494 [1993] [12 NYCRR 23-1.25 (d)]; Long v Forest-Fehlhaber, 55 NY2d 154 [1982], rearg denied 56 NY2d 805 [1982] [12 NYCRR 23-1.30]).

Footnote 5: Nostrom does not rely on 12 NYCRR 23-1.7 (g), presumably because decedent was not working in unventilated confined areas when he was exposed to asbestos.

Giordano v Market America, Inc.

Brian J. Isaac, for appellant.
Andrew J. Zajac, for respondent Market America, Inc.
Edward J. Stolarski, Jr., for respondent The Chemins
Company.

SMITH, J.:
The United States Court of Appeals for the Second Circuit has asked us three questions about the interpretation of CPLR 214-c (4), which extends the statute of limitations for certain tort victims who do not, for some time, know the cause of their injuries. We answer the questions by holding that:
(1) the provisions of CPLR 214-c (4) are limited to actions for injuries caused by the latent effects of exposure to a substance;
(2) an injury that occurs within hours of exposure to a substance can be considered "latent" for these purposes; and (3) "technical, scientific or medical knowledge and information sufficient to ascertain the cause of [the plaintiff's] injury" is "discovered, identified or determined" within the meaning of the statute when the existence of the causal relationship is generally accepted within the relevant technical, scientific or medical community.
I
Plaintiff suffered a series of strokes in March of 1999. The strokes were caused, we assume for present purposes, by ephedra, a substance contained in a dietary supplement that plaintiff had been using for about two years. Ephedra causes in some users a short-term elevation in blood pressure, heart rate or both, and a temporary constriction of certain blood vessels. This effect, which increases the risk of stroke, typically occurs within a few hours after ephedra is consumed.
Neither plaintiff nor the doctors who treated him for his strokes knew at the time that ephedra was to blame. When they could, or reasonably should, have known of the causal connection is disputed. The United States District Court for the Southern District of New York has found that studies published as early as 1996 suggested a link between ephedra and stroke, but that as late as 2005 scientific evidence did not establish the link "with any degree of medical or scientific 'certainty'" (In re Ephedra Prods. Liab. Litig., 598 F Supp 2d 535, 536 [SD NY 2009]).
Plaintiff claims that he became aware of a possible link between ephedra and stroke in February 2003, when news reports suggested that the sudden death of a major league baseball player might have been caused by ephedra. On July 28, 2003 - about four years, four months after his strokes - plaintiff sued the distributor of the product he had taken in New York State Supreme Court. The case was removed to federal court, the manufacturer of the product was added as a defendant, and the case was consolidated with other ephedra-related litigation in the Southern District of New York.
Defendants moved to dismiss the case as barred by the statute of limitations, relying on CPLR 214 (5), which imposes a three-year limitation period, with certain exceptions, on "an action to recover damages for a personal injury." It is undisputed that the claim is barred by CPLR 214 (5) unless it is saved by the exception in CPLR 214-c (4), which we quote in the next section of this opinion.
Defendants' statute of limitations motion generated a series of opinions in the District Court and the Second Circuit. Initially, the District Court granted the motion to dismiss (In re Ephedra Prods., 2006 WL 944705, 2006 US Dist LEXIS 18691 [SD NY 2006]). Plaintiff appealed to the Second Circuit, which remanded the case for determination of an issue the District Court had not reached (Giordano v Market America, Inc., 289 Fed Appx 467 [2d Cir 2008]). Following the District Court's ruling on that issue (In re Ephedra Prods. Liab. Litig., 598 F Supp 2d 535 [SD NY 2009]), the Second Circuit certified to us the three questions that we now address (Giordano v Market America, Inc., 599 F3d 87 [2d Cir 2010]).
II
Directly in issue here is subdivision four of CPLR 214-c, which refers to subdivisions two and three of the same section. The text of the three relevant subdivisions is:
"2. Notwithstanding the provisions of section 214, the three year period within which an action to recover damages for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances, in any form, upon or within the body or upon or within property must be commenced shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.
"3. For the purposes of sections fifty-e and fifty-i of the general municipal law, section thirty-eight hundred thirteen of the education law and the provisions of any general, special or local law or charter requiring as a condition precedent to commencement of an action or special proceeding that a notice of claim be filed or presented within a specified period of time after the claim or action accrued, a claim or action for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances, in any form, upon or within the body or upon or within property shall be deemed to have accrued on the date of discovery of the injury by the plaintiff or on the date when through the exercise of reasonable diligence the injury should have been discovered, whichever is earlier.
"4. Notwithstanding the provisions of subdivisions two and three of this section, where the discovery of the cause of the injury is alleged to have occurred less than five years after discovery of the injury or when with reasonable diligence such injury should have been discovered, whichever is earlier, an action may be commenced or a claim filed within one year of such discovery of the cause of the injury; provided, however, if any such action is commenced or claim filed after the period in which it would otherwise have been authorized pursuant to subdivision two or three of this section the plaintiff or claimant shall be required to allege and prove that technical, scientific or medical knowledge and information sufficient to ascertain the cause of his injury had not been discovered, identified or determined prior to the expiration of the period within which the action or claim would have been authorized and that he has otherwise satisfied the requirements of subdivisions two and three of this section."
The three questions that the Second Circuit has asked us are:
"1. Are the provisions of N.Y. C.P.L.R. § 214-c (4) providing for an extension of the statute of limitations in certain circumstances limited to actions for injuries caused by the latent effects of exposure to a substance?
"2. Can an injury that occurs within 24 to 48 hours of exposure to a substance be considered 'latent' for these purposes?
"3. What standards should be applied to determine whether a genuine issue of material fact exists for resolution by a trier of fact as to whether 'technical, scientific or medical knowledge and information sufficient to ascertain the cause of [the plaintiff's] injury' was 'discovered, identified or determined' for N.Y. C.P.L.R. § 214-c (4) purposes?"
We answer yes to both of the first two questions; thus, our answers are favorable to defendants on question one but to plaintiff on question two. We answer question three by saying, as we explain more fully below, that the test is one of general acceptance in the relevant technical, scientific or medical community.

Question One: Is the statute limited to injuries caused by latent effects?
CPLR 214-c (2), providing a statute of limitations that runs "from the date of discovery of the injury . . . or from the date when . . . such injury should have been discovered," is expressly restricted to cases of injury "caused by the latent effects of exposure to any substance or combination of substances." CPLR 214-c (3), relating to notice of claim requirements, contains an identical restriction. The Second Circuit's first question is, in essence, whether the same restriction is incorporated into CPLR 214-c (4), governing cases in which "discovery of the cause of the injury" was allegedly delayed. We conclude that it is.
CPLR 214-c (4) mentions "subdivisions two and three of this section" three times. The third mention, we conclude, answers the Second Circuit's question: "The plaintiff or claimant shall be required to allege and prove . . . that he has otherwise satisfied the requirements of subdivisions two and three of this section." Since subdivisions two and three require that the claim or action be one for injury "caused by the latent effects" of exposure, subdivision four, on its face, also imposes a latency requirement.
Even if subdivision four could be read otherwise - if it could be read as creating an independent exception to the general three-year statute of limitations, not one dependent on the provisions of subdivisions two and three - such a reading would be inconsistent with the statute's history and purpose. CPLR 214-c was enacted in 1986 to give relief to plaintiffs in certain toxic tort cases. Its legislative history, which we discussed in Matter of New York County DES Litig. (89 NY2d 506, 513-514 [1997]), shows that it was intended to overrule decisions in which we had held that toxic tort claims accrued upon exposure, even though the illness resulting from that exposure might be long delayed (see e.g., Fleishman v Lilly & Co., 62 NY2d 888 [1984]; Schwartz v Heyden Newport Chem. Corp., 12 NY2d 212 [1963]). The Legislature's concern when it enacted the statute was the problems raised by toxic tort cases in which the latency of a substance's effect could prevent the plaintiff from bringing a timely lawsuit.
Plaintiff stresses that the word "latent" does not appear in CPLR 214-c (4). Indeed, the words "exposure to any substance" do not appear there either. But the whole point of CPLR 214-c was to deal with substance exposure cases. No other kind of case is discussed in the legislative history, and the Governor, when he signed the bill, identified it as the "Toxic Tort Bill" (see Public Papers of Governor Cuomo, "Governor Approves Toxic Tort Bill" [July 30, 1986]). It can hardly be argued, and plaintiff does not argue, that CPLR 214-c (4) extends beyond substance exposure cases - that for example, it would benefit a plaintiff injured by a hit and run driver or an unidentified falling object. It is thus undisputed that the words "exposure to any substance" in subdivisions two and three are incorporated into subdivision four of CPLR 214-c. We see no possible reading of the statute under which those words are incorporated but the word "latent" is not.

Question Two: Can an effect that appears within a matter of hours be considered "latent"?
While we think it clear that CPLR 214-c (4) is limited to injuries from "latent effects," whether effects that are concealed only briefly count as "latent" is a harder question. The Second Circuit's question to us implies that the harmful effects of ephedra show themselves within "24 to 48 hours of exposure." Opinions of the District Court suggest that the time may be even shorter - a matter of a "few hours" (In re Ephedra Prods. Liab. Litig., 393 F Supp 2d 181, 193 [SD NY 2005]; see also In re Ephedra Prods., 2006 WL 944705, *1, 2006 US Dist LEXIS 18691, *3). This discrepancy need not concern us, because we conclude that even effects concealed for a few hours may be "latent" within the meaning of the statute.
The dictionary definition of "latent" is "not now visible, obvious, active, or symptomatic" (Merriam-Webster's Collegiate Dictionary 702 [11th ed 2003]). Using that word to describe a condition that exists only for hours puts no strain on its literal meaning. But in interpreting this statute, it might intuitively seem that so brief a period of latency should be disregarded as insignificant - that, as the District Court put it in its opinion granting defendants' motion to dismiss, to treat the stroke-causing effects of ephedra as latent "would effectively eliminate the statute's limitation to 'latent effects'" (In re Ephedra Prods., 2006 WL 944705, *1, 2006 US Dist LEXIS 18691, *4). In fact, however, even a brief period of latency can be important when the problem is one of determining an injury's cause - the problem with which CPLR 214-c (4) is concerned.
Perhaps the task, often confronted by doctors or scientists, of finding a causal connection between exposure to a toxic substance and an injury is never an easy one. It is certainly less difficult, however, when the effect of the toxic substance can be seen immediately - when, for example, someone breaks out in a rash as soon as his skin touches a suspected toxin. Or, to suggest an example closer to this case, if plaintiff had suffered symptoms of a stroke at once upon swallowing a pill containing ephedra, his chances and those of his doctors of inferring the causal link would have been immeasurably better. Indeed, if that had occurred, it seems highly likely that plaintiff could have discovered the cause of his injury within the normal three-year limitation period. But because his symptoms showed themselves hours later, it may have been very hard to say whether ephedra and the strokes were causally connected.
Thus cases where a toxin's effects are latent for hours are much more likely than those in which there is no latency period to present the problem addressed by CPLR 214-c (4): a difficulty in promptly learning the cause of an injury. It is entirely plausible that several hours' delay in the manifestation of symptoms could lead to a delay of years in detecting an injury's cause. It thus seems reasonable that the authors of CPLR 214-c (4) would have considered even a few hours of latency enough to justify the extension of the statute of limitations authorized by that subdivision.
Defendants, and our dissenting colleagues, argue otherwise, contending that, as we said in New York County DES, the legislative history of CPLR 214-c shows that the Legislature that enacted it was concerned with long-term latency - with plaintiffs who were unaware that they had been injured "until after the limitations period had expired" (89 NY2d at 514; internal quotation omitted). There is no doubt that the problem of injuries that go undiscovered for years was the Legislature's primary concern. But that was not its sole concern, for if it was there was no need to enact subdivision four of CPLR 214-c at all. That subdivision benefits only those plaintiffs and claimants who, having already discovered they were injured, have not discovered "the cause of the injury." A few hours of latency might well cause a plaintiff to be in such a predicament - as plaintiff here says he was.
Defendants, and the dissenters, argue in substance that the benefits of CPLR 214-c (4) should be afforded only to those plaintiffs and claimants who also benefit from CPLR 214-c (2) or CPLR 214-c (3) - i.e., those who cannot discover their injury within the limitations period. But the statute does not say that, and we see no reason to read it in that way. Defendants' and the dissent's reading would produce anomalous results. Those who benefit from subdivisions two and three may bring suits or make claims many years, even decades, after their exposure to a substance. For such plaintiffs and claimants, it is undisputed, the already-long delay can be extended by subdivision four for up to another six years (five years from the discovery of the injury to the discovery of its cause, plus another year to sue or file a claim). But defendants and the dissenters would deny the benefit of subdivision four to plaintiffs, like the present one, whose injuries are discovered within hours of exposure - even though subdivision four would effectively require those plaintiffs to sue no more than six years after that exposure.
In other words, for plaintiffs like the present one, subdivision four would replace the three-year tort statute of limitations with at most a six-year statute - an extension less generous to plaintiffs, and risking less hardship to defendants, than the indefinite extensions that can result from long-term latency. Defendants and the dissent would have us read the statute to countenance extremely old claims, but to bar relatively fresh ones. We reject that reading.
Question 3: What standards apply to the issue of when sufficient information "to ascertain the cause" of an injury has been "discovered, identified or determined"?
The Second Circuit's third question arises from CPLR 214-c (4)'s requirement that plaintiff "allege and prove that technical, scientific or medical knowledge and information sufficient to ascertain the cause of his injury had not been discovered, identified or determined" before the expiration of the otherwise-applicable limitation period. That question calls on us to resolve two possible ambiguities noted by both the District Court and the Second Circuit: Is it the plaintiff and his lawyers or the technical, scientific or medical community that must be able to "ascertain the cause of his injury"? And what level of certainty is implied by the word "ascertain"? Both aspects of this question have been previously addressed by New York courts.
As to the first of them, we said in New York County DES:
"It is apparent from the over-all statutory plan . . . that only the technical knowledge of the scientific and medical communities [was] to be considered in determining whether the injured's delay following the discovery of injury should be excused."

(89 NY2d at 515). We now reaffirm that the statute refers to the time when information is sufficient for the technical, medical or scientific community "to ascertain" the cause of an injury. It is not reasonable to extend the statute of limitations until the time when a reasonable lay person or lawyer could "ascertain" the cause without consulting an expert - in many cases, that time might never come. Plaintiff suggests that the statute of limitations in his case did not begin to run until the relevant scientific findings were publicized in the non-expert community, but the statute's language does not create a "publicity" test. We see no unfairness in requiring that injured people who want to protect their rights seek out expert advice, rather than waiting for the media to bring a possible cause of the injury to their attention.
The other aspect of the Second Circuit's third question - the issue of what level of certainty "to ascertain" implies - is not one we have previously discussed. We generally agree, however, with the Appellate Division's comments on that issue in Pompa v Burroughs Wellcome Co. (259 AD2d 18 [3d Dept 1999]). The statute
"does not require medical certainty or information sufficient to prevail at trial, but does entail showing that sufficient information and knowledge existed to enable the medical or scientific community to ascertain the probable causal relationship between the substance and plaintiff's injury"

(id. at 24).
Making the Appellate Division's "probable causal relationship" test a bit more specific, we hold that the test is one of general acceptance of that relationship in the relevant technical, scientific or medical community. That test is familiar to New York lawyers and judges. Our courts follow Frye v United States (293 Fed 1013 [DC Cir 1923]) in making "general acceptance" the test for admitting expert testimony about scientific principles or discoveries (see People v LeGrand, 8 NY3d 449, 457 [2007]; People v Wesley, 83 NY2d 417, 422 [1994]). Thus, under our holding today a causal relationship will be sufficiently ascertained for CPLR 214-c (4) purposes at, but not before, the point at which expert testimony to the existence of the relationship would be admissible in New York courts.
The above, we believe, answers the Second Circuit's third question: "What standards should be applied?" We have not been asked to, and do not, apply those standards to the facts of this case. The federal courts dealing with this and related cases are more familiar than we with the science relating to the effects of ephedra, and are thus better able to perform that task.
Accordingly, the first and second questions should be answered in the affirmative, and the third question should be answered in accordance with this opinion.


READ, J. (DISSENTING):
The majority opines that "effects [of an exposure to substances] concealed for a few hours may be 'latent'" for purposes of CPLR 214-c because "even a brief period of latency can be important when the problem is one of determining an injury's cause" (majority opn at 9). In effect, the majority defines effects as "latent" so long as symptoms do not appear "as soon as [someone's] skin touches a suspected toxin" or "at once upon swallowing a pill" (id. at 10). And whatever "as soon as" and "at once" may mean, it would seem to be something less than the 24 to 48 hours referred to in the second certified question. This approach finds no support in the statutory text or legislative history, which uniformly demonstrate that section 214-c was intended to relieve the plight of plaintiffs who became sick long after their initial exposure to a toxic substance, which is when their causes of action would otherwise accrue.
I.
A latent disease is generally understood to be an illness that does not manifest clinically diagnosable symptoms until years after initial exposure to the disease-causing agent (see e.g. David Schottenfeld and Joanna F. Haas, "Carcinogens in the Workplace," in Cancer Causing Chemicals, at 23 [Newton I. Sax ed. 1981]). And as we have recounted numerous times, the Legislature enacted CPLR 214-c to "overcome the effect of a line of Court of Appeals decisions" beginning with Schmidt v Merchants Despatch Transp. Co. (270 NY 287 [1936]), which held that the claims of plaintiffs suffering from latent diseases "accrue[d] upon 'impact' or exposure even though the resulting illness [might not have been] manifested for a long time thereafter" (Matter of New York County DES Litig. [Wetherill v Eli Lilly & Co.], 89 NY2d 506, 513 [1997] [emphasis added]; see also Snyder v Town Insulation, 81 NY2d 429, 433 [1993] [noting that Schmidt and its progeny addressed the "question of how accrual should be determined when an injury was latent and went undiscovered until long after exposure" [emphasis added]; Consorti v Owens-Corning Fiberglass Corp., 86 NY2d 449, 454 [1995] [reviewing history of Court's adherence to "the Schmidt rule fixing the occurrence of tortious injury as the date when the toxic substance invades or is introduced into the body"] [emphasis added]). As a result of the Schmidt rule, the three-year statute of limitations in CPLR 214 (5) lapsed before these plaintiffs even became aware they were sick.
To remedy this injustice, the Legislature adopted CPLR 214-c, which replaced the Schmidt rule in such cases with a rule of accrual keyed to "the discovery of the manifestations or symptoms of the latent disease that the harmful substance produced" (Wetherill, 89 NY2d at 514). Section 214-c, adopted as a part of a larger tort reform package (L 1986 ch 682), reflected numerous compromises. In particular, the bills passed by the Assembly in the run-up to the Legislature's adoption of CPLR 214-c invariably provided for accrual not only upon discovery of the injury, but also upon discovery of the injury's cause. For example, in 1984 the Assembly passed Assembly Bill A. 3547-A, which called for commencement of an action for personal injuries attributable to the latent effects of exposure to a substance "within two years of the date of discovery of the illness or injury, or the date of death, or the discovery of the cause of such injury, illness or death, whichever is later" (emphases added). By contrast, the Senate majority's versions of a time-of-discovery rule did not require discovery of causation before the statute of limitations would begin to run (see generally Steven L. White, Note, "Toward a Time-of Discovery Rule for the Statute of Limitations in Latent Injury Cases in New York State," 13 Fordham Urb L J 113, 154-160 [1984-1985]).
The Legislature ultimately compromised on this issue and adopted related time-of-discovery provisions for actions brought by plaintiffs to recover for latent injuries, CPLR 214-c (2) and CPLR 214-c (4). CPLR 214-c (2) enacts a three-year statute of limitations commencing upon a plaintiff's discovery (actual or constructive) of latent injuries from exposure to a substance. This provision assumes that the plaintiff knows the cause of the injuries at the time they are discovered - i.e., become manifest (see generally Wetherill, 89 NY2d at 513 ["That CPLR 214-c (2)'s reference to 'discovery of the injury' was intended to mean discovery of the condition on which the claim was based and nothing more is . . . apparent from the legislative history of the provision"]).
Section 214-c (4), which "has to be read in conjunction with subdivision 2" (McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 214-c, 1990 Supp Pamph at 340; see also Siegel, NYS Law Digest, No. 321, Sept. 1986, at 1), specifies that if the cause of the injury is discovered less than five years after the injury is suffered, the plaintiff may commence an action within one year after identifying the cause. In order to take advantage of section 214-c (4), however, the plaintiff must show that there was insufficient medical or scientific information available to make out the injury's cause within the three-year period otherwise prescribed in CPLR 214-c (2) (see id. [commenting that "[t]he issues of causation and knowledge on which this alternative time measure depends will often generate heavy fact disputes . . . likely to be intertwined with the merits"]).
The majority acknowledges that "[t]here is no doubt that the problem of injuries that go undiscovered for years was the Legislature's primary concern," but then adds that this was not the Legislature's
"sole concern, for if it was there was no need to enact subdivision four of CPLR 214-c at all. That subdivision benefits only those plaintiffs . . . who, having already discovered they were injured, have not discovered 'the cause of the injury.' A few hours of latency might well cause a plaintiff to be in such a predicament . . . " (majority opn at 11).
As Judge McLaughlin (coincidentally a member of the Second Circuit panel in this case) observed, "[i]t need not be said that [CPLR 214-c (4)] is a complicated statute," which "reeks of the midnight oil of political compromise. And the draftsmanship cannot be described as commendable" (McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 214-c, 1990 Supp Pamph at 340). There is no suggestion in the statutory text or the legislative history or the contemporary commentary, however, that the Legislature adopted section 214-c (4) to address any effects of exposure to substances so long as the cause was difficult to figure out when the injuries became manifest, as the majority concludes. Rather, the Legislature was concerned only with the latent effects of exposure - i.e., latent diseases triggered by (but manifest well after) an initial (and sometimes prolonged) exposure to a toxic substance. Sections 214-c (2) and 214-c (4) simply represent the compromise struck by the Assembly and the Senate to reconcile their differing time-of-discovery rules for latent diseases, previously discussed.
The majority further speculates that "it seems reasonable that the authors of CPLR 214-c (4) would have considered even a few hours of latency enough to justify the extension of the statute of limitations authorized by that subdivision" (majority opn at 10). If this was part of the authors' design, they kept it well hidden. The statute's legislative history evidences only a desire to enact a time-of-discovery rule for plaintiffs afflicted with latent diseases, such as workers exposed to asbestos or the adult daughters of mothers who ingested DES during pregnancy, not a free-floating intention to alter the accrual rule in every case where a disease's etiology is difficult to divine.
II.
In this case, the scientific evidence does not provide a sound basis for a jury to conclude that plaintiff's strokes were a latent effect of his exposure to dietary supplements containing ephedra. At least, this is what I glean from the District Court's opinion addressing general causation (see In re Ephedra Products Liability Litigation, 393 F Supp 2d 181 [SDNY 2005]), handed down in the consolidated ephedra litigation, and the same Judge's later decision concluding that this plaintiff's lawsuit was time-barred.
Ephedra is a plant that contains several chemically related biologically active substances known as ephedrine alkaloids. The ephedra products at issue in the consolidated litigation combined ephedra with caffeine, and were marketed to consumers seeking weight loss, increased energy and improved athletic performance (id. at 186). The District Court Judge conducted a Daubert hearing to assess, as particularly relevant here, whether evidence might be introduced at trial that dietary supplements containing ephedra/ephedrine cause strokes.
After a two-week evidentiary hearing at which various scientists testified as generic experts for plaintiffs and the defense, the District Court Judge concluded that none of plaintiff's experts would be permitted to testify "within a reasonable degree of scientific certainty" that ephedra causes strokes. He did, however, also rule that some of plaintiff's experts would be permitted to testify (based on such things as animal studies, analogous human studies, and plausible theories of the biological mechanisms involved) that there was a reliable basis to believe that ephedra might be a contributing cause of strokes in people with, for example, high blood pressure or a genetic sensitivity to ephedra - provided that such experts qualified their testimony with the acknowledgment that none of this had been the subject of a definitive study and might in the future be disproved (id. at 186-187).
The biologically plausible theory about how ephedra might cause injury - one of the factors that persuaded the District Court Judge to allow some of plaintiffs' generic experts to offer an opinion that ephedra might be a contributing cause of strokes in susceptible individuals - was that ephedra was known to "stimulate cardiovascular activity and constrict blood vessels, thereby increasing stress on the heart and circulatory system" (id. at 194; see also id. at 192 [discussing hypothesis that heart attacks, strokes or sudden death might be triggered by the coincidence of peak events, such as transient peak blood pressure due to other causes, occurring at the same time as peak ephedrine blood level]). The Judge also noted that ephedra is short-acting (id. at 193).
The District Court Judge subsequently dismissed plaintiff's complaint as time-barred under CPLR 214-c. He specifically commented that
"evidence admitted during the Court's extensive Daubert hearings showed that ephedra acts within a few hours to cause a transitory elevation of blood pressure and heart rate and a temporary constriction of blood vessels. Experts designated by [plaintiffs] have submitted reports stating that these immediate effects of ephedra may likely be a contributing cause of stroke in some people" (emphases added).

He then cited a decision by the Second Circuit holding that an injury manifest "within a few weeks" after exposure to a toxic substance was latent and therefore governed by section 214-c. The Judge observed, however, that "[b]y contrast" with this decision, "researchers in a study of ephedra and stroke . . . did not consider stroke patients to have been relevantly exposed . . . unless they used [ephedra] within three days before their stroke"; and that "indeed, because of ephedra's short-acting properties, the researchers studied strokes that occurred within 24 hours after using ephedra." He therefore concluded that "[t]o hold § 214-c applicable to a stroke allegedly caused by ephedra would effectively eliminate the statute's limitation to 'latent effects.'"
In other words, based upon scientific evidence adduced at the Daubert hearing and credited by the District Court Judge, he concluded that any stroke attributable to ephedra would have been caused by an exposure occurring shortly (24 hours to three days) beforehand. This is because ephedra is short-acting and its effects transitory, not permanent; therefore, it is not biologically plausible for plaintiff's strokes to have been caused by his initial exposure to ephedra, or the cumulative effect of his exposures over time. As a result, plaintiff's strokes were not a latent disease within the meaning of section 214-c (4).
Plaintiff's attorney argues in his reply brief that "assuming latency is a requirement for applying [CPLR 214-c (4)], same is present because the stroke resulted from ingestion of the product over time"; and that "plaintiff did become ill after using Ephedra based products for two years."[FN1] In other words, he proposes that it was, in fact, plaintiff's initial and repeated exposures to ephedra over a two-year period which rendered him susceptible to a stroke by effecting permanent physiological change, presumably by creating a condition of permanently elevated blood pressure. I simply do not think the District Court Judge accepted as reasonably based on good science the notion that ephedra might act on the human body to cause a stroke in this manner (see e.g. 393 F Supp 2d at 194 [noting three points on which the scientific evidence is "sparse and inconclusive"]). If I am wrong about that, I would agree with plaintiff that section 214-c (4) governs the timeliness of his cause of action, and that this would be the case whether he suffered a stroke 24 hours or 24 years after he last ingested ephedra.
III.
The majority's interpretation of section 214-c (4) - divorcing it from whether the exposure to a substance may have caused a latent disease and focusing solely on the lapse of time from last exposure to manifestation of illness - creates a number of practical problems. The Second Circuit asked if injuries occurring within 24 to 48 hours after exposure to a substance were "latent" within the meaning of section 214-c. In response, the majority holds that "an injury that occurs within hours of exposure to a substance can be considered 'latent' for these purposes" (majority opn at 2 [emphasis added]). Is "within hours" the same as 24 to 48 hours, or is it a shorter period of time? What about 12 hours? eight hours? Presumably, "within hours" must mean at least two hours, or does it? Is this purely a legal judgment, or is scientific evidence relevant? When an effect occurs "within hours" of exposure to a substance, does it matter whether a scientist would consider such an effect to be latent?
The majority acknowledges that a disease is not latent if symptoms appear "as soon as" or "at once" upon exposure. Indeed, the majority almost has to make this concession or it would be even more obvious than it already is that section 214-c (4) now covers lawsuits relating to the "effects" - not just the "latent" effects - of exposure to a substance, despite the majority's answer to the first certified question. But what do "as soon as" or "at once" mean in this context? Most substances that are ingested, for example, are not instantaneously absorbed. [*14]Does whether an injury is latent depend upon scientific evidence about how quickly a substance is taken up in the body or reaches a certain concentration in the blood?
It is difficult to predict the practical effects of the majority opinion. Certainly we now have a six-year statute of limitations in New York, running from the date an injury becomes manifest, for every purported side effect of a drug or other substance that may be ingested, subject to the restrictions in section 214-c (4) - the five-year and one-year limits and the necessity for proof about the state of medical or scientific evidence at the relevant time. Because there is no reason to believe that the Legislature had any such result in mind when it enacted CPLR 214-c (4), I respectfully dissent.
* * * * * * * * * * * * * * * * *
Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.27 of the Rules of Practice of the New York State Court of Appeals, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified questions answered in accordance with the opinion herein. Opinion by Judge Smith. Chief Judge Lippman and Judges Ciparick and Jones concur.
Judge Read dissents in an opinion in which Judges Graffeo and Pigott concur.
Decided November 18, 2010
Footnotes

Footnote 1:Plaintiff's attorney does not indicate how frequently plaintiff may have ingested ephedra over a two-year period. The District Court Judge noted that the label on one of the ephedra products did not state any maximum period for continuing the daily "suggested use" of up to 96 mg, while a competing product recommended a maximum daily dosage for a healthy adult of no more than 100 mg in a 24-hour period for not more than 12 weeks (393 F Supp 2d at 194 n 10).

KHUNS v BAY STATE INSURANCE COMPANY

Appeal from an order of the Supreme Court, Monroe County (William P. Polito, J.), entered April 16, 2008. The order, insofar as appealed from, denied the motion of defendant for summary judgment.


HISCOCK & BARCLAY, LLP, ALBANY (JOHN R. CASEY OF COUNSEL), FOR DEFENDANT-APPELLANT.
PANZARELLA & COIA, P.C., ROCHESTER (CHAD HUMMEL OF COUNSEL), FOR PLAINTIFF-RESPONDENT.


It is hereby ORDERED that the order so appealed from is affirmed without costs.
Memorandum: Plaintiff commenced this breach of contract action seeking insurance coverage resulting from damage to a structural foundation wall in her home. According to plaintiff, the damage was the "collapse" of the structural foundation wall, while defendant contended that the loss did not come within the definition of "collapse" set forth in the homeowners' insurance policy issued by defendant to plaintiff. In its letter informing plaintiff that there was no coverage, defendant set forth that the loss did not constitute a "collapse" within the meaning of the policy. In addition, defendant relied on the policy exclusions for water damage, loss caused by earth movement, and inadequate construction or design. Supreme Court denied both defendant's motion for summary judgment dismissing the complaint and plaintiff's cross motion for partial summary judgment on liability. Defendant appeals, and we affirm.
With respect to the issue whether the loss constitutes a "collapse" as defined by the policy, i.e., whether the claim is covered by the policy, we conclude that defendant failed to meet its initial burden of establishing as a matter of law that the loss did not involve a "collapse" within the meaning of the policy (see generally Zuckerman v City of New York, 49 NY2d 557, 562). In support of its motion, defendant submitted the deposition testimony of plaintiff, who twice described the loss as a "cave in."Plaintiff also testified that there was a crack below the middle of the wall where light was visible from outside the wall and, more importantly, that the wall "fell in to the point that [one] could see the outside in one portion," requiring immediate repair and replacement. In view of both plaintiff's deposition testimony and the policy language defining a collapse as "an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose," we conclude that the submissions of defendant are insufficient to establish its entitlement to summary judgment on the issue whether the loss was a "collapse" within the meaning of the policy (see generally id.). Contrary to the view of our dissenting colleague, the facts in Rector St. Food Enters., Ltd. v Fire & Cas. Ins. Co. of Conn. (35 AD3d 177) are inapposite to the facts under consideration here. The building at issue in that case, although cracked, sinking and leaning, was not caving in.
We further conclude that there is an issue of fact whether the loss is covered in view of policy language concerning water damage, a policy provision that defendant characterizes as an "exclusion." We note that, "to negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case' " (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383; see Chautauqua Patrons Ins. Assn. v Ross, 38 AD3d 1190, 1191).
Defendant contends that there is no coverage for the instant loss because the policy provides that there is no coverage for loss caused by water pressure to a foundation. The subject provision states that defendant does "not insure . . . for loss . . . [c]aused by . . . [f]reezing, thawing, pressure or weight of water or ice . . . to a . . . [f]oundation." In view of that unambiguous policy language and the opinion of defendant's expert that hydrostatic groundwater contributed to the damage to the wall, we conclude that defendant met its initial burden of establishing that the loss caused by water pressure to a foundation is not covered by the policy (see generally Zuckerman, 49 NY2d at 562).
Nevertheless, we conclude that plaintiff raised a triable issue of fact whether she is entitled to coverage for the loss in light of the policy language in question. Initially, we reject defendant's characterization of that language as a policy exclusion inasmuch as it appears in the section of the policy concerning the "perils insured against," i.e., that portion that defines the initial specification of coverage, and is not included within that portion of the policy that sets forth the policy exclusions. To the extent that the subject language conflicts with other policy language providing coverage for loss caused by decay, that conflict is to be resolved against defendant, which drafted the policy (see State of New York v Home Indem. Co., 66 NY2d 669, 671; Topor v Erie Ins. Co., 28 AD3d 1199, 1200). In view of the opinion of plaintiff's expert that the loss was caused by "decay" concealed by the finished interior wall of the basement of plaintiff's home, we conclude that defendant is not entitled to summary judgment determining that there is no coverage for plaintiff by virtue of the application of the policy language in question (see generally Zuckerman, 49 NY2d at 562).
The policy also contains an exclusion for loss caused by "water damage," including "water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure." Defendant further contends that the water damage exclusion defeats coverage for plaintiff. We again conclude on the record before us that there is an issue of fact with respect thereto (see id.). Although defendant's expert attributed the loss to hydrostatic ground forces, plaintiff's expert determined that the damage was caused by structural weakening, in which event the water damage exclusion would be inapplicable. Defendant's further contention that the policy's earth movement exclusion defeats coverage for plaintiff was raised in defendant's letter informing plaintiff that there was no coverage but was not raised by defendant in support of its motion, and thus that contention is not properly before us (see Ciesinski v Town of Aurora, 202 AD2d 984, 985). There is also an issue of fact with respect to the applicability of the final exclusion upon which defendant relies, i.e., the exclusion for loss caused by inadequate construction or design. Even assuming, arguendo, that defendant met its burden on that part of the motion, we conclude that plaintiff raised an issue of fact concerning the applicability of the exclusion by submitting the affidavit of her expert, who concluded that ambient soil pressure, rather than inadequate construction or design methods, caused the loss (see generally Zuckerman, 49 NY2d at 562). 
Finally, we agree with defendant that the court erred in concluding that defendant's letter to plaintiff concerning the absence of coverage did not meet "the specific and clear requirements under the law," although we note that defendant is not thereby entitled to summary judgment dismissing the complaint. Inasmuch as "this action involves a property insurance claim, it is not controlled by the high degree of specificity required . . . for a disclaimer of liability for death or bodily injury" (Smith v General Acc. Ins. Co., 295 AD2d 738, 739-740; see Insurance Law § 3420 [d] [2]). Here, defendant's letter adequately sets forth the policy provisions on which defendant relied and, indeed, there is no indication that there was any confusion on plaintiff's part with respect to the policy provisions upon which defendant relied and thus that plaintiff was thereby prejudiced by any alleged lack of specificity (cf. Vecchiarelli v Continental Ins. Co., 277 AD2d 992, 993).
All concur except Carni, J., who dissents and votes to reverse in accordance with the following Memorandum: I respectfully dissent, inasmuch as I disagree with my colleagues that defendant is not entitled to summary judgment dismissing the complaint.
With respect to the issue whether the damage to plaintiff's foundation wall constituted a "collapse" within the meaning of the homeowners' insurance policy in question, I conclude that defendant established as a matter of law that there was no collapse within the meaning of the homeowners' insurance policy in question. The policy specifically defines its coverage for collapse with respect to buildings as "an abrupt falling down or caving in" and provides that "[a] building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion." Here, it is undisputed that plaintiff's home, and all component parts thereof, remained standing and had not abruptly fallen down or caved in. In my view, the nature of the damage was best described by plaintiff in her deposition testimony, wherein she stated that one of the foundation walls "moved in" and had not fallen in completely. The policy language concerning collapse is unambiguous and does not cover a condition that can at best be described as presenting a danger of imminent collapse rather than the actual and abrupt collapse or caving in covered by the policy (see Rector St. Food Enters., Ltd. v Fire & Cas. Ins. Co. of Conn., 35 AD3d 177, 178).
I further disagree that what the majority refers to as "structural weakening" is a peril insured under the policy. "Structural weakening" is a result rather than a cause of a loss, and plaintiff's own expert opined that the "structural weakening" resulted from "ground frost during the 2003-2004 winter season." There is thus no coverage under the unambiguous language of the policy, which provides that defendant does not insure for loss "[c]aused by . . . [f]reezing, thawing, pressure or weight of water or ice . . . to a . . . [f]oundation, retaining wall, or bulkhead." "Ground frost" is the non-covered cause and "structural weakening" is the result.
I further disagree with the majority that plaintiff raised an issue of fact with respect to the policy exclusion for inadequate construction or design. The majority cites only to the conclusion of plaintiff's expert that the loss was caused by "ambient soil pressure," and thereby ignores that part of the opinion of the expert that the "ambient soil pressure exerted against the basement wall in its weakened state result[ed] in structural failure" (emphasis added). In my view, the "weakened state" is the same result, i.e., the structural weakening, caused by the "ground frost" discussed by the expert earlier in his affidavit. Thus, the opinion of plaintiff's own expert expressly establishes that the loss was caused by freezing water, a peril not covered under the policy. It is noteworthy that plaintiff's expert fails to explain how "ambient soil pressure" in the absence of the "weakened state" resulting from "ground frost" is a covered peril, rather than merely an expected or ordinary condition encountered by all foundations, "weakened" or not.
I therefore would reverse the order and grant defendant's motion for summary judgment dismissing the complaint.