Coverage Pointers - Volume XII, No. 25

Dear Coverage Pointers Subscribers:

It is a glorious time in Western New York and Southern Ontario. Warm weather, cool lake breezes: who can complain? These are the days we wait for all winter long.

This week's issue provides lots of interesting cases for review. We know that the court decisions begin to taper off by the end of June, so you can expect greater brevity (oxymoron?) in the July - September issues. In the meantime, sit back and read another very interesting issue of Coverage Pointers.

Training

This is the time you might be considering your company's training needs for the upcoming months. It's a great time to travel and whether it be casualty, first party anything in between, we're ready to visit your shop to help your staff stay current on developments in the law.

OK, OK, the Cow Case

I promised a loyal reader I'd tell the story here. Plaintiffs commenced a personal injury action to recover for injuries allegedly sustained in a motor vehicle accident, by way of a Summons and Complaint filed in Erie County. The Complaint alleges that on September 23, 2008, Plaintiff was traveling on Route 76, in the Town of Sherman, when he collided with a cow that was standing in a roadway. The ownership of said bovine was in issue and plaintiff sought to secure copies of the defendant's insurer's claims file, to establish some admission on the part of the defendant, a medical doctor, that the cow belonged to him. We, of course, argued that the claims file was privileged. The plaintiff persisted and the matter came on to be heard before the Hon. Donna Siwek, JSC in late April.

I don't get too many cow cases the days, so I've had these stored up for years. Included in our oral argument, were the following comments:

  • "We don't understand the beef here.
  • "This is udderly ridiculous."
  • We have mooooved for a protective order.
  • "While this lawyer is surely the crème de la crème, he's trying to milk this file."
  • "It's a very amoosing argument."
  • "The steaks are high."

We won the motion.

Scams, Shams and Flim-Flams - E&O Coverage Available for Lawyers Being Tricked?

My partner, Ann Evanko, received one of these just a few moments ago:


Dear Counsel,

On behalf of Ronshare Inc., we request your legal services and possible representation on a Debt Recovery matter involving Ronshare Inc. and a client in your jurisdiction. Do let us know if you are currently accepting new clients. We look forward to a prompt response from you. Thank you very much.

Sincerely,

Ronald Weber
Ronshare Inc.
36769 Amrhein Road
Livonia, MI 48150"

They sometimes look like this:

"My name is Jennifer Wong. I am contacting your firm in regards to a divorce settlement with my ex husband (Richard L. Wong) who resides in your jurisdiction. We had an out-of-court agreement for him to pay $550,450 plus legal fees" or

"I am an attorney representing a concern in Hong Kong, Walex Electronics, Ltd., in collection matters world-wide. We found your contact information in our on-line search for lawyers who handle collection matters in your jurisdiction . We have a matter involving delayed payment of a substantial bill ."

We all get the e-mails. The latest takes the form of n company, located in Hong Kong that needs an attorney to collect a debt in the United States. The "scam" alert goes off and we send the message to our trash bin.

You wonder who would ever be fooled by this kind of a sham.

While he denied saying it - and why would he ever admit to ending a sentence with a preposition -- Willie Sutton is credited with answering the question, "Why do people rob banks?" with the famous quip, "Because that's where the money is."

Why do scammers send out scams? Because people fall for them. What happens when the lawyer takes the bait?

A retainer agreement is prepared, sent and received back with appropriate notarial recognition. The lawyer then contacts the US debtor on behalf of the new "client" and lo and behold is successful in convincing it to pay all or a large portion of the outstanding balance. The six figure check arrives and is deposited in an account (should be a trust account, of course). The "client" then directs the lawyer to withdraw an amount equal to his or her negotiated legal fee plus expenses and have the bank wire the money to an overseas account or accounts. The direction is given, and the bank advises that the check had cleared, the transfer is made and then, within days or hours, the truth rears its ugly head. The debtor's check was fraudulent or counterfeit and the account is now short.

The lawyer, in opening the account, has promised to cover all overdrafts and now the bank begins to chase down the attorney to cover a six figure shortfall in the account. When the lawyer is unable to cover the overdraft, the bank brings suit

According to an article that appeared on LawInfo.com:

How this scam really works is that scammers know how to delay confirmation that the cashier's check is fraudulent by changing the nine-digit MICR lines at the bottom of the check. And banks often make funds "available" to good customers; i.e. reputable law firms, before a check has cleared-even though technically, there is no money in the account yet. By the time it is discovered that the check is no good, the wire has usually been sent, and the lawyer is left empty-handed.

Now, the sheepish lawyer, potentially facing professional discipline for overdrawing his escrow account, turns the bank's suit papers to the Errors and Omissions carrier seeking a defense. Note, the counsel has not been sued by a client, in fact, there wasn't ever a real client.

There are two cases in this week's issue dealing with this very issue, a state court case reported in my column and a federal case reported in Kathie Fijal's review of federal decisions. Each one finds coverage. Each one speak of duties a lawyer has as a fiduciary. E&O carriers should be scrambling to rewrite some policy language .

Audrey's Angles:


I recently attended the New York Insurance Association (NYIA) Annual Meeting and it was a great educational resource to understand what issues and concerns insurers are currently facing. The highlight was hearing from the Commissioner of the Department of Financial Services as well as representatives from the Department of Insurance and Department of Finance on how the new Department of Financial Services is going to function. NYIA, as always, brought a top notch educational program to the industry.

A theme this edition is again ensuring that in the No-Fault arena, a proper IME report supports a denial. Upstate Arbitrators have at this point all indicated that where the objective testing is positive during an IME there needs to be a thorough discussion as to why these positive tests have no bearing on the conclusion of lack of medical necessity. Overall, this leads to a broader issue of both parties ensuring that in cases of medical necessity, or lack thereof, that there is sufficient evidence to document the position. This is an issue ripe for review and determination from both sides as to whether the decisions recently provide any guidance on the minimum evidence required to survive in arbitration.

This will be a topic for presentation at NBI's No-Fault Law seminar coming up in Buffalo on September 14 and Syracuse on September 13. I will be speaking at the seminar in both locations this year together with my Associate, Cassandra Kazukenus, who is in our Albany office. Arbitrators' O'Connor and Theiss will also be speaking with William Considine from the American Arbitration Association. If you are interested in attending the seminar geared toward both the industry (insurer and provider) and attorneys please send me an email at [email protected] for a copy of the brochure.


Audrey

One Hundred Years Ago:


Clarence William (Tilly Walker) Walker played first game of major league baseball on June 10, 1911, for the Washington Senators He was the last batter to face Babe Ruth as a pitcher and he was also the last ball player to hit a homerun over the fence with Babe Ruth pitching, although the Babe later gave up two "inside-the park" home runs. Actually, Ruth gave up only 11 homers in his pitching career, between 1914 and 1921, four of which were inside-the-park. Of the remaining seven, two of those were to Tilly. Babe Ruth and Tilly Walker were tied for the American League home run lead in 1911, with 11.

Peiper's Particulars:

Thanks to all of you that responded to our Green Energy discussion from last week. Due to the response, I have decided to re-work our power point to make it more carrier appropriate. For those of you who requested a copy, thanks for your patience it will be forthcoming shortly. For those of you who may have been on vacation when last issue came out, I recently gave a presentation to the New York Bar Association TICL Section on Emerging Issues in Insurance. The focus of the presentation was on the unique risks presented by Green Energy development and the introduction of foreign materials in the US marketplace. If anyone remains interested in the power point (newly amended), or even better in training on the subject, please drop me a line.

On to one of our other reoccurring themes: extra-contractual liability. The United States District Court for New Jersey issued an extremely insightful opinion on GBL 349 claims, consequential damages and punitive damages with regard to a first party life insurance policies. The Court goes through, step by step, the respective standards that are required to establish a claim under those theories. As we note in the write up, it is a perfect road map on how to draft motions to dismiss. We'd strongly encourage you to take a moment to review.

By the way, if you have no idea was GBL 349 is, we'd strongly encourage you to give us a call at your convenience. Best wishes, see you in two weeks.

Steve

[email protected]

The Passing of a Good Man and a Good Lawyer -- Iowa Attorney Timothy J. Walker

I learned, today of the passing of Iowa lawyer Timothy J. Walker. Now most of you might now have known Tim. He had been an active practitioner in the mid-west for many years, and had practiced for the Whitfield & Eddy, firm in Des Moines. We knew Tim from his active involvement in the Federation of Defense & Corporate Counsel. About a decade ago, he suffered a stroke and had not resumed the robust practice of law in which he had been engaged earlier. However, I understand that even with his more limited capacity, he continued to volunteer, to offer assistance and to show delight in life.

He was a fine man, full of life and good humor, a wonderful lawyer and a delightful person with who to share a good story, a good drink and a good laugh.

Every day is a gift. Never forget that.

One Hundred Years Ago Today

On June 10, 1911, the New York Times and other newspapers, through the country, screamed of a scandalous story developing in the Big Apple. On the upper west side, in NYC, stands the once proud Ansonia designed as the city's largest and grandest apartment hotel by Graves and Duboy for builder William Earle Dodge Stokes. W.E.D. Stokes was the center of one of many controversies in his life, splashed across the nation's papers:

GIRLS URGED TO PRESS STOKES CASE

Wealthy Men Indicate Willingness to Furnish
Bail and Engage Counsel for Trial


NEW YORK -- That birds of a feather do not always flock together will be demonstrated Monday morning in the West Side Court when Lillian Graham and Ethel Conrad will be re-arraigned on the charge of shooting with intent to kill, W. E. D. Stokes, the millionaire owner of the Hotel Ansonia.


A number of rich men have indicated their willingness, to go bail for the girls and to see that they are represented by an array of counsel. For fear that Stokes may drop the suit now that it promises such racy developments; the girls are being urged to bring a counter-charge of felonious assault against him, as they charge him with attacking them in their apartments in the Varuna when he called ostensibly to obtain possession of letters he had written to Ms. Graham.


Whether this effort to force a trial is due to the desire to hear the expected sensational developments, or to the belief that Stokes is persecuting the-girls, one of whom, Miss Conrad, is only 18, is not known. The fact remains that the girls will not lack friends when they next appear in court.


Stokes's story that the letters he sought contained nothing that would in any way compromise him has been weakened, Miss Graham's friends say, by the admission of his own attorney, Terrenes McManus, that Stokes gave her $200 a short time before the shooting, when she called at his office in the Ansonia and demanded $500 for the return of the letters.


As Miss Graham demanded only $500 at this time, .according to Stokes, and was refused such an amount, it is believed improbable that she would have boosted her figure to $25,000, the sum which Stokes alleges .was asked of him when he appeared at the girls' apartment.


Mrs. Altee Andrews, the widowed sister of. Miss Graham, will arrive here tomorrow from San Francisco, bearing, it is said, a substantial message from John Singleton, the prisoner's brother-in-law, who Is a Los Angeles millionaire. Miss Conrad's mother, and her stepfather, who at first turned against her, have reconsidered their repudiation and will do everything they can to assist the unfortunate girl.


William Earle (or Earl, the spelling varies) Dodge Stokes was born in 1852 into a family of social position and wealth, most notably the Phelps Dodge mining operation. But in the early 1880's he left the family business and began developing real estate on the Upper West Side. From 1885 through 1890 he built several dozen row houses in the West 70's and 80's, including the Ansonia


Opened in 1903, the $3 million Ansonia had 350 suites with several restaurants, a bank, a barbershop, a ballroom, a swimming pool and full hotel services, along with an imposing Parisian-style facade of turrets and balconies.


In February 1911, Stokes, then in his late 50's, secretly married the 24-year-old Helen Ellwood. That June, when Stokes was shot and wounded by a vaudeville actress, Lillian Graham, in the Varuna apartment house, at 80th and Broadway. Graham, 22, had appeared in productions like "The Soul Kiss." She maintained that Stokes had attacked her because he was enraged by her refusal to return letters he had written her.


Stokes claimed that she had been trying to blackmail him and that she had indeed attacked him, but Graham was found not guilty. The Times disputed the verdict - saying that the actress was indisputably guilty - but agreed that Stokes's "moral character and social worth" were low.


Social Networking - Insurance Style -- LinkedIn

Remember, that our "interactive" home for Coverage Pointers is the New York Insurance Law Group on LinkedIn.

One Hundred Fifty Years Ago Today - Civil War News


For years, it was reported that the first Confederate soldier killed in the Civil War was Henry Lawson Wyatt, who died 150 years ago today in the Battle of Big Bethel. More recently, historians dispute that status and place him as the second or third Confederate fatality. Either way, the story about the battle and Wyatt's death is
available here.

In This Week's Issue:

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

    • Intra-Insured Exclusion Does Not Bar Coverage for Wrongful Death Claim Brought by Non-Resident Father of Deceased
    • Scammed Law Firm Secures Coverage for Bank Overdrafts. Hundreds Flee
    • In Asbestos Coverage Litigation, Failure by an Insurer to Provide Timely Notice of Claims to Another Insurer Results in Loss of Right to Coverage Contribution. Notice by Another Insured, Insufficient
    • Known Loss Doctrine Applied to Defeat Coverage
    • Broad Definition of "Garage Operations" Includes Personal Use of Vehicle
    • Issues of Fact on Whether Insured Had Good Faith Belief in Non-Liability, Thus Excusing Delay in Providing Notice of Accident
    • Well Documented Investigation Justifies and Excuses Delay in Disclaimer

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

    [email protected]

    • Experts' Use of Different Standards for Normal Range of Motion Does Not Render Reports Deficient
    • Examinations Revealing Limitations Two Years After Accident Fail to Support Defendants' Motions
    • Employer's Shut Down Two Months After Accident Raises Issue of Fact with Regard to 90/180-Day Category
    • The Dynamic Duo: The Contemporaneous and Recent Reports
    • Return to Work on Reduced Work Schedule Does Not Fulfill 90/180-Day Requirement
    • Plaintiffs' Deposition Testimony Carries More Weight Than Their Affidavits Submitted in Opposition to Summary Judgment Motion
    • Summary Judgment is Affirmed Where Plaintiff Fails to Raise Triable Issue of Fact
    • Asserting "Decreased" Range-of-Motion on Examination Day After Accident Is Unquantified Finding and Insufficient
    • Plaintiff's Cross Motion on the Issue of Liability Is Denied Where She Fails to Establish Serious Injury
    • Trial Court Is Reversed and Complaint Reinstated

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


    ARBITRATION

    • Hourly Rate Attorney's Fee Not Applicable In Arbitration Regarding Whether Workers' Compensation Is Available
    • Denial For Lack Of Cooperation With Voc Rehab Efforts Not Upheld
    • 45 Day Rule Denial Not Upheld For Lack Of Addressing Excuse Presented By Applicant

    LITIGATION

    • Admission Of Untimely Denial Results In Preclusion Of Reliance Upon Policy Exclusion
    • Insurer Did Not Establish Failure To Appear For Scheduled IMEs
    • EIP's Fraud In Procuring Policy Bars Applicant, Who Took An Assignment, From Recovering
    • Insurer Established Failure To Attend Scheduled IMEs

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

    FIRST PARTY

    • Documentary Evidence is Essential in Support of Material Misrepresentation Claim

    POTPOURRI

    • Questions Posed to an Employee of an Insurance Company Relative to Correspondence Issued by the Carrier May Not Be Privileged
    • Court Applies Actual Standards of First Party Existing Extra-Contractual/Bad Faith Precedent, Plaintiff's Claims for Consequential and Punitive Damages Dismissed

    CASSIE'S CAPITAL CONNECTION
    Cassandra A. Kazukenus
    [email protected]

    • Regulation 68 - Adopted Drug Impaired Exception to Emergency Treatment
    • Office of General Counsel Opinion 11-04-01 - Execution of Releases

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

    • Law Firm Scammed - Interpretation of Professional Services in E & O Policy

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

      • Question of Fact as to Whether Excess Insurer Was Provided Timely Notice
      • Employee Exclusion Considered Ambiguous Where Employee Was Injured While Swimming in a Bay During His Lunch Break
      • Court Determines that Insurer Did Not Present Sufficient Documentary Evidence to Dismiss the Complaint

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

      WHAT DO YOU WANT TO ARBITRATE?

      Ahh, family joy -- hope you don't mind that I share it with you. My daughter, Karie became engaged to be married to a wonderful young man, Shawn. A summer 2012 wedding is planned for this delightful couple. After asking for consent, he proposed while on a walk down the beach. Romance flourishes!

      And my son, Jacob, after about 16 months with GEICO in sales, just called -- about ten minutes ago -- to tell me that he has been promoted to a supervisory position.

      Not a bad week at the ranch.

      We send wishes for a continued splendid summer with all good health to you and yours.

      Dan

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

      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
      Cassandra Kazukenus
      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]
      Margo M. Lagueras
      Cassandra Kazukenus
      Jennifer A. Ehman


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


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


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


      06/09/11         Cragg v. Allstate Indemnity Corporation
      New York State Court of Appeals
      Intra-Insured Exclusion Does Not Bar Coverage for Wrongful Death Claim Brought by Non-Resident Father of Deceased
      Eric Cragg is the father of three-year-old Kayla.  Kayla and her mother, Marina Ward, lived with Kayla’s grandparents, the Kleins.  Kayla drowned accidentally in the Kleins' swimming pool.
      The Kleins had a homeowner's insurance policy issued by Allstate.  Kayla and her mother were insured persons, as residents of the household who were related to the policyholders.  Cragg maintained a separate residence and was not an insured under the Kleins' homeowner's insurance policy.

      Allstate disclaimed coverage based on the policy exclusion at issue here.  Under "Coverage X [-] Family Liability Protection," the policy states that "[w]e do not cover bodily injury to an insured person . . . whenever any benefit of this coverage would accrue directly or indirectly to an insured person." The policy does not define the term "benefit."

      Plaintiff, as the administrator of Kayla's estate, commenced an action seeking to recover against defendants for Kayla's wrongful death and for her conscious pain and suffering.  Marinia Ward defaulted and judgment was entered against her in the amount of $300,000 — $150,000 for wrongful death and $150,000 for pain and suffering.

      Plaintiff brought this declaratory judgment action against Allstate for a declaration that Allstate was required to defend and indemnify its insureds.  Supreme Court granted Allstate's motion for summary judgment, declaring that Allstate had no obligation to defend or indemnify Ward or the Kleins in relation to the wrongful death or conscious pain and suffering claims.

      The Fourth Department found that the exclusion applied and we reported on that decision in our May 14, 2010 edition.

      On appeal, the high court acknowledged that the pain and suffering claim belonged to the estate of the deceased, and therefore was subject to the policy exclusion.  However, the wrongful death claims belonged, not to the estate, but to the distributee’s themselves.  This was Cragg’s loss and not derivative of any claim on behalf of his insured daughter.

      The Court of Appeals found that Allstate has not met that burden of providing the policy language unambiguous.

      The language of the policy exclusion — excluding coverage "whenever any benefit of this coverage would accrue directly or indirectly to an insured" — could be interpreted, as Allstate urges, to mean that bodily injury to an insured is not covered whenever any benefit — including coverage itself in the form of defense and indemnification — would accrue to an insured.  However, this interpretation ascribes meaning only to the first clause of the exclusion — "[w]e do not cover bodily injury to an insured person."

      Since the right to defense and indemnification universally accrues to an insured, under Allstate's interpretation the condition of the second clause of the exclusion would always be met.  However, the second part of the exclusion must somehow modify the first part of the clause in order to have any meaning.  In this context, a benefit must mean something other than coverage itself and is more naturally read to mean proceeds paid under the policy.

      The exclusion fails to bar unambiguously payment to a noninsured plaintiff, that is to say it does not clearly cut off the nonresident distributee's wrongful death claims arising from the fatal injury to an insured.

      06/03/11         Lombardi, Walsh, Wakeman, etc. v. American Guarantee
      Appellate Division, Third Department
      Scammed Law Firm Secures Coverage for Bank Overdrafts.  Hundreds Flee
      Lombardi Walsh (“Lombardi”) is a law firm.  It was contacted via e-mail by an individual purporting to be the chief executive officer of a Taiwanese corporation seeking legal assistance in collecting debts in North America.  After the individual sent plaintiff a signed retainer agreement, plaintiff received a $384,700 check from a purported debtor of the corporation.  Lombardi opened an account at Berkshire Bank and deposited the check.

      At the request of the purported chief executive officer, Lombardi instructed Berkshire Bank to wire the value of the check, less a legal fee for plaintiff, in two transfers to a third party in South Korea, who was allegedly a supplier of the Taiwanese corporation.  After the funds were transferred, Berkshire Bank notified plaintiff that the check was counterfeit and plaintiff's account was overdrawn.
      Berkshire Bank commenced an action against the law firm seeking to recover the overdraft.  Lombardi requests that American Guarantee, its errors and omissions carrier, defend the lawsuit.  American Guarantee refuses and denies coverage and the law firm then settles with the bank on a confidential basis.

      Lombardi then sues American Guarantee claiming that it should have defended and indemnified it for the claims and losses.

      An insurer has the duty to defend an insured "whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim, or where the insurer has actual knowledge of facts establishing a reasonable possibility of coverage.

      The underlying complaint included causes of action for breach of the account agreement and violations of the Uniform Commercial Code.  The insurance policy provided coverage for any claim "based on an act or omission in [plaintiff's] rendering or failing to render Legal Services for others." "Legal Services" is defined by the policy as "those services performed by an Insured as a licensed lawyer in good standing . . . or in any other fiduciary capacity but only where the act or omission was in the rendition of services ordinarily performed as a lawyer."

      The terms of this policy encompass more than what would traditionally be considered "legal malpractice."

      The complaint alleges that plaintiff was rendering legal services.  The rules require a lawyer to promptly pay or deliver such funds to the client or a third party at the client's request.

      The insurer contends that Lombardi was performing legal services for a client, but an imposter.  However, the law firm believed it was indeed performing legal services and the firm had a retainer agreement.
      Regardless of whether the imposter qualified as a "client," the policy does not require an actual "client"; the policy only requires that plaintiff "render Legal Services for others," and the imposter fell within that broad category.
      The insurer then claimed that the contractual liability exclusion should defeat coverage because the claims by the Bank were based on an “account agreement” which held the law firm liable for overdrafts.  However, the law firm may have been liable at “law” for this loss (under the Uniform Commercial Code) and therefore, the exclusion is inapplicable, the carrier not having met its burden of providing the exclusion applicable.

      The Court orders a duty to reimburse for defense costs.  However, since it had no knowledge of the terms of the settlement, it did not rule on the indemnity obligation, but remitted the matter back to the trial court.
      Editor’s Note:  Regular readers of this newsletter are aware that when we believe a decision is absurd, we often use the tag line: “Thousands Flee”.  In this case, we’ve counted hundreds fleeing, not thousands, but it is close.
      We feel badly for the scammed law firm, really we do.  If we cashed in on the Nigerian scams we receive each and every day, we’d be virtually rich.  In our humble opinion, this does not seem to be the kind of claim that should be covered by any errors and omissions policy, including this one.  The law firm was not serving a client and its liability to the bank arises, in our view, from a breach of contract. 

      Interestingly, Kathie Fijal reports on the Chong case out of the 11th Circuit (Florida) below, where a similar fact pattern led to a coverage determination.

      06/02/11         Continental Cas. Co. v. Employers Ins. Co. of Wausau
      Appellate Division, First Department
      In Asbestos Coverage Litigation, Failure by an Insurer to Provide Timely Notice of Claims to Another Insurer Results in Loss of Right to Coverage Contribution.  Notice by Another Insured, Insufficient
      Keasbey (which ceased operating in the mid-1990s and was dissolved in 2001) installed asbestos insulation at numerous sites in the tri-state area over many years.  Wausau issued Keasbey two successive primary comprehensive general liability (CGL) policies covering the period from February 1968 to February 1970, and CNA issued Keasbey 17 successive primary CGL policies covering the period from February 1970 to February 1987.  The policies did not exclude asbestos claims..

      Although Keasbey never purchased a policy directly from OneBeacon, it was covered by two "wrap-up" policies issued by OneBeacon, each of which provided liability coverage to all contractors on a specified construction project at the Indian Point Nuclear Power Plant for claims arising from work on that project during the policy period.  Specifically, OneBeacon issued one wrap-up policy covering all contractors involved in construction work at Unit 2 at Indian Point from February 1966 to April 1974 and another, similar, policy covering all contractors involved in construction work at Unit 3 at Indian Point from June 1967 to July 1977.  During the periods of these policies, Keasbey installed asbestos-containing insulation in the turbines at Unit 2 and Unit 3 at Indian Point, which in each case involved approximately two months of work. Each of the foregoing OneBeacon policies provides that it "applies only to work performed at the [specified] project."  Neither OneBeacon policy contains an asbestos exclusion provision.

      CNA began defending Keasbey in asbestos actions in the 1970s and that coverage was exhaued by 1992.  The Wausau policies were also exhausted as were excess polices by CAN and other carriers.

      In May 2001, coverage was claimed under the “operations” part of the CNA policy which had no aggregate limit.  Previously, CNA had defended under the products/completed operations portion of its policy.  CNA then searched Keasbey’s records and found evidence of the One Beacon wrap-up policies and placed One Beacon on notice of an action commenced by one O’Reilly who worked at Indian Point during the time the One Beacon policies were in place.
      In a previous appeal, reported in Volume 10, No. 14, of Coverage Pointers, we reported on the First Department ruling:

      In Lengthy and Well-Considered Opinion, First Department Refuses to Reopen Asbestos Policies to New Claims, Where “Completed Operations” and “Products Hazard” Aggregates Exhausted.  Insured Guilty of Laches and Claimant Bound by Insured’s Guilt; No Proof of Injury in Fact

      CNA’s only possible hope for contribution, considering the earlier ruling, is from One Beacon.  An insurer who receives timely notice of a claim can seek contribution from another carrier on the risk, so long as it gives timely notice of the claim.  Clearly, Keasbey never furnished any notice of any asbestos claim to OneBeacon. Hence, CNA's ability to seek reimbursement from OneBeacon for the costs of defending any given claim against Keasbey "turns on whether [CNA] provided notice [of that claim] to [OneBeacon] within a reasonable time under all the circumstances.  The Court found that CNA failed to provide timely notice. notice.

      CNA contends that it gave OneBeacon sufficient notice of all the asbestos actions for which it now seeks reimbursement —- namely, all the thousands of actions that it defended on behalf of Keasbey between March 1, 2003 and September 30, 2007 —- by sending the February 24, 2003 letter advising OneBeacon of the O'Reilly claim, which was about to be scheduled for trial, and inviting OneBeacon (without identifying any other claim against Keasbey) "to contact us as soon as possible so that we can discuss the range of possible strategies for defense of this and comparable other Keasbey asbestos cases."

      The February 24, 2003 letter, the complaint in this action, and CNA's subsequent correspondence  do not constitute reasonably timely notice even of the claims to which they refer, much less to the thousands of other claims for which CNA seeks reimbursement. To begin, CNA cites no authority for deeming a notice as to certain claims against an insured to constitute notice of other claims not identified in the notice.  Even as to the claims referenced by name in the documents on which CNA relies, however, notice was not sufficient.  The OneBeacon policies required that any process against Keasbey be "immediately forward[ed]" to OneBeacon; CNA does not identify a single case in which this occurred.
      That OneBeacon may have notice from a different insured under the wrap-up policies, that notice cannot be imputed to another.

      05/31/11         Abraham Natural Foods Corp., v. Mount Vernon Fire Ins. Co.
      Appellate Division, Second Department
      Known Loss Doctrine Applied to Defeat Coverage

      An insurer may disclaim coverage for a loss which occurred prior to the inception of an insurance policy and which was fully known to the insured before the commencement of coverage.  Here, the carrier submitted proof that the insured was aware of the loss prior to the date the policy was issued.
      Editor’s Note:  The known loss doctrine is rarely called into play but should always be in the back of an insurer’s mind when conducting an investigation.  Based on Article 11 of the Insurance Law, it derives from the concept that insurance in intended to cover fortuity.  Accordingly, if a policy is purchased to cover a known loss, one known to the insured prior to the policy’s inception, the insurer may have a right to walk away from coverage based on the lack of that fortuity.

      05/31/11         Lancer Insurance Company v. Marine Motor Sales, Inc.
      Appellate Division, Second Department
      Broad Definition of “Garage Operations” Includes Personal Use of Vehicle
      On October 17, 2007, a pick-up truck owned by Marine Motor Sales, Inc. (“Marine”), and operated by its employee, Parks, in which the Tierney was a passenger, collided with a motor vehicle operated by Sanchez.  Tierney and Sanchez were injured.

      Tierney sued Marine and Sanchez to recover damages for personal injuries resulting from the accident. Sanchez sued Parks and Marine to recover damages for his injuries.

      Marine had a "Garage" policy (“Policy”) issued by Lancer and Tierney had a personal auto policy issued by Travelers. The Travelers policy contained SUM benefits (underinsured motorists benefits).  Lancer denied coverage to Marine, asserting that the accident did not arise out of Marine's garage operations but, rather, arose out of Parks' personal use of the subject vehicle and then commenced this declaratory judgment action to sustain its disclaimer.

      The Policy defines "garage operations" to include "the ownership, maintenance or use of the autos' indicated in Section I of this Coverage Form as covered autos.'" Under Section I of the Coverage Form, in connection with the "Garage Declarations" page for the Policy, "[a]ny [a]uto'" is a covered auto with respect to liability coverage.

      Since the truck was an “auto” as defined in the policy it is also is a "covered auto'" with respect to liability coverage under the Policy. Thus, ownership and/or use of the pick-up truck—a covered auto—constituted "garage operations."
      Accordingly, no matter what the purpose of the use might have been, the use itself constituted a garage operation under those policy terms.

      05/31/11         Tower Insurance Company of New York v. Alvarado
      Appellate Division, Second Department
      Issues of Fact on Whether Insured Had Good Faith Belief in Non-Liability, Thus Excusing Delay in Providing Notice of Accident

      Tower established its prima facie case that its insureds, the Alvarados, did not provide notice of the accident until more than two years after it occurred.  It also established that the Sampsons, the injured parties, did not provide notice despite their statutory right to do so.

      However, construing all inferences in favor of the Alvarados, they raised a triable issue of fact as to whether their delay in giving notice was reasonably based on a good faith belief in nonliability
      Editor’s Note:  The decision does not indicate what excuse was proffered and the lower court decision was not reported.

      03/29/11         Huguens v. Village of Springville
      Appellate Division, Second Department
      Well Documented Investigation Justifies and Excuses Delay in Disclaimer
      In this case, the insured claimed that the carrier’s disclaimer was untimely.  Here, the insurer presented “ample evidence” that any delay was reasonably related to a prompt, diligent, and necessary investigation it conducted into the question of whether the third-party plaintiff unduly and inexcusably delayed in providing it with notice of the lawsuit, in violation of the applicable insurance policy.
      The insurer disclaimed only eight days after the conclusion of its investigation and thus the disclaimer was timely.
      Editor’s Note:  My thanks – and kudos -- to Dean J. Vigliano, the attorney for National Fire Insurance, the successful litigant, for bringing this case to our attention.  It is the rarest appellate decision we miss in reporting and this one slipped under the radar.


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


      06/02/11         Feliz v. Fragosa
      Appellate Division, First Department
      Experts’ Use of Different Standards for Normal Range of Motion Does Not Render Reports Deficient

      On examinations both shortly after the accident and two years later, defendants’ orthopedic experts concluded that plaintiff had full range-of-motion of the cervical and lumbar spine.  The fact that they failed to review plaintiff’s medical records or MRI reports, or that they cited different standards for normal range-of-motion did not defeat defendants’ motion as both doctors agreed that plaintiff’s range-of-motion was normal.  In addition, defendants’ radiologist opined that plaintiff’s bulging discs were degenerative and consistent with her age and not causally related to the accident.  Plaintiff’s radiologist gave no opinion as to causation and therefore failed to rebut defendants’ expert.  In addition, the orthopedic report plaintiff submitted did not rebut defendants’ reports because the orthopedist never examined plaintiff and also did not provide any of the medical records on which he based his conclusions.  Furthermore, no recent range-of-motion findings were proffered resulting in the affirmance of the trial court’s dismissal of the complaint.

      05/31/11         Astudillo v. MV Transportation, Inc.
      Appellate Division, Second Department
      Examinations Revealing Limitations Two Years After Accident Fail to Support Defendants’ Motions

      Plaintiffs Astudillo and Linares both claimed injuries under the permanent consequential and significant limitation as the result of a 2006 accident.  The various defendants made separate motions for summary judgment.  With respect to Astudillo, defendants  relied on affirmed medical reports from examinations performed more than two years after the accident.  The reports noted a significant limitation in cervical spine rotation and in straight leg raising.  Although the examining neurologist opined that the limitation in straight leg raising was voluntary, he did not substantiate that opinion with objective medical evidence.  Therefore, the defendants failed to establish that Astudillo did not sustain a serious injury under the categories claimed and their motions should have been denied.

      With respect to Linares, defendants’ motions should have been denied because she raised a triable issue of fact in opposition.  Her treating osteopath found significant limitation in her cervical region shortly after the accident and MRIs revealed herniations at multiple levels.  She was examined numerous times from 2007 to 2009 and, in each instance, significant limitations were noted and causally related to the accident.  Furthermore, even though defendants’ radiologist opined that the herniations were degenerative, because she was unable to establish their etiology, Linares was not required to address the issue of degeneration and her experts’ opinion regarding causation was sufficient. 

      05/31/11         Cabey v. Leon
      Appellate Division, Second Department
      Employer’s Shut Down Two Months After Accident Raises Issue of Fact with Regard to 90/180-Day Category

      Plaintiff moved, and defendants cross moved, seeking summary judgment with respect to injury claimed under the 90/180-day category.  On appeal, all motions were denied.  Defendants failed to meet their prima facie burden because they submitted affirmed reports, none of which addressed the 90/180-day claim alleged in plaintiff’s bill of particulars.  In support of her motion, plaintiff submitted her own deposition testimony in which, when asked why she did not return to work, she replied that she was “let go” when her employer closed down two months after the accident.  This raised an issue of fact as to whether she was unable to engage in her usual and customary daily activities because of the injuries allegedly sustained, or because her employer shut down.

      05/26/11         De La Rosa v. Gomez
      Appellate Division, First Department
      The Dynamic Duo: The Contemporaneous and Recent Reports

      In opposition to defendants’ motion, plaintiff supported her claims under the permanent consequential and/or significant limitation of use categories by proffering both contemporaneous, qualitative medical evidence and recent evidence of range-or-motion limitations causally related to the accident.  In particular, the report of plaintiff’s neurologist, who examined plaintiff just days after the accident and again in response to defendants’ motion, concluded, based on objective testing, that plaintiff sustained a permanent disability to her cervical and lumbar spine.  The denial of defendants’ motion was affirmed on appeal. 

      05/26/11         Perez v. Corr
      Appellate Division, First Department
      Return to Work on Reduced Work Schedule Does Not Fulfill 90/180-Day Requirement

      On appeal, the trial court is reversed and plaintiff’s complaint dismissed.  Defendants submitted plaintiff’s deposition testimony to establish that she was confined to her home and missed only one month of work.  Although she claimed she returned to work on a reduced work schedule for two months, that fact did not serve to raise an issue of fact to defeat summary judgment.

      05/26/11         De La Cruz v. Hernandez
      Appellate Division, First Department
      Plaintiffs’ Deposition Testimony Carries More Weight Than Their Affidavits Submitted in Opposition to Summary Judgment Motion

      Plaintiffs alleged injuries to the neck and lower back as the result of a rear-end accident.  Defendant’s expert neurologist found no neurological deficits and full range of motion and concluded that any injuries had resolved.  In opposition, plaintiffs submitted the reports of their treating chiropractor who documented treatment from the time of the accident until 2010.  The sworn reports included range-of-motion test results from examinations performed just days after the accident as well as over three years later.  In addition, although defendant’s radiologist opined that plaintiffs’ injuries were due to degenerative changes, plaintiffs were only 26 and 31 at the time of the accident and when MRIs were taken and the radiologist did not support his conclusion with any details.  This was sufficient for the appellate court to modify the trial court’s decision and reinstate the claims under the permanent consequential and significant limitation of use categories.

      However, the appellate court affirmed the dismissal of the 90/180-day claim because plaintiffs’ own deposition testimony was that they were only confined to home and bed for less than a month.  Although they later averred in affidavits that they were confined to home and bed for over five months, this testimony was submitted in opposition to the summary judgment motion and “can only be considered to have been tailored to avoid the consequences of [their] earlier testimony.”  Furthermore, the objective medical evidence of their treating chiropractor did not support their testimony that they were unable to perform their usual daily activities for more than six months, not did the chiropractor’s notes indicate that he ever advised them to restrict their daily activities.  Therefore, the trial court properly dismissed the 90/180-day claim.

      05/24/11         Greene v. Culley
      Appellate Division, Second Department
      Summary Judgment is Affirmed Where Plaintiff Fails to Raise Triable Issue of Fact

      Plaintiff alleged serious injury to her right knee.  In a decision without any details, the appellate court affirms the dismissal of the trial court because defendants met their burden and, in opposition, plaintiff failed to raise a triable issue of fact as to whether her claim that the injuries to her right knee constituted a serious injury or whether she meet the requirements under the 90/180-day category.

      05/24/11         Lewars v. Transit Facility Management Corp.
      Appellate Disicion, Second Department
      Asserting “Decreased” Range-of-Motion on Examination Day After Accident Is Unquantified Finding and Insufficient

      Defendants brought separate motions on the issues of liability and serious injury.  In opposition, plaintiff submitted the report of her treating physician who examined her the day after the accident and found “decreased” range-of-motion in her cervical and lumbar spine.  He did not, however, quantify the limitations or set forth the objective testing performed. The first quantified findings were not until six months after the accident and were not sufficiently contemporaneous with the accident and did not overcome the deficiencies in the first examination.  In addition, plaintiff’s deposition testimony established that she missed only a week or work.  Therefore, the trial court should have dismissed the complaint and the cross claims asserted against defendants on the ground that plaintiff did not sustain a serious injury, and defendants’ motion on the issue of liability should therefore have been denied as academic.  In addition, on appeal the court searched the record and the un-appealing defendant was similarly granted summary judgment.

      05/24/11         Siew Hwee Lim v. Dan Dan Transit, Inc.
      Appellate Division, Second Department
      Plaintiff’s Cross Motion on the Issue of Liability Is Denied Where She Fails to Establish Serious Injury

      Defendants moved for summary judgment and plaintiff cross moved on the issue liability.  On appeal, the court affirmed the trial court’s dismissal of the complaint alleging serious injury to plaintiff’s cervical and lumbar spine, as well as to her left ankle and foot.  Although no specifics are provided, the court found that defendants submitted sufficient evidence to establish that the alleged injuries to the cervical and lumbar spine were not serious nor caused by the accident, and that the injuries to the left ankle and left foot were not serious.  Plaintiff failed to raise a triable issue not only with regard to these issues, but also with regard to her claim under the 90/180-day category.  Plaintiff’s cross motion on the issue of liability was dismissed as academic.

      05/24/11         Tavares v. Eyl
      Appellate Division, Second Department
      Trial Court Is Reversed and Complaint Reinstated

      In another decision with no specifics, the trial court is reversed and plaintiff’s complaint is reinstated where plaintiff raised a triable issue of fact with regard to claims under the permanent consequential and/or significant limitation of use categories for alleged injuries to the lumbar spine.  On appeal, the court also determined that plaintiff adequately explained a lengthy gap in treatment.


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


      ARBITRATION

      06/03/11         Applicant v. American Transit Ins. Co.

      Arbitrator Veronica K. O’Connor, Erie County
      Hourly Rate Attorney’s Fee Not Applicable in Arbitration Regarding Whether Workers’ Compensation Is Available

      The issue in this arbitration was whether Applicant was entitled to attorney’s fees under section 65-4.6(d) (hourly rate with restrictions on maximum fee charged for policy issues) or under section 65-4.6(e) (20% with $850 maximum fee).

      The issue in the original arbitration was whether the insurer’s denial was proper based upon workers’ compensation eligibility.  The Applicant argued that the denial was not specific to any medical bill or lost wage claim thus it involved a policy issue.  The insurer argued that there was no policy issue, i.e., interpretation of the No-Fault policy to ascertain if it affords coverage for the claim, and that the claim was denied due to another source of benefits – workers’ compensation being available.

      The assigned arbitrator agreed with the insurer.  The assigned arbitrator reasoned that the issue as to whether workers’ compensation is available is decided, not in No-Fault arbitration, but by the Workers’ Compensation Board.  Thus, there cannot be an insurance coverage issue to be decided in the No-Fault arbitration forum as the Worker’s Compensation Board has primary jurisdiction over that issue.  The law is well settled that workers’ compensation benefits are primary over No-Fault benefits.  When the insurer received the Workers’ Compensation Board’s decision indicating that the Board determined Worker’s Compensation was not available the issue was decided and the insurer processed the claim under the No-Fault policy after rescinding the denial.  With regard to those benefits that Applicant placed into arbitration they were awarded and the fee pursuant to section 65-4.6(e) applied.

      06/03/11         Applicant v. Auto One Ins.
      Arbitrator Kent L. Benziger, Erie County
      Denial for Lack of Cooperation With Voc Rehab Efforts Not Upheld

      The Applicant, eligible injured person, sought lost wages from May 16, 2010 through January 31, 2011, which were denied upon failure to cooperate with vocational rehabilitation efforts.

      The Applicant was involved in an October 28, 2009, accident and claimed injury to her cervical, thoracic and lumbar spine requiring chiropractic care from Horvath Chiropractic Center.  The Applicant had been working as a certified nurse’s aide, assisting patients with dressing and bathing as well as lifting them from bed to a wheelchair.  Mr. Horvath determined Applicant was totally incapacitated.

      The Applicant also treated with Dr. Matteliano who diagnosed her with flexion/extension injury to the cervical, thoracic, and lumbar spine with multiple lumbar spine disc bulges.  Dr. Matteliano determined the Applicant had a total temporary disability from working as a certified nurse’s aide.
      The insurer had the Applicant examined by Sean Higgins, DC.  Mr. Higgins concluded that while the Applicant had positive objective findings and needed more chiropractic care, she could perform normal daily activities of living with a 20 pound lifting restriction and no repetitive bending or twisting.  He determined that the Applicant had a moderate partial temporary disability.

      Thereafter, Dr. Dorothy Scarpinato, an orthopedic, examined the Applicant and found a mild causally related orthopedic disability.  At the time of Dr. Scarpinato’s examination, the Applicant had returned to work two day a week.  Dr. Scarpinato opined that the Applicant could continue working with limited walking and no heavy lifting.

      A follow up examination with Mr. Higgins occurred with similar findings and opinions to Dr. Scarpinato.

      The Applicant was sent to vocational placement services before Dr. Scarpinato’s exam and Mr. Higgins re-evaluation.  Mr. Horvath, as part of the process, was asked to complete a questionnaire with the Applicant’s diagnosis and whether she could perform any type of work.  Mr. Horvath opined that his patient was temporarily totally disabled from any work.

      About one month after the services were instituted, the vocational counselor advised the insurer that the Applicant had limited transferable skills and had not looked for employment opportunities but agreed to do so.  The insurer ceased vocational rehabilitation efforts after Dr. Scarpinato and Mr. Higgin’s examinations.  The final vocational rehabilitation report indicated that Mr. Horvath provided a disability note that the Applicant could not work until August 15, 2010.  The Applicant had not sought work and advised she would not do so until Mr. Horvath told her she could.

      The assigned arbitrator did not uphold the insurer’s denial.  The rationale provided was that the treating chiropractor determined the Applicant was temporarily totally disabled.  Further, the examining chiropractor also found some disability with lifting restrictions of 20 pounds which would not permit the Applicant to lift patients.  The Applicant did return to light duty work for a period of a few weeks but could not perform her job.  Her employer advised that it had no other positions available for her.

      In addition, the insurer’s denial did not indicate that the denial for lost wages was based upon the vocational rehabilitation counselor’s report thus the insurer could be said to have waived the defense of non-cooperation.  Even if the denial was properly worded, the vocational counselor indicated that the Applicant had limited transferrable skills.  There is little precedent that the Applicant must search for work in other areas of employment if found to have some ability to work.  Therefore, the denial was not upheld.

      05/31/11         Buffalo Neurosurgery Group v. Geico Ins. Co.
      Arbitrator Veronica K. O’Connor, Erie County
      45 Day Rule Denial Not Upheld for Lack of Addressing Excuse Presented by Applicant

      The Applicant sought reimbursement for services rendered to the eligible injured person arising out of an August 24, 2007, accident.  The insurer denied a portion of the treatment based upon an IME conducted by Dr. Guy Corkill.  The assigned arbitrator did not uphold this denial and determined that the IME had positive objective findings with no thorough explanation as to why further neurosurgical treatment was no longer medically necessary.

      The remainder of the claim was denied by the insurer based upon violation of the 45 day rule.  The Applicant’s evidence submission indicated that the bill was submitted to the insurer on May 26, 2010.  On September 2, 2010, the Applicant resubmitted the bill. The Applicant indicated to the insurer that the claim was initially submitted on May 26, 2010, but the claim number was missing one digit due to Applicant’s error which resulted in it not getting into the insurer’s billing system.

      The insurer denied the bill on the 45 day rule and submitted an affidavit that indicated the bill and the fax cover note with the Applicant’s explanation was received on September 2, 2010, but that no bill was ever received on May 26, 2010. 

      The assigned arbitrator declined to uphold the denial because the Applicant presented a reasonable excuse which the insurer did not rebut.  The insurer did not address the issue of what happened to the fax once the insurer received it.  The insurer had the claim form with the correct eligible injured person’s name and date of accident.  It did not explain why it could not ascertain the correct claim with that information.

      LITIGATION

      05/31/11         Nyack Hosp. a/a/o Rochell Ferguson v. Allstate Ins. Co.
      Appellate Division, Second Department
      Admission of Untimely Denial Results in Preclusion of Reliance Upon Policy Exclusion

      The insurer’s admission that it failed to issue a timely denial precluded it from asserting the defense that the assignor intentionally caused her own injuries pursuant to a policy exclusion.

      05/23/11         LDE Med. Services, PC a/a/o Elizabeth Gilmore v. Interboro Ins. Co.
      Appellate Term, Second Department
      Insurer Did Not Establish Failure to Appear for Scheduled IMEs

      The insurer’s cross-motion for summary judgment based upon failure to appear scheduled IMEs was properly denied.  The plaintiff’s argument that the insurer’s first IME scheduling letter was a nullity due to there being no claim submitted to the insurer was rejected.  The assignor is required to appear for an IME whether the insurer demands the IME before or after the claim is submitted.  Yet, the insurer did not demonstrate failure to attend the scheduled IMEs.  The affirmations by the doctors to perform the assignor’s IME were improperly submitted on reply for the first time.

      05/23/11         Central Radiology Services, PC a/a/o Sean Thegg v. Commerce Ins. Co.
      Appellate Term, Second Department
      EIP’s Fraud in Procuring Policy Bars Applicant, Who Took an Assignment, from Recovering

      The insurer’s motion for summary judgment should have been granted as it established that the assignor fraudulently procured the insurance policy.  The insurer established that the assignor misrepresented his state of residence thus rendering him ineligible to receive first party benefits under the insurance policy.  The Applicant took an assignment from the assignor and stands in his shoes.  Thus the Applicant cannot recover in this action.

      05/23/11         All Borough Grp. Med. Supply, Inc. a/a/o Sonia Jocelyn v. Utica Mut. Ins. Co.
      Appellate Term, Second Department
      Insurer Established Failure to Attend Scheduled IMEs

      The insurer demonstrated failure of the assignor to attend scheduled IMEs through the submission of affidavits from the insurer and the IME psychologist’s office manager warranting summary judgment in the insurer’s favor.


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


      First Party

      05/31/11         Novick v. Middlesex Mutual Assurance Company
      Appellate Division, Second Department
      Documentary Evidence Is Essential in Support of Material Misrepresentation Claim
      Defendant Middlesex sought to rescind the insurance policy that was initially issued to Novick due to an alleged material misrepresentation.  While the Court acknowledged that material misrepresentation can be established by the production of evidence which establishes that the carrier would not have issued the policy in question but for the misstatement, it further noted that unsupported affidavits of insurer employees do not meet that burden.  Rather, to prevail upon a rescission argument the insurer must produce “present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks.”

      Where no such documentary evidence was produced, Middlesex’s motion for summary judgment failed. 

      Potpourri

      05/31/11         North State Autobahn, Inc. v. Progressive Insurance Group
      Appellate Division, Second Department
      Questions Posed to an Employee of an Insurance Company Relative to Correspondence Issued by the Carrier May Not Be Privileged
      In the course of taking the deposition of Mr. Politizi (an employee of Progressive), plaintiff’s counsel posed several questions relative to a certain July 3, 2007 letter.  Counsel to Progressive objected to these questions are protected by the attorney/client privilege.  Later, counsel sought a protective order from the Court confirming that plaintiff’s questions were precluded by operation of the claim privilege.  North State opposed the motion, and moved to compel Mr. Politizi’s answers at the same time, arguing that the questions were not barred by the attorney/client privilege because they sought Mr. Politizi’s personal impressions and not those which were provided by counsel. 

      The trial court granted the motion for a protective order, but on appeal the Second Department reversed and remanded the matter for an in camera review.  In so holding, the Court noted that only those communications which sought legal advice or services were exempt from disclosure.  The Court also explained that legal opinions provided to other unnamed employees of Progressive do not, necessarily, preclude Politizi from providing testimony regarding his own impressions.  Accordingly, the Court instructed that all questions posed by plaintiff’s counsel be answered by Mr. Politizi, in writing, and submitted to the Trial Court for a determination on what matters are privileged and what matters are, in fact, discoverable.

      05/19/11         Wells Fargo Bank Nortwest, NA v. American Gen. Life Ins. Co.
      United States District Court, District Court of New Jersey
      Court Applies Actual Standards of First Party Existing Extra-Contractual/Bad Faith Precedent, Plaintiff’s Claims for Consequential and Punitive Damages Dismissed Accordingly
      This matter involves a life insurance policy that was issued by American General to a Ms. Valeria Schwartz.  Soon after the policy was purchased, Ms. Schwartz transferred her ownership in the policy the Valeria Schwartz Irrevocable Life Trust.  The Life Trust, in turn, transferred its ownership interest in the policy to the Legacy Benefits Corp. 

      Shortly after acquiring rights to the policy, Legacy Benefits Corp. requested that American General confirm the coverage available under the policy.  In response, American General allegedly acknowledged that the policy was no longer contestable (the two year contestability clause had expired), and that the policy was freely assignable.  Upon receipt of this information, Legacy Benefits Corp. then sold its interests in the policy to a Wells Fargo. 

      Wells Fargo alleges that it relied upon the confirmation provided by American General when it procured the policy from Legacy Benefits Corp.  Further, Wells Fargo alleges that it immediately took over premium payments (all of which were accepted by American General) shortly after it acquired the policy.  It last premium payment, submitted on July 20, 2009, was for the renewal of the policy which was scheduled to take effect on February 26, 2009.

      Unfortunately, Ms. Schwartz died on February 12, 2009.  Thereafter, Wells Fargo made a request for a payment of benefits under the policy.  In addition, it sought reimbursement of the premium payment which was for a policy that did not become effective until February 26th.  Of course, the renewal presumably never occurred because Ms. Schwartz passed two weeks earlier.

      When American General ignored Wells Fargo’s demand for payment, the instant lawsuit was commenced as a result.  The instant decision arises out of Wells Fargo’s motion to amend its Complaint to assert additional causes of action sounding in negligent misrepresentation, promissory estoppel, equitable estoppel, unjust enrichment and New York General Obligations Law § 349. In addition to the new causes of action, Wells Fargo also sought additional punitive and consequential damages.   American General opposed Wells Fargo’s motion to amend on the basis that it was futile under New York law. 

      It is noted that although the matter is being litigated in New Jersey, New York law unquestionably applies to this claim.  Ms. Schwartz was a New York resident, and the policy was issued and delivered in New York. 

      In a very well written decision, the USDC for New Jersey provides an excellent discussion and analysis of the doctrines of equitable estoppel, promissory estoppel, negligent misrepresentation and unjust enrichment.  If you are interested in any of these topics, we would strongly encourage you to review the decision at your leisure.  However, for our purposes, the most interesting points in this decision are the Court’s review of the law in New York on extra-contractual damages. 

      In addressing Wells Fargo’s GBL § 349 claim, the Court noted that the plaintiff must establish deceptive consumer oriented behavior that resulted in actual damage to the plaintiff.  The Court went on to note that the conduct giving rise to the claim does not have to be habitual, but that it must, at a minimum, have a “broader impact on consumers at large.” 

      Upon review of the facts as plead by Wells Fargo, the Court was not persuaded that American General’s refusal to pay benefits under the policy fell within the gambit of activities meant to be protected by statute.  Moreover, the Court also noted that a contractual dispute between sophisticated entities was hardly the type of activity to which the protections of GBL § 349 were meant to apply.  Accordingly, Wells Fargo’s request to add a cause of action under GBL § 349 were denied. 

      In addition, Wells Fargo sought to recover consequential damages as a result of the alleged breach by American General.  Although acknowledging the potential existence of consequential damages, the Court noted that said damages are available only in “limited circumstances.”  The Court went on to state the well settled rule that said damages are only recoverable where damages sought were “within the contemplation of the parties as a probable result of the breach at the time or prior to the contract.”

      Interestingly, Wells Fargo sought to support its claim for consequential damages by asserting a litany of allegations which argued American General had acted unreasonably, in bad faith, and in violation of its duty to act in good faith.  The Court was not swayed by the allegations of Wells Fargo.  Indeed, the Court noted that regardless of the activities American General had allegedly engaged in, consequential damages are onlyavailable where the requesting party can establish the types of damages sought were within the contemplation of the parties at the formation of the agreement.  Here, Wells Fargo may no such showing.  Accordingly, the Court held that it had not sufficiently plead a claim for consequential damages. 

      Finally, Wells Fargo also sought punitive damages as a result of American General’s alleged bad faith.  Wells Fargo sought to get around American General’s motion to dismiss by smartly reciting the first party bad faith standard in New York (aka “the Rocanova Test” to loyal Coverage Pointers readers).  Specifically, Wells Fargo alleged:

      American General engaged in bad faith conduct
      that is actionable as an independent tort
      (including negligent misrepresentations and
      fraudulent concealment), that its conduct is
      sufficiently egregious, directed at the public
      and part of a pattern because it is deceptive,
      intentional, flagrant, and a routine practice.

      However, the Court, smartly, was not swayed by Wells Fargo’s attempt.  In denying Wells Fargo’s motion to amend to add a claim for punitive damages, the Court noted that “egregious conduct” is described as “evil and reprehensible motives” or that the conduct showed “wanton disregard as to imply criminal indifference to civil obligations.”

      The Court noted that simply stating American General’s conduct was “sufficiently egregious” did not satisfy the requirement that the conduct must be “reaching towards criminal indifference.”  Accordingly, the Court ruled that Wells Fargo had failed to adequately support a claim for punitive damages as well.  

      Peiper’s Point:  A special thanks to Gary Schuman from Combined Insurance Company of America for alerting us to this decisionThis is an excellent decision, and is an ideal road map for defeating specious bad faith claims in the first party arena.  Huzzah…to the Judges of NJ District Court.

       

      CASSIE’S CAPITAL CONNECTION
      Cassandra A. Kazukenus
      [email protected]

      Regulation 68 – Adopted Drug Impaired Exception to Emergency Treatment
      Last year the Insurance Department amended regulation 68 by creating an exception for the treatment of a person injured while operating a vehicle while intoxicated.  On May 11, 2011, the Insurance Department expanded this exception to the treatment of a person injured while operating a vehicle while impaired by the use of a drug.  An insurer is now required to reimburse an eligible injured person for necessary emergency treatment rendered as a result of injuries sustained while driving under the influence of drugs as well as alcohol.
      Office of General Counsel Opinion 11-04-01 – Execution of Releases
      The OGC was asked if an insurer may require a third-party claimant to execute a release before the insurer will pay a settled claim and was presented with a hypothetical claim.  In this claim, a car is driven onto a homeowner’s property and damages the landscaping.  There is no dispute that the driver of the vehicle was 100% at fault, and the insurer has agreed to pay for the damages.  The insurer requests the claimant to sign a release before paying for the damages and the homeowner believes the carrier has an obligation to pay the claim without a release.

      The OGC searched the Insurance Law and regulations and found no obligation under the laws/regulations which require an insurer to use a release or which bars the use of a release in the settlement of a claim.  The OGC further reasons that it is well-settled that a release is used because this process achieves finality and ensures the claimant will not subsequently sue the carrier after the claim has been paid.  The only regulation the OGC found that is applicable to this is issue is 11 NYCRR §216.6(g) which prohibits an insurer from requiring the execution of a release that is broader than the scope of settlement. 
      Note:  I agree insurers are not barred from requiring the use of a release, but I do wish that the opinion had discussed two sections of Regulation 64, 11 NYCRR §216.6(e) and (f).  §216.6(e) states that when there is no dispute as to an element of a claim, payment shall be made notwithstanding disputes as to other elements and §216.6(f) requires an insurer to pay the claimant within five days of any agreed upon settlement.  There are times when the settlement figure is agreed upon but the allocation of the money is still disputed, often with Medicare eligible claimants.  Do these regulations come into play in those situations?  In my opinion they do not as the claim is not settled at this point because where the money is to be paid is still in dispute.


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


      05/27/11        Chong v. Medmarc Casualty Insurance Company
      United States Court of Appeals for the Eleventh Circuit – Florida
      Law Firm Scammed - Interpretation of Professional Services in E & O Policy
      Medmarc issued a professional liability insurance policy to plaintiff, Chong, that covered all claims of negligence arising from an act or omission in the performance of “professional services” rendered by Chong.  “Professional services” is defined by the policy to include “services as a . . . trustee . . . but only for those services typically and customarily performed by an attorney.”

      The issue to be resolved is whether the act of distributing trust account funds in response to a fraud perpetrated upon plaintiff by a putative client is covered under Plaintiff’s error and omissions policy.  The client, Northlink Industrial, Ltd. [“Northlink”] purported to hire Chong to establish a subsidiary in the United States and gave Chong a cashier’s check in payment.  Chong deposited the check into the firm’s trust account.  Northlink then directed Chong to wire transfer most of the proceeds of the cashier’s check to alleged overseas business partners, which Chong did.  The cashier’s check later turned out to be forged, and the funds that were transferred out of the trust account belonged to other clients.

      The district court granted the insurers motion for summary judgment denying coverage.  The district court also found that Chong’s other clients’ potential claims against it would be in the nature of restitution rather than damages covered under the policy.  For the following reasons the Eleventh Circuit reversed.

      The Eleventh Circuit held that the deposit of clients’ funds into a trust account creates a fiduciary relationship between those clients and the law firm; and, the misuse of a client’s funds is one of the most serious offenses a lawyer can commit.  The Court stated that the management of these funds held in trust for clients constitutes a “professional service” as defined by Medmarc’s policy.  In support of its opinion the court looked to the Florida Bar’s devotion of an entire chapter of its rules of attorney conduct to the topic and the fact that Medmarc’s own corporate representative testified in her deposition that Chong’s management of its trust fund account constituted the performance of legal services to those clients with funds in the account.

      In addition to finding that Chong’s management of its trust fund account constituted a professional service, the Court found no merit to the district court’s conclusion that Chong’s act is not covered by the policy because its clients’ claims against it would be in the nature of restitution and not for damages.  The Court cited to Green v. Bartel, 365 S.2d 785 (Fla. 3rd DCA 1978) which held that when an attorney distributes trust funds to a third party without his client’s authorization he may be sued for malpractice damages – not restitution.

      Accordingly, the Court concluded that Chong’s erroneous transfer of its clients’ funds to a third party was an act or omission in the conduct of its professional fiduciary duties to its clients that would give rise to a claim of negligence against it by those clients and for which it would have been liable in damages.

      Editor’s Note:  If you have already read Kohane’s Coverage Corner you read about a very similar scam which took place against a New York law firm in Lombardi, Walsh, Wakeman, Harrison, Amodeo & Davenport, P.C. v. American Guarantee and Liability Insurance Company.  This type of scam is taking place all over the U.S. and will likely result in several declaratory judgment actions against insurers and likely modifications to professional liability policies.


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


      05/24/11         FC Bruckner Assoc., L.P. v. Fireman’s Fund Ins. Co.
      Supreme Court, New York County
      Question of Fact as to Whether Excess Insurer Was Provided Timely Notice
      Fireman’s Fund Ins. Co. (“Fireman’s”) issued an excess policy to Forest City Enterprises, Inc..  FC Bruckner Assoc. (“FC Bruckner”) and First New York Management, Inc. (“First NY”) were wholly owned subsidiaries of Forest City.

      On December 3, 1996, Lorraine Sullivan was allegedly injured at a shopping center.  The center was owned by FC Bruckner Assoc. and First NY acted as the property manager.  Thereafter, Ms. Sullivan commenced an action against both entities.   National Union, the underlying carrier for FC Bruckner and First NY, provided a defense and no notice was immediately provided to Fireman’s. 

      Thereafter, in October 2002, defense counsel allegedly learned new information concerning the extent of Ms. Sullivan’s injuries.  At that point, Fireman’s was just on notice.     

      Initially, the court determined that FC Bruckner qualified as an additional insured pursuant to a provision in the excess policy that defined an insured to include wholly owned subsidiaries (apparently, there must have been no issue that First NY was an insured). 

      Next, the court determined that as the excess policy was issued for delivery in Ohio by an Ohio insurer to an Ohio insured with only Ohio amendatory provisions, Ohio law applied.  According to the court, irrespective of the fact that timely notice was a condition precedent to coverage under Ohio law, it found a genuine issue of fact as to the timeliness of the notice.  It rejected Fireman’s argument that notice should have been given upon receipt of the original complaint since it demanded five and a half million dollars; rather, according to the court, it was reasonable to believe that the claims of disk herniation and muscle spasms would not exceed the one million dollar self-insured retention and primary layer.  The obligation to notify the excess insurer only came after the notice of several stomach and spinal surgeries.  Further, there was a question of fact as to whether Fireman’s was prejudiced by the delay in providing notice, a requirement under Ohio law.

      04/26/11         Essex Ins. Co. v. Vickers
      Supreme Court, Suffolk County
      Employee Exclusion Considered Ambiguous Where Employee Was Injured While Swimming in a Bay During His Lunch Break
      99 Lynn Avenue, LLC (“99 Lynn”) and 105 Lynn Avenue, LLC (“105 Lynn”) entered into separate contracts with George E. Vickers Jr. Enterprises, Inc. (“Vickers”), a general contractor, for the construction of custom homes on each of their properties.  Pursuant to the contracts, Vickers was required to purchase and maintain liability insurance coverage naming both 99 Lynn and 105 Lynn as additional insureds.  Accordingly, for an additional premium, Vickers added 99 Lynn and 105 Lynn as additional insureds on a policy it had with Essex Insurance Company (“Essex”).  Thereafter, Essex issued two automatic renewals to Vickers.  While Essex issued certificates of insurance to 99 Lynn and 105 Lynn, neither was actually added as an additional insured on the renewal policies.

      On June 25, 2005, a subcontractor’s employee was injured on the jobsite when he took a swim in a bay located approximately 100 feet behind the site during his lunch break.  Unfortunately, when he dove into the water, he broke his neck.  Essex denied coverage for the claim.

      The first issue considered by the court was whether an exclusion in the Essex policy that removed coverage for ‘‘bodily injury’…sustained by any contractor, independent contractor, or subcontractor, or any employee…” applied.  While the court noted that the Workers’ Compensation Board determined that the employee was acting outside the scope of his employment when the accident occurred, it held that such a determination was not binding on these parties.  Nevertheless, it still held that it could reasonably conclude that there was ambiguity as to the exclusion especially as “employee” was not a defined term.  Thus, according to the court, there existed a possible interpretation of the clause that would not apply to employees acting outside the scope of their employment. 

      Next, the court considered the issue of whether 99 Lynn and 105 Lynn qualified as additional insureds.  A party seeking reformation of an insurance contract is required to show its entitlement to such relief by clear and convincing evidence and that there was a mutual mistake such that the written instrument failed to embody the parties’ true intentions or that there was a unilateral mistake coupled with fraud.  According to the court, as Essex issued an initial endorsement adding 99 Lynn and 105 Lynn as additional insureds, the annual premium increased each year, and certificates of insurance were issued to the parties during the renewals, there was no question that they had a good faith belief that Essex had issued a policy insuring them which was in effect on the date of the incident.  Thus, according to the court, the only conclusion that could be reached was that Essex mistakenly omitted them from the subsequent policies. 

      04/11/11         Eliou & Scopelitis Steel Fabrication, Inc. v. Scottsdale Ins. Co.
      Supreme Court, New York County
      Court Determines that Insurer Did Not Present Sufficient Documentary Evidence to Dismiss the Complaint
      Alisa Construction (“Alisa”) entered into subcontract with Ebenezer Construction Inc. (“Ebenezer”) to perform structural steel erection and pre-cast plank installation work.  Ebenezer then entered into purchase orders with Eliou & Scopelitis Steel Fabrication (“Eliou”) to furnish steel for the work.  The agreement provided the Ebenezer would defend and indemnify and name Eliou as an additional insured.   Thereafter, an employee of Ebenezer was injured on the jobsite. 

      Eliou’s general liability carrier, Illinois Union Insurance Co., tendered its defense to Scottsdale, Ebenezer’s CGL carrier.  Upon Eliou bringing this action against Scottsdale, it moved to dismiss the complaint based on documentary evidence, among other things.  The Scottsdale Blanket Additional Insured Endorsement provided, in relevant part:

      “who is an insured (section II) is amended to include as an insured any person or organization (called additional insured) whom you are required to add as an additional insured  on this policy under a written contract, agreement or permit which may be: a. currently in effect or becoming effective during the term of the policy; b. executed prior to the “bodily injury,” “property damage,” “personal injury,” or “advertising injury.”  The insurance provided to this additional insured is limited as follows: 1. That person or organization is an additional insured only with respect to liability arising out of: a. premises you own, rent, lease or occupy; or b. your ongoing operations performed for that additional insured as specified in a written, contract, agreement or permit…”

      Thus, Scottsdale argued that a contract was not in effect at the time of the accident and Ebenezer was not performing work for Eliou.  In considering the arguments, the court determined that Scottsdale’s submissions did not establish a defense founded upon documentary evidence because they failed to resolve all factual issues and dispose of Eliou’s claims.  Specifically, Scottsdale failed to conclusively show that Eliou did not qualify as an additional insured under the policy.  Scottsdale also failed to show that the indemnification agreement between Eliou and Ebenezer, signed prior to the underlying accident, was not sufficient to meet the criteria as set forth in the additional insured provision.  

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

      WHAT DO YOU WANT TO ARBITRATE?

      Courts generally respect arbitration provisions, but contracts often contain vague, ambiguous or conflicting provisions which result in protracted and complicated pre-arbitration legal proceedings.  If you desire an arbitration agreement, it is incumbent to draft and include as plenary and tight an arbitration clause as possible, otherwise you may expand and not limit legal proceedings.

      For example, in the case of Bechtel Do Brasil v. UEG Araucaria LTDA, 2011 U.S. App. Lexis 5840 (2d Cir. 2011), the Second Circuit had to rule on the “timeliness” of an arbitration request filed six years after project completion.  The basic issue was that the parties could not agree on what law governed the statute of limitations on the owner’s claim.  One contract provision contained a blanket statement that “any dispute”, etc. would be resolved by arbitration.  But another provision stated that the validity, effect and interpretation of the arbitration agreement would be governed by the law of New York.  The first clause suggested that any disagreement, including the statute of limitations, would be decided by arbitration.  The second provision was in seeming contradiction and suggested that a court would decide such an issue.

      Ultimately, the Bechtel court concluded that the contract was ambiguous on whether the court or arbitrator decided timeliness, and that such an ambiguity was resolved in favor of arbitration.  However, this is an example of where – even in the face of a seemingly broad arbitration clause – the contract contained other potentially differing provisions which resulted in litigation all the way up to the Second Circuit.

      Another example is the case of PaineWebber, Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996), where the arbitration agreement contained a choice of law clause under which the plaintiff sought to avoid a blanket arbitration statement.  The question was whether the parties intended that the question of arbitrability would be decided by arbitration.  The court held that the contract, as a whole, provided evidence that the parties intended that such a dispute be decided by arbitration.  This is an example of ambiguity, or at least vagueness, on whether a court or arbitrator rules on the threshold issue of whether the subject matter is arbitrable in the first instance. 

      Another example is Progressive Pipeline Management LLC v. N. Abbonizio Contractors, Inc., 2011 U.S. Dist. Lexis 38513 (D. Pa. 2011) wherein a subcontractor argued that a subcontract’s arbitration clause did not contain a clear agreement to arbitrate.  The subcontract contained two preconditions to arbitration.  The first was the presence of an arbitration agreement in the prime contract, and the contractor’s election to arbitrate.  The court ruled there was no ambiguity, and that the parties’ payment dispute was subject to arbitration. 

      These cases and examples indicate that if arbitration is truly desired, the broadest possible clause should be used providing for arbitration of all issues including preliminary and threshold issues of arbitrability, scope of the arbitration, jurisdiction, venue, statute of limitations, parties to be included in the arbitration, and the arbitration forum.


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


      06/08/11         Certain Interested Underwriters, etc. v. Chabad Lobavitch Florida District Court of Appeal
      Florida Fourth District Court of Appeals Found a Windstorm Exclusion in a Lloyd’s Policy Was Unambiguous

      A building owned by Chabad was damaged when a crane landed on it during Tropical Storm Barry.  At the time Chabad had two policies on the building.  The first was an “all risk” policy issued by Lloyd’s. It contained a “windstorm or hail exclusion” with an ensuing loss provision.  The other was a policy covering wind damage (“the wind policy”).  Before making a claim under the all risk policy, Chabad had made a claim under the wind policy for the storm damage and received the policy limits of the wind policy.  Chabad then made a claim under the all risk policy for the same storm damage.

      Lloyd’s responded by filing a complaint for declaratory judgment seeking a determination that the all risk policy’s windstorm exclusion excluded coverage for the damage caused by the wind generated during the storm.  Lloyd’s’ argument before the trial court was based on the theory that Chabad’s submission of the claim under the wind policy constituted an admission that the loss was caused by wind.  Therefore the damage to the building would not be covered under the windstorm exclusion in the all risk policy.  

      Chabad countered that the crane striking the building was the cause of the damage, not wind.  Chabad’s argument focused on the exception within the windstorm exclusion provision (the “ensuing loss” provision).  The trial court concluded that the windstorm exclusion was ambiguous and therefore should be strictly construed against Lloyd’s to cover the damage to the building.  

      The issue before the court was whether the trial court erred in determining that the windstorm exclusion was ambiguous.  The court concluded that the windstorm exclusion was unambiguous and that the trial court erred in concluding otherwise.  However, the court did not fully resolve the issue because Lloyd’s also assigned error to the trial court’s apparent factual determination that wind was not a direct cause of the damage.  The record reflects that the parties did not stipulate to the cause of the crane falling.  The factual determination was essential because the exclusion would only apply if the crane fell from its perch because of the force of wind, aided only by gravity, and not some other intervening cause.  Therefore, the case was remanded for resolution of the factual issue.
      Submitted by: Stacy Broman, Meagher & Geer, PLLP
      REPORTED DECISIONS
      Perez v. Corr

      Picciano & Scahill, P.C., Westbury (Andrea E. Ferrucci of counsel), for appellants. Arnold E. DiJoseph, P.C., New York (Arnold E. DiJoseph, III of counsel), for respondents.
      Order, Supreme Court, Bronx County (Mark Friedlander, J.), entered May 12, 2010, which, to the extent appealed from, denied defendants' motion for summary judgment dismissing the complaint as to plaintiff Gloria Dunn's claim under the 90/180 day category, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment dismissing the complaint in its entirety.
      Defendants demonstrated the absence of factual issues with respect to plaintiff's 90/180-day claim, by submitting plaintiff's deposition testimony, wherein she testified that she was confined to her home for approximately one month, and that she missed about one month of work (see McCree v Sam Trans Corp., 82 AD3d 601 [2011]). That plaintiff returned to work for an additional two months, on a reduced work schedule, fails to raise a triable issue of fact as to whether she sustained a 90/180-day injury (see Linton v Nawaz, 62 AD3d 434, 443 [2009], affd on other grounds 14 NY3d 821 [2010]).
      De La Cruz v. Hernandez


      Law Office of Louis Atilano, Bronx (Louis Atilano of counsel),
      for appellants.
      Baker, McEvoy, Morrissey & Moskovits, P.C., New York
      (Stacy R. Seldin of counsel), for respondent.
      Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered on or about July 20, 2010, which granted defendant's motion for summary judgment dismissing the complaint, unanimously modified, on the law, to reinstate plaintiffs' threshold claims with respect to the "permanent consequential limitation of use" and "significant limitation of use" categories of serious injury within the meaning of Insurance Law § 5102(d), and otherwise affirmed, without costs.
      Plaintiffs allege that they sustained serious injuries to their necks and lower backs as a result of being rear-ended by defendant in June 2007. Defendant made a prima facie showing that plaintiffs' injuries were not permanent or significant by submitting the affirmed reports of a neurologist who, based upon examinations of plaintiffs in October and November 2009, found no neurological disabilities and full ranges of motion, and concluded that all cervical and lumbar-sacral strains/sprains had been resolved (see Porter v Bajana, 82 AD3d 488, [2011]; Amamedi v Archibala, 70 AD3d 449, 449 [2010], lv denied 15 NY3d 713 [2010]; Ayala v Douglas, 57 AD3d 266 [2008]). However, the sworn reports of plaintiffs' treating chiropractor setting forth treatment from the time of the accident until early 2010, including the results of range of motion tests performed a few days after the accident and then over 3½ years later, raise triable issues of fact as to the extent of plaintiffs' injuries and causation (see Tsamos v Diaz, 81 AD3d 546 [2011]; McClelland v Estevez, 77 AD3d 403, 404 [2010]; Colon v Bernabe, 65 AD3d 969, 970 [2009]).
      The conclusion of defendant's radiologist that plaintiffs' injuries were due to degenerative changes, without further elaboration, is insufficient to satisfy defendant's prima facie burden as to causation, given that plaintiffs were only 31 and 26 years old at the time of the accident and when the MRIs were taken (see June v Ahktar, 62 AD3d 427, 428 [2009]). In any event, plaintiffs' chiropractor's attribution of the injuries to the accident raised a factual issue (see Linton v Nawaz, 62 AD3d 434, 440-441 [2009], affd 14 NY3d 821, 822 [2010]; Yuen v Arka Memory Cab Corp., 80 AD3d 481, 482 [2011]; Malloy v Matute, 79 AD3d 584 [2010]).
      Defendant made a prima facie showing of absence of a 90/180-day category injury under Insurance Law § 5102(d) by pointing to plaintiffs' deposition testimony that they both were confined to bed and home for less than a month. Plaintiffs failed to raise an issue of fact to defeat summary judgment. Their affidavits averring that they were confined to bed and home for about 5½ months, submitted in opposition to defendant's summary judgment motion, "can only be considered to have been tailored to avoid the consequences of [their] earlier testimony" (Phillips v Bronx Lebanon Hosp., 268 AD2d 318, 320 [2000]). Their testimony that they were unable to perform their customary daily activities for at least six months after the accident is not supported by objective medical evidence (see Gaddy v Eyler, 79 NY2d 955, 958 [1992]; DeJesus v Paulino, 61 AD3d 605, 607 [2009]). Their treating chiropractor never indicated in his reports that he advised them to remain home or to refrain from their daily activities, and the chiropractor's general statement that plaintiffs were unable to perform "substantially all of the
      material acts which constituted [their] usual and customary daily activities" is insufficient to raise an issue of fact (see Valentin v Pomilla, 59 AD3d 184, 187 [2009]).
      De La Rosa v. Gomez


      Baker, McEvoy, Morrissey & Moskovits, P.C., New York
      (Steven N. Feinman of counsel), for appellants.
      O'Connor, Redd, LLP, White Plains (John Grill of counsel), for
      respondent.
      Order, Supreme Court, New York County (George J. Silver, J.), entered August 17, 2010, which, insofar as appealed from as limited by their briefs, denied the motion by defendants Hidalgo and San for summary judgment dismissing plaintiff's claims under the permanent consequential and significant limitation categories of serious injury under Insurance Law § 5102(d), unanimously affirmed, without costs.
      Defendants established prima facie entitlement to summary judgment as a matter of law with respect to whether plaintiff sustained a "permanent consequential limitation of use of a body organ or member," or a "significant limitation of use of a body function or system" within the meaning of Insurance Law § 5102(d) by submitting the reports of two physicians who examined the plaintiff and found full range of motion in her cervical and lumbar spine, her right shoulder, hip, and knee (Yagi v Corbin, 44 AD3d 440, 440 [2007]).
      In opposition to defendants' motion, however, plaintiff raised an issue of fact with respect to the aforementioned categories by presenting "contemporaneous and qualitative medical evidence regarding alleged range-of-motion limitations causally related to the accident" (Blackmon v Dinstuhl, 27 AD3d 241, 242 [2006]), and a recent medical examination evincing the same (Bent v Jackson, 15 AD3d 46, 48 [2005]). In particular, plaintiff submitted a sworn report from Jean Daniel Francois, M.D., a neurologist who examined plaintiff both days after the accident and again recently in response to defendants' motion. Employing objective range of motion testing at both examinations, Francois concluded that plaintiff, as a result of the accident, suffered a permanent disability to her cervical and lumbar spine. Defendants' motion for summary judgment was thus properly denied
      (Linton v Nawaz, 62 AD3d 434, 439 [2009], affd 14 NY3d 821 [2010]; Toure v Avis Rent A Car Sys., 98 NY2d 345, 354-355 [2002]).
      Greene v. Culley


      Besen and Trop, LLP, Garden City, N.Y. (Robert E. Trop of counsel),
      for appellant.
      Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
      (Stacy R. Seldin of counsel), for
      respondents Thomas K. Culley and Huntington
      Orange & White Transportation Corp.
      Kelly, Rode & Kelly, LLP, Mineola, N.Y. (Susan M. Ulrich of
      counsel), for respondents Jose
      Leonidas Perdomo and Jose L. Hernandez.

      DECISION & ORDER
      In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Jones, Jr., J.), dated July 15, 2010, which granted the motion of the defendants Thomas K. Culley and Huntington Orange & White Transportation Corp. for summary judgment dismissing the complaint insofar as asserted against them on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and, in effect, granted the motion of the defendants Jose Leonidas Perdomo and Jose L. Hernandez for summary judgment dismissing the complaint insofar as asserted against them on the same ground.
      ORDERED that the order is affirmed, with one bill of costs.
      The defendants met their prima facie burdens of showing that the plaintiff, who allegedly sustained certain injuries to her right knee as a result of the subject accident, did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted evidence establishing that the alleged injuries to the plaintiff's right knee did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614). The defendants also established that the plaintiff did not sustain a medically determined injury or impairment that prevented her from performing substantially all of the material acts constituting her customary daily activities during at least 90 of the first 180 days following the subject accident (see McIntosh v O'Brien, 69 AD3d 585, 586).
      In opposition, the plaintiff failed to raise a triable issue of fact as to whether the alleged injuries to her right knee constituted a serious injury within the meaning of Insurance Law § 5102(d) (see Rush v Kwan Chiu, 79 AD3d 1004, 1005; cf. Caraballo v Kim, 63 AD3d 976, 977). She also failed to raise a triable issue of fact as to whether she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see Pierre v Nanton, 279 AD2d 621; Traugott v Konig, 184 AD2d 765, 766).
      Accordingly, the Supreme Court properly granted the motion of the defendants Thomas K. Culley and Huntington Orange & White Transportation Corp. for summary judgment dismissing the complaint insofar as asserted against them and, in effect, granted the motion of the defendants Jose Leonids Perdomo and Jose L. Hernandez for summary judgment dismissing the complaint insofar as asserted against them.
      Lewars v. Transit Facility Management Corp.

      Gallo Vitucci & Klar, LLP, New York, N.Y. (Yolanda L. Ayala of
      counsel), for appellants.
      Rubenstein & Rynecki, Brooklyn, N.Y. (Kliopatra Vrontos of
      counsel), for plaintiffs-respondents.

      DECISION & ORDER
      In an action to recover damages for personal injuries, etc., the defendants Transit Facility Management Corp. and Gilbert Torres, Jr., appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Bayne, J.), dated June 25, 2010, as denied their motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that they were not at fault in the happening of the subject accident, and denied their separate motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that the plaintiff Verna D. Lewars did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
      ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs payable to the appellants, the appellant's motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that the plaintiff Verna D. Lewars did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is granted, the appellants' separate motion for summary judgment dismissing the complaint and cross claims insofar as asserted against them on the ground that they were not at fault in the happening of the subject accident is denied as academic, and, upon searching the record, summary judgment is awarded to the defendant Dusko Genic dismissing the complaint and all cross claims insofar as asserted against him.
      In support of their motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that the plaintiff Verna D. Lewars (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d), the defendants Transit Facility Management Corp. and Gilbert Torres, Jr. (hereinafter the appellants), met their prima facie burden of showing that the injured plaintiff did not sustain a serious injury under any of the claimed provisions of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350—351; Gaddy v Eyler, 79 NY2d 955, 956-957).
      In opposition, the plaintiffs failed to raise a triable issue of fact. Most importantly, the affirmation and annexed submissions of Dr. Jean Claude Compas, the injured plaintiff's treating physician, did not make any findings that were sufficiently contemporaneous with the subject accident as to the existence of significant limitations in either the plaintiff's cervical or lumbar range of motion. Indeed, while Dr. Compas examined the injured plaintiff the day after the accident, he failed to quantify any lumbar or cervical spine range of motion as of that date (see Perl v Meher, 74 AD3d 930, 931). Rather, he asserted merely that the injured plaintiff had "decreased" range of motion. Even with respect to this unquantified finding, he did not set forth the objective testing he performed (see Resek v Morreale, 74 AD3d 1043, 1044). The earliest quantified findings concerning lumbar or cervical range of motion provided by the plaintiffs was from an examination performed six months after the subject accident. These findings were not sufficiently contemporaneous with the subject accident and did not overcome the deficiencies in Dr. Compas's earlier examination (id.; see Mancini v Lali NY, Inc., 77 AD3d 797, 798; Catalano v Kopmann, 73 AD3d 963, 964).
      Contrary to the plaintiffs' contentions, the appellants also established prima facie that the injured plaintiff did not sustain a serious injury under the 90/180 category of Insurance Law § 5102(d). By submitting the injured plaintiff's own deposition testimony in support of the motion, the appellants established that, at most, she missed one week of work as a result of the subject accident. In opposition, the plaintiffs failed to raise a triable issue of fact as to this category of Insurance Law § 5102(d) as well. Consequently, the Supreme Court should have granted the appellants' motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Gaddy v Eyler, 79 NY2d 955).
      In light of our determination as to serious injury, the appellants' remaining contentions are academic.
      The defendant Dusko Genic separately moved for summary judgment dismissing the complaint insofar as asserted against him on the ground, inter alia, that the injured plaintiff did not sustain a serious injury under Insurance Law § 5102(d). Although Genic did not take an appeal from the order denying his motion, this Court may search the record and award summary judgment to a nonappealing party with respect to an issue that was the subject of a motion before the Supreme Court (see Rovelo v Volcy,AD3d, 2011 NY Slip Op 03575 [2d Dept 2011]; Rivera v Bushwick Ridgewood Props., Inc., 63 AD3d 712, 714). Upon searching the record, we award summary judgment to Genic dismissing the complaint insofar as asserted against him on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see CPLR 3212[b]; Rovelo v Volcy,AD3d, 2011 NY Slip Op 03575; McIntosh v O'Brien, 69 AD3d 585, 588).
      Siew Hwee Lim v. Dan Dan Transit, Inc.


      Walia & Walia, PLLC, Flushing, N.Y. (Bobby Walia of counsel),
      for appellant.
      Baker, McEvoy, Morrissey & Moskovits, P.C., New York,
      N.Y. (Stacy R. Seldin of counsel), for
      respondents.

      DECISION & ORDER
      In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (R. Miller, J.), dated July 12, 2010, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and denied, as academic, her cross motion for summary judgment on the issue of liability.
      ORDERED that the order is affirmed, with costs.
      The defendants met their prima facie burden of showing that the plaintiff, who allegedly sustained injuries to the cervical and lumbar regions of her spine, left ankle, and left foot as a result of the subject accident, did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted evidence establishing that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795), and, in any event, were not caused by the subject accident (see Pommells v Perez, 4 NY3d 566, 579). The defendants also submitted evidence establishing that the alleged injuries to the plaintiff's left ankle and left foot did not constitute serious injuries within the meaning of Insurance Law § 5102(d). In addition, the defendants submitted evidence establishing that the plaintiff's alleged injuries did not prevent the plaintiff from performing substantially all of the material acts constituting her customary daily activities during at least 90 of the first 180 days following the accident (see Licari v Elliott, 57 NY2d 230, 238).
      In opposition, the plaintiff failed to raise a triable issue of fact as to whether she sustained a serious injury to the cervical or lumbar region of her spine within the meaning of Insurance Law § 5102(d) as a result of the accident (see Catalano v Kopmann, 73 AD3d 963, 964; Olson v Russell, 35 AD3d 684, 685). She also failed to raise a triable issue of fact as to whether the alleged injuries to her left ankle or left foot constituted a serious injury within the meaning of Insurance Law § 5102(d) (cf. Ranzie v Abdul-Massih, 28 AD3d 447, 448). Finally, she failed to raise a triable issue of fact as to whether she sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see Kauderer v Penta, 261 AD2d 365, 366; Traugott v Konig, 184 AD2d 765, 766).
      Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint, and properly denied, as academic, the plaintiff's cross motion for summary judgment on the issue of liability (see Patten v Hernandez, 80 AD3d 739, 740).
      Tavares v. Eyl


      Harmon, Linder & Rogowsky, New York, N.Y. (Mitchell Dranow,
      Sea Cliff, N.Y., of counsel), for appellant.
      Richard T. Lau, Jericho, N.Y. (Marcella Gerbasi Crewe of
      counsel), for respondent.

      DECISION & ORDER
      In an action to recover damages for personal injuries, the plaintiff appeals from (1) an order of the Supreme Court, Nassau County (Cozzens, Jr., J.), dated January 14, 2010, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2) a judgment of the same court dated February 25, 2010, which upon the order, is in favor of the defendant and against him, dismissing the complaint. The notice of appeal from the order is deemed also to be a notice of appeal from the judgment (see CPLR 5501[c]).
      ORDERED that the appeal from the order is dismissed; and it is further,
      ORDERED that the judgment is reversed, on the law, the complaint is reinstated, the defendant's motion for summary judgment dismissing the complaint is denied, and the order is modified accordingly; and it is further,
      ORDERED that one bill of costs is awarded to the plaintiff.
      The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
      The defendant met his prima facie burden of showing that the plaintiff, who allegedly sustained certain injuries to the lumbar region of his spine as a result of the subject accident, did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident by submitting evidence establishing that those injuries did not fall within the ambit of any statutory definition of serious injury (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; Rodriguez v Huerfano, 46 AD3d 794, 795).
      However, in opposition, the plaintiff submitted evidence raising a triable issue of fact as to whether the alleged injuries to the lumbar region of his spine constituted a serious injury under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Dixon v Fuller, 79 AD3d 1094). Furthermore, contrary to the Supreme Court's determination, the plaintiff adequately explained a lengthy gap in his medical treatment (see Abdelaziz v Fazel, 78 AD3d 1086).
      Accordingly, the Supreme Court should have denied the defendant's motion for summary judgment dismissing the complaint.
      Feliz v. Fragosa


      Kagan & Gertel, Brooklyn (Irving Gertel of counsel), for
      appellant.
      Reardon & Sclafani, P.C., Tarrytown (Michael V. Sclafani of
      counsel), for respondents.
      Judgment, Supreme Court, Bronx County (Edgar G. Walker, J.), entered October 28, 2010, dismissing the complaint and bringing up for review an order, same court and Justice, entered October 20, 2010, which granted defendants' motion for summary judgment on the ground that plaintiff did not sustain a "serious injury" within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs. Appeal from the aforesaid order, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
      Defendants established prima facie that plaintiff did not sustain a "permanent loss of use" or a "permanent consequential limitation of use" of the cervical and lumbar spines within the meaning of Insurance Law § 5102(d). The affirmed reports of defendants' orthopedic experts stated that plaintiff had full range of motion of her cervical and lumbar spines both shortly after and two years after the accident (see Franchini v Palmieri, 1 NY3d 536, 537 [2003]; see also DeJesus v Cruz, 73 AD3d 539, 539 [2010]). The experts' failure to review plaintiff's MRI reports or medical records does not require denial of defendants' motion (see Clemmer v Drah Cab Corp., 74 AD3d 660, 660-661 [2010]). Plaintiff improperly raises for the first time on appeal her argument that defendants' orthopedic reports are deficient because they cite different standards for normal range of motion and make different findings as to range of motion, and we decline to consider it (see Alicea v Troy Trans, Inc., 60 AD3d 521, 521-522 [2009]). In any event, even if we were to consider it, we would reject it because the differences are not significant and both doctors concluded that plaintiff's range of motion was normal.
      Defendants also established prima facie that any injury to the cervical spine was not caused by the accident by submitting the affirmed report of defendants' radiologist, who opined that the bulging discs in plaintiff's cervical spine were degenerative, consistent with plaintiff's age and the normal aging process, and not caused by plaintiff's accident (see Pommells v Perez, 4 NY3d 566, 579 [2005]; Rodriguez v Abdallah, 51 AD3d 590, 590-591 [2008]). The doctor's detailed non-conclusory explanation for his opinion was sufficient to shift the burden of proof on the issue of causation to plaintiff (cf. June v Akhtar, 62 AD3d 427, 428 [2009]).
      In opposition, plaintiff failed to raise an issue of fact. The affirmation of plaintiff's radiologist contained no conclusion as to causation, and thus failed to rebut defendants' radiologist's conclusion as to the causation of the bulging discs (see Pommells, 4 NY3d at 580; Rodriguez, 51 AD3d at 592). In addition, the orthopedic report submitted by plaintiff was insufficient to refute the range-of-motion findings of defendants' orthopedist, since he never examined her and, although a physician at the facility where plaintiff received treatment, failed to provide the medical records on which he based his conclusions (see Euvino v Rauchbauer, 71 AD3d 820, 820 [2010], lv denied 15 NY3d 713 [2010]; see also Bandoian v Bernstein, 254 AD2d 205, 205 [1998]). Plaintiff also failed to submit any evidence of current limitations in range of motion (see Nagbe v Minigreen Hacking Group, 22 AD3d 326, 326-327 [2005]).
      On appeal, plaintiff has failed to address her fracture or 90/180-day claims. Nor does she assert any serious injury with respect to any body part other than her cervical and lumbar spines.
      Continental Cas. Co. v. Employers Ins. Co. of Wausau

      Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York
      (Alfred L. D'Isernia of counsel), for appellants-respondents.
      Hardin, Kundla, McKeon & Poletto, P.A., New York (George
      R. Hardin of counsel), for Employers Liability Assurance
      Company, respondent-appellant.
      Seward & Kissel LLP, New York (John J. Galban of counsel)
      and (Rolf E. Gilbertson of the bar of the State of Minnesota
      admitted pro hac vice), for Employers Insurance Company of
      Wausau, respondent-appellant.
      Gilbert LLP, District of Columbia (August J. Matteis, Jr., of the
      bar of the District of Columbia, admitted pro hac vice, of
      counsel), for Michael O'Reilly, appellant.
      Judgment, Supreme Court, New York County (Richard F. Braun, J.), entered April 22, 2009, after a nonjury trial resulting in findings of fact and conclusions of law (same court and Justice), dated October 14, 2008, as amended November 24, 2008 and December 5, 2008 (also brought up for review), declaring, inter alia, (1) that plaintiffs Continental Casualty Company and American Casualty Company of Reading, Pa. (collectively, CNA), defendant Employers Insurance Company of Wausau (Wausau) and defendant Employers Liability Assurance Company n/k/a OneBeacon America Insurance Company (OneBeacon) each had and has an equal duty to defend defendant Robert A. Keasbey Company (Keasbey) in past and future asbestos-related personal injury actions (asbestos actions) against Keasbey from the commencement of each asbestos action until it is established that the asbestos exposure alleged therein did not occur at a work site or within a time period covered by the insurer's policy, (2) that CNA is entitled to be reimbursed by OneBeacon for one quarter of the cost of defending Keasbey in the asbestos actions to the date of judgment, and (3) that indemnity obligations with respect to each asbestos action are to be allocated pro rata to each year of asbestos exposure at a given site, with each insurer obligated to pay for years and sites within its coverage and with any OneBeacon coverage to be deemed primary to any CNA or Wausau coverage, unanimously reversed, on the law and the facts, without costs, the judgment vacated, Supreme Court's findings of fact reversed to the extent inconsistent herewith and new findings substituted as set forth below, and it is declared that
      (1) CNA has no further obligation to defend or indemnify Keasbey in asbestos actions pursuant to the primary comprehensive general liability insurance policies it issued to Keasbey covering, in aggregate, the period from February 15, 1970 to February 15, 1987, and Wausau has no further obligation to defend or indemnify Keasbey in asbestos actions pursuant to the primary comprehensive general liability insurance policies it issued to Keasbey covering, in aggregate, the period from February 15, 1968 to February 15, 1970,
      (2) CNA is not entitled to be reimbursed by OneBeacon for any portion of the costs of defending Keasbey in asbestos actions from March 1, 2003 to September 30, 2007, or for any portion of the costs of defending the same actions after September 30, 2007, because CNA has failed to establish that it gave OneBeacon timely notice of any of those actions,
      (3) to the extent CNA has paid for Keasbey's defense in any asbestos actions commenced against Keasbey after September 30, 2007, any claim by CNA against OneBeacon for reimbursement of such defense costs is barred unless CNA establishes that it provided OneBeacon with timely notice of that particular action under the terms of the OneBeacon policies, and CNA's complaint dismissed to the extent it seeks relief different from, in addition to, or inconsistent with the foregoing, and the matter remanded for entry of judgment consistent herewith.
      Keasbey (which ceased operating in the mid-1990s and was dissolved in 2001) installed asbestos insulation at numerous sites in the tri-state area over many years. Wausau issued Keasbey two successive primary comprehensive general liability (CGL) policies covering the period from February 1968 to February 1970, and CNA issued Keasbey 17 successive primary CGL policies covering the period from February 1970 to February 1987. None of the foregoing CNA and Wausau policies contains an asbestos exclusion.
      Although Keasbey never purchased a policy directly from OneBeacon, it was covered by two "wrap-up" policies issued by OneBeacon, each of which provided liability coverage to all contractors on a specified construction project at the Indian Point Nuclear Power Plant for claims arising from work on that project during the policy period. Specifically, OneBeacon issued one wrap-up policy covering all contractors involved in construction work at Unit 2 at Indian Point from February 1966 to April 1974 and another, similar, policy covering all contractors involved in construction work at Unit 3 at Indian Point from June 1967 to July 1977. During the periods of these policies, Keasbey installed asbestos-containing insulation in the turbines at Unit 2 and Unit 3 at Indian Point, which in each case involved approximately two months of work. Each of the foregoing OneBeacon policies provides that it "applies only to work performed at the [specified] project." Neither OneBeacon policy contains an asbestos exclusion provision.
      Pursuant to its policies' products/completed operations coverage, CNA began defending Keasbey in asbestos actions in the 1970s. This coverage under Keasbey's primary CNA policies was exhausted by 1992, as was similar coverage under the Wausau policies and all other primary policies. Thereafter, excess insurers, including CNA under policies other than those at issue on this appeal, assumed Keasbey's defense. CNA continued to defend Keasbey as an excess insurer until August 2000, when it believed its excess coverage had been exhausted [FN1] . Another excess insurer continued to defend Keasbey until 2002.
      In May 2001, attorneys for claimants in the asbestos actions sent CNA a letter asserting that Keasbey's exposure to asbestos liability fell within the scope of the CNA primary policies' operations coverage, which (unlike the long-exhausted products/completed operations coverage) has no aggregate limit. CNA responded by filing suit against the claimants in October 2001, seeking a declaration that Keasbey's potential asbestos liability is not within the CNA policies' operations coverage. To avoid default judgments, however, CNA took over Keasbey's defense in 2002.
      The claimants' assertion that their claims fell within CNA's operations coverage prompted CNA to undertake a review of Keasbey's records to determine whether any other primary coverage was available. Since the 1980s, those records had been in the possession of the law firm CNA had retained to defend Keasbey in the asbestos cases. In February 2003, CNA found evidence in Keasbey's records that Keasbey was covered by the aforementioned OneBeacon wrap-up policies. By letter dated February 24, 2003, CNA notified OneBeacon of an asbestos action brought by a claimant (Michael O'Reilly) allegedly exposed to asbestos while working at Indian Point from 1968 to 1975, and tendering the defense of the case to OneBeacon. Thereafter, in April 2003, CNA commenced the present declaratory judgment action (superseding the action commenced in October 2001), naming as defendants (in addition to the personal injury claimants, who have been certified as a class) OneBeacon and Wausau [FN2] . CNA's complaint seeks a judgment declaring, inter alia, (1) that Keasbey's potential asbestos liability falls under the exhausted products/completed operations coverage of the CNA policies (not the operations coverage), (2) that OneBeacon is obligated to assume Keasbey's defense in present and future asbestos actions, and (3) that OneBeacon is obligated to reimburse CNA for the amounts the latter has spent on Keasbey's defense in asbestos actions since March 1, 2003 (after the February 24, 2003 letter).[FN3]
      On the appeal taken from the order entered after the Phase I trial in this matter (60 AD3d 128 [2008], supra), this Court, reversing the trial court's order, determined that Keasbey's potential asbestos liability falls under the exhausted products/completed operations coverage of the CNA policies, not the operations coverage, from which it follows that CNA has no further obligation to defend or indemnify Keasbey in asbestos actions [FN4] . The Phase II trial was conducted before the Phase I appeal was decided, and resulted in a judgment (the Phase II judgment) declaring, inter alia, that the four insurers before the court (the two CNA subsidiaries, OneBeacon and Wausau) are obligated to share equally the cost of Keasbey's defense in all asbestos actions (past, present and future) and that OneBeacon's coverage is primary as to indemnity (although apparently not as to the duty to defend). All parties now appeal from the Phase II judgment, each to the extent it is aggrieved thereby. Given the disposition of the Phase I appeal and CNA's failure to prove that it gave OneBeacon timely notice of any underlying asbestos action, the Phase II judgment must be reversed.
      As noted, the trial court held that defense costs should be shared equally among the two CNA subsidiaries, OneBeacon and Wausau. This ruling cannot stand. Given this Court's determination on the Phase I appeal that the only applicable coverage under the subject CNA primary policies was the coverage for products/completed operations, which (it is undisputed) was exhausted almost 20 years ago, there is no occasion to allocate coverage between CNA and other primary insurers with regard to the defense costs at issue, namely, those that may be incurred in the future or that CNA has incurred since March 1, 2003. However, that CNA did not owe Keasbey any coverage when it defended Keasbey in asbestos actions since March 2003 does not necessarily mean that CNA is entitled to reimbursement for such costs from OneBeacon. While OneBeacon raises a number of arguments against CNA's reimbursement claim, we need address only the argument based on lack of timely notice, which is dispositive.[FN5]
      Where an insured gives only one of two insurers timely notice of a claim, the insurer that received notice may obtain reimbursement from the other insurer only if it gives the other insurer notice of the claim that is reasonable under the circumstances (see Matter of Crum & Forster Org. v Morgan, 192 AD2d 652, 654 [1993]). Here, although each OneBeacon policy contained a notice-of-claim provision requiring the insured to "immediately forward to [OneBeacon] every demand, notice, summons or other process received by him or his representative," it is undisputed that Keasbey never furnished any notice of any asbestos claim to OneBeacon. Hence, CNA's ability to seek reimbursement from OneBeacon for the costs of defending any given claim against Keasbey "turns on whether [CNA] provided notice [of that claim] to [OneBeacon] within a reasonable time under all the circumstances" (State of New York v Blank, 27 F3d 783, 795 [2d Cir 1994] [citing Crum & Forster, 192 AD2d at 654]). Contrary to CNA's arguments, it plainly failed to provide OneBeacon with such notice.
      CNA contends that it gave OneBeacon sufficient notice of all the asbestos actions for which it now seeks reimbursement —- namely, all the thousands of actions that it defended on behalf of Keasbey between March 1, 2003 and September 30, 2007 —- by sending the February 24, 2003 letter advising OneBeacon of the O'Reilly claim, which was about to be scheduled for trial, and inviting OneBeacon (without identifying any other claim against Keasbey) "to contact us as soon as possible so that we can discuss the range of possible strategies for defense of this and comparable other Keasbey asbestos cases." To the extent further notice was required, CNA contends that it was furnished by the complaint it served to commence this coverage action in April 2003, to which is appended a schedule setting forth the names of 174 claimants against Keasbey and the law firms representing them. CNA also refers to a number of e-mails and letters it subsequently sent to OneBeacon's coverage counsel during the pendency of this action discussing a number of the asbestos actions against Keasbey.
      In our view, the February 24, 2003 letter, the complaint in this action, and CNA's subsequent correspondence with OneBeacon's coverage counsel do not constitute reasonably timely notice even of the claims to which they refer, much less to the thousands of other claims for which CNA seeks reimbursement. To begin, CNA cites no authority for deeming a notice as to certain claims against an insured to constitute notice of other claims not identified in the notice. Even as to the claims referenced by name in the documents on which CNA relies, however, notice was not sufficient. The OneBeacon policies required that any process against Keasbey be "immediately forward[ed]" to OneBeacon; CNA does not identify a single case in which this occurred. With regard to the O'Reilly claim referenced in CNA's letter of February 23, 2003, for example, the letter apprised OneBeacon of the case just as it was about to be scheduled for trial —- by which time the case presumably already had a substantial history. CNA argues that it contacted OneBeacon promptly after it first learned of the existence of the OneBeacon policies in February 2003, and could not have been expected to provide notice any earlier than that. We disagree. The Keasbey records from which CNA learned of the OneBeacon policies had been in the possession of asbestos defense counsel chosen and paid by CNA since the 1980s. CNA could have reviewed those records for evidence of additional insurance at any time it chose. It did not see fit to do so until 2003, when the claimants sought to revive its long-expired primary policies on the theory (rejected on the preceding appeal) that operations coverage applied to the asbestos actions. While CNA's sudden interest in finding an untapped primary insurer in response to this unexpected development may be understandable, it does not change the fact that the means to discover the OneBeacon policies had been available to CNA for more than a decade. Further, the possibility of prejudice to OneBeacon from the delay in notice is obvious, given that the OneBeacon policies, unlike the comprehensive CNA policies, covered Keasbey only for work at two particular sites where Keasbey had been present, in the case of each site, for only about two months. Given the vast difference in the scope of coverage between the CNA policies and the OneBeacon policies, it cannot be assumed that OneBeacon's interests were adequately protected by CNA's defense of Keasbey in the asbestos actions (see State of New York v Blank, 27 F3d at 797).[FN6]  
      We reject the theory apparently adopted by the trial court after the Phase I trial (see 16 Misc 3d 223, 253-254 [2007], revd on other grounds 60 AD3d 128 [2008], lv denied 13 NY3d 710 [2009]) that OneBeacon received adequate notice of an action as against Keasbey if it received notice of the action from a different insured under the wrap-up policies. Where each insured has an independent duty to give timely notice under the policy, notice by one insured cannot be imputed to another (see National Cas. Co. v Paxson Communications Corp., 304 AD2d 391, 394 [2003]; Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40, 44 [2002]; American Mfrs. Mut. Ins. Co. v CMA Enters., 246 AD2d 373, [1998]).
      In view of the foregoing, we need not reach the parties' remaining arguments.
      Lombardi, Walsh, Wakeman, etc. v. American Guarantee


      Calendar Date: April 20, 2011
      Before: Peters, J.P., Spain, McCarthy, Garry and Egan Jr., JJ.

      Lombardi, Walsh, Wakeman, Harrison, Amodeo &
      Davenport, P.C., Albany (Robert G. Wakeman of counsel), for
      appellant.
      Steinberg & Cavaliere, White Plains (Robert P. Pagano
      of counsel), for respondent.
      MEMORANDUM AND ORDER

      McCarthy, J.
      Appeal from a judgment of the Supreme Court (McNamara, J.), entered April 14, 2010 in Albany County, which, among other things, granted defendant's motion for summary judgment declaring that it had no duty to defend or indemnify plaintiff in an underlying action.
      Plaintiff, a law firm, was contacted via e-mail by an individual purporting to be the chief executive officer of a Taiwanese corporation seeking legal assistance in collecting debts in North America. After the individual sent plaintiff a signed retainer agreement, plaintiff received a $384,700 check from a purported debtor of the corporation. Plaintiff opened an account at Berkshire Bank and deposited the check. At the request of the purported chief executive officer, plaintiff instructed Berkshire Bank to wire the value of the check, minus a legal fee for plaintiff, in two transfers to a third party in South Korea, who was allegedly a supplier of the Taiwanese corporation. After the funds were transferred, Berkshire Bank notified plaintiff that the check was counterfeit and plaintiff's account was overdrawn.[FN1]
      Berkshire Bank commenced an action against plaintiff as a result of the overdraft. Plaintiff requested that defendant, an insurer that issued plaintiff a professional liability policy, defend the action. Defendant disclaimed coverage. Plaintiff then entered a confidential settlement with Berkshire Bank.[FN2]
      Plaintiff commenced this action seeking, among other things, declarations that defendant was required to defend and indemnify it. Defendant moved for summary judgment. Plaintiff cross-moved for summary judgment or, in the alternative, an order compelling defendant to comply with its disclosure demands. Supreme Court denied plaintiff's cross motion, granted defendant's motion and entered a judgment declaring that defendant was not required to defend or indemnify plaintiff in the Berkshire Bank action. Plaintiff appeals.
      An insurer has the duty to defend an insured "whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim, or where the insurer 'has actual knowledge of facts establishing a reasonable possibility of coverage'" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997], quoting Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 67 [1991]). The insurer's duty to defend, which is broader than the duty to indemnify, exists regardless of the merit of the underlying claim (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]). To avoid defending an action, the insurer bears the burden of showing that the claim is not even potentially covered (see United States Fid. & Guar. Co. v U.S. Underwriters Ins. Co., 194 AD2d 1028, 1028-1029 [1993]).
      Berkshire Bank's complaint alleged that plaintiff, as a law firm, opened a bank account, deposited a check in that account, ordered wire transfers from the account and caused an overdraft when the check was determined to be counterfeit. The complaint included causes of action for breach of the account agreement and violations of the Uniform Commercial Code. The insurance policy issued by defendant provided coverage for any claim "based on an act or omission in [plaintiff's] rendering or failing to render Legal Services for others." "Legal Services" is defined by the policy as "those services performed by an Insured as a licensed lawyer in good standing . . . or in any other fiduciary capacity but only where the act or omission was in the rendition of services ordinarily performed as a lawyer." The terms of this policy encompass more than what would traditionally be considered "legal malpractice" (see United States Fid. & Guar. Co. v U.S. Underwriters Ins. Co., 194 AD2d at 1029).
      The complaint alleges that plaintiff was rendering legal services. An attorney in possession of a client's funds is a fiduciary (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.15 [a]; former Code of Professional Responsibility DR 9-102 [a] [22 NYCRR former 1200.46 (a)])[FN3]. The rules require a lawyer to promptly pay or deliver such funds to the client or a third party at the client's request (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.15 [c] [4]; former Code of Professional Responsibility DR 9-102 [c] [4] [22 NYCRR former 1200.46 (c) (4)]). Plaintiff was thus acting in a fiduciary capacity and under rules imposed upon attorneys acting in their professional capacity when it deposited the check and requested wire transfers in accordance with its purported client's request. Although plaintiff may not have adhered to its ethical obligations when it failed to designate the account as an attorney special account, attorney trust account or attorney escrow account (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.15 [b] [2]; former Code of Professional Responsibility DR 9-102 [b] [2] [22 NYCRR former 1200.46 (b) (2)]), this error did not remove its actions from the realm of its fiduciary duties. As required by the ethical rules, attorneys ordinarily maintain accounts with client funds and transfer those funds at the client's request. Thus, when dealing with Berkshire Bank, plaintiff was performing legal services as defined by the policy.
      Defendant contends that plaintiff was not truly performing legal services for a client because the individual who contacted plaintiff was an imposter and never intended to receive legal services. Although the imposter may not have intended to receive legitimate legal services, someone requested legal assistance and signed a retainer agreement to engage plaintiff to perform legal services. Plaintiff was under the impression that it was legitimately retained and attempted to perform services as attorneys. Regardless of whether the imposter qualified as a "client," the policy does not require an actual "client"; the policy only requires that plaintiff "render Legal Services for others," and the imposter fell within that broad category.
      The only remaining element under the policy's coverage definition is whether the claim was "based on" plaintiff's actions in rendering legal services to others. The Court of Appeals has held that the phrases "based on" and "arising out of" are practically synonymous in the insurance coverage context (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 352 [1996]). The latter phrase "requires only that there be some causal relationship between the injury and the risk for which coverage is provided" (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005]). Supreme Court, after finding that plaintiff was providing legal services, held that "the attorney-client relationship between [plaintiff] and [the imposter] merely furnished the circumstances under which the claim by Berkshire Bank arose and the claim itself was not based, or claimed to be based, on any act or omission of [plaintiff] in providing 'legal services'" (citing Elashker v Medical Liab. Mut. Ins. Co., 46 AD3d 966 [2007]). Considering the broad duty to defend and defendant's burden of showing that it can avoid that duty, Supreme Court interpreted the policy and facts too narrowly. A causal relationship exists between plaintiff's actions in handling funds for its alleged client (the legal services) and the overdraft of its account (the injury). Hence, the claim for damages related to the overdraft were "based on" plaintiff's acts in rendering legal services to others (see American Guar. & Liab. Ins. Co. v Moskowitz, 58 AD3d 426, 427 [2009]).
      Defendant also contends that it is not required to defend or indemnify plaintiff due to the policy's exclusion of coverage for claims based upon or arising out of "any liability assumed by [plaintiff] under any oral or written contract or agreement, unless such liability would have attached to [plaintiff] by law in the absence of such contract or agreement." An insurer attempting to avoid coverage based upon an exclusion bears a heavy burden of demonstrating that the underlying complaint places the situation wholly within the exclusion, the exclusion is clear and subject to only one reasonable interpretation defeating coverage, and "there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d at 175). While defendant asserts that the claim arises only because plaintiff signed an account agreement with Berkshire Bank by which plaintiff assumed obligations due to an overdraft, Berkshire Bank asserted claims based upon the Uniform Commercial Code as well as the account agreement (see UCC 3-414, 3-417, 4-207, 4-212). The record does not contain the account agreement, making it impossible for us to determine whether that agreement provides Berkshire Bank with the same, greater or lesser rights than those provided under the Uniform Commercial Code. As plaintiff's liability for the overdraft potentially could have attached under UCC 4-212 regardless of the terms of the account agreement — i.e., "by law in the absence of such contract or agreement" — defendant did not demonstrate that the exclusion applies.
      Because defendant did not meet its burden on the motion, plaintiff was entitled to a declaration that defendant had a duty to defend plaintiff in the Berkshire Bank action. Due to the confidential settlement of that action, we are unable to determine whether defendant was obligated to indemnify plaintiff. Accordingly, we remit for further proceedings (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 425 [1985]).
      Peters, J.P., Spain, Garry and Egan Jr., JJ., concur.
      ORDERED that the judgment is modified, on the law, with costs to plaintiff, by reversing so much thereof as granted defendant's motion and denied plaintiff's cross motion; motion denied, cross motion partially granted by declaring that defendant had a duty to defend plaintiff in the underlying action, and matter remitted to the Supreme Court for further proceedings not inconsistent with this Court's decision; and, as so modified, affirmed.
      Footnotes

      Footnote 1: Plaintiff had instructed Berkshire Bank to wait until the check "cleared," which it did, before wiring funds. Unfortunately, plaintiff did not understand that a bank may be required to make funds deposited by check available for the account holder to use even if the funds have not been finally collected by the bank (see 12 CFR 229.10 [c]). If the bank later determines that the check does not constitute good funds and cannot be finally collected, the bank may require repayment of those funds that had been made available to the account holder.

      Huguens v. Village of Springville

      Goldstein & Metzger, LLP, Poughkeepsie, N.Y. (Paul J. Goldstein of counsel), for defendant/third-party plaintiff-appellant.
      Colliau Elenius Murphy Carluccio Keener & Morrow, New York, N.Y. (Dean J. Vigliano of counsel), for third-party defendant-respondent.

      In an action to recover damages for personal injuries, the defendant/third-party plaintiff appeals from an order of the Supreme Court, Rockland County (Garvey, J.), dated February 25, 2010, which denied its motion for summary judgment on its third-party cause of action for reimbursement of its defense expenses in the main action, and granted the third-party defendant's cross motion for summary judgment dismissing the third-party complaint.
      Ordered that the order is affirmed, with costs.

      The third-party defendant made a prima facie showing of its entitlement to judgment as a matter of law, and the defendant/third-party plaintiff failed to raise a triable issue of fact in opposition. Contrary to the contention of the defendant/third-party plaintiff, the delay of the third-party defendant in issuing the disclaimer of coverage in this case was not unreasonable. The third-party defendant presented ample evidence demonstrating, as a matter of law, that the delay was reasonably related to a prompt, diligent, and necessary investigation it conducted into the question of whether the third-party plaintiff unduly and inexcusably delayed in providing it with notice of the lawsuit, in violation of the applicable insurance policy (see Magistro v Buttered Bagel, Inc., 79 AD3d 822, 825 [2010]; Matter of GMAC Ins. Co. v Jones, 61 AD3d 1358, 1360-1361 [2009]; Tully Constr. Co., Inc. v TIG Ins. Co., 43 AD3d 1150, 1153 [2007]; Ace Packing Co., Inc. v Campbell Solberg Assoc., Inc., 41 AD3d 12, 14 [2007]). Since the third-party defendant promptly disclaimed coverage on the ground of late notice only eight days after the conclusion of its investigation, the Supreme Court properly determined that the disclaimer was valid (see Tully Constr. Co., Inc. v TIG Ins. Co., 43 AD3d at 1153; Ace Packing Co., Inc. v Campbell Solberg Assoc., Inc., 41 AD3d at 14).

      Abraham Natural Foods Corp., v. Mount Vernon Fire Ins. Co.

      Daniel D. Kim, New York, N.Y. (Danbee Kim of counsel), for
      appellant.
      Miranda Sambursky Slone Sklarin Verveniotis LLP, Mineola,
      N.Y. (Steven Verveniotis and Ron
      Ben-Bassat of counsel), for
      respondent.

      DECISION & ORDER

      In an action for a judgment declaring that the defendant Mount Vernon Fire Insurance Company is obligated to defend and indemnify the plaintiff in an underlying action entitled Boogaerts v Abraham Natural Foods Corp., commenced in the Supreme Court, Queens County, under Index No. 1018/03, the plaintiff appeals from an order of the Supreme Court, Queens County (Satterfield, J.), dated January 12, 2010, which denied its cross motion for summary judgment on the complaint and granted the motion of the defendant Mount Vernon Fire Insurance Company, in effect, for summary judgment in its favor on the complaint insofar as asserted against it.

      ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the defendant Mount Vernon Fire Insurance Company has no duty to defend or indemnify the plaintiff in the underlying action.

      An insurer may disclaim coverage for a loss which occurred prior to the inception of an insurance policy and which was fully known to the insured before the commencement of coverage (see Insurance Law § 1101[a][1], [2]; Henry Modell & Co. v General Ins. Co. of Trieste & Venice, 193 AD2d 412, 412-413; see also National Union Fire Ins. Co. v Stroh Cos., 265 F3d 97, 106; Stonewall Ins. Co. v Asbestos Claims Mgt. Corp., 73 F3d 1178). Here, the defendant Mount Vernon Fire Insurance Company (hereinafter Mount Vernon) demonstrated its prima facie entitlement to judgment as a matter of law by submitting evidence that the plaintiff became aware of the loss in the underlying action prior to the date the subject policy was issued. In opposition, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320). Accordingly, the court properly granted Mount Vernon's motion, in effect, for summary judgment in its favor on the complaint insofar as asserted against it.

      Contrary to the plaintiff's contention, Mount Vernon's motion for summary judgment was not premature, since the plaintiff failed to demonstrate that further discovery might lead to relevant evidence (see Wood v Capital One Fin. Corp., 82 AD3d 1214; Bukharetsky v Court St. Off. Supplies, Inc., 82 AD3d 812). 
      The plaintiff's remaining contentions are without merit.

      Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that Mount Vernon is not obligated to defend or indemnify the plaintiff in the underlying action (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).

      Tower Insurance Company of New York v. Alvarado


      Mound Cotton Wollan & Greengrass (Law Office of Max W.
      Gershweir, New York, N.Y., of counsel), for appellant.
      Hurley, Fox & Selig, Stony Point, N.Y. (Benjamin E. Selig and
      Susan Cooper of counsel), for
      respondents.

      DECISION & ORDER
      In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendants Edwin L. Alvarado and Irma Alvarado in an underlying personal injury action entitled Sampson v Alvarado, pending in the Supreme Court, Bronx County, under Index No. 20092/07, the plaintiff appeals from an order of the Supreme Court, Rockland County (Jamieson, J.), entered September 29, 2010, which denied its motion for summary judgment.
      ORDERED that the order is affirmed, with costs.
      Where, as here, an insurance policy requires that notice of an occurrence be given "as soon as practicable," notice must be given within a reasonable period of time in view of all the circumstances (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440; 25th Ave., LLC v Delos Ins. Co., ____AD3d ____, 2011 NY Slip Op 03833 [2d Dept 2011]; Bigman Bros., Inc. v QBE Ins. Corp., 73 AD3d 1110, 1111; Blue Ridge Ins. Co. v Biegelman, 36 AD3d 736). However, "there may be circumstances that excuse a failure to give timely notice, such as where the insured has a good-faith belief of nonliability,' provided that belief is reasonable" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 743, quoting Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 441; see 25th Ave. LLC v Delos Ins. Co., ____AD3d ____, 2011 NY Slip Op 03833). The insured has the burden of establishing that there was a reasonable excuse for the delay in giving notice (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 744; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 441). "Ordinarily, the question of whether the insured had a good-faith belief in nonliability, and whether that belief was reasonable, presents an issue of fact and not one of law" (St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d 1030, 1031; see 25th Ave. LLC v Delos Ins. Co., ____AD3d ____, 2011 NY Slip Op 03833; McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d 981, 983). Nevertheless, the issue of whether an insured's excuse for the delay is reasonable "may be determined as a matter of law where the evidence, construing all inferences in favor of the insured, establishes that the belief was unreasonable or in bad faith" (McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d at 983; Bigman Bros., Inc. v QBE Ins. Corp., 73 AD3d at 1111).

      The plaintiff insurance company established its prima facie entitlement to judgment as a matter of law by demonstrating that its insureds, the defendants Edwin L. Alvarado and Irma Alvarado (hereinafter together the Alvarados), did not provide notice of the subject accident until more than two years after it had occurred, and that the defendants Winston Sampson and Lupertia Sampson (hereinafter together the Sampsons), did not exercise their independent right as injured parties to provide notice (see Lobosco v Best Buy, Inc., 80 AD3d 728, 731; Bigman Bros., Inc. v QBE Ins. Corp., 73 AD3d at 1112; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689, 690; St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d at 1032; Seneca Ins. Co. v W.S. Distrib., Inc., 40 AD3d 1068, 1069-1070; Felix v Pinewood Bldrs., Inc., 30 AD3d 459, 461). However, construing all inferences in favor of the Alvarados, they raised a triable issue of fact as to whether their delay in giving notice was reasonably based on a good faith belief in nonliability (see 25th Ave., LLC v Delos Ins. Co., ____AD3d ____, 2011 NY Slip Op 03833; North Country Ins. Co. v Jandreau, 50 AD3d 1429, 1430-1431; St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d at 1032; Klersy Bldg. Corp. v Harleysville Worcester Ins. Co., 36 AD3d 1117, 1119; G.L.G. Contr. Corp. v Aetna Cas. & Sur. Co., 215 AD2d 821, 822; Triantafillou v Colonial Coop. Ins. Co., 178 AD2d 925, 926-927).

      While it is undisputed that the Sampsons did not exercise their independent right as injured parties to give notice, in view of the existence of a triable issue of fact as to whether the insureds' delay in providing notice was excusable, the plaintiff is not entitled at this juncture to summary judgment declaring that it has no duty to defend and indemnify its insureds in the underlying personal injury action.

      Lancer Insurance Company v. Marine Motor Sales, Inc.

      Feeney & Associates, PLLC, Hauppauge, N.Y. (Kenneth F.
      Whitman of counsel), for appellant.
      Curtis, Vasile P.C., Merrick, N.Y. (Patricia M. D'Antone of
      counsel), for plaintiff-respondent.

      DECISION & ORDER

      In an action for declaratory relief, the defendant Travelers Insurance Group appeals, as limited by its brief, (1) from so much of an order of the Supreme Court, Nassau County (Murphy, J.), entered March 2, 2010, as granted those branches of the plaintiff's cross motion which were for summary judgment declaring that the plaintiff is not obligated under a certain policy of insurance to provide coverage to, or to defend and indemnify, the defendants Marine Motor Sales, Inc., and John Parks for claims arising out of an incident allegedly occurring on October 17, 2007, and denied that branch of its motion which was for summary judgment declaring that the plaintiff is obligated under the subject policy of insurance to defend and indemnify those defendants for such claims, and (2) from so much of a judgment of the same court dated April 20, 2010, as, upon the order entered March 2, 2010, declared that the plaintiff is not obligated under the subject policy of insurance to provide coverage to, or to defend and indemnify, the defendants Marine Motor Sales, Inc., and John Parks for claims arising out of the incident allegedly occurring on October 17, 2007.

      ORDERED that the appeal from the order is dismissed; and it is further,

      ORDERED that the judgment is reversed insofar as appealed from, on the law, that branch of the motion of the defendant Travelers Insurance Group which was for summary judgment declaring that the plaintiff is obligated under a certain policy of insurance to defend and indemnify the defendants Marine Motor Sales, Inc., and John Parks for claims arising out of an incident allegedly occurring on October 17, 2007, is granted, those branches of the plaintiff's cross motion which were for summary judgment declaring that it is not obligated under the subject policy of insurance to provide coverage to, or to defend and indemnify, those defendants for such claims are denied, it is declared that the plaintiff is obligated under the subject policy of insurance to defend and indemnify the defendants Marine Motor Sales, Inc., and John Parks for claims arising out of the incident allegedly occurring on October 17, 2007, and the order entered March 2, 2010, is modified accordingly; and it is further,

      ORDERED that one bill of costs is awarded to the appellant.

      The appeal from the intermediate order must be dismissed, as the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

      Shortly after midnight on October 17, 2007, a pick-up truck owned by the defendant Marine Motor Sales, Inc. (hereinafter Marine), and operated by the defendant John Parks, an employee of Marine, in which the defendant Donald Tierney was a passenger, collided with a motor vehicle operated by the defendant Luis Sanchez. As a result of the accident, both Tierney and Sanchez allegedly sustained serious physical injuries.

      In December 2007, Tierney commenced an action in the Supreme Court, Kings County, against Marine and Sanchez to recover damages for personal injuries resulting from the accident. Similarly, Sanchez commenced an action in the Supreme Court, Richmond County, against Marine and Parks to recover damages for personal injuries resulting from the accident.

      At the time of the accident, Marine had a "Garage Dealer's" policy of insurance (hereinafter the Policy) with the plaintiff, Lancer Insurance Company (hereinafter the plaintiff). Tierney had an automobile insurance policy with Travelers Indemnity Company, incorrectly sued herein as Travelers Insurance Group (hereinafter the appellant), which, inter alia, provided for Supplemental Uninsured/Underinsured Motorists benefits in the event Tierney was injured in connection with a collision involving an uninsured or underinsured motor vehicle. In December 2007, the plaintiff informed Marine in writing that it was disclaiming coverage under the Policy for claims arising out of the subject accident, since, according to the plaintiff, the accident did not result from Marine's garage operations but, rather, arose out of Parks's personal use of the subject vehicle.
      In January 2008, the plaintiff commenced this action against, amongst others, Marine, Parks, Tierney, Sanchez, and the appellant seeking declaratory relief relative to its obligations under the Policy for claims arising out of the subject accident. After joinder of issue and discovery, the appellant moved, inter alia, for summary judgment declaring that the plaintiff is obligated under the Policy to defend and indemnify Marine and Parks for claims arising out of the subject accident. The plaintiff cross-moved, among other things, for summary judgment declaring that it is not obligated under the Policy to provide coverage to, or to defend and indemnify, Marine and Parks for claims arising out of the subject accident.

      The Supreme Court, inter alia, granted those branches of the plaintiff's cross motion which were for summary judgment declaring that it is not obligated under the Policy to provide coverage to, or to defend and indemnify, Marine and Parks for claims arising out of the subject accident, and denied that branch of the appellant's motion which was for summary judgment declaring that the plaintiff is obligated under the Policy to defend and indemnify Marine and Parks for such claims. Subsequently, the Supreme Court issued a judgment declaring, inter alia, that the plaintiff is not obligated under the subject policy of insurance to provide coverage to, or to defend and indemnify, Marine and Parks for claims arising out the subject accident. The instant appeal ensued.

      "The tests to be applied in construing an insurance policy are common speech . . . and the reasonable expectation and purpose of the ordinary businessman" (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [citation omitted]). Any "ambiguities in an insurance policy are . . . to be construed against the insurer" (id. at 398; see Nationwide Mut. Ins. Co. v CNA Ins. Co., 286 AD2d 485, 487).

      As relevant to this appeal, the Policy provides, with respect to liability coverage, that the plaintiff "will pay all sums an insured' legally must pay as damages because of bodily injury' or property damage' to which this insurance applies, caused by an accident' and resulting from garage operations' involving the ownership, maintenance or use of covered autos'" and has the "duty to defend any insured' against a suit' asking for such damages." The Policy defines "garage operations" to include "the ownership, maintenance or use of the autos' indicated in Section I of this Coverage Form as covered autos.'" Under Section I of the Coverage Form, in connection with the "Garage Declarations" page for the Policy, "[a]ny [a]uto'" is a covered auto with respect to liability coverage.
      In that regard, it is undisputed that the subject pick-up truck is an "auto" within the meaning of the Policy, and, as such, the pick-up truck also is a "covered auto'" with respect to liability coverage under the Policy. Thus, under the broad language of the Policy, ownership and/or use of the pick-up truck—a covered auto—constituted "garage operations." Accordingly, because the claims arising out of the subject accident resulted from Marine's ownership and/or Parks's use of the pick-up truck, the Policy provides liability coverage to Marine and Parks for such claims, even assuming, as the plaintiff contends, that at the time of the accident, Parks was using the pick-up truck for personal reasons rather than garage business (see McClaney v Utility Equipment Leasing Corp., 560 F Supp 1265, 1268-1269; Spangle v Farmers Ins. Exchange, 166 Cal App 4th 560, 568-569 [2008]; Farmers Alliance Mut. Ins. Co. v Ho, 68 P3d 546, 549-550 [Colo 2002], cert denied 2003 WL 1905670, 2003 Colo LEXIS 360 [S Ct Colo]; Arnold v Beacon Ins. Co. of Am., 687 So 2d 843, 844 [Fla 1996]; Burr v Nationwide Mut. Ins. Co., 178 W Va 398, 401-402, 359 SE2d 626 [1987]; Guillory v Morein, 468 So 2d 1254, 1256-1257 [La 1985]; cf. Dumblewski v ITT Hartford Ins. Group, 213 AD2d 823, 824; Calkins v Merchants Mut. Ins. Co., 59 AD2d 1052, 1053). We note that the case of Lancer Ins. Co. v Whitfield (61 AD3d 724), cited by the plaintiff, is distinguishable.

      In light of our determination, we need not reach the parties' remaining contentions.

      Astudillo v. MV Transportation, Inc.


      Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of
      counsel), for appellants.
      Gallo, Vitucci & Klar, New York, N.Y. (Yolanda L. Ayala of
      counsel), for respondents MV
      Transportation, Inc., New York City Transit
      Authority, and Walkins Ferdinand.
      Cheven, Keely & Hatzis, New York, N.Y. (William B. Stock
      of counsel), for respondents
      Gowkarran Lallaachan and Asiq Rashid.

      DECISION & ORDER
      In an action to recover damages for personal injuries, the plaintiffs appeal from so much of an order of the Supreme Court, Queens County (Lane, J.), entered February 23, 2010, as granted those branches of the separate motions of the defendants Gowkarran Lallaachan and Asiq Rashid, and the defendants MV Transportation, Inc., New York Transit Authority, and Walkins Ferdinand which were for summary judgment dismissing the plaintiffs' claims of serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) insofar as asserted against each of them on the ground that the plaintiffs did not sustain such injuries within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
      ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs, and those branches of the separate motions of the defendants Gowkarran Lallaachan and Asiq Rashid, and the defendants MV Transportation, Inc., New York City Transit Authority, and Walkins Ferdinand which were for summary judgment dismissing the plaintiffs' claims of serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) insofar as asserted against each of them on the ground that the plaintiffs did not sustain such injuries within the meaning of Insurance Law § 5102(d) as a result of the subject accident are denied.
      The plaintiffs commenced this action to recover damages for personal injuries that were allegedly sustained as a result of a motor vehicle accident occurring on September 4, 2006. The defendants Gowkarran Lallachan and Asiq Rashid, and the defendants MV Transportation, Inc., New York City Transit Authority, and Walkins Ferdinand separately moved for summary judgment dismissing the complaint insofar as asserted against each of them. The Supreme Court, inter alia, granted those branches of the defendants' separate motions which were for summary judgment dismissing the plaintiffs' claims of serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) insofar as asserted against each of them.
      With regard to the plaintiff Alicia Astudillo, the Supreme Court erred in dismissing her claims of serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d). In support of the motions, the defendants relied on submissions including the affirmed medical report of Dr. Barry M. Katzman. Dr. Katzman examined Astudillo on September 19, 2008, more than two years post-accident, and found during that examination a significant limitation in cervical spine rotation (see Rhodes v Stoddard, 79 AD3d 997; Kharzis v PV Holding Corp., 78 AD3d 1122). Also submitted on the motions was the affirmed medical report of Dr. Ravi Tikoo, a neurologist who examined Astudillo on September 17, 2008, more than two years post-accident. During that examination, Dr. Tikoo noted that straight leg raising was possible to 90 degrees bilaterally in the sitting position, but only to 45 degrees in the standing position. While Dr. Tikoo opined that this was a voluntary limitation without a physiological basis, he failed to explain or substantiate, with objective medical evidence, the basis for his conclusion that the limitation was voluntary (see Quiceno v Mendoza, 72 AD3d 669; Mondert v Iglesia De Dios Pentecostal Cristo Viene, Inc., 69 AD3d 590; cf. Perl v Meher, 74 AD3d 930, 930).
      Thus, the defendants failed to objectively demonstrate that Astudillo did not sustain a serious injury under the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d) (see Aronov v Leybovich, 3 AD3d 511).
      With regard to the plaintiff Nancy Linares, the defendants met their respective prima facie burdens of showing that she did not sustain a serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352; Gaddy v Eyler, 79 NY2d 955, 956-957; Vilomar v Castillo, 73 AD3d 758).
      However, the Supreme Court erred in finding that Linares failed to raise a triable issue of fact in opposition as to whether she sustained a serious injury under the permanent consequential limitation of use or significant limitation of use categories (see Noel v Choudhury, 65 AD3d 1316; Gaviria v Alvardo, 65 AD3d 567, 567-568; Gonzalez v MTA Bus Co., 63 AD3d 999).
      Linares raised a triable issue of fact based on the submissions of Dr. Gregg M. Szerlip, Dr. Harold James, Dr. Richard L. Parker, and Dr. Richard J. Rizzuti. Dr. Szerlip, Linares' treating osteopath, established via his affirmation that Linares had significant limitations in the cervical region of her spine on testing done contemporaneous with the subject accident. He deemed the injuries to the cervical region of Linares' spine to have been caused by the subject accident. Shortly after the accident, Linares underwent magnetic resonance imaging (hereinafter MRI) scans of, inter alia, the cervical region of her spine, which were read by Dr. Rizzuti, her examining radiologist. The cervical MRI showed posterior disc herniations at the C3 through C7 levels which abutted the anterior aspect of the spinal cord. Dr. Parker, one of Linares' treating physicians, examined Linares in July 2007, and found, among other things, significant limitations in the cervical region of her spine. He reexamined Linares on various dates, and most recently on May 28, 2009, at which time she still had significant limitations in the cervical region of her spine. Dr. Parker concluded, based on his examinations and review of Linares' MRIs, that the injuries sustained by Linares, including those to the cervical region of her spine, were significant and permanent in nature and caused by the subject accident. Dr. James, another of Linares' examining physicians, also examined Linares at various points in time, most recently on June 1, 2009. During that examination, significant limitations in Linares' cervical region of her spine were set forth. He concluded, based on his examinations and review of her cervical spine MRI, that the injuries allegedly sustained by Linares, including those to the cervical region of her spine, were permanent and that her limitations were significant. He concluded, inter alia, that Linares sustained a significant limitation of use of the cervical region of her spine as a result of the subject accident.
      While it is true that the defendants' radiologist, Dr. Audrey Eisenstadt, opined that the MRI scans taken of Linares' cervical spine revealed disc protrusions at C3 through C7, Dr. Eisenstadt was unable to establish the etiology of that pathology. Therefore, contrary to the Supreme Court's determination, Linares was not required to address the issue of degeneration as it related to her cervical spine. Dr. Szerlip, Dr. James, and Dr. Parker all concluded that the disc herniations at C3 through C7 were caused by the subject accident. Linares alleged in her bill of particulars that she sustained herniated discs at C3 through C7 as a result of the subject accident. These herniations clearly could have caused the limitations in cervical spine range of motion observed by Linares' treating experts.
      Based on Linares' submissions, she raised a triable issue of fact as to whether she sustained a serious injury to the cervical region of her spine under the permanent consequential limitation of use or the significant limitation of use categories of Insurance Law § 5102(d) as a result of the subject accident.
      Accordingly, the Supreme Court erred in granting those branches of the separate motions of the defendants Gowkarran Lallaachan and Asiq Rashid, and the defendants MV Transportation, Inc., New York City Transit Authority, and Walkins Ferdinand which were for summary judgment dismissing the plaintiffs' claims for serious injury under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) insofar as asserted against each of them.
      Cabey v. Leon


      Harmon, Linder & Rogowsky, New York, N.Y. (Mitchell
      Dranow of counsel), for appellant.
      Baker, McEvoy, Morrissey & Moskovits, P.C., New York,
      N.Y. (Stacy R. Seldin of counsel),
      for respondent Luis Leon.
      Alan B. Brill, P.C., Suffern, N.Y. (Donna M. Brautigam of
      counsel), for respondents Patricia
      Caseres and Jose Caseres.

      DECISION & ORDER
      In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Rockland County (Berliner, J.), dated February 4, 2010, which denied her motion for summary judgment on the issue of serious injury and granted the separate cross motions of the defendant Luis Leon and the defendants Patricia Caseres and Jose Caseres for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
      ORDERED that the order is modified, on the law and the facts, by deleting the provision thereof granting the defendants' separate cross motions for summary judgment dismissing the complaint insofar as asserted against each of them, and substituting therefore a provision denying the cross motions; as so modified, the order is affirmed, without costs or disbursements.
      On September 20, 2007, the plaintiff allegedly was injured as a result of a two-vehicle accident that occurred in Rockland County. At the time of the accident, the plaintiff was a passenger in a taxi owned and operated by the defendant Luis Leon. The second vehicle was owned and operated by the defendants Jose Caseres and Patricia Caseres (hereinafter together the Caseres defendants), respectively.
      The plaintiff moved for summary judgment on the threshold issue of serious injury, arguing that as a result of the accident, she was unable to work at her employment for at least 90 of the 180 days immediately following the occurrence (hereinafter the 90/180-day category). The defendants opposed the motion and separately cross-moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
      The Supreme Court granted the defendants' respective cross motions for summary judgment and denied the plaintiff's motion for summary judgment. We modify.
      The Supreme Court should have denied the defendants' cross motions for summary judgment. The affirmed reports of Dr. René Elkin and Dr. Joseph Laico submitted on behalf of the Caseres defendants, and the affirmed reports of Dr. Laico and Dr. Stephen Fromm submitted on behalf of Leon, did not relate their findings to the 90/180-day category of serious injury alleged in the plaintiff's bill of particulars. Therefore, they failed to establish their prima facie entitlement to judgment as a matter of law (see Lewis v John, 81 AD3d 904; Mugno v Juran, 81 AD3d 908; Reynolds v Wai Sang Leung, 78 AD3d 919, 920).
      The Supreme Court properly denied the plaintiff's motion for summary judgment, since she failed to demonstrate, prima facie, her entitlement to judgment as a matter of law on the issue of serious injury under the 90/180-day category (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Elshaarawy v U-Haul Co. of Miss., 72 AD3d 878, 800; Ellithorpe v Marion, 34 AD3d 1195, 1197). Although the plaintiff demonstrated that she received a disability payment in the sum of $1,616.60 covering the period from September 24, 2007, to January 20, 2008, her deposition testimony, which she submitted in support of her motion, presented a triable issue of fact. Specifically, when she was asked why she did not return to work, the plaintiff responded that she was "let go" from her employment in November of 2007 when her employer closed down. Therefore, the deposition testimony presents a triable issue of fact as to whether the plaintiff's failure to engage in her usual and customary daily activities for not less than 90 of the 180 days immediately following the accident was a result of her physical condition or the employer's closing two months after the occurrence.
      The parties' remaining contentions either are without merit or have been rendered academic by our determination.

      Cragg v. Allstate Indemnity Corporation


      Edward J. Markarian, for appellant.
      Patrick B. Omilian, for respondent.

      LIPPMAN, Chief Judge:

      This appeal requires us to interpret the breadth of an exclusion in a homeowner's insurance policy excluding coverage for bodily injury to an insured where an insured would receive "any benefit" under the policy.

      Plaintiff, Eric Cragg, is the father of decedent, Kayla Margaret Rose Cragg. Three-year-old Kayla and her mother, defendant Marina Ward, lived with defendant grandparents, Gregory and Katherine Klein, in the Kleins' Clarence, New York home. In July 2001, Kayla drowned accidentally in the Kleins' swimming pool. At the time, the Kleins had a homeowner's insurance policy in place that had been issued by Allstate. Under the terms of the policy, Kayla and her mother were insured persons, as residents of the household who were related to the policyholders. Plaintiff maintained a separate residence and was not an insured under the Kleins' homeowner's insurance policy.

      Allstate disclaimed coverage based on the policy exclusion at issue here. Under "Coverage X [-] Family Liability Protection," the policy states that "[w]e do not cover bodily injury to an insured person . . . whenever any benefit of this coverage would accrue directly or indirectly to an insured person." Bodily injury is defined in the policy as "physical harm to the body, including sickness or disease, and resulting death." The policy does not define the term "benefit."

      Plaintiff, as the administrator of Kayla's estate, commenced an action seeking to recover against defendants for Kayla's wrongful death and for her conscious pain and suffering. Defendant Ward defaulted and judgment was entered against her in the amount of $300,000 — $150,000 for wrongful death and $150,000 for pain and suffering. Plaintiff brought this declaratory judgment action against Allstate for a declaration that Allstate was required to defend and indemnify its insureds. Supreme Court granted Allstate's motion for summary judgment, declaring that Allstate had no obligation to defend or indemnify Ward or the Kleins in relation to the wrongful death or conscious pain and suffering claims.

      The Appellate Division affirmed (74 AD3d 90 [4th Dept 2010]). That Court noted that the general purpose of homeowner's insurance policies is to provide coverage for injuries sustained by those who are not insured by the subject policy and found that, based on the plain language of the exclusion, Allstate did not have to indemnify Ward because she would thereby obtain a benefit under the policy. We granted plaintiff leave to appeal and we now reverse.

      At this stage of the litigation, plaintiff properly limits his argument to the wrongful death claims of the underlying action. As we recently noted, a claim for conscious pain and suffering belongs to the estate of the deceased, rather than the distributees (see Heslin v County of Greene, 14 NY3d 67, 76-77 [2010]; EPTL 11-3.2 [b]). By contrast, "a wrongful death action belongs to the decedent's distributees and is designed to compensate the distributees themselves for their pecuniary losses as a result of the wrongful act" (Heslin, 14 NY3d at 76; see also EPTL 5-4.3). Plaintiff's wrongful death claim therefore is based on his own loss and is not derivative of any claim on behalf of his insured daughter.

      Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured (see Matter of Mostow v State Farm Ins. Cos., 88 NY2d 321, 326-327 [1996]). To the extent that there is any ambiguity in an exclusionary clause, we construe the provision in favor of the insured. Moreover, "'exclusions or exceptions from policy coverage . . . are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction. Indeed, before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation'" (Pioneer Towner Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 307 [2009], quoting Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984]). Allstate has not met that burden here.

      The language of the policy exclusion — excluding coverage "whenever any benefit of this coverage would accrue directly or indirectly to an insured" — is ambiguous. It could be interpreted, as Allstate urges, to mean that bodily injury to an insured is not covered whenever any benefit — including coverage itself in the form of defense and indemnification — would accrue to an insured. However, as plaintiff points out, this interpretation ascribes meaning only to the first clause of the exclusion — "[w]e do not cover bodily injury to an insured person." Since the right to defense and indemnification universally accrues to an insured, under Allstate's interpretation the condition of the second clause of the exclusion would always be met. However, the second part of the exclusion must somehow modify the first part of the clause in order to have any meaning. In this context, a benefit must mean something other than coverage itself and is more naturally read to mean proceeds paid under the policy. In light of our obligation to interpret the exclusion in a manner that gives full force and effect to the policy language and does not render a portion of the provision meaningless (see County of Columbia v Continental Ins. Co., 83 NY2d 618, 628 [1994]), we find plaintiff's interpretation of the clause to be more in keeping with these well-settled principles of contract interpretation.

      The current version of the exclusion at issue was brought about in response to the decision in Allstate Ins. Co. v Pestar (168 AD2d 931 [4th Dept 1990]). The prior version of the exclusion had excluded coverage for bodily injury to an insured. In Pestar, a child was injured when she dove into a State-owned lake. Her parents filed a negligence action against the State and the State counterclaimed seeking contribution. Despite the policy exclusion, the Appellate Division determined that Allstate had a duty to defend and indemnify the parents on the State's counterclaim, finding that "the liability at issue . . . is not the parents' liability to [the insured child] but rather the parents' potential liability to the State on a claim of equitable apportionment" (Pestar, 168 AD2d at 931-932).

      The insurer subsequently added language to the exclusion stating that bodily injury to an insured is not covered "whenever any benefit of this coverage would accrue directly or indirectly to an insured person" (see 9A Couch on Insurance 3d § 128:4).

      Assuming the insurer intended this language to exclude coverage under the policy entirely for bodily injury to insureds, it did not accomplish the desired result. Instead of making the exclusion broader, the additional language can be read as limiting the application of the exclusion to situations where an insured would receive a benefit (i.e. payment) under the policy. The amendment, then, can be seen as the insurer's attempt to cut off indirect claims, such as claims for contribution. As relevant to this appeal, however, the exclusion fails to bar unambiguously payment to a noninsured plaintiff, that is to say it does not clearly cut off the nonresident distributee's wrongful death claims arising from the fatal injury to an insured.

      Other jurisdictions have observed that there are valid policy reasons for excluding coverage in cases such as this one. They have noted that homeowner's insurance is generally meant to cover bodily injury to noninsureds (see Cincinnati Indem. Co. v Martin, 85 Ohio St 3d 604, 608; 710 NE2d 677, 680 [1999]) and that coverage is excluded in these types of situations in order to avoid imposing liability on the insurer in a case where the insured, due to a close relationship with the injured party, might be unmotivated to assist the insurer in defending against the claim (see Whirlpool Corp. v Ziebert, 197 Wis 2d 144, 149; 539 NW2d 883, 885 [1995])[FN1]. However, faced with a very similar case addressing the identical exclusion, the Wisconsin Supreme Court recently held that "Allstate has failed to meet its burden to demonstrate that the policy term 'benefit' unambiguously includes the contractual right to receive a defense or the contractual right to indemnification" (Day v Allstate Indem. Co., 2011 WI 24, ¶57 [decided April 29, 2011]). We agree with this analysis.

      We therefore find that judgment should have been granted in plaintiff's favor, as the exclusion did not operate to bar coverage for the noninsured plaintiff's wrongful death claim for the death of the insured decedent.

      Accordingly, the order of the Appellate Division should be reversed, with costs, and the matter remitted to Supreme Court for further proceedings in accordance with this opinion.

      Novick v Middlesex Mut. Assur. Co..


      Goldberg Segalla LLP, Mineola, N.Y. (Joanna M. Roberto and Paul
      C. Steck of counsel), for appellant.
      Edward J. Lackaye, Jr., Poughkeepsie, N.Y., for respondent.

      DECISION & ORDER
      In an action to recover the proceeds of a marine insurance policy, the defendant appeals from an order of the Supreme Court, Dutchess County (Sproat, J.), dated November 29, 2010, which denied its motion for summary judgment dismissing the complaint.
      ORDERED that the order is affirmed, with costs.
      To establish its right to rescind an insurance policy, an insurer must show that the insured made a material misrepresentation when he or she secured the policy (see Varshavskaya v Metropolitan Life Ins. Co., 68 AD3d 855, 856; Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713, 714). "A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented" (Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d at 714). " To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application'" (Varshavskaya v Metropolitan Life Ins. Co., 68 AD3d at 856, quoting Schirmer v Penkert, 41 AD3d 688, 690-691; see also Insurance Law § 3105[c]). However, "[c]onclusory statements by insurance company employees, unsupported by documentary evidence, are insufficient to establish materiality as a matter of law" (Schirmer v Penkert, 41 AD3d at 691; accord Tuminelli v First Unum Life Ins. Co., 232 AD2d 547). Here, the defendant insurer failed to establish, prima facie, that the plaintiff's misrepresentation was material as a matter of law (see Curanovic v New York Cent. Mut. Fire Ins. Co., 307 AD2d 435, 438; Tuminelli v First Unum Life Ins. Co., 232 AD2d at 547).
      The defendant's remaining contentions are without merit.
      Accordingly, the defendant's motion for summary judgment dismissing the complaint was properly denied (see Schirmer v Penkert, 41 AD3d at 691).
      ANGIOLILLO, J.P., FLORIO, BELEN and ROMAN, JJ., concur.
      North State Autobahn, Inc. v Progressive Ins. Group


      Medina, Torrey, Mamo & Camacho, P.C., New York, N.Y. (Richard
      Paul Stone of counsel), for appellants.
      Nelson Levine de Luca & Horst, LLC, New York, N.Y. (Michael
      R. Nelson and Kymberly Kochis of
      counsel), for respondents.

      DECISION & ORDER
      In an action, inter alia, to recover damages for fraud, the plaintiffs appeal from so much of an order of the Supreme Court, Westchester County (Lefkowitz, J.), entered May 25, 2010, as granted that branch of the defendants' motion which was for a protective order precluding the plaintiffs from compelling defense witness Victor Politzi to answer certain questions at his deposition on the ground of attorney-client privilege.
      ORDERED that the order is reversed insofar as appealed from, on the facts and in the exercise of discretion, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for an in camera inspection of answers, to be supplied by Victor Politzi in writing, that are responsive to the disputed deposition questions posed by the plaintiffs' counsel at the prior deposition of Victor Politzi regarding a certain letter dated July 3, 2007, and for a new determination thereafter of the defendants' motion for a protective order.
      The Supreme Court improvidently exercised its discretion in granting the defendants' motion for a protective order precluding the plaintiffs from compelling defense witness Victor Politzi to answer certain questions posed to him by the plaintiffs' counsel during his deposition on the ground of attorney-client privilege. "In order to make a valid claim of privilege, it must be shown that the information sought to be protected from disclosure was a confidential communication made to the attorney for the purpose of obtaining legal advice or services" (Matter of Priest v Hennessy, 51 NY2d 62, 69 [internal quotation marks omitted]; see Cross Bay Contr. Corp. v Town of Islip Resource Recovery Agency, 238 AD2d 461, 462). In the instant case, the defendants failed to establish that the answers sought by the plaintiffs during their questioning of Politzi in connection with a letter dated July 3, 2007, are "primarily or predominantly of a legal character" (Rossi v Blue Cross & Blue Shield of Greater N.Y., 73 NY2d 588, 594; cf. Cooper-Rutter Assoc. v Anchor Natl. Life Ins. Co., 168 AD2d 663). Although an attorney's affidavit supplied by defense counsel states that "[t]he questions presented involve items about which [the attorney] provided legal advice to" unnamed employees, a large number of the questions posed by the plaintiffs' counsel sought information about Politzi's own personal knowledge. Accordingly, the matter must be remitted to the Supreme Court, Westchester County, for an in camera inspection of answers, to be supplied by Politzi in writing, that are responsive to the disputed deposition questions posed by the plaintiffs' counsel at Politzi's deposition regarding the letter dated July 3, 2007, and for a new determination thereafter of the defendants' motion for a protective order.
      ANGIOLILLO, J.P., FLORIO, BELEN and ROMAN, JJ., concur.

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