Coverage Pointers - Volume XII, No. 16

Dear Coverage Pointers Subscribers:

 Such a busy week.

 Every Day is One Day Closer to Spring

 We are delighted to remind those that are geographically challenged about the Empire State, that Buffalo is not located anywhere near New York City, but some hundreds of miles west. We're closer to Los Angeles than the Bronx.  We're three hours from east of Cleveland and four hours north of Pittsburgh and 90 minutes from Toronto (about 60 miles as the crow flies - actually, they would be Canadian crows, so, 97 kilometers).  Why do we mention that? I have received calls and e-mails from many friends extending empathy or sympathy for the storms that have paralyzed New York City.  Fortunately for us, these storms have not impacted western New York.  Our weather comes from Chicago, when they are through with it.  The NYC storms come up the east coast, often visiting DC beforehand and Boston thereafter.

 We were expected to have a huge storm on Ground Hog's Day, 12 - 18 inches predicted and that's even noticeable by Buffalo standards.  We woke up to a mere four, what we consider a flurry.  Our office sponsored a contest to select a name for the dud of a storm and entries included:

•        Monster in Name Only
•        I Can't Believe I Wasted a Personal Day Storm
•        The Aaron Maybin Storm (in honor of a Bills draft choice that had a lot of hype and no substance)
•        The February Fizzle
•        The Wide Right (in honor of the 25th anniversary of the Buffalo Bills first of four losses in the Super Bowl, with a kick -- like the storm -- that was "oh so close" but missed the mark);
•        The Snizzle That Fizzled                                                               
•        Stormapa-Loser
•        Tempest in a Teapot                                                                                  
•        The Bluster of 2011            
•        The Little Storm on the Prairie
•        Snow 2K

 The winner, drawn randomly was Earl Cantwell's submission:

•        The Mini-Doxies Delight                                                    

 

Insurance Industry No Fault Bill Introduced

In our Special Edition, last week, we discussed the reintroduction of last year's No Fault "Reform" bill in the Assembly, which did not provide a great deal of real reform.  We're pleased to advise that a bill supported by many industry members has been introduced in the Senate by the Senator James Seward, the new Chair of the Republican-controlled Senate.  Senate Bill 2816, which we will make available to anyone on request, would:

•        Leave the definition of "serious injury" intact;
•        Overturn Presbyterian Homes to eliminate automatic preclusion of defenses for untimely No Fault denials, recognizing that there is already a substantial interest penalty for delay;
•        More equitably assess the burden of proof requirements in provider cases to require the medical provider to present information that the services for which bills are submitted are medically necessary and do not exceed applicable;
•        Require mandatory arbitration of no-fault disputes, which are now either arbitrated or litigated at the injured party's option;
•        Provide assignment of benefit rules for no-fault which are similar to assignment of benefit rules applicable to other types of medical claims; 

 As the sponsor points out:

 The assignment used in New York no-fault claims differs from those commonly used, in that it assigns "all rights and privileges and remedies" to the provider to pursue benefits under the no-fault law.  This allows the provider "assignee" the right to contest all issues, including "policy" issues such as coverage eligibility and the patient/clamant/assignor's duties to comply with policy conditions, such as attending independent medical examinations or examinations under oath.  The result is a huge amount of litigation, instigated by the providers/assignees with little or no involvement from the injured party.  This section would address this problem by providing that the right to contest denials of claims involving policy issues would belong to the claimant only and the assignment would not be valid when coverage or compliance with policy terms is in dispute. 

•        Revise current provisions authorizing the decertification of medical providers who engage in fraud and certain other practices from receiving payment under no-fault so as to allow for the implementation of these provisions; 
•        Provide for the use of treatment guidelines in the no-fault system, now in place for the workers compensation system;
•        Allow insurers to rescind or cancel a policy within the first 60 days back to the inception of the policy where there is nonpayment of the initial premium or initial installment or where it is discovered that the payment proceeds or identity of the policyholder were stolen. 

 

Issue has now been joined!

 From the Universe of Asbestos:

Asbestos Claims Repel the Flame of Owner/contractor Vicarious Liability-Redux

V. Christopher Potenza

[email protected]

 

Back in 2009 we reported to you on the First Department's decision in Nostrom v. A.W.Chesterton, et al., 59 A.D.3d 159 (1st Dep't 2009), in which the plaintiff, suffering from an asbestos related disease, attempted to hold certain premises owners vicariously liable under Labor Law § 241(6) for activities performed on their premises that released asbestos fibers into the air.  

 Labor Law § 241(6) serves as the basis for many construction accident bodily injury claims, and imposes on owners and/or general contractors (who are themselves free from negligence), vicarious liability for the acts of subcontractors in construction, demolition, and excavation settings.  The intent of the statute is to give workers in these fields added protection (beyond Workers' Compensation) by imposing certain non-delegable duties on owners and/or contractors, regardless of whether the owner/contractor controlled or supervised the work performed.  Vicarious liability to owners/contractors attaches for violations of only specific regulations contained in the Department of Labor Regulations at Title 12 NYCRR part 23 ("Industrial Code").  The important distinction for 241(6) analysis is whether the alleged part 23 code violation is an unequivocal and specific command and not a mere reiteration of the common-law negligence standard of care.  The vast majority of litigation involving 241(6) is whether the code alleged to be violated is specific or general. In this case however, plaintiff did not allege violations of the Industrial Code at Part 23 (as required by the statute), but rather alleged Labor Law § 241(6) liability premised on code violations at Part 12, which contains regulations prohibiting dangerous air contaminants in the workplace. 

 The Court of Appeals has affirmed the First Department's decision that 241(6) liability applies only to part 23 regulations ("Protection  in Construction, Demolition and Excavation Operations") and not part 12 regulations ("Control of Air Contaminants").  See, Nostrom v. A.W.Chesterton, et al., 15 N.Y.3d. 502 (2010).   The Court of Appeals did not address the First Department's alternative holding that in any event the regulations invoked by plaintiff are not sufficiently specific to support a section 241(6) claim. 

 This Court of Appeals decision smothers at least one creative plaintiff's attempt expand the pool viable non-bankrupt asbestos defendants, and could protect a vast majority of potentially "new" asbestos defendants who had no independent negligence of their own, but may have been held vicariously liable by statute.

 Chris

 

From Audrey Seeley, Exulted Queen of No Fault:

Does anyone right now truly believe that there will be an early Spring???

 There are only a few cases and decisions to report this edition but there seems to be a trend forming.  This is the second edition where we have reported on cases wherein the plaintiff seeks to vacate a trial de novo demand from the insurer on the ground that the insurer defaulted at the mandatory arbitration.  The argument is that while the insurer's participated at the arbitration through appearance and arguments there was no admissible evidence entered or presented.  Thus, the insurer is in default.  The court so far has rejected this argument holding that there was no default at the arbitration. 

 Please keep in mind that DRI's Insurance Law Committee is holding the Insurance Coverage and Claims Institute from March 30 through April 1st.  Why attend? 

 You will obtain the viewpoint from industry leaders such as Joseph M. Goldberg of Sentry Insurance Company, Daina E. Kojelis of Zurich in North America, and Carlos Del Carpio, former Vice President, Director Strategic Claims at RiverStone Claims Management LLC, who have a wealth of knowledge from an in-house counsel's perspective on insurance coverage litigation.  Specifically, how to lay the groundwork to file an effective declaratory judgment action and analyzing whether such an action is warranted which includes the insurer's cost/benefit analysis.

 Carlos Del Carpio is a partner at the Chicago law firm of Meckler Bulger Tilson Marick & Pearson LLP. At RiverStone Claims Management LLC, he focused on evaluating, litigating and resolving the most volatile and complex liability exposures of certain affiliated insurance companies, including TIG Insurance Company.

 Joseph M. Goldberg is the assistant general counsel and director of legal services at Sentry Insurance Company in Stevens Point, Wisconsin. He manages the corporate legal department and the staff counsel operation, and he advises the claims department on extra-contractual exposures. He is the immediate past vice president-insurance of the IADC.

 Daina E. Kojelis is senior coverage counsel for Zurich in North America, in Schaumburg, Illinois. Ms. Kojelis provides coverage advice to claims and underwriting professionals and supervises related litigation, including bad faith litigation arising from claims handling.

 Please note if you are in-house counsel, as defined by DRI, then you may be eligible for free registration.  Also, if you are a DRI member who wants to invite in-house counsel, as defined by DRI, who is not a DRI member you may qualify to invite them as your guest at no cost to him or her.  For more information, please do not hesitate to me at [email protected]. 

 Audrey

 

One Hundred Years Ago Today:

Olean Evening Times
Page 1

February 4, 1911

NO NEWS OF MISSING MISS ARNOLD

Story That She Was Found in Philadelphia is Denied

New York -- The fifty-fourth day of the absence of Dorothy Arnold, the missing heiress, from her home, is as much a mystery today as ever. Her father, Francis Arnold, denied this morning the report sent front Philadelphia that the girl's brother had found her in that city. Attorney Keith, representing the girl's family, announced that the brother had returned from Philadelphia and had been unsuccessful in locating Dorothy. He said: "Mr. Arnold worked a number of good traces in .Philadelphia without, result. Miss Arnold may be in that city, .but we have not found her.

 Young Arnold said: "I am going 'back to Philadelphia to take up the search again." 'It is known that the missing girl has a host of friends in Philadelphia, where most of her school chums of Bryn Mawr reside.

Pretty young heiress Dorothy Arnold vanished into thin air from Fifth Avenue and 27th Street, one of the busiest street corners in the world. Scores of people surrounded her but she disappeared without a trace -- never to be heard from again.

A clerk who sold Dorothy a box of chocolates at Park and Tilford's said that she was very carefree and friends who ran into her outside of the bookstore said that they noticed nothing unusual about her. Strangely though, these acquaintances would be the last people to ever see the girl who came to be known as the "vanishing heiress" alive.

A fascinating story, despite rumors and innuendo, she was never seen again.

 

A Century Ago:

Washington Post

February 4, 1911

Page 3

Opens Grave of Lawyer to Restore Life

Woman, Guided by a "Vision," Digs Alone in Cemetery During the Night

STANFORD, Ky., Feb. 3.-"A vision from God told me that he would rise again," said Mrs. Amanda Harrison in confessing before Judge Bailey today that she worked all Tuesday night digging into the grave and removing the casket containing the body of George B. Saufley, an attorney, which was found above  the grave in the cemetery early Wednesday. Mrs. Harrison readily admitted her connection with the attempted grave robbery and declared that she had no accomplice and declared that she had no accomplice.

 With hands unused to a spade, she shoveled the dirt from the grave, working feverishly during the dark hours, confident that the end of her task meant the restoration of life for the man who procured a divorce for her.

Editor's Note:  She succeeded in removing the casket from the ground but reports indicate that she could not open the coffin, and then fled to avoid arrest.  This story was carried in newspapers throughout the country. In one report, she declared the young attorney who "was dearer to her than many knew and that she had been ill at the time of his death, though she had longed to look at him once more." There is no verification to the rumor that she received a bill from the deceased attorney for his time incurred during his grave's desecration.

 Medicare Liens - Workout Sheet Provided

 In every personal injury case on which you make a payment you become the jury that must decide whether a Medicare Set Aside (which I like to call a Future Care Allocation Account) needs to be established. In Mike Perley's Liening Tower of Perley column, he provides a simple verdict-style sheet to guide you through these deliberations.

 Peiper's Perceptions:

 We weren't sure whether you caught the troubling Carden v. Allstate Ins. Co decision when it was first reported as part of Jennifer's Gems in the December 24, 2010 issue of Coverage Pointers.  However, if you haven't had a chance to consider the outcome of this case, or the reasoning behind it, we invite you to again take a quick moment to review it.  With Jen Ehman's gracious consent, I have re-published her write-up (as well as my rant) in this week's offerings.

Since February of 2008, we have been diligently monitoring any and all activity which references New York's long established bad faith standards.  This effort has been particularly focused on the (so far) unsuccessful attempts to expand the reaches of the Bi-Economy v. Harleysville into the bad faith arena. 

 Although we, among others, remain steadfast in our efforts to keep consequential damages segregated from bad faith/punitive damages litigation, the Carden case presents yet another example of the continued blurring of that line.  We will continue to monitor, and as always, keep you apprised as this decision no doubt makes its way through the appellate process.  In the interim, please feel free to drop us a line or join us on LinkedIn to share your thoughts.  We'd love to hear what you have to say. 

 Steve
[email protected]

 

 One Hundred Years Ago Today:

Olean Times

February 4, 1911

NO QUORUM IN SENATE FIGHT

Rumor That This Break in

Deadlock May Come Monday

 

Albany.  - There was no quorum on the sixteenth ballot for United State Senator today.  Shrewd observers would not be surprised if the breaking of the deadline came on Monday.  All Democrats in the Senate and Assembly have received ironclad instructions on taking no chances of not being here for the vote on Monday. Most of them are fearing tardiness of trains will go back on Monday night.

 The rumors persist that Murphy is about to drop Sheehan, but such rumors are without foundation.  Murphy will stick to Sheehan as long as he keeps himself in the race. Other rumors that the Governor, who already has privately urged some of the insurgents to vote for Sheehan, soon will come out openly for him appear to have more basis.

Editor's Notes:  Until the 17th Amendment to the Constitution, US Senators were not elected by popular vote in New York and this election, by vote of the New York State Legislature was the last US Senator ever so elected.  It took 63 ballots before the Legislature filled the seat vacated by the retirement of Senator Chauncey Depew with a Tammany Hall candidate, James A. O'Gorman, hand-picked by Tammany leader, Charles Francis "Boss" Murphy.

 Let's see how many of O'Goman's successors you remember.  He only served one term, and was succeeded by:

·         Royal S. Copeland (1923 - 1938)

·         James Mead (1938 - 1947)

·         Irving Ives (1947 - 1959)

·         Kenneth Keating (1959 - 1965)

·         Robert Kennedy (1965 - 1968)

·         Charles Goodell (1968 - 1971)

·         James Buckley (1971 - 1977)

·         Daniel Patrick Moynihan (1977 - 2001)

·         Hilary Rodham Clinton (2001 - 2009), and now

·         Kirsten E. Gillibrand

 

In This Week's Coverage Pointers: 

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

•        Snow Plow Contractor Not Liable; It's Carrier Walks on Late Notice
•        Once an Insurer Has Undertaken a Defense, a Motion by Defense Counsel to Withdraw as Counsel Is "Poor Substitute" for DJ Action to Test an Insurer's Later Disclaimer
•        For Purposes of SUM (Underinsured) Coverage, Corporations Do Not Have Family Members
•        Court Dances Around "Acts or Omissions" Language in Blanket Additional Insured Endorsement
•        Insured Cannot Compel Insurer to Arbitrate Underinsured Motorists Claim.  Florida Policy Involved.
•        Failure of Insured to Advise Secretary of State That It Has Moved Is Not an Acceptable Excuse for Late Reporting
•        No Reasonable Excuse Offered for Late Notice by Named Insured; Owner and GC Not Afforded Coverage as Additional Insureds Because No Such Coverage in Policy

Michael F. Perley
[email protected]

Medicare Set Aside Verdict Sheet

 

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

•        Plaintiff Raises Issue of Fact With Range of Motion Limitation of 52% Two Years Post Accident
•        Defendants' Motion for Summary Judgment Affirmed Where Plaintiff Fails to Raise a Triable Issue of Fact
•        Conclusion That Limitation Is "Volitional" Must Be Substantiated or Explained
•        Not Being Able to Perform Usual and Customary Activities as Easily as Before Accident Is Not the Same as Being Curtailed to a Great Extent
•        Chiropractor's Submissions Are Insufficient Where They Do Not Assess ROM Qualitatively or Quantitatively

 

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

ARBITRATION

•        Evidence of Palliative Benefit Is Medically Necessary Treatment.

 LITIGATION 

•        Insurer Properly Relied Upon Chiropractic Fee Schedule For Reimbursement of Licensed Acupuncturist.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

•        Failure to "Exercise Reasonable Diligence" to Uncover Potential Claims, Renders the Insured's Notice Impermissibly Late
•        Attorney Affirmation in Opposition to "Grave Injury" Claim was Insufficient to Defeat Summary Judgment
•        Court Awards Consequential Damages Based on the Insurer's Bad Faith in Settling the Claim

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

•        Applying Massachusetts Law - Interpreting an Indemnification Clause
•        Applying Colorado Law - When Does Damage Occur? 

JEN'S GEMS
Jennifer A. Ehman

[email protected]  

•        Court Declines to Award Attorneys' Fees as Affirmative Defense Asserting Late Notice of Claim Is Not Equivalent to Placing the Insured In a Defensive Posture
•        Thirty-Eight Day Delay in Disclaiming Coverage Renders Academic Any Consideration of the Validity of the Grounds Asserted in the Disclaimer
•        Pollution Exclusion Triggered When Spill Occurred While Transporting Petroleum to Spill Site
•        Intent to Reside In House Following Renovation Was Not Sufficient to Establish Residency On Date of Loss
•        No Coverage For Pollution Related Cleanup Costs Where Investigation Reveals Primary Source of Contamination Resulted From a Non-Covered Underground Storage Tank

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

Hallmarks of Property Insurance Fraud

Have a lovely Valentine's Day.  A dozen roses for your erstwhile editor would be appreciated. See you next time.

 

Dan

 

Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:  [email protected]
H&F Website:  www.hurwitzfine.com

LinkedIn: www.linkedin.com/in/kohane

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
Liening Tower of Perley
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]

02/03/11       Kogan v. North Street Community, LLC
Appellate Division, First Department
Snow Plow Contractor Not Liable; It’s Carrier Walks on Late Notice
We love snow plow cases and the coverage issues they present.

North Street, property owner, submitted proof that on the day before the accident the temperature rose above 60° so that any ice that might have formed overnight would have melted by the time of plaintiff's accident.  Thus, North Street established prima facie that it neither created nor had notice of an icy condition in its parking lot.

The plaintiff attested he slipped on a patch of ice, coupled with his expert's affidavit stating that ice had formed by 3:00 a.m. and would not have melted by the time of plaintiff's fall and thus raised issues of fact as to North Street's notice of the alleged icy condition.

However, under its “snow plow” contract with North Street, Tripicchio was required only to "snow plow if needed" for three winter months.  The contract called for salt to be applied only after plowing had been performed.  North Street's on-site property manager testified that Tripicchio was required to inspect for refreezing only in the event of snowfall.  There was no evidence in the record of any snowfall after January 15, when about one-half inch of mixed snow and sleet fell, with only "trace" accumulation, and it is undisputed that the temperature would have caused any snow remnants to melt by midnight on January 18.

There is no record of any snowfall event that could have triggered Tripicchio's duty to either plow or inspect the premises for refreezing on the morning of the accident.  Accordingly, plaintiff's fall did not arise from Tripicchio's performance of its work.  Therefore, North Street is not entitled to contractual indemnification against Tripicchio.

The court held:  Finally, even were we to find Tripicchio liable, recovery would not lie against Merchants.  North Street learned of the accident approximately two weeks after it occurred, but failed to notify Merchants until four months later.
Editor’s Note:  All kinds of question abound.  We do love the mystery and intrigue of snow plow contractor cases.  Let’s see:

• What does Tripicchio’s liability, if any, have to do with Merchants’ obligations to, what appears to be, an additional insured?
• The Court blended and confused “liability” and the “insured’s operations”.  It isn’t Tripicchio’s liability that would have given rise to coverage, it’s Tripicchio’s operations. 
• We have taken the liberty of rewriting that portion of the decision as we feel it should have be written:
  

Finally, even were we to find that this accident arose out of Tripicchio’s operations and thereby qualifying North Street for additional insured status under the blanket additional insured endorsement within Merchants’ policy, North Street has still forfeited its coverage under that policy.  As an additional insured, North Street had a separate and distinct obligation to promptly notify Merchants of the occurrence.  North Street learned of the accident approximately two weeks after it occurred, but failed to notify Merchants’ until four months later and thereby breached the condition of coverage requiring timely reporting.

One of the great questions still unresolved by the New York courts is this one: when does a slip and fall on snow or ice arise out of the snow plow contractor’s operations when the snow plow contractor is to plow “as needed?”  That question was never reached.

02/01/11       Hollomon v. Manginelli Realty Company, Inc.
Appellate Division, First Department
Once an Insurer Has Undertaken a Defense, a Motion by Defense Counsel to Withdraw as Counsel Is “Poor Substitute” for DJ Action to Test an Insurer’s Later Disclaimer
The New York State Liquidation Bureau retained a law firm to defend its insureds, the owner and managing agent of an apartment building, in a lead paint case.  The alleged exposure took place between May 2002 and September 2004 and the firm was retained in October 2005.  Five years later, when the matter was ready for trial, Liquidation Bureau notified the law firm and defendants that it was disclaiming coverage, asserting that the alleged exposure did not occur within the policy period.

The law firm moved to withdraw as counsel.  In affirming an order of the motion court denying the law firm’s motion to withdraw – without reaching the merits of the coverage decision -- the appellate court held a motion for withdrawal by counsel under such circumstances is an improper attempt to test an insurer's disclaimer of coverage.  Once a defense has been provided, “the right of an insurer to deny coverage can only be resolved by a declaratory judgment action in which the insured would be able to adequately litigate the facts of [the insurance company's] disclaimer."  The law firm did not demonstrate any conflict of interest arising from its clients' conduct or inconsistency between their interests, which would warrant granting the motion to withdraw.
Editor’s Note:  This decision is in line with a number of earlier decisions dating back to the 1970 Court of Appeals decision in Brothers v. Burt.  The duty to defend continues and, whether the carrier likes it or not, it has the obligation to continue paying defense costs until it has retained separate coverage counsel and successfully prosecuted a declaratory judgment action (or has convinced the insured to hire and pay for its own defense counsel).

01/27/11       Roebuck v. State Farm Mutual Automobile Ins. Co.
Appellate Division, Third Department
For Purposes of SUM (Underinsured) Coverage, Corporations Do Not Have Family Members
Roebuck is an Ulster County Deputy Sheriff. He and his wife, plaintiff Wanda Roebuck, are sole shareholders in KMR Landscape. KMR uses a commercial dump truck that is insured by defendant National Grange Mutual Insurance Company (National Grange). While on duty as a Deputy Sheriff and driving a County-owned patrol car, plaintiff was involved in an automobile accident and suffered multiple injuries. Plaintiff recovered the full $25,000 limit of the other driver's insurance policy, then sought payment under the supplementary uninsured/underinsured motorists (hereinafter SUM) provisions of defendants' policies.  State Farm insured other vehicles and its policies were not involved in this appeal. National Grange denied coverage and after being sued, moved for summary judgment.
The SUM policy is established by regulation. The term "insured" includes, among others, "(1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse; (2) any other person while occupying: (i) a motor vehicle insured for SUM under this policy".  When the policy is issued to a corporation, the SUM provision does not follow any particular individual, but instead "covers any person [injured] while occupying an automobile owned by the corporation or while being operated on behalf of the corporation".
Here, the policy confines coverage to listed automobiles and only KMR's commercial dump truck is listed. It is undisputed that plaintiff was working as a Deputy Sheriff and was not occupying that dump truck when he was injured. Thus, he is entitled to SUM coverage only if the policy was issued to him individually, not to the corporation.

01/27/11       Auriemma v. Biltmore Theatre, LLC
Appellate Division, First Department
Court Dances Around “Acts or Omissions” Language in Blanket Additional Insured Endorsement
Plaintiff asserts that a four-foot-deep open pit at his worksite was an elevation-related hazard and brought a claim under Labor Law § 240(1). He worked for Mass Electric (“Mass”).  Mass was a subcontractor to Sweet Construction, the general contractor (“Sweet”) in connection with a renovation of the Biltmore Theater owned by Manhattan Theater (“Manhattan”). His responsibilities included the installation electrical conduit. Sweet hired Civetta as the excavation and masonry contractor.
Both Mass and Civellta, under agreements, had agreed to defend and indemnify actions brought against the owner, Manhattan, and Sweet, the GC and each was required to purchase policies naming the owner and GC as additional insureds.  
Civetta's policy was issued by Diamond State Insurance Company, covers additional insureds with respect to liability arising out of Civetta's acts or omissions. Mass's policy, issued by St. Paul Fire and Marine Insurance Company, covers additional insureds for injury resulting from Mass's work or the insureds' general supervision of Mass's work. It did not cover bodily injury resulting from any act or failure to act of an additional insured, other than general supervision of Mass's work. The policy also states that it is excess over the insureds' primary or other available insurance.
Contractual Indemnification
A finding of liability under Section 240(1) of the a Labor Law is not a finding of negligence and does not preclude enforcement on an indemnity agreement.  Under the General Obligations Law § 5-322.1 (GOL), so long as there is no evidence of negligence on the part of the party seeking indemnity, an indemnification agreement is enforceable.
Here, the issue of negligence on the part of Mass, Civetta and Sweet has not yet been litigated so the court is unwilling to determine that the indemnity agreement is enforceable.  Those parties may be negligent and if so, the GOL might preclude the enforceability of the agreement.
Insurer’s Obligations
An insurer's duty to defend, on the other hand, is broader than its duty to indemnify and arises "whenever the allegations of the complaint suggest [. . .] a reasonable possibility of coverage'", thus, the duty to provide a defense may arise before indemnification has been decided.
The court then concluded that the Mass policy covered the additional insureds for injury resulting from Mass's work for them or "their general supervision of that work," also has a duty to defend because it had actual notice of the possibility of coverage from Sweet of LI's answers to the complaints alleging Mass's culpability, and its deposition testimony.
The Court (Unfortunately) Blends the Two
The appellate court noted that the agreements executed by Civetta and Mass require them to defend "any and all legal actions" brought against Sweet of LI in connection with the purchase order agreements. The court noted that the complaints contain no allegations against Civetta but refer to excavation.  The Diamond policy covered the additional insureds only for liability arising out of Civetta’s alleged acts or omissions. The court then noted that Diamond should have known that Civetta was responsible for excavation and the contract between Civetta and Sweet of LI and deposition testimony describing Civetta's responsibilities at the site provided Diamond with knowledge of facts establishing a reasonable possibility of coverage.
Editor’s Note:  The court noted that there were no allegations of Civetta’s negligence and thus the conclusion ignores the policy language requiring the carrier’s coverage to trigger only for alleged acts or omissions. Wrongo.  Negligence was not established – not even alleged -- and a duty to defend has not triggered.  Compare this to a 2005 First Department decision.
In Am. Guar. & Liab. Ins. Co. v. CNA Reinsurance Co., 16 A.D.3d 154 (1st Dept 2005) defendant Linden Housing Plaza was the landlord of a building in which a tenant was allegedly shot by intruders. Linden had a security guard contract which required that the security guard company procure a liability policy naming Linden as an additional insured, which it did. The blanket additional insured endorsement covered Linden "only with respect to acts or omissions of the Named Insured in connection with the Named Insured's security or investigative operations on behalf of said additional insured." The tenant brought a personal injury action against Linden and its security guard company, alleging both negligent maintenance of the building's lighting and door locks and negligent supervision and conduct of the security guards. The Appellate Division found that "under well-settled canons of interpretation (citations omitted) the additional insured endorsement covering Linden under its security guard company's policy unambiguously provided Linden with coverage only for injuries arising from security guard negligence.

01/25/11       Salzman v. Electric Insurance Company
Appellate Division, Second Department
Insured Cannot Compel Insurer to Arbitrate Underinsured Motorists Claim.  Florida Policy Involved.
This was what the court called a “hybrid proceeding” brought to compel Electric Insurance to proceed to arbitration of a claim for underinsured motorists benefits, as well as a declaration that the policyholders did not need the consent of the carrier to settle their automobile accident case with Jewish Community Council of Greater Coney Island, for the sum of $250,000.
The lower court compelled arbitration but the appellate court reversed, holding that the policy did not specifically compel arbitration.
Here, it is clear that the subject automobile insurance policy issued by Electric Insurance Company to the petitioners only provided for arbitration of underinsured motorist benefit claims where "[b]oth parties" agreed to arbitrate. Accordingly, since Electric Insurance Company did not agree to arbitrate, the Supreme Court erred in granting the petition to compel it to proceed to arbitration.”
Editor’s Note:  While the decision does not so indicate, we thought it might be an out-of-state policy.  According to appellate counsel Scott Horn from Mischel & Horn, P.C. there was a Florida policy in play.  Certainly, under the mandatory language of Condition 12 of the NY regulatory endorsement, the carrier can be compelled to arbitrate:
12. Arbitration: If any insured making claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration, administered by the American Arbitration Association, pursuant to procedures prescribed or approved by the Superintendent of Insurance for this purpose.
Mr. Horn noted, by the way, that the court upheld the settlement of the underlying BI claims without the consent of the UI carrier, without discussion.  That would be odd, even for Florida.

01/25/11       SP & S Assoc., LLC, v. Insurance Co. of Greater New York
Appellate Division, First Department
Failure of Insured to Advise Secretary of State That It Has Moved Is Not an Acceptable Excuse for Late Reporting
In a late notice / late reporting case, the insured was sued by serving the Secretary of State, as is permitted by law.  In what is a growing and repetitive problem, the insured failed to keep the Secretary of State informed of its current mailing address.  As a result, the insured did not get notice of the lawsuit and a motion for default was filed against it. The fact that plaintiff did not actually receive a copy of the summons with notice, due to its failure to keep its address current with the Secretary of State, does not excuse its noncompliance with the notice requirements of the policy. As plaintiff did not provide notice of the action to its insurer until receipt of a motion for default judgment some five-and-a-half months after service of process, defendant was entitled to disclaim coverage.  Editor’s Note: The court relied on Briggs, a 1998 Court of Appeals decision we have discussed in the past on this self-same issue.

01/25/11       Lobosco v. Best Buy, Inc.
Appellate Division, Second Department
No Reasonable Excuse Offered for Late Notice by Named Insured; Owner and GC Not Afforded Coverage as Additional Insureds Because No Such Coverage in Policy
Dame Contracting, Inc. (“Dame”), entered into a subcontract with a general contractor, Schimenti, to install dry wall and metal framing at a Valley Stream Best Buy.  Dame, the subcontractor, was required to obtain a commercial general liability insurance policy which was to name Schimenti and Best Buy as additional insureds.  Although an insurance broker obtained a liability insurance policy on Dame's behalf from the third-party defendant Everest National Insurance Company (“Everest”), the policy failed to name Schimenti and Best Buy as additional insureds.

Dame employee Lobosco was hurt while on the Valley Stream project and Dame notified Everest four months after the accident.  Everest denied coverage on the grounds of late notice.

Lobosco sued Best Buy and Schimenti and they both sued Dame (seeking contractual indemnification and for damages for a breach of its duty to defend), and Everest (seeking coverage).  Everest claimed that neither was an insured and in any event, they each breached their duties to provide prompt notice. Everest counterclaimed seeking a determination that it had no obligation to any of the parties, the owner, general contractor and its own insured (because of late notice). 

The excuses offered for the late notice were that the parties believed the accident would not result in a claim because the plaintiff's injuries appeared to be minor, and because he had filed a Workers' Compensation claim.  The appellate court found that their excuses were not reasonable in view of both the fact that they were aware that the plaintiff had sought medical treatment for his injuries, and Dame's failure to inquire further as to his condition

An application to reform the policy to include Schimenti and Best Buy as additional insureds is denied as academic, in light of the determination that they failed to give Everest timely notice of the plaintiff's accident.
Editor’s Note:  The right decision for the right reason.  Still pending, we trust, is the contractual claim for indemnity and the claim that the subcontractor breached its contractual obligation to have coverage provided by an insurance carrier.

LIENING TOWER OF PERLEY
Michael F. Perley
[email protected]

In every personal injury case on which you make a payment you become the jury that must decide whether a Medicare Set Aside (which I like to call a Future Care Allocation Account) needs to be established.  At that time, I suggest you make use of this simple verdict sheet to guide you through your deliberations.
MEDICARE SET ASIDE VERDICT SHEET

• Will the plaintiff need future medical care and treatment for the injuries claimed in the lawsuit?

Yes    ____             No      ____
If your answer to Question 1 is “Yes,” proceed to Question 2.  If your Answer to Question 1 is “No” you do not need to create a Medicare set-aside.

• Will the plaintiff need these future medical services and treatment when he/she is eligible for Medicare benefits (either by age or disability)?

Yes    ____             No      ____
If your answer to Question 2 is “Yes,” proceed to Question 3.  If your Answer to Question 2 is “No” you do not need to create a Medicare set-aside.

• Is there another entity (such as no-fault) that will pay for ALL of the plaintiff’s medical care and treatment in place of Medicare?

Yes    ____             No      ____
IF YOUR ANSWER TO QUESTION 3 IS “NO”, YOU NEED TO ESTABLISH A MEDICARE SET ASIDE OR A FUTURE CARE ALLOCATION ACCOUNT AS PART OF THE SETTLEMENT.  If your Answer to Question 3 is “Yes,” you do not need to create a Medicare set-aside.        
REPORT YOUR DECISION TO THE APPROPRIATE PEOPLE

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

02/01/11       Whitaker v. Soumano
Appellate Division, First Department
Plaintiff Raises Issue of Fact With Range of Motion Limitation of 52% Two Years Post Accident
On appeal, the trial court is reversed and defendants’ motion denied as plaintiff submitted sufficient medical evidence, including the affirmation of his treating doctor who noted pain and limited range-of-motion the day after the accident, 83% limitation three months later, and 52% two years later.  He also opined that plaintiff would likely never fully recover.  This was sufficient to raise a triable issue of fact under the permanent consequential limitation and/or significant limitation of use categories and defeat defendants’ motion.

01/25/11       Patten v. Hernandez
Appellate Division, Second Department
Defendants’ Motion for Summary Judgment Affirmed Where Plaintiff Fails to Raise a Triable Issue of Fact
The facts are that plaintiff collided with an oncoming landscaping trailer towed by a van which attempted to make a left-hand turn, from the left turning lane, into another street.  Defendants’ made a prima facie showing of entitlement to summary judgment through the affirmed reports of their medical experts which concluded the plaintiff did not sustain a serious injury.  Without any details, the court simply held that plaintiff’s submissions in opposition failed to raise a triable issue of fact, warranting the grant of defendants’ motion.

01/18/11       Isakov v. Cooper
Appellate Division, Second Department
Conclusion That Limitation Is “Volitional” Must Be Substantiated or Explained
During examination, defendants’ orthopedic surgeon found a limitation in plaintiff’s spinal flexion but did not set forth the extent because, according to the orthopedist, plaintiff’s refusal to bend was “volitional”.  However, the orthopedist failed to provide an explanation or substantiate his conclusion with objective medical evidence.  In addition, the orthopedist did not set forth any range-of-motion findings with regard to plaintiff’s alleged injury to the right hip.  Therefore, the trial court’s denial of defendants’ motion was affirmed.

01/18/11       Lanzarone v. Goldman
Appellate Division, Second Department
Not Being Able to Perform Usual and Customary Activities as Easily as Before Accident Is Not the Same as Being Curtailed to a Great Extent
In August 2005, the parties were involved in a three-car chain collision in which plaintiffs, Lanzarone and Schiralli, claimed to have been serious injured under the 90/180-day category.  They sued the two trailing vehicles, later discontinuing the action against one of them and proceeding only against defendant Goldman. 

At trial, and upon plaintiffs’ motion, judgment was entered, as a matter of law, on the issue of whether plaintiffs sustained a serious injury under the 90/180-day category, and upon a jury verdict, each was awarded $20,000.

Schiralli, who was 80 years old at the time of trial in 2009, testified, among other things, that she could no longer reach up high to hang curtains and that she was no longer able to run up the stairs to her apartment as she had done before the accident, but that she now had to walk slowly and hold on to the banister.  Lanzarone, a stay-at-home mother, testified that she had to walk and do chores more slowly but that she had not stopped any of her usual activities completely.

On appeal, the Court found that the trial court erred not only in directing a verdict in favor of plaintiffs under the 90/180-day category, but in refusing to grant defendant’s motion and dismiss the complaint based on that category.  The Court stated that no rational jury could have found that either plaintiff sustained a serious injury under the 90/180-day category as that category required curtailment from one’s usual activities “to a great extent” and not merely being unable to perform those activities as easily as before the accident or suffering some pain when doing so. 

01/18/11       Messina v. Rohr
Appellate Division, Second Department
Chiropractor’s Submissions Are Insufficient Where They Do Not Assess ROM Qualitatively or Quantitatively
On appeal, defendant’s motion for summary judgment is granted because plaintiff’s treating chiropractor failed to include either quantified range-of-motion findings or a qualitative assessment of plaintiff’s cervical limitations and, as such, did not raise a triable issue of fact in opposition.

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

ARBITRATION
02/01/11       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Evidence of Palliative Benefit Is Medically Necessary Treatment
The Applicant sought reimbursement of chiropractic services rendered from January 3, 2005 through April 19, 2010, arising out of a May 22, 2002, motor vehicle accident.  The Applicant’s assignor complained of constant left-sided neck pain with radiation into the left shoulder as well as pain, numbness, and tingling to the left arm and hand.  A cervical spine MRI revealed C3/C4 right foraminal stenosis, C4/C5 bilateral foraminal stenosis, C5/C6 central stenosis with ventral cord impingement, and C7/T1 right paracentral disc herniation.  A lumbar spine MRI revealed a L4/L5 disc herniation.

The Applicant’s records indicated that the chiropractic treatment provided control of symptoms.  The Applicant’s assignor testified at the arbitration that each chiropractic treatment provided two to three weeks of relief.

The insurer denied chiropractic treatment based upon the independent chiropractic re-examination (“IME”) of Louis Marconi, D.C.   Mr. Marconi’s opinion was that even though the eligible injured person’s condition was permanent, chiropractic treatment was providing palliative relief.  Further, chiropractic treatment was at an endpoint.

The assigned arbitrator declined to uphold the insurer’s denials.  The basis was that while all chiropractics agreed that treatment was not providing curative benefits, treatment did provide a palliative benefit which was medically necessary.  The assigned arbitrator relied upon the Applicant’s assignor’s testimony and the Applicant’s records to support this conclusion.  Likewise, Mr. Marconi’s examination indicated that chiropractic treatment could provide palliative benefit.

LITIGATION

01/26/11       Sung Bok Lee a/a/o Miriam Kassin v. Metropolitan Prop. and Cas. Ins. Co.
Appellate Term, Second Department
Insurer Properly Relied Upon Chiropractic Fee Schedule for Reimbursement of Licensed Acupunturist
The insurer, in reimbursing a licensed acupuncturist for services, properly used the workers’ compensation fee schedule established for a chiropractor who is properly trained to perform acupuncture. 

TREND ALERT!

The following three decisions all involve a plaintiff challenging an insurer’s filing a demand for trial de novo after an adverse mandatory arbitration decision.  We reported in last edition on a case involving the same issue. 

The Appellate Term upheld the lower court’s denial of plaintiff’s motion to strike the demand for trial de novo on the ground that the insurer was not entitled to trial de novo as it defaulted in the mandatory arbitration.  The Court consistently held in all of the reported decisions to date that if the party’s attorney appears for the mandatory arbitration; participates in the hearing; and submits evidence, if admissible, which would rebut the plaintiff’s case it is not in default.    The fact that the defendant’s documents were excluded from evidence based upon plaintiff’s hearsay objection was not sufficient evidence that the defendant was in default. 

Here are the three case cites all decided on January 18, 2011, and emanating from the Appellate Term, Second Department:

 

B.Y., M.D. P.C a/a/o Jeffrey Louissaint v. Progressive Northern Ins. Co.,

B.Y., M.D. P.C a/a/o Jason France v. Progressive Direct Ins. Co., and

Richard Morgan, DO, P.C. a/a/o Roger Darbasic v. Progressive Northeastern Ins. Co.

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

02/03/11       Hudson Ins. Co. v Oppenheim
Appellate Division, First Department
Failure to “Exercise Reasonable Diligence” to Uncover Potential Claims Renders the Insured’s Notice Impermissibly Late
Upon learning that Hudson delayed more than 10 months in providing notice, Lloyds’ denied its claim for coverage. Importantly, the policy issued by someone at Lloyds required notice of a loss be provided “at the earliest practicable moment after discovery…by the Corporate Risk Manager.” 

Here, the insured, Hudson, did not have a formal Corporate Risk Manager.  Rather, on motion, it was posited that Hudson’s chief actuary performed job duties that would be akin to those performed by a Corporate Risk Manager.  Because the chief actuary was never made aware of the loss until one month after the claim was tendered, Hudson reasoned that its notice was timely per the terms of the policy.  This was despite the fact that Hudson acknowledged that other individuals at the company knew of the claim for nearly a year prior to notice being provided to either the chief actuary or Lloyds.

In upholding the denial, the First Department ruled that regardless of when the actuary was provided notice of the loss, Hudson breached its obligation to “exercise reasonable diligence to acquire knowledge of covered losses.”  Moreover, the Court also ruled that the actuary had “delegated” risk management activities to the legal department.  As such, knowledge of the claim by the legal department nearly 10 months prior to notice being provided to Lloyds was imputed to the actuary.  Accordingly, notice was untimely, and Lloyds’ denial appropriate. 

Peiper’s Point – While we applaud the outcome, we note that the Court appears to have followed the perceived intent, rather than actual wording, of the policy language at issue.  Under the terms of the late notice clause, notice was only required upon knowledge of the claim by the Corporate Risk Manager.  Where, as here, knowledge of the incident was not provided to the Corporate Risk Manager (the chief actuary) until after the notice was provided, we question the outcome.  Note, however, that the Court finds a way around this issue by also providing that notice to the legal department was imputed to the chief actuary. By finding that the notice was imputed, the First Department defuses the argument that notice was not due until the chief actuary learned of the claim.

01/20/11       Cullin v. Makely
Appellate Division, Third Department
Attorney Affirmation in Opposition to “Grave Injury” Claim Was Insufficient to Defeat Summary Judgment
Plaintiff, Ted Cullin, sustained an injury to his lower leg and ankle when he fell from a scaffold while in the course of his employment.  As a result of the incident, coupled with the fact that the same area of Mr. Cullin’s body had been traumatically injured in a previous accident, Mr. Cullin’s foot was amputated.  The treating physician opined that the amputation was necessary where the plaintiff was being subjected to continued pain and that other conservative treatments were not viable options.

Armed with this evidence, defendant Makely commenced a third-party action seeking common-law indemnity from Mr. Cullin’s employer.  The Court noted the well- known rule that common law indemnification is available against an employer of an injured party so long as the injury qualifies as a “grave injury” under Section 11 of the Workers’ Compensation Law.   Here, based upon the statements provided by Mr. Cullin’s treating physician, it was clear that the burden of establishing a grave injury had been met.  In reply, the Court noted that a self-serving attorney affirmation on behalf of the employer was not enough to rebut the objective medical evidence provided by Makely. 

12/10/10        Carden v. Allstate Ins. Co.
Supreme Court, Westchester County
Court Awards Consequential Damages Based on the Insurer’s Bad Faith in Settling the Claim
Plaintiffs’ home in Pelham, New York was substantially damaged by fire.  At the time of the loss, plaintiffs were insured under a policy issued by defendant.  Due to the damage, plaintiffs could no longer reside in their home and were required to rent another residence.   

After being notified of the fire, defendant offered to settle the loss for $265,000.  This offer was rejected.  In the meantime, due to damage to the roof, mold became an additional concern.  Plaintiffs hired an environmental company to assess the problem.  Based on the company’s assessment, the entire home had to be gutted to repair the mold issue.  Accordingly, in June 2007, defendant revised its estimate and offered plaintiffs $575,000, which again they rejected. 

Plaintiffs then demanded that the loss be determined by an appraiser pursuant to the policy (plaintiff’s appraiser estimated the cost to repair to be $1,069,849 while defendant’s appraiser estimated it at $750,320).  In December 2007, an Umpire was appointed determine the cost to repair.  He estimated it at $832,982. 

In the spring of 2008, defendant agreed to pay the Umpire’s amount and the house was reconstructed.  During reconstruction, the plaintiffs’ driveway and landscaping were damaged, which defendant refused to reimburse.  Further, as a result of the delays in reconstruction, plaintiffs were forced to rent another residence for 18 months (the policy only covered 12 months). 

Thereafter, plaintiffs commenced this action asserting Four Causes of Action.  The First and Fourth sought reimbursement of expenses plaintiffs assert were covered under the policy and the second and third sought consequential damages based on defendant’s delay in settling the claim.  The court addressed the covered claims first.   

The First Cause of Action sought reimbursement for the expense of removal of debris and for damage to plaintiffs’ driveway and landscaping during reconstruction.  The court granted plaintiffs summary judgment as to liability on this claim stating that the policy provides “Property We Cover Under Coverage A: 1. Your dwelling including attached structures.”  As the term structure was not defined in the policy, and a driveway requires a building permit, the court construed the ambiguity against the insurer.  Notably, the court indicated that defendant conceded the debris removal and damage to landscaping was covered. 

The Fourth Cause of Action sought reimbursement of rental charges plaintiff incurred during the first 12 months to store their possessions.  The court denied defendants’ motion for summary judgment dismissing this claim noting that the reasonableness of these expenses was a question of fact.

The Second Cause of Action sought damages in excess of the 12 month ALE (additional living expenses) provided for in the policy.  Likewise, the Third Cause of Action sought recovery of expenses related to the mold inspection and appraisal.  Both damages admittedly were not covered under the policy.  The court noted that were an insurer breaches its duty to investigate, bargain and settle claims in good faith, consequential damages for breach of contract may be covered not limited by the amount specified in the insurance policy.  It then held that plaintiffs suffered damage due to delay in reconstruction of their home due to defendant’s bad faith in settling the claim.  As defendant failed to submit evidence that raised a question of fact, the court granted summary judgment on these claims for plaintiffs. 

Peiper’s Point  

In this case, notice that the consequential damages had absolutely nothing to do with a coverage issue.  Rather, they arose from delays as the two sides argued over the value of the loss.  This is exactly what the appraisal provision of the policy is meant to resolve –and, in fact, in this case did resolve.

For more than a hundred years, the appraisal provision is a built in “dispute-ender” so that arguments over value can be efficiently and cheaply resolved.  Where there was no issue as to the coverage, there likewise should have been no violation of the good faith and fair dealing obligation that is at the hallmark of any extra-contractual claim.  Again, the matter was resolved exactly as it should have been under the clear terms of the policy and the Insurance Law.

However, despite that the fact the carrier negotiated the matter in good faith, never erroneously asserted coverage defenses, and availed itself of the protections of the appraisal provision which is required to be in all policies by the Insurance Law, the Trial Court has ruled that Allstate breached its duty of good faith and fair dealing.  As such, the court held that Allstate ought to be required to pay for extra-contractual expenses that accrued because of the good faith delay.  If upheld, not only does this decision have the potential to expand the reaches of Bi-Economy, but more importantly, holds hostage the carrier’s ability to disagree (in good faith) on the valuation of a loss.     

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

01/21/11       Farmers Insurance Exchange v. RNK, Inc.
United States Court of Appeals for the First Circuit
Applying Massachusetts Law – Interpreting an Indemnification Clause
In 2005, a minor acting through her adoptive father brought suit in the United States District Court for the Southern District of New York against RNK alleging that RNK violated a regulatory order issued by the New York Public Service Commission.  The regulation provided that all Competitive Local Exchange Carriers that had chat lines in their networks had to immediately either designate existing chat line central office codes as blockable or transfer these chat lines to specific central office codes that were already designated as blockable codes.

RNK admitted that it failed to comply with the regulatory order and plaintiff alleged that as a result of this violation the minor was improperly able to gain access to a chat line through which she met several individuals who, after convincing her to contact them in person, sexually assaulted her. 

RNK’s insurer settled the lawsuit and then, in the name of RNK, sought indemnity from Ripple Communications [“Ripple”], the company that provided RNK with conferencing services.  One of Ripple’s services allowed people to meet and confer through live telephone chat lines.  RNK’s claim for indemnification was and continues to be based on its contention that the indemnity provisions of the Agreement require indemnification from the claims asserted in the underlying lawsuit. 

Ripple’s insurer, Farmers, filed its declaratory judgment action against both Ripple and RNK seeking a ruling that it had no duty to defend or indemnify RNK in connection with the underlying lawsuit. 

After concluding that Ripple is not contractually obligated under the agreement to indemnify RNK against such claims the district court issued an order denying RNK’s motion for summary judgment and granted Farmers and Ripple’s joint motion for summary judgment.

RNK claimed that Ripple is obligated, pursuant to the Agreement, to indemnify it from claims asserted in the underlying lawsuit.  The bases for RNK’s position were paragraph 3 and paragraph 10 of the Agreement.

Under paragraph three of the Agreement, Ripple agreed to “indemnify RNK and hold harmless from and against all damage claims associated with the equipment of Ripple.”  Since the term “equipment” was not a defined term in the Agreement, the Court looked to the Agreement as a whole. In so doing, the court held that the agreement unambiguously clear that the term “equipment” is used in the agreement in its ordinary sense to refer to Ripple’s tangible equipment to be located at RNK’s premises.  The court also analyzed how the term “associated” was used in the indemnification clause and determined that the term was ordinarily and commonly used to indicate something that is “closely connected, joined or united with another.  The court therefore concluded that under paragraph three of the Agreement, Ripple undertook the obligation to indemnify RNK against all claims associated (i.e., closely connected, jointed or united) with Ripple’s tangible equipment located at RNK’s premises.

The court concluded that the plain language of the Agreement shows that its purpose was mainly to allow Ripple to locate its equipment in RNK’s premises for the operation of Ripple’s chat lines and to require RNK to assign telephone numbers thereto.  In light of this purpose and reading the agreement as a whole, the court found it evident that the aim of paragraph three was to protect RNK in case Ripple’s tangible equipment located at RNK’s premises specifically caused damage to adjacent property in RNK’s facilities or bodily injury to persons in the vicinity. 

The court also fount it telling that paragraph three specifically restricts the indemnification obligation to claims associated with Ripple’s “equipment”, as opposed to claims associated with Ripple’s “services” or the “existence of Ripple’s chat lines.”

With respect to paragraph three of the agreement the court held that the indemnification obligation unambiguously relates to claims specifically caused by Ripple’s tangible equipment located in RNK’s premises and does not encompass all claims that can somehow be traced back to the existence of Ripple’s chat lines.

Under paragraph ten of the Agreement Ripple agreed to indemnify RNK from all claims arising from all “marketing” and “content”.  The district court found that the term “content” was used to refer to the prompts, menus and information publicized on the various chat, conference and information lines contemplated in the contract, and did not encompass third-party conversations taking place through RNK’s network and Ripple’s chat lines.

In analyzing paragraph ten the Court found it significant that paragraph ten is titled “Customer Conduct” and that the provisions of said paragraph evince that the purpose behind paragraph ten was to protect RNK from possible unlawful conduct by Ripple.  The court stated that when read in proper context, it was clear that this paragraph required that Ripple indemnify RNK from any claims arising from Ripple’s marketing and content.  The court found that the term “content” related to materials generated by Ripple (i.e., prompts, menus and information publicized by Ripple on the various chats) and does not encompass the traffic (i.e., third party conversations) that went through RNK’s network and Ripple’s chat lines.  The court held that the claims asserted in the underlying complaint fell outside the indemnification obligation set forth in paragraph ten, even if it were assumed that such claims arose from conversations she carrier out through Ripple’s chat lines.

The court affirmed the district court decision which granted summary judgment to Farmers and Ripple. 

01/27/11       United Fire Casualty Co. v. Boulder Plaza Residential, LLC
United States Court of Appeals for the Tenth Circuit
Applying Colorado Law – When Does Damage Occur?
Boulder Plaza Residential [“BPR”], a real estate developer, and McCreary & Roberts Construction Co. [“M & R”] entered into a contract in which M & R agreed to serve as the general contractor for the interiors of condominiums BPR was building in Boulder, Colorado.  M & R then entered into a subcontract with Summit Flooring, LLC [“Summit”] whereby Summit agreed to install the hardwood floor in the condominiums.  Summit obtained a CGL policy from United Fire Casualty [“UFC”].  M & R, as the general contractor, was listed as an Additional Insured.

Shortly after the sale of the Boulder condominiums, their new owners notified BPR of damages to the floors of the units. BPR then notified M & R.  M & R and Summit tried unsuccessfully to repair the floors.  B PR then sent M & R a notice of loss relating to the floor installations, which M & R forwarded to Summit.  M& R then sent UFC a formal notice of claim and demand for indemnification as an additional insured under the CGL policies.

UFC investigated M & R’s claim and concluded that the physical damage to the floors was caused by excessive moisture in the concrete floor and the wood floors at the time of installation, but that Summit’s “work and floor adhesion was sound.”  UFC denied coverage to M & R.

Various claims were filed in state court regarding the damage to the floors.  While the state court action was pending UFC filed this declaratory judgment action in federal court, seeking a declaration that it had no duty to defend or indemnify M & R in the state court. M & R later settled the state court claims and assigned its action against UFC to BPR. BPR then filed counterclaims against UFC alleging breach of the insurance contract and bad faith.  BPR also pursued M & R’s cross claims against Summit through trial in state court, which resulted in the jury finding that Summit was not negligent and was not liable for the damages alleged by BPR.

UFC argued that it had no duty to defend M & R because M & R’s coverage as an additional insured was limited to imputed liability out of the “ongoing operations” of Summit; and, that obligation ceased once Summit’s operations were completed.  According to UFC, the complaints in the underlying action alleged that damage to the floors was first observed only after Summit had completed installation.  As the endorsement did not cover M & R for liability arising out of completed operations, UFC contended that it had not duty to defend M & R. 

The district court denied UFC’s motion and granted BPR’s motion ruling that the complaints sufficiently alleged damage to the floors during improper installation, thereby triggering a duty to defend M & R.  The district court also ruled that UFC had a duty to indemnify M & R as an additional insured.

UFC then filed a motion for reconsideration of the duty to defend, based on a subsequent decision by the Colorado Court of appeals, General Security Indemnity Co. of Arizona v. Mountain States Mutual Casualty Co., 205 P.3d 529 (Colo. App. 2009).  UFC’s motion for reconsideration was granted in part on the ruling that, under General Security, the complaints alleged only damages from faulty workmanship and there was therefore no “occurrence” within the definition of UFC’s policy.  Based on this precedent, the district court concluded that neither UFC’s duty to indemnify, nor its duty defend was triggered. BPR then filed its notice of appeal.

In analyzing the case the Tenth Circuit first noted that under normal circumstances the General Security interpretation of “occurrence” would govern this case.  However, in response to General Security, the Colorado Legislature enacted Colo. Rev. Stat. §13-20-808 explicitly critiquing the restrictive interpretation of “accident” adopted by the court in General Security.  The statute provides that “in interpreting a liability insurance policy issued to a construction professional, a court shall presume that the work of the construction professional that results in property damage, including damage to the work itself or other work, is an accident. The statute applied to all insurance policies currently in existence or issued on or after its effective date of May 21, 2010.

Although the court addressed General Security and §13-20-808 it resolved the issues of the case without reference to either authority. Rather, the court centered its decision on whether the damage occurred out of Summit’s “ongoing operations”.  The additional insured endorsement in the UFC policy provided additional insured coverage “only with respect to [Summit’s] liability which may be imputed to [M & R] directly arising out of [Summit’s] ongoing operations performed for [M & R].

Referring to precedent from the Colorado Court of Appeals, Weitz Co., LLC v. Mid-Century Insurance Co., 181 P.3d 309 (Colo.App. 2007) and Globe Indem. Co. v. Travelers Ind. Co. of Ill, 98 P.3d 971 (Colo.App. 2004) the court recognized a dispositive distinction between the timing of the wrongful act and the time of the actual damage. The time of the occurrence of an accident is not the time the wrongful act was committed but the time when the complaining party was actually damaged.  The physical manifestation of damage and not improper installation or other faulty workmanship is the trigger for coverage. Summit began installing the floor boards in the units at One Boulder Plaza on or about November, 2002, and it completed the installation process on or about April, 2003.  Shortly after the installation was complete, many of the floors installed began to exhibit signs of cupping, or upward warping of the outside edges of the floor boards.

The court held that because the allegations of the complaint fail to indicate any factual or legal basis on which the insurer might eventually be held liable to indemnify the insured, UFC did not owe M & R a duty of defense.  Therefore, the court did not address the issue of whether Colo.Rev.Stat. §13-20-808 applies to this case.  Inasmuch as the complaint only alleged damage that occurred after the installation was complete, nothing in the four corners of the complaint alleged damage arising from Summit’s “on-going operations” – UFC had no duty to defend.

The final issue addressed by the court was whether UFC had a duty to indemnify M & R.  BPR argued that even if there was no duty to defend a duty to indemnify results from the indemnification clause in the contract between BPR and M & R, which required that M & R indemnify BPR not only for its own acts or omissions but for the acts and omissions of its subcontractors. UFC in turn agreed to insure M & R for Summit’s “liability which may be imputed to M & R.” 

In determining that UFC had no duty to indemnify the Court pointed out that in the underlying state court action, the jury found for Summit on all claims asserted by both BPR and M & R, and the verdict was affirmed on appeal – Summit was not liable to anyone.  The court noted that BPR confuses M & R’s liability arising from Summit’s conduct with Summit’s liability imputed to M & R.  Irrespective of M & R’s contractual obligations to BPR, Summit had no liability which could be imputed to M & R – absent such liability UFC’s duty to indemnify cannot be triggered.

As a final effort to trigger an indemnification obligation BPR argued that the “insured contract” provision in the contract triggered UFC’s indemnification obligation.  In reviewing the definition of an insured contract under the UFC policy the Court determined that the insured contract provision only applies to the named insured, Summit; and, as an additional insured M & R’s coverage is limited “to your [Summit’s] liability which may be imputed to that person or organization [M & R] directly arising out of your ongoing operations performed for that person or organization.”  Simply stated, M & R’s coverage is limited exclusively to the liability of Summit which may be imputed to M & R.

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

01/21/11       Estee Lauder v. OneBeacon Ins. Group, LLC
Supreme Court, New York County
Court Declines to Award Attorneys’ Fees Holding That Affirmative Defense Asserting Late Notice of Claim Is Not Equivalent to Placing the Insured in a Defensive Posture
This case addresses whether an insured can recover attorneys’ fees it incurred in litigating and successfully defending against an insurer’s late notice claim raised for the first time as an affirmative defense in litigation. 

On July 24, 2002, defendant denied plaintiff’s request for coverage regarding claims related to two landfills based on defendant’s inability to locate any evidence of the policy the claim was made under.  Thereafter, on November 1, 2002, defendant denied coverage for another claim for the same reason.  In both of these denial letters, no mention was made of plaintiff’s failure to give timely notice of a claim or occurrence. 

Plaintiff then commenced a lawsuit against defendant.  In defendant’s Answer, it raised for the first time plaintiff’s failure to provide timely notice of claim.  After subsequent motion practice, the court granted summary judgment in favor of plaintiff reasoning that defendant waived this ground for denial.  Plaintiff then moved for summary judgment seeking defense costs incurred in defending defendant’s motion. 

The argument plaintiff put forth was that the Court of Appeals, in its Mighty Midgets decision, left open the possibility for an insured to recover its attorneys’ fees in a coverage action initiated by the insured if the insurer forced the insured into a defensive posture.  Further, plaintiff argued that it was not necessary that the insurer be the one to initiate the lawsuit in order for an insured to recover attorneys’ fees as the situation in Mighty Midgets was an example of a “defensive posture” scenario, not the exclusive situation. 

After considering plaintiff’s argument, the court declined to grant its motion.  The court reiterated that New York has adopted the longstanding “American Rule” that precludes the prevailing party from recouping legal fees from the losing party except where authorized by statute, agreement or court rule.  An exception was created in Mighty Midgets where the court permitted the insured to recover legal fees, but, in that case it was noted, that such recovery only occurs “when [the insured] has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations.”  A situation not present here.

In an interesting discussion, the court distinguished the facts herein from two cases cited by plaintiff: (1) where the insured and insurer each commenced separate declaratory judgment actions and the two cases were consolidated; and (2) where after all of the coverage issues were resolved in a declaratory judgment action an insurer raised an additional reason for denying coverage after the court issued judgment.  Accordingly, the court determined that defendant’s assertion of an affirmative defense was not tantamount to a lawsuit. 

Notably, in the last section of the decision, the court indicated that there are strong policy reasons against adopting a rule that would reduce the incentives for insurance companies to defend in underlying tort actions.  It further noted that until the legislature determines otherwise this court is constrained to interpret the law as it currently stands. 

01/19/11       RDZ & Co., LLC v. Harleysville Ins. Co.
Supreme Court, Nassau County
Thirty-Eight Day Delay in Disclaiming Coverage Renders Academic Any Consideration of the Validity of the Grounds Asserted in the Disclaimer
Plaintiff commenced this action seeking defense and indemnity for a personal injury action brought by Patricia Berger who tripped and fell in plaintiff’s parking lot.  Defendants issued a businessowners policy to plaintiffs, but disclaimed coverage based on late notice of claim. 

On June 1, 2009, defendant received an Accord Notice of Occurrence/Claim.  On June 4, 2009, defendant questioned plaintiff about this occurrence and was told by plaintiff that he had received a letter from Ms. Berger’s attorney “a few months” ago and had ignored it as, in this opinion, it had no merit.  Thereafter, on July 9, 2009, thirty-eight days after receipt of notice, defendant disclaimed coverage. 

In considering this motion for summary judgment brought by defendant and plaintiff’s cross-motion based on failure to timely disclaim coverage, the court provided the following analysis.  First, it addressed defendant’s argument that it issued a “reservation of rights” letter on June 19, 2009.  The court explained that merely reserving the carrier’s right to disclaim coverage has no relevance to the question of whether the insurer timely sent a notice of disclaimer of liability or denial of coverage.  Second, the court considered whether defendant had a reasonable excuse for the delay.  In support, defendant submitted an investigator’s report, dated June 30, 2009.  Likewise, it submitted an affidavit of defendant’s employee attesting to the fact that on July 7, 2009, Ms. Berger’s attorney was contacted to verify that a letter was sent in November of 2008 to the insured.  Upon confirmation of this fact, defendant disclaimed coverage. 

The court granted plaintiff’s cross-motion and denied defendant’s motion holding that the lack of timeliness of a disclaimer renders academic any consideration of the validity of the grounds asserted therein.  Further, defendant failed to explain why an investigative call was not made to Ms. Berger’s attorney until July 7, 2009 or why an investigator was needed to obtain information already gathered through defendant’s conversation with plaintiff, its insured.

01/18/11       State of New York v. One Beacon Ins. Co.
Supreme Court, Albany County
Pollution Exclusion Triggered When Spill Occurred While Transporting Petroleum to Spill Site
The insurance policy issued by defendant to its insured, Florence B. Deyo, Inc. (“Deyo”),  provided that “[t]his insurance does not apply to:…’property damage’ arising out of the actual, alleged or threatened discharge…of ‘pollutants’…[w]hich are or were at any time transported, handled, stored, treated, disposed of or processed as waste by…any insured…”  Neither party contested that petroleum was a “pollutant” under the policy. 

Plaintiff commenced the underlying action against Deyo seeking recovery for costs it expended to cleanup a discharge of petroleum that occurred at a spill site.  Specifically, it was alleged that Deyo did not own the spill site but rather was delivering petroleum thereto when it spilled. 

According to the court, the delivery of petroleum unquestionably constituted transporting or handling of petroleum and, thus, was not covered under the policy issued by defendant.  Notably, although it is not in the case, we presume that a default judgment was taken against Deyo which gave plaintiff standing to bring this action.   

01/14/11       Commisso v. Tower Ins. Co. of New York
Supreme Court, New York County
Intent to Reside in House Following Renovation Was Not Sufficient to Establish Residency on Date of Loss
Plaintiff owned a house in Little Neck, New York, which was insured under a homeowners policy issued by defendant.  On January 26, 2008, there was a fire at the house. 

After the fire, defendant issued a denial letter alleging that plaintiff violated the terms of the policy by making material misrepresentations that he occupied the premises as his sole and primary residence; and that plaintiff was not entitled to coverage for the premises as the policy was limited to coverage for residence premises, and the premises was not plaintiff’s “residence premises.” 

In support of its motion for summary judgment, defendant submitted an affidavit along with its underwriting guidelines, which stated that defendant only issued homeowners policies on owner-occupied one or two family residences.  Further, the affidavit attested to the fact that “residence premises” means “[t]he one family dwelling where [the insured] resides and which is shown as the ‘residence premises’ in the declarations.” 

In reply, plaintiff argued that he made no material misrepresentation as he purchased the premises to use as his primary residence, but had not yet occupied it due to renovations and construction which were taking place at the time of the fire. 

The court held that as plaintiff never resided in the premises, and had only the intention to live there in the future there was insufficient evidence of plaintiff’s physical presence and permanency to demonstrate that he resided in the premises at any time prior to the date of loss. 

01/14/11       Northport Land Corp. v. Zurich N. Am. Ins.
Supreme Court, Suffolk County
No Coverage for Pollution Related Cleanup Costs Where Investigation Revealed Primary Source of Contamination Came from a Non-Covered Underground Storage Tank
This action arises out of a discharge of gasoline on property owned by plaintiff.  Plaintiff seeks recovery under its insurance policy, issued by defendant, for cleanup charges it incurred as a result of the contamination. 

On or about November 3, 2006, defendant issued a Storage Tank System Third Party Liability and Cleanup Policy.  The policy had a retroactive date of October 20, 2005 and provided that “[w]we will pay on behalf of the ‘insured’ any ‘cleanup costs’ required by ‘governmental authority’ as a result of a ‘release’ that ‘emanates’ from a ‘scheduled storage tank system(s)’ at a ‘scheduled location, that commences on or after the ‘retroactive date’…”  The policy excluded “’claim(s)’, ‘cleanup costs’ or ‘loss(es)’ based upon or arising out of:…E. any ‘release’ from a ‘scheduled storage tank system’ which commences after the ‘scheduled storage tank system’ or the ‘scheduled locations’ is sold, leased, given away, ‘abandoned’, or operational control has been relinquished by the ‘insured.’”

In considering defendant‘s motion for summary judgment and plaintiff’s cross-motion, the court held that sufficient evidence was presented to establish that the primary source of the contamination on the subject premises was a drywell improperly used to store waste oil, which was not listed as a covered underground storage tank.  Further, the contamination occurred prior to the coverage period as an inspection of the soil revealed the presence of MTBE which was banned for use in gasoline on January 1, 2004.  Lastly, according to the court, there was evidence that plaintiff had sold and relinquished operational control of the subject premises during the applicable period. 

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

Hallmarks of Property Insurance Fraud
(Note:  the majority of property insurance fraud involves arson.)

• The insured is deeply in debt or in/near bankruptcy.
• The insured is willing to accept a small settlement rather than document all claims.
• No one is at home or in the building at the time of loss, including family members and pets (planned absence).
• Loss occurs late at night – after 11:00 p.m., on a holiday or weekend.
• No apparent sign of forced entry.
• Neighbors and witnesses report movement of people or items out of building before the loss.
• Large outstanding utility bills or taxes on the property.
• Building and/or contents are for sale at time of loss.
• Entry to property is locked or blocked - firefighters cannot easily gain access.
• Fire department reports fire cause is incendiary, suspicious or unknown.
• Evidence suggests use of an accelerant and/or unusual burn pattern.
• Fire has multiple points of origin, or point of origin is not consistent with normal cause of a fire.
• Fire alarm or sprinkler system failed to work (or only worked partially).
• Investigation suggests property/contents were heavily over-insured.
• Contents include items of high value recently purchased.
• Contents include serial numbers owners usually do not keep or record.
• Contents include detailed inventory, including receipts for very old items.
• Contents are inconsistent with claimant’s income or property location.
• Insurance is greater than market value of property.
• Receipts are in whole dollar amounts or fail to include sales tax.
• Losses include numerous appraised items and/or items of scheduled property.
• Extensive commercial loss occurs at site with little or no security features.
• Insured indicates opposition to appearing at an EUO.
• Delayed report of fire or damage to building or contents.
• No police report (or perfunctory report) of the loss event.
• Has the claimant been recently divorced or separated?
• Loss occurs just after coverage takes effect, just before it terminates, or right after it was increased.
• Loss includes an alleged large amount of cash or personal property.
• Commercial loss primarily involves seasonal inventory and equipment at the end of the selling season, e.g., a ski inventory loss in the Spring.
• Did the fire involve or require disposal of illegal or toxic chemicals stored on the premises?

 

• “TRAVELING CONTENTS” disappear or “walk” out the door and cannot be accounted for after a fire or theft.  Some hallmarks of “traveling contents” are:

• Delay in reporting the claim.
• No photographic evidence of the items or their loss.
• Items were listed or inventoried as “top of the line” goods.
• No or few receipts and proofs of purchase.
• Claim is at or near the coverage limit.
• The insured had high levels or lower shipments of inventory prior to the loss (i.e., unusually high levels of inventory and goods in storage).

ACROSS BORDERS
Courtesy of the FDCC Website
www.thefederation.org
01/13/11       Simms v. Ruby Tuesday, Inc.
Virginia Supreme Court
Employee Injured During “Horseplay” Is Entitled to Workers’ Compensation Benefits
The Virginia Supreme Court, addressing the “horseplay doctrine” for the first time, found that an employee injured when ice was thrown at him is entitled to workers’ compensation benefits. While working at a Ruby Tuesday’s restaurant, the employee, Matthew Simms, a server, went to print a check for a customer when three of his fellow employees (who were friends) began throwing ice at him. While the other employees continued to throw ice at him, through his reaction and trying to block the ice, Simms dislocated his shoulder. Simms was unable to use his shoulder for everyday activities, missed a period of work and eventually required surgery. The deputy commissioner of the Workers’ Compensation Commission determined that Simms had been injured as a result of horseplay by his co-employees and that the injury occurred in the course of his employment. The deputy commissioner reduced the amount compensable due to prior injuries to his shoulder which may have contributed to the need for surgery. Both parties appealed to the full Commission, which reversed, finding that while Simms was injured as an innocent victim of workplace horseplay, his injury did not arise out of his employment and denied his claim. The Court of Appeals affirmed the Commission’s decision. The Virginia Supreme Court provided an historical analysis of the horseplay doctrine, from its enunciation by Judge Cardozo through the eventual recognition of the doctrine by courts across the country. The Court distinguished between “playful acts” and assaults involving the determination as to whether certain actions constituted horseplay. The Court determined that the actions of the fellow employees are a natural risk of the employment because horseplay is a natural incident of work contemplated by a reasonable person in the same situation. The Virginia Supreme Court reversed the lower court and ruled that the employee was entitled to workers’ compensation benefits.
Submitted by: Elizabeth Lorell and Jeffrey Kopco of Gordon & Rees LLP (New Jersey)

01/13/11       Cassel v. The Superior Court of Los Angeles County
California Supreme Court
California Supreme Court Addresses Contours of Mediation Confidentiality Statutes
Cassel sued his attorneys claiming that he was induced by them into settling a business dispute during mediation for an amount lower than he told his attorneys he would accept and lower than what the case was allegedly worth. The trial court granted the attorney defendants’ motion to exclude evidence of attorney-client discussions before and during the mediation regarding “mediation settlement strategies and defendants’ efforts to persuade petitioner to reach a settlement in the mediation.” The Court of Appeal vacated the trial court’s order, finding that the mediation confidentiality statutes are not intended to protect attorneys from client claims of malpractice. The California Supreme Court reversed and held that the communications at issue between Cassel and his attorneys were protected by mediation confidentiality statutes. The Court explained that the “plain language of the mediation confidentiality statutes controls [their] result” and that the Court of Appeal decision “contravenes the Legislature’s explicit command that, unless the confidentiality of a particular communication is expressly waived, under statutory procedures, by all mediation ‘participants,’ or at least by all those ‘participants’ by or for whom it was prepared, things said or written ‘for the purpose of’ and ‘pursuant to’ a mediation shall be inadmissible in ‘any . . . civil action’” (citations omitted). The Court also held that confidentiality extends beyond communications “in the course of” a mediation.
Submitted by: Daniel J. Herling and Leila Qutami, Keller and Heckman LLP
REPORTED DECISIONS
SP & S Associates, LLC, v. Insurance Company of Greater New York

Thomas D. Hughes, New York (Richard Rubinstein of counsel),
for appellant.
Rose & Rose, New York (Dean Dreiblatt of counsel), for
respondent.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered June 18, 2010, which denied defendant's motion to dismiss a declaratory judgment action seeking to hold defendant responsible for defending and indemnifying plaintiff insured in a personal injury action, unanimously reversed, on the law and the facts, without costs, and the motion granted to the extent that it is declared that defendant has no duty to defend or indemnify plaintiff in the underlying action.
The subject insurance policy's notice of claim condition precedent to coverage required the insured corporate plaintiff to notify defendant insurer of an occurrence which might result in a claim "as soon as practicable." The receipt of service of a personal injury summons with notice by the Secretary of State, as plaintiff's designated agent (Limited Liability Company Law § 301, § 303), constituted receipt by the plaintiff itself (Cedeno v Wimbledon Bldg. Corp., 207 AD2d 297, 298 [1994], lv dismissed 84 NY2d 978 [1994]). The fact that plaintiff did not actually receive a copy of the summons with notice, due to its failure to keep its address current with the Secretary of State, does not excuse its noncompliance with the notice requirements of the policy. As plaintiff did not provide notice of the action to its insurer until receipt of a motion for default judgment some five-and-a-half months after service of process, defendant was entitled to disclaim coverage (Briggs Ave. LLC v Insurance Corp. of Hannover, 11 NY3d 377 [2008]; 26 Warren Corp. v Aetna Cas. & Sur. Co. (253 AD2d 375, 376 [1998]).
Auriemma v. Biltmore Theatre, LLC

Cross appeals from the order of the Supreme Court, New York County (Debra A. James, J.), entered April 25, 2008, which, inter alia, denied the motion of third-party defendants and second third-party defendants Civetta and Sons Inc. and Diamond State Insurance Company for summary judgment dismissing the third-party actions as against them, and denied the motion of defendants, third-party plaintiffs and second third-party plaintiffs Biltmore Theatre, LLC, Biltmore Tower, LLC, Manhattan Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment declaring that Civetta and Sons, Inc. and Diamond State Insurance Company are obligated to defend and indemnify Sweet Construction of Long Island LLC and Sweet Construction Corp.; from the order, same court and Justice, entered April 2, 2009, which denied the motion of third-party defendant and second third-party defendant Mass Electric Construction Company for summary judgment dismissing the third-party action as against it; from the order, same court and Justice, entered April 2, 2009, which denied the motion of Biltmore Theatre LLC, Biltmore Tower LLC, Manhattan Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment dismissing the complaint; and from the order, same court and Justice, entered April 2, 2009, which denied the motion of Biltmore Theatre LLC, Biltmore Tower LLC, Manhattan, Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment declaring that Mass Electric Construction Company and third-party defendant and second third-party defendant St. Paul Fire and Marine Insurance Company owe them defense and indemnification, and denied St. Paul's motion for summary judgment seeking a declaration that the policy it issued is excess to any other coverage for Sweet Construction of Long Island, LLC.

Nicoletti Gonson Spinner & Owen LLP, New York
(Laura M. Mattera of
counsel), for John Civetta & Sons,
Inc. and Diamond State
Insurance Company, appellants-
respondents/respondents.
Devereaux Baumgarten, New York (Michael J.
Devereaux of counsel), for
respondents-appellants.
London Fischer LLP, New York (Brian A. Kalman and
Anthony F. Tagliagambe of
counsel), for Mass Electric
Construction Company,
respondent/respondent-appellant.
Lazare Potter & Giacovas LLP, New York (Jeremy
M. Sokop and Andrew
Premisler of counsel), for St. Paul
Fire and Marine Insurance
Company, appellant-
respondent.
Alexander J. Wulwick, New York, for Auriemma
respondents.

Catterson, J.
In this personal injury action, the plaintiff asserts that a four-foot-deep open pit at his worksite was an elevation-related hazard for which the defendants failed to provide a safety device as required by Labor Law § 240(1). Because the defendants have not raised an issue of fact with regard to a violation of the statute or whether the plaintiff was the sole proximate cause of his own injuries, partial summary judgment is granted in favor of the plaintiff.
Jimmy Auriemma, the plaintiff in this case, is an electrician who was employed by Mass Electric Construction Company (hereinafter referred to as "Mass"), a subcontractor of Sweet Construction of Long Island, LLC (together with Sweet Construction Corp. collectively hereinafter referred to as "Sweet of LI"), for electrical work in connection with a renovation of the Biltmore Theater. His responsibilities included the installation of conduit pipes for electrical lines throughout the building. John Civetta & Sons, Inc. (hereinafter referred to as "Civetta") was hired by Sweet of LI for masonry and excavation work on the project.
Under their respective purchase order agreements, Mass and Civetta agreed to defend actions brought against the owner/net lessee, Manhattan Theater Club, Inc. (hereinafter referred to as "Manhattan"), and the purchaser/general contractor, Sweet of LI. Both subcontractors were also required to obtain insurance policies naming the owner Biltmore Theatre LLC (hereinafter referred to as "Biltmore") and Sweet of LI as additional insureds. The agreements also included indemnification clauses.
Civetta's policy, issued by Diamond State Insurance Company, covers additional insureds with respect to liability arising out of Civetta's acts or omissions. Mass's policy, issued by St. Paul Fire and Marine Insurance Company, covers additional insureds for injury resulting from Mass's work or the insureds' general supervision of Mass's work. It does not cover bodily injury resulting from any act or failure to act of an additional insured, other than general supervision of Mass's work. The policy also states that it is excess over the insureds' primary or other available insurance.
The plaintiff was on the site for about a month before he was injured in the accident at issue. On the morning of October 1, 2002, the plaintiff's foreman directed him to go downstairs to the mechanical room to unlock tools and set up equipment for the day. The plaintiff testified that the staircase he would normally have used was blocked with debris and/or materials and the only route to the mechanical room was to go down into an excavated pit about four to six feet deep and climb out the other side. There was no way around the pit, and the only ladder he saw was at the bottom resting against the opposite wall.
In order to get into the pit, the plaintiff used a 10-foot-long wooden plank that had been placed with one edge at the top and the other at the bottom of the pit. He tested the plank by pushing down with one foot, and then, since it appeared stable, he started down. The plank, which was resting on dirt, shifted and he fell to the bottom of the pit, suffering injuries to his neck, back, and right shoulder.
The plaintiff's personal injury actions brought in September 2003 and October 2004 against Biltmore, Biltmore Tower LLC, Biltmore 47 Associates, LLC,[FN1] Manhattan, and Sweet of LI alleged that defendants were negligent and, inter alia, violated Labor Law §§ 200, 240(1), and § 241(6) and regulations promulgated thereunder.
In July 2004, Sweet of LI and its insurer, Liberty International Underwriters (hereinafter referred to as "Liberty"), brought a third party action against Mass, St. Paul, Civetta, and Diamond. Approximately a year later, Sweet of LI and Liberty brought a second third-party action against Mass, St. Paul, Civetta, Diamond, and United National Group.[FN2]
After the parties answered, Civetta and Diamond moved for summary judgment dismissing the third-party actions against them, which was opposed by Biltmore, Sweet of LI, Liberty, Manhattan, and Mass. Biltmore, Sweet of LI, Liberty, and Manhattan cross-moved for an order declaring, inter alia, that Civetta and Diamond had to defend and indemnify Sweet of LI.
On April 25, 2008, the motion court denied Civetta's motion for summary judgment dismissing the third-party action, on the grounds that there was a triable issue of fact with regard to Civetta's alleged negligence in placing the plank in the pit. The court also denied Biltmore, Sweet of LI, Liberty, and Manhattan's cross motion for summary judgment requesting a declaration that Civetta and Diamond were required to provide defense and contractual indemnification to Sweet of LI, as premature since there were outstanding issues of fact regarding Sweet of LI's negligence.
Biltmore, Manhattan, and Sweet of LI also moved for a declaration that, inter alia, Mass and St. Paul had to defend and indemnify them and reimburse them for attorneys' fees and costs. In opposition, Mass argued that the indemnification clause was unenforceable pursuant to General Obligations Law § 5-322.1, and that overall site safety was Sweet of LI's responsibility. St. Paul also opposed, arguing that its insurance was excess, that Biltmore and Manhattan were not entitled to seek summary judgment on unpleaded claims, and in any event, the motion was premature since Sweet of LI's liability had not yet been determined. In its order entered April 2, 2009, the court agreed, denying the motion.
Mass moved for summary judgment dismissing the third party claims against it on the grounds that § 240(1) did not apply and the plaintiff was the sole proximate cause of his own injuries, and that Mass was not negligent. On similar grounds, Sweet of LI, Biltmore, and Manhattan moved for summary judgment to dismiss the plaintiff's claims and all cross claims against them, and as to the Labor Law § 200 and negligence claims, that they did not control his work performance. In its order entered April 2, 2009, the court denied these motions, citing issues of fact.
St. Paul moved for summary judgment dismissing the first third-party action on the grounds that it provides only excess insurance coverage with respect to Sweet of LI and severing non-insurance claims from insurance coverage claims. The court granted St. Paul's motion to dismiss the first third-party action and to sever noninsurance issues, but in its order entered April 2, 2009, denied St. Paul's motion for a declaration that its coverage was excess, reasoning that there must first be a finding of negligence and primary coverage by Diamond.
Defendants Civetta and Diamond appeal the denial of their motion for summary judgment dismissing the third-party actions against them. Defendants Biltmore, Manhattan, Sweet of LI, and Liberty cross-appeal the denial of their cross motions for summary judgment declaring that Civetta and Diamond are obligated to defend and indemnify Sweet of LI.
Defendants Biltmore, Manhattan, Sweet of LI and Liberty appeal the denial of their motions for summary judgment declaring that Mass and St. Paul are obligated to defend and indemnify them, and requesting dismissal of plaintiff's claims against them. Mass appeals the denial of its motion for summary judgment dismissing the third-party claims against it, and St. Paul appeals the denial of its motion for summary judgment seeking a declaration that the policy it issued is excess to any other coverage of Sweet of LI.
I. Labor Law § 240(1)
On appeal, defendants Biltmore, Manhattan, Sweet of LI, Liberty, and Mass assert that the plaintiff's Labor Law § 240(1) claim should be dismissed on the grounds that there is no recovery under § 240(1) when a plank is used as stairs or a passageway. Alternatively, they argue that even if § 240(1) is applicable, they are not liable because the plaintiff is the sole proximate cause of his own injury.
Although he did not dispute the motion court's earlier determination that issues of fact preclude summary disposition of his § 240(1) claim, on appeal the plaintiff requests partial summary judgment on the grounds that defendants have not raised an issue of fact with regard to a § 240(1) violation. For the reasons set forth below, we find in favor of the plaintiff.
It is well established that contractors and owners have a statutory duty to provide adequate safety devices for their workers. The failure to provide a safety device is a per se violation of the statute for which an owner/contractor is strictly liable. See Zimmer v. Chemung County Performing Arts, 65 N.Y.2d 513, 523-524, 493 N.Y.S.2d 102, 106-107, 482 N.E.2d 898, 902-903 (1985); Cherry v. Time Warner, Inc., 66 AD3d 233, 885 N.Y.S.2d 28 (1st Dept. 2009). Moreover, the public policy protecting workers requires that the statute be liberally construed. Cherry, 66 AD3d at 235-236, 885 N.Y.S.2d at 30.
The defendants assert that because the plank was used as the equivalent of stairs or a passageway, as opposed to one of the safety devices enumerated in the statute, the plaintiff's claim is not within the purview of § 240(1). See Paul v. Ryan Homes, 5 AD3d 58, 61, 774 N.Y.S.2d 225, 227 (4th Dept. 2004) (recovery under § 240(1) was not available where the plank served as a passageway and not a tool used in the performance of plaintiff's work). This argument is unpersuasive. The plaintiff may recover under § 240(1) if he was engaged in an activity covered by the statute and exposed to an elevation-related hazard for which no safety device was provided or the device provided was inadequate. Jones v. 414 Equities LLC, 57 AD3d 65, 69, 866 N.Y.S.2d 165, 169 (1st Dept. 2008).
There is no bright-line minimum height differential that determines whether an elevation hazard exists. Thompson v. St. Charles Condominiums, 303 A.D.2d 152, 154, 756 N.Y.S.2d 530, 532 (1st Dept. 2003), lv. dismissed, 100 N.Y.2d 556, 763 N.Y.S.2d 814, 795 N.E.2d 40 (2003); see e.g. Arrasti v. HRH Constr., LLC, 60 AD3d 582, 583, 876 N.Y.S.2d 373, 375 (1st Dept. 2009) (finding that 18 inches was sufficient to create an elevation hazard); Lelek v. Verizon N.Y., Inc., 54 AD3d 583, 584, 863 N.Y.S.2d 429, 431 (1st Dept. 2008) (noting that defendants were not relieved of liability under Labor Law § 240(1) despite that the fall was only two and a half to three feet). Rather, the relevant inquiry is whether the hazard is one "directly flowing from the application of the force of gravity to an object or person." Prekulaj v. Terano Realty, 235 A.D.2d 201, 202, 652 N.Y.S.2d 10, 11 (1997), citing Ross v. Curtis-Palmer Hydro-Elec. Co., 81 N.Y.2d 494, 601 N.Y.S.2d 49, 618 N.E.2d 82 (1993).
Here, the plaintiff was injured while descending approximately four-to-six feet from one elevation at the top of the pit to another elevation at the bottom in order to retrieve his equipment as directed by his foreman. The possibility of injury from a fall from that height constituted exposure to an elevation-related risk. See Carpio v. Tishman Constr. Corp. of N.Y., 240 A.D.2d 234, 235, 658 N.Y.S.2d 919, 921 (1st Dept. 1997) (noting that common sense dictates that a fall is gravity related when the risk exists due to a difference in elevation); see also e.g. Salazar v. Novalex Contr. Corp., 72 AD3d 418, 421, 897 N.Y.S.2d 423, 426 (1st Dept. 2010) (finding that the four-foot drop from the basement floor to the bottom of a trench constituted a gravity-related hazard). Whether the plank served as a functional substitute for a staircase or passageway, as opposed to a safety device, is irrelevant since the defendants had a statutory duty to provide a safety device adequate to protect the plaintiff from an elevation-related hazard, and failed to do so.
Furthermore, the plaintiff established a prima facie case that defendants violated Labor Law § 240(1). To prevail on a motion for partial summary judgment on his cause of action under § 240(1), the plaintiff must show both that the statute was violated and that the violation was a proximate cause of his injuries. Cahill v. Triborough Bridge & Tunnel Auth., 4 NY3d 35, 39, 790 N.Y.S. 2d 74, 76, 823 N.E.2d 439, 441 (2004); Blake v. Neighborhood Hous. Servs. of N.Y. City, 1 NY3d 280, 287, 771 N.Y.S.2d 484, 488, 803 N.E.2d 757, 761 (2003).
The plaintiff testified that the only access to his equipment was through the pit because the stairs he normally used were blocked. His foreman testified that blocked stairways were a constant, "hourly" problem, and could not confirm whether any staircase was unblocked at the time of the accident. The plaintiff further testified, and defendants do not dispute, that there was no ladder available in the immediate vicinity of the pit. Since it is uncontroverted that the plaintiff's injuries were sustained in his fall from an unstable wooden plank while attempting to get to the bottom of the pit, he has satisfied the burden of showing that the defendants' failure to provide him with an adequate safety device was the proximate cause of his injuries.
In opposition, the defendants assert that the plaintiff's own negligence was the sole proximate cause of his injury. However, to defeat the plaintiff's motion for partial summary judgment, the defendants must raise an issue of fact as to whether the plaintiff "had adequate safety devices available; that he knew both that they were available and that he was expected to use them; that he chose for no good reason not to do so; and that had he not made that choice he would not have been injured." Cahill, 4 NY3d at 40, 790 N.Y.S.2d at 76, 823 N.E.2d at 441; see Gallagher v. New York Post, 14 NY3d 83, 88, 896 N.Y.S.2d 732, 734, 923 N.E.2d 1120, 1123 (2010). Even viewed in the light most favorable to the defendants, there is no evidence in the record that the plaintiff had a safety device available, knew that he was expected to use it, and unreasonably chose not to do so.
The burden of providing a safety device is squarely on contractors and owners and their agents. Cherry, 66 AD3d at 235, 885 N.Y.S.2d at 31, citing Zimmer, 65 N.Y.2d at 520, 493 N.Y.S.2d at 107. Section 240(1) of the Labor Law has unequivocally placed the duty on "[a]ll contractors and owners" to " furnish or erect or cause to be furnished or erected' safety devices which shall be so constructed, placed and operated as to give proper protection.'" See Cherry, 66 AD3d at 255, 885 N.Y.S.2d at 31.
Thus, a worker is expected, as a "normal and logical response,'" to obtain a safety device himself (rather than having one provided to him) only when he either knows exactly where a safety device is located, and there is a practice of obtaining the safety device himself because it is easily done. Cherry, 66 AD3d at 238, 885 N.Y.S.2d at 32, quoting Montgomery v. Federal Express Corp., 307 A.D.2d 865, 866, 763 N.Y.S.2d 600, 601 (1st Dept. 2003), affd, 4 NY3d 805, 795 N.Y.S.2d 490, 828 N.E.2d 592 (2005). The general availability of safety equipment at a work site does not relieve the defendants of liability. Cherry, 66 AD3d at 236, 885 N.Y.S.2d at 31 ("[t]he mere presence of ladders or safety belts somewhere at the worksite does not establish proper protection''"), quoting Zimmer, 65 N.Y.2d at 524, 493 N.Y.S.2d at 107; see also Garcia v. 1122 E. 180th St. Corp., 250 A.D.2d 550, 551-552, 675 N.Y.S.2d 2, 4 (1st Dept. 1998); McLean v. Vahue & Son Bldrs., 210 A.D.2d 999, 620 N.Y.S.2d 634 (4th Dept. 1994).
The plaintiff testified that the only ladder in the area was inaccessible because it was located at the bottom of the pit propped against the opposite wall to facilitate exit from the pit on that side. Although the foreman testified that ladders were generally available at the construction site, he observed that no ladder was available in the vicinity of the pit when he arrived at the scene shortly after the accident. The defendants have not asserted, nor is there any evidence in the record, that the plaintiff either knew where a ladder was located or that it was his habit to get one for himself.
Moreover, a standing order to use safety devices does not raise a question of fact that the plaintiff knew that safety devices were available and unreasonably chose not to use them. Gallagher, 14 NY3d at 88-89, 896 N.Y.S.2d at 734, 923 N.E.2d at 1123. Similarly, the announcement made to Mass workers at the weekly safety meeting directing them to use ladders or stairs does not raise a question of fact as to whether the plaintiff knew that a safety device was available, that he was expected to use it, and unreasonably chose not to do so.
Even if we accept the defendants' assertion that the plaintiff was told to use only ladders or stairs and not planks, his decision to use a plank can only be considered unreasonable if ladders or stairs were in fact readily available. See e.g. Rivera v. Ambassador Fuel & Oil Burner Corp., 45 AD3d 275, 276, 845 N.Y.S.2d 25, 27 (1st Dept. 2007) ("[a] worker does not become recalcitrant merely by disobeying a general instruction not to use certain equipment if safer alternatives are not supplied"), citing Stolt v. General Foods Corp., 81 N.Y.2d 918, 920, 597 N.Y.S.2d 650, 651, 613 N.E.2d 556, 557 (1993), and Balthazar v. Full Circle Constr. Corp., 268 A.D.2d 96, 99, 707 N.Y.S.2d 70, 72-73 (1st Dept. 2000). Here, the defendants have not established that the plaintiff had a choice much less that he explicitly refused to use an available safety device and unreasonably opted to use the wooden plank.
Because the defendants have not raised any issue of fact with regard to a violation of § 240(1) or as to whether the plaintiff was the sole proximate cause of his own injury, partial summary judgment is granted to the plaintiff. Furthermore, having prevailed on his § 240(1) claim, we need not address plaintiff's Labor Law § 200 or negligence claims. The plaintiff's damages are the same under any of the theories of liability and he can only recover once, rendering such a discussion academic. See Torino v. KLM Constr., 257 A.D.2d 541, 542, 685 N.Y.S.2d 24, 25 (1st Dept. 1999).
II. Defense and Indemnification
Biltmore, Manhattan, Sweet of LI, and Liberty argue on appeal that Mass, St. Paul, Civetta, and Diamond are obligated to provide Sweet of LI with a defense and indemnification. As a threshold matter, finding in favor of the plaintiff on his § 240(1) claim does not constitute a finding of negligence on the part of the defendant general contractor for purposes of barring indemnification. Brown v. Two Exch. Plaza Partners, 76 N.Y.2d 172, 179, 556 N.Y.S.2d 991, 994, 556 N.E.2d 430, 433 (1990) (finding that liability for a violation of § 240(1) "is not the equivalent of negligence and does not give rise to an inference of negligence").
Mass's contention that the indemnification provisions of the contracts signed by Civetta and Mass are unenforceable pursuant to General Obligations Law § 5-322.1, is unavailing. Where, as here, the provision provides for full indemnification, GOL 5-322.1's proscription of indemnification is only applicable if the indemnitee is found negligent to any extent. Itri Brick & Concrete Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 786, 795, 658 N.Y.S.2d 903, 908, 680 N.E.2d 1200, 1205 (1997); Pardo v. Bialystoker Ctr. & Bikur Cholim, Inc., 10 AD3d 298, 301, 781 N.Y.S.2d 339, 342 (1st Dept. 2004); See also Brown, 76 N.Y.2d at 179, 556 N.Y.S.2d at 994 (where the general contractor was not found to be negligent after a full trial, GOL 5-322.1 did not bar indemnification even though the contractor was strictly liable under § 240(1)).
Moreover, where the contractor's negligence has not been litigated and a triable issue of fact is raised, the contractor's request for summary judgment for contractual indemnification must be denied. Pardo, 10 AD3d at 301, 781 N.Y.S.2d at 342. Because the record raises questions of fact as to Mass, Civetta, and Sweet of LI's negligence, the enforceability of the contractual indemnification provision cannot be decided at this time; therefore, the motions of Mass, Biltmore, Manhattan, and Sweet of LI requesting a declaration as to the duties of Civetta, Mass, Diamond, and St. Paul to indemnify Sweet of LI were appropriately denied.
An insurer's duty to defend, on the other hand, is broader than its duty to indemnify and arises "whenever the allegations of the complaint suggest [. . .] a reasonable possibility of coverage'" (Automobile Ins. Co. of Hartford v. Cook, 7 NY3d 131, 137, 818 N.Y.S.2d 176, 179, 850 N.E.2d 1152, 1155 (2006), quoting Continental Cas. Co. v. Rapid-American Corp., 80 N.Y.2d 640, 648, 593 N.Y.S.2d 966, 969, 609 N.E.2d 506, 509 (1993)) or where "the insurer has actual knowledge of facts establishing a reasonable possibility of coverage'" (Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., 91 N.Y.2d 169, 175, 667 N.Y.S.2d 982, 984, 690 N.E.2d 866, 868 (1997), quoting Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 67, 571 N.Y.S.2d 672, 675, 575 N.E.2d 90, 93 (1991)). Thus, the duty to provide a defense may arise before indemnification has been decided. See New Hampshire Ins. Co. v. Jefferson Ins. Co. of N.Y., 213 A.D.2d 325, 326-327, 624 N.Y.S.2d 392, 393-394 (1st Dept. 1995) (noting that the contractual obligation to defend is triggered by facts alleged in the complaint and liability for indemnification is based on negligence).
The agreements executed by Civetta and Mass require them to defend "any and all legal actions" brought against Sweet of LI in connection with the purchase order agreements. The Diamond policy covers additional insureds for liability arising out of Civetta's alleged acts or omissions. The policy further states that it is primary with an exception not relevant here. Although the first-party complaints contain no allegations against Civetta, they refer to excavation. By the time Diamond moved for summary judgment dismissing the third-party complaints on the ground that it had no duty to defend, it had actual knowledge that Civetta was responsible for excavation. Moreover, the contract between Civetta and Sweet of LI and deposition testimony describing Civetta's responsibilities at the site provided Diamond with knowledge of facts establishing a reasonable possibility of coverage. See e.g. Staten Is. Molesi Social Club, Inc. v. Nautilus Ins. Co., 39 AD3d 843, 844, 835 N.Y.S.2d 303, 305 (2d Dept. 2007). [*10]
Mass, whose policy covers additional insureds for injury resulting from Mass's work for them or "their general supervision of that work," also has a duty to defend because it had actual notice of the possibility of coverage from Sweet of LI's answers to the complaints alleging Mass's culpability, and its deposition testimony. Although the motion court declined to rule on the status of St. Paul's coverage, the record indicates that St. Paul's coverage is excess. The St. Paul policy covers additional insureds for injury in "excess over any other valid and collectible insurance available to the additional [insured], whether primary, excess contingent, or on any other basis."
Therefore, the motions of Biltmore, Manhattan, and Sweet of LI and Liberty should be granted to the extent of declaring that Diamond must defend Sweet of LI up to the limits of its coverage or until the disputed facts are resolved at trial. See e.g. Sport Rock Intl., Inc., v. American Cas. Co. of Reading, Pa., 65 AD3d 12, 13, 878 N.Y.S.2d 339, 341 (1st Dept. 2009); Staten Is. Molesi Social Club, 39 AD3d at 844-845, 835 N.Y.S.2d at 305; Graphic Arts Mut. Ins. Co. v. Abrams, 1 AD3d 890, 891, 767 N.Y.S.2d 733, 733-734 (4th Dept. 2003).
An insurance carrier that provides excess coverage becomes obligated to defend the insured when the limit of the primary carrier's coverage has been reached. Sport Rock Intl., Inc., 65 AD3d at 13, 878 N.Y.S.2d at 341. Therefore, if Diamond's coverage is exhausted before the disputed factual allegations are resolved at trial, then St. Paul has a duty to assume the defense of Sweet of LI. We have considered the parties' remaining arguments and find them unavailing.
Accordingly, the order of the Supreme Court, New York County (Debra A. James, J.), entered April 25, 2008, which, inter alia, denied the motion of third-party defendants and second third-party defendants Civetta and Sons Inc. and Diamond State Insurance Company for summary judgment dismissing the third-party actions as against them, and denied the motion of defendants, third-party plaintiffs and second third-party plaintiffs Biltmore Theatre, LLC, Biltmore Tower, LLC, Manhattan Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment declaring that Civetta and Sons, Inc. and Diamond State Insurance Company are obligated to defend and indemnify Sweet Construction of Long Island LLC and Sweet Construction Corp., should be modified, on the law, to grant the motion of Biltmore Theatre, LLC, et al. to the extent of declaring that Civetta & Sons, Inc. and Diamond State Insurance Company must defend Sweet Construction Corp. and Sweet Construction of Long Island, LLC up to the limits of coverage or until the disputed facts are resolved at trial, and otherwise affirmed, without costs. The order of the same court and Justice, entered April 2, 2009, which denied the motion of third-party defendant and second third-party defendant Mass Electric Construction Company for summary judgment dismissing the third-party action as against it, should be affirmed, without costs. The order of the same court and Justice, entered April 2, 2009, which denied the motion of Biltmore Theatre LLC, Biltmore Tower LLC, Manhattan Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment dismissing the complaint, should be modified, on the law, to grant, upon a search of the record, the plaintiff summary judgment as to liability on his Labor Law § 240(1) claim, and otherwise affirmed, without costs. The order of the same court and Justice, entered April 2, 2009, which denied the motion of Biltmore Theatre LLC, Biltmore Tower LLC, Manhattan Theatre Club, Inc., Sweet Construction of Long Island, LLC, Sweet Construction Corp., and Liberty International Underwriters for summary judgment declaring that Mass Electric Construction Company and third-party defendant and second third-party defendant St. Paul Fire and Marine Insurance Company owe them defense and indemnification, and denied St. Paul's motion for summary judgment seeking a declaration that the policy it issued is excess to any other coverage for Sweet Construction of Long Island, LLC, should be modified, on the law, to grant the motion of Biltmore et al. to the extent of declaring that the coverage provided by St. Paul is excess, and that Mass Electric Construction Company and St. Paul Fire and Marine Insurance Company must defend Sweet Construction of Long Island, LLC if Diamond State Insurance's coverage is exhausted and if the disputed facts have not yet been resolved, and otherwise affirmed, without costs.
All concur.
Order, Supreme Court, New York County (Debra A. James, J.), entered April 25, 2008, modified, on the law, to grant the motion of Biltmore Theatre, LLC, et al., to the extent of declaring that Civetta & Sons, Inc., and Diamond State Insurance Company must defend Sweet Construction Corp., and Sweet Construction of Long Island, LLC up to the limits of coverage or until the disputed facts are resolved at trial, and otherwise affirmed, without costs. Order, same court and Justice, entered April 2, 2009, affirmed, without costs. Order, same court and Justice, entered April 2, 2009, modified, on the law, to the extent of granting the plaintiff partial summary judgment on his Labor Law § 240(1) claim, and otherwise affirmed, without costs. Order, same court and Justice, entered April 2, 2009, modified, on the law, to grant the motion of Biltmore et al., to the extent of declaring that the coverage provided by St. Paul is excess, and that Mass Electric Construction Company and St. Paul Fire and Marine Insurance Company must defend Sweet Construction of Long Island, LLC if Diamond State Insurance's coverage is exhausted and if the disputed facts have not yet been resolved, and otherwise affirmed, without costs.
Opinion by Catterson, J. All concur.

Footnotes
Footnote 1: Biltmore 47 Associates was dismissed from this action pursuant to order dated April 10, 2006.

Footnote 2: The second third-party complaint against United National Group was dismissed in an order entered April 25, 2008.
Roebuck v. State Farm Mutual Automobile Ins. Co.

Calendar Date: December 14, 2010
Before: Cardona, P.J., Malone Jr., Stein, McCarthy and Egan Jr., JJ.

Basch & Keegan, L.L.P., Kingston (Derek J. Spada of
counsel), for appellants.
Brill & Associates, P.C., New York City (Hayden
Brill of counsel), for respondent.
MEMORANDUM AND ORDER

McCarthy, J.
Appeal from an order of the Supreme Court (Zwack, J.), entered January 20, 2010 in Ulster County, which granted a motion by defendant National Grange Mutual Insurance Company for summary judgment dismissing the complaint against it.
Plaintiff Lyle Roebuck (hereinafter plaintiff) is an Ulster County Deputy Sheriff. He and his wife, plaintiff Wanda Roebuck, are sole shareholders in KMR Landscape Supply Company, Inc., a New York corporation. KMR utilizes a commercial dump truck that is insured by defendant National Grange Mutual Insurance Company. While on duty as a Deputy Sheriff and driving a County-owned patrol car, plaintiff was involved in an automobile accident and suffered multiple injuries. Plaintiff recovered the full $25,000 limit of the other driver's insurance policy, then sought payment under the supplementary uninsured/underinsured motorists (hereinafter SUM) provisions of defendants' policies [FN1]. After National Grange disclaimed coverage, plaintiffs commenced this action. National Grange moved for summary judgment dismissing the complaint against it. Supreme Court granted the motion. Plaintiffs appeal.
Supreme Court properly granted National Grange's motion for summary judgment. Pursuant to statute, every insurance company must, at the option of the insured, provide SUM coverage as part of an insurance policy issued in New York (see Insurance Law § 3420 [f] [2] [A]). A regulation specifies the language that is required in a SUM endorsement (see 11 NYCRR 60-2.3 [c], [f]). That language provides that "[w]e, the insurance company, agree with you, as the named insured," to provide SUM coverage subject to certain conditions (11 NYCRR 60-2.3 [f]). The regulation and, necessarily, the SUM endorsement in National Grange's insurance policy, define the term "insured" to include, among others, "(1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse; (2) any other person while occupying: (i) a motor vehicle insured for SUM under this policy" (11 NYCRR 60-2.3 [f] [I] [a]). Where an automobile insurance policy contains a SUM provision and is issued to an individual, that individual and others in his or her family may be afforded SUM coverage under the policy when such person is injured in any vehicle, including a vehicle owned and insured by a third party (see e.g. Matter of Encompass Indem. Co. v USAA Cas. Ins. Co., 61 AD3d 974, 975-976 [2009]). Where such a policy is issued to a corporation, however, the SUM provision does not follow any particular individual, but instead "covers any person [injured] while occupying an automobile owned by the corporation or while being operated on behalf of the corporation" (Buckner v Motor Veh. Acc. Indem. Corp., 66 NY2d 211, 215 [1985]). The policy language is not rendered ambiguous by the inclusion of words such as "you," "spouse" and "relatives" when a corporation is the named insured, because it is obvious to the average reader, construing the language according to common speech, that a corporation cannot have family members; those portions of the mandatory policy language are merely inapplicable to the corporate insured (see id. at 214; Siragusa v Granite State Ins. Co., 65 AD3d 1216, 1217-1218 [2009]; Matter of Royal Ins. v Bennett, 226 AD2d 1074, 1075 [1996]).
Here, the policy confines coverage to listed automobiles. Only KMR's commercial dump truck is listed. It is undisputed that plaintiff was working as a Deputy Sheriff and was not occupying that dump truck when he was injured. Thus, he is entitled to SUM coverage only if the policy was issued to him individually, not to the corporation.
Plaintiff was originally listed as the named insured, but an amendment retroactive to the inception of the policy changed the named insured to "Lyle Roebuck dba KMR Landscape Supply Inc." National Grange explained that this change was made because state regulations require insurers to identify the insured consistent with the name listed on the vehicle's registration (see 15 NYCRR 32.4 [g] [6]; 32.13 [a], [b]). Considering the insurance policy as a whole — including its characterization as a business automobile policy and its limited application to only the one commercial vehicle used by KMR — along with the inclusion of plaintiff's name as an insured only in connection with the
corporation and to comply with state regulations,[FN2] Supreme Court correctly construed the policy as having been issued to the corporation as the named insured (see Buckner v Motor Veh. Acc. Indem. Corp., 66 NY2d at 213-215). Thus, the SUM provision did not cover plaintiff when he was injured in a vehicle that was not listed in the policy and while he was not conducting business on behalf of KMR (see id.; Matter of Royal Ins. v Bennett, 226 AD2d at 1075).
Cardona, P.J., Malone Jr., Stein and Egan Jr., JJ., concur.
ORDERED that the order is affirmed, with costs.
Footnotes

Footnote 1:Defendant State Farm Mutual Automobile Insurance Company insured plaintiffs' personal vehicles and the vehicles they used in another business they owned. Those policies are not at issue on this appeal.

Footnote 2:The dump truck's registration lists both plaintiff and KMR. This apparently created difficulty for National Grange, because insurers are required to comply with regulations regarding named insureds in policies and identification cards. The regulations do not permit identification cards to be issued in a combination of individual and corporation names (see 15 NYCRR 32.4 [g] [2]; 32.13 [b]; but cf. 15 NYCRR 32.4 [g] [4], [5]). National Grange's policy listed a corporation as a "DBA," which is legally inaccurate, enabling National Grange to include both the individual and corporate names from the registration as the named insured.

Salzman v. Electric Insurance Company

Cheng & Associates, PLLC, Long Island City, N.Y. (Pui Chi
Cheng of counsel), for appellant.
Lucarelli & Castaldi, LLP, Staten Island, N.Y. (Mischel &
Horn, P.C. [Scott T. Horn], of
counsel), for petitioners-respondents.

DECISION & ORDER
In a hybrid proceeding pursuant to CPLR article 75 to compel Electric Insurance Company to proceed to arbitration of a claim for underinsured motorist benefits, and action, in effect, for a judgment declaring that the petitioners did not need the consent of Electric Insurance Company in order to settle their underlying automobile accident claim against, among others, the Jewish Community Council of Greater Coney Island, for the sum of $250,000 for each petitioner, in order to preserve their right to seek underinsured motorist benefits, Electric Insurance Company appeals from an order and judgment (one paper) of the Supreme Court, Richmond County (McMahon, J.), dated October 13, 2009, which granted the petition to compel it to proceed to arbitration and, in effect, declared that the petitioners did not need the consent of Electric Insurance Company in order to settle their underlying automobile accident claim to preserve their right to seek underinsured motorist benefits.
ORDERED that the order and judgment is modified, on the law, by deleting the provision thereof granting the petition to compel Electric Insurance Company to proceed to arbitration and substituting therefor a provision denying the petition; as so modified, the order and judgment is affirmed, without costs or disbursements.
"A party to an agreement may not be compelled to arbitrate its dispute with another unless the evidence establishes the parties' clear, explicit and unequivocal' agreement to arbitrate" (God's Battalion of Prayer Pentecostal Church, Inc. v Miele Assoc., LLP, 6 NY3d 371, 374, quoting Matter of Waldron [Goddess], 61 NY2d 181, 183; see Matter of Varsames v DiMauro, 56 AD3d 681). " The agreement to arbitrate must be express, direct, and unequivocal as to the issues or disputes to be submitted to arbitration'" (Matter of State Farm Mut. Auto. Ins. Co. v Juma, 44 AD3d 963, 963, quoting Gangel v DeGroot, 41 NY2d 840, 841). Thus, "[a] party will not be compelled to arbitrate, and thus surrender the right to litigate a dispute in court, absent evidence which affirmatively establishes that the parties expressly agreed to arbitrate their disputes" (Matter of State Farm Mut. Auto. Ins. Co. v Torcivia, 277 AD2d 321, 322). Here, it is clear that the subject automobile insurance policy issued by Electric Insurance Company to the petitioners only provided for arbitration of underinsured motorist benefit claims where "[b]oth parties" agreed to arbitrate. Accordingly, since Electric Insurance Company did not agree to arbitrate, the Supreme Court erred in granting the petition to compel it to proceed to arbitration (see Matter of State Farm Mut. Auto. Ins. Co. v Juma, 44 AD3d 963; Matter of State Farm Mut. Auto. Ins. Co. v Torcivia, 277 AD2d 321).
Lobosco v. Best Buy, Inc.

Goodman & Jacobs LLP, New York, N.Y. (Lester Chanin and Sue
C. Jacobs of counsel), for third-party defendant appellant-
respondent.
Martin Clearwater & Bell LLP (Weg and Meyers, P.C., New
York, N.Y. [Joshua L. Mallin, Lisa N.
Wall, and Dennis D'Antonio], of
counsel), for third-party defendant
respondent-appellant.
O'Connor O'Connor Hintz & Deveney, LLP, Melville, N.Y.
(Eileen M. Baumgartner of counsel),
for defendants third-party plaintiffs-
respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the third-party defendant Everest National Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated October 13, 2009, as denied its cross motion for summary judgment on its counterclaim in the third-party action for a judgment declaring that it has no duty to defend or indemnify the defendants third-party plaintiffs Schimenti Construction Corporation and Best Buy, Inc., in the main action, and for summary judgment on its cross claim in the third-party action for a judgment declaring that it has no duty to defend or indemnify the third-party defendant Dame Contracting, Inc., in the third-party action, and granted that branch of the motion of the third-party defendant Dame Contracting, Inc., which was for leave to amend its answer to add a cross claim to reform the subject insurance policy to name Schimenti Construction Corporation and Best Buy, Inc., as additional insureds, and the third-party defendant Dame Contracting, Inc., cross-appeals, as limited by its brief, from so much of the same order as denied that branch of its motion which was for summary judgment on its cross claims for a judgment declaring that the third-party defendant Everest National Insurance Company is obligated to defend and indemnify it in the third-party action.

ORDERED that the cross-appeal by the third-party defendant Dame Contracting, Inc., from so much of the order as denied that branch of its motion which was for summary judgment on its cross claims for a judgment declaring that the third-party defendant Everest National Insurance Company is obligated to defend and indemnify it in the third-party action, are dismissed as academic in light of our determination on the appeal by the third-party defendant Everest National Insurance Company from so much of the order as denied its cross motion for summary judgment on its counterclaim in the third-party action for a judgment declaring that it has no duty to defend or indemnify the defendants third-party plaintiffs Schimenti Construction Corporation and Best Buy, Inc., in the main action; and it is further,

ORDERED that order is reversed insofar as reviewed, on the law, the cross motion of the third-party defendant Everest National Insurance Company for summary judgment on its counterclaim in the third-party action for a judgment declaring that it has no duty to defend or indemnify the defendants third-party plaintiffs Schimenti Construction Corporation and Best Buy, Inc., in the main action, and on its cross claim in the third-party action for a judgment declaring that it has no duty to defend or indemnify the third-party defendant Dame Contracting, Inc., in the third-party action is granted, that branch of the motion of the third-party defendant Dame Contracting, Inc., which was for leave to amend its answer to add a cross claim to reform the subject insurance policy to name Schimenti Construction Corporation and Best Buy, Inc., as additional insureds is denied as academic, and the and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the third-party defendant Everest National Insurance Company is not obligated to defend or indemnify the defendants third-party plaintiffs Schimenti Construction Corporation and Best Buy, Inc., in the main action, and is not obligated to defend or indemnify the third-party defendant Dame Contracting, Inc., in the third-party action; and it is further,

ORDERED that one bill of costs is awarded to the third-party defendant Everest National Insurance Company payable by the defendants third-party plaintiffs Schimenti Construction Corporation and Best Buy, Inc., and the third-party defendant Dame Contracting Inc.

In May 2006, the third-party defendant Dame Contracting, Inc. (hereinafter Dame), entered into a subcontract with a general contractor, the defendant third-party plaintiff Schimenti Construction Corporation (hereinafter Schimenti), to install dry wall and metal framing at a Best Buy, Inc. (hereinafter Best Buy), store under construction in Valley Stream. Under the terms of the subcontract, Dame was required to obtain a commercial general liability insurance policy for the Valley Stream project, which was to name Schimenti and Best Buy as additional insureds. Although an insurance broker obtained a liability insurance policy on Dame's behalf from the third-party defendant Everest National Insurance Company (hereinafter Everest), the policy allegedly failed to name Schimenti and Best Buy as additional insureds on the Valley Stream project.

On July 24, 2006, the plaintiff was working for Dame at the Valley Stream site when he fell off the end of a loading dock and allegedly sustained injuries to his right wrist. The plaintiff immediately sought treatment at a hospital, and subsequent medical treatment allegedly revealed that he had sustained additional injuries, inter alia, to his back. Everest first received notice of the plaintiff's accident from Dame, Schimenti, and Best Buy approximately four months after its occurrence. Everest disclaimed coverage for the accident on the ground of late notice.

In January 2007, the plaintiff commenced the underlying main action to recover damages for personal injuries allegedly sustained as a result of the defendants' negligence and Labor Law violations. Schimenti and Best Buy thereafter commenced a third-party action against both Dame and Everest seeking contribution, indemnification, and damages for Everest's alleged breach of its duty to defend. Dame answered, asserting cross claims for a judgment declaring that Everest had a duty to defend Dame, Schimenti, and Best Buy, and to indemnify Dame. Everest answered, alleging that Schimenti and Best Buy were not additional insureds under the subject policy, and that even if they were, they breached their duties to provide timely notice of the occurrence under the policy terms. In its answer, Everest also asserted a counterclaim against Schimenti and Best Buy for a judgment declaring that it was not obligated to defend or indemnify them in the main action, and a cross claim against Dame for a judgment declaring that it was not obligated to defend or indemnify Dame in the third-party action. Everest subsequently cross-moved for summary judgment on its counterclaim against Schimenti and Best Buy and on its cross claim against Dame, contending, inter alia, that it had no duty to defend or indemnify them because they had failed to provide timely notice of the plaintiff's accident. The Supreme Court denied Everest's cross motion, and we reverse. 

Where, as here, a contract of primary insurance requires notice "as soon as practicable" after an occurrence, "the absence of timely notice of an occurrence is a failure to comply with a condition precedent which, as a matter of law, vitiates the contract" (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339; see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440-443). Everest established its entitlement to judgment as a matter of law on its counterclaim for a judgment declaring that it has no duty to defend or indemnify Schimenti and Best Buy in the main action, and on its cross claim for a judgment declaring that it has no duty to defend or indemnify Dame in the third-party action, by submitting evidence that it did not receive notice of the plaintiff's accident from these parties until about four months after its occurrence (see Bauerschmidt & Sons, Inc. v Nova Cas. Co., 69 AD3d 668, 669; Felix v Pinewood Bldrs., Inc., 30 AD3d 459, 461; Gershow Recycling Corp. v Transcontinental Ins. Co., 22 AD3d 460, 461). In opposition, neither Dame, Schimenti, nor Best Buy raised an issue of fact as to whether their delay in providing notice was reasonably based on a good faith belief of nonliability. Their proffered excuses that they believed the accident would not result in a claim because the plaintiff's injuries appeared to be minor, and because he had filed a Workers' Compensation claim, were not reasonable in view of both the fact that they were aware that the plaintiff had sought medical treatment for his injuries, and Dame's failure to inquire further as to his condition (see Hanson v Turner Constr. Co., 70 AD3d 641, 643; Sevenson Envtl. Servs., Inc. v Sirius Am. Ins. Co., 64 AD3d 1234, 1235; York Specialty Food, Inc. v Tower Ins. Co. of N.Y., 47 AD3d 589, 590; Felix v Pinewood Bldrs., Inc., 30 AD3d at 461; Pendill v Furry Paws, Inc., 29 AD3d 453, 454; Rondale Building Corp. v. Nationwide Property and Casualty Ins. Co., 1 AD3d 584, 585; Zadrima v PSM Ins. Cos., 208 AD2d 529, 530; Winstead v Uniondale Union Free School Dist., 201 AD2d 721, 722-723). Accordingly, Everest's cross motion for summary judgment on its counterclaim in the third-party action and on its cross claim in the third-party action should have been granted based on late notice of the occurrence.

In light of our determination that Schimenti and Best Buy were not entitled to coverage under the subject policy because they failed to give Everest timely notice of the plaintiff's accident, that branch of Dame's motion which was for leave to amend its answer to add a cross claim to reform the subject insurance policy to name Schimenti and Best Buy as additional insureds must be denied as academic.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring that Everest is not obligated to defend or indemnify Schimenti and Best Buy in the main action, and is not obligated to defend or indemnify Dame in the third-party action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Isakov v. Cooper

DeSena & Sweeney, LLP, Hauppauge, N.Y. (Shawn P.
O'Shaughnessy of counsel), for appellant.
Elliot Ifraimoff & Associates, P.C., Forest Hills, N.Y. (Dmitriy
Shulman of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant Charles Timeus appeals from so much of an order of the Supreme Court, Nassau County (Mahon, J.), entered May 11, 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.
We agree with the Supreme Court that the appellant 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), but for reasons other than those cited by the Supreme Court.
In support of the motion, the appellant relied upon, inter alia, the affirmed medical report of an orthopedic surgeon, who noted during his examination of the appellant that the appellant had a limitation in spinal flexion, the extent of which is unknown because the appellant refused to bend more than partway, claiming that he was in pain. The orthopedist concluded that the limitation was "volitional," but failed to sufficiently explain or substantiate with objective medical evidence the basis for that conclusion (see Quiceno v Mendoza, 72 AD3d 669; Mondert v Iglesia De Dios Pentecostal Cristo Viene, Inc., 69 AD3d 590). Further, with respect to the plaintiff's claimed injury to his right hip, the orthopedist examined the right hip, but failed to set forth any range-of-motion findings concerning that region of the plaintiff's body (see Sajid v Murzin, 52 AD3d 493), and no additional evidence was submitted on this issue.
Lanzarone v. Goldman

Mead, Hecht, Conklin & Gallagher, LLP, Mamaroneck, N.Y.
(Elizabeth M. Hecht of counsel), for appellant.
Zwirn & Saulino, P.C., Brooklyn, N.Y. (Thomas Torto and
Jason Levine of counsel), for
respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant Samantha Goldman appeals from a judgment of the Supreme Court, Kings County (Bailey-Schiffman, J.), entered August 6, 2009, which, upon the granting of the motion of the plaintiffs Genevieve Lanzarone and Emily Schiralli pursuant to CPLR 4401 for judgment as a matter of law as to liability on the issue of whether either of those plaintiffs had sustained a serious injury within the 90/180-day category of serious injury under Insurance Law § 5102(d), and upon a jury verdict on the issue of damages, is in favor of those plaintiffs and against her in the principal sum of $40,000.
ORDERED that the judgment is reversed, on the law, with costs, the motion of the plaintiffs Genevieve Lanzarone and Emily Schiralli pursuant to CPLR 4401 for judgment as a matter of law as to liability on the issue of whether either of those plaintiffs had sustained a serious injury within the 90/180-day category of serious injury under Insurance Law § 5102(d) is denied, and the complaint is dismissed.
On August 15, 2005, the plaintiffs Michael Lanzarone, Genevieve Lanzarone (hereinafter Genevieve), and Emily Schiralli were injured in a three-car chain collision at the Verrazano Bridge toll plaza. The plaintiffs commenced this action to recover damages for personal injuries against the drivers of the two trailing vehicles. The action eventually was discontinued as to one of the drivers, and proceeded to trial on the issue of damages against the other driver, the defendant Samantha Goldman (hereinafter the defendant).
Schiralli, who was 80 years old at the time of trial, testified that she continued to experience pain in her neck as a result of the injuries she sustained in the accident, and that she could not stretch and bend because it "bother[ed]" her neck to do so. She also testified that she was unable to lift things, or reach up high in order to hang curtains. Although Schiralli acknowledged that she was still able to do her own grocery shopping, she stated that she needed to make two trips, rather than one, to get all of the items she needed, and that she had to go slowly. Schiralli further testified that while she was able to run up the stairs to her apartment prior to the accident, she could now only walk up slowly and had to hold onto the banister. Genevieve, a mother who was not employed outside of the home, testified that she continued to experience pain in her lower back as a result of the injuries she sustained in the accident. She also walked and performed her household chores more slowly than she had prior to the accident, and needed to take breaks when walking and performing chores. However, she admitted that she nevertheless continued to perform all of her household chores, and that she had not completely stopped any of her usual activities.
At the close of the evidence, the Supreme Court informed the defendant's attorney that it would not grant a motion to dismiss the complaint upon the ground that the plaintiffs failed to make a prima facie showing that they had sustained serious injuries within the meaning of Insurance Law § 5102(d). Over the defendant's objection, the Supreme Court then granted the motion of Genevieve and Schiralli pursuant to CPLR 4401 for judgment as a matter of law as to liability on the issue of whether either of them had sustained a medically determined injury which prevented them from "performing substantially all of the material acts which constitute[d] [their] usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment" (Insurance Law § 5102[d]). The jury thereafter returned a verdict finding that Genevieve and Schiralli had each sustained damages in the sum of $20,000, and a judgment was entered in those principal amounts. The jury found that the third plaintiff, Michael Lanzarone, had not sustained a serious injury within the meaning of Insurance Law § 5102(d), and he is not a party to this appeal. We reverse the judgment entered in favor of Genevieve and Schiralli (hereinafter together the plaintiffs) and dismiss the complaint.
Viewing the evidence in the light most favorable to the plaintiffs, we conclude that no rational jury could have found that either of the plaintiffs had sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see Nesci v Romanelli, 74 AD3d 765, 766; Hamilton v Rouse, 46 AD3d 514, 516—517; Rodriguez v Virga, 24 AD3d 650, 652). In order to establish serious injury under this prong of the statute, the plaintiff must establish that he or she "has been curtailed from performing his [or her] usual activities to a great extent" (Licari v Elliot, 57 NY2d 230, 236). Here, the plaintiffs presented no evidence that the injuries they suffered as a result of this accident curtailed them from performing their usual and customary activities to a great extent for the requisite 90/180-day period. Rather, the testimony established only that, at the time of trial, the plaintiffs were unable to perform their usual and customary activities as easily as they had before the accident, and that they suffered pain when performing those tasks. Consequently, the Supreme Court erred not only in directing a verdict in favor of the plaintiffs under the 90/180-day category of serious injury of Insurance Law § 5102(d), but also by, in effect, refusing to dismiss the complaint insofar as it was based on that category of serious injury (see Gaddy v Eyler, 79 NY2d 955, 958; Licari v Elliott, 57 NY2d at 236; Nesci v Romanelli, 74 AD3d at 766; Hamilton v Rouse, 46 AD3d at 516—517; Mercado v Garbacz, 16 AD3d 631, 632; Crane v Richard, 180 AD2d 706, 707).
Messina v. Rohr

Richard T. Lau, Jericho, N.Y. (Joseph G. Gallo of counsel), for
appellant.
Davis & Hersh, LLP, Islandia, N.Y. (Ian Sack of counsel), for
respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals, as limited by her brief, from so much of an order of the Supreme Court, Suffolk County (Sweeney, J.), entered June 1, 2010, as denied her cross 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 defendant's cross motion for summary judgment dismissing the complaint is granted.
The defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. On appeal, the plaintiff argues that the submissions of her treating chiropractor, Dr. Barbara Lonergan-Potenza, were sufficient to raise a triable issue of fact as to whether she sustained a serious injury to the cervical region of her spine as a result of the subject accident. Dr. Lonergan-Potenza, however, failed to set forth any quantified range-of-motion findings or a qualitative assessment of the cervical region of the plaintiff's spine on her recent examination of the plaintiff (see Toure v Avis Rent A Car Sys., 98 NY2d at 350; Giannini v Cruz, 67 AD3d 638; Taylor v Flaherty, 65 AD3d 1328; Barnett v Smith, 64 AD3d 669, 671; Shtesl v Kokoros, 56 AD3d 544, 546). Accordingly, the Supreme Court should have granted the defendant's cross motion for summary judgment dismissing the complaint.
Patten v. Hernandez

Mahon, Mahon, Kerins & O'Brien, LLC, Garden City South, N.Y.
(Joseph A. Hyland of counsel), for appellant.
Epstein, Frankini & Grammatico, Woodbury, N.Y. (Michele A.
Musarra of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Agate, J.), dated October 28, 2009, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) and denied, as academic, her cross motion for summary judgment on the issue of liability.
ORDERED that the order is affirmed, with costs.
The plaintiff was operating her motor vehicle in the southbound roadway of Marcus Avenue, in New Hyde Park, when it collided with a landscaping trailer towed by a van, which was in the process of executing a left turn from the left turn lane of the opposing roadway onto Laurel Drive. At the time of the occurrence, the van and trailer were owned by the defendant Antonio Guerra and operated by the defendant Eduardo A. Hernandez.
After joinder of issue, the defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and the plaintiff cross-moved for summary judgment on the issue of liability.
The defendants met their prima facie burden of demonstrating their entitlement to judgment as a matter of law by showing, through the affirmed reports of their medical experts, that 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 Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; Srebnick v Quinn, 75 AD3d 637). The evidence which the plaintiff presented in opposition to the defendants' motion failed to raise a triable issue of fact (see CPLR 3212[b]). Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint.
In view of the foregoing, the Supreme Court properly denied, as academic, the plaintiff's cross motion.
Holloman v. Manginelli Realty Co., Inc.

Garbarini & Scher, P.C., New York (William D. Buckley of
counsel), for appellant.
Levy, Phillips & Konigsberg, LLP, New York (Philip Monier,
III of counsel), for Destinee Holloman and Tonisha Mimms,
respondents.
Yoeli & Gottlieb LLP, New York (Michael Yoeli of counsel),
for Manginelli Realty Co., Inc., Appula Management Corp. and
Vito Manginelli, respondents.

Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered September 24, 2010, which denied the motion of nonparty law firm retained by the New York Liquidation Bureau, as ancillary receiver for the insurance carrier, to withdraw as counsel for defendants, unanimously affirmed, without costs.

Defendants are the owner and managing agent of an apartment building in which the infant plaintiff was allegedly exposed to lead-based paint between May 2002 and September 2004. The ancillary receiver retained the law firm to represent defendants in the matter in October 2005. Five years later, when the matter was ready for trial, the entity handling covered claims of the carrier in liquidation notified the law firm and defendants that it was disclaiming coverage, asserting that the alleged exposure did not occur within the policy period.

The motion court properly denied the law firm's motion without reaching the merits of the coverage dispute, since it is settled that a motion for withdrawal by counsel under such circumstances is an improper attempt to test an insurer's disclaimer of coverage (see Brothers v Burt, 27 NY2d 905 [1970]). "[T]he right of an insurer to deny coverage, can only be resolved by a declaratory judgment action in which the defendant[s] would be able to adequately litigate the facts of [the insurance company's] disclaimer" (Sojka v 43 Wooster LLC, 19 AD3d 266, 267 [2005] [internal quotation marks and citations omitted]). Furthermore, the law firm did not demonstrate any conflict of interest arising from its clients' conduct or inconsistency between their interests, which would warrant granting the motion to withdraw (compare Dillon v Otis El. Co., 22 AD3d 1 [2005]; Carbonetti v Carver Concrete Corp., 43 AD2d 522 [1973]).
Whitaker v. Soumano

Bruce A. Newborough, Brooklyn, for appellant.
Baker McEvoy Morrissey & Moskovits, P.C., New York
(Stacey R. Seldin of counsel), for Sambaly Soumano and Beech Trans
Corp., respondents.
Law Offices of Frank J. Laurino, Bethpage (Calvin Weintraub
of counsel), for Prince Yates, respondent.
Order, Supreme Court, New York County (Paul Wooten, J.), entered September 24, 2009, which granted defendants' motion for summary judgment dismissing the complaint for lack of serious injury within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motion denied.
Defendants established prima facie that plaintiff did not sustain a serious injury as a result of the accident by submitting the reports of doctors who concluded, based on independent medical examinations, that plaintiff's range of motion was normal (see Toure v Avis Rent A Car Sys., 98 NY2d 345 [2002]). However, plaintiff submitted sufficient objective medical evidence to raise factual issues as to the "significant limitation" or "permanent consequential limitation" categories of serious injury (Insurance Law § 5102[d]). The doctor who treated him commencing on the day after the accident affirmed that he noted pain and limited range of motion in plaintiff's right shoulder and lumbar spine on his initial examination, 83% limitation in range of motion three months after the accident, and 52% nearly two years after the accident. In addition, the doctor concluded that plaintiff was unlikely to recover fully, thus providing both quantitative and qualitative assessments of plaintiff's condition sufficient to create triable issues of fact (see id.).
Plaintiff failed to raise an issue of fact as to his claim of a 90/180-day injury.
Kogan v. North Street Community, LLC

Baxter, Smith & Shapiro, P.C., Hicksville (Margot L. Ludlam
of counsel), for Nino Tripicchio & Son Landscaping, appellant.
Milber Makris Plousadis & Seiden, LLP, Woodbury (Sarah M.
Ziolkowski of counsel), for Merchants Mutual Insurance
Company, appellant.
Russo, Keane & Toner, LLP, New York (Alan Russo of
counsel), for North Street Community, LLC, 311 North Street, LLC,
Bettina Equities Company, LLC, respondents/respondents-
appellants.
Pollack, Pollack, Isaac & De Cicco, New York (Brian J. Isaac
of counsel), for Stanley J. Kogan and Penny Sniffen-Kogan,
respondents.

Order, Supreme Court, New York County (Emily Jane Goodman, J.), entered May 19, 2010, which, insofar as appealed from, denied the motion by North Street Community, LLC, 311 North Street, LLC, and Bettina Equities Company, LLC (collectively, North Street) for summary judgment dismissing the complaint as against them, denied Tripicchio's motion for summary judgment dismissing the third-party complaint as against it, and implicitly denied third-party defendant Merchants Mutual Insurance Company's motion for summary judgment declaring that it has no obligation to provide insurance coverage for North Street in connection with the first-party action and dismissing the third-party complaint and all cross claims against it, unanimously modified, on the law, to grant Tripicchio's motion and to grant Merchants' motion and declare that it has no obligation to provide insurance coverage for North Street in connection with the first-party action, and otherwise affirmed, without costs. The Clerk is directed to enter judgment in favor of Tripicchio dismissing the third-party complaint as against it and judgment in favor of Merchants dismissing the third-party complaint and all cross claims against it.

North Street submitted certified weather records and an expert meteorologist's affidavit showing that temperatures on the day before the accident rose to 61° or 62° and that any ice that might have formed overnight would have melted by the time of plaintiff's accident. Thus, North Street established prima facie that it neither created nor had notice of an icy condition in its parking lot (see Smith v Costco Wholesale Corp., 50 AD3d 499, 500-501 [2008]; Baptiste v 1626 Meat Corp., 45 AD3d 259 [2007]). Plaintiff's testimony that he slipped on a 2½-foot-by-1½-foot patch of ice, coupled with his expert's affidavit stating that ice had formed by 3:00 a.m. and would not have melted by the time of plaintiff's fall, raised issues of fact as to North Street's notice of the alleged icy condition (see Garcia v Mack-Cali Realty Corp., 52 AD3d 420 [2008]).

Pursuant to its "Contract for Maintenance & Snow Plowing" with North Street Community, LLC, Tripicchio was required only to "snow plow if needed" for three winter months (including, without dispute, January 2006, the month of plaintiff's accident). On its face, the contract called for salt to be applied only after plowing had been performed. North Street's on-site property manager testified that Tripicchio was required to inspect for refreezing only in the event of snowfall. It is undisputed that, on January 18, the day before the accident, the temperature reached at least 61°, and there was rain but no snow. There is no evidence in the record of any snowfall after January 15, when about one-half inch of mixed snow and sleet fell, with only "trace" accumulation, and it is undisputed that the temperature would have caused any snow remnants to melt by midnight on January 18. In sum, there is no record of any snowfall event that could have triggered Tripicchio's duty to either plow or inspect the premises for refreezing on the morning of the accident. Accordingly, plaintiff's fall did not arise from Tripicchio's performance of its work. Therefore, North Street is not entitled to contractual indemnification against Tripicchio. Because Tripicchio had no liability for plaintiff's accident, North Street is also not entitled to contribution or common-law indemnification against it (see Mas v Two Bridges Assoc., 75 NY2d 680, 689-690 [1990]).

Finally, even were we to find Tripicchio liable, recovery would not lie against Merchants. North Street learned of the accident approximately two weeks after it occurred, but failed to notify Merchants until four months later. This delay rendered the notice untimely under a provision in Tripicchio's policy requiring that Merchants be notified of an occurrence "as soon as practicable." Thus, Merchants had no obligation to North Street under the policy (see Republic N.Y. Corp. v American Home Assur. Co., 125 AD2d 247 [1986]). In view of the foregoing, we do not reach Merchants' remaining insurance-related issues.

CULLIN v MAKELY

Calendar Date: November 23, 2010
Before: Peters, J.P., Spain, Rose, Lahtinen and McCarthy, JJ.

Harris Beach, P.L.L.C., Albany (Mark J. McCarthy of
counsel), for third-party defendants-appellants.
Rosenbloom, Ronan, Kessler & Sarachan, Albany
(George L. Sarachan of counsel), for respondent.
Kelly & Leonard, L.L.P., Ballston Spa (Thomas E.
Kelly of counsel), for defendants and third-party plaintiffs-
respondents.
MEMORANDUM AND ORDER

McCarthy, J.
Appeal from an order of the Supreme Court (Devine, J.), entered August 25, 2009 in Schoharie County, which, among other things, granted a cross motion by defendants Alton D. Makely and Matthew O. Loder for summary judgment on their indemnification and contribution claims against third-party defendants.
While working as a laborer on a construction project, plaintiff fell because scaffolding he was standing on collapsed. He suffered lower leg trauma and fractures to his ankle. As a result of these injuries, plaintiff commenced this action against defendants, the owners of the property, alleging, among other things, violations of Labor Law §§ 240 and 241 (6). After plaintiff had his left leg amputated below the knee, defendants Alton D. Makely and Matthew O. Loder (hereinafter collectively referred to as defendants) commenced a third-party action seeking indemnification or contribution from third-party defendants, plaintiff's employers. Plaintiff moved for partial summary judgment against defendants on the issue of liability under the Labor Law. Defendants cross-moved for summary judgment on their claims against third-party defendants. Supreme Court granted both motions. Third-party defendants appeal.
Defendants are entitled to indemnification or contribution from third-party defendants. An employer generally may not be held liable to any third party for injuries sustained by an employee acting within the scope of employment unless the third party "proves through competent medical evidence that such employee has sustained a 'grave injury'" (Workers' Compensation Law § 11). The Legislature narrowly defined "grave injury" by creating an extremely limited list of injuries that includes "amputation of an arm, leg, hand or foot" (Workers' Compensation Law § 11; see Fleming v Graham, 10 NY3d 296, 299-300 [2008]). To support their motion — by proving that plaintiff suffered a grave injury — defendants relied on plaintiff's medical records and an affidavit from his treating physician who opined, with a reasonable degree of medical certainty, that the amputation he performed was due to plaintiff's chronic pain and disability primarily resulting from his work-related traumatic accident, superimposed on a childhood injury. The doctor further opined that the trauma from the work-related accident "was a substantial factor in [plaintiff] undergoing amputation surgery," and that the surgery was a reasonable medical procedure because more conservative treatments were ineffective. Defendants' proof constituted competent medical evidence of a grave injury — satisfying the category of amputation of a leg or, at the very least, a foot — establishing their prima facie case (see Trimble v Hawker Dayton Corp., 307 AD2d 452, 453 [2003]).
In response, third-party defendants relied upon their attorney's affidavit alleging that the amputation was elective and was not caused by the work accident, but was necessary because of plaintiff's prior leg injuries arising from an accident approximately 30 years earlier when, at the age of five, he was run over by a truck. That affidavit, which lacked any competent medical evidence and contained only unsupported allegations in an attempt to create issues of fact, was insufficient to rebut the medical opinion of plaintiff's physician (see Root v Hogan, 3 AD3d 809, 810 [2004]; compare Millard v Alliance Laundry Sys., LLC, 28 AD3d 1145, 1147-1148 [2006]). Because no genuine triable issues of fact were raised by third-party defendants, Supreme Court properly granted defendants' cross motion for summary judgment (see Quinn v Depew, 63 AD3d 1425, 1428-1429 [2009]; Fleischman v Peacock Water Co., Inc., 51 AD3d 1203, 1204-1205 [2008]).
Peters, J.P., Spain, Rose and Lahtinen, JJ., concur.
ORDERED that the order is affirmed, with one bill of costs.
Hudson Insurance Company v. M.J. Oppenheim

Lazare Potter & Giacovas LLP, New York (David E. Potter of
counsel), for appellant.
Katten Muchin Rosenman LLP, New York (Philip A. Nemecek
of counsel), for respondents.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered August 26, 2009, which, insofar as appealed from as limited by the briefs, denied defendant's motion for summary judgment dismissing the complaint, unanimously reversed, on the law, with costs, and the motion granted. The Clerk is directed to enter judgment dismissing the complaint.
Defendant demonstrated as a matter of law that plaintiffs' notice of the claimed loss was untimely. The subject policy required the insured to provide notice of a loss "[a]t the earliest practicable moment after discovery of [the] loss by the Corporate Risk Manager," and provided that "[d]iscovery occurs when the Corporate Risk Manager first becomes aware of facts which would cause a reasonable person to assume that a loss ... has been or will be incurred." This language notwithstanding, there was no designated "Corporate Risk Manager" at either plaintiff. Rather, plaintiffs assert that Fairfax's chief actuary, Jean Cloutier, functioned as their "de facto corporate risk manager." They argue that Cloutier learned of the loss in June or July 2003 and that therefore the notice transmitted to the Underwriters on May 30, 2003 was timely. However, Hudson's general counsel and assistant general counsel, among other executives, learned of the subject loss on July 23, 2002. The assistant general counsel only later informed Cloutier of it. Indeed, Cloutier testified that he merely "remind[ed]" subsidiaries to report claims to insurers and that he merely "requested" that Fairfax subsidiaries (among them Hudson) copy him on claims. There is no evidence that subsidiaries were required to report assumable losses, as opposed to filed claims, to Cloutier.
Thus, crediting their assertion that Cloutier functioned as their "Corporate Risk Manager," we find that plaintiffs breached their duty to "exercise reasonable diligence . . . to acquire knowledge" of covered losses "with reasonable celerity" (see Bauer v Whispering Hills Assoc., 210 AD2d 569, 571 [1994], lv denied 86 NY2d 701 [1995] [internal quotation marks and citation omitted]). Moreover, to the extent that Cloutier delegated the risk management role to Hudson's legal department (by directing subsidiaries to report losses directly to the insurer), Hudson's general counsel's and assistant general counsel's knowledge of the claimed loss — and the corresponding duty to notify the Underwriters — would be imputed to Cloutier (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 240 [2002]; Bauer, 210 AD2d at 571).
In addition, since plaintiffs "discovered" the loss on July 23, 2002, given the 24-month limitations period contained in the policy, this action was untimely commenced on July 28, 2004, the date of a Standstill Agreement entered into by the parties (see e.g. Lichter Real Estate No. Three, L.L.C. v Greater N.Y. Ins. Co., 43 AD3d 366, 366-367 [2007]; 815 Park Ave. Owners v Fireman's Ins. Co. of Washington, D.C., 225 AD2d 350, 354 [1996], lv denied 88 NY2d 808 [1996]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
Carden v. Allstate Ins. Co .

Caruso Glynn, LLC
Attorneys for Plaintiffs
53-04 193rd Street
Fresh Meadows, NY 11365
Law Offices of Mary A. Bjork
Attorneys for Defendant
660 white Plains Road, Suite 200
Tarrytown, NY 10591 Lewis Johs Avallone Aviles, LLP
Attorneys for Defendant
425 Broad Hollow Road, Suite 400
Melville, NY 11747
Gerald E. Loehr, J.
Upon the foregoing papers, On January 31, 2007, Plaintiffs home in Pelham, New York (the "Dwelling") was substantially damaged by fire. At that time, Plaintiffs were insured by Defendant under a Deluxe Homeowner's Policy (the "Policy"). Due to the damage caused by the fire, the Plaintiffs could no longer reside in the Dwelling and rented another residence. They also apparently put some of their possessions, presumably rescued from the Dwelling, into rented storage.
After being notified of the fire and having an adjuster inspect the Dwelling, in March 2007 Defendant offered to settle the loss for $265,000. Plaintiffs rejected this offer. Due to damage to the roof of the Dwelling and the consequent intrusion of rain, mold became an additional concern. In March 2007, Plaintiffs hired an environmental company to assess the mold problem. Based on the fire damage and mold, it was determined that the entire Dwelling should be gutted. Based thereon, in June 2007, Defendant revised its estimate and offered Plaintiffs $575,000 as a final settlement. Plaintiffs rejected this settlement.
Plaintiffs then demanded that the amount of the loss be determined by appraisal pursuant to Section I, Paragraph 7 of the Policy. Plaintiff retained J-Con, Inc. which estimated the cost to repair the Dwelling to be $1,069,849. Defendant retained Prism General Services which estimated the cost to repair to be $750,320. In December 2007, the Umpire, appointed pursuant to Paragraph 7 of the Policy, determined the cost to repair the Dwelling to be $832,982. In the spring of 2008, Defendant agreed to pay such amount and the Dwelling was reconstructed. During the reconstruction, Plaintiffs driveway and landscaping was damaged. Defendant refused to reimburse Plaintiffs therefor. Additionally, due to the delay in the settlement process and consequent delay in reconstruction, Plaintiffs were forced to remain out of the dwelling for 18 months. Under the Policy, Plaintiffs were entitled to Additional Living Expense ("ALE")[FN1] for a maximum of 12 months which Defendant refused to extend.
On June 30, 2009, Plaintiffs commenced this action. The Complaint sets forth four causes of action. The First and Fourth Causes of Action seek reimbursement of expenses Plaintiffs assert are covered under the Policy and the Second and Third Causes of Action seeks consequential damages based on Defendant's bad faith delay in settling the claim.
Defendant moves for summary judgment dismissing the Complaint. The First Cause of Action seeks reimbursement for the expense to remove debris and for damage to Plaintiff's driveway and landscaping during the reconstruction. While conceding that debris removal and damage to landscaping are covered under the Policy,[FN2] Defendant asserts that damage to the driveway is not. The Policy provides: "Property We Cover Under Coverage A: 1. Your dwelling including attached structures." While "Dwelling" is defined in the Policy, "structure" is not. The Court takes judicial notice that the construction of a driveway in Pelham requires a building permit. Construing the ambiguity in the Policy against Defendant, the Court finds that the driveway is an attached structure under the Policy. Accordingly, upon searching the record (Lerner v F. Schumacher & Co.,___ AD3d ___, 2010 WL 4909924 [2d Dept]), Plaintiffs are granted summary judgment as to liability on the First Cause of Action with the damages for reimbursement of debris removal expenses and landscaping damage as limited by the Policy.
The Fourth Cause of Action seeks reimbursement for rental charges the Plaintiffs incurred to store their possessions during the first 12 months after the fire. As there is a question of fact as to whether this was a reasonable expense necessary for the Plaintiffs to maintain their normal standard of living, (see note 1, supra ), the motion for summary judgment dismissing this Cause of Action is denied.
The Second Cause of Action seeks damages equal to their ALE in excess of 12 months, and the Third Cause of Action seeks recovery of the expense of the mold inspection and expenses of the appraisal. Defendant moves for summary judgment dismissing such claims based on the language of the Policy which limits ALE claims to 12 months and provides that each party "shall pay the appraiser it chooses, and equally bear the expenses for the umpire and all other appraisal expenses." Plaintiffs do not seek these amounts under the Policy but as consequential damages for Defendant's breach of its covenant of good faith and fair dealing.
As in all contracts, implicit in contracts of insurance is a covenant of good faith and fair dealing, such that a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims (Bi-County Market, Inc. v Harleysville Ins. Co. of New York, 10 NY3d 187, 193 [2008]). While New York does not recognize an independent tort cause of action for an insurer's failure to perform its contractual obligations under an insurance policy (New York Univ. v Continental Ins. Co., 87 NY2d 308 [1995]; Roconova v Equitable Life Assur. Socy., 83 NY2d 603 [1994]), where an insurer breaches its duty to investigate, bargain and settle claims in good faith, consequential damages for breach of contract may be recovered not limited by the amount specified in the insurance policy (Acquista v New York Life Ins. Co., 285 AD2d 73, 77 [1st Dept 2001] ; see Bi-County Market, Inc. v Harlysville Ins. Co. of New York, 10 NY3d 187, 192-93 [2008]).
Here, the Plaintiffs have submitted evidence in admissible form that Defendant offered Plaintiffs $265,000 and then $575,000 on a claim ultimately determined to be, and paid, in the amount of $832,982, and that Plaintiffs suffered damage due to the delay in reconstruction of their Dwelling due to Defendant's bad faith delay in settling the claim. This makes out a prima facie claim for breach of the covenant of good faith (see id.). The duty therefore shifted to Defendant to submit evidence that raises a question of fact requiring a trial. Defendant has failed to do so. Accordingly, Plaintiffs are granted summary judgment as to liability on the Second and Third Causes of Action.
This constitutes the decision and order of the Court.