Dear Coverage Pointers Subscribers:

We send you a hearty autumnal welcome from your friends on the Coverage Pointers staff. We're delighted to share a very interesting and eclectic group of cases in this week's issue with one more interesting than the next.

A Coverage Pointers Pointer

For our newer subscribers, we remind you that this cover letter, our spiritual introduction to the issue attached is only that, a 30,000 view of the highlights (or, sometimes, lowlights) of the newsletter. We attach Coverage Pointers to our letter and the issue, for example runs some 61 pages. It is always produced in Microsoft Word format for a number of reasons:

  • Converting to PDF or some other fancy format will increase the size of the attachment and don't need any of that;
  • We expect and encourage you to cut and paste relevant summaries and decisions into claims or related files where they may of value to you in a case you're handling;
  • Some of our subscribers, with our permission, republish our decisions in trade electronic and print publications and this makes it easier for them;
  • We're not fancy people and adding color, creative design, photos, cute logos and other items would only feed our egos while clogging up your e-mail, and requiring time and enough extra editorial effort to make the issues less timely without adding substance.

Highlights

On the casualty side, we have a peculiar decision out of the First Department, Metalios, where the court appropriate applies an "Assault and Battery" to remove coverage under a business policy for a stabbing outside of a restaurant and then in the same decision, offers a rather odd interpretation of the "business pursuits" exclusion in the same insured's homeowners policy. The same court, the same day, in the Tower Insurance v. Red Rose decision reaffirms a now common rule that requires a party seeking to rely on a "good faith belief in non-liability" to establish that it actually conducted an investigation when it learned of the accident to determine its presumed lack of liability.

On the other side of the state, the Fourth Department dealt GEICO what should be a only a temporary setback as that carrier was unable to free itself from being potentially liable for SUM benefits under an umbrella policy, even though it does not sell SUM benefits in umbrella policies in New York. On the next go-round, GEICO should be able to demonstrate that the insured had the opportunity to read the policy, and had he done so, he would have realized the absence of coverage. That's the Herendorf decision.

Finally, in our "must read" category is another Fourth Department decision holding that an insurer that wrongfully refused to defend was still not bound by the determination of negligence against its insured established in a default hearing. Read the Council summary and decision.

One Hundred Years Ago Today:

October 15, 1910

The (Dunkirk) Evening Observer

Suffragists See Dawn of Millennium

Claim that the Universal Election Ordered in Portugal is the Starting Wedge

New York, Oct. 15. - That the revolution In Portugal may mark the beginning of equal suffrage for the civilized world was the declaration today of Mrs. Clarence Mackay, president of the Equal Franchise Society. In fact, the announcement of President Braga that the coming national assembly of the new republic of Portugal would be elected by universal suffrage has caused great enthusiasm among the New York votaries of the suffragette cause.-

"If President Braga but keeps his word," said Mrs. Markay today, "the revolution In Portugal will become, more historical for what It will do for the cause of women's suffrage than for what It will do in merely bringing about the freedom of that country. With such a scholar of modern conditions at the head of the government, it is more than likely that he will do as he says, grant universal suffrage and the effect of this would be world-wide. It would unquestionably be the opening wedge that would eventually brings about universal suffrage in all civilized and progressive countries and I am confident that President Braga realizes fully the opportunity that is being offered for his country to play a new and important rule is the future history of the world's social and political development. He can make the revolution in Portugal count as much for the political freedom of the world over as the American Revolution has counted for national freedom."


Editor's note:
President Braga's promise of women's suffrage was unfulfilled and in fact, his term is office lasted only through 1911. Women first not granted suffrage in Portugal until 1934.

Clarence met our heroine, Katherine, on a steamship crossing between New York and England in about 1897. They fell in love and were married on May 17, 1898 when she was 18.

Katherine (1880-1930), the President of the Equal Franchise Society, described by historians as a "beautiful debutante from an old, high society New York family, was a suffragette and a champion of women's rights and became the first woman member of the Roslyn school board in 1905. Katherine left Clarence and her three children to run away with Clarence's doctor, Dr. Joseph Blake in 1910. The marriage officially ended in divorce in Paris in 1914. Katherine returned to New York in 1930 and briefly tried to rekindle her former marriage with Clarence. He visited her but tragically, she died of cancer that same year.

From Steve (the Pied) Pieper of Property and Potpourri

Another slow couple of weeks for Property and Potpourri. That said, from reviewing my colleagues' sections, it appears that business is picking up. At your leisure, please take a moment to review the Abacus v. ADT decision found in this week's potpourri. In that decision, the First Department reminds us that a party may contractually insulate itself from liability for its own ordinary negligence. Further, the Court also reminds us that a waiver of subrogation insulates a party from virtually any claim, including a claim for gross negligence.

We also invite you to take a look at the Cumberland Packing Corp. decision headlining Jennifer's Gems. We suspect that this case is the first of its kind that will seek to recover some of the millions lost by Bernie Madoff's infamous Ponzi scheme. As the scheme was, at its core, fraud, it stands to reason that those impacted would look to their first party crime policies in order to recoup some of the losses. As an administrator, Mr. Madoff likely qualified as an "employee" of various pension funds that had been entrusted to him to "manage." Thus, it follows that his actions may very well trigger employee fraud provisions. Justice Demarest's insightful opinion takes direct aim at which coverages may be triggered, and whether Mr. Madoff's acts constituted multiple occurrences under the policy. Surely, this is a topic worth monitoring as we move forward.

Steve Peiper

[email protected]


Editor's Note:
Steve is gaining quite the reputation as a well-sought after and well-received speaker on both casualty and first-party issues. He's out doing another one this morning, on the thorny issue of insured-selected defense counsel.

A Century Ago Today:

Walter Wellman was a journalist and an adventurer in the early part of the 20th century. He made several unsuccessful attempts to reach the North Pole, some of which were by dirigible. On October 15, 1910, he and his crew took off in the dirigible America seeking to be the first to cross the Atlantic by air. The Washington Post and every major paper carried a front page report on the event. The Post editorialized on the event the following day:

Wellman's Flight

The ocean will be crossed some day by men flying in the air; there need be no doubt of that. The art of aviation has made such substantial progress during the past five years that it may now be regarded as a permanent addition to man's methods of locomotion, and the possibilities of its development are not to be limited by achievements up to date.

In this country the aeroplane, rather than the dirigible balloon, is believed to be the precursor of the future conqueror of space. Its greater speed and comparative ability to fight adverse winds seem to give it an advantage over the dirigible.

It is true that the longest continuous flight of an aeroplane has been only a little over 100 miles, but this record is very recent, and is likely to be excelled at any moment. Distance is a barrier that yields to mechanical ingenuity, now that the secret of flight has been discovered. Perhaps Wellman "has hit upon a happy combination of sustaining, power and driving force that will carry him across the Atlantic. Every one who admires pluck, ingenuity, and daring will wish him success. Particularly will all Americans hope that the airship America, flying the Stars and Stripes, will be the first to cross the ocean. If Wellman succeeds in his present undertaking, he will have accomplished something far more difficult and important than the discovery of the North Pole, and he will have no occasion for regretting that he abandoned his attempt to reach 90 north.

Editor's Note: The Atlantic Flight drifted in a huge arc past Cape Cod and then southeast for over 1,000 miles before engine trouble forced the journalist and his crew to abandon ship not far from Bermuda. Wellman brought the ship down within a mile of a passing steamer which delivered Wellman and his crew to shore. The Atlantic adventure set a record for the longest airship flight to date in aviation history. It took another nine years before non-stop trans-Atlantic flights were made by both airplanes and dirigibles.

From Audrey Seeley, the Golfing Queen of No Fault:

By the time you read this I will be in the Charlotte, NC area for the Liberty Mutual Invitational to benefit the March of Dimes. It will be great to catch up with people and to contribute to a good cause.

This edition there is a must read decision from the Second Department regarding whether a New York insurer can proceed with inter-company loss transfer arbitration under Insurance Law 5105 against a non-New York insurer, non-New York tortfeasors, in a non-New York State accident.

Also, there is an explosion of decisions from the Appellate Term, Second Department on the summary judgment burden when the insurer seeks summary judgment. We note that all decisions held the insurer's summary judgment should have been granted as the plaintiff failed to specifically rebut the findings and conclusions in the IME or peer review report.

If you are interested in receiving a complete copy of any of the decisions please email me at [email protected].

Audrey

In This Week's Issue:

KOHANE'S COVERAGE CORNER
Dan D. Kohane

[email protected]

  • "Assault and Battery" Exclusion in Business Policy Eliminates Coverage for Stabbing Outside Restaurant. Party Held by Business Owner Is "Incident to Non-Business Activity" and Covered by Homeowners Policy
  • Failure to Investigate the Possibility of Liability Attaching After Awareness of Accident and Injury Precludes Insured from Claiming a Good Faith Belief in Non-Liability for Later Reporting
  • Winning the Battle but Not the War. Carrier That Does Not Sell SUM Coverage in Umbrella Policies May Be Liable for SUM Coverage
  • MVAIC's Sat On Its Rights for Four Years and Refusal of Arbitrator to Grant It More Time to Investigate Not Abuse of Discretion
  • Since Son and Daughter-in-Law Still Lived with His Mother, They Were Insureds Under Her Policy and Uninsured Motorists Coverage Was Available
  • Excess Carrier Obligated to Pay Coverage Defense Costs of Its Insured, if Carrier Unsuccessfully Prosecuted DJ Action to Free Itself from Coverage
  • Carrier That Wrongfully Refused to Defend Not Bound by Determination of Negligence in Default Hearing

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

  • Plaintiff's Injuries Have Resolved but She Still Has ROM Limitations? You Cannot Have It Both Ways if She Was Asymptomatic Before the Accident
  • Treating Chiropractor's Report Is Sufficient to Raise Triable Issue of Fact
  • Plaintiff Fails to Raise Issue of Fact Where He Fails to Submit Objective Findings from a Recent Examination
  • Defendant's Experts' Reports Do Not Indicate Tests Performed or Compared
  • Plaintiff's Failure to Submit Contemporaneous Report Defeats Claims Under Soft Tissue Categories
  • Plaintiff's Own Affidavit Does Not Raise a Triable Issue of Fact
  • If One Injury Meets Threshold, All Injuries May Be Considered
  • Plaintiff's Expert Fails to Provide Qualitative Assessment Which Results in Reversal on Appeal
  • Plaintiff Fails to Prove Injuries Under the Permanent Consequential or Significant Limitation Categories Where Experts Determine Injuries Not "Protracted" Limitations
  • Defendant Defeats Her Own Motion by Submitting Plaintiff's Deposition Testimony
  • Plaintiff Defeats Summary Judgment by Submitting IME Reports Opining Accident Aggravated Pre-Existing Condition
  • Plaintiff's Past Medical History Raises Question Regarding Injury's Relatedness to Accident
  • Defendants' Examining Orthopedist Notes Significant ROM Limitations More Than Two Years Post-Accident; Claim in Bill of Particulars Not Addressed

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

ARBITRATION

  • While Limited to This Case, Failure to Send to Correct Address Reasonable Excuse to Compliance with 30-Day Rule
  • Journal Articles Did Not Support Conclusions of Peer Reviewer Resulting in Denial Being Found Improper

LITIGATION

  • Article 78 Against Superintendent, NICB, and Insurers Properly Dismissed
  • Excellent Review of Why Loss Transfer Unavailable for New York Insured in Out of State Accident
  • Insurer Establishes Failure to Appear for IME and Breach of Condition to Policy Precluding Coverage
  • Case Should Have Been Held in Abeyance Pending Decision from WC Board
  • How Can You Argue Non-receipt of Service Dates Insurer Enumerated but Plaintiff Never Asserted in Complaint?
  • Acupuncture Claims Dismissed as Insurer Demonstrated Paid at Fee Schedule

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Agreement Providing for a Limitation of Liability for One's Own Negligence Is Held Enforceable; Waiver of Subrogation Bars Other Claims
  • No "Common Interest Privilege" Where the Parties Were Not United-In-Interest

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

  • Applying Delaware Law - The Distinction Between the Duty to Defend and the Duty to Advance Defense Costs
  • Applying Massachusetts Law - Interpreting a Directors & Officers Policy

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

  • Recovery of Loss Sustained Due to Madoff Ponzi Scheme Limited to Limit of Employee Theft under One Policy
  • Court Denies Motion for Summary Judgment Where Moving Party Fails to Attach a Copy of the Insurance Policy and a Question of Fact Exists As to the Late Notice Claim
  • Where Injured Party Was First to Provide Notice of Suit, 38 Day Delay Was Reasonable As a Matter of Law

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

FALSE CLAIMS ACT CLAIMS:

BREACH OF CONTRACT OR FRAUD?

We hope to see some of you at the DRI Annual Meeting in San Diego. If you're looking to grab some adult refreshment while there, you can reach me on my cell at 716-445-2258.

Hope all is well.

Dan

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

NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

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


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


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

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

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


KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

10/14/10           Metalios v. Tower Insurance Company of New York
Appellate Division, First Department
“Assault and Battery” Exclusion in Business Policy Eliminates Coverage for Stabbing Outside Restaurant. Party Held by Business Owner Is “Incident to Non-Business Activity” and Covered by Homeowners Policy
Metalios hosted a party on February 12, 2005 for employees at friends at her (we don’t make these up) Pluck U restaurant after closing hours. Metalios noticed a guest and former employee arguing and shortly afterwards, a Pluck U employee stabbed the guest and another person outside the restaurant.

There was an “assault and battery” exclusion in the Tower policy issued to the restaurant and the court found – under case law well established in Mount Vernon v. Creative Housing, 88 NY2d 347 (1996) that the claim of negligence against the restaurant arose out of “operative act” of assault and battery.
The failure to have the endorsement signed or countersigned was of no consequence.
However, the court held that Metalios’ homeowners carrier, AIC, had a duty to defend. AIC relied upon a “business pursuit” exclusion in the homeowners’ policy. However the court found that the exception to the exclusion, that "this exclusion does not apply to: (1) activities which are ordinarily incident to non-business pursuits," focuses on the objective nature of the activity itself rather than on the motivation of the policy holder. The court holds that a social gathering is "ordinarily incident to a non-business pursuit." Thus, even if Metalios's motivation was in part that of employee morale, a party itself falls under the exception to the exclusion.
Editor’s Note: With “assault and battery” exclusion in the business policy, the court was undoubtedly right that there would be no coverage for the stabbing. In the Mount Vernon case, the Creative Housing was sued for not providing proper security in a building it managed, which led to an assault by a stranger. The court held that the “operative act” was the assault, and even though the claims against the building owner (like here) sounded in negligence, the exclusion applied.
We are troubled, however, by the second part of the decision, sticking the homeowners’ carrier with what appears to us to be a business-related accident. When businesses hold parties for their employees, it is generally to establish good will for the business. The court’s holding that a social event is “ordinarily incident to a non-business pursuit” just doesn’t fly, when that particular party is held to establish good will for the business and is held at the business.
Yet another “Attaboy Max” noted.

10/14/10            Tower Insurance Company v. Red Rose Restaurant, Inc.
Appellate Division, First Department
Failure to Investigate the Possibility of Liability Attaching After Awareness of Accident and Injury Precludes Insured from Claiming a Good Faith Belief in Non-Liability for Later Reporting

Another Tower late report case. Here, the insureds became aware of the accident on the night it occurred but failed to notify the insurer for some 14 months. The insureds knew that the claimant had fallen on or near their property but failed to “describe any action they took to ascertain the possibility of their liability.” They also knew that the claimant was taken away in an ambulance, knew claimant’s family members, etc.

Even if the insureds believed that the claimant fell on the abutting sidewalk, under the NYC Administrative Code imposed obligations on the property owner to keep the sidewalk in good repair.
Editor’s Note: Attaboy Max [where have we heard that before]

10/8/10            Herendorf v. GEICO
Appellate Division, Fourth Department
Winning the Battle But Not the War. Carrier That Does Not Sell SUM Coverage in Umbrella Policies May Be Liable for SUM Coverage

This case involves a claim for underinsurance coverage under a GEICO umbrella policy. Apparently, GEICO does not sell that coverage in New York and was able to prove that to the satisfaction of the motion and appellate court. Claimant tried to create an ambiguity out of a reference on the Declarations Page but was unsuccessful in convincing the court that one existed. GEICO is not penalized for failing to send out a disclaimer letter because the coverage cannot be created where none exists.

Unfortunately, for GEICO, that wasn’t the end of it. The policyholder swore that the GEICO agent told him that he was getting underinsurance coverage on his umbrella policy. The agent had no recollection of the conversation, but testified that if he had been asked the question, he would have told the policyholder that coverage was not available on a GEICO umbrella policy.

While an agent is not generally liable for failing to procure coverage, if there is a specific request for coverage, the agent has a duty to obtain the coverage or inform the client of an inability to do so.

GEICO contends that even if the agent were asked, GEICO should not be required to provide coverage if they were not selling it within the State. .The appellate court rejected that argument as well, because GEICO failed to establish that other carriers did not provide SUM coverage.

Finally, to the extent that the defendants contended that plaintiff “is conclusively presumed to know the contents of an insurance policy concededly received” that contention wasn’t raised until the reply brief so it was not properly before the court.
Editor’s Note: Since the matter is being remanded, GEICO has another chance to raise what should be the dispositive point that the court referenced at the end of the decision. If the insured had received a copy of the policy, there is a conclusive presumption that the insured both read and understood the coverages within the policy. Clearly, the court held that the policy did not, by its terms, provide underinsured motorists coverage. Accordingly, the coverage did not exist. That finding ought to provide solace both for GEICO and the agent.
10/7/10            MVAIC v. NYC East-West Acupuncture, P.C
Appellate Division, First Department
MVAIC’s Sat On Its Rights for Four Years and Refusal of Arbitrator to Grant It More Time to Investigate Not Abuse of Discretion
An auto accident occurred in 9/21/03. Li, a pedestrian was struck by a hit-and-run car. Wu, a witness, provided the license plate of the vehicle to a police officer. The police tracked the plates to a car owned by Chu and Chu was insured by GEICO. Chu's vehicle was insured by Government Employees Insurance Company (GEICO) during the time period when the hit-and-run accident occurred.
GEICO denied their no fault provider claims on the basis that its investigation revealed that neither Chu, nor the vehicle insured by GEICO, was involved in the underlying incident.
One of the providers, East-West, notified MVAIC in a letter dated October 27, 2004, denied its claim and requested payment for the medical services it rendered to Li. On December 10, 2003, Li executed a notice of intent to file a claim with MVAIC. MVAIC responded in a letter, dated January 20, 2004, that it would not honor Li's claim because pursuant to Article 52 of the New York Insurance Law, she was not a "qualified person" within the meaning of the statute since there was coverage from GEICO. Appellants East-West, Sinai, PSW and Comprehensive then filed arbitration request forms as to MVAIC and GEICO with the American Arbitration Association.
During the course of the arbitration, four years later, MVAIC asked for an adjournment which the arbitrator refused. The court held that that MVAIC had been on notice for three years that GEICO had denied coverage based on the contention that its insured was not operating a GEICO-insured car. Here, the record establishes that because of East-West's letter dated October 27, 2004, MVAIC had been on notice for approximately three years that GEICO denied East-West's claim on the basis that neither Chu nor a vehicle insured by GEICO was involved in the underlying hit-and-run motor vehicle accident.
10/5/10            In the Matter of Allstate Insurance Company v. Ban
Appellate Division, Second Department
Since Son and Daughter-in-Law Still Lived with His Mother, They Were Insureds Under Her Policy and Uninsured Motorists Coverage Was Available
The issue in the case was whether the claimants, Jozsef and Claudia Ben lived in the same house hold as Jozsef’s mother, Elizabeth. Elizabeth was the named insured on the Allstate policy. Before the accident, Jozsef and Claudia had purchased a home to which they intended to move after extensive renovations but apparently had not moved there yet. They had been living in the house owned by the named insured for at least seven years prior to the accident. The claimants "actually resided in the [named insured's] household with some degree of permanence and with the intention to remain for an indefinite period of time"

10/1/10           
RLI Insurance Company v. Smiedala
Appellate Division, Fourth Department
Excess Carrier Obligated to Pay Coverage Defense Costs of Its Insured, if Carrier Unsuccessfully Prosecuted DJ Action to Free Itself from Coverage
RLI had previously commenced an action seeking a declaration that it had no obligation to defend and indemnify Hale and Regional Integrated Logistics, Inc.. In an earlier ruling the Fourth Department determined that RLI had an obligation to defend Regional but not Hale.

In this appeal, RLI argued that while it unsuccessfully litigated the coverage case against Regional, it had no obligation to pay for Regional’s costs in defending the DJ action, or Hale’s.
RLI argued that the Mighty Midgets rule, which allows the recovery of attorneys’ fees by an insured that successfully defends a declaratory judgment action, does not apply to an excess carrier seeking to free itself from excess obligations, but only to primary carriers. RLI based its argument on two federal court decisions that so held. The Fourth Department chose not to follow the federal court decisions and held that an excess carrier is similarly obligation to pay for the DJ defense costs if it starts, and does not prevail, in a DJ action.
However, the court did agree with RLI that it was not obligated to pay for the defense costs for the party against whom it prevailed, in this case, Hale. Since the same attorney represented Hale and Regional, the appellate court remanded the matter to the trial court to determine the breakdown.
10/1/10            Council v. Utica First Insurance Company
Appellate Division, Fourth Department
Carrier That Wrongfully Refused to Defend Not Bound by Determination of Negligence in Default Hearing
Council was hurt in an altercation with an employee of a nightclub, insured by Utica. Council took a default against the nightclub and brought a declaratory judgment action seeing to hold Utica liable to defend and indemnify its insured.
The underlying complaint alleged that the plaintiff suffered as “assault” but that the nightclub was “negligent”. That was enough to obligate the insurer to defend.
However, plaintiff testified during the hearing preceding the default judgment that he was injured when he was "tackled" by a bouncer at the nightclub. Although plaintiff alleges that he was injured as a result of the "negligence" of the bouncer, the record demonstrates that the attack was an unprovoked assault, and thus the event falls within the "Assault and Battery" exclusion of the nightclub's insurance policy with defendant. .
The court went on to determine that the carrier was not bound by the determination of “negligence” as established in the default hearing. Because the judgment was entered on default, “the issue of negligence was not actually litigated in [that] action, and the finding of negligence therefore has no collateral estoppel effect".
Editor’s Note: Very interesting decision for a number of reasons. First of all, why standing does the underlying plaintiff have to challenge the insurer’s refusal to defend the insured? Secondly, while we expect some to take issue with the court’s ruling on the carrier not being bound by the determination below, the court’s decision makes sense under older Court of Appeals case law. Back in 1985, the Court of Appeals in Servidone, 64 NY2d 419, held that in the absence of bad faith, where an insurer wrongfully refuses to defend, it is liable ONLY for the damages that are covered by the policy. Here, the court looked at the admissions and concluded that there was an unprovoked attack and thus an assault. Even if the carrier had defended and there had been a finding of negligence, the carrier would have been permitted to relitigate that finding in a separate declaratory judgment action. The insurer is not a party to that underlying lawsuit and therefore couldn’t produce witnesses to establish the assault, even if it had assigned defense counsel. Years back the same Fourth Department so decided in: Kaczmarek v. Shoffstall, 119 A.D.2d 1001.

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

10/12/10            Feaster v. Boulabat
Appellate Division, First Department
Plaintiff’s Injuries Have Resolved but She Still Has ROM Limitations? You Cannot Have It Both Ways if She Was Asymptomatic Before the Accident

That is exactly what defendants tried to do: Their examining orthopedist found range-of-motion limitations in plaintiff’s cervical and lumbar spines and in both knees which he attributed to degenerative changes and opined that any injuries sustained in the accident had resolved. The court determined that as plaintiff testified she was asymptomatic prior to the accident, the existence of limitations belied the orthopedist’s opinion that the injuries had resolved. In addition, and with regard to plaintiff’s claim under the 90/180-day category, because defendant’s orthopedist did not examine plaintiff until a year after the accident that examination did not serve to discredit her claim.

10/5/10            Evans v. Pitt
Appellate Division, Second Department
Treating Chiropractor’s Report Is Sufficient to Raise Triable Issue of Fact

On appeal, the trial court’s denial of summary judgment to defendant is affirmed, although on different grounds. The Appellate Court found that defendant did meet her prima facie burden of showing that plaintiff did not sustain a serious injury. In opposition, however, plaintiff submitted the affidavit of his treating chiropractor. The affidavit was based on both contemporaneous and recent examinations and noted significant ROM limitations of the cervical and lumbar spine. The chiropractor, who also reviewed MRI films revealing herniations at four levels, concluded that the injuries were permanent and causally related to the subject accident. This affidavit was sufficient to raise a triable of fact in support of plaintiff’s claims under the permanent consequential and/or significant limitation of use categories.

10/5/10            Jean v. Labin-Natochenny
Appellate Division, Second Department
Plaintiff Fails to Raise Issue of Fact Where He Fails to Submit Objective Findings from a Recent Examination

Plaintiff claimed serious injury to his right knee under the permanent loss of use, permanent consequential and/or significant limitation of use categories, as well as under the 90/180-day category. He did not, however, submit any objective medical evidence regarding the right knee from a recent examination. In addition, the contemporaneous testing performed, which only revealed ROM limitations on flexion and extension did not quantify the limitations or provide a qualitative assessment. He also admitted during his deposition that he did not miss a single day of work, thus defeating his 90/180-day claim. As such, the trial court was reversed and the complaint dismissed.

10/5/10            Karvay v. Gueli
Appellate Division, Second Department
Defendant’s Experts’ Reports Do Not Indicate Tests Performed or Compare Findings to What Is Normal So Defendant Fails to Meet His Burden

Defendant relied on the reports of an orthopedist and a neurologist who examined both plaintiffs, Iveta and Boleslaw Karvay. The orthopedist noted that Iveta was unable to touch her toes during lumbar testing. He also stated she had full passive ROM of the cervical spine but did not indicate what objective tests her performed. The neurologist, in turn, set forth degrees of motion on lumbar and cervical testing, but did not compare those results with what is normal. As regards Boleslaw, the orthopedist noted significant restriction in flexion of the lumbar spine. The neurologist, while noting “normal” neck movement, again failed to indicate the objective tests performed and also failed to compare the restrictions noted in the lumbar spine to the norm. Because defendant failed to meet his prima facie burden, the court did not need to review plaintiffs’ opposing papers.

10/5/10            Pierson v. Edwards
Appellate Division, First Department
Plaintiff’s Failure to Submit Contemporaneous Report Defeats Claims Under Soft Tissue Categories

Here plaintiff’s submissions were plagued with evidentiary problems. Contemporaneous MRI reports were unaffirmed and, therefore, inadmissible. Although MRI reports of the cervical and lumbar spine from two years later were set forth in defendant’s examining neurologist’s affirmed report and indicated plaintiff had bulging discs in the cervical and lumbar regions, this was not evidence of a serious injury without the required objective evidence of the extent of the alleged limitations and their duration. In addition, plaintiff’s treating chiropractor’s report was in affirmation, rather than affidavit form, and when, upon reargument, it was submitted in affidavit form, it was nevertheless insufficient because the chiropractor did not quantify any ROM limitations. Even plaintiff’s orthopedist surgeon’s report was insufficient to raise an issue of fact under the soft tissue categories because he did not examine plaintiff until 4½ years after the accident. As neither plaintiff nor her orthopedic surgeon proffered any competent medical evidence that was contemporaneous with the accident, her claims failed.

10/5/10            Riley v. Randazzo
Appellate Division, Second Department
Plaintiff’s Own Affidavit Does Not Raise a Triable Issue of Fact

On appeal the trial court is reversed and summary judgment is granted to defendants where, in opposition, plaintiff only submitted his own insufficient affidavit and the affirmed medical report of a doctor who saw plaintiff three times, but never set forth any competent medical evidence regarding the existence of any significant ROM limitations.

10/5/10            McClelland v. Estevez
Appellate Division, First Department
If One Injury Meets Threshold, All Injuries May Be Considered

Citing the recent Court of Appeals decision in Linton v. Nawaz, the court modifies the trial court’s order by affirming the denial of defendant’s motion to dismiss the complaint but granting the motion with regard to plaintiff’s 90/180-day claim.

In support of his motion, defendant submitted affirmed reports of an orthopedist and a neurologist, as well as plaintiff’s deposition testimony in which he admitted only missing three days of work. In opposition, plaintiff submitted an MRI of his lumbar spine, which revealed herniation at L5/S1, and the affirmed report of his expert which related the injury to the accident. Because serious injury was established with regard to the lumbar spine, the court does not need to address whether his proof with respect to his other alleged injuries would be sufficient to withstand defendant’s motion for summary judgment.
Note: We covered the Linton v. Nawaz decision in our April 16, 2010 edition of Coverage Pointers.

10/1/10            Accurso v. Kloc
Appellate Division, Fourth Department
Plaintiff’s Expert Fails to Provide Qualitative Assessment Which Results in Reversal on Appeal

Plaintiff’s vehicle was rear-ended. In her bill of particulars, she asserted claims under the permanent consequential and the significant limitation categories and submitted the affirmation of her treating physician who determined she had persistent back pain and numbness in her lower left extremity related to the accident and supported his determination with objective findings from a fluoroscopically-guided injection of the left sacroiliac joint.

Nevertheless, on appeal the trial court was reversed and summary judgment granted to defendants whose motion was supported by an IME reporting only a mild lumbosacral strain with no neurological findings and no objective evidence of permanency. In reversing, the court found that plaintiff’s expert’s affirmation failed to set forth plaintiff’s restrictions as a result of the injuries or provide a qualitative assessment of the seriousness of the injuries to support her deposition testimony. Her expert also noted no significant range-of-motion limitation and that she was able to continue work. As such, plaintiff failed to raise a triable issue of fact in opposition to defendants’ motion.

10/1/10            Gallo v. Rieske
Appellate Division, Fourth Department
Plaintiff Fails to Prove Injuries Under the Permanent Consequential or Significant Limitation Categories Where Experts Determine Injuries Not “Protracted” Limitations

Defendant submitted plaintiff’s emergency room records, X-rays, MRI, records of a treating neurologist and the IME report of defendant’s examining physician in support of her motion. Both doctors concluded that plaintiff only sustained a mild injury and did not suffer from any protracted limitations. They determined there was no objective medical evidence of a significant or permanent injury and plaintiff failed to raise an issue of fact in opposition. Plaintiff also failed to submit the necessary objective evidence to support her claim under the 90/180-day category. Summary judgment dismissing the complaint was affirmed.

10/1/10            Stearns v. O’Brien
Appellate Division, Fourth Department
Defendant Defeats Her Own Motion by Submitting Plaintiff’s Deposition Testimony

On appeal, the trial court’s grant of summary judgment to defendant is affirmed with respect to two of the four categories alleged in the complaint. With regard to the other two, permanent consequential and significant limitation of use categories, the trial court’s denial of defendant’s motion is also affirmed.

Defendant did not submit any competent medical evidence regarding the injury to plaintiff’s jaw and, in fact, raised a triable issue of fact sufficient to defeat her own motion by submitting the deposition testimony of plaintiff in which plaintiff testified as to the condition of his jaw including the pain, audible clicking, limited ability to open the mouth and chew and the possible future need for surgery.

10/1/10            Roll v. Gavitt
Appellate Division, Fourth Department
Plaintiff Defeats Summary Judgment by Submitting IME Reports Opining Accident Aggravated Pre-Existing Condition

Defendant met his initial burden by submitting an IME in which the examining physician indicated that the injury to plaintiff’s cervical spine was only “minor, mild or slight”, and was, therefore, insignificant and did not meet the serious injury threshold. The physician also noted that plaintiff had pre-existing degenerative and hypertrophic changes in the cervical spine.

In opposition, however, plaintiff submitted two IME reports from his workers’ compensation claim and an affidavit from his treating physician. These reports contained sufficient medical evidence to defeat defendant’s motion where the IME physician opined that the accident aggravated plaintiff’s pre-existing condition. The trial court’s denial of defendant’s motion was affirmed.

10/1/10            Webb v. Bock
Appellate Division, Fourth Department
Plaintiff’s Past Medical History Raises Question Regarding Injury’s Relatedness to Accident

Plaintiff’s vehicle was rear-ended and he claimed that he sustained a neck injury, but only under the significant limitation of use category which, by definition, means “significant” and not “minor, mild or slight.” Defendant’s IME physician determined that plaintiff sustained only minor whiplash. In opposition to defendant’s motion, plaintiff established that he is disabled due to injuries to his lumbar spine sustained in several prior accidents. He failed to defeat defendant’s motion, however, because here he only claimed injury to his neck and his submissions did not address how, in light of his past history, the neck injury was related to the accident in question.

9/28/10            Ballard v. Cunneen
Appellate Division, Second Department
Defendants’ Examining Orthopedist Notes Significant ROM Limitations More Than Two Years Post-Accident; Claim in Bill of Particulars Not Addressed

On appeal, the trial court is reversed and summary judgment is denied to defendants who relied, in part, on the affirmed report of an orthopedist. The orthopedist examined plaintiff more than two years after the accident and noted significant range-of-motion limitations of the cervical and thoracolumbar spine. In addition, defendant Cunneen’s motion papers, upon which the other defendant relied, did not address the 90/180-day claim set forth in plaintiff’s bill of particulars. Not only did defendant Cunneen’s experts examine plaintiff over two years after the accident, they did not relate their findings to the 180 days following the accident.

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

ARBITRATION
10/1/10            Medical Care of WNY v. Respondent
Arbitrator Kent L. Benziger, Erie County
While Limited to This Case, Failure to Send to Correct Address Reasonable Excuse to Compliance with 30-Day Rule

The eligible injured person (“EIP”) was involved in an August 6, 2006, motor vehicle accident while operating his or her employer’s vehicle. The employer filled out the accident report and listed an insurance code for American County Insurance Company. The EIP regained a law firm and on August 21, 2006, the firm sent, via certified mail, to the vehicle owner a request that the owner provide notification of the accident to his insurer. The same day, the law firm sent correspondence to American County Insurance Company providing notification of the accident. The letter was returned with no forwarding address to the law firm.

The law firm determined the correct address and on September 12 and 19th sent notification of the accident, together with a copy of the MV-104A. The insurer received the notification on September 18, 2006. The law firm received an application for No-Fault benefits and returned same on October 11, 2006.

The insurer denied the entire claim on the grounds that the EIP failed to comply with the 30 day rule to provide notice of the accident.

The assigned arbitrator determined that the EIP, through counsel, did initially timely send notification even though to the old business address of the insurer. The question became whether this was a clear and reasonable justification for failing to comply with the 30 day timeframe.

The assigned arbitrator reasoned that the regulation’s intent was to focus on the EIP’s difficulty in ascertaining the insurer’s identity as opposed to the insurer’s correct address. The assigned arbitrator determined, based solely on the facts of this case, that the difficulty in determining the insurer’s address was clear and reasonable justification in failing to comply with the regulation. The law firm presented evidence of its efforts to timely notify the insurer as well as its relatively prompt effort to determine the insurer’s correct address and resend the notice of accident.

10/1/10            Elite Medical Supply of NY v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Journal Articles Did Not Support Conclusions of Peer Reviewer Resulting in Denial Being Found Improper

The Applicant sought reimbursement for an LSO traction belt and cervical traction collar as a result of a December 24, 2009, motor vehicle accident. The medical necessity for the testing was neck and low back pain with the braces being identified as reducing swelling, increasing circulation, and permitting daily home use.

The insurer denied the durable medical equipment upon the peer review of Rom Amidror, D.C. Mr. Amidror opined that the LSO traction belt was not medically necessary as there was no documentation that the eligible injured person had a mechanical or structural instability, dislocation or fracture requiring immediate immobilization. Further, the prescribed durable medical equipment would be counterproductive to the physical therapy program goals and the medical literature does not support the use of such equipment.

The assigned arbitrator, upon reviewing the portions of the journals recited in the peer review, determined that those conclusions did not support the peer reviewer’s opinion. Therefore, the insurer did not meet its burden in establishing lack of medical necessity.

LITIGATION

10/12/10            Matter of Okslen Acupuncture v. Dinallo
Appellate Division, First Department
Article 78 Against Superintendent, NICB, and Insurers Properly Dismissed.

The trial court properly dismissed the petition against all defendants in this Article 78 proceeding by a medical provider assigned No-Fault benefits as well as eligible injured persons claiming No-Fault benefits to compel the Superintendent of Insurance to audit and investigate the Respondent insurer’s claims practices, compel the National Insurance Crime Bureau (NICB) to cease investigating on behalf of the Respondent insurers until it is licensed under General Business Law Article 7 and compel the Respondent insurers to ensure that their SIU investigators are qualified under the No-Fault regulations.

The petition was properly dismissed against the Insurance Superintendent as the relief requested seeks to compel discretionary acts. The petition was also properly dismissed against NICB and the insurers as there was no allegation that petitioners are employees or members of these private parties affected by the discharge of their rules or bylaws.

10/5/10           Hunter v. OOIDA Risk Retention Group, Inc.
Appellate Division, Second Department
Excellent Review of Why Loss Transfer Unavailable for New York Insured in Out of State Accident

Plaintiff, Hunter, was an “independent trucker” involved in a February 3, 2006, Connecticut motor vehicle accident. Hunter was operating a Freightliner tractor-trailer by agreement with the owner – Fleego Delivery Systems. The tractor was registered in New York. The tractor was insured by OODIA through a commercial motor carrier liability policy. The OODIA policy provided mandatory PIP protection and OBEL coverage. The total amount of benefits available was $100,000. The OODIA policy further provided that OOIDA was subrogated to the rights of its insured to the extent of OODIA’s payment of benefits under the policy.

As a result of this accident, Hunter claimed injuries to his knees, neck, and lower back. He eventually underwent left knee arthroscopic surgery.

The other motor vehicle involved in the accident was operated by Ms. Gubbins and owned by Ms. Lesinski. Ms. Lesinski’s motor vehicle was registered in Connecticut and the she resided in Connecticut. The motor vehicle was insured by USAA Casualty Insurance Company (“USAA”). USAA is licensed and authorized to transact business in New York and Connecticut. The USAA policy provided $100,000/300,000 in bodily injury liability insurance coverage for this accident.

OOIDA issued payments to Hunter in the amount of $72,710.00 for medical expenses and lost wages. OOIDA sent correspondence to USAA on December 7, 2006, advising USAA that USAA’s insured was responsible for the first party benefit payments due to OOIDA’s subrogation rights.

In the meantime, USAA and Hunter reached a settlement agreement with regard to Hunter’s third-party liability claims against Gubbins and Lesinski for the $100,000 policy limit, but the agreement could not be consummated due to OOIDA’s subrogation claim.

Hunter commenced this action against USAA and OOIDA seeking a declaration that OOIDA could not recover its first party benefits it paid to him either by lien against his bodily injury action or by subrogation.

Hunter sought summary judgment against OOIDA on the theory that under Insurance Law §5102(j) OOIDA can only assert a lien for first-party benefits against a non covered person. Hunter contended that all parties – Hunter, Gubbins, and Lesinski – were covered persons under the statute precluding the lien assertion. Further, OOIDA’s claim is governed by Connecticut law which bars such a claim under anti-subrogation law. USAA joined in on Hunter’s choice of law argument as well.

OOIDA opposed the motion acknowledging it had no lien right under Insurance Law §5102(j) but could seek loss transfer arbitration under Insurance Law §5105(a).

The trial court granted Hunter’s summary judgment motion on the ground that Insurance Law 5102(j) bars recovery and the claim OOIDA has against USAA is governed by Connecticut law and barred under the anti-subrogation law.

On appeal, the specific issue before the Court was whether an insurer that paid first party benefits to its insured under a New York policy for a Connecticut accident can recoup those benefits through loss transfer arbitration under Insurance Law §5105(a) against the insurer who issued a Connecticut policy to Connecticut tortfeasors.

The Court affirmed the trial court’s decision that OOIDA cannot recover in loss transfer arbitration in New York but on a different ground. The Court held that Insurance Law §5105(a) does not apply here because the statute applies only to accident that occur in New York and the tortfeasors are not in the category of persons that would have been liable directly in tort.

Thereafter, the Court proceeded through a detailed history of New York No-Fault insurance law. The Court described the system as being two pronged. The first prong addressed insurance coverage and recovery on a first party basis. In other words the statute required each motor vehicle owner to procure insurance coverage for himself or herself, operators, occupants, and pedestrians irrespective of fault.

The second prong addressed tort liability limitations in Insurance Law §5104(a) between defined covered persons under Insurance Law §5102(j). In particular, Insurance Law §5104(a) prohibits, inter alia, a covered person from recovering in tort against another covered person for injuries arising out of the use and operation of a motor vehicle in New York State basic economic loss. Accordingly, the No-Fault insurer must absorb the loss and cannot seek reimbursement through a lien or subrogation action when both parties are covered persons.

However, Insurance Law §5105(a) provides a special exception to this rule and in specific circumstances an insurer can proceed against another in intercompany arbitration to transfer the payment of first party benefits, irrespective of whether both parties are covered persons. The statute permits insurers or self insurers to pursue through arbitration only the insurer for the liable covered person for the amount it paid in first-party benefits but only if one of the vehicles involved in the accident weighs more than 6,500 pounds unloaded or is principally for the transportation of persons or property for hire.

Here, the Court reasoned that OOIDA was not seeking to recover from a covered person since, based upon a New York State Insurance Department Office of General Counsel Opinion a covered person is one who has no-fault coverage arising out of motor vehicle policy issued in New York. Thus, loss transfer arbitration under Insurance Law §5105(a) is unavailable for those out of state insureds involved in an accident with a New York insured.

However, the Court recognized and adopted the conclusion reached by Third and Fourth Departments, which have a different interpretation of covered person. Those Departments held that a covered person also includes individuals that have liability insurance coverage in excess of the statutory mandatory minimum issued by an insurer authorized to transact business in New York.

In this case, USAA’s insured had $100,000/$300,000 in liability insurance coverage, well in excess of New York’s required minimum, and USAA is authorized to transact business in New York. Therefore, USAA’s insured were covered persons under the insurance law. On that issue, OOIDA would not be precluded from pursuing arbitration under Insurance Law §5105(a).

Yet, the Court that OOIDA could not proceed with arbitration as OOIDA would only have the right to pursue arbitration “to the extent that such other covered person would have been liable, but for the provisions of this article, to pay damages in an action at law.” Therefore, the statute would not apply if New York’s no-fault law did not prevent the tortfeasor from being held liable to pay damages by an action at law.

Here, New York’s no-fault law does not prohibit Hunter from recovering from Gubbins and Lesinski in tort. Why you may ask when both parties are covered persons?? Think back to the summary of Insurance Law §5104(a) we provided earlier. Yup, you got it – the accident did not happen in New York State thus Insurance Law §5104(a) does not apply. Thus, a prerequisite set forth in Insurance Law §5105(a) has not been satisfied and OOIDA cannot proceed to arbitration.

Unfortunately, OOIDA did not appeal from the determination that it has no subrogation rights and the Court did not address that issue. The Court does state that there is obvious concern for double recovery but does not proceed to address how that concern is rectified. We submit a review of Insurance Law §5104(b) may address the concern.

10/1/10            St. Vincent Med. Care, P.C. a/a/o Albert Collins v. Clarendon Nat. Ins. Co.
Appellate Term, Second Department
Insurer Establishes Failure to Appear for IME and Breach of Condition to Policy Precluding Coverage

The insurer’s cross-motion for summary judgment dismissing the complaint should have been granted as it demonstrated that the eligible injured person failed to appear for scheduled independent medical examinations (“IME”). The insurer submitted an affidavit from the company hired by the insurer to schedule the IME establishing that the IME notices were mailed in accordance with standard office practice and procedure. The insurer also submitted an affidavit from the IME physician who attested to the eligible injured person’s failure to appear for the examination.

10/1/10            D.A.V. Chiropractic, P.C. v. American Transit Ins. Co.
Appellate Term, Second Department
Case Should Have Been Held in Abeyance Pending Decision from WC Board

The trial court should have held the case in abeyance pending determination from the Workers’ Compensation Board regarding the parties’ rights under the Workers’ Compensation Law. The insurer proffered sufficient evidence creating a question whether the eligible injured person was acting as an employee at the time of the accident and thus whether Workers’ Compensation applied. This issue is within the ambit of the Workers’ Compensation Board.

10/1/10            Lev Aminov, MD a/a/o Kareen Cohn v. Travelers Prop. Cas. Ins. Co.
Appellate Term, Second Department
How Can You Argue Non-receipt of Service Dates Insurer Enumerated but Plaintiff Never Asserted in Complaint?

The insurer’s motion for summary judgment was improperly granted on the ground that the insurer did not receive the claim forms at issue in the litigation within 180 days after the services were rendered. The plaintiff was actually required to submit them 45 days after the services were rendered. Further, the complaint listed only the amount at issue and not the dates of service at issue. The claim forms at issue were not annexed to the complaint either. The Court held that it was unclear what source the insurer derived the service dates from if it never received them and the plaintiff never enumerated them. Therefore, the insurer did not meet its initial burden on summary judgment.

Burden on Summary Judgment When Only Insurer Seeks Summary Judgment
There is an explosion of cases on the burden for summary judgment when the insurer moves for such relief. We have grouped them together for you and all find that the insurer was entitled to summary judgment as the plaintiff failed to come forward with evidence to specifically rebut the expert’s conclusions and opinions in an independent medical examination or peer review report:

10/1/10            Altair Med., P.C. v. Clarendon Nat. Ins. Co.
Appellate Term, Second Department

10/1/10                      Neomy Med., P.C. a/a/o Rob Perez v. Auto One Ins. Co.
Appellate Term, Second Department

10/1/10            Alfa Med. Supplies a/a/o Angel Peralta v. Progressive Northeastern Ins. Co.
Appellate Term, Second Department

10/1/10            Mutual Care Med. Supply, Inc. a/a/o Albert Childs v. Mercury Cas. Co.
Appellate Term, Second Department

10/1/10            I.V. Med. Supply, Inc. a/a/o Kenneth Fleming v. Mercury Ins. Grp.
Appellate Term, Second Department

Acupuncture Claims Dismissed as Insurer Demonstrated Paid at Fee Schedule
There are also a number of cases reported this time involving acupuncture services that the insurer properly paid at the workers’ compensation fee schedule rate. Therefore, the action should have been dismissed as the bills at issue were already paid:

10/1/10           Irina Kazanskaya a/a/o Glady Rodriguez v. GEICO Ins. Co.
Appellate Term, Second Department

10/1/10            MIA Acupuncture a/a/o Cherry Ann Mellad v. GEICO Ins. Co.
Appellate Term, Second Department

10/1/10           Point of Health Acupuncture, P.C. a/a/o Michael Rusynyak v. GEICO Ins. Co.
Appellate Term, Second Department


PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

10/12/10            Abacus Federal Savings Bank v ADT Security Services, Inc.
Appellate Division, First Department
Agreement Providing for a Limitation of Liability for One’s Own Negligence Is Held Enforceable; Waiver of Subrogation Bars Other Claims
Plaintiff, Abascus, entered into an agreement with ADT wherein ADT agreed to install a central burglar alarm. Co-Defendant Diebold also entered into a contract with Abascus where it agreed to provide monitoring services of the central alarm system. Both agreements contained provisions which exonerated ADT and Diebold, respectively, for losses arising from their respective negligence. Further, both agreements required that Abascus procure first party property coverage providing insurance against, among other things, theft and burglary.

In 2004, during the course of the agreements, someone broke into Abascus’ bank vault. The burglary appeared to have occurred over the course of several hours. Unfortunately, however, either the alarm did not work properly, Diebold did not notice the alarm, or both.

As a result, Abascus commenced the instant action seeking recovery for the loss. Abascus’ theories were premised upon gross negligence and/or breach of contract. The court immediately dismissed the claims for gross negligence under standing precedent which holds that a failure to properly install or monitor burglary alarm systems does not rise to “gross” negligence. Moreover, there was no claim for ordinary negligence because the parties had contractually waived any liability for negligent conduct.

Finally, the court noted that the waiver of subrogation clause found with the Diebold agreement required that all losses be covered under Abascus’ first party policy. Accordingly, the waiver of subrogation clause barred any attempt to recovery from Diebold.

As a result, Abascus’ dismissed all claims as against both ADT and Diebold.

10/12/10            Mt. McKinley Insurance Company v Corning Incorporated
Appellate Division, First Department
No “Common Interest Privilege” Where the Parties Were Not United-In-Interest
In this case, Corning sought to preclude production of certain documents that they maintained by were protected by the common interest privilege. This privilege enables interested parties to freely discuss an issue which commonly affects all parties to the communication. The doctrine is a very practical idea, and at times a very useful protection, but with one major problem in this case.

Here, despite Corning’s arguments to the contrary, the collaborating parties were not aligned in interest, but, in fact, adverse to one another. Further, and probably because the parties were adverse, Corning was also unable to satisfy the requirement that all parties shared a reasonable expectation of confidentiality.

Barring unity and an expectation of confidentiality, Corning’s attempts avoid disclosure were overruled.

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

10/12/10            American Legacy Foundation RP v. National Union
United States District Court for the Third Circuit
Applying Delaware Law – The Distinction Between the Duty to Defend and the Duty to Advance Defense Costs
American Legacy Foundation is a Delaware non-profit corporation, formed by the terms of the 1998 Master Settlement Agreement [“MSA”] between 46 states’ attorneys general and the country’s largest tobacco companies. Among these was Lorillard Tobacco Company. The MSA provided that the tobacco companies would fund advertising campaigns developed by the Foundation that demonstrated the negative impact of the use of tobacco products. Personal attacks or vilification of tobacco companies or its employees was prohibited.

In 2001, Lorillard sent a cease-and-desist letter to the Foundation threatening to file suit over one of the Foundations’ ads. Later, Lorillard followed up with a “Notice of Intent to Initiate Enforcement Proceeding under MSA”. Lorillard asserted that the Foundation had improperly used the funding designated by the MSA for public education and failed to meet its obligations under that agreement.

In response the Foundation filed a declaratory judgment action against Lorillard in Delaware Chancery Court. Six days later Lorillard brought suit against the Foundation in North Carolina state court. The complaint included no tort claims but alleged breach of the MSA and the covenant of good faith and fair dealing.

Lorillard then counterclaimed against the Foundation in the Delaware Chancery Court alleging breach of the MSA; breach of the duty of good faith and fair dealing implied in the MSA; violations of the Foundation’s bylaws and certificate of incorporation; a declaratory judgment that the Foundation was not eligible for public funding under the MSA; and trespass to chattel. The North Carolina suit was stayed and remained pending while the parties litigated the Delaware matter.

After lengthy discovery and motion practice, the Chancery Court found that the ads in question did not breach the MSA. The Delaware Supreme Court later affirmed the Chancery Court’s ruling.

During the time it was publishing the ads at issue, the Foundation had in effect a number and variety of insurance policies. There were three CGL policies written by Travelers and one CGL policy written by Scottsdale. In addition, National Union had issued an Individual and Organization [“I & O”] Policy as well as umbrella insurance to the Foundation. It is the National Union’s I & O and umbrella policies which are the subject of this litigation.

The Foundation put National Union on Notice of a potential claim upon receipt of Lorillard’s “cease and desist” letter in 2001. Ultimately, National Union disclaimed coverage under both its I & O and umbrella policies.

In May 2007, after all potential insurers denied coverage, the Foundation filed its action in the United States District Court for the District of Delaware to recover the approximately $17,000,000 it claims to have spent defending against Lorillard’s suit. The district court found in favor of National Union.

Unlike the terms of a typical liability insurance policy, the I & O policy issued by National Union explicitly stated that National Union did not assume the duty to defend unless defense of the case was tendered in writing by the policyholder. The Foundation did not contend that National Union was asked or required to assume the defense of the Lorillard litigation. Rather, the Foundation’s coverage claim is based on another provision of the I & O Policy which obligated National Union to “advance . . . at the written request of the insured, Defense Costs prior to the final disposition of a Claim. Such advanced payments by the insurer shall be repaid to the insurer by the insured . . . in the event and to the extent that the insured shall not be entitled under the terms and conditions of this policy to payment of such Loss”.

The policy further stipulated that “Only those . . . Defense Costs which have been consented to by the insurer shall be recoverable as Loss under the terms of this policy.” In addition, exclusion (k) denied coverage for claims “alleging, arising out of, based upon or attributable to any actual or alleged contractual liability of the insured under any express contract”.

The district court concurred with the Chancery Court’s conclusion that the Foundation “had an explicit relationship to the MSA”. As a result, the district court held that Exclusion (k) excluded coverage. The district court also decided that because Lorillard did not alleged libel or slander in the underlying cases, Exclusion (k)’s “escape clause” restoring insurance for those contractual claims that would have “attached in the absence of an express contract”, did not apply. Therefore, National Union had no duty to defend.

The Third Circuit agreed with the district court’s conclusion but analyzed the case on different grounds. The Court pointed out that the Foundation’s request for relief was not based on a refusal to assume the defense but rather the failure to advance the costs of the defense. The court noted that these are discrete concepts. When an insurance company assumed a defense, it retains and remunerates counsel; ordinarily no reimbursement of legal fees is required, even if the underlying claims proves false, fraudulent, or unfounded. In contrast, if an insurer agrees to advance the costs of a defense, the insured must request in writing the insurer’s consent before incurring defense costs and may be required to repay the insurer for advanced payments.

The starting point for the Court’s analysis is whether the duty to advance costs was activated, and if so, when. The Court notes that National Union’s policy does not state when the advance payments were due other than “prior to final disposition of a claim; that the record reveals no explicit requests for National Union’s prior approval of particular, designated defense expenses; and, that there were no demands by the Foundation for payment of accrued defense costs at any time prior to final resolution of the Lorillard suit. Nor did the Foundation challenge National Union’s denial of coverage until the filing of the declaratory judgment action.

The Foundation argues that the duty to advance payment of defense costs was triggered by Lorillard’s allegations in the counterclaims, the same criterion for determining when the obligation to defend arising in most liability policies.

The Court stated that although that argument may have some weight when an I & O policyholder seeks an interim determination of coverage, it does not win the day here. At no point before suit was filed in the district court did the Foundation seek a declaratory judgment contesting the application of Exclusion (k); nor did it demand payment of expenses as they came due; nor was there a written request for National Union’s consent at any time before the declaratory judgment action was brought.

Instead, the Foundation’s complaint in the district court sought a monetary judgment of at least $16,828,946.41. This legal action did not commence until after the Delaware Supreme Court had resolved the underlying dispute, holding that the Foundation had not committed any wrongful act against Lorillard. At that point, final determination of the issues arising under the I & O Policy as to the Lorillard claim had been reached.

The Court held that the legal and factual basis for resolution of the Lorillard suit had been finally adjudicated before the Foundation filed its declaratory judgment action to recover defense expenditures. The Court stated that it need not decide whatever might have been an obligation to advance moneys during early stages of the Lorillard litigation. The court noted that it is reality, not conjecture that establishes that the Foundation is not entitled to recovery of unadvanced costs of defense under the I & O policy after the underlying litigation has been finally adjudicated.

Finally the court held that notwithstanding the above it agreed with the District Court that coverage under the I & O Policy as barred by Exclusion (k) because the opinions of the Delaware Courts made clear that the rulings against Lorillard were not founded on the torts of libel, slander or disparagement. The rulings were based on breach of contract.

As to the National Union’s Umbrella policy the only issue which remained was whether the Foundation was entitled to coverage under Coverage B – Personal and Advertising Injury. The Court held that because Lorillard did not allege facts constituting “Personal Injury” as defined in the Umbrella Policy, a duty to defend under Coverage B was not triggered.

10/13/10           Genzyme Corporation v. Federal Insurance Company
United States District Court for the First Circuit
Applying Massachusetts Law – Interpreting a Directors & Officers Policy
Genzyme Corporation, a biotechnology corporation, appeals from a district court order dismissing Genzyme’s complaint against Federal Insurance Company for failure to state a claim. Genzyme sought to recover its costs in settling a shareholder class action under a corporate and director and officer liability policy. Federal denied coverage and Genzyme filed suit seeking damage of $10 million, the policy limits.

In May, 2003, Genzyme announced that it had decided to invoke the exchange provisions in its Articles of Organization and eliminate certain tracking stocks – the “share exchange”. The share exchange was unpopular with certain division shareholders and soon after it was announced, a number of shareholder lawsuits were filed against Genzyme, its board of directors, and its officers. The class action plaintiffs alleged that Genzyme and its officers and directors violated the securities laws by causing Genzyme to engage in insider trading and by failing to disclose material information to the public. They also alleged that the directors and officers breached their fiduciary duties of loyalty, candor, good faith, and duty care to Genzyme shareholders. The shareholders further allege that Genzyme breached the implied covenant of good faith with respect to the Articles of Organization and that Genzyme breached the merger agreement it executed with Biomatrix – an independent biomaterials company. Finally, the class action plaintiffs alleged that Genzyme engaged in unfair and deceptive trade practices under state law. The class action plaintiffs alleged that the directors and officers would be motivated to carry out such a scheme by virtue of the fact that they themselves owned large numbers of General Division shares.

In August, 2007 Genzyme agreed to settle all of the class members’ claims against the company and against its directors and officers by making a one-time payment of $64 million. The entirety of the settlement was paid by Genzyme. Genzyme now seeks to recover from Federal for the settlement in the amount of $10 million, the maximum recovery allowed under the policy.

The Directors and Officers policy issued by Federal contained two insuring clauses – Insuring Clause 2 and Insuring Clause 3. Insuring Clause 2 covers losses for which Genzyme grants indemnification to its Officers and Directors. Insuring Clause 3 covers losses suffered by Genzyme on account of securities claims.

The policy also contains a “Bump-Up” provision which provides that Federal shall not be liable under Insuring Clause 3 for that part of Loss, other than Defense Costs, which is based upon, arising from, or in consequence of the actual or proposed payment by any Insured Organization of allegedly inadequate or excessive consideration in connections with its “purchase” of securities issued to Genzyme. There is also an “Allocation” provision in the policy which addresses covered and uncovered claims.

Federal denied coverage to Genzyme stating that the settlement payment is not an insurable loss under the policy. Genzyme filed suit and Federal moved to dismiss on the grounds that Genzyme failed to state a claim upon which relief can be granted.

The district court dismissed the suit finding that the settlement payment was not an insurable loss for the purposes of Insuring Clause 3 as a matter of public policy. The district court opined that Genzyme in effect “stole” from certain shareholders and conferred and improper benefit on other shareholders. In the alternative, the district court held that the settlement payment represented a loss in connection with Genzyme’s purchase or proposed purchase of its own securities, thereby triggering the Bump-Up clause and excluding the payment from coverage under Insurance Clause 3. The district court also applied the Bump-Up Clause under Insuring Clause 2, even if it did not apply to Clause 2 the district court stated that it made little sense to allow a corporation to sidestep coverage limitations in its insurance policy through the simple expedient of claiming that a settlement payment was made to indemnify its directors and officers. Finally, the district court held that Genzyme did not state a claim of unfair and deceptive acts and practices under Mass. Gen. Laws ch. 93a.

On Appeal the First Circuit reversed the district court’s grant of Federal’s motion to dismiss in part.

First, the First Circuit determined that the public policy rationale articulated by the district court finds no support in Massachusetts statutory or decisional law. The court found no Massachusetts legislation or precedent for concluding that the settlement payment is uninsurable as a matter of public policy. The court held that there is no clear public policy that would prevent the parties from including securities litigation coverage in policies, or any basis to assume that policies are designed to exclude such coverage particularly where, as here, securities litigation is specifically mentioned in the policy and one class of claims arising from such litigation is specifically excluded by the Bump-Up clause.

Second, the Court concluded that it need not address the situation of whether Massachusetts recognizes an exception set forth in Clause 3 since the case does not fit within the framework of Clause 3. The Court stated that this case did not present an unjust enrichment situation because Genzyme obtained no identifiable asset in the share exchange and therefore the settlement payment cannot represent the restoration to the plaintiffs of some amount Genzyme had improperly taken and withheld.

Third, in response to Federal’s argument that a loss for insurance purposes does not occur if it derives from the fulfillment of an existing obligation, the court held that Genzyme had no concrete and identifiable preexisting contractual obligation to pay the amount of the settlement. Rather, the underlying complaint made clear that the alleged cause of the injury was in fact the breach of Genzyme’s applicable fiduciary duties and/or contractual obligations.

Next, the court addressed the Bump-Up clause. Analyzing the Bump-Up clause the court determined that the sole question was whether a “purchase” was involved. Essentially, the court agreed with Federal that a “purchase” was involved when certain division shares were cancelled rather than surrendered because such a transaction is commonly referred to as a purchase.

The Court concluded that the settlement payments made to the shareholders represented losses “arising from . . . a proposed payment . . . of allegedly inadequate or excessive consideration”. Since the Bump-Up provision applies to both actual and proposed payments of inadequate considered for a corporation’s own securities, Genzyme may not seek indemnification for that part of the settlement payment that went to the class members who sold into the open market.

Finally, the Court agreed with Genzyme that the district court erred in concluding that the Bump-Up clause would bar coverage under Insuring Clause 2, as well as to Insuring Clause 3. The Bump-Up clause could not bar Genzyme from seeking recovery under Clause 2 for any amount it paid to indemnify its officers and directors – on its face the Bump-Up clause only applies to Clause 3. The court referenced the allocation clause in the policy to support its position. The allocation provision in the policy specifically contemplates a situation in which the Bump-Up clause would bar coverage under Insurance Clause 3, but Insuring Clause 2 would still operate to provide coverage. Allocation would then be required.
Since the Bump-Up clause applies to Insurance Clause 3, but not to Insuring Clause 2, and the policy provides for allocation the court remanded to the district court to consider the all

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

10/8/10            Cumberland Packing Corp. v. Chubb Ins. Corp.
Supreme Court, Kings County
Recovery of Loss Sustained Due to Madoff Ponzi Scheme Limited to Limit of Employee Theft under One Policy
This is a case that arises out of the Madoff losses. Plaintiff, Cumberland Packing Corp., and its employee pension plan and trust invested $11.3 million with Madoff. The investment occurred in four separate years. The pension plan transferred $2 million to Madoff in 2002 and $2 million in 2004. Thereafter, plaintiff transferred $4.3 million in 2005 and $3 million in 2007.

After Madoff’s Ponzi scheme was exposed, plaintiff submitted a notice of claim to defendant. Defendant’s policy contained a “Crime Non-Liability Coverage Section,” which contained nine insuring clauses with varying limits of liability. Plaintiff claimed that it was entitled to coverage under four separate insuring clauses: the “Employee Theft” insuring clause, the “Funds Transfer Fraud” insuring clause, the “Premises” insuring clause, and the “Computer Fraud” insuring clause. Defendant denied coverage under all insuring clauses except the “Employee Theft” clause due to Madoff’s status as an “employee” of plaintiff’s pension. Accordingly, defendant paid $3.5 million, the limit of liability under this clause.

Thereafter, plaintiff brought this action to recover the balance. In considering defendant’s motion to dismiss, the court held as follows. First, the court agreed that Madoff qualified as an “employee” of the pension as an “employee” included any natural person fiduciary, trustee, administrator or employee of a Sponsored Plan and any other natural person required to be bonded in connection with such Sponsored Plan by Title 1 of ERISA. Thus, coverage under the “Employee Theft” clause was triggered.

Next, the court considered whether the pension fund and plaintiff constituted separate insureds entitled to separate recovery. The court held, based on a provision which provided that the maximum liability for each loss shall not exceed the Limit of Liability applicable to such loss regardless of the number of insureds, that this issue was irrelevant as plaintiff could not recover more than the maximum limit, $3.5 million. Further, the court considered whether the transfers were one act or more than act. In response, it pointed to a clause which held that all losses resulting from a single act or a number of acts of the same “employee” will be treated as a single loss. Even though Madoff did not act alone in his scheme, the court held that any loss caused by Madoff’s collaboration with others fell within the Employee Theft insuring claim limitation as a single loss.

In addition, the court considered the three other insuring clauses that defendant had denied coverage on. As the three other insuring clauses required that the theft be caused by a third-party, and Madoff was an employee, they did not apply.

Lastly, the court considered whether the loss was covered by prior policies. It held that the policy clearly stated that prior policies issued by the defendant terminate upon commencement of the present policy at issue and that there will be no coverage under any previous policy that had not been discovered and noticed to the defendant upon commencement of this policy.

10/4/10            American Empire Surplus Lines Ins. Co. v. Merchants Mut. Ins. Co.
Supreme Court, New York County
Court Denies Motion for Summary Judgment Where Moving Party Fails to Attach a Copy of the Insurance Policy and a Question of Fact Exists As to the Late Notice Claim
This action arises out of jobsite incident in which Benjamin Millar sustained serious injury when a ladder that he was descending slipped out from underneath him. Almost three years after the incident, he commenced an action against the property owners and the general contractor

The property owners and general contractor where additional insureds under commercial liability policies issued to Millar’s employer and Beaver Brook Associates, LLC. (another subcontractor). Plaintiff, Beaver Brook’s insurer, tendered the defense of the property owners and general contractor to defendant, the employer’s insurer. Defendant denied the tender based on an untimely notice of claim and asserted that the additional insured coverage under its policy had not been triggered.

In this motion for summary judgment, plaintiff argues that notice by a named insured is applicable to an additional insured provided that their interests were not adverse. Thus, its notice was timely. In reply, defendant argued that plaintiff’s notice was late and its motion was defective as it failed to attach a copy of defendant’s insurance policy.

In considering this motion, the court held that plaintiff’s failure to attach a copy of defendant’s policy, standing alone, would be sufficient to deny its motion. This was especially true as plaintiff sought, in the alternative, a determination that its policy was excess to defendants. Moreover, the court held that too many issues of fact existed concerning the allegedly late notice, especially as plaintiff failed to establish when and how the named insured placed defendant on notice of the incident, to grant summary judgment.

9/28/10           American Tr. Ins. Co. v. Chamishe Corp.
Supreme Court, Suffolk County
Where Injured Party Was First to Provide Notice of Suit, 38 Day Delay Was Reasonable As a Matter of Law
In another late notice case, plaintiff brought this declaratory judgment action seeking a declaration that it was not obligated to defend or indemnify defendants. The action arose out of a motor vehicle accident that occurred on September 24, 2002.

At the time of the accident, defendant Chamishe Corp. was insured under an automobile polity issued by plaintiff. It is undisputed that the injured party filed a claim with plaintiff regarding the accident. Plaintiff investigated the claim and settled the property damage claim by assigning 100% of the fault to its insured. However, the bodily injury claim was never settled. Approximately, two and a half years after the accident, the injured party brought an action against defendant.

After Chamishe failed to serve an answer, the injured party mailed a copy or the summons and complaint to plaintiff along with an affidavit of service. Plaintiff disclaimed coverage on the grounds that defendant failed to give timely notice of suit pursuant to the policy. When a default judgment was entered against defendant, plaintiff brought this action.

As first notice of suit was provided to plaintiff by the injured party 38 days after Chamishe failed to answer, the court found the delay reasonable as a matter of law. In addition, the court held that there was a question of fact as to whether plaintiff disclaimed as soon as reasonably possible. Specifically, there was an affirmation submitted which indicated that an adjuster with plaintiff, prior to the default judgment, indicated that he was going to disclaim coverage unless an extension to answer was granted. The injured party’s counsel denied the extension pursuant to a policy in his office which did not allow him to grant an extension to an insurance representative.

EARL’S PEARLS
Earl K. Cantwell

[email protected]


FALSE CLAIMS ACT CLAIMS:
BREACH OF CONTRACT OR FRAUD?


Allegations of fraud and qui tam claims brought under the Federal False Claims Act (“FCA”) are a legal and public relations nightmare. They may also have costly consequences given statutory provisions for enhanced damages, costs, and awards of attorneys’ fees. However, not every disagreement or problem on a federal contract rises to the level of “fraud” sufficient to state a claim under the FCA. The Fourth Circuit recently made this point in rejecting a claim by a disgruntled whistle blower in United States ex rel. John Owens v. First Kuwaiti General Trading & Contracting Co., 2010 U.S. App. Lexis 14610 (4th Cir. July 16, 2010). In Owens, the Court emphasized that the FCA is concerned with fraud, not ordinary contract claims and disputes.

Owens was a foreman for First Kuwaiti on several construction contracts in Iraq totaling $600 million to construct new facilities. As is the usual tale, Owens became dissatisfied, then disgruntled, then resigned, and then filed a FCA suit alleging that First Kuwaiti defrauded the government by billing for defective work. Owens claimed there were several “construction mistakes” on the job, but the Court concluded that these amounted to “run of the mill” construction contract issues which were not “fraudulent” in nature.

Owens claimed that First Kuwaiti billed for substandard concrete work that had to be repaired, but the Court called such routine quality issues a “far cry from fraud”. It was also emphasized that the job was staffed by government inspectors who routinely examined and approved the work, indicating that there were no major defects and that the work was generally acceptable, which negated the element of fraud or falsity required under the FCA.

Owens also asserted that in progress payment invoices First Kuwaiti overstated the amount of work performed and implied that the invoices were for actual work completed when in fact they were only estimates. However, progress payments based on estimates are the norm in construction, and the contract contained a clause that stated the government would make progress payments based upon estimates of work completed.

A FCA claimant has to demonstrate that a party engaged in fraudulent conduct carried out knowingly or with reckless disregard. The Court rejected such a claim here, drawing a line between fraud or false statements and disagreements, routine adjustments, and corrections which are commonplace on construction projects.

It should be noted that heavily influencing the Court, which granted summary judgment dismissing the case, was the fact that the government witnesses generally supported the contractor and its work. These witnesses convinced the Court that the work was generally acceptable and that any alleged errors concerned the quality of the work and did not involve conscious or reckless fraud. It was unlikely that these issues would have even risen to the level of a breach of contract, but they certainly did not amount to fraud under the FCA.

The lesson of Owens is that, when confronted with a FCA claim or claims under similar state statutes, a valid defense is that even if there are errors, disagreements or problems with performance under a government contract, such problems were expected, routine, or do not rise to the level of fraud in the circumstances. The same analysis would also apply if the nature of the dispute involves disagreements on the interpretation of contractual terms and provisions, as opposed to outright fraud or deception.

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

10/08/2010            Northern Security Insurance Company v. Stanhope
Supreme Court of Vermont
One Insured’s Application Misrepresentation Did Not Preclude Coverage for Innocent Co-Insureds
This case is the most recent decision in protracted litigation involving allegations of sexual abuse at a day care run out of the insured’s home. Northern Security Insurance Company filed a declaratory judgment action, arguing that no coverage existed with respect to the complaints. After judgment, appeal, reversal, and remand, the trial court denied Northern’s motion for summary judgment on grounds that the insured wife’s application misrepresentations voided the policy completely. The Supreme Court upheld the trial court’s ruling that the policy was void as to the wife, due to her misrepresentations, however the other insureds were entitled to coverage as innocent co-insureds because they were unaware of the misrepresentation and the policy expressly applied separately to each insured against whom suit was brought. Northern’s argument that the policy barred recovery by innocent co-insureds was rejected by the Court without discussion of the merits, because Northern did not raise the issue below and so preserve it for review on appeal. The Court also rejected Northern’s argument regarding the burden of proof for the intentional harm exclusion; Northern argued that the insured had the burden to prove that the injuries were not intended, however the Court held that the insured had the burden of making a prima facie case for coverage, and the insurer had the burden to rebut by proving application of the exclusion. The Court affirmed the trial court’s ruling that the intentional harm exclusion hinges on a subjective standard as to the intent of the insured, and found no basis for Northern’s claim that the jury was misled or prevented from considering the totality of the facts and circumstances in determining intent to harm.
Submitted by: Mike Bagley and Benson Ward, Drew, Eckl & Farnham, LLP -

10/07/10            Clayton v. Southern General Insurance Company
Court of Appeals of Georgia, Third Division
No Evidence That Boyfriend and Cousin of Insured’s Daughter Were Insured Persons Under the Policy.

Southern General Insurance Company filed suit seeking declaratory judgment that its policy did not provide coverage for the driver of its insured’s vehicle. The insured occasionally allowed her daughter to drive the insured vehicle for certain limited purposes, and on the night in question allowed her daughter to drive the vehicle home. After the daughter went to bed, the daughter’s boyfriend and his cousin took the keys and drove the vehicle to a nightclub, and on the way home the cousin, now driving, struck another car, resulting in injuries to the passengers in the other car. The trial court granted summary judgment to Southern General, and the passengers appealed, arguing that genuine issues of material fact existed as to whether the boyfriend and cousin were permissive users of the vehicle and thus covered under the Southern General policy. Where the policy defined “insured persons” as one driving the insured vehicle “with the expressed or implied consent of the named insured,” and the Court found no genuine issue of material fact as to whether the boyfriend or cousin had permission to drive the vehicle, the two were not insured persons under the policy. The Court also found coverage excluded under the policy because the two men used the vehicle without a reasonable belief that they were entitled to do so. Finally, the Court precluded any application of the “second permittee” doctrine, because the two men’s use of the vehicle to drive to a nightclub exceeded the permission given by the insured to her daughter.
Submitted by: Mike Bagley and Benson Ward, Drew, Eckl & Farnham, LLP

REPORTED DECISIONS
RLI Insurance Company v. Smiedala


Appeal from an order of the Supreme Court, Niagara County (Frank Caruso, J.), entered August 13, 2009 in a declaratory judgment action. The order granted the motion of defendants Michael J. Hale and Regional Integrated Logistics, Inc. for summary judgment determining that plaintiff is obligated to pay costs and fees incurred by them in defending this action.

SCHINDEL, FARMAN, LIPSIUS, GARDNER & RABINOVICH LLP, NEW YORK CITY, HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR PLAINTIFF-APPELLANT.
SLIWA & LANE, BUFFALO (KEVIN A. LANE OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by denying that part of the motion with respect to defendant Michael J. Hale and vacating those parts concerning that defendant and as modified the order is affirmed without costs, and the matter is remitted to Supreme Court, Niagara County, for further proceedings in accordance with the following Memorandum: Plaintiff commenced this action seeking judgment declaring that it is not obligated to defend or indemnify defendants Michael J. Hale and Regional Integrated Logistics, Inc. (Regional) in the underlying personal injury action and related third-party action under the commercial automobile insurance policy issued by plaintiff to Regional. Supreme Court granted the motion of Hale and Regional for summary judgment declaring that plaintiff must defend and indemnify them under the policy. On a prior appeal, we determined that Hale is not an insured under the policy, and we therefore modified the judgment by denying that part of the motion with respect to Hale and granting judgment declaring that plaintiff is not obligated to defend or indemnify Hale in the underlying action (RLI Ins. Co. v Smiedala, 71 AD3d 1553). Before our decision in that appeal was issued, the court granted the subsequent motion of Hale and Regional for summary judgment determining that plaintiff is obligated to pay costs and fees incurred by them in defending the declaratory judgment action.
Contrary to plaintiff's contention, the court properly granted that part of the motion with respect to the attorneys' fees incurred by Regional in the declaratory judgment action. "It is well settled that an insurer's responsibility to defend reaches the defense of any actions arising out of the occurrence,' and defense expenses are recoverable by the insured, including those incurred in defending against an insurer seeking to avoid coverage for a particular claim" (National Grange Mut. Ins. Co. v T.C. Concrete Constr., Inc., 43 AD3d 1321, 1322, quoting Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21). Moreover, "an insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorneys' fees regardless of whether the insurer provided a defense to the insured" (U.S. Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 598; see Progressive Halcyon Ins. Co. v Giacometti, 72 AD3d 1503, 1507). We reject the contention of plaintiff that it is not obligated to pay the attorneys' fees incurred by Regional because it is an excess insurer whose coverage has not yet been triggered. Although plaintiff's duty to defend Regional may not have been triggered in the underlying action because the primary coverage has not been exhausted, Regional may nevertheless recover its attorneys' fees from plaintiff incurred in the declaratory judgment action inasmuch as Regional was "cast in a defensive posture by the legal steps [plaintiff took] in an effort to free itself from its policy obligations" (Mighty Midgets, 47 NY2d at 21). The coverage dispute here is between plaintiff and Regional and does not involve the primary carrier or its coverage.
We agree with plaintiff, however, that Hale is not entitled to attorneys' fees inasmuch as he is not an insured under the policy and thus did not prevail in the declaratory judgment action (RLI Ins. Co., 71 AD3d at 1554-1555; see generally Nestor v McDowell, 81 NY2d 410, 415-416, rearg denied 82 NY2d 750). We therefore modify the order accordingly.
The record establishes that the same attorney represented Hale and Regional in the declaratory judgment action, and it is not possible to determine on the record before us how much of the attorneys' fees are attributable to each of them. We therefore remit the matter to Supreme Court to determine the amount of reasonable attorneys' fees to which Regional is entitled in the declaratory judgment action following a hearing, if necessary (see Progressive Halcyon Ins. Co., 72 AD3d at 1507).
Council v. Utica First Insurance Company


Appeal from a judgment (denominated order and judgment) of the Supreme Court, Onondaga County (Brian F. DeJoseph, J.), entered September 24, 2009 in a declaratory judgment action. The judgment, insofar as appealed from, granted the motion of defendant for summary judgment, declared that defendant is not obligated to defend and indemnify its insured and denied the cross motion of plaintiff for summary judgment.

ALEXANDER LAW OFFICE, PLLC, SYRACUSE (RALPH S. ALEXANDER OF COUNSEL), FOR PLAINTIFF-APPELLANT.
FABER BROCKS & ZANE, LLP, MINEOLA (SHERRI N. PAVLOFF OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the judgment so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking a declaration that, inter alia, defendant is obligated to defend and indemnify its insured, a nightclub against which plaintiff obtained a default judgment. In the underlying action, plaintiff sought damages for injuries he sustained during an altercation with an employee of the nightclub. Supreme Court, inter alia, granted defendant's motion for summary judgment dismissing the complaint in this action and denied plaintiff's cross motion for summary judgment on the complaint. We affirm.
At the outset, we agree with plaintiff that the court erred in determining that he failed to plead a cause of action for negligence against the nightclub in the underlying action. Plaintiff alleged that he suffered an "assault" and that the nightclub was "negligent." It is well settled that "an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage' . . . If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured,' " and that is the case here (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137; see Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648; Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669-670, rearg denied 54 NY2d 753; see also Melito v Romano, 160 AD2d 1081, 1082).
We conclude, however, that defendant established its entitlement to judgment as a matter of law dismissing the complaint. Plaintiff testified during the hearing preceding the default judgment that he was injured when he was "tackled" by a bouncer at the nightclub during a discussion with the bar manager. Although plaintiff alleges that he was injured as a result of the "negligence" of the bouncer, the record demonstrates that the attack was an unprovoked assault, and thus the event falls within the "Assault and Battery" exclusion of the nightclub's insurance policy with defendant (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 352; U.S. Underwriters Ins. Co v Val-Blue Corp., 85 NY2d 821, 822-823; Mark McNichol Enters. v First Fin. Ins. Co., 284 AD2d 964).
Contrary to plaintiff's contention, "[d]efendant is not estopped from asserting that its insured acted intentionally by virtue of the finding of negligence in the [underlying] action. Because the judgment was entered on default, the issue of negligence was not actually litigated in [that] action, and the finding of negligence therefore has no collateral estoppel effect" (Rourke v Travelers Ins. Co., 254 AD2d 730, 731; see Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457; Robbins v Michigan Millers Mut. Ins. Co., 236 AD2d 769, 771).
Ballard v. Cunneen


Anthony J. Montiglio, Mineola, N.Y., for plaintiff-appellant.
Scalzi & Nofi, Melville, N.Y. (Vincent J. Nofi of counsel), for
defendant-respondent- appellant.
Dennis Marc Reisman, Great Neck, N.Y. (John B. Whelan of
counsel), for plaintiff-respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff Rose Rogers appeals, as limited by her brief, from so much of an amended order of the Supreme Court, Nassau County (Spinola, J.), dated March 13, 2009, as granted that branch of the motion of the defendant Victor P. Cunneen, and that branch of the cross motion of the defendant Edna M. Jackson, which were for summary judgment dismissing the complaint insofar as asserted by her on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and the defendant Victor P. Cunneen cross-appeals, as limited by his brief, from so much of the same amended order as denied that branch of his motion which was for summary judgment dismissing the complaint insofar as asserted against him by the plaintiff Etta Louise Ballard on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the amended order is reversed insofar as appealed from, that branch of the motion of the defendant Victor P. Cunneen, and that branch of the cross motion of the defendant Edna M. Jackson, which were for summary judgment dismissing the complaint insofar as asserted by the plaintiff Rose Rogers are denied; and it is further,
ORDERED that the amended order is affirmed insofar as cross-appealed from; and it is further,
ORDERED that one bill of costs is awarded to the plaintiffs.
On the afternoon of November 13, 2005, the plaintiffs were passengers in a motor vehicle operated by the defendant Edna M. Jackson, when it collided with a motor vehicle operated by the defendant Victor P. Cunneen, on Jericho Turnpike. After issue was joined, Cunneen moved for summary judgment dismissing the complaint insofar as asserted against him on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d), and Jackson cross-moved for summary judgment dismissing the complaint of Rogers, in reliance on the contentions and medical evidence which Cunneen presented in support of his motion. Cunneen failed to meet his prima facie burden of showing that Ballard did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of the motion, Cunneen relied upon, inter alia, the affirmed medical report of Dr. David Benatar, who was Cunneen's examining orthopedist. Dr. Benatar examined Ballard on February 26, 2008, more than two years after the accident. On that date, he performed various range-of-motion testing on Ballard, including cervical spine and thoracolumbar spine testing. According to Dr. Benatar's own findings, during this examination, he noted significant limitations in range of motion in those regions of Ballard's spine (see Chang Ai Chung v Levy, 66 AD3d 946).
In addition, Cunneen's motion papers never addressed the claim clearly set forth by Ballard in her verified bill of particulars that she sustained a medically-determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The accident occurred on November 13, 2005, and Cunneen's physicians conducted their independent examinations on Ballard in February 2008, more than two years later. Neither of Cunneen's experts related their findings to this category of serious injury for the period of time immediately following the accident (see Sayers v Hot, 23 AD3d 453).
Furthermore, the defendants failed to make out a prima facie case that Rogers did not sustain a "significant disfigurement" as a result of the subject motor vehicle accident (Insurance Law § 5102[d]; see Onder v Kaminski, 303 AD2d 665, 666).
In view of the foregoing, Cunneen failed to establish his entitlement to judgment as a matter of law with respect to both plaintiffs, and Jackson failed to establish her entitlement to judgment as a matter of law with respect to Rogers. Accordingly, we need not consider the sufficiency of the plaintiffs' opposition papers (see Onder v Kaminski, 303 AD2d at 666).
Accurso v. Kloc


Appeal from an order of the Supreme Court, Erie County (Rose H. Sconiers, J.), entered December 3, 2009 in a personal injury action. The order denied the motion of defendants for summary judgment.

LAW OFFICES OF LAURIE G. OGDEN, BUFFALO (JERRY MARTI OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
FLAHERTY & SHEA, BUFFALO (MICHAEL J. FLAHERTY OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs, the motion is granted and the complaint is dismissed.
Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Nina A. Accurso (plaintiff) when the vehicle she was operating was rear-ended by a vehicle owned by defendant Shirley J. Kloc and operated by defendant Nicole M. Kloc. The complaint, as amplified by plaintiffs' bill of particulars, alleges that plaintiff sustained a serious injury as a result of the motor vehicle accident under two categories of Insurance Law § 5102 (d), i.e., a permanent consequential limitation of use of a body organ or member and a significant limitation of use of a body function or system. We agree with defendants that Supreme Court erred in denying their motion for summary judgment dismissing the complaint inasmuch as defendants established as a matter of law that plaintiff did not sustain a serious injury and plaintiffs failed to raise an issue of fact sufficient to defeat the motion (see generally Zuckerman v City of New York, 49 NY2d 557, 561).
In support of their motion, defendants submitted the affirmation of the physician who conducted the independent medical examination of plaintiff (see generally Zuckerman v City of New York, 49 NY2d 557, 562). The physician stated therein that, as a result of the motor vehicle accident, plaintiff sustained a mild lumbosacral strain with no neurologic involvement. He further stated that there was no objective evidence that any injury sustained by plaintiff in the motor vehicle accident "kept her from doing the majority of her routine activities," nor was there any "objective evidence [that plaintiff] sustained any injury which would have caused any permanency."
In opposition to defendants' motion, plaintiffs submitted the affirmation of plaintiff's treating physician, who is board certified by the American Board of Physical Medicine and Rehabilitation. It is axiomatic that "whether a limitation of use or function is significant' or consequential' . . . 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; see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352-353). Here, plaintiffs' expert determined that plaintiff had persistent back pain with numbness in her left lower extremity that was causally related to the motor vehicle accident, and he supported that determination with objective findings from the fluoroscopically-guided injection of plaintiff's left sacroiliac joint (see Toure, 98 NY2d at 350; cf. Weaver v Town of Penfield, 68 AD3d 1782, 1785). Nevertheless, we conclude that plaintiffs failed to raise an issue of fact to defeat defendants' motion inasmuch as the affirmation of their expert failed to set forth plaintiff's limitations or restrictions of use as a result of the injuries (cf. Toure, 98 NY2d at 352-353). Although plaintiff testified at her deposition that she was no longer able to engage in many activities, including bicycling, housework, gardening and power-walking, plaintiffs' expert did not address or quantify any limitations in the activities of plaintiff resulting from her injuries (cf. id.). Indeed, plaintiffs' expert noted that plaintiff had no significant loss of range of motion and was able to continue to work at her job. Although plaintiffs' expert concluded that plaintiff may have "periodic flare-ups of pain that will require intervention . . . once or twice a year for the foreseeable future," he likewise failed to provide the requisite qualitative assessment of the seriousness of plaintiff's injuries (see id. at 350-351).
Gallo v. Rieske


Appeal from an order and judgment (one paper) of the Supreme Court, Erie County (John A. Michalek, J.), entered October 1, 2009. The order and judgment granted the motion of defendant for summary judgment and dismissed the complaint.

SPADAFORA & VERRASTRO, LLP, BUFFALO (RICHARD E. UPDEGROVE OF COUNSEL), FOR PLAINTIFF-APPELLANT.
BURGIO, KITA & CURVIN, BUFFALO (WILLIAM J. KITA OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the order and judgment so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking damages for injuries she allegedly sustained when a vehicle driven by defendant collided with the vehicle in which plaintiff was a passenger. Supreme Court properly granted defendant's motion 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). With respect to two of the three categories of serious injury allegedly sustained by plaintiff, i.e., a permanent consequential limitation of use and a significant limitation of use, the Court of Appeals has held that "[w]hether a limitation of use or function is significant or consequential (i.e., 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" (Toure v Avis Rent A Car Sys., 98 NY2d 345, 353 [internal quotation marks omitted]). In support of her motion, defendant submitted plaintiff's emergency room records, imaging tests that included X rays and an MRI, and records of plaintiff's treating neurologist and a physician who examined plaintiff on behalf of defendant, both of whom concluded that plaintiff did not suffer from any protracted limitations as a result of the accident. "Defendant thereby established that plaintiff sustained only a mild injury as a result of the accident and that there was no objective medical evidence that plaintiff sustained a significant or permanent injury" (Beaton v Jones, 50 AD3d 1500, 1501; see Sewell v Kaplan, 298 AD2d 840). Plaintiff failed to raise an issue of fact with respect to either of those two categories (see generally Zuckerman v City of New York, 49 NY2d 557, 562).
Defendant further established that plaintiff did not sustain a serious injury within the meaning of the 90/180 category, the third category of serious injury allegedly sustained by plaintiff. Defendant met her initial burden with respect to that category, and plaintiff failed to raise an issue of fact, i.e., she failed "to submit the requisite objective evidence of a medically determined injury or impairment of a non-permanent nature' . . . and to establish that the injury caused the alleged limitations on plaintiff's daily activities" (Calucci v Baker, 299 AD2d 897, 898; see Beaton, 50 AD3d at 1502).
Stearns v. O'Brien


Appeal from an order of the Supreme Court, Ontario County (Craig J. Doran, A.J.), entered May 11, 2009 in a personal injury action. The order, insofar as appealed from, denied in part the motion of defendant for summary judgment.

LAW OFFICE OF KEITH D. MILLER, LIVERPOOL (KEITH D. MILLER OF COUNSEL), FOR DEFENDANT-APPELLANT.
MERKEL AND MERKEL, ROCHESTER (CHARLES A. HALL OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action seeking damages for injuries sustained by Adam R. Stearns (plaintiff) when the vehicle he was driving collided with a vehicle operated by defendant, as well as economic damages incurred by plaintiff Kathleen Stearns in connection with the vehicle driven by plaintiff, her son. Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d), and Supreme Court granted those parts of the motion with respect to two of the four categories of serious injury alleged by plaintiffs. We affirm. Defendant failed to meet her initial burden on the motion with respect to the two remaining categories, i.e., permanent consequential limitation of use and significant limitation of use. In support of her motion, defendant failed to submit any competent medical evidence regarding the condition of plaintiff's jaw (see Elmer v Amankwaah, 2 AD3d 1350). Indeed, defendant herself raised a triable issue of fact whether plaintiff sustained a permanent consequential limitation of use or a significant limitation of use of his jaw as a result of the accident by submitting the deposition testimony of plaintiff concerning intermittent pain and audible clicking in his jaw, the limited ability to open his mouth and to chew certain foods, and the possible need for surgery (cf. Guillaume v Reyes, 22 AD3d 803, 803-804; see generally Mancusi v Miller Brewing Co., 251 AD2d 265). Because defendant failed to meet her initial burden, we do not examine the sufficiency of plaintiffs' opposing papers (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324).
Roll v. Gavitt


Appeal from an order of the Supreme Court, Steuben County (Marianne Furfure, A.J.), entered October 23, 2009 in a personal injury action. The order denied the motion of defendant for summary judgment and granted the cross motion of plaintiffs for partial summary judgment on the issue of negligence.

LEVENE GOULDIN & THOMPSON, LLP, VESTAL (JOHN L. PERTICONE OF COUNSEL), FOR DEFENDANT-APPELLANT.
LAW OFFICE OF JACOB P. WELCH, CORNING (ANNA CZARPLES OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action seeking damages for injuries allegedly sustained by Gary S. Roll (plaintiff) when the vehicle he was driving was rear-ended by a vehicle operated by defendant. Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d), and plaintiffs cross-moved for partial summary judgment on the issue of negligence. Supreme Court properly denied defendant's motion and granted plaintiffs' cross motion. With respect to defendant's motion, we agree with defendant that she met her initial burden by submitting evidence that plaintiff did not sustain a permanent consequential limitation of use or a significant limitation of use, the two categories of serious injury in Insurance Law § 5102 (d) set forth in plaintiffs' bill of particulars. Defendant submitted an "affirmed report" of a physician who, upon conducting an examination of plaintiff at defendant's request, indicated that the injury to plaintiff's cervical spine was only " minor, mild or slight . . .[, which is] classified as insignificant within the meaning of' " Insurance Law § 5102 (d) (Gaddy v Eyler, 79 NY2d 955, 957). Indeed, the physician opined that, although plaintiff "may have sustained soft tissue injuries to the cervical spine in the accident, . . . his current symptoms are minimal and intermittent," and he has preexisting "mild degenerative and hypertrophic changes" in his cervical spine. We further conclude, however, that plaintiffs raised a triable issue of fact in opposition to the motion by submitting two independent medical examination (IME) reports from a physician who examined plaintiff in connection with his workers' compensation claim, as well as an affidavit from his treating physician. The IME reports and affidavit contain the requisite objective medical findings that raise issues of fact whether plaintiff sustained a serious injury under both categories alleged by plaintiffs (see generally Toure v Avis Rent A Car, 98 NY2d 345, 350; Chmiel v Figueroa, 53 AD3d 1092). Contrary to defendant's contention, although plaintiff may have had a preexisting degenerative disc condition, the IME physician opined that the accident aggravated plaintiff's preexisting condition (see generally Ellis v Emerson, 34 AD3d 1334, 1335; Evans v Mendola, 32 AD3d 1231, 1232-1233).
Finally, contrary to defendant's remaining contention, the court properly granted plaintiffs' cross motion for partial summary judgment on the issue of negligence. "Plaintiffs met their initial burden of establishing a prima facie case of negligence by submitting evidence that defendant's vehicle rear-ended plaintiff's stopped vehicle" (Ruzycki v Baker, 301 AD2d 48, 50), and defendant failed to submit any evidence of negligence on the part of plaintiff sufficient to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562).
Webb v. Bock


Appeal from an order of the Supreme Court, Jefferson County (Hugh A. Gilbert, J.), dated October 14, 2009 in a personal injury action. The order granted the motion of defendant for summary judgment and dismissed the complaint.

STANLEY LAW OFFICES, LLP, SYRACUSE (PAUL STYLIANOU OF COUNSEL), FOR PLAINTIFF-APPELLANT.
SUGARMAN LAW FIRM, LLP, SYRACUSE (JENNA W. KLUCSIK OF COUNSEL), FOR DEFENDANT-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking damages for injuries he allegedly sustained when the vehicle he was driving was rear-ended by a vehicle operated by defendant. We conclude that Supreme Court properly granted defendant's motion 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). On appeal, plaintiff contends that he sustained a neck injury solely within the meaning of the significant limitation of use category of serious injury. It is well settled that, in order to qualify as a serious injury under that category, "[a]ny demonstrated limitation must be significant, not minor, mild or slight" (Kithcart v Mason, 51 AD3d 1162, 1163; see Gaddy v Eyler, 79 NY2d 955, 957). Defendant met his initial burden on the motion by submitting, inter alia, the affirmed report of a physician who examined plaintiff at defendant's request. The physician concluded, based on his examination of plaintiff as well as his review of plaintiff's medical records, that plaintiff sustained only minor, temporary injuries to his cervical spine, consisting of soft tissue injuries with minor whiplash. The burden thus shifted to plaintiff to raise a triable issue of fact, and he failed to do so (see Caldwell v Grant [appeal No. 2], 31 AD3d 1154; Wiegand v Schunck, 294 AD2d 839). Although plaintiff presented evidence establishing that he is disabled based on injuries to his lumbar spine, it is undisputed that those injuries were sustained in several prior accidents. Indeed, plaintiff seeks recovery in this case only for a neck injury, and his "submissions in opposition to the motion did not adequately address how [the neck injury], in light of [his] past medical history, [is] causally related to the subject accident' " (Anania v Verdgeline, 45 AD3d 1473, 1474).
McClelland v. Estevez


Baker, McEvoy, Morrissey & Moskovitz, P.C., New York
(Stacy R. Seldin of counsel), for appellant.
Steven Adam Rubin & Associates, PLLC, New York (Steven
Adam Rubin of counsel), for respondent.
Order, Supreme Court, Bronx County (Dominic R. Massaro, J.), entered on or about October 8, 2009, which, in an action for personal injuries sustained in a motor vehicle accident, denied defendant's motion for summary judgment dismissing the complaint, unanimously modified, on the law, the motion granted to the extent of dismissing plaintiff's claim based on the 90/180-day provision of Insurance Law § 5102(d), and otherwise affirmed, without costs.
Defendant established his prima facie entitlement to summary judgment by submitting evidence, including the affirmed reports of an orthopedist and neurologist, who determined, based upon their examinations of plaintiff and objective tests conducted, that he did not sustain a serious injury. Defendant also submitted the deposition testimony of plaintiff, who stated that he missed three days of work after the subject accident.
In opposition, plaintiff raised a triable issue of fact as to whether he sustained a serious injury to his lumbar spine.
Plaintiff's expert offered objective medical proof of limited range of motion in plaintiff's lumbar spine; the MRI of plaintiff's lumbar spine showed disc herniation at L5/S1; and plaintiff's expert affirmed that the injury was caused by the accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352-353 [2002]). Furthermore, although plaintiff's evidence regarding his injuries to his cervical spine and right elbow is limited, where "plaintiff establishe[s] that at least some of his injuries meet the No Fault' threshold, it is unnecessary to address whether his proof with respect to other injuries he allegedly sustained would have been sufficient to withstand defendant[']s motion for summary judgment" (Linton v Nawaz, __ NY3d __, 2010 NY Slip Op 02835, *2 [2010]; see also Rubin v SMS Taxi Corp., 71 AD3d 548, 549 [2010] ["[o]nce a prima facie case of serious injury has been established and the trier of fact determines that a serious injury has been sustained, plaintiff is entitled to recover for all injuries incurred as a result of the accident" (internal quotation marks and citations omitted)]).
However, plaintiff's claim under the 90/180-day category of Insurance Law § 5102(d) is dismissed in light of his testimony
that he only missed three days of work after the accident (see Day v Santos, 58 AD3d 447 [2009]).
We have considered defendant's other arguments and find them unavailing.
In the Matter of Allstate Insurance Company v. Ban


Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y.
[Marshall D. Sweetbaum] of counsel), for appellant.
Law Office of Schwartzapfel Truhowsky Marcus, P.C., Jericho,
N.Y. (Abraham Warmbrand of counsel),
for respondents-respondents.

DECISION & ORDER
In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals, as limited by its notice of appeal and brief, from so much of a judgment of the Supreme Court, Queens County (Rios, J.), entered December 18, 2009, as, after a framed-issue hearing, denied the petition and dismissed the proceeding.
ORDERED that the judgment is affirmed insofar as appealed from, with costs.
The Supreme Court properly determined, after a hearing, that on the date of the subject accident, Jozsef Ban and Claudia Ban (hereinafter together the claimants) were residents of the household of Elizabeth E. Ban, who is the named insured under the relevant automobile liability insurance policy and the mother of Jozsef Ban. Accordingly, the claimants were insured persons under the uninsured motorist endorsement of the subject automobile liability insurance policy (see Matter of Biundo v New York Cent. Mut., 14 AD3d 559, 559-560; Matter of Allstate Ins. Co. [Rapp], 7 AD3d 302, 303; Preferred Mut. Ins. Co. v Ryan, 179 AD2d 902). Contrary to the petitioner's contention, the mere fact that, prior to the accident, the claimants had purchased a separate home to which they intended to move after extensive renovations were completed, was not dispositive of the issue (see Matter of Biundo v New York Cent. Mut., 14 AD3d at 559-560; Matter of Allstate Ins. Co. [Rapp], 7 AD3d at 303; see also Hochhauser v Electric Ins. Co., 46 AD3d 174, 184). The claimants' undisputed testimony, which was also supported by documents such as driver's licenses and financial account statements, demonstrated that, while they had sometimes reported their address as that of their new home in order to avoid confusion of Jozsef Ban's mail with the mail of his father, who had the same name, they had been living in the house owned by the named insured for at least seven years prior to the accident, and, due to the ongoing renovations, had not yet moved into their own home as of the date of the accident. Accordingly, contrary to the petitioner's contention, the evidence demonstrated that, on the date of the accident, the claimants "actually resided in the [named insured's] household with some degree of permanence and with the intention to remain for an indefinite period of time" (Matter of Biundo v New York Cent. Mut., 14 AD3d at 560; see Matter of Allstate Ins. Co. [Rapp], 7 AD3d at 303; cf. Matter of State Farm Mut. Auto. Ins. Co. v Bonifacio, 69 AD3d 864, 865).
The petitioner's further contention that the claimants maintained a separate household within the named insured's two-family house is not supported by any evidence in the record (see generally Matter of State Farm Mut. Auto. Ins. Co. v Nater, 22 AD3d 762, 763).
MVAIC v. NYC East-West Acupuncture, P.C

Israel, Israel & Purdy, LLP, Great Neck (Jennifer Greenhalgh
Howard of counsel), for appellants.
Marshall & Marshall, Jericho (Craig B. Marshall of counsel),
for respondent.
Order and judgment (one paper), Supreme Court, New York County (Joan B. Lobis, J.), entered August 13, 2009, which, to the extent appealed from as limited by the briefs, granted petitioner Motor Vehicle Accident Indemnification Corporation's (MVAIC) application to vacate the arbitration awards in favor of respondent medical providers, and denied respondents' cross petition to confirm said awards, unanimously reversed, on the law, without costs, the petition denied, the cross petition granted, and the awards confirmed.
This appeal arises out of a motor vehicle accident that occurred on September 21, 2003. Chong Hong Li, a pedestrian, claimed to have been struck by a motor vehicle that fled from the scene. The one witness to the incident, Jian Neng Wu, provided the license plate number of the offending vehicle to the responding police officer. Based upon the information provided by Wu, police traced the vehicle to the owner, Phyllis Chu, a resident of New York State. Chu's vehicle was insured by Government Employees Insurance Company (GEICO) during the time period when the hit-and-run accident occurred.
As a result of the injuries she allegedly sustained, Li underwent medical treatment from appellants East-West Acupuncture, P.C. (East-West), MBR Psychological, P.C. (MBR), Sinai Medical, P.C. (Sinai), PSW Chiropractic Care, P.C. (PSW) and NY Comprehensive Medical P.C. (Comprehensive). All five medical providers submitted their claims to GEICO for payment. However, GEICO denied their claims on the basis that its investigation revealed that neither Chu, nor the vehicle insured by GEICO, was involved in the underlying incident.
In a letter dated October 27, 2004, counsel for appellant East-West notified MVAIC that GEICO denied its claim and requested payment for the medical services it rendered to Li.On December 10, 2003, Li executed a notice of intent to file a claim with MVAIC. MVAIC responded in a letter, dated January 20, 2004, that it would not honor Li's claim because pursuant to Article 52 of the New York Insurance Law, she was not a "qualified person" within the meaning of the statute since there was coverage from GEICO. Appellants East-West, Sinai, PSW and Comprehensive then filed arbitration request forms as to MVAIC and GEICO with the American Arbitration Association.[FN1]
During the course of the arbitration, GEICO received several continuances. On August 20, 2007, at the first scheduled hearing, GEICO produced an affidavit from Chu attesting that neither she, nor a vehicle she owned, had been involved in the hit-and-run accident. The arbitrator granted GEICO's request for an adjournment to allow GEICO to produce Chu to testify. However, at the next scheduled hearing GEICO failed to produce Chu. The arbitrator ordered GEICO to produce deposition transcripts of Li and Chu taken as a result of a personal injury action Li had filed against Chu in Supreme Court. The arbitrator also ordered GEICO to produce the order dismissing Li's personal injury claim.
On October 15, 2007, the next scheduled hearing date, GEICO produced Chu, however it did not produce the deposition transcripts or the order. Chu testified and MVAIC cross-examined her. The arbitrator then allowed GEICO until October 22, 2007, to serve all transcripts and the court order in the underlying personal injury action filed by Li. The arbitrator determined that should any party require further testimony from Chu, the parties were to advise the arbitrator within five days from the date GEICO served the deposition transcripts.
On October 22, 2007, the attorney for GEICO submitted to the arbitrator an affidavit of service attesting that GEICO served upon all parties the deposition transcript of Li and the order of the underlying personal injury action. After a telephone conference held on November 1, 2007 between the arbitrator and the parties, it was established that Chu's transcript had not been produced. The arbitrator then determined, after review of Supreme Court's decision dismissing Li's personal injury action, that the dismissal was not a result of the matter being tried on the merits, but as a result of Supreme Court granting a CPLR 3126 motion to dismiss for Li's failure to provide discovery.
At one point in Chu's testimony, when questioned regarding the license plate cited in the police report filed in connection with the underlying motor vehicle accident, Chu testified that she owned the vehicle cited in the police report, but that those license plates had been surrendered to the New York Department of Vehicles prior to the accident. Chu further testified that at the time Li was struck by the unidentified vehicle, she had been preparing her children for bed and that no one else was using her vehicle. Chu also testified that she had been advised by her counsel, who had represented her in Li's personal injury action, that Li had stated that Chu was not involved in the incident.
At a hearing held on November 5, 2007, MVAIC argued to the arbitrator that Li was not entitled to receive no-fault benefits because she was not a "qualified person" within Insurance Law § 5102 since there was a possibility that she was insured by Allstate. In support of its argument, MVAIC submitted an uncertified "Insurance Activity Expansion" document dated October 18, 2007, which indicated that someone with the same last name and date of birth, and who appeared to live at the same address as Li, held insurance with Allstate during the time she sustained her alleged injuries. MVAIC requested that the arbitrator adjourn the matter in order to allow it to investigate.
The arbitrator denied MVAIC's request based upon its conclusion that given the fact that four years had elapsed since Li had filed her notice of claim, MVAIC failed to exercise due diligence in investigating this matter. The arbitrator rendered awards in favor of the medical providers against MVAIC and dismissed the claims against GEICO. MVAIC appealed to the master arbitrator arguing that although GEICO was given multiple adjournments, its single request for a continuance to investigate whether Li was insured with Allstate was denied. MVAIC asserted that although it had time to investigate alternative theories of insurance coverage for Li, it did not have the opportunity to do so, and that it had no obligation to fully investigate this matter until either an arbitrator or a court concluded that no other insurer was responsible. The master arbitrator affirmed the awards based upon its conclusion that MVAIC's argument that it was not obligated to fully investigate this matter until after the arbitrator declared GEICO not responsible, was inconsistent with the purpose and intent of Articles 51 and 52 of the Insurance Law.
MVAIC moved to vacate the arbitration awards. In a decision and order dated October 31, 2008, Supreme Court affirmed the decisions of the arbitrator and the master arbitrator that GEICO was not responsible for Li's medical expenses. However, Supreme Court remanded this matter to the arbitrator for a new hearing in order to provide MVAIC with the opportunity to present evidence showing that Li is not entitled to benefits because she was covered by other insurance.
By order dated January 8, 2009, Supreme Court, inter alia, consolidated the five separate actions brought by MVAIC to vacate arbitration awards arising out of Li's motor vehicle accident and allowed appellant medical providers to interpose answers and/or cross-move to confirm the arbitration awards.
Appellant medical providers cross-moved to confirm the arbitration awards. In the order appealed from, Supreme Court denied the applications based upon its conclusion that
"[g]iven the length of time that had already passed since the accident and the commencement of the arbitration, a brief adjournment to ascertain whether or not Ms. Li had insurance coverage was not an unreasonable request . . . [and] that the arbitrator's failure to grant MVAIC's request is deemed to constitute an abuse of discretion constituting misconduct within the meaning of CPLR 7511 (b)(1)(i) since it resulted in the foreclosure of the presentation of pertinent and material evidence" [internal quotation marks and citations omitted].

We reverse.
It is well settled that "[a]djournments generally fall within the sound exercise of an arbitrator's discretion pursuant to CPLR 7506(b), the exercise of which will only be disturbed when abused" (Matter of Bevona [Superior Maintenance Co.], 204 AD2d 136, 139 [1994] [citations omitted]). The burden falls to "the party seeking to avoid an arbitration award to demonstrate by clear and convincing proof that the arbitrator has abused his discretion in such a manner so as to constitute misconduct sufficient to vacate or modify an arbitration award" (Matter of Disston Co. [Aktiebolag], 176 AD2d 679, 679 [1991] lv denied 79 NY2d 757 [1992] [internal quotation marks and citation omitted]). Arbitral misconduct is established not by the refusal of an adjournment, but where the refusal forecloses "the presentation of material and pertinent evidence to the [movant]'s prejudice" (Matter of Omega Contr. v Maropakis Contr., 160 AD2d 942, 943 [1990], lv denied 76 NY2d 710 [1990]).
We conclude that the arbitrator did not abuse his discretion in refusing to grant MVAIC an adjournment. The arbitrator's decision not to grant a postponement in order to allow MVAIC to investigate an adversary's contention was within his sound discretion and powers. Here, the record establishes that because of East-West's letter dated October 27, 2004, MVAIC had been on notice for approximately three years that GEICO denied East-West's claim on the basis that neither Chu nor a vehicle insured by GEICO was involved in the underlying hit-and-run motor vehicle accident. This letter also advised MVAIC that GEICO's investigation revealed that there existed no other insurance coverage for Li.
MVAIC's untimely assertion of a lack of coverage defense does not preclude it from denying liability (see Matter of MVAIC v Interboro Med. Care and Diagnostic PC, 73 AD3d 667 [2010]). However, we find that the arbitrator's refusal to adjourn the hearing did not constitute misconduct because there was an insufficient showing of cause for MVAIC's last minute request (see Gillis v Toll Land XIII Ltd. Partnership, 309 AD2d 734 [2003], lv denied 3 NY3d 602 [2004]).
Despite MVAIC having notice in late 2004 of GEICO's contentions, MVAIC took no affirmative steps, such as searching New York State Department of Motor Vehicle (DMV) records, to establish whether Li was eligible for MVAIC benefits. Indeed, MVAIC provides no explanation as to why it did not investigate the DMV records sooner or why it could not discover that Li allegedly used the alias "Lillian Li," and that under this alias, she was insured by Allstate at the time she sustained her injuries. Under these circumstances, we conclude that MVAIC has failed to establish by clear and convincing proof that the arbitrator abused his discretion in such a manner to constitute misconduct sufficient to vacate or modify the arbitration awards in favor of appellants.
We have reviewed MVAIC's remaining contentions and find them without merit.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
Footnotes

Footnote 1: East-West's arbitration request form is dated May 24, 2007, Sinai's arbitration request form is dated May 24, 2007, 2007, PSW's arbitration request form is dated June 28, 2007, and Comprehensive's arbitration request form is dated May 23, 2007. MBR's arbitration request form, dated November 20, 2007, was filed after the arbitration decisions regarding the other providers were rendered

Herendorf v. GEICO Insurance Company

CHELUS, HERDZIK, SPEYER & MONTE, P.C., BUFFALO (KEVIN E. LOFTUS OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
GELBER & O’CONNELL, LLC, AMHERST (TIMOTHY G. O’CONNELL OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

Appeal from an order of the Supreme Court, Erie County (Frank A.
Sedita, Jr., J.), entered June 16, 2009. The order, insofar as
appealed from, denied the motion of defendants for summary judgment
dismissing the complaints.

It is hereby ORDERED that the order so appealed from is affirmed
without costs.

Memorandum: Plaintiff commenced an action seeking supplementary underinsured motorist (SUM) coverage under an automobile insurance policy and an umbrella insurance policy issued by defendant Geico Insurance Company (Geico) to plaintiff’s parents. Plaintiff subsequently commenced a second action seeking SUM coverage for the full amount of the umbrella policy. Defendants moved for summary judgment dismissing the complaints “[b]ased upon the undisputed fact that [Geico] has never offered SUM coverage under its umbrella
policies in New York State.” Supreme Court denied the motion, and we affirm.

At the outset, we agree with defendants that the umbrella policy at issue is not ambiguous and does not provide SUM coverage (see Matter of Utica Mut. Ins. Co. [Leno], 214 AD2d 980, lv denied 86 NY2d 708; Connolly v St. Paul Fire & Mar. Ins. Co., 198 AD2d 652, 653).

The umbrella policy stated that it would pay damages on behalf of an insured arising out of an occurrence, and damages were defined as the total of, inter alia, “damages an insured must pay . . . because of personal injury or property damage covered by [the umbrella] policy.” The umbrella policy contained exclusions for damages resulting from “[p]ersonal injury to any insured” and for “[p]ersonal injury or property damage resulting from an . . . underinsured motorist claim unless a premium is shown for the [SUM] coverage in the declarations,”
and that is not the case here.

Plaintiff’s misreading of the declarations page of the umbrella policy did not create an ambiguity in that policy, and plaintiff erroneously relies on extrinsic evidence in an attempt to create an ambiguity. “[E]xtrinsic and parol evidence is not admissible to create an ambiguity in a written agreement [that] is complete and clear and unambiguous upon its face” (Intercontinental Planning v
Daystrom, Inc., 24 NY2d 372, 379, rearg denied 25 NY2d 959; see South
Rd. Assoc., LLC v International Bus. Machs. Corp., 4 NY3d 272, 278).

Contrary to plaintiff’s contention, the failure of defendants to issue a timely disclaimer does not alone warrant denial of the motion (see Insurance Law § 3420 [former (d)]). A “[d]isclaimer pursuant to section 3420 [(former [d])] is unnecessary when a claim falls outside the scope of the policy’s coverage portion” (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188), and that is the case here. The exclusions relied upon by defendants “simply reinforce the provision” that the umbrella policy provides coverage only for those damages that the insured must pay (New York Mut. Underwriters v Baumgartner, 19 AD3d 1137, 1140). Indeed, this case does not present “a situation in which the claim would be covered but for the policy exclusion[s]” (id.).

We nevertheless reject defendants’ contention that the court erred in denying the motion. Plaintiff alleged in the second action that the failure of Geico to provide SUM coverage was based on the “errors and omission” of its agent, defendant Jesse Jansky, in failing to obtain SUM coverage or to notify the policyholders of his inability to do so. An insurance agent “ ‘may be held liable, based upon either
breach of contract or tort, for neglect in failing to procure insurance’ ” (Mott v New York Prop. Ins. Underwriting Assn., 209 AD2d 981, 981; see Rodriguez v Investors Ins. Co. of Am., 201 AD2d 355; American Motorists Ins. Co. v Salvatore, 102 AD2d 342, 346). “[A] general request for insurance does not trigger a duty to recommend coverage for every possible scenario” (Frost v Mayville Tremaine, 299 AD2d 839, 840; see Catalanotto v Commercial Mut. Ins. Co., 285 AD2d 788, 790, lv denied 97 NY2d 604; Empire Indus. Corp. v Insurance Cos. of N. Am., 226 AD2d 580). Where, however, there is a specific request for insurance, the agent has a duty to obtain the requested coverage or to inform the client of his or her inability to do so (see Murphy v Kuhn, 90 NY2d 266, 270; Catalanotto, 285 AD2d at 790; Twin Tiers Eye Care Assoc. v First Unum Life Ins. Co., 270 AD2d 918, 919, lv denied 95 NY2d 758). In such a case, it must be demonstrated that the coverage could have been procured prior to the occurrence of the insured event (see Mott, 209 AD2d 981; Rodriguez, 201 AD2d 355; American Motorist Ins. Co., 102 AD2d at 346).

In support of their motion, defendants submitted evidence establishing that Geico does not provide SUM coverage in umbrella policies issued in New York. They also submitted the deposition testimony of Jansky, who had no recollection of his conversation with the policyholders but testified that, if they had requested SUM
coverage, he would have told them that Geico did not offer that coverage under an umbrella policy. In opposition to the motion, however, plaintiff submitted the affidavit of one of the policyholders, who averred that he specifically requested SUM coverage in the umbrella policy when he spoke with Jansky. He further stated that Jansky informed him that the umbrella policy would cover claims against his family, as well as claims brought by them, including those for injuries in underinsurance situations. That policyholder also averred that he was never told that Geico did not offer SUM coverage under umbrella policies. Plaintiff thus raised a triable issue of fact whether defendants breached their duty to her by failing to obtain the requested coverage or to inform the policyholders of Geico’s
inability to provide such coverage.

Defendants contend that, even if plaintiff had requested SUM coverage, such coverage was not available in umbrella policies issued by Geico in New York, and thus they cannot be required to provide coverage where none exists. We reject that contention. Although defendants established that Geico did not provide SUM coverage in New York, they failed to establish that other insurers did not provide such coverage. Defendants’ reliance on American Motorist Ins. Co. in support of the motion is misplaced. In that case, the insurance company established that no insurance company offered the coverage in question, i.e., coverage for interspousal liability claims, and thus the First Department concluded that there was no triable issue of fact “whether interspousal coverage could be obtained in New York from any insurance company” and no basis to impose liability upon the insurance company (102 AD2d at 346).

Finally, to the extent that defendants further contend that plaintiff “is conclusively presumed to know the contents of an insurance policy concededly received” (Laconte v Bashwinger Ins. Agency, 305 AD2d 845, 846; see Loevner v Sullivan & Strauss Agency, Inc., 35 AD3d 392, 394, lv denied 8 NY3d 808), that contention is not properly before us because it is raised for the first time in
defendants’ reply brief (see generally Matter of State of New York v Zimmer [appeal No. 4], 63 AD3d 1563; McCarthy v Roberts Roofing & Siding Co., Inc., 45 AD3d 1375; Turner v Canale, 15 AD3d 960, lv denied 5 NY3d 702).

Evans v. Pitt


Wollerstein & Futoran (Mitchell Dranow, Mineola, N.Y., of
counsel), for appellant.
Robert T. Acker, P.C., Massapequa, N.Y., for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals from so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated May 19, 2010, as denied her cross motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is affirmed insofar as appealed from, with costs.
While we affirm the order appealed from, we do so on a ground other than that relied upon by the Supreme Court. Contrary to the Supreme Court's determination, the defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50).
In opposition, the plaintiff raised a triable issue of fact based on the affidavit of his treating chiropractor, Dr. Jamie Skurka. Based on Dr. Skurka's contemporaneous and recent examinations of the plaintiff, which revealed significant limitations of the range of motion in the cervical and lumbar regions of the plaintiff's spine, and his review of the magnetic resonance imaging films of those regions of the plaintiff's spine, which revealed, inter alia, herniated discs at C3-4, C4-5, C6-7, and L4-5, Dr. Skurka concluded that the injuries to the cervical and lumbar regions of the plaintiff's spine, and significant range of motion limitations observed during the examinations, were permanent and causally related to the subject accident. This submission alone was sufficient to raise a triable issue of fact as to whether the plaintiff sustained a serious injury to the cervical and/or lumbar regions of his spine under the permanent consequential limitation of use and/or the significant limitation of use categories of Insurance Law § 5102(d) as a result of the subject accident (see Tai Ho Kang v Young Sun Cho,74 AD3d 1328; Barry v Valerio, 72 AD3d 996; Williams v Clark, 54 AD3d 942; Casey v Mas Transp., Inc., 48 AD3d 610; Green v Nara Car & Limo, Inc., 42 AD3d 430; Francovig v Senekis Cab Corp., 41 AD3d 643; Acosta v Rubin, 2 AD3d 657).
The plaintiff also provided an adequate explanation for the gap in his treatment history (see Pommells v Perez, 4 NY3d 566, 577; Delorbe v Perez, 59 AD3d 491, 492; Black v Robinson, 305 AD2d 438, 439-440).
Jean v. Labin-Natochenny


Mendolia & Stenz (Montfort, Healy, McGuire & Salley, Garden
City, N.Y. [Donald S. Neumann, Jr.], of counsel), for appellant.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Cullen, J.), entered May 6, 2009, as denied that branch of her motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Fegans Jean on the ground that that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the defendant's motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Fegans Jean on the ground that that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is granted.
The defendant met her prima facie burden of showing that the plaintiff Fegans Jean (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact.
The plaintiff failed to raise a triable issue of fact as to whether he sustained a serious injury to his right knee under the permanent loss of use, the permanent consequential limitation of use, and/or the significant limitation of use categories of Insurance Law § 5102(d), since he failed to set forth any objective medical findings from a recent examination concerning his right knee (see Clarke v Delacruz, 73 AD3d 965; Kin Chong Ku v Baldwin-Bell, 61 AD3d 938; Diaz v Lopresti, 57 AD3d 832, 832-833; Soriano v Darrell, 55 AD3d 900, 900-901; Diaz v Wiggins, 271 AD2d 639, 640; Kauderer v Penta, 261 AD2d 365, 366; Marin v Kakivelis, 251 AD2d 462, 463). Moreover, the only testing done on the plaintiff's right knee during the period of time immediately after the subject accident was on July 12, 2005, and testing conducted on that date by Dr. Jean-Marie L. Francois revealed only that range of motion of the plaintiff's right knee was "limited when right knee flexion and extension are tested." Dr. Francois failed to quantify any such limitation, and there was no qualitative assessment of the right knee contained in Dr. Francois's affirmation (see Toure v Avis Rent A Car Sys., 98 NY2d at 350; Robinson-Lewis v Grisafi, 74 AD3d 774; Ortiz v Ianina Taxi Servs., Inc., 73 AD3d 721; Acosta v Alexandre, 70 AD3d 735; Giannini v Cruz, 67 AD3d 638, 639; Taylor v Flaherty, 65 AD3d 1328; Barnett v Smith, 64 AD3d 669, 671). In addition, the plaintiff admitted during his deposition that he did not miss a single day of work as a result of the subject accident and, thus, was not prevented from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 of the first 180 days immediately following the accident (hereinafter the 90/180-day category). Accordingly, the plaintiff failed to raise a triable issue of fact under the 90/180-day category of Insurance Law § 5102(d) with respect to the injury to his right knee.
With respect to the alleged injuries to the cervical and lumbar regions of the plaintiff's spine, the plaintiff also failed to raise a triable issue of fact as to whether those injuries were "serious" with the meaning of Insurance Law § 5102(d).
Karvay v Gueli


Peter M. Zirbes, Esq. & Assoc., P.C., Forest Hills, N.Y., for
appellants.
Russo, Apoznanski & Tambasco, Westbury, N.Y. (Susan J.
Mitola of counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Adams, J.), dated June 25, 2009, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that neither of them sustained a serious injury within the meaning of Insurance Law § 5102(d), and denied, as untimely and academic, their cross motion for summary judgment on the issue of liability.
ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the defendant's motion for summary judgment dismissing the complaint on the ground that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d), and substituting therefor a provision denying the motion, and (2) by deleting the provision thereof denying, as untimely and academic, the plaintiffs' cross motion for summary judgment on the issue of liability, and substituting therefor a provision denying, as untimely, the plaintiffs' cross motion for summary judgment on the issue of liability; as so modified, the order is affirmed, without costs or disbursements.
Contrary to the Supreme Court's determination, the defendant failed to meet his prima facie burden of showing that the plaintiffs did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of his motion, the defendant relied on the affirmed medical reports for both plaintiffs of Dr. Anthony Spataro and Dr. C.M. Sharma.
As to the plaintiff Iveta Karvay (hereinafter Iveta), she was examined by Dr. Spataro, an orthopedist, on November 4, 2008. At that time, Dr. Spataro noted that Iveta was unable to bend when asked to touch her toes during lumbar spine testing. Additionally, when Dr. Spataro examined Iveta's cervical spine, he merely stated that she had "full passive range of motion," but failed to set forth any objective testing he did in order to arrive at that conclusion (see Chiara v Dernago, 70 AD3d 746; Mannix v Lisi's Towing Serv., Inc., 67 AD3d 977; Smith v Quicci, 62 AD3d 858; Giammalva v Winters, 59 AD3d 595).
Dr. Sharma, a neurologist, examined Iveta on November 12, 2008. At that time, Dr. Sharma noted that during cervical spine testing, Iveta was able to perform 15 to 20 degrees of motion. Dr. Sharma further noted that during lumbar testing, Iveta was able to elevate her legs to 30 degrees bilaterally. While Dr. Sharma set forth these findings, he failed to compare them to what was normal (see Chiara v Dernago, 70 AD3d at 746; Wallace v Adam Rental Transp., Inc., 68 AD3d 857; Page v Belmonte, 45 AD3d 825, 826; Malave v Basikov, 45 AD3d 539, 540; Fleury v Benitez, 44 AD3d 996).
The plaintiff Boleslaw Karvay (hereinafter Boleslaw) was also examined by Dr. Spataro on November 4, 2008. When Dr. Spataro examined Boleslaw, he noted that Boleslaw had a significant limitation in lumbar flexion (see Smith v Hartman, 73 AD3d 736; Quiceno v Mendoza, 72 AD3d 669; Giacomaro v Wilson, 58 AD3d 802, 803).
Dr. Sharma examined Boleslaw on November 12, 2008. Dr. Sharma stated that Boleslaw had "normal" movements of the neck, but failed to set forth the objective testing done to arrive at that conclusion. Additionally, while Dr. Sharma noted limitations of the lumbar spine, he failed to compare those findings to what was normal (see Gaccione v Krebs, 53 AD3d 524).
Since the defendant failed to meet his prima facie burden, it is unnecessary to consider whether the papers submitted by the plaintiffs were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).
The Supreme Court properly determined that the plaintiffs' cross motion was untimely.
Pierson v. Edwards


McMahon, Martine & Gallagher, LLP, Brooklyn, N.Y. (Patrick W.
Brophy of counsel), for appellant.
Martyn, Toher & Martyn, Mineola, N.Y. (Christine J. Hill of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals (1) from an order of the Supreme Court, Nassau County (Galasso, J.), entered August 5, 2009, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and (2), as limited by her brief, from so much of an order of the same court, entered December 17, 2009, as, upon reargument and renewal, adhered to the original determination.
ORDERED that the appeal from the order entered August 5, 2009, is dismissed, as that order was superseded by the order entered December 17, 2009, made upon renewal and reargument; and it is further,
ORDERED that the order entered December 17, 2009, is affirmed insofar as appealed from; and it is further,
ORDERED that one bill of costs is awarded to the defendant.
The Supreme Court correctly determined that the defendant met her prima facie burden of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. In this regard, the magnetic resonance imaging (hereinafter MRI) reports dated October 9, 2003, and September 16, 2003, were unaffirmed and, thus, were not in admissible form (see Grasso v Angerami, 79 NY2d 813; Resek v Morreale, 74 AD3d 1043; Lozusko v Miller, 72 AD3d 908). Additionally, although the MRI reports of the cervical region of the plaintiff's spine, dated January 31, 2005, and of the lumbar region of her spine, dated May 16, 2005, the contents of which were set forth in the affirmed medical report of the defendant's examining neurologist (see Lozusko v Miller, 72 AD3d 908; Zarate v McDonald, 31 AD3d 632; Ayzen v Melendez, 299 AD2d 381), indicated that the plaintiff had sustained, among other things, disc bulges in the cervical and lumbar regions of her spine, the mere existence of bulging discs, in the absence of objective evidence as to the extent of the alleged physical limitations resulting from the injuries and their duration, is not evidence of serious injury (see Lozusko v Miller, 72 AD3d 908; Shvartsman v Vildman, 47 AD3d 700; Patterson v NY Alarm Response Corp., 45 AD3d 656; Tobias v Chupenko, 41 AD3d 583; Mejia v DeRose, 35 AD3d 407).
The affirmation of the plaintiff's treating chiropractor did not constitute competent evidence to oppose the motion for summary judgment because it was not in affidavit form (see CPLR 2106; see also Perdomo v Scott, 50 AD3d 1115; Pichardo v Blum, 267 AD2d 441; Doumanis v Conzo, 265 AD2d 296). Moreover, the affidavit of that chiropractor submitted upon renewal failed to quantify any limitations in the plaintiff's ranges of motion revealed by objective medical testing and, thus, was inadequate to defeat summary judgment (see Robinson-Lewis v Grisafi, 74 AD3d 774, 775; Ortiz v Ianina Taxi Servs., Inc., 73 AD3d 721, 722).
Likewise, the affirmed medical report of the plaintiff's examining orthopedic surgeon failed to raise a triable issue of fact, since that physician did not examine the plaintiff for the first time until almost 4½ years after the subject accident. While that report set forth range-of-motion findings from the recent examination, neither the orthopedic surgeon nor the plaintiff proffered competent medical evidence that revealed the existence of significant limitations which were contemporaneous with the subject accident (see Resek v Morreale, 74 AD3d 1043; Delarosa v McLedo, 74 AD3d 1012; Vilomar v Castillo, 73 AD3d 758; Bleszcz v Hiscock, 69 AD3d 890; Taylor v Flaherty, 65 AD3d 1328; Fung v Uddin, 60 AD3d 992; Gould v Ombrellino, 57 AD3d 608; Kuchero v Tabachnikov, 54 AD3d 729; Ferraro v Ridge Car Serv., 49 AD3d 498). Absent such contemporaneous findings, the plaintiff's submissions were inadequate to withstand summary judgment under the permanent loss, permanent consequential limitation of use, or significant limitation of use categories of Insurance Law § 5102(d) (see Resek v Morreale, 74 AD3d 1043; Vilomar v Castillo, 73 AD3d 758; Jack v Acapulco Car Serv., Inc., 72 AD3d 646; Bleszcz v Hiscock, 69 AD3d 890; Taylor v Flaherty, 65 AD3d 1328; Ferraro v Ridge Car Serv., 49 AD3d 498).
Finally, the plaintiff's submissions failed to set forth competent medical evidence that the injuries she allegedly sustained as a result of the subject accident rendered her unable to perform substantially all of her daily activities for not less than 90 days of the first 180 days thereafter (see Nieves v Michael, 73 AD3d 716; Sainte-Aime v Ho, 274 AD2d 569).
Riley v. Randazzo


Richard T. Lau, Jericho, N.Y. (Linda Meisler of counsel), for
appellants.
Kenneth M. Mollins, P.C., Melville, N.Y., for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Suffolk County (Tanenbaum, J.), dated September 30, 2009, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is granted.
The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact.
The affirmed medical report of Dr. Jeffrey Perry submitted by the plaintiff in opposition to the defendants' motion failed to raise a triable issue of fact. While the plaintiff was examined by Dr. Perry on December 8, 2006, January 5, 2007, and March 16, 2007, Dr. Perry never set forth any competent medical evidence that revealed the existence of significant limitations of motion in the plaintiff's spine (see Fest v Agnew, 68 AD3d 1051; Bertoglio v Fernandez, 65 AD3d 1065, 1066).
In addition, the plaintiff's affidavit was insufficient to raise a triable issue of fact (see Shvartsman v Vildman, 47 AD3d 700; Fisher v Williams, 289 AD2d 288).
The plaintiff also failed to set forth competent medical evidence that the injuries he allegedly sustained as a result of the subject accident rendered him unable to perform substantially all of his usual and customary daily activities for not less than 90 days of the first 180 days thereafter (see Nieves v Michael, 73 AD3d 716; Sainte-Aime v Ho, 274 AD2d 569).
Feaster v. Boulabat


Feinman & Grossbard, P.C., White Plains (Steven N. Feinman
of counsel), for appellants.
Shayne, Dachs, Corker, Sauer & Dachs, Mineola (Jonathan A.
Dachs of counsel), for respondent.
Order, Supreme Court, Bronx County (Geoffrey D. Wright, J.), entered April 20, 2010, which, to the extent appealed from, denied defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.
Defendants failed to meet their initial burden of establishing prima facie that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Their examining orthopedist found limitations in range of motion in plaintiff's cervical and lumbar spines and both knees, and opined that these were attributable to degenerative changes. However, plaintiff testified that she had been asymptomatic before her car accident, and her orthopedic surgeon opined in a report submitted by defendants that plaintiff's injuries were causally related to the accident. Moreover, defendants' orthopedist's opinion that, while plaintiff may have sustained injuries to her cervical and lumbar spines and left knee in the accident, these injuries had resolved, is belied by the limitations in range of motion that he found in those areas (see Pommells v Perez, 4 NY3d 566, 577-578 [2005]; Linton v Nawaz, 62 AD3d 434, 438-439 [2009], affd 14 NY3d 821 [2010]). In view of defendants' failure to establish their prima facie case, we need not consider the sufficiency of plaintiff's opposition (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Glynn v Hopkins, 55 AD3d 498, 498 [2008]).
The report of defendants' orthopedist suggesting that plaintiff's injuries had resolved was based on an examination of plaintiff performed almost one year after the subject accident and was thus insufficient to show that plaintiff did not sustain a 90/180-day injury (see Toussaint v Claudio, 23 AD3d 268, 268 [2005]).
Mt. McKinley Insurance Company v Corning Incorporated


Dickstein Shapiro LLP, New York (Edward Tessler of counsel),
for appellant.
O'Melveny & Myers LLP, New York (Tancred V. Schiavoni of
counsel), for respondents.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered December 4, 2009, which, to the extent appealed from, granted the cross motion of respondents Century Indemnity Company et al. to compel discovery and denied appellant Corning Incorporated's assertion of the "common interest" privilege for certain communications with asbestos claimants made in connection with strategy and preparation for Bankruptcy Plan confirmation hearings, unanimously affirmed, with costs.
In this action seeking a declaratory judgment establishing entitlement to insurance coverage for defense and/or indemnification, the IAS court did not abuse its discretion in ordering the subject documents produced (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 1 AD3d 223, 224 [2003]). The court properly held that Corning failed to establish that the subject documents were protected by the common interest privilege, as the negotiations indicated that the parties remained in adversarial positions, and that there was no reasonable expectation of confidentiality (see In re Quigley, 2009 Bankr. LEXIS 1352 at *31 [Bankr SD NY 2009].
We have considered Corning's remaining arguments and find
them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
Abacus Federal Savings Bank v ADT Security Services, Inc.

Shook, Hardy & Bacon LLP, New Jersey (Charles Carson
Eblen of the bar of the State of New Jersey admitted pro hac
vice, of counsel), for ADT Security Services, Inc., appellant.
Lester Schwab Katz & Dwyer LLP, New York (Dennis M.
Rothman of counsel), for Diebold Incorporated, Inc., appellant.
Port & Sava, Garden City (George S. Sava of counsel), for
respondent.
Orders, Supreme Court, New York County (Ira Gammerman, J.H.O.), entered July 31, 2009, which denied so much of the motions of defendants ADT and Diebold as sought to dismiss the causes of action for breach of contract and gross negligence, unanimously reversed, on the law, with costs, the motions granted in their entirety, and the amended complaint dismissed against these defendants. The Clerk is directed to enter judgment accordingly.
This action arises out of an overnight burglary of plaintiff's bank and vault in 2004. On the date of the loss, ADT was obligated by written agreements to provide a central station burglar alarm system to protect plaintiff's premises. At the same time, Diebold was obligated by a separate agreement to monitor the signals of ADT's reporting system, and to provide the equipment necessary to perform such monitoring as well as additional security alarm equipment for redundant central station security monitoring. The breach-of-contract cause of action alleges these defendants' failures to provide security protection, to check the system to ensure its viability, and to notify plaintiff and the police upon receipt of alarms, suspicious signals or abnormalities within the system. The gross negligence cause of action is based upon the same failures coupled with the fact that the burglars were able to carry out their crime without interruption over an extended period of time.
Both defendants moved for dismissal of the gross negligence claims on the ground that plaintiff did not allege a breach of any duty independent of defendants' contractual obligations, and dismissal of the contract claims on the basis of the risk allocation provisions of the respective agreements. Diebold further asserted that its alleged failure to receive or act upon alarm signals did not constitute gross negligence as a matter of law, and that plaintiff lacked standing to assert claims for losses sustained by its safe deposit customers. The court denied these portions of the motions, finding the allegations facially sufficient for gross negligence and sufficient as a basis for the breach-of-contract claim. We disagree.
The agreements contained provisions that effectively exonerated these defendants from liability for their own negligence or limited the damages recoverable therefrom to nominal sums. Such contractual provisions are generally enforceable under New York law, although as a matter of public policy, a party may not contractually insulate itself from liability caused by its own grossly negligent conduct (see Colnaghi U.S.A. v Jewelers Protection Servs., 81 NY2d 821, 823 [1993]). Gross negligence, when invoked to pierce a contractual limitation of liability, must smack of intentional wrongdoing (Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 385 [1983]) by evincing a reckless indifference to the rights of others (see Sommer v Federal Signal Corp., 79 NY2d 540, 554 [1992]). This Court has consistently held that an alarm company's delayed or inadequate response to an alarm signal, without more, is not gross negligence (see e.g. Hartford Ins. Co. v Holmes Protection Group, 250 AD2d 526, 528 [1998]; Consumers Distrib. Co. v Baker Protective Servs., 202 AD2d 327 [1994], lv denied 84 NY2d 811 [1994]). Similarly, plaintiff's allegations that these defendants provided an inadequate security system, which they also failed to inspect, amount to nothing more than claims of ordinary negligence as opposed to gross negligence (see e.g. David Gutter Furs v Jewelers Protection Servs., 79 NY2d 1027 [1992]).
Plaintiff cites Sommer for the proposition that an alarm company can be held liable in tort for its gross failure to perform contractual services. In Sommer, the Court held that a fire alarm company could be held liable in tort for its gross failure to perform its contractual services properly. As the Court of Appeals explained, Sommer was based upon reasoning that the fire alarm company's duty, separate and apart from its contractual obligations, arose from the very nature of its services - to protect people and property from physical harm (see New York Univ. v Continental Ins. Co., 87 NY2d 308, 317 [1995]). Noting the catastrophic consequences that could flow from the fire alarm company's failure to perform its contractual obligations with due care, the Sommer court cited the central fire station requirement set forth in the Administrative Code (now § 27-972 [f] and [g]) as a reflection of the public interest in the careful performance of the fire alarm services contract (see New York Univ., 87 NY2d at 317). By contrast, no public interest is implicated here or in Gutter Furs, a case decided the same day as Sommer. We, thus, find no basis for tort liability in this case.
Under its agreement with Diebold, plaintiff was required to insure the premises and their contents against perils that included theft, and to look solely to its insurer for recovery in the event of a loss, waiving all such claims against Diebold. This waiver-of-subrogation provision constitutes a defense to all of plaintiff's claims, including gross negligence (see Great Am. Ins. Co. of N.Y. v Simplexgrinnell LP, 60 AD3d 456 [2009]). Although plaintiff's agreement with ADT did not contain a waiver-of-subrogation provision, it did require plaintiff to obtain its own insurance to cover the loss. In light of our holding, it is unnecessary to reach defendants' additional argument that plaintiff lacks standing to assert claims based upon losses sustained by its safe deposit customers (see Mehlman v 592-600 Union Ave. Corp., 46 AD3d 338, 343 [2007]).
Tower Insurance Company of New York v. Red Rose Restaurant, Inc.


Longo & D'Apice, Brooklyn (Mark A. Longo of counsel), for
Red Rose Restaurant, Inc., and Romano appellants.
Robert C. Fontanelli, P.C., Brooklyn (Robert C. Fontanelli of
counsel), for Peluso appellants.
Law Office of Max W. Gershweir, New York (Joshua L. Seltzer
of counsel), for respondent.
Judgment, Supreme Court, New York County (Doris Ling-Cohan, J.), entered February 13, 2009, inter alia, declaring that plaintiff insurer has no obligation to defend or indemnify defendants Red Rose Restaurant and the Romanos (the insureds) in an underlying personal injury action, unanimously affirmed, without costs.
The policy required the insureds to notify plaintiff of a possible claim as soon as practicable. The insureds became aware of defendant Maryann Peluso's accident on the night it occurred, but failed to notify the insurer of the possibility of a claim until 14 months later. An insured's good-faith belief in its nonliability may excuse the failure to give timely notice (see Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742 [2005]). "However, where a reasonable person could envision liability, that person has a duty to make some inquiry" as to potential liability (see White v City of New York, 81 NY2d 955, 958 [1993]). Here, the insureds failed to describe any action they took to ascertain the possibility of their liability for the accident. Since they knew that Peluso fell on or near their premises, assisted her, watched as she was taken away in an ambulance, and knew that her mother-in-law lived nearby and frequented the restaurant, the insureds "had both the ability and the responsibility to investigate the outcome of the accident" and determine for certain the location and the cause of her fall (SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 585 [1998]; see also White, 81 NY2d at 958). Their failure to do so belies any claim that they had a good-faith belief in their nonliability (York Specialty Food, Inc. v Tower Ins. Co. of N.Y., 47 AD3d 589 [2008]). Thus the 14-month delay in notifying the insurer was inexcusable (see e.g. id.).
The insureds' purported belief that Peluso fell on the abutting public sidewalk, as opposed to the restaurant steps, would not have relieved them of their duty to notify the insurer. Administrative Code of the City of New York § 7-210, which was in effect when the accident occurred, requires an abutting property owner to maintain a public sidewalk in a reasonably safe condition. The insureds' ignorance of this provision would not have excused their noncompliance with the policy requirement to notify plaintiff of the occurrence as soon as practicable (see e.g. Greyhound Corp. v Gen. Acc. Fire & Life Assur. Corp., 14 NY2d 380, 388 [1964, Fuld, J., concurring]).
The court properly exercised its discretion in denying the Peluso claimants' cross motion herein to strike the complaint. Plaintiff did not refuse to comply with the Pelusos' discovery demand; rather it produced the reports of its investigation, redacting only those portions that were privileged (see Recant v Harwood, 222 AD2d 372, 374 [1995]). As the Pelusos never sought to compel production of the redacted material, the court never determined that the material sought should have been disclosed, and no order was ever entered compelling plaintiff to produce material alleged to have been wilfully withheld, there is no basis for a sanction against plaintiff (see Zletz v Wetanson, 67 NY2d 711 [1986]).
We have considered defendants' remaining contentions and find them unavailing

Metalios v. Tower Insurance Company of New York


Bertram Herman, Mount Kisco, for appellants.
Law Office of Max W. Gershweir, New York (Joshua L. Seltzer
of counsel), for Tower Insurance Company of New York,
respondent.
Lazare Potter & Giacovas LLP, New York (Yale Glazer of
counsel), for The Automobile Insurance Company of Hartford,
Connecticut, respondent.
Order and judgment (one paper), Supreme Court, New York County (Louis B. York, J.), entered June 17, 2009, which granted defendants' motions for summary judgment declaring they had no duty to defend or indemnify plaintiffs in an underlying personal injury action, unanimously modified, on the law, to deny the motion of defendant The Automobile Insurance Company of Hartford, Connecticut (AIC), and otherwise affirmed, without costs.
Plaintiff Metalios hosted a party on February 12, 2005 for employees and friends at her Pluck U restaurant after closing hours. Early the next morning, Metalios witnessed a guest and former employee engaged in a verbal altercation with someone in the restaurant's kitchen, and a fight ensued. Shortly thereafter, a Pluck U employee fatally stabbed the guest and injured another person outside the restaurant.
The court properly declined to find that defendant Tower had a duty to defend or indemnify, based on the "assault and battery" exclusion in the commercial lines policy issued to Pluck U (see Marina Grand, Inc. v Tower Ins. Co. of N.Y., 63 AD3d 1012 [2009]; New York Cas. Ins. Co. v Ward, 139 AD2d 922 [1988]). Because the complaint's negligence allegations could not survive except for the assault, those claims are deemed to have arisen from the assault and are thus subject to the assault and battery exclusion (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 353 [1996]). Nor is there merit to Pluck U's argument that the exclusion is inapplicable because the insured was not involved in the assault. That the endorsement containing the exclusion was unsigned is also irrelevant because it was part of the insuring agreement. Where, as here, "the policy has been duly countersigned, an endorsement or rider which was a part of the policy when it was issued is valid even though not signed or countersigned by the insurer or its authorized representative" (68A NY Jur 2d, Insurance § 752; see also Ruiz v State Wide Insulation & Constr. Corp., 269 AD2d 518, 519 [2000]).
However, the court erred in finding that defendant AIC had no duty to defend or indemnify, based on the "business pursuits" exclusion in the homeowners policy issued to Metalios (see United Food Serv. v Fidelity & Cas. Co. of N.Y., 189 AD2d 74, 76-77 [1993]; Stewart v Dryden Mut. Ins. Co., 156 AD2d 951 [1989]; Home Ins. Co. v Aurigemma, 45 Misc 2d 875, 879-880 [1965]). We recognize that a business purpose may render an otherwise social activity, such as the party at issue here, a business pursuit, even if the gathering was partially motivated by social interests (see West Am. Ins. Co. v California Mut. Ins. Co., 195 Cal App 3d 314, 324, 240 Cal Rptr 540, 545 [1987]). However, it is beyond cavil that "an insurer seeking to exclude coverage must do so "in clear and unmistakable" language' and any exclusions are given a strict and narrow interpretation" (Bragin v Allstate Ins. Co., 238 AD2d 773, 774 [1997], quoting Seaboard Sur. Co. v Gillete Co., 64 NY2d 304, 311 [1984], quoting Kratzenstein v Western Assur. Co. of City of Toronto, 116 NY 54, 59 [1889]). Furthermore, we recognize that it is the insurer's burden to establish the applicability of the claimed exclusion, and any ambiguity perceived in its language "must be strictly construed against the insurer" (Allstate Ins. Co. v Noorhassan, 158 AD2d 638, 639 [1990] [emphasis added]).
The exception to the exclusion, that "[t]his exclusion does not apply to: (1) activities which are ordinarily incident to non-business pursuits," dictates a result contrary to that reached by the motion court. The exception focuses on the objective nature of the activity itself rather than on the motivation of the policy holder. We find on this record that a social gathering is "ordinarily incident to a non-business pursuit." Thus, even if Metalios's motivation was in part that of employee morale, a party itself falls under the exception to the exclusion. Even were the exception somewhat ambiguous, it nevertheless must be strictly construed against AIC.