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Coverage Pointers - Volume XII, No. 26

Dear Coverage Pointers Subscribers:

Welcome to the 26th and final issue of Volume XII, the conclusion of a dozen years of Coverage Pointers publication. Thank you for your loyal and enthusiastic support.

Greetings from Petoskey, Michigan. After three days in Chicago where we participated in a creative and successful mediation of six catastrophic injury claims, we were happy to return to our Canadian home, just in time to pack for a morning flight to the upper part of the Lower Peninsula which was leaving a mere 10 hours later. The fog is so thick here right now; I am not quite sure whether Lake Michigan is really out our hotel window as promised.

This week's issue will not be a disappointing conclusion to the year's work: late notice, rescission, assaults, D&O, E&O, all of life's treats await you in the attached issue

Insurance Coverage Mediation and Arbitration
Resolving the Complex without the Substantial Costs of Litigation or the Risk of Adverse Precedent

I call it, the "Fear of Success." How often is an insurer battling another over a coverage issue on a Monday and taking the opposite position on the same question in another case on a Tuesday? If the company wins on one case, that precedent can lead to a loss, perhaps even a more significant loss, in the next case. Be fearful of success because that victory can come back to hurt your company -- or the industry -- tomorrow, next week or next year.

There are times, more often recently than not, when insurers wish to resolve complex insurance coverage disputes without the expense and costs of trial and without the risk of potentially adverse judicial precedent. We have encouraged the mediation and/or arbitration of complex insurance coverage claims and our office can assist insurers and insureds in bringing reasoned resolution to coverage disputes.

Hurwitz & Fine, P.C. offers both mediation and arbitration services. Why spend the money and the time to litigate these questions when resolution by mediation or arbitration can bring closure to hotly contested matters in relatively short order for substantially reduced costs.

I have been handling complex insurance coverage matters for over 25 years. For over 20 years, I have served as an Adjunct Professor of Insurance Law at the Buffalo Law School and am often retained as an expert witness in insurance coverage matters throughout the United States, Canada and in the London market. With mediation and arbitration training and certifications and years of practical experience, common sense and scholarship, I may be able to help mediate a dispute between and among insurers -- or insureds and insurers efficiently and, if successful, without the risk of harmful precedent.

For information, contact Dan Kohane at [email protected] or 716.849.8942.

Albany Office

Remember that we have a Capital District office now, staffed by Cassie Kazukenus, prepared to serve you from Westchester to the North Country, and all points east, west and south. Speaking of Albany:

Cassie's Comments:

I am sitting here in Albany with window open listening to the rain and thinking that it has been a busy and interesting week and a half in the Capital District due in large part to the variety of legislation that remains to be dealt with even though session was scheduled to end on Monday then Wednesday then Thursday. We shall see. This week downtown Albany has seen rallies and protests on a variety of issues currently before the Legislature.

  • The park and streets around the Capitol were filled with Taxi's and their drivers from New York City protesting Mayor Bloomberg's plan to allow livery drivers to pick up street hails outside of Manhattan which has passed the Assembly but is currently stalled in the Senate.
  • PEF members held a rally seeking fairness and respect in response to the Governor's proposal which will eliminate thousands of state jobs. No deal has been made there, but a deal between the Governor and CSEA, the state's largest union, has been tentatively agreed upon.
  • There was a rally drawing attention to the rent control protections expiring and included the arrest of two legislators.
  • Groups on both sides of the same-sex marriage debate have been in and around the capitol for more than a week and have continuously been stationed outside the Senate Chamber door. This legislation passed the Assembly last week but is currently stalled in the Senate.

All of these issues are still to be determined while I am writing this, but for my friends in Buffalo, the Senate and Assembly did agree on something. Both passed legislation allowing allow Nik Wallenda, of the "Flying Wallendas," to tightrope walk above Niagara Falls. Unfortunately, with all the excitement, there is not much activity on the insurance front.

Cassie Kazukenus

[email protected]

Editor's Note: Your editor isn't so sure that a lack of activity is unfortunate.

Notes from Mike Perley: Spanning the Globe

Taking a page from ABC's Wide World of Sports, I am now searching the country for cases involving Medicare Set-Aside issues, as this problem matures and results in judicial determinations. This week we have a case, reported in May 2011 from the New Jersey Superior Court, where the plaintiff gambled that procurement costs would be deducted future allocations and won. I also bring to your attention a case from the United State District Court for the Western District of Kentucky, where the court did not impose sanctions upon an insurance company under the prompt payment statute where Medicare issues were involved.

Michael F. Perley
[email protected]

One Hundred Years Ago:

Middletown Times Press

June 24, 1911

Page 1

FRANK BROWER,

ARRESTED HERE,

IS FOUND GUILTY

Sentenced to Serve 59 Days in

Newburgh Jail for Breaking Up Home

Frank Brower, of this city, told Police Justice Holbrow of Walden in answer to charges professed against him by John Scott of Walden of breaking up his home, of bringing beer and whiskey into the Scott house and drinking it with Scott's wife, and of wrong conduct with her in the presence of Scott's eight little children, ranging in age from an infant to a girl of fourteen years, that he "paid the rent."

The case was heard at 9 o'clock Friday morning and immediately after, Justice Holbrow had concluded reading the charges and sworn affidavits of several persons, the prisoner pleaded guilty.

At this time, Attorney Robert T. Hume, who represented Scott, upbraided Brower for his actions and pleaded with the justice not to allow the prisoner to get off with a small fine. He stated that in his experience he has never before met with a case which there was such a bitter disregard for moral conditions as was shown by the evidence in this one. The sworn statement of the little boy, Jonny, 13 years old stated that he had seen Brower come to his home every day while they lived in Walden . and seen him bring beer into the house and drink it with his mother. Both would get drunk and ugly and try to make the children drink the liquor. The lad's testimony aroused the ire of the spectators in the court room when it came to where the boy narrated he had seen Brower put beer and whiskey in the milk in the nursing bottle and make the helpless baby of twelve months drink it.

Jennie Scott, age 14 years, the oldest of the children, said that she has seen Brower go to McGuire's Saloon and get beer which he brought into their home and he would sit on her mother's lap and drink it. She had heard Brower threaten to blow her father's head off. She had seen Brower kick and abuse her brother and he had threatened her.

The justice dwelt for a few minutes in talking to Brower and Mrs. Scott about their conduct in the presence of the children and in passing sentence on Brower he stated that it was lightened somewhat by pleading guilty. The justice sentenced the man to 59 days in the county jail. Mrs. Scott was very anxious to have Brower taken to Goshen. Her reason, although not stated, was that Goshen is near her present home near this city and she could visit her affinity much more conveniently.

The climax of the degrading circumstances in this case came on April 5th when Brower and Mrs. Scott eloped; the later deserting her entire family.Mrs. Scott expressed a strong desire to stay in the cell with Brower last night. She pleaded urgently with the chief constable for permission.

Audrey's Angle:

Summer is officially here! It is nice to have it light for so long as I have been able to get nine holes of golf in after work.

This edition focuses on arbitration decisions and yet again whether an insurer's denial of durable medical equipment is sufficient. Arbitrator Benziger has an instructive decision as to how he analyzes this type of arbitration in terms of evidence both parties must submit to prove their case.

Also, there is another noteworthy decision from Arbitrator Benziger regarding reasonable excuse for failure to timely submit a medical claim.

If you are looking to line up training this Fall, please note that NBI is holding a No-Fault law seminar September 13 in Buffalo and September 14 in Syracuse. The American Arbitration Association is participating and Arbitrator Veronica O'Connor and Arbitrator Mary Anne Theiss will be speaking. If you need more information please feel free to e-mail me at [email protected].

Audrey Seeley

One Hundred Years Ago Today - First Battered Spouse Defense in Canada

June 24, 1911

New York Times

Page 1

OFFERS TO HANG FOR WOMAN

Doctor Would Be Executed Instead of Wife Who Killed Her Husband

Dr. Alexander Aalto of Ashtabula is willing to be hanged in place of Mrs. Angelina Napolitano of Sault Ste. Marie, who is condemned to die on Aug. 9, one month after the expected birth of her fifth child. She was convicted for killing her husband who tried to force her into white slavery

Dr. Aalto is a middle-aged bachelor, with a mother and sister in Finland. He has a large practice among Swedish and Finnish citizens, many coming from Detroit, Youngstown, Pittsburgh and Cleveland, to be treated by him.

"It would only fair for a man to give his life for her, inasmuch as her life is at peril because of a man's persecution of her, and because men condemned her," said Dr. Aalto. "I know that my old mother would consider me honoring her motherhood in dying for Mrs. Napolitano."

Angelina Napolitano was born in 1883 and was an immigrant to Canada who murdered her abusive husband in 1911, leading to a public debate about domestic violence and the death penalty. She was the first woman in Canada to use the battered woman defense on a murder charge.

Angelina married Pietro Napolitano about 1898 and the couple emigrated to America shortly after the turn of the century. They lived in NYC then moved to Ontario. She had four children.

Apparently, Pietro often beat her and threatened her. In November 1910, he attacked her with a pocket knife, leaving scars. Charged with assault, he received a suspended sentence.

In the winter of 1910-1911, Pietro, who was a laborer, was pressuring Angelina to earn money so they could buy a home and wanted her to become a prostitute. On April 16, 1911, when was six months pregnant, Pietro told her to go out and make money through sex or he would beat her, kill her, or kill her unborn child. He was going to sleep and she had until he woke to get some money.

That afternoon, as Pietro slept. Angelina took an axe and hit him four times in the neck and head, killing him. She immediately sought out a neighbor and confessed, adding "I just killed a pig," and waited for the police to come. They found her with her arms wrapped around her youngest child, and charged her with murder.

The trial began just three weeks later, on May 8th. The prosecution called nine witnesses to testify to her guilt. The defense lawyer appointed was Uriah McFadden, well-known for defending Italians and other immigrants charged with crimes. He called Angelina, who did not speak English well. McFadden's case rested on what was essentially a battered woman defense, arguing that Pietro's abuse had forced a desperate Angelina to murder, and cited the November stabbing.

The trial judge would not admit evidence of the stabbing, holding that "if anybody injured six months ago could give that as justification or excuse for slaying a person, it would be anarchy complete."

The three-hour trial led to a guilty verdict. The jury recommended clemency but she was sentenced to hang, in August, one month after her baby was due.

Once the story hit the newspapers, however, media frenzy began - not just in Sault Ste. Marie, but especially in the United States and even Europe. Though some of the coverage was negative, arguing from racist stereotypes that Angelina, as an Italian, was a "hot-blooded foreigner" and deserved to pay the penalty for her crime most of it revolved around those sympathetic to the abuse she had suffered, and agitating for her sentence to be commuted.

Dr. Aalto's remarks reflect a theme among Angelina's supporter who argued that the murder was in self-defense and that the judge was being sexist by now allowing the evidence of abuse. The Federal Cabinet commuted her sentence to life imprisonment in July 1911. Her baby was born and died within a few weeks. Her children was placed into foster homes. She was paroled on December 30, 1922, after serving 11 years. Her whereabouts thereafter are unknown.

In 2003, an independent film producer began researching Angelina's life for a documentary and that eventually broadened the project to a feature film Looking for Angelina. The film is often shown as part of domestic violence awareness campaigns.

Editor's Note: We attempted, also, to find Dr. Aalto's descendants, but have been so far unable.

Peiper's Personifications:

After the wettest spring on record, here's hoping all of you are enjoying a beautiful start to summer. We especially wish for nothing but sunshine for our friends in the Midwest who have endured more than their share of trouble over the past few months.

After a two weeks off, we again pick up our discussion on the enforceability of indemnity agreements within commercial leases. This week the Fourth Department weighs in on the application of GOL 5-321 to indemnity agreements which certainly push, or in this case exceed, the limit of acceptable risk transfer. We especially note the well-reasoned concurring opinion that was penned by Justice Carni.

As with our previous discussions, the Fourth Department wades into the "sophistication of parties" argument that we often see in GOL 5-321 cases. In Wagner, the Court noted that the agreement at issue was not entered into by sophisticated entities dealing at arm's length. However, as with its brethren in the Second Department, no description of what constitutes a "sophisticated entity" was provided by the Court. As we've done in the past, we would advise significant attention be paid to this detail during paper discovery exchange, and certainly in depositions.

Finally, as we start a new Season, we invite all of you to visit the New York Insurance Page on LinkedIn. While we cover every appellate decision, and some trial court decisions, relevant to New York Insurance in Coverage Pointers every two weeks, this venue only provides us with a limited opportunity to provide in-depth discussion on decisions, legislative developments and trends. More importantly, it does not give you, the reader, an opportunity to comment in an interactive fashion. We hope that our increased use of the space available on LinkedIn, will enhance and enliven discussion on cases impacting the insurance industry. I you haven't already done so, sign up at Linkedin.com, and search the New York Insurance Law Group. We'd love to see you there. In the meantime, Happy 4th of July!

Steve

[email protected]

One Hundred Years Ago Today - A Park in the "Fens" Neighborhood

In the middle of February 1911, a group of real estate entrepreneurs convened, including John's father, General Charles H. Taylor. The assembly called itself "the Fenway improvement association" and discussed plans for an emerging neighborhood in the Fens section of Boston. Less than two weeks later, General Taylor acquired over 365,000 square feet of land between Ipswich Street and Lansdowne Street at public auction. Four months after that purchase, on June 24, 1911, the younger Taylor publicly announced his intention to build a new home for the Red Sox.

In This Week's Issue:

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

  • No Proof of Bad Faith Offered Against D&O Carrier
  • Umbrella Policy Over CGL Contractual Liability Coverage Never Triggered When Unlimited Employers Liability Coverage Applies
  • Langan Strikes Again. Police Officer Did Not Expect to Be Assaulted by Auto Driver and Thus May Recover Uninsured/Underinsured Motorists Benefits
  • For Want of a Policy, a Motion Was Lost
  • When Declaratory Judgment Action Ends Defense Obligation, Defense Firm Retained by Carrier Is Permitted to Withdraw as Defense Counsel
  • Policy Properly Rescinded Due to Material Misrepresentations
  • Exclusion for Workplace Injuries Applies to Remove Coverage for Sexual Assault by Co-Employee at Worksite, Even if Assault Not Work-Related
  • Errors and Omissions Claim Against Insurance Agent Fails, in Absence of Proof of Request for Specific Coverage or Special Relationship
  • SUM (Underinsured) Coverage Does Not Trigger, When Liability Coverage of Offending Tortfeasor Paid to Other People in the Same Car

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

  • Complaint Partially Reinstated Based on Affidavit Containing Numeric Percentage of Loss of Range-of-Motion
  • Statement by Treating Physician that Injuries Are Causally Related Is Conclusory and Insufficient to Defeat Motion
  • Permanent Injury Claim Fails Where Post-Operative Report Indicated Full Range-of-Motion
  • Contemporaneous Evidence Is a Prerequisite to Establishing Serious Injury Even if Plaintiff Undergoes Surgery
  • Significant Range-of-Motion Limitations Reported by Defendant's Examining Neurologist Defeat Defendant's Motion
  • Repeating Shoulder Dislocations May Constitute Permanent Consequential Limitation of Use
  • Plaintiff's Experts Raise a Triable Issue of Fact and Grant of Summary Judgment to Defendants Is Reversed
  • Plaintiff Need Not Address Prior Accident if Defendants Do Not Argue or Submit Evidence to Establish Injuries Were So Caused

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

ARBITRATION

  • Chiropractic Treatment Not Medically Necessary After Three Examinations
  • Mere Assertion of Mailing to Wrong Address Not Reasonable Justification for Failing to Timely Submit Bill
  • Durable Medical Equipment Denial Based Upon Peer Review Upheld
  • Durable Medical Equipment Denial Based Upon IME Upheld
  • Rental of Durable Medical Equipment Requires Updated Prescription for Necessity

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

First Party

  • If Validly Established, Irrevocable Beneficiary Status Bars Any Subsequent Changes to a Life Insurance Policy Unless Prior Consent is Provided by the Person Holding Such Status

Potpourri

  • Indemnity Clause in a Commercial Lease Voided Per GOL § 5-321

LIENING TOWNER OF PERLEY

Michael F. Perley

[email protected]

  • Hinsinger v. Showboat Atlantic City, 2011 N.J. Super, Lexis 96
  • Wilson v. State Farm Mutual Automobile Insurance Company, 2011 U.S. Dist. Lexis 63430

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

  • Creation of the Adversarial Medical Examination Procedure Act (A673 and S5373)
  • Change to the General Obligation Law - Settlements in Tort Actions

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

  • Continuing Disputes Between Auto Insurers and Auto Glass Shops

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

  • Court Artfully Rejects Defendant's Alleged Good Faith Belief in Non-Liability
  • Court Grants Temporary Stay of Arbitration and a Framed Issue Hearing as to Whether the Subject Vehicle Was in Fact Uninsured
  • Court Refuses to Dismiss Excess Insurer's Breach of the Duty of Good Faith and Fair Dealing Action Against Primary Insurer
  • Where Insurer Fails to Establish That the Non-Renewal Letter Was Taken to the Post Office, Court Finds Life Policy Was Not Canceled
  • Late Notice Excused

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

Red Flags of Staged Accident "Crash for Cash" Schemes

All the best for a great sumnmer!
Dan
Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202
Phone: 716.849.8942
Fax: 716.855.0874
Cell: 716.445.2258
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
Liening Tower of Perley
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]

 

06/23/11         Small v. Arch Capital Group, Ltd.
Appellate Division, First Department
No Proof of Bad Faith Offered Against D&O Carrier
Plaintiffs appear to be insured under a Directors & Officers policy.  Among other claims, they alleged that Arch breached the implied covenant of good faith and fair dealing by bad-faith exercise of their contractual right to approve strategic decisions. Plaintiffs theorized that Arch influenced another party to abandon a lawsuit because the defendant in that lawsuit was an Arch business partner. However, there was no such proof offered. 

06/17/11         Merchants Mutual Ins. Co. v. New York State Ins. Fund
Appellate Division, Fourth Department
Umbrella Policy Over CGL Contractual Liability Coverage Never Triggered When Unlimited Employers Liability Coverage Applies
Merchants sought to recover monies from the State Insurance Fund (“SIF”) based on the SIF’s failure to indemnify Jerrick Waterproofing (“Jerrick”), a third-party defendant in a wrongful death case. Jerrick’s employer’s liability policy with the SIF provided unlimited employer's liability coverage for employees subject to the Workers' Compensation Law.  Jerrick also had a commercial umbrella policy issued by Merchants which was excess over any other policy’s limits.

In the underlying action, a Jerrick employee was killed when he fell of a worksite where T&G was the general contractor and Jerrick was a sub-contractor.  The wrongful death case settled for $2.2 million with all parties contributing.

The Court held that the SIF was required to provide unlimited coverage for the accident, despite an exclusion in its policy for liability assumed under a contract. Although T & G was granted summary judgment on its contractual indemnification cause of action against Jerrick Waterproofing in the underlying third-party action, T & G's common-law indemnification cause ]of action in that third-party action was still viable at the time of the settlement.

While the declarations page of the Umbrella Policy limited certain claims for bodily injury to $100,000, claims covered by Workers Compensation were not so limited.

Since the SIF policy was never exhausted, the Umbrella policy was never triggered.

06/14/11         Progressive Northeastern Ins. Co. v. Vanderpool
Appellate Division, Second Department
Langan Strikes Again.  Police Officer Did Not Expect to Be Assaulted by Auto Driver and Thus May Recover Uninsured/Underinsured Motorists Benefits
Vanderpool, a police officer, attempted to execute an arrest warrant on Yvette Pullum at her home. Pullum attempted to avoid the arrest, jumped into her car and drove away, striking Vanderpool with her car. Pullum eventually pleaded guilty to assault in the second degree which contains as an element that the defendant intended to prevent a police officer from performing a lawful duty and thereby caused the officer to suffer physical injury. It does not contain as an element that the defendant intended to cause physical injury to the officer.

Pullum never admitted to intending to injury the officer.

Vanderpool eventually filed a claim with his automobile insurance carrier, Progressive Northeastern Insurance Company (hereinafter the petitioner), seeking supplemental underinsured motorist coverage under the supplemental uninsured/underinsured motorist (hereinafter SUM) endorsement on his automobile insurance policy. The petitioner disclaimed coverage on the ground that Vanderpool's injuries were not caused by an "accident," as that term is used in the SUM endorsement, and Vanderpool sought arbitration. The petitioner commenced this proceeding, inter alia, to permanently stay arbitration.

Under the recent ruling by the Court of Appeals in State Farm v. Langan, an occurrence should be viewed from the perspective of the insured, rather than of the tortfeasor. Here, from Vanderpool's perspective, his encounter with Pullum's vehicle was unexpected, unusual, and unforeseen. Consequently, whatever Pullum's intent, the occurrence was an "accident" within the meaning of the SUM endorsement of Vanderpool's policy. Consequently, Vanderpool may proceed with its SUM arbitration.

06/14/11         Vantage of Jackson, LLC v. Everest National Insurance Co.
Appellate Division, Second Department
For Want of a Policy, a Motion Was Lost
Everest issued a CGL policy to Vantage in connection with a Long Island City construction project. The policy contained an exclusion where the claimed injury and liability resulted from, or were caused by, the work of a contractor, subcontractor, or sub-subcontractor, if the contractor, subcontractor, or sub-subcontractor failed to have in force an insurance policy including liability coverage for the benefit of the plaintiff, as well as for the contractor, subcontractor, or sub-subcontractor, for indemnification and contribution claims in the event of a loss.

When a worker was injury, Everest disclaimed based on that exclusion.  Vantage challenged that disclaimer in this declaratory judgment action.

Since Everest’s counsel failed to include the contractor's policy with its motion papers and included only the disclaimer letter, it did not establish its prima facie entitlement to summary judgment.
Editor’s Note:  For want of a nail … a kingdom was lost.

We have seen this problem time and time again – insurers and insureds alike making motions for summary judgment on coverage issues without ever presenting an evidentiary version of the policy to the court in motion papers.  Everest may eventually win this coverage determination, but now has to litigate this case through trial.

06/14/11         Alvarado-Vargas v. 6422 Holding Corp.
Appellate Division, Second Department
When Declaratory Judgment Action Ends Defense Obligation, Defense Firm Retained by Carrier Is Permitted to Withdraw as Defense Counsel

In a personal injury action, the Marshall, Conway law firm was assigned to represent Forthright Construction by the latter’s insurer, Tower. In March 2010, the underlying plaintiff was granted summary judgment on liability against defendants 6422 Holding and Forthright and 6422 was granted summary judgment on its cross-claims against Forthright based on contractual liability.
In September 2010, in a separate law suit, it was determined that Tower had no obligation to defend or indemnify Forthright.  Marshall Conway then moved for leave to withdraw as Forthright’s counsel. Forthright did not oppose the motion by 6422 did, claiming that it would be prejudiced by Marshall Conway’s withdrawal because it would impact 6422’s asset discovery activities.
The Court affirmed the decision of the lower court which permitted Marshall Denahy to withdraw.  They were no longer be paid by Tower for defense work and the firm’s own client, Forthright, did not oppose it.  The argument that 6422 would be prejudice was simply not a compelling one.
06/14/11         East 115th Street Realty Corp.v. Focus & Struga Building, et al
Appellate Division, First Department
Policy Properly Rescinded Due to Material Misrepresentations
Insurance Law § 3105 permits an insurer to rescind a policy where the application contains a material misrepresentation.  Here, the application stated that no structural alterations to the subject building would be done, which plaintiff's principal admitted was untrue.

GAIC submitted an affidavit of its underwriter, along with the relevant underwriting guidelines, establishing that it would not have issued the policy in this form had it known the true state of affairs.
Editor’s Note:  The key to rescission based on misrepresentations in a policy application is to demonstrate that the policy would not have been issued had the truth been known based on relevant (generally written) underwriting precepts.

06/10/11         Gray-Lines of Niagara Falls, Inc. v. Cincinnati Insurance Co.
Appellate Division, Fourth Department
Exclusion for Workplace Injuries Applies to Remove Coverage for Sexual Assault by Co-Employee at Worksite, Even if Assault Not Work-Related

Gray-Lines sought a declaration that Cincinnati Insurance Company had to defend it in a federal court action commenced by Trusso, a Gray-Line employee.  Trusso claimed to have been sexually assaulted by a fellow employee.  
The commercial liability policy issued by defendant to plaintiff excludes coverage where "[a]n ‘employee' of the insured sustain[s] a bodily injury in the workplace."
Gray-Lines and Trusso argued that coverage should be available because the injuries were unrelated to the performance of her employment duties.  However, this exclusion did not reference employment duties, but focused on the situs of the injuries.  It was noted that there was a separate “performance of duties” exclusion but the “workplace” exclusion served to remove coverage.

06/10/11         Obomsawin v. Baily, Haskell & Lalonde Agency, Inc.
Appellate Division, Fourth Department
Errors and Omissions Claim Against Insurance Agent Fails, in Absence of Proof of Request for Specific Coverage or Special Relationship

The Obomsawin’s own a small business which is operated out of a barn on their residential property.  They obtained both CGL coverage as well as commercial inland marine insurance for two pieces of heavy equipment used in the business.  Another insurance agent obtained first party coverage for their personal and business property.

When a fire destroyed their barn and contents, including property owned by their customers, they realized that the loss would not be fully covered under their policies.  They commenced an errors and omissions claim against their insurance agent, for the failure to secure sufficient coverage for their business property and that of their customers.

An insurance agent’s duty to its customers is generally defined by the nature of the customer's request for coverage. Without a specific request for coverage or the existence of a special relationship with the insured, an agent or broker has no duty to continuously advise its client of its need for additional coverage.

No such proof was offered here, so the judgment granted to the agent was affirmed.

06/07/11         In the Matter of AIU Insurance Company v. Hibbert
Appellate Division, Second Department
SUM (Underinsured) Coverage Does Not Trigger, When Liability Coverage of Offending Tortfeasor Paid to Other People in the Same Car
The Hibberts were involved in an auto accident on January 31, 2004, when the vehicle in which they were riding was rear-ended by a motor vehicle.  The rear-ending vehicle had been struck in the rear by a motor vehicle, which was propelled into the Hibberts’ vehicle was insured by Travelers.
Delroy Hibberts had an auto policy with AIU covering the car in which the Hibberts were riding. The other passengers in the insured vehicle were considered "insured" persons under the provisions of the AIU policy.
Travelers, as insurer for the rear-vehicle, exhausted its $50,000 in liability limits by paying or's insurer, paid $15,000 to passenger Gina Stewart, $5,000 to passenger Delroy Hibbert, $5,000 to passenger Phyllis Hibbert and $25,000 to passenger Sharon Stewart.

The Hibberts and some of the Stewarts filed claims for underinsured benefits under the AIU policy, which had limits of $25,000 / $50,000, equal to its liability limits.  AIU sought to stay arbitration.

Since the AIU policy had identical bodily injury liability policy limits as the Travelers policy issued to the tortfeasor, the tortfeasor's vehicle was not underinsured.  Following the recent Court of Appeals decision in Allstate v. Rivera, 12 NY3d 602, the court held that payment by Travelers to the other passenger in the insured vehicle in the amount of $25,000 did not render the tortfeasor's vehicle "underinsured" for the purpose of triggering the AIU SUM endorsement since the other passenger was also an "insured" under the AIU policy and not an "other person."

Moreover, AIU was entitled to offset the $50,000 received by its insureds from Travelers against its own SUM limits, thereby precluding any recovery under the SUM endorsement.

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

06/17/11         Burke v. Moran
Appellate Division, Fourth Department
Complaint Partially Reinstated Based on Affidavit Containing Numeric Percentage of Loss of Range-of-Motion

In her bill of particulars plaintiff alleged injuries under the permanent loss of use, permanent consequential and/or significant limitation and 90/180-day categories.  Defendants’ expert averred that there was no objective injury to support the claims under either the 90/180-day or the permanent consequential/ significant limitation of use categories.  Defendants also submitted evidence that plaintiff’s cervical limitations were a voluntary restriction, that she had essentially normal neurological examinations, and that she suffered from advanced degenerative disc disease. 

Plaintiff abandoned her claim under the permanent loss of use category and, in opposition to defendants’ motion, submitted an expert affidavit and medical records showing objective limitations with numeric percentages of range-of-motion loss sufficient to raise a triable issue of fact.  The court reinstated the claims under the permanent consequential and/or significant limitation of use categories but affirmed the dismissal of the 90/180-day claim.

06/16/11         Velez v. Almonte
Appellate Division, First Department
Statement by Treating Physician that Injuries Are Causally Related Is Conclusory and Insufficient to Defeat Motion

Defendants submitted affirmed reports from a radiologist who reviewed plaintiff’s MRI films and found preexisting degenerative disease in plaintiff’s knees and spine consistent with her weight and age.  These same findings were also noted by plaintiff’s own radiologist and treating physician and plaintiff failed to rebut this asserted lack of causal relationship.  The statement by her treating physician that the injuries were caused by the accident was conclusory and insufficient to defeat defendants’ motion.

06/16/11         Harrigan v. Kemmaj
Appellate Division, First Department
Permanent Injury Claim Fails Where Post-Operative Report Indicated Full Range-of-Motion

Plaintiff was involved in an accident in 2007 and underwent knee surgery.  In 2009 she was examined by defendant’s examining orthopedist who found full range-of-motion in the knee.  Plaintiff failed to support her claim of permanent injury because the post-operative report by her surgeon also indicated that there were no range-of-motion restrictions in the knee.

06/16/11         Soho v. Konate
Appellate Division, First Department
Contemporaneous Evidence Is a Prerequisite to Establishing Serious Injury Even if Plaintiff Undergoes Surgery

In 2006, while 75 year-old plaintiff was trying to get into a taxi, she fell.  The taxi driver got out to help her but inadvertently left the taxi in drive and it moved forward striking plaintiff’s leg.  She claimed serious injuries to her right knee and right shoulder. 

Following examination and review of plaintiff’s medical records, defendants’ examining orthopedist concluded that plaintiff did not sustain a serious injury and that, in any event, it was not causally related to the accident but rather the result of and consistent with her weight and age.  The court found the orthopedist’s opinion was not conclusory and sufficient to establish defendants’ prima facie case.

In addition to the records relied on by defendants, plaintiff attempted, unsuccessfully, to rely on the unaffirmed report of a physician who examined her three years after the accident.  Her other evidence also failed to rebut defendants’ showing as she failed to produce any evidence of contemporaneous limitations to the right knee or shoulder.  The report of an examination performed ten days after the accident was deficient because it did not compare the findings with normal ranges-or-motion.  Another report of an examination performed five months after the accident was not contemporaneous.  Furthermore, plaintiff’s physicians did not address the existence of degenerative conditions and did not explain how the alleged injuries to the knee and shoulder might not have been related to her weight and age.  The mere fact that plaintiff had surgery for a torn meniscus did not establish causation.

06/14/11         Cues v. Tavarone
Appellate division, Second Department

Significant Range-of-Motion Limitations Reported by Defendant’s Examining Neurologist Defeat Defendant’s Motion
On appeal, the trial court is reversed and defendant’s motion denied as defendant failed to meet his burden where his examining neurologist noted significant range-of-motion limitations to plaintiff’s cervical spine and no other competent evidence was proffered by defendant in support of his assertion that plaintiff’s injuries were not caused by the accident.  It was, therefore, not necessary to consider plaintiff’s opposing papers.

06/10/11         Barres v. Riker
Appellate Division, Fourth Department
Repeating Shoulder Dislocations May Constitute Permanent Consequential Limitation of Use

Plaintiff had just undergone shoulder surgery a month earlier when she was a passenger involved in a motor vehicle accident.  During her deposition, she testified that her shoulder painfully dislocates twice a week.  In his affidavit, her treating physician stated that the condition was permanent and significantly restricted her activities.  She made claims under the permanent consequential and significant limitation of use categories and defendant moved to dismiss.  On appeal, the court affirmed the denial of defendant’s motion finding that, while permanency alone is not sufficient to qualify as a permanent consequential injury, when combined with limitations that are more than “minor, mild or slight” an injury will qualify.  The court rejected defendant’s conclusory contention that two dislocations a week is only a slight inconvenience.

However, the court found that defendant’s motion should have been granted with respect to the 90/180-day category because plaintiff testified during her deposition that she only missed a few days of school and the accident did not affect her school work.  In addition, the first reported dislocation following the accident occurred more than 180 days later.  As such, the court modified the trial court’s order.

06/07/11         Carballo v. Pacheco
Appellate Division, Second Department
Plaintiff’s Experts Raise a Triable Issue of Fact and Grant of Summary Judgment to Defendants Is Reversed

Defendants separately met their prima facie burden showing that plaintiff did not sustain a serious injury to the lumbar and cervical regions of her spine and left shoulder and that, in any event, those injuries were not caused by the accident.  Without details as to what evidence plaintiff submitted in opposition, the court on appeal found that plaintiff’s experts raised a triable issue of fact and that summary judgment should not have been granted to defendants.

06/07/11         Messiana v. Drivas
Appellate Division, Second Department
Plaintiff Need Not Address Prior Accident if Defendants Do Not Argue or Submit Evidence to Establish Injuries Were Caused by Prior Accident

On appeal, the court reversed the order upon reargument, vacated it and denied defendants’ motion.  Although defendants met their prima facie burden, in opposition plaintiff submitted sufficient competent medical evidence to raise and issue of fact, and also adequately explained the cessation of his treatment.  The court held that plaintiff was not required to address the issue of whether or not his injuries were caused by a prior accident in which he similarly sustained injuries to the lumbosacral and cervical spine because, on their motion, defendants did not argue or submit any evidence to establish that the injuries were caused by the prior accident.  Because defendants did not make a prima facie showing, the burden did not shift to the plaintiff and the trial court, upon reargument, should have vacated its original order and denied the motion.

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


ARBITRATION
06/17/11         Cichocki & Cichocki v. Progressive Ins. Co.
Arbitrator Veronica K. O’Connor, Erie County
Chiropractic Treatment Not Medically Necessary After Three Examinations

The Applicant sought reimbursement of chiropractic services rendered to the assignor as a result of an August 1, 2006, accident.  The insurer denied the chiropractic treatment based upon an IME conducted by Frank Esposito, DC.

Mr. Esposito conducted three examinations of the Applicant beginning February 27, 2007 with his final examination occurring on December 21, 2007.  This last examination served as the basis for the insurer’s denial.  Mr. Esposito concluded that the assignor’s findings were nearly identical to those at the examination conducted six months prior.  The assignor’s lack of therapeutic progression resulted in the recommendation that the assignor reached an endpoint in chiropractic care.

The assigned arbitrator determined that the Applicant failed to meets its burden establishing medical necessity for chiropractic care.  The Applicant’s evidence did not refute Mr. Esposito’s conclusions.  It was specifically noted that of the 39 progress notes Applicant submitted, only five indicated improvement in objective findings.  The insurer’s denials were upheld and the claim was denied.

06/17/11         Mislak Chiropractic v. GEICO Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Mere Assertion of Mailing to Wrong Address Not Reasonable Justification for Failing to Timely Submit Bill

The insurer denied one bill based upon violation of the 45 day rule.  The Applicant contended that it sent the bill for an October 2008 service date to the wrong address and resent it to the correct address in March 2009.  The assigned arbitrator, relying upon Synergy First Medical PLLC v. ELRAC Inc., 26 Misc3d 131(A) (2010) and Bronx Expert Radiology PC v. MVAIC, 20 Misc3d 140(A) (2009), determined that the Applicant must demonstrate a reasonable justification in the subsequent period prior to submission of the bill to the correct address.  In this case, the Applicant failed to do this and a review of the initial bill submitted revealed that it contained the correct address of the insurer.  The Applicant did not provide any evidence that it had mailed the initial bill and to what address or even when it mailed it to the address.  Thus, the excuse was determined to not be reasonable and the denial was upheld.

06/13/11         RS Medical v. Geico Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Durable Medical Equipment Denial Based Upon Peer Review Upheld

The Applicant sought reimbursement for an interferential & muscle stimulator dispensed to the assignor eight days post-accident.  The insurer denied the durable medical equipment based upon the peer review of Robert A. Sohn, D.C.  Mr. Sohn opined that the equipment did not meet chiropractic standards of protocol and cited to various journals to support his conclusion.

The assigned arbitrator determined that the peer review was persuasive.  Specifically, the treating chiropractor dispensed the equipment very soon after the accident when there was no history of chronic pain.  Also, there was no office administration of this device to ascertain if the assignor positively responded to it.

06/13/11         RS Medical v. Geico Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Durable Medical Equipment Denial Based Upon IME Upheld

The Applicant sought reimbursement for an interferential & muscle stimulator dispensed to the assignor eight days post-accident.  The insurer denied the durable medical equipment based upon the IME of Dr. Jeffrey Beers.  The assigned arbitrator upheld the insurer’s denial as it was determined that the Applicant failed to establish its prima facie case of medical necessity.  The assigned arbitrator determined that the Applicant’s submission of a prescription for the device by the treating physician without the date of accident was insufficient.  Further, no other medical records were submitted from the treating physician.  Also, the claim form was not signed by the treating provider but listed the Applicant’s law firm under the insurance plan.

06/11/11         RS Medical v. Geico Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Rental of Durable Medical Equipment Requires Updated Prescription for Necessity

The Applicant sought reimbursement for the monthly rental of an interferential & muscle stimulator.  The insurer denied the durable medical equipment based upon the IME of Dr. Howard Levin.  The assigned arbitrator determined that the Applicant did not establish a prima facie case of medical necessity.  The Applicant, to establish its case, must prove that it submitted a claim; set forth the amount of the loss sustained; and that payment was overdue.  The claim is validly submitted when the claim sets forth the assignor’s name; date of accident; date of service; description of service rendered; and charges for the service.  Here, the Applicant did not submit a signed claim form and the form was from an equipment supplier in Washington State.  Also, the treating physician submitted a prescription without an accompanying medical report which was fatal.  Further, there was no contemporaneous medical report or updated prescriptions demonstrating continuing necessity for the equipment’s rental.  The assigned arbitrator specifically determined that “continued use of rehabilitative services whether it be physical therapy or the on-going rental of durable medical equipment requires additional prescriptions or physician certification for the equipment.”  The assigned arbitrator cited to Ground Rule Five of the Workers’ Compensation Fee Schedule to support this determination.

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


First Party

06/14/11         Kliamovic v. Kliamovic
Appellate Division, Second Department
If Validly Established, Irrevocable Beneficiary Status Bars Any Subsequent Changes to a Life Insurance Policy Unless Prior Consent Is Provided by the Person Holding Such Status
Decedent purchased a life insurance policy from Companion Life insurance Company.  At some point in 1996, it appears that the decedent submitted a change request form to Companion providing irrevocable beneficiary status to three individuals.  Plaintiff, William Kliamovic, decedent’s son, was one of the three who enjoyed irrevocable beneficiary status. 

However, in 1998, with no notice provided to plaintiff, it appears Companion provided documentation which listed Winnifred Kliamovic, decedent’s wife, as the primary beneficiary.  Thereafter, in 2000, Mrs. Kliamovic was named the sole beneficiary under the terms of the policy issued by Companion. 

Upon the policyholder’s death, both Mr. Kliamovic (as the son) and Mrs. Kliamovic (as the widowed spouse) sought benefits under the policy.  In reviewing this issue, the Second Department noted that the plaintiff, William, had established the existence of the 1996 Change Request which granted him irrevocable beneficiary status.  As the holder of irrevocable beneficiary status, the Court noted that the policy could not have been changed without William’s notice and consent.  Where no such consent was given in this case, the Court noted that he had established any changes after the 1996 Change Request Form were null and void.

Notwithstanding the acknowledgment that Companion’s changes to the named beneficiary after 1996 were null and void, the Second Department nonetheless found a question of fact existed relative to whether the 1996 Change Request Form establishing William’s irrevocable beneficiary was valid.  Accordingly, the trial court’s decision to grant summary judgment to William Kliamovic was overturned, and the matter remanded for further proceedings on the validity of the 1996 Change Request Form.  

Potpourri

06/10/11         Wagner v. Ploch
Appellate Division, Fourth Department
Indemnity Clause in a Commercial Lease Voided Per GOL § 5-321
Plaintiff sustained injury while in the course of her employment with 1680 Elmwood Avenue, Inc. (“Elmwood”).  As a result, plaintiff commenced a lawsuit against the owner of the premises where she was working.  The owner was/is defendant Ploch.  In response to being named in a lawsuit, Mr. Ploch commenced a third-party action seeking contractual indemnification against Elmwood. 

Elmwood moved for summary judgment against Ploch on the basis that the contractual indemnification clause at issue was in violation of the General Obligations Law.  Essentially, Elmwood argued that the clause was void because it provided for Ploch’s complete indemnification even if Ploch, himself, was the negligent party.  Where the indemnity clause at issue contemplated “complete rather than partial shifting of liability from [Ploch] to [Elmwood]”, the Fourth Department found in violation of New York Public Policy. 

In so holding, the Court noted Ploch’s argument that this was a contract negotiated at arm’s length, between sophisticated entities, did not save the indemnity clause from being voided.  Although it did not explain why, the Fourth Department unequivocally noted that the contract was not, contrary to Ploch’s contention, negotiated at arm’s length between sophisticated parties.

Lastly, the Court also refused to be swayed by Ploch’s argument that the existence of an insurance procurement clause within the lease removed the indemnity clause from the reaches of the General Obligations Law.  Here, the insurance clause at issue only required Elmwood to purchase a policy of insurance.  It did not, however, require that Elmwood provide additional insured status to Ploch on such policy of insurance.  Accordingly, the Court noted that the insurance clause did not evidence an intent to circumvent the scope of the GOL.

 

LIENING TOWER OF PERLEY

Michael F. Perley
[email protected]

Hinsinger v. Showboat Atlantic City, 2011 N.J. Super, Lexis 96

Plaintiff, Thomas Hingsinger obtained a verdict in the amount of $600,000 against Showboat Atlantic City (one would assume not for gambling losses).  The issue before the court was whether or not a Medicare Set-Aside for future payments is subject to 42 C.F.R. § 411.37, which provides for a deduction of procurement costs and the “costs are borne by the party against which CMS seeks to recover.”  A New Jersey court held that regulation was unclear whether the reduction for procurement costs applies only to recovery of funds already expended by Medicare in conditional payments or also applies to funds obtained through settlement or judgment for future medical expenses.  Finding that the language of the regulation could apply to funds obtained for future medical expenses, the court applied the procurement cost provision to a future Medicare Set-Aside.  In addition to the regulatory construction, the court found that general principals of equity would require that procurement costs be deducted from the amount required in any future allocation.

A CAUTIONARY NOTE:  This case was decided by a state court and not a federal court.  It does not appear to me that the regulations regarding procurement costs for past conditional payments are at all ambiguous.  In addition, the government did not appear in the proceeding and had no opportunity to be heard.  It is doubtful to me that this determination is binding on CMS or any other agency and one can expect the U.S. Government will take a different position when it appears.

Wilson v. State Farm Mutual Automobile Insurance Company, 2011 U.S. Dist. Lexis 63430

Upon reaching a settlement for a policy limits payment of $50,000, State Farm Mutual Automobile Insurance Company attempted to determine a value of a Medicare lien and asked for permission to discuss the matter with Medicare.  The plaintiff refused the request and, instead, proposed that the entire $50,000 be payable to the plaintiff’s attorney’s escrow account.  State Farm refused that request and suggested that it place Medicare on the check.  Plaintiff refused that request and, after the expiration of the prompt payment statute, brought an action seeking costs, attorney’s fees and 12% interest.  In addition, the plaintiff sought a determination that State Farm had acted in bad faith. 

The court held that there was no bad faith since State Farm had the ultimate responsibility to pay Medicare if the plaintiff failed to do so.  Accordingly, State Farm was justified in its delay in payment both within the context of the prompt payment statute, as well as the bad faith claim.  In response to plaintiff’s argument that State Farm acted “in pure self-interest,” although the plaintiff may be right, the court held that “to comply with federal law and to protect its own legitimate interest against overpayment is reasonable and certainly is not bad faith.”

It is noteworthy to understand the context of the prompt payment claim.  The prompt payment statute in Kentucky provides for attorney’s fees and interest where “an insurer fails to settle a claim within the time prescribed…and the delay was without reasonable foundation.”  (K.R.S. 304.12-235(2)).  The court, in this case, determined that there was a reasonable basis for State Farm’s delay in payment and would not find for the plaintiff under the statute.  This highlights what this column has previously identified as a significant component in settling cases; that the interest of Medicare must be discussed early and often in the context of any settlement so that no confusion arises.  Many prompt payment statutes do not contain the generous language of the Kentucky statute, allowing a reasonable basis to be brought post-settlement agreement.

If you have any questions regarding these issues, feel free to give me a call or drop me an e-mail at [email protected]. I would be happy to discuss them with you.

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

A few of the bills I had reported on have seen a little action.  Senate Bill 4507, allowing an insurer to rescind or retroactively cancel a policy in certain situations, was passed by the Senate and is currently before the Assembly.  Also, Assembly Bill 4601, requiring an insurer to remove from the claim record missing property if the carrier was reimbursed, passed the Assembly and is currently before the Senate.

Although there is only a limited amount of time for these bills that are currently before both the Senate and Assembly, I felt they are worth mentioning.

Creation of the Adversarial Medical Examination Procedure Act (A673 and S5373)

This bill proposes to amend the CPLR, Ins. Law and Workers’ Compensation Law by changing any language referring to independent medical exams or physical or mental exams to adversarial medical examination.  The sponsors reason that the term Independent Medical Exam is a misnomer because the physician conducting the exam is not in fact independent but instead is paid by a party which has a conflicting interest.  Other than changing the terminology from IME to adversarial medical examination, the legislature would prohibit requiring the individual being examined from producing any documents or producing written answers to questions put to him or her during the exam.  Instead, this information must be obtained through the regular course of discovery.

Change to the General Obligation Law – Settlements in Tort Actions

This bill would require any defendants who have not settled a case with a plaintiff for injury or wrongful death to choose, prior to opening statements in a trial, whether he or she wishes to reduce their liability by the settlement amount, the total consideration actually paid for settlement or by the tortfeasor’s equitable shares of the damages as determined under Article 14.  Currently, a non-settling defendant does not have to make this decision prior to trial, and the sponsor reasons the statute as currently enacted discourages settlement and benefits the non-settling defendant because the defendant can choose whichever approach benefits him the most.

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

06/17/11         Alpine Glass Inc. v. Illinois Farmers Insurance Company
United States Court of Appeals for the Eighth Circuit –Minnesota
Continuing Disputes Between Auto Insurers and Auto Glass Shops
Under Minnesota Law an insured who has purchased auto-glass coverage may select any vendor to repair or replace auto glass.  Minn. Stat. § 72A.201, subd. 6(14)(16).  The insurer is required to pay the vendor directly for auto-glass work and must pay “a competitive price” that is fair and reasonable within the local industry at large.”  The auto glass vendor is precluded from giving an inducement to the insured to purchase its goods or services.  Inducements include “any rebate, gift, prize, bonus coupon, credit, referral fee, trade-in or trade-in payment, advertising or other fee or payment, or any other tangible thing or item of monetary value.”

Alpine is a vendor who repairs and replaces auto glass in Minnesota.  If a customer carries auto-glass insurance, Alpine bills the quoted amount to the customer’s insurer and releases the customer from any obligation to pay the difference between the amount billed and the amount the insurer pays.

Farmers’ insures automobile owners in Minnesota and provides auto-glass coverage.  Every policy that Farmers’ issued to the insureds relevant to this case contained the endorsement MN0008, which states that the maximum that Farmers’ will pay for the repair or replacement of auto glass is the “prevailing competitive price.”  Most of the policies also contained the E1400 endorsement, which states that Farmers’ “limit of liability for loss is the amount necessary to repair or replace safety glass.”

In June 2002 and February 2005, Farmers’ sent blast faxes to Alpine that listed the prices Farmers’ intended to pay vendors for auto-glass goods and services.  The faxes were described as unsolicited price lists that were sent by Farmers’ third-party administrator to auto-glass vendors throughout Minnesota.  Each fax stated that the pricing structure set forth in the document “superseded any prior pricing agreements with Farmers.”  During the relevant time period Farmers’ routinely received invoices from Alpine that did not conform with Farmers’ pricing structure.  Rather than paying Alpine the amount listed on the invoice, Farmers’ remitted a lesser amount, in accordance with the prices listed in its faxes.

Alpine, as assignee to the insureds, filed suit in state court seeking to consolidate the numerous short-pay claims and to compel arbitration under Minnesota’s No-Fault Automobile Insurance Act.  Farmers’ removed the action to federal court and filed a counterclaim.   The counterclaim alleged, among other things, that Alpine violated Minnesota’s anti-incentive statute when it released customers from the difference between the amount Alpine billed and the amount Farmers paid, and that Alpine breached its unilateral contract with Farmers’ when it claimed amounts in excess of the prices listed in the blast faxes.

Alpine moved to dismiss the counterclaim and the district court granted its motion in part, dismissing all claims but the breach of contract claim.  The district court declined to decide which endorsement set Farmers’ limit of liability, the MN 008 or the E1400, leaving the issue to be decided by the arbitrator.  Farmers’ appealed but while the appeal was pending the case went to arbitration. Following the arbitration the arbitrator found that “Farmers was paying a rate not based upon competitive pricing in the auto glass replacement industry in Minnesota, and that Farmers had underpaid Alpine $400,436.63.  The arbitrator did not decide which endorsement applies because “the award was the same regardless of which endorsement was applicable.”  The Appeal was later dismissed for want of jurisdiction.

Farmers’ moved to vacate the arbitrator’s award for failure to apply endorsement MN008.  Both parties agreed that endorsement E1400 was more generous.  Following a lengthy hearing the district court accepted their agreement and determined that the endorsements did not conflict and held that when the policy contains both endorsements, the E1400 governs over the MN008.  The district court also dismissed Farmers’ breach of contract counterclaim.

Farmers’ appealed, and Alpine later moved for an order confirming the arbitration award.  The district court refused to schedule a hearing to confirm the award because it was without jurisdiction to do so.  Alpine moved to dismiss the appeal, contending that judgment was not final because the district court did not confirm the arbitration award.  An administrative panel of the Eighth Circuit denied Alpine’s motion. 

The Eight Circuit later found that it did have jurisdiction to hear Farmers’ appeal because there was nothing left for the district court to do but confirm the arbitration award and enter judgment. 

The Court then went on to dismiss Farmers’ claim based on violation of the anti-incentive statute.  Farmers’ argued that Alpine’s practice of releasing the insured from any obligation to pay the difference between the amounts Farmers’ agreed to pay and the amount billed by Alpine, constituted a violation of the anti-incentive statute.  The court disagreed concluding that the plain language of the statute’ and the ordinary meaning of the terms rebate and credit, did not violate the anti-incentive statute. The court stated that Alpine did not offer a rebate, credit or anything that could be fairly described as a “tangible thing or item of monetary value.” The court noted that the insured did not receive any tangible thing or item, in addition to auto-glass work, that might set Alpine apart from other vendors or otherwise induce the insured to choose Alpine.  The court further noted that Farmers’ pays only for the required auto-glass work, not additional incentives.  The Court agreed with the district court’s characterization of Alpine’s practice as charging a contingent price.

On appeal Farmers’ also argued that the district court erred in granting summary judgment to Alpine on Farmers’ breach of contract counterclaim.  Farmers’ argued that the price lists it faxed to Alpine constituted offers and that Alpine accepted the offers when it performed auto-glass work on behalf of Farmers’ insureds.  Citing to Minnesota law on formation of unilateral contracts the Court held that even if the blast faxes constituted offers to enter into unilateral contract, Alpine rejected the offers when its actions failed to conform to the terms of the offer. The Court pointed out that, among other things, Alpine’s invoices did not conform to Farmers’ pricing structure.  Importantly, in Minnesota the auto glass industry is highly regulated.  The Court determined that although Farmers’ framed the issued as a breach of unilateral contract, the real issue is what constitutes a “competitive price” and who dictates that price.  Minnesota statute § 72A, subd. 6(14), provides that “the insurer must pay the vendor directly and must pay “a competitive price that is fair and reasonable within the local industry at large.”

Finally, Farmers’ argued that the district court erred in holding that the E1400 endorsement established the limit of liability in policies that contained both endorsements.  Farmers’ argued that the Court should reverse the district court, vacate the arbitration award, and remand for new arbitration proceeding with instructions to apply the MN008 endorsement.  The Court disagreed concluding that such further proceedings were unnecessary because the arbitrator applied the “competitive price” standard set forth in MN008 and the Minnesota Statutes.

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

06/15/11         Hermitage Ins. Co. v Art Crating, Inc.
Supreme Court, New York County
Court Artfully Rejects Defendant’s Alleged Good Faith Belief in Non-Liability
On October 13, 2008, while on route from Moscow to New York, a Brice Marden painting entitled “AuCentre” was damaged.  The damage was estimated at $3,000,000. 

On November 25, 2008, over one month after the damage, Defendant, Art Crating, Inc., was notified of the loss and a demand for payment was made.  In response, on December 1, 2008, Art Crating denied the request asserting that it was not involved in the packing or handing of the painting at the time of loss. 

Thereafter, in June 2009, a suit was commenced against Art Crating and, upon receipt of the papers, it turned them over to its insurer, Plaintiff, Hermitage Ins. Co.  This was Hermitage’s first notice of the loss.  Following its investigation, coverage was denied since Art Crating was notified of the loss nearly eight months prior to giving notice to Hermitage. 

In response to Heritage’s motion for summary judgment, Art Crating asserted that its late notice should be excused since it had a good faith belief in non-liability.  It pointed to a telephone conversation Art Crating had with the transportation agent, who apparently told it that another company arranged for this particular transport. 

Nevertheless, the court determined that notice was late and that Art Crating should have reported the loss to Hermitage upon receipt of the November letter, especially as the letter directed Art Crating to notify its insurance company and stated that legal action might ensue.

06/15/11         Matter of State Farm Mut. Auto. Ins. Co. v Apple of Westchester Corp.
Supreme Court, New York County
Court Grants Temporary Stay of Arbitration and a Framed Issue Hearing as to Whether the Subject Vehicle Was in Fact Uninsured
This decision comes from a petition to permanently stay an uninsured motorist arbitration or, in the alternative, temporarily stay the arbitration pending a framed issue hearing as to whether the vehicle involved in the accident was in fact uninsured.  In support of its petition, State Farm presented the Policy Accident Report which indicated the vehicle was insured by National Fire Insurance Company of Hartford (“National Fire”) and the Insurance Activity Report that indicated the vehicle had proof of insurance by Property and Casualty Company of Hartford (“Property”). 

National Fire took the position that it never issued a policy to Apple of Westchester Corp., the owner, while Property took the position that the policy it issued was not renewed. 

In granting the temporary stay and a framed issue hearing, the court determined that State Farm provided admissible evidence that the vehicle was insured at the time of the accident by virtue of the Police Accident Report and the Insurance Activity Report.  While the injured party and the alleged insurers tried to rebut this presumption, the court held that National failed to disclose an exhaustive search to confirm that Apple never had a policy with it and Property failed to submit sufficient proof that notice of non-renewal was served on the Department of Motor Vehicles, as required by law.

06/10/11         Certain Underwriters of Lloyd’s of London v. Virginia Sur. Co., Inc.
Supreme Court, Bronx County
Court Refuses to Dismiss Excess Insurer’s Breach of the Duty of Good Faith and Fair Dealing Action Against Primary Insurer
This case arises out of a scaffolding collapse in which seven people were injured and one was killed.  Defendant, Virginia Sur. Co., Inc. (“Virginia”), issued a CGL policy to Bayrock Group.  In addition to coverage for Bayrock, the policy also provided coverage for the ownership entities, the general contractor and DiFama Concrete, Inc.  Virginia agreed to defend and indemnify all entities. 

Lloyd’s, as the excess insurer for Bayrock Group, brought this action against Virginia alleging that Virginia breached its duty of good faith and fair dealing by, among other things, refusing to implead a potentially responsible third-party.

Virginia immediately moved to dismiss the action asserting that Lloyd’s failed to state a cause of action since it had not paid any money in the defense or settlement of any of the underlying actions.  In other words, without damages there could be no misconduct.

In opposition, Lloyd’s argued that present damages were not necessary as the purpose of a declaratory judgment action is to ascertain the rights and obligations of the parties involved prior to the imposition of damages.  Further, as the demands totaled over forty million dollars (in excess of both the primary and excess layer), the controversy was ripe for adjudication.  It also noted that contractual privity was not required to assert a breach of the duty of good faith and fair dealing against the primary insurer.  Lloyd’s then argued that a breach of the duty by Virginia could be shown as it failed to implead a responsible third- party out of concern that it would then commence contractual and common law claims against DiFama.  Virginia allegedly wanted to avoid this situation as, in addition to the policy it issued to Bayrock, it also issued an employer’s liability policy with unlimited coverage to DiFama. 

Ultimately, the court denied Virginia’s motion to dismiss because, accepting the facts alleged as true, it found that Lloyd’s had sufficiently stated a cause of action.  It also noted that it is not the function of this court to evaluate the merits of the declaratory judgment action.   

05/31/11         Zwelsky v North American Co. for Life & Health Ins. of N.Y.
Supreme Court, Nassau County
Where Insurer Fails to Establish That the Non-Renewal Letter Was Taken to the Post Office, Court Finds Life Insurance Policy Was Not Cancelled
Frank Zwelsky passed away in April 2006. North American asserted that prior to Mr. Zwelsky’s death his life insurance policy had been cancelled for nonpayment.  The court noted that a life insurance policy in New York State may not be terminated or lapse in the year following a default unless, for scheduled premium policies, a notice is mailed at least fifteen days, and not more than forty-five days, prior to the day when such payment becomes due.  As it is the insurance company’s burden to prove cancellation before the insured’s death, the insurer must prove that the notice was sent by establishing the office practices it follows in ensuring that these notices are mailed.

In this case, the court examined North American’s Affidavit as to its mailing procedures.  It found however that the Affidavit neglected to address what happened after the letters left its mail room and were deposited with an outside vendor for addresses and postage. The court noted that mailing refers to depositing letters with the post office, not an outside vendor.  Accordingly, the court determined that North American failed to establish that Mr. Zwelsky’s life insurance policy was cancelled.

04/15/11         Hoyer v. Erie Ins. Co. of N.Y.
Supreme Court, Onondaga County
Insurers Late Notice Excused
Marleen Hoyer and her husband hired AAA Plumbing & Mechanical of CNY, Inc. (“AAA”) to perform some plumbing work at their home.  Apparently, while performing this work an employee of AAA damaged a step leading from Marleen’s residence to the garbage and never told anyone about it.  Shortly thereafter, Marleen was injured when she fell on the step.

Upon receipt of Marleen’s suit papers, Erie Insurance, AAA’s insurer, denied coverage citing late notice.  In response, AAA decided to handle the matter itself and worked out a settlement with Marleen that included a judgment against it in the amount of $100,000.  With the judgment “in hand”, Marleen brought this coverage action against Erie Insurance.

Interestingly, in this case, after hearing oral arguments on both parties’ motions for summary judgment, the court scheduled and held a framed issue fact finding hearing to address the issue of Marleen’s efforts to ascertain the identity of AAA’s insurer and notify it of the original claim.    

In support of Erie Insurance’s motion, it presented the following evidence:

  • Testimony of AAA’s principal that he did not recall receiving any correspondence from Marleen’s counsel and that he felt the lawsuit was “bogus.”
  • A telephonic statement of AAA’s employee, taken by Erie Insurance, that in fact he was the one injured by the damaged step and had told the homeowner to get it fix.  He further felt that the lawsuit was commenced because the Hoyers thought he was going to sue them.

In opposition, and support of cross-motion, Marleen presented contrary evidence:

  • Marleen’s testimony that she notified AAA of her accident and then attempted to contact AAA five times when it failed to send insurance information.
  • Testimony of Marleen’s attorney, paralegal and the attorneys’ law clerk detailing their efforts to ascertain the identity of AAA’s insurer.

Ultimately, the court determined that Erie Insurance’s liability specialist, despite interviewing and taking statements from at least four of its insured’s principals and/or employees, summarily issued a disclaimer of coverage.  The court made two further findings: (1) that the statements provided by AAA could reasonably be interpreted as its good faith belief in non-liability (specifically, its belief that the claim was “bogus”); and (2) Marleen exercised her independent right to give notice by commencing an action; thus, because Marleen, the injured party, exercised her right to give notice, timeliness cannot be judged by the same standard as an insured’s notice.  Accordingly, the court held that Marleen acted diligently in her attempt to secure AAA’s insurance information.  In turn, summary judgment was granted to Marleen.

Note:  We strongly disagree that an injured party gives notice to the insurer by commencing an action.  This appears to run contrary to the established law of this state and, if this were true, there would be significantly fewer late notice cases.   

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

RED FLAGS OF STAGED ACCIDENT “CRASH FOR CASH” SCHEMES

(1)       No police investigation of the accident, or at the accident scene.
(2)       Conflicting statements and information on how the accident occurred.
(3)       One of the vehicles involved was a rental just prior to the accident.
(4)       The vehicles involved in the loss have expired factory warranties.
(5)       The vehicle involved is a leased vehicle with highly excessive mileage.
(6)       The ignition was intact after recovery.
(7)       The title is out of state.
(8)       The ownership of documentation consists of only an assigned title from the previous     owner.
(9)       There is a comprehensive coverage but no collision coverage on a late-model vehicle.
(10)     The vehicle is a total loss, but the owner seeks to retain possession.
(11)     The loss claim includes expensive personal articles in the vehicle.
(12)     Cross reference for chop shops and theft rings.  Is the vehicle a target model or class?
(13)     Was there evidence of another complicit vehicle that aided or caused the accident and sped off (i.e. a “swoop and squat” scheme)?
(14)     Do witnesses or police report damaged or inoperable taillights or brake lights on a vehicle that was rear ended.
(15)     Do “helpful” people appear immediately on scene to recommend or call a particular towing company, collision shop, attorney, etc.
ACROSS BORDERS
Courtesy of the FDCC Website
www.thefederation.org

06/10/11         Czapski v. Maher
Illinois Appellate Court, Sixth Division
Is a Person Who Test Drives a Motor Vehicle a “Customer” Within Meaning of Auto Dealer’s Umbrella and Excess Policies?
Defendant Christopher Maher was test-driving a BMW automobile owned by Motor Werks of Barrington, Inc. accompanied by Motor Werks’ salesperson Roger Czapski who was seated in the BMW’s front passenger seat. Czapski was killed when the BMW collided with another vehicle. The collision resulted in a wrongful death and personal injury claim against Maher. The underlying wrongful death claim went to trial resulting in a $13.72 million judgment against defendant Maher. The dealership, Motor Werks, had purchased a $5 million umbrella policy from defendant National Casualty Company and a $10 million excess policy from defendant Federal Insurance Company. These policies were purchased to protect defendant Motor Werks from liability in excess of its $1 million primary policy. The policy stated that the term “insured” does not include the dealership’s “customers”. Thus, the key issue was whether the test-driver of the motor vehicle was a “customer” within the policy terms.

The Illinois Appellate Court rejected looking at dictionary definitions of the term “customer”. Rather, the Court concluded that the plain and ordinary meaning of the term “customer” in the context of an insurance policy includes a test-driver of an automobile when the dealership gives permission to test-drive the vehicle. The Court did not find the term “customer” in this context to be subject to more than one reasonable interpretation. The Court found that courts throughout many jurisdictions, including Illinois, refer to a test-driver as a “customer”. The auto dealership and insurer seek to exclude coverage for test-drivers of automobiles when they use the term “customer”, and the general public should be well aware that test-drivers are included in the term “customer”. In sum, the plain and ordinary meaning of the term “customer” as used in an insurance policy issued to an automobile dealership would reasonably include one who test-drives an automobile before purchase. Thus, no coverage was provided under the National Casualty and Federal Insurance policies which excluded coverage for “customers” of the dealership.
Submitted by: Stacy Broman, Meagher & Geer, PLLP

REPORTED DECISIONS
Gray-Line of Niagara Falls, Inc. v. Cincinnati Insurance Companies

Appeal from an order and judgment (one paper) of the Supreme Court, Erie County (Frank A. Sedita, Jr., J.), entered October 28, 2010 in a declaratory judgment action. The order and judgment granted plaintiff's motion for summary judgment and denied the cross motion of defendant Cincinnati Insurance Companies for summary judgment.

GOLDBERG SEGALLA LLP, BUFFALO (BRIAN R. BIGGIE OF COUNSEL), FOR DEFENDANT-APPELLANT.
BOUVIER PARTNERSHIP, LLP, BUFFALO (NORMAN E.S. GREENE OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
CREIGHTON, JOHNSEN & GIROUX, BUFFALO (ANNA FALICOV OF COUNSEL), FOR DEFENDANT-RESPONDENT.
It is hereby ORDERED that the order and judgment so appealed from is unanimously reversed on the law without costs, plaintiff's motion is denied, the cross motion is granted and judgment is granted in favor of defendant Cincinnati Insurance Companies as follows:

It is ADJUDGED and DECLARED that defendant Cincinnati Insurance Companies has no duty to defend or indemnify plaintiff in the underlying action in federal court.
Memorandum: Plaintiff commenced this action seeking judgment declaring that Cincinnati Insurance Companies (defendant) is obligated to defend and indemnify it in the underlying action commenced in federal court by defendant Ann Marie Trusso, one of plaintiff's employees. In that underlying action, Trusso sought damages for, inter alia, injuries sustained by her when she was sexually assaulted by a person also employed by plaintiff. We agree with defendant that Supreme Court erred in granting plaintiff's motion for summary judgment against defendant. The commercial liability policy issued by defendant to plaintiff excludes coverage where "[a]n employee' of the insured sustain[s a bodily injury] in the workplace.' " There is no dispute that Trusso was plaintiff's employee at the time of the incident and that she was working at the tour booth pursuant to plaintiff's directive when the incident occurred. Thus, the exclusion applies as a matter of law (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Plaintiff and Trusso argue that coverage is nonetheless available because Trusso's injuries were unrelated to the performance of employment duties. We note that there is also a separate policy exclusion for bodily injuries to "[a]n employee' of the insured arising out of the performance of duties related to the conduct of the insured's business." Inasmuch as the policy separately excludes coverage for injuries that occur in the workplace as well as injuries that are work-related, the fact that Trusso's injuries were unrelated to the performance of employment duties is of no moment (see generally Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 5 NY3d 157, 162, rearg denied 5 NY3d 825; Progressive Halcyon Ins. Co. v Giacometti, 72 AD3d 1503, 1506).

Obomsawin v. Baily, Haskell & Lalonde Agency, Inc..

Appeal from an order of the Supreme Court, Oneida County (Norman I. Siegel, A.J.), entered August 4, 2010. The order granted the motion of defendant to dismiss the complaint.

GUSTAVE J. DETRAGLIA, JR., UTICA, FOR PLAINTIFFS-APPELLANTS.
KEIDEL, WELDON & CUNNINGHAM LLP, SYRACUSE (HOWARD S. KRONBERG OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs own a small business that they operate out of a barn on their residential property. Defendant procured commercial general liability insurance coverage and supplemental commercial inland marine insurance coverage for two pieces of heavy equipment used for the business, and another insurance agent obtained first-party property damage coverage for plaintiffs' personal and business property. A fire thereafter destroyed the barn and its contents, including the property of plaintiffs' customers. The loss sustained by plaintiffs was not fully covered under the commercial general liability or property damage policies, and they commenced this action alleging negligence, breach of contract and negligent misrepresentation based upon defendant's alleged failure to provide appropriate advice with respect to their insurance needs and to secure sufficient coverage for their business property and the property of their customers.
Supreme Court properly granted defendant's motion seeking summary judgment dismissing the complaint. "[A]n insurance agent's duty to its customer is generally defined by the nature of the customer's request for coverage" (M & E Mfg. Co. v Frank H. Reis, Inc., 258 AD2d 9, 11; see Madhvani v Sheehan, 234 AD2d 652, 654). "Absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide[] or direct a client to obtain additional coverage" (Loevner v Sullivan & Strauss Agency, Inc., 35 AD3d 392, 393,lv denied 8 NY3d 808; see Murphy v Kuhn, 90 NY2d 266, 270; Chaim v Benedict, 216 AD2d 347). Here, defendant met its initial burden on the motion by submitting evidence establishing that plaintiffs never made a specific request for additional coverage and that the services it provided to plaintiffs did not give rise to a special relationship (see Loevner, 35 AD3d at 393; M & E Mfg. Co., 258 AD2d at 12-13). The affidavit of plaintiff Robbin Obomsawin submitted in opposition to the motion is insufficient to raise a triable issue of fact (see generally Loevner, 35 AD3d at 393).
In view of our determination, we do not address the alternative ground upon which the court granted defendant's motion, i.e., that the action is time-barred.
Barres v. Riker


Appeal from an order of the Supreme Court, Oneida County (Anthony F. Shaheen, J.), entered October 18, 2010 in a personal injury action. The order, insofar as appealed from, denied in part the motion of defendant for summary judgment.

BURKE, SCOLAMIERO, MORTATI & HURD, LLP, ALBANY (JEFFREY E. HURD OF COUNSEL), FOR DEFENDANT-APPELLANT.
DAVID M. GIGLIO AND ASSOCIATES LLC, UTICA (ALYSSA O'NEIL OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting that part of the motion for summary judgment dismissing the complaint insofar as the complaint alleges that plaintiff sustained a serious injury under the 90/180-day category of serious injury within the meaning of Insurance Law § 5102 (d) and dismissing the complaint to that additional extent and as modified the order is affirmed without costs.
Memorandum: Plaintiff commenced this action seeking damages for injuries she allegedly sustained while she was a passenger in a vehicle that was struck by a vehicle driven by defendant. It is undisputed that, at the time of the accident, plaintiff was recovering from surgery to her left shoulder, which had been performed approximately one month before the accident. Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury under any of the categories of Insurance Law § 5102 (d) set forth in the complaint, and Supreme Court granted only that part of the motion with respect to the significant disfigurement category of serious injury. We note at the outset that the only injury addressed by the parties in their motion papers before Supreme Court and on appeal is the alleged injury to plaintiff's left shoulder, despite the fact that the complaint also alleges that plaintiff's hips, legs and cervical spine also were affected. We thus address on appeal only the alleged injury to plaintiff's left shoulder (see generally Ciesinski v Town of Aurora, 202 AD2d 984).
With respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury allegedly sustained by plaintiff, we conclude that the court properly denied those parts of defendant's motion. Whether a limitation of use or function is consequential or significant, that is, important, "relates to medical significance and involves a comparative determination of the degree or qualitative nature of an injury based on the normal function, purpose and use of the body part" (Dufel v Green, 84 NY2d 795, 798). Those categories require limitations that are more than
" minor, mild or slight' " (Toure v Avis Rent A Car Sys., 98 NY2d 345, 353, quoting Licari v Elliott, 57 NY2d 230, 236), and the permanency of an injury alone is not sufficient to render it a permanent consequential limitation of use (see Paolini v Sienkiewicz, 262 AD2d 1020). Here, there are issues of fact on the record before us with respect to those two categories of serious injury relating to plaintiff's left shoulder. We note in particular that plaintiff testified at her deposition that her left shoulder is dislocated twice a week and that the dislocations are painful, and her treating physician stated in an affidavit that the condition was permanent and that the injury significantly limited her activity level. We reject defendant's conclusory contention that a person experiencing two shoulder dislocations a week suffers only a minor, mild, or slight inconvenience.
We agree with defendant, however, that the court erred in denying that part of his motion with respect to the 90/180-day category of serious injury, and we therefore modify the order accordingly. Plaintiff testified at her deposition that she missed only a few days of school and that her injuries did not affect her school work, and we note in addition that plaintiff's first reported shoulder dislocation after the accident occurred more than 180 days after the accident at issue on appeal (see generally Chmiel v Figueroa, 53 AD3d 1092, 1093).
In the Matter of AIU Insurance Company v. Hibbert

DECISION & ORDER
In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of an underinsured motorist claim, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Phelan, J.), entered June 7, 2010, as denied that branch of its petition to which was to permanently stay arbitration.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the petition which was to permanently stay arbitration is granted.

On January 31, 2004, the respondents were involved in an automobile accident when the vehicle in which they were traveling was struck in the rear by a motor vehicle, which was propelled into the respondents' vehicle by a vehicle insured by nonparty Travelers Insurance Company (hereinafter Travelers).

The respondents' vehicle was insured under a policy of insurance issued by the petitioner AIU Insurance Company (hereinafter AIU) to the respondent Delroy Hibbert. The other passengers in the insured vehicle at the time of the accident, which includes two of the other respondents, were considered "insured" persons under the provisions of the AIU policy.

Travelers, as the tortfeasor's insurer, paid $15,000 to respondent Gina Stewart, $5,000 to the respondent Delroy Hibbert, and $5,000 to the respondent Phyllis Hibbert. It also paid $25,000 to another passenger in the insured vehicle, nonparty Sharon Stewart, exhausting its bodily injury liability coverage of $50,000.

Subsequently, the respondents made a demand for arbitration of their claims under the AIU policy's endorsement for supplementary uninsured/underinsured motorist (hereinafter SUM) benefits in the total sum of $50,000. The AIU policy was underwritten with SUM benefits in the amount of $25,000 per person and $50,000 per accident, which was equal to its bodily injury liability limits.
AIU filed a petition which sought, in part, to permanently stay the arbitration. The Supreme Court denied that branch of AIU's petition seeking to stay the arbitration. We reverse.

Since the AIU policy had identical bodily injury liability policy limits as the Travelers policy issued to the tortfeasor, the tortfeasor's vehicle was not underinsured (see Insurance Law § 3420[f][2][A]; Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 607-608; Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 684). Payment by Travelers to the other passenger in the insured vehicle in the amount of $25,000 did not render the tortfeasor's vehicle "underinsured" for the purpose of triggering the AIU SUM endorsement since the other passenger was also an "insured" under the AIU policy and not an "other person" (11 NYCRR 60-2.3[f]; Matter of Allstate Ins. Co. v Rivera, 12 NY3d at 609-610). Therefore, AIU correctly contends that the Travelers bodily injury policy limits were equal to its own since it did not have to reduce the Travelers policy limits by payments made on behalf of the tortfeasor to any of the occupants in the AIU insured vehicle (see Matter of Allstate Ins. Co. v Rivera, 12 NY3d at 610).

Moreover, AIU was entitled to offset the $50,000 received by its insureds from Travelers against its own SUM limits, thereby precluding any recovery under the SUM endorsement (see 11 NYCRR 60-2.1[c]).
East 115th Street Realty Corp.v. Focus & Struga Building Developers LLC

Ropers Majeski Kohn Bentley PC, New York (Anthony D.
Grande of counsel), for appellant.
Mound Cotton Wollan & Greengrass, New York (Kevin F.
Buckley of counsel), for respondent.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered March 12, 2010, which, insofar as appealed from, granted the motion of defendant Great American Insurance Company of New York (GAIC) for summary judgment dismissing plaintiff's third cause of action alleging breach of an insurance contract, unanimously affirmed, with costs.

The motion court determined that the policy was void ab initio due to material misrepresentations on the insurance application submitted by defendant-appellant Abad Consulting (broker).
Insurance Law § 3105 permits an insurer to rescind a policy where the application contains a material misrepresentation (see American Sur. Co. of N.Y. v Patriotic Assur. Co., Ltd., 242 NY 54, 64 [1926]). Here, the application stated that no structural alterations to the subject building would be done, which plaintiff's principal admitted was untrue. Although other documents submitted with the initial application had some indication that there would be structural work, in response to GAIC's request for "clarification," it received an e-mail stating that "the broker advises there will be no structural changes."
GAIC submitted an affidavit of its underwriter, along with the relevant underwriting guidelines, establishing that it would not have issued the policy in this form had it known the true state of affairs. This was sufficient to establish GAIC's entitlement to judgment as a matter of law (see Dwyer v First Unum Life Ins. Co., 41 AD3d 115 [2007]).

We have considered the broker's remaining contentions, including that further discovery should have been conducted before the motion was decided, and find them unavailing.

Carballo v. Pacheco


Silvia M. Surdez, P.C., Astoria, N.Y. (Kevin J. Perez of counsel),
for appellant.
Kaplan, Hansen, McCarthy, Adams, Finder & Fishbein, Lake
Success, N.Y. (Alease A. Brown of
counsel), for respondent Fernando M.
Pacheco.
Russo, Apoznanski & Tambasco, Westbury, N.Y. (Susan J.
Mitola of counsel), for respondents
Christina Cornejo and Maria F.
Cornejo.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Winslow, J.), entered April 14, 2010, which granted the separate motions of the defendant Fernando M. Pacheco, and the defendants Christina Cornejo and Maria F. Cornejo, for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with one bill of costs payable by the defendants appearing separately and filing separate briefs, and the motions for summary judgment dismissing the complaint are denied.
The defendants met their prima facie burdens of showing that the plaintiff, who allegedly sustained injuries to the lumbar and cervical regions of her spine and her left shoulder 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 competent medical evidence establishing, prima facie, that the alleged injuries to the lumbar region of the plaintiff's spine did not constitute a serious injury 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 Jilani v Palmer, 83 AD3d 786). The defendants also submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical region of the plaintiff's spine and the plaintiff's left shoulder did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Cantave v Gelle, 60 AD3d 988; Rodriguez v Huerfano, 46 AD3d at 795). The defendants also submitted evidence establishing, prima facie, that the plaintiff did not have an "injury or impairment . . . which prevent[ed]" her "from performing substantially all of the material acts which constitute[d]" her "usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment" (Insurance Law § 5102[d]; see Ranford v Tim's Tree & Lawn Serv., Inc., 71 AD3d 973, 974).
However, in opposition, the plaintiff, through her medical experts, raised triable issues of fact. Accordingly, the Supreme Court should have denied the defendants' separate motions for summary judgment dismissing the complaint insofar as asserted against each of them.
Messiana v. Drivas

Dinerman, Bergam & Dinerman, LLP, New York, N.Y. (Barry M.
Dinerman 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 Daniel Messiana appeals (1) from an order of the Supreme Court, Kings County (Silber, J.), dated May 17, 2010, which granted that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by him on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2), as limited by his brief, from so much of an order of the same court dated December 9, 2010, as, upon reargument, adhered to the original determination.
ORDERED that the appeal from the order dated May 17, 2010, is dismissed, as that order was superseded by the order dated December 9, 2010, made upon reargument; and it is further,
ORDERED that the order dated December 9, 2010, is reversed insofar as appealed from, on the law, upon reargument, the order dated May 17, 2010, is vacated, and that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Daniel Messiana is denied; and it is further,
ORDERED that one bill of costs is awarded to the plaintiff Daniel Messiana.
The defendants established, prima facie, that the plaintiff Daniel Messiana (hereinafter the appellant), who allegedly sustained injuries to, inter alia, the lumbosacral and cervical regions 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 that accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants submitted competent medical evidence establishing, prima facie, among other things, that the alleged injuries to the lumbosacral and cervical regions of the appellant's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795).
However, in opposition, the appellant submitted competent medical evidence raising a triable issue of fact as to whether the alleged injuries to the lumbosacral and cervical regions of his spine constituted serious injuries 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, 1094-1095). He also provided an adequate explanation for the cessation of his medical treatment (see Abdelaziz v Fazel, 78 AD3d 1086).
Contrary to the determination of the Supreme Court, in opposing the defendants' motion, the appellant was not obligated to "address" the issue of whether the alleged injuries to the lumbosacral and cervical regions of his spine were caused by the subject accident, as opposed to a prior accident he was involved in, in which he sustained injuries to those regions. As the appellant pointed out when moving for leave to reargue, the defendants did not argue, or submit any evidence on their motion for summary judgment to establish, that the alleged injuries to those regions were caused by the prior accident. Thus, the defendants did not make a prima facie showing that those alleged injuries were caused by the prior accident (see Hightower v Ghio, 82 AD3d 934, 935). "Therefore, the burden did not shift to the [appellant] to raise a triable issue of fact as to whether [those alleged] injuries were caused by the subject accident" (id. at 935; see Stukas v Streiter, 83 AD3d 18, 24-25; cf. Franchini v Palmieri, 1 NY3d 536).
Accordingly, the Supreme Court, upon reargument, should have vacated the order dated May 17, 2010, and thereupon denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by the appellant.
Merchants Mutual Ins. Co. v. New York State Ins. Fund

Appeal from an order and judgment (one paper) of the Supreme Court, Erie County (Donna M. Siwek, J.), entered July 13, 2010. The order and judgment granted the motion of plaintiff for summary judgment, denied the cross motion of defendant New York State Insurance Fund for summary judgment and awarded money damages to plaintiff.

TREVETT CRISTO SALZER & ANDOLINA P.C., ROCHESTER (MARK M. CAMPANELLA OF COUNSEL), FOR DEFENDANT-APPELLANT.
HISCOCK & BARCLAY, LLP, ROCHESTER (ANTHONY J. PIAZZA OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order and judgment so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking, inter alia, to recover funds from New York State Insurance Fund (defendant) based on defendant's alleged failure to indemnify Jerrick Waterproofing Co., Inc. (Jerrick Waterproofing), a third-party defendant in the underlying wrongful death action. Jerrick Waterproofing held an insurance policy issued by defendant that provided unlimited employer's liability coverage for employees subject to the Workers' Compensation Law, and Jerrick Waterproofing also held a commercial umbrella insurance policy issued by plaintiff that provided excess coverage upon the exhaustion of all other insurance policy limits. The plaintiff in the underlying wrongful death action sought damages for injuries sustained by the decedent, a construction worker employed by Jerrick Waterproofing, when he fell from scaffolding on a work site where T & G Contracting, Inc. (T & G) was the general contractor and Jerrick Waterproofing was a subcontractor. The wrongful death action against T & G and the owners of the property on which the accident occurred settled for approximately $2.2 million. All of the parties to the instant action contributed toward that settlement.

Defendant appeals from an order and judgment granting plaintiff's motion for summary judgment on the complaint against defendant and awarding plaintiff damages in the amount of $600,000. We conclude that Supreme Court properly granted the motion. Contrary to its contention, defendant was obligated to provide unlimited coverage for the accident, despite an exclusion in its policy for liability assumed under a contract. Although T & G was granted summary judgment on its contractual indemnification cause of action against Jerrick Waterproofing in the underlying third-party action, T & G's common-law indemnification cause of action in that third-party action was still viable at the time of the settlement. "The fact that [T & G's] recovery against [Jerrick Waterproofing] could have been based upon a contract of indemnity does not preclude the existence also of a common-law right to indemnity" (Aetna Cas. & Sur. Co. v Lumbermens Mut. Cas. Co., 136 AD2d 246, 248, lv denied 73 NY2d 701; see O'Dowd v American Sur. Co. of N.Y., 3 NY2d 347, 353). Where, as here, "the facts of the case are such that the insured's liability exists on one theory as well as another and one of the theories results in liability within the coverage, the insured may avail itself of the coverage" (Hawthorne v South Bronx Community Corp., 78 NY2d 433, 438).

Defendant further contends that the otherwise unlimited coverage provided by its policy was limited by language on the declarations page of the excess insurance policy issued by plaintiff, indicating that defendant's policy limit for bodily injury caused by an accident was $100,000. We reject that contention. An excess insurer may be bound by a misidentification of an underlying insurer's liability limit (see generally Liberty Mut. Ins. Co. v Insurance Co. of State of Pa., 43 AD3d 666, 668). Here, however, the declarations page of the policy issued by plaintiff unambiguously excludes coverage in situations where the Workers' Compensation Law is applicable, and the language with respect to defendant's policy limit for bodily injury caused by an accident is applicable only to employees not subject to the Workers' Compensation Law. Thus, defendant was obligated to provide unlimited coverage to Jerrick Waterproofing with respect to its liability for decedent's accident, and the obligation of plaintiff to provide excess coverage was never triggered.
Alvarado-Vargas v. 6422 Holding Corp.

Babchik & Young LLP, White Plains, N.Y. (Ephraim Fink of
counsel), for appellant.
Marshall, Conway, Wright & Bradley, P.C., New York, N.Y.
(Tara L. Wolf of counsel), nonparty-
respondent pro se.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant 6422 Holding Corp. appeals from an order of the Supreme Court, Kings County (Knipel, J.), dated October 22, 2010, which, inter alia, granted the motion of nonparty Marshall, Conway, Wright & Bradley, P.C., pursuant to CPLR 321(b)(2) for leave to withdraw as counsel of record for the defendant Forthright Construction, Inc.

ORDERED that the order is affirmed insofar as appealed from, with costs.
In this personal injury action, the nonparty law firm Marshall, Conway, Wright & Bradley, P.C. (hereinafter the law firm), was assigned to represent the defendant Forthright Construction, Inc. (hereinafter Forthright), by Forthright's insurance carrier, the nonparty Tower Insurance Company of New York (hereinafter the insurer). In March 2010 the Supreme Court granted the plaintiff's motion for summary judgment on the issue of liability against the defendants Forthright and 6422 Holding Corp. (hereinafter 6422), as well as 6422's separate motion for summary judgment on its cross claim against Forthright for contractual indemnification. In September 2010 a judgment was rendered in a separate action declaring that the insurer is not obligated to defend or indemnify Forthright in the instant action (Tower Ins. Co. of N. Y. v Forthright Constr., Inc., Supreme Court, New York County, Index No. 108006/09) . Shortly thereafter, the law firm moved for leave to withdraw as Forthright's counsel. Forthright did not oppose the motion, but 6422 submitted opposition, contending that it would be prejudiced by the law firm's withdrawal, insofar as it would negatively affect 6422's ability to conduct asset discovery against Forthright on its cross claim for indemnification. We affirm the order insofar as appealed from.

"The decision to grant or deny permission for counsel to withdraw lies within the discretion of the trial court, and the court's decision should not be overturned absent a showing of an improvident exercise of discretion" (Cashdan v Cashdan, 243 AD2d 598, 598; see Musachio v Musachio, 80 AD3d 738; Ben-Yu Zhan v Sun Wing Wo Realty Corp., 208 AD2d 668). Here, in light of Forthright's lack of opposition to its own law firm's motion for leave to withdraw as its counsel, and the undisputed fact that the insurer will no longer pay the law firm's legal fees for Forthright's defense, the Supreme Court providently granted the law firm's motion to withdraw (see Winters v Winters, 25 AD3d 601; Ben-Yu Zhan v Sun Wing Wo Realty Corp., 208 AD2d at 668; cf. Brothers v Burt, 27 NY2d 905; Iacobellis v A-1 Tool Rental, Inc., 65 AD3d 1015). Under the circumstances of this case, the contentions of 6422 regarding the alleged prejudice it will suffer in pursuing its claims after the law firm's withdrawal do not require denial of the law firm's motion (see Charles Weiner Corp. v Davis Corp., 113 Misc 2d 263, 266; cf. Monaghan v Meade, 91 AD2d 1014, 1015).

Progressive Northeastern Ins. Co. v. Vanderpool


Kaplan, Hanson, McCarthy, Adams, Finder & Fishbein, Yonkers,
N.Y. (Michael A. Zarkower of counsel), for appellant.
John A. Cannistraci, New York, N.Y., for respondent-respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for underinsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Putnam County (Nicolai, J.), dated November 15, 2010, which, after a framed-issue hearing, denied that branch of the petition which was to permanently stay the arbitration and directed the parties to proceed to arbitration. By decision and order on motion dated December 20, 2010, this Court granted the petitioner's motion to stay arbitration pending hearing and determination of this appeal.

ORDERED that the order is affirmed, with costs.

On November 12, 2005, the respondent Wayne Vanderpool, a police officer, attempted to execute an arrest warrant on additional respondent Yvette Pullum at her home. Rather than submit to the arrest, Pullum got into her car and drove away. In the process, Pullum struck and injured Vanderpool with her vehicle. Pullum eventually pleaded guilty to assault in the second degree (see Penal Law § 120.05[3]) with respect to the incident. Penal Law § 120.05(3) contains as an element that the defendant intended to prevent a police officer from performing a lawful duty and thereby caused the officer to suffer physical injury. It does not contain as an element that the defendant intended to cause physical injury to the officer. In addition, at her plea proceeding, Pullum did not admit that she intended to cause physical injury to Vanderpool. Vanderpool eventually filed a claim with his automobile insurance carrier, Progressive Northeastern Insurance Company (hereinafter the petitioner), seeking supplemental underinsured motorist coverage under the supplemental uninsured/underinsured motorist (hereinafter SUM) endorsement on his automobile insurance policy. The petitioner disclaimed coverage on the ground that Vanderpool's injuries were not caused by an "accident," as that term is used in the SUM endorsement, and Vanderpool sought arbitration. The petitioner commenced this proceeding, inter alia, to permanently stay arbitration. After a framed-issue hearing, the Supreme Court denied the petition and directed the parties to proceed to arbitration. The petitioner appeals.

The Court of Appeals recently held in State Farm Mut. Auto. Ins. Co. v Langan (16 NY3d 349) that, for the purposes of a SUM endorsement, an occurrence should be viewed from the perspective of the insured, rather than of the tortfeasor. When, from the insured's perspective, the occurrence was " unexpected, unusual and unforeseen'" (id. at 355 [some internal quotation marks omitted], quoting Miller v Continental Ins. Co., 40 NY2d 675, 677 [internal quotation marks omitted]), it qualifies as an "accident." Thus, the Court held in Langan that, even though the holder of SUM coverage was the victim of an intentional assault, there had been an "accident" because the assault was unexpected or unintended from the insured's perspective, and SUM coverage was triggered (see Langan, 16 NY3d at 355).

Here, from Vanderpool's perspective, his encounter with Pullum's vehicle was unexpected, unusual, and unforeseen. Consequently, whatever Pullum's intent, the occurrence was an "accident" within the meaning of the SUM endorsement of Vanderpool's policy. Consequently, the order denying the petition and directing the parties to proceed to arbitration was properly affirmed (id. at 356-357).

Vantage of Jackson, LLC v. Everest National Insurance Co.


Devitt Spellman Barrett, LLP, Smithtown, N.Y. (John M. Denby of
counsel), for appellant.
Carroll, McNulty & Kull LLC, New York, N.Y. (Denise M.
Marra of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify Vantage of Jackson, LLC, in an underlying action entitled Mendoza v Vantage at Jackson, LLC, pending in the Supreme Court, Queens County, under Index No. 26456/08, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Mahon, J.), dated June 8, 2010, as granted the defendant's renewed cross motion for summary judgment.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the defendant's renewed cross motion for summary judgment is denied.

The defendant issued a commercial general liability insurance policy to the plaintiff in connection with construction work at certain property in Long Island City (hereinafter the property). The policy contained an exclusion (hereinafter the exclusion), which excluded coverage, inter alia, where the claimed injury and liability resulted from, or were caused by, the work of a contractor, subcontractor, or sub-subcontractor, if the contractor, subcontractor, or sub-subcontractor failed to have in force an insurance policy including liability coverage for the benefit of the plaintiff, as well as for the contractor, subcontractor, or sub-subcontractor, for indemnification and contribution claims in the event of a loss. A worker on the property sustained personal injuries, and commenced an underlying personal injury action against the plaintiff. After the plaintiff submitted a claim to the defendant, the defendant disclaimed coverage, relying on the exclusion. The plaintiff commenced this action, inter alia, for a judgment declaring that the defendant was obligated to defend and indemnify the plaintiff in the underlying action. In an order dated March 5, 2010, the Supreme Court, inter alia, denied the defendant's cross motion for summary judgment, without prejudice to renew. In the order appealed from, the Supreme Court, inter alia, granted the defendant's renewed cross motion for summary judgment. We reverse that order insofar as appealed from.

"To be relieved of its duty to defend on the basis of a policy exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case'" (Great Am. Restoration Servs., Inc. v Scottsdale Ins. Co., 78 AD3d 773, 776, quoting Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383). Here, the defendant failed to establish its prima facie entitlement to judgment as a matter of law by demonstrating that the exclusion applied. Although the defendant argued that the exclusion was applicable because the plaintiff was not covered under its contractor's policy of insurance, the defendant failed to include the contractor's policy with its motion papers (cf. Empire Ins. Co. v Insurance Corp. of N.Y., 40 AD3d 686, 688; Zurich Am. Ins. Co. v Argonaut Ins. Co., 204 AD2d 314, 315; see also American Motorists Ins. Co. v Greater N.Y. Mut. Ins. Co., 255 AD2d 190). Instead, it only included a conclusory and unsworn letter from the contractor's insurer to the plaintiff, disclaiming coverage. This was insufficient to establish that the plaintiff was not covered by its contractor's policy and, thus, insufficient to meet the defendant's prima facie burden of demonstrating that the exclusion applied. Accordingly, the Supreme Court should have denied the defendant's renewed cross motion for summary judgment.

In light of our determination, we need not address the plaintiff's remaining contentions.
Soho v. Konate


Budin, Reisman, Kupferberg & Bernstein, LLP, New York
(Adam S. Bernstein of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for respondents.
Order, Supreme Court, Bronx County (MaryAnn Brigantti-Hughes, J.), entered July 28, 2009, which granted defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.
On February 4, 2006, plaintiff, then 75 years old, fell as she attempted to enter a taxi driven by defendant Konate. Konate exited the car in an effort to help plaintiff. However, he had mistakenly left the taxi in drive and it subsequently moved forward and struck plaintiff in the leg. Plaintiff commenced this action against defendants alleging that she sustained serious injuries.
Defendants established their prima facie entitlement to judgment as a matter of law by submitting, inter alia, the affirmation of an orthopedic surgeon who concluded that based upon an examination of plaintiff and a review of her medical records, plaintiff was not seriously or permanently injured and that her right knee and right shoulder complaints were not causally related to the accident, but were the results of her weight and pre-existing degenerative conditions consistent with her age (see Franchini v Palmeri, 1 NY3d 536 [2003]; Kerr v Klinger, 71 AD3d 593 [2010]). Thus, the orthopedist's opinion regarding causation was neither conclusory nor unsupported and was sufficient to establish defendants' prima facie case (see Lopez v American United Transp., Inc., 66 AD3d 407 [2009]; compare Frias v James, 69 AD3d 466 [2010]).
In opposition, plaintiff failed to raise a triable issue of fact. While plaintiff's medical records that were relied upon by defendants were properly before the court, plaintiff may not rely upon the unaffirmed medical report of the physician who examined her three years after the accident (see Bent v Jackson, 15 AD3d 46, 48 [2005]), and her remaining evidence failed to rebut defendant's prima facie showing. Indeed, plaintiff failed to provide objective evidence of contemporaneous limitations to her right knee and right shoulder as a result of the accident (see Jean v Kabaya, 63 AD3d 509 [2009]; Valentin v Pomilla, 59 AD3d 184, 185 [2009]), a prerequisite to establishing serious injury even where the plaintiff has undergone surgery (Jean, 63 AD3d at 510). Even though Dr. Nelson noted limitations to plaintiff's knee and shoulder ten days after the accident, the doctor's report is deficient because it does not compare the findings to the standards for normal ranges of motion (Yang v Alston, 73 AD3d 562 [2010]). Further, Dr. Bishow's operative report is not contemporaneous because he did not examine plaintiff until five months after the accident (see Cabrera v Gilpin, 72 AD3d 552 [2010]; Toulson v Young Han Pae, 13 AD3d 317 [2004]). Plaintiff's physicians also failed to address the existence of pre-existing degenerative conditions as the cause of plaintiff's symptoms and failed to explain how the alleged serious injuries of plaintiff's right shoulder and right knee might not have been related to her age or weight (see Lopez, 66 AD3d at 407). Further, plaintiff's physicians failed to address the fact that merely because plaintiff had surgery for a meniscal
tear does not establish that the injury was caused by the accident (see Ortiz v Ash Leasing, Inc., 63 AD3d 556, 557-558 [2009]).
Harrigan v. Kemmaj


Greenberg & Massarelli, LLP, Purchase (Crystal Massarelli of
counsel), for appellant.
Cohen, Kuhn & Associates, New York (Ira Goldman of
counsel), for respondent.
Order, Supreme Court, Bronx County (Patricia Anne Williams, J.), entered September 14, 2010, which granted defendant's motion for summary judgment dismissing the complaint on the threshold issue of serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, without costs, the motion denied as to the 90/180-day claim, and otherwise affirmed, without costs.
Defendant made a prima facie showing that plaintiff did not sustain permanent injuries as a result of the April 2007 automobile accident by submitting an affirmed report by an orthopedist who examined plaintiff in March 2009 and found full range of motion and no abnormalities in her knee (see Porter v Bajana, 82 AD3d 488 [2011]; DeJesus v Paulino, 61 AD3d 605, 607 [2009]).
In response, plaintiff failed to raise an issue of fact as to the permanent nature of her injuries. We note that the August 2007 post-operative report by plaintiff's surgeon indicates no restrictions in range of motion (see Pou v E & S Wholesale Meats, Inc., 68 AD3d 446 [2009]).
Defendant failed to show prima facie that plaintiff did not sustain a 90/180-day injury.
Velez v. Almonte


Law Office of Bruce A. Newborough, Brooklyn (Bruce A.
Newborough of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Stacy R. Seldin of counsel), for respondent.
Order, Supreme Court, Bronx County (Alexander W. Hunter, Jr., J.), entered December 21, 2009, which, in an action for personal injuries, granted defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.
Defendants established their entitlement to judgment as a matter of law by showing that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Defendants submitted, inter alia, affirmed reports from a radiologist, who reviewed plaintiff's MRI films, and found preexisting degenerative disease in plaintiff's knees and spine that was consistent with her age and weight (see Lemos v Giacomo Mgt., Inc., 82 AD3d 602 [2011]; Amamedi v Archibala, 70 AD3d 449 [2010], lv denied 15 NY3d 713 [2010]). Plaintiff's radiologist and treating physician also noted findings of degenerative disease.
In opposition, plaintiff failed to raise a triable issue of fact, as she did not present evidence rebutting the asserted lack of causation (see Valentin v Pomilla, 59 AD3d 184, 186 [2009]). The statement by plaintiff's treating physician that plaintiff's injuries were caused by the accident was conclusory and insufficient to defeat the motion (see Ortiz v Ash Leasing, Inc., 63 AD3d 556, 557 [2009]). Nor did plaintiff raise a triable issue of fact with respect to her 90/180-day claim in the absence of evidence that her injuries were related to the accident (see Reyes v Esquilin, 54 AD3d 615 [2008]).
Cues v. Tavarone


Harmon, Linder, & Rogowsky, New York, N.Y. (Mitchell Dranow
of counsel), for appellant.
Nesci-Keane, PLLC, Hawthorne, N.Y. (Jason M. Bernheimer of
counsel), for respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Rockland County (Garvey, J.), dated July 1, 2010, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendant's motion for summary judgment dismissing the complaint is denied.
The defendant failed to meet his prima facie burden of showing that the plaintiff, who allegedly sustained injuries to, among other areas, the cervical 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 that accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). Although the defendant asserted that the alleged injuries to the cervical region of the plaintiff's spine did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 352; Gaddy v Eyler, 79 NY2d at 955-956), his examining neurologist recounted, in her affirmed report submitted in support of the motion, that the range-of-motion testing she performed during her examination revealed the existence of certain significant limitations in the region (see Fields v Hildago, 74 AD3d 740). In addition, although the defendant asserted that the alleged injuries to the region were not caused by the subject accident (see Pommells v Perez, 4 NY3d 566, 579), he provided no competent medical evidence supporting that argument (see Hightower v Ghio, 82 AD3d 934, 935).
Since the defendant failed to meet his prima facie burden, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Fields v Hildago, 74 AD3d at 740).
Burke v. Moran


Appeal from an order of the Supreme Court, Erie County (Donna M. Siwek, J.), entered April 16, 2010 in a personal injury action. The order granted the motion of defendants for summary judgment and dismissed the complaint.

GROSSMAN & CIVILETTO, NIAGARA FALLS, HOGAN WILLIG, AMHERST (AMANDA L. LOWE OF COUNSEL), FOR PLAINTIFF-APPELLANT.
BURGIO, KITA & CURVIN, BUFFALO (JAMES P. BURGIO OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by denying the motion in part and reinstating the complaint, as amplified by the bill of particulars, with respect to the permanent consequential limitation and significant limitation of use categories of serious injury within the meaning of Insurance Law § 5102 (d) and reinstating the claim for economic loss in excess of basic economic loss, and as modified the order is affirmed without costs.
Memorandum: Plaintiff commenced this action seeking damages for injuries she allegedly sustained when the vehicle she was driving was rear-ended by a vehicle operated by defendant Ryan D. Moran and owned by defendant Mary E. Moran. Defendants initially moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d) and thereafter, in their reply papers, sought dismissal of plaintiff's claim for economic loss in excess of her basic economic loss. According to her bill of particulars, plaintiff sustained a serious injury under the permanent loss of use, permanent consequential limitation of use, significant limitation of use, and the 90/180-day categories of serious injury. Plaintiff has abandoned her contention with respect to permanent loss of use, and we conclude that Supreme Court erred in granting those parts of defendants' motion with respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury. We therefore modify the order accordingly.
Defendants met their initial burden on the motion by submitting an expert's affirmation establishing as a matter of law that there was no objective confirmation of plaintiff's pain and that she had not sustained "any objective injury which would have disabled her for more than 90 out of 180 days following the motor vehicle accident" or any objective injury that would constitute a "permanent consequential limitation of use of a body organ or member," or a "significant limitation of use of a body function or system" (see Herbst v Marshall [appeal No. 2], 49 AD3d 1194, 1195). Defendants also submitted evidence indicating with respect to plaintiff's cervical spine that she had a "voluntary restriction of rotation," "essentially normal" neurological examinations and "advanced degenerative disc disease."
In opposition to defendants' motion, however, plaintiff raised triable issues of fact with respect to the permanent consequential limitation and significant limitation of use categories of serious injury by submitting an expert affidavit and medical records demonstrating an objective basis for the reduced range of motion in her neck and containing a "numeric percentage of [her] loss of range of motion" (Toure v Avis Rent A Car Sys., 98 NY2d 345, 350; see Howard v Robb, 78 AD3d 1589; Feggins v Fagard, 52 AD3d 1221, 1223-1224; Moore v Gawel, 37 AD3d 1158). Nevertheless, we agree with defendants that the court properly granted that part of defendants' motion regarding the 90/180—day category of serious injury. With respect to that category, plaintiff failed to raise an issue of fact whether she was unable to perform substantially all of the material acts that constituted her usual and customary daily activities during the requisite period of time (see Licari v Elliott, 57 NY2d 230, 236; Parkhill v Cleary, 305 AD2d 1088, 1089-1090).
Finally, we conclude that the court further erred in granting that part of defendants' motion seeking to dismiss plaintiff's claim for economic loss in excess of basis economic loss, inasmuch as defendants moved for that relief for the first time in their reply papers (see Clearwater Realty Co. v Hernandez, 256 AD2d 100, 102; Lumbermens Mut. Cas. Co. v Morse Shoe Co., 218 AD2d 624, 625-626). We therefore further modify the order accordingly.

Small v. Arch Capital Group, Ltd.

Indik & McNamara, P.C., Philadelphia, PA (Thomas S.
McNamara of the Bar of the State of Pennsylvania and the Bar of the
State of New Jersey, admitted pro hac vice, of counsel), for
appellants.
Foley & Lardner LLP, New York (Peter N. Wang of counsel),
for Arch Capital Group, Ltd. and American Independent
Companies, Inc., respondents.
Pepper Hamilton LLP, Philadelphia, PA (M. Duncan Grant of
the Bar of the State of Pennsylvania and the State of Delaware,
admitted pro hac vice, of counsel), for TDH Capital Partners and
TDH III, L.P., respondents.

Judgment, Supreme Court, New York County (Richard B. Lowe III, J.), entered April 19, 2010, dismissing the complaint and bringing up for review orders, same court and Justice, entered on or about March 15, 2010, which granted defendants' motions for summary judgment, unanimously affirmed, with costs. Appeal from the aforesaid orders, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
Plaintiffs failed to raise a triable issue of fact whether defendants breached section 9.10 of the parties' agreement by preventing plaintiff Lewis Small from managing the Lawsuits (as defined in the agreement) and a directors' and officers' liability claim (the D & O claim) under the insurance policies of American Independent Insurance Holding Company, the predecessor to defendant American Independent Companies, Inc.
With respect to the D & O claim, section 9.10 states, in pertinent part, that "Small will continue to assist and manage the Lawsuits." "Lawsuits" are defined in the agreement as "the State Lawsuits together with the Lederman Lawsuits and any other lawsuits or other actions which may arise out of or be in relation to or in connection with such lawsuits." A claim submitted to an insurance company is not a "lawsuit[]," nor is the D & O Claim an "action," within the meaning of the agreement (see Peterson v Continental Cas. Co., 282 F3d 112, 119-120 [2d Cir 2002]).

With respect to the Lawsuits, the only concrete management issues about which plaintiffs complain are that defendants took a long time to agree with Small's decision to replace American's lead counsel in the Lederman Lawsuit and did not agree that certain witnesses should be listed in that lawsuit. However, section 9.10(ii) states, in pertinent part, that "the prior written approval of [American] and [defendants TDH Capital Partners and TDH III, L.P.] will be required for any strategic decisions relating to the Lawsuits, including without limitation . . . the selection or removal of legal counsel." Thus, the plain language of the agreement forecloses plaintiffs' claim about lead counsel. On appeal, plaintiffs concede that listing witnesses is a strategic decision. Accordingly, their claim about listing witnesses is also precluded by the language of the agreement.

Plaintiffs failed to raise a triable issue of fact whether defendants breached section 9.10(iv) of the parties' agreement, which states that American "will continue to fund reasonable fees and reasonable expenses of the Lawsuits (based on appropriate supporting written invoices) up to a maximum of $500,000." Plaintiffs' theory of damages is that, because the funding for the Lederman Lawsuit dried up, they lost the opportunity to recover damages in that lawsuit. However, the plain language of section 9.10(iv) shows that the TDH defendants had no funding obligation, and we disagree with the District Court that section 9.10 does not make clear what it means for American to "continue to fund reasonable fees and reasonable expenses of the Lawsuits (based on appropriate supporting written invoices) up to a maximum of $500,000" (see Small v Arch Capital Group, Ltd., 2006 WL 2708448, *13, 2006 US Dist LEXIS 67910, *39 [SD NY 2006]). It is true, as the District Court noted, that the parties dispute the contractual language of Section 9.10. The plain language of the section, however, warrants dismissal of plaintiffs' breach of contract cause of action. With respect to American and defendant Arch, which acquired 100% of American's shares pursuant to the parties' agreement, plaintiffs concede in paragraph 216 of their complaint that "the loss of the value of their respective shares of the proceeds from the Lederman Lawsuit" constitutes "consequential damages." Even if there were a triable issue of fact whether American and/or Arch fulfilled the funding obligation, it would not avail plaintiffs because they have not satisfied the requirements for consequential damages (see Kenford Co. v County of Erie, 73 NY2d 312, 320 [1989]).

Plaintiffs failed to raise a triable issue of fact whether defendants breached the implied covenant of good faith and fair dealing by bad-faith exercise of their contractual right to approve strategic decisions. Plaintiffs' theory is that Arch caused American to abandon the Lederman Lawsuit because Rockwood Casualty Insurance Co. (one of the defendants in that lawsuit) was part of Argonaut Insurance Group, Inc., and Arch wanted to do reinsurance business with Argonaut. However, plaintiffs have presented no evidence as to why TDH would fail to prosecute the Lederman Lawsuit. Unlike plaintiffs, who got at least some cash from the sale of their American shares to Arch, TDH's contractual right to be compensated came solely from the proceeds of the Lawsuits. Thus, TDH had every incentive to prosecute the Lederman Lawsuit vigorously (see Fremont v E.I. DuPont DeNemours & Co., 988 F Supp 870, 877 [ED Pa 1997]).

As for Arch, the facts do not support plaintiffs' theory. When Arch and American learned that Argonaut had purchased Rockwood's parent, they both deemed it a positive development because it might mean that Lederman had some money that American could pursue. Moreover, the facts do not support plaintiffs' chronology. According to plaintiffs, Arch caused American to abandon the Lederman Lawsuit from late April 2001. However, Arch did not begin its efforts to acquire reinsurance business in general until late October or November 2001, and it did not know about the specific possibility of underwriting reinsurance for Argonaut until late 2001.

Small v. Arch Capital Group, Ltd.

Indik & McNamara, P.C., Philadelphia, PA (Thomas S.
McNamara of the Bar of the State of Pennsylvania and the Bar of the
State of New Jersey, admitted pro hac vice, of counsel), for
appellants.

Foley & Lardner LLP, New York (Peter N. Wang of counsel),
for Arch Capital Group, Ltd. and American Independent
Companies, Inc., respondents.
Pepper Hamilton LLP, Philadelphia, PA (M. Duncan Grant of
the Bar of the State of Pennsylvania and the State of Delaware,
admitted pro hac vice, of counsel), for TDH Capital Partners and
TDH III, L.P., respondents.

Judgment, Supreme Court, New York County (Richard B. Lowe III, J.), entered April 19, 2010, dismissing the complaint and bringing up for review orders, same court and  Justice, entered on or about March 15, 2010, which granted defendants' motions for summary judgment, unanimously affirmed, with costs. Appeal from the aforesaid orders, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Plaintiffs failed to raise a triable issue of fact whether defendants breached section 9.10 of the parties' agreement by preventing plaintiff Lewis Small from managing the Lawsuits (as defined in the agreement) and a directors' and officers' liability claim (the D & O claim) under the insurance policies of American Independent Insurance Holding Company, the predecessor to defendant American Independent Companies, Inc.
With respect to the D & O claim, section 9.10 states, in pertinent part, that "Small will continue to assist and manage the Lawsuits." "Lawsuits" are defined in the agreement as "the State Lawsuits together with the Lederman Lawsuits and any other lawsuits or other actions which may arise out of or be in relation to or in connection with such lawsuits." A claim submitted to an insurance company is not a "lawsuit[]," nor is the D & O Claim an "action," within the meaning of the agreement (see Peterson v Continental Cas. Co., 282 F3d 112, 119-120 [2d Cir 2002]).

With respect to the Lawsuits, the only concrete management issues about which plaintiffs complain are that defendants took a long time to agree with Small's decision to replace American's lead counsel in the Lederman Lawsuit and did not agree that certain witnesses should be listed in that lawsuit. However, section 9.10(ii) states, in pertinent part, that "the prior written approval of [American] and [defendants TDH Capital Partners and TDH III, L.P.] will be required for any strategic decisions relating to the Lawsuits, including without limitation . . . the selection or removal of legal counsel." Thus, the plain language of the agreement forecloses plaintiffs' claim about lead counsel. On appeal, plaintiffs concede that listing witnesses is a strategic decision. Accordingly, their claim about listing witnesses is also precluded by the language of the agreement.

Plaintiffs failed to raise a triable issue of fact whether defendants breached section 9.10(iv) of the parties' agreement, which states that American "will continue to fund reasonable fees and reasonable expenses of the Lawsuits (based on appropriate supporting written invoices) up to a maximum of $500,000." Plaintiffs' theory of damages is that, because the funding for the Lederman Lawsuit dried up, they lost the opportunity to recover damages in that lawsuit. However, the plain language of section 9.10(iv) shows that the TDH defendants had no funding obligation, and we disagree with the District Court that section 9.10 does not make clear what it means for American to "continue to fund reasonable fees and reasonable expenses of the Lawsuits (based on appropriate supporting written invoices) up to a maximum of $500,000" (see Small v Arch Capital Group, Ltd., 2006 WL 2708448, *13, 2006 US Dist LEXIS 67910, *39 [SD NY 2006]). It is true, as the District Court noted, that the parties dispute the contractual language of Section 9.10. The plain language of the section, however, warrants dismissal of plaintiffs' breach of contract cause of action. With respect to American and defendant Arch, which acquired 100% of American's shares pursuant to the parties' agreement, plaintiffs concede in paragraph 216 of their complaint that "the loss of the value of their respective shares of the proceeds from the Lederman Lawsuit" constitutes "consequential damages." Even if there were a triable issue of fact whether American and/or Arch fulfilled the funding obligation, it would not avail plaintiffs because they have not satisfied the requirements for consequential damages (see Kenford Co. v County of Erie, 73 NY2d 312, 320 [1989]).

Plaintiffs failed to raise a triable issue of fact whether defendants breached the implied covenant of good faith and fair dealing by bad-faith exercise of their contractual right to
approve strategic decisions. Plaintiffs' theory is that Arch caused American to abandon the Lederman Lawsuit because Rockwood Casualty Insurance Co. (one of the defendants in that lawsuit) was part of Argonaut Insurance Group, Inc., and Arch wanted to do reinsurance business with Argonaut. However, plaintiffs have presented no evidence as to why TDH would fail to prosecute the Lederman Lawsuit. Unlike plaintiffs, who got at least some cash from the sale of their American shares to Arch, TDH's contractual right to be compensated came solely from the proceeds of the Lawsuits. Thus, TDH had every incentive to prosecute the Lederman Lawsuit vigorously (see Fremont v E.I. DuPont DeNemours & Co., 988 F Supp 870, 877 [ED Pa 1997]).

As for Arch, the facts do not support plaintiffs' theory. When Arch and American learned that Argonaut had purchased Rockwood's parent, they both deemed it a positive development because it might mean that Lederman had some money that American could pursue. Moreover, the facts do not support plaintiffs' chronology. According to plaintiffs, Arch caused American to abandon the Lederman Lawsuit from late April 2001. However, Arch did not begin its efforts to acquire reinsurance business in general until late October or November 2001, and it did not know about the specific possibility of underwriting reinsurance for Argonaut until late 2001.

 

Kliamovich v. Kliamovich


Kevin T. Mulhearn, P.C., Orangeburg, N.Y., for appellant.
McCullough, Goldberger & Staudt, LLP, White Plains, N.Y.
(Patricia E. Hurahian, Evan M.
Eisland, and Edmund C. Grainger III of
counsel), for respondent.

DECISION & ORDER
In an action, inter alia, for a judgment declaring that the plaintiff is the sole beneficiary of a life insurance policy, the defendant appeals from an order of the Supreme Court, Rockland County (Weiner, J.), entered March 9, 2010, which, upon a decision dated January 5, 2010, granted the plaintiff's motion, among other things, for summary judgment, denied the defendant's cross motion, inter alia, for summary judgment, declared that changes to beneficiaries made in 1996 were valid and binding and that changes to beneficiaries made after 1996 were ineffective and void, and directed that the proceeds of the subject life insurance policy be turned over to the irrevocable beneficiaries as designated by a 1996 Policy Change Request form and that the Nassau County Treasurer pay the proceeds to the irrevocable beneficiaries. The notice of appeal from the decision dated January 5, 2010, is deemed a notice of appeal from the order (see CPLR 5512[a]).
ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the plaintiff's motion, inter alia, for summary judgment, and substituting therefor a provision denying the motion, and (2) by deleting the provisions thereof declaring that changes to beneficiaries made in 1996 were deemed valid and binding and that changes to beneficiaries made after 1996 were ineffective and void, and directing that the proceeds of the subject life insurance Policy be turned over to the irrevocable beneficiaries as directed by a 1996 Policy Change Request form and that the Nassau County Treasurer pay the proceeds to the irrevocable beneficiaries; as so modified, the order is affirmed, without costs or disbursements.
On or about August 28, 1987, the plaintiff's father, William B. Kliamovich (hereinafter the insured), purchased a life insurance policy with a death benefit of $250,000 from Companion Life Insurance Company (hereinafter Companion). After the insured's death in October 2005, the plaintiff commenced this action against Winifred T. Kliamovich, also known as Winifred T. McMahon, the insured's wife, inter alia, for a judgment declaring that he is the sole beneficiary under the policy.
The plaintiff moved, inter alia, for summary judgment. In support of the motion, the plaintiff submitted, among other things, an undated Policy Change Request form which designated the plaintiff and two others as irrevocable beneficiaries, and a letter dated July 29, 1996, which bore the signature stamp of Companion's president, acknowledging the request. The plaintiff contended that any change of beneficiary thereafter was void, based upon a lack of consent by the irrevocable beneficiaries. The defendant cross-moved, inter alia, for summary judgment, disputing the validity of the 1996 changes and claiming entitlement to the policy proceeds pursuant to a Policy Change Request form from 1998, that designated the defendant as the primary beneficiary of the policy.
It is undisputed that neither the Policy Change Request form, nor the July 29, 1996, letter, could be located in Companion's files. Consequently, the plaintiff was unable to produce the original writings which allegedly would have been contained in Companion's files.
The best evidence rule requires the production of an original writing where its contents are in dispute and sought to be proven (see Schozer v William Penn Life Ins. Co. of N.Y., 84 NY2d 639, 644). Under an exception to the rule, "secondary evidence of the contents of an unproduced original may be admitted upon threshold factual findings by the trial court that the proponent of the substitute has sufficiently explained the unavailability of the primary evidence and has not procured its loss or destruction in bad faith" (id. [citations omitted]; see Lipschitz v Stein, 10 AD3d 634, 637). "Once a sufficient foundation for admission is presented, the secondary evidence is subject to an attack by the opposing party not as to admissibility but to the weight to be given the evidence, with [the] final determination left to the trier of fact'" (Schozer v William Penn Life Ins. Co. of N.Y., 84 NY2d at 645, quoting United States v Gerhart, 538 F2d 807, 809).
Here, the plaintiff established a sufficient foundation for the admission of the undated Policy Request Change form and the letter dated July 29, 1996. A letter written to the plaintiff's attorney by Companion's counsel set forth that despite a diligent search, Companion was unable to locate copies of the Policy Change Request Form or the letter dated July 29, 1996. The plaintiff, in an affidavit, set forth that he had found the Policy Change Request Form and the July 29, 1996, letter among his father's personal papers, after his father's death. Companion's representative, Judy Snowdon, testified at her deposition that the July 29, 1996, letter appeared to be a Companion letter, that it contained the stamp of the signature Ernest B. Johnson, Companion's president in 1996, and that his stamped signature was used by Companion at the time. Snowdon also testified that she had no reason to believe that the letter was not authentic. Moreover, a business event note and a letter dated November 12, 1997, which were located in Companion's files, referenced the fact that the policy had an irrevocable beneficiary.
The interest of an irrevocable beneficiary in a life insurance policy cannot be divested without the beneficiary's consent (see Ruckenstein v Metropolitan Life Ins. Co., 263 NY 204). Consequently, the plaintiff established his prima facie entitlement to judgment as a matter of law by demonstrating that the 1996 changes to the policy designated him, as well as two others, as irrevocable beneficiaries, that he did not consent to any change in the policy and, as a result, any change in beneficiary after the 1996 changes was null and void. In opposition, however, the defendant raised a triable issue of fact by submitting evidence that Companion accepted changes to the policy designating her as the primary beneficiary in 1998 and the sole beneficiary in 2000. That Companion accepted these subsequent changes, absent consent of the alleged irrevocable beneficiaries, raises an issue of fact as to the validity and/or authenticity of the 1996 changes which are not reflected in Companion's files. Accordingly, the Supreme Court erred in granting the plaintiff's motion, inter alia, for summary judgment (see Zuckerman v City of New York, 49 NY2d 557).
Similarly, the Supreme Court properly denied the defendant's cross motion, inter alia, for summary judgment. While the defendant established her prima facie entitlement to judgment as a matter of law by submitting evidence demonstrating that the insured designated the defendant as the primary beneficiary of the policy in 1998, and the sole beneficiary of the policy in 2000, the plaintiff, in opposition, raised a triable issue of fact by submitting the Policy Change Request form and letter dated July 29, 1996.
The parties' remaining contentions either are without merit or need not be addressed in light of our determination.
DILLON, J.P., BALKIN, ENG and ROMAN, JJ., concur.
WAGNER v PLOCH



Appeal from an order of the Supreme Court, Erie County (Russell P. Buscaglia, A.J.), entered June 25, 2010 in a personal injury action. The order denied the motion of third-party plaintiff for summary judgment and granted the cross motion of third-party defendant for summary judgment.


RUPP, BAASE, PFALZGRAF, CUNNINGHAM & COPPOLA LLC, BUFFALO (JOHN R. CONDREN OF COUNSEL), FOR THIRD-PARTY PLAINTIFF-APPELLANT.
KENNEY SHELTON LIPTAK NOWAK LLP, BUFFALO (MELISSA B. BURKE OF COUNSEL), FOR THIRD-PARTY DEFENDANT-RESPONDENT.


It is hereby ORDERED that the order so appealed from is affirmed without costs.
Memorandum: Plaintiff commenced this negligence action seeking damages for injuries she sustained while working at a restaurant operated by third-party defendant on property owned by defendant-third-party plaintiff (defendant). Third-party defendant was leasing the property from defendant pursuant to an agreement that included an indemnification provision and, after plaintiff commenced the main action, defendant commenced the third-party action seeking contractual indemnification. Contrary to defendant's contention, Supreme Court properly granted third-party defendant's cross motion for summary judgment dismissing the third-party complaint. "Pursuant to General Obligations Law § 5-321, a lease provision which purports to exempt a lessor from liability for its own acts of negligence is void and unenforceable" (Rego v 55 Leone Lane, LLC, 56 AD3d 748, 749). The indemnification provision here required third-party defendant to indemnify defendant for "any and all liability . . . arising from injury . . . to person or property . . ., occasioned wholly or in part by an act . . . of [third-party defendant or its employees]." We agree with third-party defendant that the indemnification provision is unenforceable under General Obligations Law § 5-321 because it "shifts the entire responsibility for damages to [third-party defendant] regardless of [defendant's] own negligence" (Rego, 56 AD3d at 749; see Ben Lee Distribs., Inc. v Halstead Harrison Partnership, 72 AD3d 715). Indeed, the indemnification provision improperly "contemplate[d] a complete rather than partial shifting of liability from [defendant] to [third-party defendant]" (Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co., 89 NY2d 786, 793, rearg denied 90 NY2d 1008), inasmuch as it made no exception for defendant's own negligence (see DeSabato v 674 Carroll St. Corp., 55 AD3d 656, 659; cf. Lennard v Mendik Realty Corp., 43 AD3d 279).
Defendant's reliance on the insurance rider to the lease agreement is misplaced. Where a lease agreement, negotiated at arm's length between two sophisticated business entities or persons, includes a provision that the tenant is to obtain insurance naming the landlord as an additional insured, General Obligations Law § 5-321 will not prohibit an indemnification provision such as the one at issue in this case inasmuch as the parties to the lease agreement are using insurance to allocate between themselves the risk of liability to a third party (see Great N. Ins. Co. v Interior Constr. Corp., 7 NY3d 412, 418-419; Castano v Zee-Jay Realty Co., 55 AD3d 770, 772, lv denied 12 NY3d 701). In this case, however, the record establishes that the lease agreement was not negotiated at arm's length between two sophisticated business entities or persons (see DeSabato, 55 AD3d at 659). Moreover, although the insurance rider in this case required third-party defendant to obtain insurance on the property, there was no requirement that defendant be named as an additional insured on the policy. A landlord may not circumvent General Obligations Law § 5-321 "merely by inserting in the lease a requirement that the tenant obtain insurance" (Graphic Arts Supply v Raynor, 91 AD2d 827, 828; see Ben Lee Distribs., Inc., 72 AD3d at 716).
All concur except Carni, J., who concurs in the result in the following Memorandum: Although I concur in the result reached by my colleagues, I would affirm for a different reason. While I agree that the indemnification clause in the lease in question is unenforceable under General Obligations Law § 5-321, I cannot agree with my colleagues that it is unenforceable based on the clause requiring third-party defendant to indemnify defendant for "any and all liability . . . arising from injury . . . to person or property . . ., occasioned wholly or in part by an act . . . of [third-party defendant or its employees]." Contrary to the conclusion of my colleagues, that clause merely partially, rather than entirely, shifts the responsibility for damages to third-party defendant. Indeed, by its express language, the clause in question does not "indemnify the promisee[, i.e., defendant,] for losses attributable to the promisee's own negligence and therefore do[es] not run afoul of the statute" (Ostuni v Town of Inlet, 64 AD3d 854, 855; see Brooks v Judlau Contr., Inc., 11 NY3d 204, 207-211). Nevertheless, I concur with the majority in the result based on the further language of the indemnification clause in question, which requires third-party defendant to indemnify defendant "also for any matter or thing growing out of the occupation of the demised premises or of the streets, sidewalks or vaults adjacent thereto." That broad indemnification language shifts the entire responsibility for damages to third-party defendant regardless of defendant's own negligence, rendering the entire clause "void as against public policy and wholly unenforceable" (§ 5-321; see Mendieta v 333 Fifth Ave. Assn., 65 AD3d 1097, 1100-1101; Rego v 55 Leone Lane, LLC, 56 AD3d 748, 749-750). Finally, I note my agreement with my colleagues that the insurance rider to the lease is insufficient to circumvent General Obligations Law § 5-321.

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