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Coverage Pointers - Volume XII, No. 17

Dear Coverage Pointers Subscribers:

Capital News!

As of March 21, 2011, Hurwitz & Fine, P.C. is officially opening an Albany, New York office with a resident attorney available to better serve clients from the Adirondacks to the Hudson Valley, from the Catskills to the Central Leatherstocking District.  We will continue to provide counsel and representation in Insurance Coverage & Extra-contractual Liability, General Liability Defense, Regulatory Compliance and Business & Commercial Litigation from our new office in one of North America's oldest cities (4th actually), New York's historic Capital City on the banks of the mighty Hudson River. Ah the view!

Spring is Springing:

Nothing like a warmer to bring a lift to one's step.  It's a steamy 50 degrees today and I can see the ice-fishers in Bermuda's and short-sleeved shirts cutting holes in a frozen Lake Erie.

There's a lot of good material to discuss

Court of Appeals to Review Important No Fault Issues - Attack on Necessity of Contemporaneous Reports. Here's a special report from Margo Lagueras, our Dean of Serious Injury:

Insurer Support Needed?  Carriers might consider filing amicus briefs?

While we anxiously await the reawakening of our representatives in Albany and their hopefully revitalized efforts to provide some specificity, which might in turn afford some clarity and consistency, with regard to the soft tissue injury categories of permanent consequential and/or significant limitation of use, our Court of Appeals appears ready to entertain yet another serious injury trilogy, which probably will come to be referred to, in shorthand, as Perl

As you may recall, we reviewed the Second Department's decision. Perl v. Meher, 74 A.D.3d 930, in our June 25, 2010 issue of Coverage Pointers, at which time we noted the strenuous two-judge dissent and predicted that Perl would see the Court of Appeals:

6/8/10             Perl v. Meher
Appellate Division, Second Department
Findings During Recent Examination Cannot "Be Stretched" to Remedy Deficiencies of Contemporaneous Examination:  But, Read the 2-Judge Dissent
On appeal, the trial court is reversed and the defendants' motion is granted, over a 2-judge dissent which reflects some of the current hot issues.

First, the majority decision:  Defendants' orthopedist gave a detailed explanation and observations in support of his conclusion that the plaintiff's range-of-motion restrictions were self-imposed and there were no objective findings of impairment.  The court reiterated the standards both defendants and plaintiffs are held to in threshold serious injury motions:  numerically quantified ROM with comparison to the norm, based on identified objective testing.  In addition, plaintiffs must demonstrate limitations both in contemporaneous and recent examinations.  The majority determined that the plaintiff's physician failed to identify the tests used, the numerical results, or provide any comparison with what would be normal range-of-motion during the examination 6 days after the accident.  The examination 2 years later by the same physician quantified the restrictions based on identified objective tests and compared them with the norm, but this could not "be stretched" to remedy the deficiencies in the contemporaneous findings because, while the "norm" might be the same, the findings themselves, and the tests used, could be different from one exam to the other. 

Having established entitlement to summary judgment, the burden shifted to the plaintiff to raise an issue of fact which here, plaintiff failed to do.  Plaintiff's physician's affirmation based on a qualitative assessment was not sufficient because, among other things, it did not identify the objective tests used during the contemporaneous examination.  In addition, the court points out that the plaintiff did not raise the issue of qualitative assessment in his appellate submission.

The 2-judge dissent:  Here the opinion is that the majority holds the plaintiff to a standard of medical proof that is not stated anywhere in § 5102(d) and thus bars a potentially meritorious claim.  The dissent notes that the majority assumes that an injured person, who presents just days after an accident for treatment, does so already in anticipation of litigation.  No case law dictates that an initial report must be recorded in a specific manner.  "Rather, so long as the affirmation of the treating physician indicated that his or her contemporaneous testing revealed a measurable limitation of the injured plaintiff's range or motion, the threshold set forth in Insurance Law § 5102(d) should be deemed to be satisfied * * * To hold a treating physician to a litigation standard of marking his or her chart at such an early stage effectively turns away plaintiffs with arguably colorable claims who seek treatment with a physician who is more focused on providing care than preparing for litigation."  In contrast, a defendant's expert sees an injured plaintiff solely for purposes of litigation.  This puts a plaintiff at a disadvantage.

The dissent notes that in his affirmation, the plaintiff's physician stated that there were "numerically and objectively determined" ROM restrictions of the knees, cervical and lumbar spine and which were causally related to the accident since the plaintiff had no pre-existing similar symptoms.  The affirmation also stated that these restrictions were significant and permanent.  During the contemporaneous examination, it was noted that ROM of the cervical and lumbar spine was 60% of normal and knee extension was "decreased".  The physician's recent examination detailed the tests, results and norms and the dissent found that the affirmation, read as a whole, should be deemed sufficient.  The remedy, according to the dissent, is to test the qualitative assessment during cross-examination.
Note:  We will stay tuned to see if this one goes to the Court of Appeals.

It seems that Perl has two traveling companions: Adler, a Second Department neighbor (Adler v. Bayer, 77 A.D.3d 692), and Travis, a First Department resident (Travis v. Batchi, 75 A.D.3d 411).  All three involve injuries alleged under the Siamese Twin "and/or" categories.  All three were defense victories.  Perl and Travis shared common defense counsel.  Perl and Adler shared common plaintiffs' counsel.

Procedurally, in Perl the trial court was reversed and the complaint dismissed.  In Travis, the trial court was affirmed and the complaint dismissed.  In Adler, the defendants' motion for judgment as a matter of law was denied and a jury verdict awarded.  On appeal, the defendants' motion was granted and the complaint dismissed.

The common thread in all three is the appellate courts' determination that the plaintiffs failed to support their claims under the permanent consequential and/or significant limitation categories because there was some deficiency either with the contemporaneous medical report, the recent medical reports, or both.  We have emphasized the insistence of the courts in the importance of having both a contemporaneous and a recent examination to substantiate the duration and extent of any injury under these twin categories.  Now, and if we take a stab at what we think is the issue the Court will address, we quote Judge Austin, the author of the Perl dissent:

By ruling that the injured plaintiff, Joseph Perl (hereinafter the injured plaintiff), failed to strictly comply with a standard of medical proof which can be found nowhere in Insurance Law 5102(d), the majority bars a colorably meritorious claim from reaching a jury...

The majority assumes that days after an accident, an injured plaintiff presents to his or her doctor for the purpose of litigation rather than treatment.  Research reflects no case law which mandates that a treating physician records his or her findings of that initial examination in a particular manner.  Rather, so long as the affirmation of the treating physician indicates that his or her contemporaneous testing revealed a measurable limitation of the injured plaintiff's range of motion, the threshold set forth in Insurance Law 5102(d) should be deemed to be satisfied. 

To hold a treating physician to a litigation standard of marking his or her chart at such an early stage effective turns away plaintiffs with arguably colorable claims who seek treatment with a physician who is more focused on providing care than preparing for litigation.  This unfortunate result does little, if anything, to promote the legislative purpose of Insurance Law 5192(d) which was to "weed out frivolous claims." (internal citations omitted)

Judge Austin called for the evening out of the playing field, noting that the defense's experts' reports, being created when they are, are focused on litigation, while plaintiffs' treating doctors have different approaches to record keeping which may "convey the required information in a less than perfect way."  Therefore, provided an expert's assessment contains objective medical support, the "qualitative assessment" of an injury's seriousness can, and it is suggested should, "be tested during cross-examination, challenged by another expert and weighed by the trier of fact."

It is our opinion that the issue the Court will consider is whether or not the judicially dictated standards of medical proof imposed up to now on the contemporaneously-generated reports of plaintiffs' treating physicians should be relaxed to allow for "a reading of the entirety of the physician's affirmation tendered by the injured plaintiff in opposition" to be sufficient to raise a triable issue of fact.

 

Notes from Audrey Seeley:

The snow banks are melting and I think I heard a bird chirping the other day.  As much as I wish Spring we really just around the corner I am reminded that I do live in Buffalo.  See me in April and my tune will probably change.

There are few reported decisions and cases this time but be sure to read the one arbitration decision.  It is important to note in investigating this type of accident to ensure that there are no injuries actually arising from the accident itself.

Finally, if you have not signed up yet there is still time to register for the DRI Insurance Coverage and Claims Institute in Chicago.  There is an entire half day track devoted to the duty to defend addressing such issues as what happens when you undertook your insured's defense but realize down the road that no duty ever existed; allocation of defense costs in cases with covered and non-covered causes of action; as well as an excess insurer's defense obligation when the loss is not covered by the primary insurance but covered under the excess insurance.  If you need more information please feel free to email me at [email protected].

Audrey

[email protected]

 

A Century Ago:

On February 18, 1911, the first official flight with air mail takes place in Allahabad, British India, when Henri Pequet, a 23-year-old pilot, delivers 6,500 letters to Naini, about 10 km away.

 

One Hundred Years Ago - Lest We Forget:

For over two decades, we have served as counsel to Housing Opportunities Made Equal.  HOME is Buffalo's fair housing agency and fights to assure equal access to housing and battles against discrimination in many forms.  Discrimination continues to exist today, but is more subtle than it was 100 years ago:

Dunkirk Evening Observer

February 18, 1911

Page 1

Negro Residents

Not Wanted in Fashionable White District in Harlem

New York. - Continuing the war against Negro residents of Harlem, the 91 property owners who own 138th Street between Lenox and Eighth Avenue have gone on record with one of the most amazing documents filed in New York since the days of the old Dutch patrons.  It is a covenant binding on all of the signers to neither rent nor sell their properties to Negroes.  Each household may employ not more "than one male and one female negro or two negresses." Violation of the agreement will be cause for injunction proceedings and suits by the other signers.

 

Great FDCC Programming:

As past President of the Federation of Defense & Corporate Counsel, I want you to consider two excellent programs scheduled for 2011.  Information for these events is available at the FDCC website, www.thefederation.org:

 

FDCC Litigation Management College

June 12-16, 2011, Emory University, Atlanta

Registration is now open for the FDCC's 17th Annual Litigation Management College ("LMC") and 8th annual LMC Graduate Program.  Encourage your clients to take advantage of these programs, which enable claim and litigation management professionals to develop their skills in litigation management, claim assessment, and avoiding costly claims handling pitfalls by tackling a catastrophic injury case study (including coverage issues) in workshops. The LMC is geared toward claim and litigation management professionals with 5-15 years claim or litigation management experience. The Graduate Program builds upon on the solid foundation provided by the LMC to gain an enhanced understanding of insurance coverage issues, strategic litigation tactics, and alternatives for resolution.

 

FDCC Insurance Industry Symposium

November 16-18, 2011, New York Athletic Club

This year's Insurance Industry Institute, entitled "Addressing Industry-Wide Challenges in Unsettled Times," will focus on four areas that senior level insurance executives and their counsel will confront in coming years: (a) the changing regulatory landscape; (b) challenges to the protection of privileged information; (c) privacy protection and legal exposures; and (d) the blurring of international borders in insurance claims arising out of claim exposures and natural disasters that cross boundaries. 

 

One Hundred Years Ago - Front Page News:

(Syracuse) Post Standard

February 18, 1911

TRAMP HURLS A BRICK AT MISS HELEN GOULD

WHEN REFUSED ALMS 

Throws Heavy Weight Through Window of Her Residence-Mrs. Edward Scholes Struck on Head, Saved by Abundance of Hair

New York - Angered when refused alms at the door, a disheveled tramp retired to the street and hurled a brick through one of the library windows of Miss Helen Gould's Fifth Avenue residence tonight. Miss Gould was in an adjoining room and was unhurt, but Mrs. Edward Scholes, standing near the window, was struck squarely on the head and escaped serious injury because of an abundance of hair.

As it was she was knocked prostrate and a large bump raised at the base of her skull. Police began searching for the beggar but had not found him late tonight.

The butler told the police that an unkempt man, an apparently under the influence of liquor, had lurched up to the house shortly before 7 o'clock.  He rang the bell until the butler answered and then demanded to see Miss Gould.

The butler told him that Miss Gould was engaged but the man insisted that she had helped him before and that he was in dire stress now.  He was so persistent that when the butler attempted to shut the door, he placed his foot in the opening and withdrew it only when the heavy door squeezed it painfully

As the stranger left, he heard the man curse lustily, and five minutes later, the brick came hurtling through the window.

Editor's Note:  Helen Gould was the daughter of railroad robber baron Jay Gould. A philanthropist in her own right, at the commencement of the Spanish-American War she donated $100,000 to the United States government in support of the war. She gave an additional $50,000 toward military hospital supplies and worked in a hospital for wounded soldiers. She donated the library building at New York University (having attended the law school there in 1913) and began the Hall of Fame for Great Americans at the NYU campus.   The New York Times reported, on January 13, 1932, that "[i]t was not until 1913 that she married Railman Finley Johnson Shepard. In the 45 years of her spinsterhood -- she was plain, plump, not much concerned with 'Society' -- she dedicated herself to good works while her brothers and sister went out in the world".

As to Mrs. Scholes, we note that an Edward (not sure if it was her husband) Scholes was arrested in 1908 for running a gambling house.  Mrs. Scholes' legacy was her abundance of hair.

 

Highlights of This Week's Coverage Pointers: 

KOHANE'S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • Residential Construction Activities Exclusion Inapplicable to Mixed-use Building; Whether "Acts or Omissions" of Named Insured Led to Loss Must Await Resolution of Underlying Lawsuit
  • "Operation of Customers Autos Garage Operations" Endorsement Excludes Coverage for Accident 60 Miles Away from Garage
  • Cross-Liability Endorsement Means What It Says and Says What It Means
  • Is there an Echo in Here? Cross-Liability Endorsement Means What It Says and Says What It Means
  • NYU Wins Twice.  Personal Injury Lawsuit Dismissed as Speculative, When Plaintiff Dies Before Deposition.  University Then Establishes Right to Contractual Indemnity for Costs and Breach of Contract for Failure to Procure Proper Policy of Insurance
  • Notice to Insurer Given Three Months After Accident Is Too Late When No Excuse Is Offered for Delay; Disclaimer 30 Days Later Was Effective
  • Late Notice Leads to Loss of Coverage
  • UM Carrier Has No Standing to Sue Carrier That Has Denied Coverage 

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

  • Operation of School Bus Was Not Negligent so Complaint Is Dismissed
  • Quantitative Assessment More Than 3 Years After Accident Is Too Remote
  • Allegedly Asymptomatic Pre-Existing Condition Raises Issue of Fact 

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

ARBITRATION

  • Unfortunate Stroke While Driving Resulting in Accident and Injuries Not Causally Related to Accident 

LITIGATION

  • Judgment Which, if Satisfied, Will Exceed Policy Limits Cannot Be Modified Under CPLR 5019(a) 

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

  • Failure to Establish an Expectation of Confidentiality Dooms "Common Interest" Defense in a Discovery Dispute
  • Where a Damages Claim Arises Out of a Shipping Agreement that is Incorporated into the General Supply Agreement, the General Supply Agreement's Mandatory Arbitration Clause Governed the Dispute 

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

 

  • Amount in Controversy Is 1¢ Short of Jurisdictional Minimum - Ohio
  • Once Again Policy Terms and Conditions Control - Nebraska

JEN'S GEMS
Jennifer A. Ehman

[email protected]

  • Court Finds Testimony That Underlying Plaintiff Was Injured When a Friend Jumped On His Ankle Insufficient to Establish Good Faith Belief in Nonliability Where Insured Also Testified that He Contacted Insurance Broker Immediately Afterwards and Told Him Everything
  • First Post-Prejudice Rule Decision (Well, Sort Of)
  • More Late Notice.
  • Failure to Change Address With Secretary of State No Excuse For Late Notice
  • Court Holds Insurer Waived Right to Rely On Late Notice Or Object to Contractual Indemnity Claim
  • Court Defers to Workers' Compensation Board On Applicability of Employer Exclusion

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

Limits on Professional Malpractice Damages

 

See you in a couple of weeks.

 

Dan

 

Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202


Phone: 716.849.8942
Cell:  716.445.2258
Fax: 716.855.0874
E-Mail:  [email protected]
H&F Website:  www.hurwitzfine.com

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]


02/17/11       Admiral Insurance Company v. Joy Contractors, Inc.
Appellate Division, First Department
Residential Construction Activities Exclusion Inapplicable to Mixed-use Building; Whether “Acts or Omissions” of Named Insured Led to Loss Must Await Resolution of Underlying Lawsuit
In the crane collapse litigation arising out of the March 15, 2008 accident on East 51st Street in New York, Admiral sought a declaration that it had no obligation to provide coverage for claims arising from the accident, based on the residential construction activities exclusion. However, the record established that the exclusion does not apply as the building was intended to be a mixed-use structure, not a purely residential one.
As the additional insureds' coverage depends on whether the underlying claims arose out of Joy's acts or omissions, disposition of the fourth cause of action must await the trials of the underlying actions. Similarly, in the absence of discovery, it cannot be determined whether the professional services exclusion (the thirteenth cause of action) is applicable here.
Admiral also sought to avoid coverage by declaring the policy void ab initio based on Joy's alleged misrepresentations in its application for excess coverage. However, the other defendants are not alleged to have made any misrepresentations to Admiral, and under New York law, they may not be penalized because of a material misrepresentation made by Joy.
02/10/11       Progressive Northeastern Ins. Co. v. State Farm Ins. Cos.
Appellate Division, Fourth Department
"Operation of Customers Autos Garage Operations" Endorsement Excludes Coverage for Accident 60 Miles Away from Garage
A vehicle occupied by Bosket and Card was rear-ended by a vehicle owned by Rhea and operated by defendant Donaghey. Earlier that day, Rhea had taken her car to Gabe's Auto in Syracuse for minor repairs and an inspection. Because a light for the vehicle's Onboard Diagnostic System (ODS) had been activated, an inspection sticker could not be issued. To deactivate the light, the car had to be driven for a time so Gabe let his employee Donaghey drive the car to pick up his son. The accident occurred during that trip.
Progressive insured Donaghey and sought a declaration that it had no obligation to defend and indemnify its insured (presumably because the vehicle was being driven for service and repair). Gabe's sought a declaration that its insurer, Charter Oak was obligated to defend Gabe and that furthermore, Charter Oak should reimburse Gabe for the costs of hiring substitute counsel to defend them in the underlying personal injury action.
The Court disagreed with Gabe, noting that the commercial liability policy issued by Charter Oak specifically excludes coverage for injuries and property damage arising from the use of any "auto" owned, operated, or rented or loaned to the insured. While the policy had a "Operation of Customers Autos Garage Operations" endorsement, the auto exclusion "does not apply to any customer's auto' while on or next to those premises you [the insured] own, rent or control and that are being used for any garage operations' " (emphasis added). The court held that the endorsement is inapplicable in this case because the accident involving the customer's auto occurred 60 miles away and not "on or next to" the insured premises.
The court rejected Gabe's argument that the language of the endorsement was ambiguous and applied to garage operations anywhere as being an “unnatural or unreasonable construction." The underscored word and above made it clear that coverage was not available for garage operations that were not on or near the premises.
02/10/11       385 Third Avenue Associates, L.P.,v. Metropolitan Metals Corp.
Appellate Division, First Department
Cross-Liability Endorsement Means What It Says and Says What It Means
The injured party was an employee of an insured, Metropolitan. The Burlington policy contained a cross-liability exclusion which removed coverage for any actual or alleged bodily injury to any present, former, future, or prospective employee of any insured. As the injured party was an employee of an insured and was working within the scope of his employment at the time of his injury, the cross liability exclusion bars coverage for his injuries
That the policy also contained an employer’s liability exclusion does not render the policy or the cross-liability exclusion ambiguous.  Individual exclusions are considered separately, not cumulatively.
In the world of contract, contractual liability claims against Metropolitan can be maintained, and were in this case.  The evidence demonstrated that Metropolitan exercised exclusive supervisory control over the injured employee and directed the means and methods of his work.  Plaintiff, the party seeking indemnity, also established that Metropolitan breached its contract to provide coverage that would protect them in the event of a claim by an injured employee.  It provided coverage but not the coverage required by the contract.
Editor’s Note:  Kudo’s to Christopher E. Strapp at Guilford Specialty for a tri-fecta this week.  This one, the Richner case that follows and the February 1 decision in Nabutovsky, reported below.
02/10/11       Richner Development Co., Inc. v. Burlington Ins. Co.
Appellate Division, Second Department
Is there an Echo in Here? Cross-Liability Endorsement Means What It Says and Says What It Means
It does, it does.
02/01/11       Roldan v. New York University
Appellate Division, Second Department
NYU Wins Twice.  Personal Injury Lawsuit Dismissed as Speculative, When Plaintiff Dies Before Deposition.  University Then Establishes Right to Contractual Indemnity for Costs and Breach of Contract for Failure to Procure Proper Policy of Insurance
On February 25, 2004, Roldan was loading garbage into a freight elevator at premises owned NYU under a cleaning contract between Roldan’s employer, ABM and NYU.  During the process of riding with the final load in the elevator up to the street, he was injured. Mainco maintained the elevators pursuant to an elevator maintenance agreement.  The plaintiff died of unrelated causes before he was deposed.
NYU and Mainco met their burden of establishing their prima facie entitlement to judgment as a matter of law by demonstrating that any determination as to how the accident occurred would be based on speculation.  Accordingly, the action was dismissed.
NYU contended that ABM owed it indemnity under a contract and defense costs and ABM breached its contract to provide NYU with insurance and the court agreed.
The express language of the subject indemnification agreement specifically obligates ABM to indemnify the NYU defendants from all claims "caused by, resulting from, arising out of or occurring in connection with the performance of the work or services specified" in the cleaning services agreement. This also included an obligation by ABM to pay the NYU defendants for any defense costs they may incur in such claims. While the exact circumstances of how the accident happened are unknown, what is known is that the decedent was performing janitorial services under the subject contract when he was injured. ABM is therefore liable under the indemnity agreement.
In addition, ABM was supposed to purchase a policy of insurance naming NYU with $2 million in primary, non-contributory coverage.  Instead it purchased a policy with a $1 million SIR and thus ABM breached its contract with NYU
02/01/11        Nabutovsky v. Burlington Insurance Company
Appellate Division, Second Department
Notice to Insurer Given Three Months After Accident Is Too Late When No Excuse Is Offered for Delay; Disclaimer 30 Days Later Was Effective
In September 2004 the plaintiffs were patrons at a restaurant, when they were injured by a third party who assaulted them with a broken bottle. Plaintiff’s sued the restaurant, which defaulted and then sued Burlington, the restaurant’s insurer, to enforce the default judgment against the insurer.  That protocol is known in New York as a “Direct Action” and is permitted under Insurance Law §3420(a).
Burlington moved for summary judgment claiming that it validly disclaimed based on late notice, not having received notice of the accident for three months following the happening of the event.
The plaintiffs provided notice to the insurance broker but that did not constitute notice to the insurer.  The carrier’s disclaimer, 30 days after receiving notice was timely.  No valid excuse was offered to justify the delay in giving notice.
02/01/11       Ciampa 21, LLC v.  QBE Insurance Corporation
Appellate Division, Second Department

Late Notice Leads to Loss of Coverage
The decision does not offer a lot of facts to offer elucidation.  Appellate court finds that QBE properly denied coverage based on late reporting and insured loses its coverage.

01/20/11       Symonds v. Progressive Insurance Company
Appellate Division, Third Department
UM Carrier Has No Standing to Sue Carrier That Has Denied Coverage

Symonds was involved in a car accident with Miller, when Miller ran a stop sign.  Symonds, a New York resident, was insured by Progressive.  Miller, a Pennsylvania resident, had been insured by Allstate.  When Symonds learned that Allstate had canceled the Miller policy for non-payment of premium, it sought coverage under the uninsured/SUM policy.

When Progressive did not respond to the request for coverage, Symonds sued Progressive seeking UM/SUM coverage and Progressive sued Allstate, seeking a declaration that Miller’s policy was not canceled and in effect at the time of the accident.

Progressive and Allstate each made dispositive motions.

The Third Department dismissed the action against Allstate holding that Progressive did not have standing to maintain it under Lang v. Hanover.  That case holds that a declaratory judgment action can be advanced by the insured or the insurer prior to a judgment in the underlying lawsuit, but not by the injured party.  Progressive stands in the shoes of the injured party in this instance and since the injured party does not have a judgment against Miller, Progressive can not now challenge the decision by Allstate to deny coverage.


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


02/17/11       Green v. South Colonie School District
Appellate Division, Third Department
Operation of School Bus Was Not Negligent so Complaint Is Dismissed

A first day of school to remember.  Plaintiff, Nathan, and his brother were riding home in the school bus after Nathan’s first day of kindergarten when Nathan stood up just as the bus decelerated causing him to hit his face on the back of the seat in front of him and resulting in the loss of one of his permanent front teeth.  His parents brought an action alleging negligent operation of the bus in braking suddenly on an incline, resulting in serious injury to Nathan.  On defendants’ motion for summary judgment, the trial court found there were issues of fact both as to negligence and as to whether Nathan sustained a serious injury under the permanent loss of use and permanent consequential limitation of use categories.  The trial court dismissed the allegations under the significant disfigurement and significant limitation of use categories.

On appeal, the court found that plaintiffs failed to raise a question of fact with respect to negligence.  The incident was captured on video from a camera at the front of the bus.  Defendants’ experts established that the bus and its braking system were functioning correctly, that the bus was traveling within the speed limit, did not decelerate improperly or abruptly, and that the driver was qualified, properly trained and experienced.  The video also revealed that none of the other students had any forward movement in reaction to the bus’s deceleration.

Plaintiffs did not identify the applicable standard of care for deceleration of a school bus, nor did they challenge defendants’ experts with any admissible proof.  In addition, the deposition testimony of Nathan and his brother was refuted by the video and the mother’s testimony was improper opinion testimony as she did not witness the incident.  As such, the appellate court dismissed the complaint in its entirety.

02/15/11       Ikeda v. Hussain
Appellate Division, First Department
Quantitative Assessment More Than 3 Years After Accident Is Too Remote

Once again, a plaintiff’s complaint is dismissed because her expert’s quantitative assessment of her lumbar range-of-motion was conducted over 3 years after the accident and not compared to any contemporaneous quantitative assessment based on objective testing at the time of the accident.  As such, the assessment was too remote to support causation and plaintiff’s other medical reports were unsworn.  She therefore failed to raise a triable issue of fact in opposition to defendants’ expert who found only minor range-of-motion restrictions.  The appellate court, in addition to reversing the trial court with respect to the appealing defendants, also granted the motion dismissing the complaint with regard to the non-appealing defendants.  No serious injury means no serious injury.
Note:  The decision does not specify whether plaintiff did not have a contemporaneous report based on objective medical testing with a quantitative assessment, or did not have any contemporaneous report, or whether her expert simply failed to make the requisite comparison.  This could be yet another among many cases where a complaint has been dismissed based on the contemporaneous/recent examination requirement currently in effect and which, as we discussed in this issue’s cover letter, we believe will soon be addressed by the Court of Appeals. 

02/10/11       Terwilliger v. Knickerbocker
Appellate Division, Fourth Department
Allegedly Asymptomatic Pre-Existing Condition Raises Issue of Fact

Plaintiff was struck as she attempted to cross an intersection at a crosswalk when defendant made a right turn on red.  Plaintiff was granted summary judgment on her cross-motion on the issue of negligence.  Furthermore, defendants’ motion on the threshold issue was denied by the trial court and affirmed on appeal.  Although it was established that plaintiff had slipped on ice a month prior to the accident, defendants failed to show that her injuries (back and left arm/elbow) were pre-existing and not caused by the accident.  Plaintiff submitted affidavits of her treating physician and a chiropractor, both averring that she was asymptomatic prior to the accident and quantifying her limited range-of-motion post-accident.  They also related plaintiff’s radiating pain to the right leg to the accident noting that it was consistent with MRI results revealing pressure on the nerve root at L4.  The court found that the affidavits contained sufficient objective medical findings to defeat defendants’ motion.


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


ARBITRATION
02/13/11       Applicant v. Respondent
Arbitrator Kent Benziger, Erie County
Unfortunate Stroke While Driving Resulting in Accident and Injuries Not Causally Related to Accident

On December 14, 2009, the Applicant, a 59 year old female, was operating a motor vehicle that when she felt dizzy then lost control of her car resulting in her hitting a telephone pole.  The Applicant had slurred speech and weakness on the left side of her body.  She was diagnosed with a likely right middle cerebral artery stroke.  Thereafter, the Applicant was admitted to the hospital for physical therapy, occupational therapy and speech therapy.  After two months of care, the Applicant was discharged.  There is no indication that the Applicant sustained any injury as a result of hitting the telephone pole.

The Applicant sought No-Fault benefits in the form of medical expenses and lost wages as a result of this incident.

The insurer conducted a peer review with Dr. Maria DeJesus, a neurologist, on March 22, 2010.  Dr. DeJesus opined that based upon her review of the Applicant’s medical records the Applicant had a stroke with led to left-sided weakness.  This condition caused Applicant to lose control of her vehicle.  Dr. DeJesus opined that the stroke and not the motor vehicle accident was the cause of Applicant’s medical expenses and lost wages.

The insurer, relying upon the peer review report, denied the entire No-Fault claim on the basis that the treatment was not causally related to the accident.

The assigned arbitrator upheld the insurer’s denial reasoning that the Applicant did not submit any completed health claim forms that documented the facts and a causal relationship. 

LITIGATION

02/08/11       Mount Sinai Hosp. a/a/o Anthony Benjamin v. Country Wide Ins. Co.
Appellate Division, Second Department
Judgment Which, if Satisfied, Will Exceed Policy Limits Cannot Be Modified Under CPLR 5019(a)

The Plaintiff obtained a judgment against the insurer which the insurer belatedly sought to modify under CPLR 5019(a) as the judgment would exceed the policy limits.  The lower court granted the insurer motion and ordered a hearing to determine the amount remaining on the policy.

On appeal, the Appellate Division reversed and denied the insurer’s motion to modify the judgment.  The Court reasoned that CPLR 5019(a) provides a court with the discretion to correct a technical defect or ministerial error.  This provision cannot legally be used to alter the substantive rights of a party.

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


02/15/11       Mt. McKinley Ins. Co. v Corning, Inc.
Appellate Division, First Department
Failure to Establish an Expectation of Confidentiality Dooms “Common Interest” Defense in a Discovery Dispute
As part of an ongoing declaratory judgment action to determine coverage obligations, defendant/respondent Century Insurance Company sought production of certain documents from Corning Incorporated.  Corning opposed the document request on the basis that items sought were protected by the “common interest” privilege.
The trial court granted Century’s motion to compel, and the First Department affirmed on the basis that Corning had failed to establish the materials contained confidential strategy for an upcoming bankruptcy hearing as had been alleged. Moreover, the court also noted that Corning had also failed to establish the second part of the “common interest” test which required a demonstration that Corning had a “reasonable expectation of confidentiality” at the time the documents were created.

02/10/11       Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S. v. Travelers Ins. Co.
Appellate Division, First Department
Where a Damages Claim Arises Out of a Shipping Agreement that is Incorporated into the General Supply Agreement, the General Supply Agreement’s Mandatory Arbitration Clause Governed the Dispute
Non-party Tube City entered into an agreement with Icdas Celik to provide scrap metal.  Tube City then contracted with non-party Fairless where in Fairless agreed to provide the scrap metal that Tube City would ship to Icdas’ port in Turkey in compliance with Tube City/Icdas contract.  Both Tube City and Fairless agreed that Sangamon would serve as the shipping company in this dispute.  However, it was Fairless that executed the contract with Sangamon.
Thus,

  • Fairless – supplier
  • Tube City - shipper
  • Icdas – purchaser
  • Sagamon – shipping company

Unfortunately, upon arrival at port in Turkey, Icdas rejected the scrap met that Tube City had procured from Fairless.  This resulted in the detention of Sagamon’s vessel, as well as alleged damage to the vessel in the unloading process. 
As a result, Sagamon (the shipping company) sought damages in arbitration from Fairless with whom it had entered into the earlier contract.  Importantly, the Fairless/Sagamon contract provided that Fairless would responsible for damages to vessel caused in the unloading process. 
Fairless responded by demanding that Icdas defend Fairless in the arbitration proceeding.  Fairless also sought institute a claim for common law indemnification against Icdas.   The claim was based upon language in the Tube City/Icdas agreement wherein Icdas agreed to hire the stevedores (dockworkers).  As such, Fairless maintained that Icdas was responsible for any damage caused by the stevedores
At this point, the caption would have read Sagamon v. Fairless v. Icdas.
At some point thereafter, Tube City assigned its rights under the Tube City/Icdas contract (including its rights to mandatory arbitration) to Fairless.  Icdas, however, opposed Fairless rights to demand arbitration pursuant to the Tube City/Icdas contract. 
In permitting the matter to proceed in arbitration, the First Department held that Tube City was not precluded from assigning its rights under the Tube City/Icdas contract to Fairless.  The court went on to hold that terms of the Fairless/Sagamon contract (which governed who was responsible for the alleged damages) were incorporated into the Tube City/Icdas contract.  Accordingly, the arbitration clause in the Tube City/Icdas contract governed the dispute.


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

02/04/11       Freeland v. Liberty Mutual Fire Insurance Co.
United States Court of Appeals for the Sixth Circuit
Amount in Controversy Is 1¢ Short of Jurisdictional Minimum – Ohio
The plaintiffs loaned their vehicle to their son and his family.  On March 7, 2007, the son was driving the vehicle with his wife and three children in the car when he ran a red light and struck a police cruiser in the middle of an intersection.  The son and his wife were killed and the three children survived with serious injuries.

Liberty Mutual insured the plaintiffs’ vehicle.  The policy provided coverage for bodily injuries up to a “single limit” of $100,000 as well as coverage for accidents caused by uninsured/underinsured motorists (“UM/UIM coverage”) up to a split limit of $12,500 per person and $25,000 per accident. Because the plaintiffs’ son did not have car insurance of his own, he was an uninsured motorist.  Liberty offered the plaintiffs the $25,000 limit of their UM/UIM coverage.  The plaintiffs declined the offer and filed suit alleging that their selection of UM/UIM coverage in 1999 was invalid under the Ohio Supreme Court’s decision in Linko v. Indemnity Ins. Co.. of North America, 739 N.E.2d 338 (Ohio 2000), because the coverage selection form they signed did not contain certain required disclosures.  Because of this invalid selection, the plaintiffs claimed that they had acquired UM/UIM coverage in an amount equal to their policy’s bodily injury coverage by operation of law.  The plaintiffs sought a declaratory judgment establishing that their insurance policy provided $100,000 UM/UIM coverage per accident, instead of the $25,000 per accident stated on the policy’s face.

Liberty Mutual removed the cased to the United States District Court for the Northern District of Ohio.  In the notice of removal, Liberty Mutual asserted that the parties were completely diverse and that the amount in controversy was $100,000, the full amount of UM/UIM coverage which the plaintiffs argued they were now entitled to receive.

Neither party challenged the district court’s jurisdiction - the district court granted Liberty Mutual’s motion for summary judgment. The plaintiffs appealed to the Sixth Circuit.

The Sixth Circuit determined that the amount in controversy was exactly one penny short of the jurisdictional minimum for federal courts and remanded the case back to the district court with instructions to remand the case back to state court. 

In analyzing the facts of the case the Court determined that if the plaintiffs prevail they would receive a declaration that the policy provides up to $100,000 in UM/UIM coverage.  If they do not prevail, their policy will remain as-is, with only $25,000 in UM/UIM coverage.  The “value of the consequences which may result from this litigation” is the difference between $100,000 and $25,000 – exactly $75,000.

The conclusion reached by the court results from the text of the jurisdictional statute itself.  In order for the district court to have original jurisdiction, “the matter in controversy must exceed the sum or value of $75,000.”  28 U.S.C., §1332.  In this case, since Liberty Mutual had already offered $25,000 there was no controversy over the $25,000 and the matter in controversy was only $75,000 – one penny short of the jurisdictional requirements for federal court.

02/07/11       Behrens v. Arch Insurance Co.
United States Court of Appeals for the Eighth Circuit
Once Again Policy Terms and Conditions Control – Nebraska
Behrens was a registered representative of Sunset Financial Services, Inc. [“Sunset”], a broker-dealer subsidiary of Kansas City Life Insurance Company [“KCL”] from May 17, 2000 to December 20, 2007.  During this time, Behrens was the President and CEO of 21st Century Financial Group [“21st Century”], a financial planning and insurance firm that also operated as a branch office for Sunset.  Behrens also operated a separate entity, National Investments, Inc. [“National”].

Arch issued Behrens and errors and omissions policy that provided coverage to Behrens for his activities performed as a representative for KCL and Sunset.  Pursuant to the policy provisions the policy period [6/1/07 to 6/1/08] ended early on December 20, 2007, the date that sunset terminated Behrens’ agent contract. Generally, the policy applies only to claims first made against Behrens and reported by him to Arch during the policy period.  An extended reporting period applies, however, when a policy period ends prematurely due to termination of the agent contract.  The extended reporting period provides coverage for claims arising out of a wrongful act committed during the policy period, if Behrens gives written notice of such a claim within ninety days of termination of his agent contract.

On February 8, 2008 during the extended reporting period, Behrens gave Arch written notice of a complaint filed against him by the SEC and future anticipated related claims.  The SEC complaint alleges that Behrens engaged in a Ponzi-like scheme from at least 2002 through December, 2007, misappropriating more than $3.5 million of investor funds for his personal use.  The complaint also alleges that Behrens perpetrated this scheme by soliciting investors from 21st Century, his firm that operated as a branch office of Sunset, and then offering and selling the investors notes through his separate entity, National.

Beginning on July 28, 2009, individual investors brought six lawsuits and one arbitration action against Behrens asserted the same conduct that formed the basis of the SEC action.  Behrens notified Arch and Arch denied coverage.  Behrens filed suit and Arch counterclaimed.  Summary judgment motions were filed by both parties.

The district court determined that Behrens actions were not professional services as defined by the policy and granted Arch’s motion for summary judgment. Behrens appealed.

In analyzing the issues the Eighth Circuit assumed, for the sake of analysis that the SEC complaint qualified as a “claim” and turned to the question of whether Arch had a duty to defend the subsequent claims based on that asserted claim.

The court pointed out that the policy defined “professional services” as “the solicitation, sale or servicing of: . . . b. variable annuities, flexible and scheduled premium annuities and variable life insurance . . . and d. Securities (other than variable annuities, variable life insurance and mutual funds) that were authorized or approved by the Broker/Dealer subsidiary of the Sponsoring Company or that were processed through the Broker/Dealer subsidiary of the sponsoring company or that were processed through the Broker/Dealer subsidiary of the Sponsoring Company.”

The policy also contained several exclusions including Exclusion W which states that the policy does not cover any claim “based upon, arising out of or in any way involving and Securities (other than variable annuities, variable life insurance and mutual funds) that were not authorized or approved by the Broker/Dealer subsidiary of the Sponsoring company or Securities that were not processed through the Broker/Dealer.”

Behrens argued that his conduct in selling the promissory notes at issue was arguably professional services, because the notes may fairly be characterized as “scheduled premium annuities.”  The court held that it was not necessary to resolve whether Behrens performed professional services on that theory, because Exclusion W applies to any loss suffered by Behrens from his conduct in selling promissory notes; and, Behrens admitted that the notes were securities within the meaning of the policy.  The court determined that even if they might be viewed as scheduled premium annuities, they are not variable annuities, variable life insurance or mutual funds.  As such a claim based on the sale of promissory notes is excluded from coverage by Exclusion W if the securities were not authorized by, approved by, or processed through Sunset.  The record established that the sale of those securities was not approved by Sunset.

Arch had no duty to defend.

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

02/15/11       Orange Grill Rest. Corp. v. United States Liab. Ins. Co.
Supreme Court, Kings County
Court Finds Testimony That Underlying Plaintiff Was Injured When a Friend Jumped On His Ankle Insufficient to Establish Good Faith Belief in Nonliability Where Insured Also Testified that He Contacted Insurance Broker Immediately Afterwards and Told Him Everything
In the underlying lawsuit, Gennady Fedorov was injured while dancing with a group of friends at plaintiff’s restaurant.  Plaintiff’s vice president and floor manager witnessed the incident and observed a friend of Mr. Fedorov’s jump up in the air and accidently land on his ankle.  After the accident, the vice president helped Mr. Fedorov to a chair and ultimately summoned an ambulance.  Mr. Fedorov was placed on a stretcher and taken to the hospital. 

Approximately one year later, a lawsuit was commenced by Mr. Fedorov.  Upon receipt of the Summons and Complaint, which alleged that Mr. Fedorov slipped on the dance floor because of plaintiff’s negligence, plaintiff turned the documents over to its broker.  The broker unfortunately failed to deliver them to defendant, plaintiff’s insurer.

Thereafter, plaintiff received a letter from Mr. Fedorov’s attorney warning that it was in default in the underlying action.  Plaintiff then retained a new broker who successfully notified defendant of the lawsuit.  Defendant disclaimed coverage citing late notice of occurrence.

In this motion for summary judgment, defendant asserted that plaintiff failed to notify it of the accident as soon as practicable.  In reply, plaintiff submitted an affidavit and deposition testimony of its vice president asserting that he witnessed Mr. Fedorov’s injury and it was the result of a friend stepping on his ankle.  Thus, plaintiff had a reasonable belief in nonliability, which excused its late notice.  Interestingly, Mr. Fedorov’s attorney also submitted papers arguing that defendant’s disclaimer was invalid as it failed to apprise its insured of its basis for disclaiming with the high degree of specificity required under the 3420(d) because it was based solely upon plaintiff’s failure to timely notify defendant of the claim and suit and failed to mention anything at all with respect to Mr. Fedorov’s notification of claim. 

In considering the facts, the court granted defendant’s motion for summary judgment holding that plaintiff failed to meet its burden of demonstrating a good faith belief it nonliability.  It reasoned that while plaintiff’s vice-president testified that he witnessed a friend of Mr. Fedorov’s step on his ankle, he also testified that on the Monday following the accident he telephoned his insurance broker and told him everything that occurred.  According to the court, the fact that he contacted his insurance broker undercut his claim of a good faith belief in nonliability. 

Further, the court held that there was no merit in Mr. Fedorov’s argument that the disclaimer was invalid.  The court correctly reasoned that Mr. Fedorov never provided defendant with notice of the incident or his claim (notice to the insured, is not notice do the insurer), nor did Mr. Fedorov allege that he made a diligent effort in attempting to ascertain the identity of plaintiff’s insurer.

02/10/11       National Grid v. GEICO Ins. Agency
City Court of Albany
First Post-Prejudice Rule Decision (Well, Sort Of)
On December 24, 2005, defendant’s insured’s truck was involved in an accident with plaintiff’s utility pole.  On or about January 14, 2008, plaintiff commenced an action in this court against defendant’s insured seeking to recover for the property damage. 

Although defendant knew of the underlying accident, it was never informed about the lawsuit until after plaintiff took a default judgment against its insured.  Upon receipt of the default judgment, on October 23, 2008, defendant disclaimed coverage based on late notice of suit whereby plaintiff commenced this action. 

In considering the issue of late notice, the court analyzed the provisions contained in the current version Insurance Law §3420(c).  Specifically, it examined subparagraph (B), which provides “[n]otwithstanding paragraph (A) of this paragraph, an irrebuttable presumption of prejudice shall apply if, prior to notice, the insured’s liability has been determined by a court of competent jurisdiction or by binding arbitration.” 

The court then reasoned that although defendant was timely notified of the accident, its insured had a separate obligation to notify it of the lawsuit.  Accordingly, since “neither defendant’s insured nor plaintiff, the injured party, gave notice to defendant of the commencement of plaintiff’s action against defendant’s insured until after plaintiff had already obtained a judgment, the notice condition in the policy was not satisfied.  It found that the notice plaintiff provided was insufficient to afford defendant a fair and reasonable opportunity to appear and defend the claim against its insured.  Thus, the court granted summary judgment in favor of defendant.

Note:  Although it does not change the decision, I hope everyone recognizes the problem with the court’s analysis.  The prejudice rule is only applicable to policies issued on or after January 17, 2009.  The facts of the case indicate that the accident occurred on December 24, 2005 and the denial was dated October 23, 2008.  Thus, it seems quite clear that the policy was issued prior to the statue’s revision and, accordingly, the no prejudice rule applies.  With that said, this is our first glance of what the world is going to look like moving forward.

02/08/11                 City of New York v. General Star Indem. Co.
Supreme Court, New York County
More Late Notice…
On November 12, 2001, Glenn Rolph was allegedly injured at a worksite during the course of his employment.  The City of New York was the owner of the worksite.  It had entered into a contract with MVN Associates, Inc. (“MVN”) to stabilize a piling and deck at a pier in Staten Island.  Pursuant to the contact MVN was obligated to obtain liability insurance to protect the City against claims for property damage and personal injuries, including accidental death caused by the operation of MVN or its subcontracts. 

On January 22, 2002, the City received a Notice of Claims filed by Mr. Rolph and, on May 29, 2002, it held a 50-h hearing whereby it examined Mr. Rolph under oath.  By letter dated June 7, 2002, it forwarded the notice of claim to defendant, MVN’s insurer.  Based on the evidence presented, defendant did not receive the letter until June 27, 2002 at the latest.  Defendant did not reply.  On July 8, 2002, defendant received a fax from its agent providing a separate notice of claim, which included the policy number and the name of the insured.  Defendant took the position that this was its first notice of the incident as this document included the policy number and insured’s name.  Thereafter, by letter dated July 31, 2002, defendant disclaimed coverage based on late notice.

In June 2003, the City commenced this action and moved for summary judgment on the ground that the disclaimer was untimely.  The court granted the motion, but was reversed on appeal.  The First Department found that “an issue of fact…exists as to the timeliness of defendant’s disclaimer of coverage.  Specifically, it noted that, according to defendant, it disclaimed coverage 23 days after it received notice of the claim. 

Thereafter, the City renewed its motion for summary judgment on the same grounds.   The court explained that for a motion to renew the movant must allege new facts not offered on the prior motion and a reasonable justification for the failure to present those facts on the prior motion or a demonstration of a change in the law.  It then held that the City’s purported discovery that the disclaimer letter was not mailed until August 7, 2002 did not suffice for the court to conclude that the disclaimer was late as a matter of law.  

01/20/11       Stelsim, Inc. v. Kensington Ins. Co.
Supreme Court, New York County
Failure to Change Address With Secretary of State No Excuse For Late Notice
On or about May 19, 2009, plaintiff was served pleadings in the underlying lawsuit by service upon the New York Secretary of State.  Unfortunately, when plaintiff moved, it never changed its address with the Secretary of State.

Plaintiff asserted that its first notice was not until ten months later when it learned of the suit from its “tenants.”  Thereafter, it placed its insurance carrier, defendant, on notice of the suit.  Defendant disclaimed covered citing the policy requirement that plaintiff provide notice “as soon as practicable.” 

In considering defendant’s motion to dismiss, the court held that plaintiff had not put forth a reasonable excuse for failing to notify the Secretary of State of its changed address.  Further, although plaintiff had the burden of proffering a reasonable excuse for its failure to give timely notice, none was offered.  Further, in a reoccurring theme of this issue, the court rejected plaintiff’s argument that defendant needed to show prejudice noting that “New York Insurance Law Section 3420(a)(5) expressly applies to policies issued or delivered on or about January 17, 2009.”  Here, it was undisputed that defendant’s policy was issued or delivered before January 17, 2009. 

01/19/11       Structure Tone, Inc. v. Harleysville Worcester, Ins. Co.
Supreme Court, New York County
Court Holds Insurer Waived Right to Rely On Late Notice Or Object to Contractual Indemnity Claim
This case arises out of an injury to an employee while installing hinges on a door at a jobsite.  The employee brought suit against plaintiff, the project’s general contractor, and the subcontractor that hired his employer to perform woodworking services at the project.  

Two years after the accident, when a lawsuit was commenced, plaintiff sought additional insured coverage under the subcontractor’s insurance policy issued by defendant and it sought contractual indemnity from the subcontractor.  Plaintiff pointed to the Purchase Order signed by the subcontractor agreeing to name it as an additional insured and indemnify and hold it harmless from and against all claims caused by the subcontractor’s negligence which arose, in whole or in part, from the work performed under the Purchase Order. 

Thereafter, defendant denied the request for defense and indemnify based on late notice.  This prompted plaintiff to commence this suit.  Approximately five months after the lawsuit was commenced, defendant sent a follow up letter denying the clam for contractual indemnification because there was a lack of evidence that the named insured, the subcontractor, was actively negligent. 

However, ten months later, defendant sent one more letter, in which it reversed its position and agreed to assume the defense and indemnity of plaintiff, subject to its agreement to waive its right to reimbursement of all past legal fees.  The letter recognized plaintiff as an additional insured for all purposes and contained no explanation for its change of position.  

In considering plaintiff’s motion for summary judgment, and the cross-motions, the court held that irrespective of the fact that plaintiff failed to adequately address how and when it learned of the accident, since defendant accepted the tender, its renewed attempt to disclaim on the ground of late notice was untimely and unreasonable as a matter of law.  In the court’s opinion, the final letter sent by defendant was an implicit waiver of any late notice and/or contractual obligations, concerns or objections.

01/19/11       Kensington Ins. Co. v. Nationwide Management of NY, Inc.
Supreme Court, Queens County
Court Defers to Workers’ Compensation Board On Applicability of Employer Exclusion
This case arises out of an employee’s slip and fall on December 19, 2007 while in the course of her employment.  Plaintiff issued a commercial general liability policy to Nationwide of New York, Inc. (“Nationwide”).  It is alleged that Nationwide is also known as BAB Management and Allborough (three related entities with the same principals and officers).

The confusion in this case is that, at the time of the accident, the employee was working for Allborough.  The building where she fell was leased to BAB Management and the insurance policy was issued to Nationwide.  After the accident, she filed a workers compensation claim and also brought a personal injury action against the building owner and all three related entities. 

Upon receipt of the lawsuit, Kensington denied coverage because of the employer exclusion and late notice.  Eventually, this coverage action was brought and Kensington moved for summary judgment. 

In reply, the President of Nationwide asserted that immediate notice of the occurrence was not provided as she believed the matter was covered by Workers’ Compensations.   Thus, it had a reasonable belief in nonliability.

The court held that, as the Workers’ Compensation board had not yet determined the employee’s rights under the statute, it would be improper to determine factual issues regarding the applicability of the workers’ compensation law.  According to the court, the issue of whether Nationwide was the proper employer was relevant to both the applicability of the employer exclusion and the reasonableness of Nationwide’s delay in giving notice of the occurrence.  Thus, the court denied the motion with leave to renew.   

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

Limits on Professional Malpractice Damages

In defending various types of professional malpractice cases, it is important to examine the claim of damages and eliminate those which are speculative and not directly and proximately caused by alleged professional negligence.  This doctrine was reviewed in the case of Rivers v. Moore, Myers & Garland, LLC, 2010 WY 102, 236 P.3d 284 (July 28, 2010).  In this case, the plaintiff in a legal malpractice action had to prove that breach of the standard of care was both the cause in fact and the proximate cause of the alleged damages.  The plaintiff failed to present any evidence which showed that had the law firm acted differently, the plaintiff could have built a 10,000 square foot building when the restrictive covenants on the property apparently limited the building size to 4,200 square feet.

Dr. Rivers sued his law firm of Moore, Myers & Garland alleging legal malpractice in the firm’s representation with respect to his purchase of property on which he allegedly planned to construct a 10,000 square foot medical office building.  However, the seller rejected the plans and, because of building size restrictions on the property, the doctor had to construct a much smaller building.  The doctor alleged that he would not have purchased the property if he had known and understood the building limitations.

The law firm filed a motion for summary judgment alleging that the doctor was adequately advised about the restrictive covenants.  An alternative motion for partial summary judgment sought to exclude the doctor’s claim for “expectancy damages” which consisted of the claimed difference in value between the allowed building and the desired 10,000 square foot building.  The trial court denied the motion for complete summary judgment, but granted the motion for partial summary judgment determining that there was no causal connection between the law firm’s actions and the doctor’s inability to construct a larger building. 

Dr. Rivers alleged that the law firm committed malpractice by failing to adequately warn him about the development restrictions, and by delay in taking action to address those issues.  The appellate court focused its summary judgment analysis on the question of whether any alleged breach of duty caused the asserted “expectancy damages”.  These damages were based on the contention that, if the law firm had fulfilled its duty to adequately and timely represent Rivers, he would have been able to build the 10,000 square foot building.  The appellate court agreed with the trial court’s conclusion that this premise was not supported by the record. 

The court found there was nothing on the record to indicate that, if the law firm had performed its duties differently or more diligently, the seller would have allowed construction of a 10,000 square foot building.  Indeed, the plaintiff’s pleadings contained no allegation that, but for the law firm’s alleged failures, the seller would have agreed to a larger building.  The appellate court agreed that the doctor’s allegations were vague, speculative, and could not create a disputed issue of fact when the evidence showed that no one expected the seller would agree to a 10,000 square foot building under any circumstances. 

The appellate court made this ruling despite an expert affidavit presented by the plaintiff.  The court stated that the conclusory opinion of the plaintiff’s expert attempted to impermissibly shift the doctor’s business loss to the firm without showing that the loss suffered was in fact caused by the firm’s alleged malpractice.  The trial court had correctly rejected that evidence and concluded that the doctor’s claim for “expectancy damages” failed as a matter of law. 

The lessons of the Rivers case are multiple.  First, in defending professional malpractice claims, it is important to make all motions possible, which the defense counsel did in this case, making a motion for complete summary judgment, partial summary judgment, and to strike or limit projected expert witness testimony.  This increases the likelihood of a significant legal victory on one or even multiple grounds.

Second, in defending professional malpractice cases, it is important to closely examine the alleged damages and argue that they were not proximately or directly caused by the alleged professional malpractice but perhaps by other factors, such as a plaintiff’s loss of financing, delays in the transaction which were not the fault of the law firm, etc.  Simply because there is a claim of some malpractice does not mean that all injuries and losses were proximately caused by the alleged professional negligence. 

In this case, the appellate court agreed that the “expectancy damages” sought were speculative and indeed were not possible and could not be proven because there was no indication that the seller ever would have agreed to construction of a 10,000 square foot office building due to the restrictive covenants on record.  Thus, both the lower court and the appellate court concluded that there was nothing about the alleged professional malpractice which proximately created or caused the differential of the plaintiff only being able to construct a building approximately half that size.    


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


02/04/11       R.C. Wegman Construction Co. v. Admiral Ins. Co.
Seventh Circuit Court of Appeals
Strategic Decision by Insurer Placed Insured at Jeopardy of Excess Judgment and Created a Conflict of Interest Under Illinois Insurance Law
Admiral Insurance Company provided a defense to its insured, Wegman, in an underlying case. The underlying plaintiff issued a settlement demand in excess of policy limits. Admiral made a strategic decision to proceed to trial and to downplay, rather than deny, Wegman’s responsibility for the plaintiff’s injury, in hopes of a ruling that would reduce damages awarded below the policy limit. A conflict arose when Admiral learned that an excess judgment was a nontrivial probability. However, Admiral failed to notify Wegman of its strategy or the known degree of risk, so that Wegman was not given the opportunity to obtain its own counsel. Following a trial, the underlying plaintiff secured an award double the policy limit.  Wegman filed suit against Admiral alleging breach of an implied contractual duty of good faith in not notifying it of the possibility of an excess judgment in time for it to have invoked its excess coverage. The district court dismissed the action, but on appeal the Court of Appeals reversed and remanded, holding that the insured stated a claim and dismissal was premature. Admiral moved for rehearing and the Court of Appeals denied the motion.
Submitted by: Joseph Gill and Joanna Gomez (Currie Johnson Griffin Gaines & Myers, P.A.
REPORTED DECISIONS
Ciampa 21, LLC v.  QBE Insurance Corporation


Newman Myers Kreines Gross Harris, P.C., New York, N.Y.
(Olivia M. Gross and Howard B. Altman of counsel), for appellant.
Meyer, Suozzi, English & Klein, P.C., Garden City, N.Y.
(Brian Michael Seltzer and Robert N.
Zausner of counsel), for respondent.

DECISION & ORDER
In an action for a judgment declaring that the defendant QBE Insurance Corporation is obligated to defend and indemnify Ciampa 21, LLC, in an underlying action entitled Pacheco v Ciampa 21, LLC, commenced in the Supreme Court, Kings County, under Index No. 31686/04, the defendant QBE Insurance Corporation appeals from an order of the Supreme Court, Nassau County (Iannacci, J.), entered February 2, 2010, which denied its motion for summary judgment, in effect, declaring that it is not so obligated and granted the plaintiff's cross motion for summary judgment declaring that it is so obligated.
ORDERED that the order is reversed, on the law, with costs, the motion of the defendant QBE Insurance Corporation for summary judgment, in effect, declaring that it is not obligated to defend or indemnify Ciampa 21, LLC, in the underlying action is granted, the plaintiff's cross motion for summary judgment declaring that the defendant QBE Insurance Corporation is so obligated is denied, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant QBE Insurance Corporation is not obligated to defend or indemnify Ciampa 21, LLC, in the underlying action.
The defendant QBE Insurance Corporation (hereinafter QBE) established, prima facie, that it was not obligated to defend and indemnify the plaintiff, Ciampa 21, LLC, in an underlying personal injury action because it properly disclaimed coverage on the ground of late notice of the underlying accident (see QBE Ins. Corp. v D. Gangi Contr. Corp., 66 AD3d 593; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689; Quality Invs., Ltd. v Lloyd's London, England, 11 AD3d 443). The plaintiff failed to raise a triable issue of fact in response.
In view of the foregoing, we need not reach QBE's alternative contention.
Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that QBE is not obligated to defend and indemnify Ciampa 21, LLC, in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
Nabutovsky v. Burlington Insurance Company


Ford Marrin Esposito Witmeyer & Gleser, LLP, New York, N.Y.
(James M. Adrian and Shayne W. Spencer of counsel), for appellant-
respondent.
Isaac Tessler, New York, N.Y., for respondents-appellants.

DECISION & ORDER
In an action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against the defendant's insured, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated July 1, 2009, as denied its cross motion for summary judgment dismissing the complaint, and the plaintiffs cross-appeal from so much of the same order as denied their motion for summary judgment on the complaint.
ORDERED that the order is reversed insofar as appealed from, on the law and the facts, and the defendant's cross motion for summary judgment dismissing the complaint is granted; and it is further,
ORDERED that the order is affirmed insofar as cross-appealed from; and it is further,
ORDERED that one bill of costs is awarded to the defendant.
In September 2004 the plaintiffs were patrons at Rasputin Restaurant, which is owned and operated by RNF International Cuisine, Inc., doing business as Rasputin (hereinafter the insured), when they were injured by a third party who assaulted them with a broken bottle. Based upon this incident, the plaintiffs commenced an action against the insured to recover damages for personal injuries, which resulted in a default judgment against the insured.
Thereafter, pursuant to Insurance Law § 3420(a)(2), the plaintiffs commenced the instant action to recover the amount of the unsatisfied judgment from the defendant, Burlington Insurance Company, the insured's insurance carrier. The plaintiffs moved for summary judgment on the complaint, and the defendant cross-moved for summary judgment dismissing the complaint, inter alia, on the basis that it validly disclaimed coverage due to late notice of the occurrence. The Supreme Court denied the motion and the cross motion.
The defendant established its prima facie entitlement to judgment as a matter of law on its cross motion by demonstrating that the insured failed to provide it with notice of the occurrence as soon as practicable and that its disclaimer was timely. An insurer is not obligated to pay for the loss of its insured in the absence of timely notice in accordance with the terms of the policy (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436; Power Auth. of State of N.Y. v Westinghouse Elec. Corp., 117 AD2d 336). Where an insurance policy requires that notice of an occurrence be given "as soon as practicable," notice must be given within a reasonable time in view of all of the circumstances (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d 596; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d 719, 721).
Here, the defendant demonstrated that the insured did not provide notice of the plaintiffs' personal injury claims until December 21, 2004, more than three months after the incident occurred, despite the insured's knowledge of the incident at the time it occurred. Under all of the circumstances, the insured did not provide notice within a reasonable time. Moreover, the plaintiffs' provision of notice to the insurance broker for the insured did not constitute notice to the defendant (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 442 n 3; Guayara v Hudson Ins. Co., 48 AD3d 628, 629; Escobar v Colonial Indem. Ins. Co., 22 AD3d 633, 634; Matter of First Cent. Ins. Co., 3 AD3d 494, 495).
The defendant also established that its disclaimer was timely. The defendant had a duty to disclaim coverage in a timely manner because the occurrence at issue is governed by Insurance Law § 3420(d) (see Sphere Drake Ins. Co. v Block 7206 Corp., 265 AD2d 78; American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau, 265 AD2d 49). The defendant's disclaimer of coverage, made approximately 30 days after receiving the notice of occurrence from the insured, satisfied the statute and was timely under the circumstances of this case (see Interboro Mut. Indem. Ins. Co. v Fatsis, 279 AD2d 450; Sphere Drake Ins. Co. v Block 7206 Corp., 265 AD2d 78).
In opposition, the plaintiffs failed to raise a triable issue of fact. Accordingly, the defendant's cross motion for summary judgment dismissing the complaint should have been granted.
In light of our determination, we need not address the parties' remaining contentions.
SKELOS, J.P., BALKIN, LEVENTHAL and SGROI, JJ., concur.
Roldan v. New York University


Abrams, Fensterman, Fensterman, Eisman, Greenberg, Formato &
Einiger, LLP, Lake Success, N.Y. (Harry Demiris and Sarah C.
Lichtenstein of counsel), for appellant-respondent.
Jones Hirsch Connors & Bull P.C., New York, N.Y. (Michael P.
Kelly and Richard C. Imbrogno of
counsel), for defendants third-party plaintiffs-
respondents-appellants.
Babchick & Young, LLP, White Plains, N.Y. (Marisa C.
Wooldridge and Dan Quart of counsel), for
defendant-respondent.
Gallo Vitucci & Klar LLP, New York, N.Y. (Kimberly A.
Ricciardi of counsel), for third-party
defendant-respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for personal injuries, etc., the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Satterfield, J.), entered October 2, 2009, as granted those branches of the separate motions of the defendants third-party plaintiffs and the defendant Mainco Elevator & Electric Corp. which were for summary judgment dismissing the complaint insofar as asserted against them, and the defendants third-party plaintiffs separately appeal, as limited by their brief, from so much of the same order as (a) denied those branches of their motion which were for summary judgment on their cross claim for contractual indemnification against the defendant Mainco Elevator & Electrical Corp., to the extent it sought defense costs incurred by them in this action, and on their third-party causes of action alleging breach of contract to procure insurance and for contractual indemnification against the third-party defendant, to the extent they sought defense costs incurred by them in this action, (b) granted that branch of the motion of the defendant Mainco Elevator & Electric Corp. which was for summary judgment dismissing the cross claim for contractual indemnification to the extent it sought defense costs incurred by them in this action, and (c) granted that branch of the motion of the third-party defendant which was for summary judgment dismissing the third-party causes of action alleging breach of contract to procure insurance and for contractual indemnification against the third-party defendant, to the extent they sought defense costs incurred by them in this action.
ORDERED that the order is modified, on the law and the facts, by (1) deleting the provision thereof denying that branch of the motion of the defendants third-party plaintiffs which was for summary judgment on their third-party causes of action alleging breach of contract to procure insurance and for contractual indemnification against the third-party defendant, to the extent they sought defense costs incurred by them in this action, and substituting therefor a provision granting that branch of the motion, and (2) deleting the provision thereof granting that branch of the motion of the third-party defendant which was for summary judgment dismissing the third-party causes of action alleging breach of contract to procure insurance and for contractual indemnification against the third-party defendant, to the extent they sought defense costs incurred by the defendants third-party plaintiffs in this action, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from; and it is further,
ORDERED that the defendant third-party plaintiffs are awarded one bill of costs, payable by the plaintiff and the third-party defendant, and the defendant Mainco Elevator & Electrical Corp. is awarded one bill of costs, payable by the plaintiff.
On February 25, 2004, the plaintiff's decedent, Jose Roldan (hereafter the decedent), was loading garbage and other debris into a service freight elevator in the basement at premises owned by the defendants third-party plaintiffs, New York University and New York University Real Estate Corporation (hereafter together the NYU defendants), pursuant to a cleaning services contract between the decedent's employer, the third-party defendant, American Building Maintenance (hereafter ABM), and the NYU defendants. After putting the final load into the freight elevator, the decedent rode the elevator alone with the garbage and debris up to the street, during which time he allegedly sustained injuries to his leg. The defendant Mainco Elevator & Electrical Corp. (hereafter Mainco), maintained the elevators at New York University pursuant to an elevator maintenance agreement. The decedent died before this action was commenced for reasons unrelated to the subject accident, and before he could be deposed.
The plaintiff's contention that the Supreme Court incorrectly granted those branches of the separate motions the the NYU defendants and Mainco which were for summary judgment dismissing the complaint insofar as asserted against them is without merit. The NYU defendants and Mainco met their burden of establishing their prima facie entitlement to judgment as a matter of law by demonstrating that any determination as to how the accident occurred would be based on speculation (see Stock v Otis El. Co., 52 AD3d 816; Lissauer v Shaarei Halacha, Inc., 37 AD3d 427; Manning v 6638 18th Ave. Realty Corp., 28 AD3d 434, 434-435; Teplitskaya v 3096 Owners Corp., 289 AD2d 477, 477-478). The evidence submitted by the plaintiff in opposition was insufficient to raise a triable issue of fact. "Although hearsay evidence may be considered in opposition to a motion for summary judgment, it is insufficient to bar summary judgment if it is the only evidence submitted" (Stock v Otis El. Co., 52 AD3d at 816-817 [internal quotation marks omitted]).
The plaintiff, the decedent's widow, contends that her deposition testimony established that a question of fact existed as to the cause of the decedent's accident. However, her testimony was based on speculation and hearsay since she admitted that she did not witness the accident and her testimony was based on information she received from either the decedent or from her son who purportedly relayed to her what the decedent told him about how the accident occurred (id. at 817; see Hochhauser v Electric Ins. Co., 46 AD3d 174, 178; Rodriguez v Sixth President, Inc., 4 AD3d 406). The plaintiff further relied upon statements as to the cause of the accident contained in the accident report and the decedent's Workers' Compensation file, but these items contained inadmissible hearsay and the plaintiff failed to lay the proper foundation for their admission as business records (CPLR 4518 [a]; Stock v Otis El. Co., 52 AD3d at 817; Whitfield v City of New York, 48 AD3d 798, 799; Daliendo v Johnson, 147 AD2d 312, 321; Di Paolo v Somma, 111 AD2d 899, 900-901). Further, the affidavit submitted by the plaintiff's elevator consultant in opposition to the motions, which was in part based on his personal observation of the elevator five years after the accident, was, among other things, impermissibly speculative and lacking in probative value (see Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533; Stock v Otis El. Co., 52 AD3d at 817; McFadden v Village of Ossining, 48 AD3d 761, 762).
Moreover, the Supreme Court properly ruled that the plaintiff could not rely on the doctrine of res ipsa loquitur, as the plaintiff failed to demonstrate that either the NYU defendants or Mainco had exclusive control of the elevator, that the accident was one that would not ordinarily occur in the absence of one's negligence, or that the accident was not due to any voluntary action or contribution on the part of the decedent (see Dermatossian v New York City Tr. Auth., 67 NY2d 219, 226-227; Cilinger v Arditi Realty Corp., 77 AD3d 880; Cortes v Central El. Inc., 45 AD3d 323, 324; Hardy v Lojan Realty Corp., 303 AD2d 457).
Accordingly, the Supreme Court properly granted those branches of the separate motions of the NYU defendants and Mainco which were for summary judgment dismissing the complaint insofar as asserted against them.
The NYU defendants contend that the Supreme Court erred in denying that branch of their motion which was for summary judgment in their favor on their third-party causes of action alleging breach of contract to procure insurance and for contractual indemnification against ABM, to the extent they sought defense costs incurred by them in this action, and in granting that branch of ABM's motion which was for summary judgment dismissing those causes of action. We agree.
The right to contractual indemnification depends upon the specific language of the contract (see e.g. Canela v TLH 140 Perry St., LLC, 47 AD3d 743, 744). The promise to indemnify should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances (see Hooper Assoc. v AGS Computers, 74 NY2d 487, 491-492). The express language of the subject indemnification agreement specifically obligates ABM to indemnify the NYU defendants from all claims "caused by, resulting from, arising out of or occurring in connection with the performance of the work or services specified" in the cleaning services agreement. This also included an obligation by ABM to pay the NYU defendants for any defense costs they may incur in such claims. Here, the NYU defendants met their burden of demonstrating entitlement to judgment as a matter of law that the subject accident arose out of or occurring in connection with the performance of the cleaning services agreement. In response, ABM failed to raise a triable issue of fact. While the exact circumstances of how the accident happened are unknown, what is known is that the decedent was performing janitorial services under the subject contract when he was injured inside the elevator. Accordingly, the Supreme Court should have granted that branch of the NYU defendants' motion which was for summary judgment on so much of their third-party cause of action for contractual indemnification which was for defense costs, and denied that branch of ABM's motion which was for summary judgment dismissing so much of that cause of action (see Brown v Two Exch. Plaza Partners, 76 NY2d 172; Baginski v Queen Grand Realty, LLC, 68 AD3d 905).
Further, the NYU defendants demonstrated their prima facie entitlement to judgment as a matter of law on their third-party cause of action alleging breach of contract to procure insurance against ABM. Although ABM obtained a commercial general liability policy naming the NYU defendants as additional insureds, it failed to procure the specific coverage required under the insurance provisions of the subject cleaning services contract. ABM obtained a policy that was subject to a $1 million self-insured retention, when it was required to obtain a $2 million policy that was primary to the NYU defendants' own policy (see Guercio v Hertz Corp., 40 NY2d 680; Lima v NAB Constr. Corp., 59 AD3d 395, 397). In opposition to the NYU defendants' prima facie showing, ABM failed to raise a triable issue of fact. Accordingly, the Supreme Court should have granted that branch of the NYU defendants' motion which was for summary judgment on their third-party cause of action alleging breach of contract to procure insurance, and denied that branch of ABM's motion which was for summary judgment dismissing that cause of action.
Symonds v. Progressive Insurance Company


Calendar Date: November 18, 2010
Before: Peters, J.P., Rose, Lahtinen, Kavanagh and Egan Jr., JJ.

Levene, Gouldin & Thompson, L.L.P., Vestal (Maria
E. Lisi-Murray of counsel), for defendant and third-party
plaintiff-appellant.
MEMORANDUM AND ORDER

Egan Jr., J.
Appeal from an order of the Supreme Court (O'Shea, J.), entered February 25, 2010 in Chemung County, which, among other things, granted third-party defendant's cross motion for summary judgment dismissing the third-party complaint.
In August 2005, plaintiffs were involved in a motor vehicle accident with Pamela Miller when Miller failed to yield the right-of-way at a stop sign. At the time of the accident, plaintiffs, residents of the City of Elmira, Chemung County, were insured by defendant. Miller, a resident of Pennsylvania, had previously been insured by third-party defendant, Allstate Indemnity Group. Plaintiffs sought payment for their injuries under the supplemental uninsured and underinsured motorist coverage of its policy with defendant after learning that Allstate had canceled its policy with Miller prior to the accident due to nonpayment. Defendant did not respond to plaintiffs' requests for coverage.
In May 2008, plaintiffs commenced this action for breach of contract against defendant. Defendant subsequently commenced a third-party action against Allstate seeking, among other things, a declaration that Miller's insurance policy was in full force and effect at the time of the accident. Defendant subsequently moved for summary judgment against plaintiffs and Allstate. Thereafter, Allstate cross-moved for summary judgment dismissing the third-party complaint. Supreme Court, among other things, denied defendant's motion for summary judgment against plaintiffs and granted Allstate's cross motion for summary judgment due to defendant's lack of standing under the applicable Pennsylvania statute and Allstate's substantial compliance with the statute. Defendant now appeals and we affirm, albeit on different grounds.
Defendant lacks standing under New York law to seek a judgment declaring Allstate's insurance policy in effect at the time of the accident. Under Insurance Law § 3420 (a) (2), a declaratory judgment action seeking a judgment declaring that the at-fault party's insurance company was obligated to defend and indemnify its insured can only be commenced after the third party seeking the declaration obtains a judgment against the at-fault insured, and it has gone unpaid for 30 days (see Lang v Hanover Ins. Co., 3 NY3d 350, 354-355 [2004]; Sabatino v Capco Trading, Inc., 27 AD3d 1019, 1021 [2006]). Likewise, since defendant, as plaintiffs' subrogee, stands in the shoes of its subrogor and "is subject to any claims or defenses which may be raised against the subrogor" (Peerless Ins. Co. v Michael Beshara, Inc., 75 AD3d 733, 735-736 [2010] [internal quotation marks and citation omitted]; see United States Fid. & Guar. Co. v Smith Co., 46 NY2d 498, 504 [1979]), and since plaintiffs have not obtained a judgment against Miller, defendant does not have standing to seek a declaratory judgment against Miller's carrier, Allstate.
Finally, since both defendant and Allstate have settled their respective disputes with plaintiffs subsequent to Supreme Court's decision, defendant's appeal from the denial of summary judgment with relation to plaintiffs has been rendered moot (see Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714 [1980]; Matter of Clear Channel Communications v Rosen, 263 AD2d 663, 664 [1999]; Matter of Herald Co. v O'Brien, 149 AD2d 781, 782 [1989]).
385 Third Avenue Associates, L.P.,v. Metropolitan Metals Corp.


Bee Ready Fishbein Hatter & Donovan, LLP., Mineola
(Patrick K. Foster of counsel), for appellant-respondent.
Quirk and Bakalor, P.C., New York (Richard H. Bakalor of
counsel), for respondents-appellants.
Ford Marrin Esposito Witmeyer & Glesser, L.L.P., New York
(James M. Adrian), for respondent.
Order and judgment (one paper), Supreme Court, New York County (Louis B. York, J.), entered July 24, 2009, which, to the extent appealed from as limited by the briefs, denied plaintiffs' motion for summary judgment (1) declaring that defendant Burlington Insurance Company is obligated to provide insurance coverage to defendant Metropolitan Metals Corp. in connection with plaintiffs' contractual indemnification claims against Metropolitan arising out of the underlying personal injury action and (2) as to liability on their contractual indemnification claims against Metropolitan, and granted their motion for summary judgment as to liability on their breach of contract claim against Metropolitan for failure to procure insurance; denied Metropolitan's motion for summary judgment declaring that Burlington is obligated to defend and indemnify it in connection with plaintiffs' contractual indemnification claims against it; and granted Burlington's motion for summary judgment declaring that it has no obligation to defend or indemnify plaintiffs or Metropolitan in connection with the underlying action, and so declared, unanimously modified, on the law, to grant plaintiffs' motion for summary judgment as to liability on their contractual indemnification claims against Metropolitan, and otherwise affirmed, without costs.
The cross liability exclusion in the Burlington policy, set forth in a separate endorsement, unambiguously excludes from coverage any actual or alleged bodily injury to any present, former, future, or prospective employee of any insured. As the injured party was an employee of an insured (Metropolitan) and was working within the scope of his employment at the time of his injury, the cross liability exclusion bars coverage for his injuries (see DRK, LLC v Burlington Ins. Co., 74 AD3d 693, 694-95 [2010]; Tardy v Morgan Guar. Trust Co. of N.Y., 213 AD2d 296 [1995]; Consolidated Edison Co. of N.Y. v United Coastal Ins. Co., 216 AD2d 137 [1995], lv denied 87 NY2d 808 [1996]). It is immaterial whether the policy proceeds are sought by way of direct claims by the injured party or by way of plaintiffs' contractual indemnification claims against Metropolitan (see Guachichulca v Laszlo N. Tauber & Assoc., LLC, 37 AD3d 760, 762 [2007]).
Contrary to plaintiffs' and Metropolitan's contention, the separate and distinct employer's liability exclusion contained within the insuring agreement does not render the policy ambiguous so as to require that it be construed in the insured's favor (see Guardian Life Ins. Co. of Am. v Schaefer, 70 NY2d 888, 890 [1987]; State of New York v Home Indem. Co., 66 NY2d 669, 671 [1985]). "[E]xclusions in policies of insurance must be read seriatim, not cumulatively, and if any one exclusion applies there can be no coverage since no one exclusion can be regarded as inconsistent with another" (Monteleone v Crow Constr. Co., 242 AD2d 135, 140-141 [1998], lv denied 92 NY2d 818 [1998] [internal quotation marks and citation omitted]). Moreover, the cross liability exclusion is contained in the policy endorsement, which clearly states that it changes the policy.
As to their contractual indemnification claims against Metropolitan, plaintiffs established prima facie that Metropolitan was negligent in connection with the accident and that plaintiff's were completely free from negligence. The evidence demonstrated that Metropolitan exercised exclusive supervisory control over the injured employee and directed the means and methods of his work (see Comes v New York State Elec. & Gas Corp., 82 NY2d 876 [1993]; Carino v Webster Place Assoc., LP, 45 AD3d 351 [2007]; O'Sullivan v IDI Constr. Co., Inc., 28 AD3d 225, 226 [2006], affd 7 NY3d 805 [2006]). Metropolitan failed to oppose this aspect of plaintiffs' motion, and the evidence it adduces on appeal merely demonstrates that plaintiffs had general supervisory authority over the project and notice of the allegedly unsafe manner in which the work was being conducted, which is insufficient to withstand summary judgment (see Comes, 82 NY2d at 878; Burkoski v Structure Tone, Inc., 40 AD3d 378, 380-82 [2007]; O'Sullivan, 28 AD3d at 226-227).
Contrary to Metropolitan's contention, the indemnification provision passes muster under General Obligations Law § 5-322.1 (see Brooks v Judlau Contr., Inc., 11 NY3d 204, 210 [2008]; Hughey v RHM-88, LLC, 77 AD3d 520, 523 [2010]).
Plaintiffs made a prima facie showing that, while Metropolitan obtained insurance coverage and had them named as additional insureds, it failed to procure the coverage required by the subcontract that would protect them in the event of a claim made by an injured employee of one of the other named insureds; Metropolitan failed to rebut this showing (see Lima v NAB Constr. Corp., 59 AD3d 395, 397 [2009]). We decline to reach Metropolitan's argument, raised for the first time in reply on appeal, that plaintiffs' damages are limited to their out-of- pocket expenses in obtaining and maintaining a separate policy of insurance.
Progressive Northeastern Insurance Co. v. State Farm Insurance Companies


Appeal from a judgment (denominated order) of the Supreme Court, Onondaga County (John C. Cherundolo, A.J.), entered October 14, 2009 in a declaratory judgment action. The judgment, inter alia, declared that defendant Charter Oak Fire Insurance Company is obligated to defend and indemnify Gabe's Auto, Gabriel O'Loughlin and Craig Donaghey in an underlying personal injury action.

HISCOCK & BARCLAY, LLP, ROCHESTER (JOSEPH A. WILSON OF COUNSEL), FOR DEFENDANT-APPELLANT.
MACKENZIE HUGHES LLP, SYRACUSE (RYAN T. EMERY OF COUNSEL), FOR DEFENDANTS-RESPONDENTS STATE FARM INSURANCE COMPANIES AND CANDICE A. RHEA.
COLELLA LAW OFFICE, CHITTENANGO (JOHN D. COLELLA OF COUNSEL), FOR DEFENDANT-RESPONDENT GABE'S AUTO. It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by denying the motion of defendant Gabe's Auto in its entirety, vacating in part the 4th decretal paragraph and vacating in their entirety the 7th and 10th decretal paragraphs, and granting judgment in favor of defendant Charter Oak Fire Insurance Company as follows:

It is ADJUDGED and DECLARED that defendant Charter Oak Fire Insurance Company is not obligated to defend or indemnify defendant Gabe's Auto, Gabriel O'Loughlin or Craig Donaghey in the underlying personal injury action brought by defendants Jeanette Bosket and Gloria Card and is not obligated to reimburse defendant Gabe's Auto and Gabriel O'Loughlin in hiring substitute counsel in that underlying personal injury action and as modified the judgment is affirmed without costs.
Memorandum: This declaratory judgment action involves a dispute over insurance coverage of various parties involved in a motor vehicle accident. The accident occurred when a vehicle occupied by defendants Jeanette Bosket and Gloria Card was rear-ended by a vehicle owned by defendant Candice Rhea and operated by defendant Craig Donaghey. Earlier that day, Rhea had taken her vehicle to defendant Gabe's Auto in Syracuse for minor repairs and an inspection. Because a light for the vehicle's Onboard Diagnostic System (ODS) had been activated, an inspection sticker could not be issued at that time because the inspection could be approved only after the light was deactivated. Because the light would not deactivate until the vehicle had been driven for a period of time, that same day the owner of Gabe's Auto gave Donaghey, his employee, permission to drive the vehicle to Binghamton to pick up his son for visitation. The accident occurred when Donaghey was returning from Binghamton. The occupants of the other vehicle, Bosket and Card, were injured in the accident, and they later commenced the underlying personal injury action against Donaghey and Rhea.
In its amended complaint in this action, plaintiff, Progressive Northeastern Insurance Company, sought a declaration that it is not obligated to defend or indemnify its insured, Donaghey, in the underlying action. Gabe's Auto in turn asserted a cross claim seeking a declaration that its insurer, defendant Charter Oak Fire Insurance Company (Charter Oak), is obligated to defend and indemnify it in the underlying action as well as a second cross claim seeking, inter alia, a declaration that Charter Oak is obligated to reimburse Gabe's Auto and Gabriel O'Loughlin for the costs of hiring substitute counsel to defend them in the underlying personal injury action. Charter Oak thereafter moved for summary judgment dismissing, inter alia, that cross claim against it, and Gabe's Auto cross-moved for summary judgment on its cross claim. Supreme Court issued the declaration sought by Gabe's Auto in its cross claim, and Charter Oak appeals.
We agree with Charter Oak that the court erred in declaring that it has a duty to defend and indemnify Gabe's Auto in the underlying action. The commercial liability policy issued by Charter Oak specifically excludes coverage for injuries and property damage arising from the use of any "auto" owned, operated, or rented or loaned to the insured. Pursuant to the "Operation of Customers Autos Garage Operations" endorsement, however, the auto exclusion "does not apply to any customer's auto' while on or next to those premises you [the insured] own, rent or control and that are being used for any garage operations' " (emphasis added). That endorsement is inapplicable in this case because the accident involving the customer's auto did not occur "on or next to" the insured premises; as noted, it occurred in another city, some 60 miles away. We thus conclude that, even assuming that Donaghey was using Rhea's vehicle for "garage operations" at the time of the accident, the policy does not afford coverage, and Charter Oak has no obligation to defend or indemnify Gabe's Auto in the underlying action.
Gabe's Auto contends that the court properly determined that the endorsement is ambiguous and should therefore be construed against Charter Oak. According to Gabe's Auto, the endorsement can reasonably be read to limit the auto exclusion where the accident occurs "on or next to" the premises or if the vehicle is being used at the time for "garage operations," which includes the servicing and repair of a customer's auto. We disagree. Although insurance contracts should be liberally construed in favor of the insured (see Salimbene v Merchants Mut. Ins. Co., 217 AD2d 991, 992, appeal withdrawn 88 NY2d 979), it is equally true that policies must be interpreted in light of "the plain language of the contract as it would be understood by an average or ordinary citizen" (RLI Ins. Co. v Smiedala, 71 AD3d 1553, 1554), and "[w]here the provisions of an insurance contract are clear and unambiguous, the courts should not strain to superimpose an unnatural or unreasonable construction" (Maurice Goldman & Sons, Inc. v Hanover Ins. Co., 80 NY2d 986, 987). In our view, the construction of the relevant policy language urged by Gabe's Auto, and accepted by the court, is strained, unnatural and unreasonable. The endorsement is phrased in the conjunctive, meaning that for an accident to be covered, two conditions must be satisfied - i.e., the customer's auto must be "on or next to those premises," and the premises must be "being used for any garage operations.' " Interpreting this language in the manner urged by Gabe's Auto effectively turns the conjunctive "and" into a disjunctive "or." The structure of the sentence does not support that interpretation. Moreover, the interpretation proffered by Gabe's Auto relies on a construction of the sentence that is grammatically incorrect, in that it requires the plural verb "are" to modify the singular noun "auto." Thus, "the plain language" of this sentence, "as it would be understood by an average or ordinary citizen" (RLI Ins. Co., 71 AD3d at 1554), supports the interpretation urged by Charter Oak.
We also reject respondents' alternative contention that the Garagekeepers Liability endorsement applies to this case. That endorsement provides coverage only for property damage to a customer's vehicle; it does not provide liability coverage for damage caused by a customer's vehicle. We therefore modify the judgment accordingly and declare that Charter Oak is not obligated to defend or indemnify Gabe's Auto (or its employee, Donaghey) in the underlying action.
Richner Development, LLC v. The Burlington Insurance Company

Faust Goetz Schenker & Blee, LLP, New York, N.Y. (Marisa
Goetz of counsel), for appellant.
Ford Marrin Esposito Witmeyer & Gleser, LLP, New York,
N.Y. (James M. Adrian and Seth B.
Goldberg of counsel), for respondent.

DECISION & ORDER
In three related actions, inter alia, for a judgment declaring that the defendant in Action No. 3 is obligated to defend and indemnify the plaintiff in Action No. 3 in an underlying action entitled Giampetruzzi v 2 Endo Boulevard, LLC, pending in the Supreme Court, Nassau County, under Index No. 10115/06, the plaintiff appeals from an order of the Supreme Court, Nassau County (Diamond, J.), entered November 3, 2009, which denied its motion for summary judgment and granted the defendant's cross motion for summary judgment in that action.
ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the defendant in Action No. 3 is not obligated to defend and indemnify the plaintiff in Action No. 3 in the underlying action entitled Giampetruzzi v 2 Endo Boulevard, LLC, pending in the Supreme Court, Nassau County, under Index No. 10115/06.
"An insurer may . . . disclaim coverage on the basis of a policy exclusion by demonstrating that the allegations of the [underlying] complaint cast that pleading solely and entirely within the exclusion" (Bruckner Realty, LLC v County Oil Co., Inc., 40 AD3d 898, 900; see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137).
"An exclusion from coverage must be specific and clear in order to be enforced' (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311), and an ambiguity in an exclusionary clause must be construed most strongly against the insurer" (Guachichulca v Laszlo N. Tauber & Assoc., LLC, 37 AD3d 760, 761; see Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Howard & Norman Baker, Ltd. v American Safety Cas. Ins. Co., 75 AD3d 533, 534). "However, the plain meaning of a policy's language may not be disregarded to find an ambiguity where none exists" (Howard & Norman Baker, Ltd. v American Safety Cas. Ins. Co., 75 AD3d at 534; see Guachichulca v Laszlo N. Tauber & Assocs., LLC, 37 AD3d at 761; Bassuk Bros. v Utica First Ins. Co., 1 AD3d 470, 471).
Here, the plain meaning of the cross-liability exclusion at issue was that the subject policy "did not provide coverage for damages arising out of bodily injury sustained by an employee of any insured in the course of his or her employment" (Howard & Norman Baker, Ltd. v American Safety Cas. Ins. Co., 75 AD3d at 534-535; see Guachichulca v Laszlo N. Tauber & Assocs., LLC, 37 AD3d at 762; Bassuk Bros., Inc. v Utica First Ins. Co., 1 AD3d at 471). Despite the "Separation Of Insureds" policy provision stating that "this insurance applies . . . [a]s if each Named Insured were the only Named Insured[,]" the reference in the cross-liability exclusion to "[a]ny insured" "makes it unmistakably clear that the exclusion is not limited to injuries sustained by [the plaintiff's] own employees" (Howard & Norman Baker, Ltd. v American Safety Cas. Ins. Co., 75 AD3d at 535).
The respondent made a prima facie showing of its entitlement to judgment as a matter of law by establishing "that there was no factual or legal basis upon which it might eventually be obligated to indemnify its insureds . . . and that the only interpretation of the allegations in the [underlying] complaint [was] that they fell wholly within [the cross-liability exclusion]" (Global Constr. Co., LLC v Essex Ins. Co., 52 AD3d 655, 656; see Catucci v Greenwich Ins. Co., 37 AD3d 513, 515). In opposition, the appellant failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Global Constr. Co., LLC v Essex Ins. Co., 52 AD3d at 656; Catucci v Greenwich Ins. Co., 37 AD3d at 515). Accordingly, the respondent's cross motion for summary judgment was properly granted.
The appellant's remaining contention is not properly before this Court.
We note that since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the respondent is not obligated to defend and indemnify the appellant in the underlying action entitled Giampetruzzi v 2 Endo Boulevard, LLC, pending in the Supreme Court, Nassau County, under Index No. 10115/06 (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
TERWILLIGER v. KNICKERBOCKER


Appeal from an order of the Supreme Court, Steuben County (Marianne Furfure, A.J.), entered November 10, 2009 in a personal injury action. The order denied the motion of defendants for summary judgment on the issue of serious injury and granted the cross motion of plaintiff for summary judgment on the issue of negligence.

LEVENE GOULDIN & THOMPSON, LLP, BINGHAMTON (DAVID F. MCCARTHY OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
LAW OFFICE OF JACOB P. WELCH, CORNING (ANNA CZARPLES OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking to recover damages for injuries she allegedly sustained when she was struck by a vehicle operated by Christina L. Knickerbocker (defendant). Plaintiff was a pedestrian crossing the street at an intersection, and defendant struck her while turning right at a red light. As a result of the low-speed collision, plaintiff fell on her buttocks and allegedly injured her back as well as her "left arm/elbow." The record establishes, however, that plaintiff had injured her back approximately one month earlier when she slipped and fell on ice. Defendants moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of the three categories of serious injury set forth in her bill of particulars, i.e., the permanent consequential limitation of use, significant limitation of use, and the 90/180 categories in Insurance Law § 5102 (d), and plaintiff cross-moved for summary judgment on the issue of negligence. Supreme Court denied the motion and granted the cross motion. We affirm.
Although defendants met their initial burden of proof in support of their motion by submitting evidence establishing that plaintiff's injuries were attributable to preexisting conditions, we conclude that plaintiff raised an issue of fact sufficient to defeat the motion (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Specifically, plaintiff submitted the affidavits of a treating physician and chiropractor, each of whom averred that plaintiff's back problems were asymptomatic prior to the accident and that, after the accident, plaintiff had a quantified limited range of motion in her lower back. The treating physician and chiropractor further averred that plaintiff's symptoms of lower back pain radiating into the right leg were consistent with MRI results showing pressure on the L-4 nerve root, and that such injury was caused by the collision. Contrary to defendants' contention, the affidavits submitted by plaintiff "contain the requisite objective medical findings that raise issues of fact whether plaintiff sustained a serious injury" (Roll v Gavitt, 77 AD3d 1412, 1413).
We further conclude that the court properly granted plaintiff's cross motion for summary judgment on the issue of negligence. The evidence submitted by plaintiff in support thereof established that defendant was negligent as a matter of law in turning right at a red light while plaintiff was entering the intersection at a crosswalk, and defendant failed to submit any evidence that plaintiff was careless in entering the intersection (see Benedikt v Certified Lbr. Corp., 60 AD3d 798; Hoey v City of New York, 28 AD3d 717).
Ikeda v. Hussain


Baker, McEvoy, Morrissey & Moskovitz, P.C., New York
(Stacy R. Seldin of counsel), for appellants.
Order, Supreme Court, New York County (George J. Silver, J.), entered January 26, 2010, which, insofar as appealed from, as limited by the briefs, denied defendants-appellants' motion for summary judgment as to plaintiff's claims for permanent consequential limitation of use of a body organ or member and/or a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, the motion granted, the complaint dismissed as against defendants-appellants, and, upon a search of the record, as against co-defendants as well. The Clerk is directed to enter judgment in favor of defendants dismissing the complaint.
The affirmed report of defendants' expert neurologist, wherein he concluded that his examination of plaintiff's lumbar spine revealed that she suffered from only a minor deficit in her range of motion, was sufficient to shift the burden of proof to plaintiff to demonstrate the existence of a triable issue of fact as to whether she had suffered a "serious" injury within the meaning of Insurance Law § 5102(d) (see Rosa-Diaz v Maria Auto Corp., 2010 NY Slip Op 08995 [2010]; Sone v Qamar, 68 AD3d 566 [2009], Style v Joseph, 32 AD3d 212 [2006]).
Plaintiff failed to satisfy her burden. Her expert's quantitative assessment of the range of motion of her lumbar spine, conducted more than three years after the accident, failed to compare the limitation observed with any contemporaneous quantitative assessment based on objective testing at the time of the alleged injury (see Rossi v Alhassan, 48 AD3d 270, 271 [2008]). Thus, the expert's assessment as to plaintiff's range of motion limitation in her lumbar spine was too remote in time to warrant the inference that such limitation was caused by the accident (see Clemmer v Drah Cab Corp., 74 AD3d 660, 663 [2010]).
Plaintiff's other medical reports are unsworn, and therefore insufficient to raise an issue of fact (see Alicea v Troy Trans, Inc., 60 AD3d 521 [2009]).
Although co-defendants Christine Brooks and Samantha Brooks s/h/a John Doe, did not file a notice of appeal from the partial denial of their cross motion for summary judgment, we find that summary judgment should nonetheless be granted in their "favor as well because, obviously, if plaintiff cannot meet the threshold for serious injury against one defendant, [she] cannot meet it
against [others]" (Taylor v Vasquez, 58 AD3d 406, 408 [2009] [internal quotation marks omitted]).
Admiral Insurance Company v. Joy Contractors, Inc.


Gallo Vitucci & Klar, New York (Chad E. Sjoquist of
counsel), for Reliance Construction Ltd., appellant-respondent.
Gordon & Silber, P.C., New York (Jon D. Lichtenstein of
counsel), for New York Crane & Equipment Company,
appellant-respondent.
Coughlin Duffy LLP, New York (Justin N. Kinney of counsel),
for respondent-appellant.
Schoenfeld Moreland, P.C., New York (Jeff R. Thomas of
counsel), for Lincoln General Insurance Company, respondent.
O'Melveny & Myers LLP, New York (Thomas G. Carruthers
of counsel), for James Kennelly, East 51st Street Development
Company, LLC, East 51st Associates, LLC, Magnum Real Estate
Group, LLC, 968 Kingsman LLC, 309 Eagle LLC, East 51st
Street New Co., LLC, Kennelly Development Company, LLC,
and Kennelly-McInnis Development Company, LLC,
respondents.
Order, Supreme Court, New York County (Karen S. Smith, J.), entered June 25, 2009, which, insofar as appealed from as limited by the briefs, granted plaintiff Admiral Insurance Company's and defendant Lincoln General Insurance Company's motions for summary judgment to the extent of declaring that they have no obligation to defend or indemnify defendant New York Crane & Equipment Company under the subject insurance policies, denied motions to dismiss the first, fourth, twelfth and thirteenth causes of action, and granted motions to dismiss the fifth cause of action and the sixth, seventh, ninth and tenth causes of action as against defendants other than Joy Contractors, Inc., unanimously modified, on the law, to declare that the residential construction activities exclusion in the Admiral policy is not applicable, and otherwise affirmed, without costs.
On March 15, 2008, a tower crane operated by Joy collapsed during the construction of a high-rise condominium at 303 East 51st Street in Manhattan. The accident resulted in the deaths of seven people, including six of Joy's employees, and other injuries and damage. Joy is a named insured under commercial general liability (CGL) and excess liability policies issued by Lincoln and Admiral, respectively.
In its first cause of action, Admiral seeks a declaration that it has no obligation to provide coverage for claims arising from the accident, based on the residential construction activities exclusion. However, the record establishes that the exclusion does not apply in this case (see Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652 [1993]). The evidence overwhelmingly indicates that, at the time of the accident, the
building was intended to be a mixed-use structure, not a purely residential one. This evidence includes references to "storefronts" in various documents, correspondence in which the New York City Department of Buildings confirms that the building to be constructed is a "mixed use" structure, and the affidavits by two people associated with the project. Admiral's engineering expert conclusorily dismissed the evidence indicating a "mixed use" intent. However, he lacked personal knowledge of the project, and his speculative conclusions are insufficient to overcome the evidence of mixed-use intent.
Admiral's second cause of action and Lincoln's cross claim seek a declaration that New York Crane is not entitled to coverage under the subject policies because it does not qualify as an additional insured. The additional insured endorsement under which New York Crane seeks coverage provides that "all insureds shown in a written contract, or agreement that includes primary and non-contributory wording where required" are additional insureds, "but only with respect to liability . . . caused . . . by [Joy's] acts or omissions; or . . . [t]he acts or omissions of those acting on [Joy's] behalf; in the performance of [Joy's] ongoing operations for the additional insured(s)" (emphasis added). "[A]ffording the unambiguous provisions of the
policy their plain and ordinary meaning" (Greater N.Y. Mut. Ins. Co. v United States Underwriters Ins. Co., 36 AD3d 441, 442 [2007]), we reject New York Crane's contention that Joy's contractual obligation to follow industry standards in its operation of the crane leased to it by New York Crane transformed Joy into a party working "for" or "on behalf" of New York Crane. Plainly, the parties had a lessor/lessee relationship, which could have been insured by an appropriate endorsement, such as one for leased equipment (see e.g. Westchester Fire Ins. Co. v Continental Cas. Co., 2006 WL 786866, 2006 Minn App Unpub LEXIS 274 [Minn App 2006]).
As the additional insureds' coverage depends on whether the underlying claims arose out of Joy's acts or omissions, disposition of the fourth cause of action must await the trials of the underlying actions. Similarly, in the absence of discovery, it cannot be determined whether the professional services exclusion (the thirteenth cause of action) is applicable here.
In its fifth cause of action, Admiral seeks a declaration that the "LLC" defendants do not qualify as insureds, based on the CGL policy provision entitled "Section II - Who Is An Insured." However, the LLC defendants, who are the owners and developers of the construction project, seek coverage not as
named insureds, but as additional insureds, and that coverage is provided by the above-cited additional insured endorsement.
Insurance Law § 3420(d) (subd [d][2], as amended by L 2008, ch 388, § 5) does not afford a defense to Admiral's 12th and 13th causes of action relying on the employer's liability and professional services exclusions, respectively, because the Admiral policy was not "delivered or issued for delivery in this state." An insurance policy "is issued for delivery in New York if it covers both insureds and risks located in this state" (see Preserver Ins. Co. v Ryba, 10 NY3d 635, 642 [2008] [internal quotation marks and citation omitted]). The Admiral policy was issued to Joy, a New Jersey corporation with a New Jersey place of business, and delivered in New Jersey.
The sixth, seventh, ninth and tenth causes of action seeking to avoid coverage by, inter alia, declaring the policy void ab initio, are based on Joy's alleged misrepresentations in its application for excess coverage. However, the other defendants are not alleged to have made any misrepresentations to Admiral, and under New York law, they may not be penalized because of a material misrepresentation made by Joy (Lufthansa Cargo, AG v New York Mar. & Gen. Ins. Co., 40 AD3d 444 [2007]; see also BMW Fin. Servs. v Hassan, 273 AD2d 428, 429 [2000], lv denied 95 NY2d 767 [2000]).
We have considered the parties' remaining arguments and find them unavailing.
Green v. South Colonie School District


Calendar Date: January 14, 2011
Before: Mercure, J.P., Peters, Spain, Malone Jr., and McCarthy, JJ.

The Mills Law Firm, L.L.P., Clifton Park (Christopher
K. Mills of counsel), for appellant.
Joyce Serbalik Choi, Mechanicville, for respondents.
MEMORANDUM AND ORDER
Peters, J.
Appeal from an order of the Supreme Court (Devine, J.), entered June 15, 2010 in Albany County, which partially denied defendant's motion for summary judgment dismissing the complaint.
On September 7, 2006, plaintiff Nathan C. Green (hereinafter plaintiff) rode the school bus home following his first day of kindergarten at Veeder Elementary School. As the bus was decelerating, plaintiff stood up from his seat and his face struck the back of the seat in front of him, causing the avulsion of one of his permanent front teeth. The incident was captured on a video recording — which contained both speed and time data — taken from a camera located at the front of the bus.
Plaintiff and his parents thereafter commenced this action alleging that defendant negligently operated the school bus by, among other things, suddenly and abruptly braking while descending on an inclined street, thereby causing plaintiff to suffer a serious injury within the meaning of Insurance Law § 5102. Following joinder of issue and discovery, defendant moved for summary judgment dismissing the complaint on the ground that it had breached no duty to plaintiff and, alternatively, that the injury suffered by plaintiff did not constitute a serious injury under the Insurance Law. Supreme Court found that questions of fact existed as to defendant's negligence and whether plaintiff sustained a serious injury under the permanent loss of use and permanent consequential limitation of use categories, but dismissed the complaint insofar as it asserted a significant disfigurement and significant limitation of use. Defendant appeals.
Concluding that plaintiffs failed to raise a question of fact as to whether defendant was negligent in its operation of the school bus, we modify Supreme Court's order by dismissing the complaint in its entirety. Defendant satisfied its initial burden as proponent of the summary judgment motion by demonstrating that it transported its students "in a careful and prudent manner" (Pratt v Robinson, 39 NY2d 554, 561 [1976]; see Wenger v Goodell, 220 AD2d 937, 937 [1995]; Bruce v Hasbrouk, 207 AD2d 10, 12 [1994], affd 87 NY2d 370 [1995]). Peter Tunney, defendant's Director of Transportation, averred that the bus, including its braking system, was functioning properly at the time of the incident and that the driver of the bus was qualified, experienced and properly trained to operate a school bus. He further averred that, upon his review of the video of the incident, the bus was traveling within the speed limit, did not decelerate in an improper manner, and was otherwise operated in accordance with New York State and School District guidelines, policies and procedures. Defendant also submitted the expert affidavit of Lawrence Levine, a licensed engineer. Based upon his review of, among other things, the video surveillance of the incident and the speed data set forth therein, Levine opined that the bus driver did not apply the brakes in an improper or sudden manner and that the bus's rate of deceleration was safe, appropriate and within the applicable standard of care. His analysis, which included a graph of the speed of the bus over the 18-second period from when it slowed from 30 miles per hour to the time it stopped, indicated that the bus driver's braking was linear and "consistent over time, which means that there was not any sudden or abrupt stop." Lastly, defendant proffered the video recording of the incident which reveals no other students exhibiting any forward movement in reaction to the deceleration of the bus at the time that plaintiff sustained his injuries.
In opposition, no evidence was proffered identifying or defining the standard of care applicable to the deceleration of a school bus, nor did plaintiffs submit any admissible proof challenging the rate of deceleration propounded by Levine or indicating that the deceleration at issue here was otherwise improper or in violation of any applicable guidelines, policies or procedures (see Gray v South Colonie Cent. School Dist., 64 AD3d 1125, 1128-1129 [2009]; see also Moshier v Phoenix Cent. School Dist., 199 AD2d 1019, 1019 [1993], affd 83 NY2d 947 [1994]). Rather, plaintiffs relied upon the deposition testimony of plaintiff and his brother, who was seated next to plaintiff at the time of the incident. While both recollected a quick or sudden stop by the bus, such testimony is utterly refuted by the video evidence and Levine's analysis thereof. Furthermore, the lay testimony of plaintiff's mother — who did not witness the incident — that her review of the videotape revealed that the bus "stopped too fast" constitutes improper opinion testimony (see Nucci v Proper, 270 AD2d 816, 817 [2000], affd 95 NY2d 597 [2001]) and, in any event, is insufficient to withstand summary judgment. Accordingly, inasmuch as plaintiffs failed to submit any admissible evidence sufficient to raise a question of fact as to defendant's negligence, the complaint should have been dismissed in its entirety.
Mercure, J.P., Spain, Malone Jr. and McCarthy, JJ., concur.
ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as partially denied defendant's motion; motion granted in its entirety, summary judgment awarded to defendant and complaint dismissed; and, as so modified, affirmed.
Mt. McKinley Insurance Company v. Corning Incorporated


Dickstein Shapiro LLP, New York (Edward Tessler of counsel),
for appellant.
O'Melveny & Myers LLP, New York (Tancred V. Schiavoni of
counsel), for respondents.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered December 4, 2009, which, to the extent appealed from, granted the cross motion of respondents Century Indemnity Company et al. to compel discovery and denied appellant Corning Incorporated's assertion of the "common interest" privilege for certain communications with asbestos claimants made in connection with strategy and preparation for Bankruptcy Plan confirmation hearings, unanimously affirmed, with costs.
In this action seeking a declaratory judgment establishing entitlement to insurance coverage for defense and/or indemnification, the IAS court did not abuse its discretion in ordering the subject documents produced (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 1 AD3d 223, 224 [2003]). The motion court properly held that Corning failed to establish that the subject documents were protected by the common interest privilege. While Corning asserted that the documents were "generated in furtherance of a common legal interest" between itself and the committees in the bankruptcy action and that the documents included, communications evincing strategy and preparation for an upcoming confirmation hearing, it submitted no evidence in support of these assertions. Moreover, Corning never stated, let alone established, that it or the committees had a reasonable expectation of confidentiality with respect to these communications. Accordingly, Corning failed to establish that the relevant communications with the committees were in furtherance of a common legal interest and that with respect to these communications, Corning and the committees had a reasonable expectation of confidentiality (see United states v Schwimmer, 892 F2d 237, 243-244 [2d Cir 1989]; In re Quigley Company, Inc., 2009 Bankr LEXIS 1352, 8-9 [Bankr SD NY 2009].
We have considered Corning's remaining arguments and find them unavailing.
The Decision and Order of this Court entered herein on October 12, 2010 is hereby recalled and vacated (see M-5785 decided simultaneously herewith).
Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S v. Travelers Ins. Co., etc.


Marshall, Dennehey, Warner, Coleman & Goggin, New York
(Edward C. Radzik of counsel), for appellant.
Kestenbaum, Dannenberg & Klein, LLP, New York (Michael
H. Klein of counsel), for respondent.
Judgment, Supreme Court, New York County (Marylin G. Diamond, J.), entered January 12, 2010, permanently staying arbitration, and bringing up for review an order, same court and Justice, entered December 30, 2009, which granted petitioner's motion for a permanent stay of arbitration, unanimously reversed, on the law, without costs, the stay vacated, and the petition denied. Appeal from the aforesaid order unanimously dismissed without costs, as subsumed in the appeal from the judgment.
Petitioner entered into a contract to purchase scrap metal from nonparty U.S. Ferrous Trading Division, Tube City Division, Tube City IMS (Tube City). Tube City was to ship the scrap metal to a designated port in Turkey pursuant to a charter party agreement with a cargo-vessel owner it had nominated (nonparty Sangamon Transport Group). The scrap purchase agreement provided, inter alia, that "[a]ll disputes arising in connection with this contract shall exclusively be settled through arbitration by the American Arbitration Association [AAA] in New York/U.S.A. in accordance with their rules."
At the same time, Tube City entered into a separate agreement with respondent Fairless Iron & Metals pursuant to which Fairless would supply Tube City with the scrap metal to be shipped to petitioner. While it apparently was Tube City that nominated Sangamon, it was Fairless that executed the charter party agreement with Sangamon.
When the shipment arrived in Turkey, petitioner rejected the scrap metal and arranged for the Turkish authorities to detain the vessel. Sangamon demanded arbitration against Fairless, pursuant to the charter party agreement, alleging losses due to the detention of the vessel, stevedore damage and other expenses incurred. On the ground, inter alia, that the stevedores were hired by petitioner, Fairless demanded that petitioner defend it in the arbitration proceeding. It also placed Sangamon on notice that it was "vouching in" petitioner to that proceeding. Thereafter, Tube City assigned to Fairless "in full, all rights and claims it ha[d] against [petitioner], under [the scrap purchase agreement], including, but not limited to, the right to arbitration." [*2]
We note initially that, given the arbitration clause's specific incorporation by reference of AAA rules, the question of arbitrability, which includes the existence, scope and validity of the arbitration agreement, is for the arbitrator to determine (see Life Receivables Trust v Goshawk Syndicate 102 at Lloyd's, 66 AD3d 495, 496 [2009], affd 14 NY3d 850 [2010]). The petition to permanently stay arbitration should have been denied upon this ground alone.
In any event, as the broad arbitration clause in the scrap purchase agreement does not expressly preclude an assignee of a signatory to the agreement from seeking arbitration, Tube City's assignment to Fairless of its rights against petitioner under the agreement gave Fairless the right to demand that petitioner submit to arbitration (see Matter of Vann v Kreindler, Relkin & Goldberg, 78 AD2d 255, 259 [1980], affd 54 NY2d 936 [1981]).
Fairless was assigned Tube City's rights under the scrap purchase agreement to enable it to seek indemnification from petitioner in the event it became obligated to Sangamon for damages associated with the detention of the cargo vessel. The assignment does not violate Judiciary Law § 489, because Fairless was not assigned an existing collectible claim "with the intent and for the purpose of bringing an action or proceeding thereon."
The scrap purchase agreement incorporates the terms of the charter party agreement regarding loading and unloading the vessel, including specifically that the "Charterers [Fairless] [were] to be ultimately responsible for any damage caused to the vessel by Stevedores." Under the agreement, petitioner was responsible for hiring the stevedores. Thus, Fairless's claim for common-law indemnification against petitioner in connection with the alleged negligence of the stevedores, while collateral to the scrap purchase agreement, is encompassed in the agreement's broad arbitration clause.
Having determined that the dispute is within the scope of the arbitration clause, we do "not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute" (Matter of Gershen v Hess, 163 AD2d 17, 18 [1990]). Fairless's claim for indemnification depends upon the outcome of pending proceedings brought against it by Sangamon and is therefore viable. Petitioner may, if so advised, assert its argument that the demand for arbitration was premature as a defense in the arbitration (see e.g. Cementos Andinos Dominicanos, S.A. v East
Bulk Shipping S.A.
, 2006 WL 1206475, *1, 2006 US Dist Lexis 25888, *3 [SD NY 2006]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

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