Coverage Pointers - Volume XII, No. 9

Dear Coverage Pointers Subscribers:

 Happy Halloween.  This issue won't scare you.  It's just our treat.

 See You In November?

 One more shameless plug for DRI's Insurance Coverage and Practice Symposium being held in NYC on November 18-19.  It's a "Must Attend" for any coverage aficionado, lawyers and claims professional alike.  The program offers terrific topics and all of New York City's entertainment and holiday shopping are available.  Register now at www.dri.org or you'll hurt the Program Chair's feelings (and you don't want to do that).

 The Symposium theme is Autumn in New York.  Topics?  You want topics?  Look at this cutting-edge agenda:
 

• A Colorful Landscape: A Bird's-Eye View from the Regulators
• The Leaves Are Full of Color: Don't Get Black and Blue over Bad Faith Set-Ups
• Medicare Secondary Payer Act: Falling Prey
• The Autumn of Insurers' Discontent: Long Tails and Large Verdicts-What to Do When
• You Need a Coverage Chart to Map Out Your Exposure
• Fall Without Cover: Coverage Issues in the Era of Catastrophic Recalls
• Autumn Winds: Insurance Coverage in a Virtual World
• Preparing Company Witnesses for Deposition: Don't Fall for the Other Lawyer's Tricks
• A Cacophony of Colors: The Impact of Deductibles and SIRs When Multiple Policies Are Triggered
• Good Faith/Bad Faith: An Overview of Conduct That Causes Allegations of Bad Faith Under the Property Policy
• Leaves Between the Pages: ILC Chairs Look Back 50 Years and Peer into the Crystal Ball
• Others People's Money, Cumis Counsel, Cold Winds and the Trouble with Tripartites
• Emerging Issues Involving Employment Practices Liability Insurance
• Tales from the Chinese Drywall Coverage Wars and the Implications for Other Construction Defect Claims
• Withering Leaves: Acting Ethically When You Fear Your Client Has Not

Over 250 registrants already.  Be there, or be square.

Today's Challenge/Contest: Non-Owned v. Temporary Substitute
(Originally posted on the New York Insurance LinkedIn Group)

OK, such a simple question. Dastardly Driver's car is in the repair shop and Dastardly borrows Nice Neighbor's vehicle to run to the store. Dastardly runs over Poor Pedestrian, and Poor sues Dastardly.

Assume that Neighbor's car is insured by Nicely Insurance Company and Dastardly's policy on his "broken" car is insured by Dramatic Insurance company.

Assume further the usual "other insurance" clauses making coverage for a vehicle the insured doesn't own excess over an owned vehicle's coverage.

Here's the questions:

• ·        Does Nicely (insurer for the Neighbor's car) provide sole primary coverage for the accident, with Dramatic in an excess position?
• ·        Does Dramatic (insurer for the Driver's car) provide sole primary coverage for the accident with Nicely in an excess position?
• ·        Do both Dramatic and Nicely provide primary coverage which will pro-rate?

Cases to consider include:

• ·        Utica Mutual v. Preferred Mutual, 180 AD2d 195, (3rd Dept. 1992),
• ·        New York Central Mutual Fire Insurance Company v. Peerless Insurance Company, 22 AD3rd 815 (2nd Dept. 2005),

Prize?  We'll publish the best answer in our next issue.

 

From Audrey Seeley, Queen of No Fault:

 Happy early Halloween to all!  I have no tricks but some treats this edition. 

 There is a good decision from Arbitrator McCorry this edition that explains that even though an insurer issues an untimely denial for lost wages the applicant must still demonstrate entitlement to same in the first instance.  In essence, even though the insurer did not timely deny the applicant cannot simply recover because he claims he lost work.  Rather, there needs to be a medically documented disability.

 Also, Arbitrator O'Connor provides a good reminder to insurers to ensure that your IME report actually addresses the treatment you are attempting to deny.

 Finally, it is not too late to sign up for the DRI Insurance Coverage and Practice Symposium in New York from November 18-19th.  The New York and the New Jersey Insurance Departments have individuals presenting about the issues they face in today's economic time.  There is also a presentation on the Medicare Secondary Payer Act.  The icing on this top notch program is that our own, Dan Kohane, is the program chair.  You know if Dan is involved the program is going to be spectacular.  If you need information on how to register or wish to see the brochure please email me at [email protected].

 Audrey Seeley

 One Hundred Years Ago:

 A century ago, Tammany Hall had a virtual stranglehold over New York politics.  Time and time again, reformers tried to overthrow the political bosses and a prediction for Election Day, 1910 (inaccurately) forecasted success:

Olean Times

October 29, 1910

STIMSON WILL BE ELECTED

Chairman Prentice Says His Majority Will Be More Than 90,000

New York. - After reviewing reports from nearly every county in the state, Republican Chairman Prentice today made the first prediction as to results in the gubernatorial election.  He says, "I feel safe in saying that Stimson will be elected by a majority of between ninety and a hundred ten thousand.  New York City will give him about thirty thousand more than it gave Hughes.  In some of the upstate counties, there is a falling off of the Republican vote, but other counties show big increases. There is great enthusiasm for Roosevelt and much dissatisfaction of the labor issue along with a horror for Tammany."

 Editor's Note:  Gubernatorial polling was no better then in predicting the results of political contests.  Instead of him winning as the Republican Chair had predicted, Stimson was trounced by the Tammany candidate John Alden Dix by 70,000 votes.  Ezra Prentice, who had been elected as Republican State Chairman earlier in October 1910, resigned from the position in January 1911.

 Tammany Hall controlled New York City and State politics for many years, with various degrees of success.

 When John A. Dix took office as Governor, he turned over the "keys to the kingdom" to Tammany Hall, in particular Charles H. Murphy.  Murphy was responsible for patronage throughout the state and one commentator indicated that his term would be "noteworthy in history chiefly because of the avenues to graft and public plunder which were opened to Tammany."

 During the summer of 1912, Williams Jennings Bryant, a great orator and supporter of Woodrow Wilson's Presidential nomination took issue with Murphy's control over New York government and the "ninety wax figures" Murphy brought to the Democratic National Convention. In a later interview on the subject, Dix suggested that Bryant be "put out of the Democratic party."  With investigations abounding, Tammany dumped Dix in the 1912 election and instead nominated William Sulzer who sent on to easy victory in the general election over the Republican and Progressive candidates.

 William Sulzer's term lasted only several months.  Within a short time, he took issue with the Tammany control over State government and split with Murphy over many appointments and issues.  Unfortunately for him, Tammany controlled the Legislature and on August 13th, he was impeached by a vote in the Assembly of 79-45.  Of the 72 Democratic Assemblymen who voted for impeachment, only 17 were re-elected in the next November election. He was convicted and removed from office by the High Court of Impeachment on October 17, 1913. .To this day, many consider his removal from office as a Tammany political lynching.

 Sulzer was elected to the New York State Assembly the following year.  He remains the only New York Governor to ever be impeached.  Only two governor's portraits are not displayed in the Hall of Governor's in the Capitol Building in Albany:  William Sulzer's and Elliot Spitzer's.

 Because I know you wanted to know this little piece of New York political trivia, Governor John Alden Dix was the nephew of John Adams Dix, who was governor of New York from 1873-74. Uncle John was defeated in his re-election bid by Samuel J. Tilden.  Tilden ran for President, winning the popular vote in the 1876 election over Rutherford B. Hayes, but losing in the Electoral College

 Pipings from Peiper:

 From a practitioner's stand point, I have always enjoyed convoluted third-party actions where the sole focus is attempting to shift the risk of exposure to someone else. One thing I've always noticed is that even the most experienced and sharpest lawyer may not recognize every opportunity to pass the proverbial buck to someone else via contract or common-law.  This week's offering of Potpourri discusses two cases that look at the theories of common-law and contractual indemnification, and more importantly, how those doctrines intersect virtually every premises liability or construction claim that you'll come across.  I am sure that most loyal readers of Coverage Pointers will already understand how this process works, but nonetheless the well-reasoned decisions from the First and Second Departments, respectively, are worth your perusal. 

 As a final note, last issue our fearless editor kindly pointed out that I have been traveling here and there for much of the past few months speaking at training seminars.  I wanted to take an opportunity to thank all of you that I have had the good fortune of meeting for providing such a welcoming and interested environment.  We take pride in providing what we hope is a service to you, and sincerely hope that you take something away from our presentations other than a few bad jokes. That said, if there is a topic that you are interested in, please do not hesitate to drop us a line to let us know.  Thanks again.

 Steve Peiper

[email protected]

  In This Week's Coverage Pointers:

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

• Binding?  Shminding.  SUM Arbitrator Can Disregard Previous Award Based on Same Facts and That is Just Dandy
• When Policy Limits Exhausted, Defense Counsel Can Withdraw
• That the Plaintiff Was a Member of the Board of Directors of the Insured Defendant Does Not Excuse a Later Report of an Accident

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

• Claim of Fracture, First Raised in Opposition to Defendants' Motion, Will Not Be Considered:  And She Is Not Disfigured Either
• Once Again, Soft Tissue Categories Must Be Supported With Contemporaneous Findings
• Leave to Renew Should Have Been Granted Based on Law Firm Error
• Conclusion Based on Physical Exam Days After Accident Was Sufficient to Show Causal Relationship and Rebut MRI
• Finding of Significant ROM Limitations 3 Years After Accident Warranted Denial of Summary Judgment
• Plaintiff's Failure to Submit Any Proof in Admissible Form as to Treatment Received Warrants Dismissal

AUDREY'S ANGLES ON NO-FAULT
Audrey A. Seeley

[email protected]

Arbitration

• Chiropractic IME Upheld Despite Personal Attacks Against Insurer and Chiropractor
• Failure to Address Shoulder Injury in IME Fatal to Denial of Claim for Treatment to Shoulder
• Despite Untimely Denial, EIP Must Still Establish Medical Disability From Work to Recover Lost Wages

Litigation

• Accrual Is Date Claim Overdue, Not Date of Insurer's Untimely Denial
• Motion Denied for Failure to Submit Evidence of Mailing Procedures at Time of Denial
• Insurer Establishes Failure to Appear for IME and Breach of Condition to Policy Precluding Coverage

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

Of Property  

• Family Trust Is a Necessary Party to Litigation Under the CPLR 

And Potpourri 

• Tenant's Large SIR Does Not Satisfy an Insurance Procurement Clause
• Landlord Cannot Contract Away Its Duty to Provide a Safe Premises, But It Can Recover Any Liability from Third Parties by Way of Contractual and/or Common-Law Indemnification
• Settlement, Where Indemnity Cross-Claims Are Known and Preserved, Does Not Preclude a Later Indemnity Claim

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

• Second Circuit Rejects Follow-the-Fortunes Argument on Occurrences Outside Reinsurance Contract's Express Time Limitation
  Editor's Note: Reproduced from the Recent Developments section of the Reinsurance Law page on DL.com with permission of author Larry P. Schiffer and Dewey & LeBoeuf LLP.  

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

Question of Fact as to the Application of a Two Year Statute of Limitations Clause Where Counsel Fails to Rebut Insured's Assertion that it Never Received a Copy of the Specific Policy Relied upon by Defendant

• Court Allow Insurer to Deny Coverage and Rescind Policy Where Insureds Failed to Pay
• No Coverage for Additional Insured Where Policy Renewal Contained a Broader Employee Exclusion
• Claimant who Sustained Injury While Pushing a Vehicle off a Concrete Parking Barrier Not Entitled to Uninsured/Underinsured Motorist Coverage 

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

Developments

(Strategies for Effective Defense Handling of Medicare Issues) 

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

 

What is the Proper Measure of Damages?  The Forest or the Trees?

 

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
The Liening Tower of Perley
Earl’s Pearls
Across Borders

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

10/21/09              Falzone v. New York Central Mutual Fire Ins. Co.
New York Court of Appeals
Binding?  Shminding.  SUM Arbitrator Can Disregard Previous Award Based on Same Facts and That is Just Dandy
The Court of Appeals affirmed a finding of the Fourth Department reported previously:
7/2/09              Falzone v. New York Central Mutual Fire Ins. Co.
Appellate Division, Fourth Department
Split Court Finds SUM Arbitrator Not Necessarily Bound by Decision of No Fault Arbitrator in Case Involving Same Parties and Same Issues
Falzone claimed injury in a car accident.  She contested New York Central’s (“Central”) denial of her No Fault benefits and won, the arbitrator awarding her in excess of $4,000.  Falzone also sought supplemental uninsured motorist (SUM) benefits and, following a second hearing before a different arbitrator, the arbitrator denied her request for such benefits on the ground that her injuries were not caused by the accident.  Falzone moved, pursuant to Article 75, to vacate or modify the SUM arbitration award contending Central could no longer contest causation based on the arbitrator’s no fault award.  Central sought to enforce it.  A three judge majority in the Fourth Department held that Article 7511 does not specify “inconsistence of award” as a ground for vacating or modifying a second award.  The SUM arbitrator had the power to consider the legal and factual issues.
Two dissenting justices argued that the SUM arbitrator exceeded his power when he chose to disregard the preclusive effect of the first decision.
Editor’s Note:  This case is ripe for Court of Appeals review.
In so holding, the Court noted that
The prior (no-fault) arbitration award involved the same parties, the same accident, the same injuries, and resolution of the same issue (causation) as the subsequent (SUM) arbitration award. Respondent insurer, a party to the prior arbitration, lost on the causation issue. Petitioner, the prevailing party on that issue in the prior arbitration, reasonably argued that collateral estoppel should apply to bar relitigation of the causation issue in the subsequent SUM arbitration. The SUM arbitrator rejected petitioner's argument, had the parties relitigate the causation issue and, contrary to the no-fault arbitrator's determination, found in respondent insurer's favor on the causation issue.
Despite all of that, the Court held, with Justice Piggot justifiably dissenting, held that because the SUM arbitration award was not patently irrational or so egregious as to violate public policy, the instant SUM arbitration award (and whether the SUM arbitrator erred or exceeded his authority) is beyond this Court's review powers.
10/19/10       Kemper Mutual Insurance Company v. Russell
Court of Appeals
The Court of Appeals has accepted a motion for leave to appeal in this interesting decision reported in Volume XII, No. 1 of Coverage Pointers:
7/1/10      Kemper Mutual Insurance Company v. Russell
Appellate Division, First Department
Interesting One: Malpractice Payment Does Not Substitute for Auto Liability Coverage When SUM Coverage Involved
The tortfeasor had $50,000 in liability coverage but plaintiff’s counsel blew the statute of limitations. Instead, the lawyers’ malpractice carrier offered and eventually paid the $50,000. The plaintiff then tried to pursue an underinsured claim against its own carrier.
A split court ruled that the SUM case cannot be pursued. An insurer is obligated to pay under SUM coverage if the bodily injury liability insurance limits of its insured's policy exceed those of the other policy, subject to the condition that "the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements." In other words, the auto liability carrier has to exhaust its policy limits. Here, because of the malpractice, it paid nothing so the SUM carrier’s coverage is not triggered.
Editors Note: The malpractice case against the lawyer should have been for the lost liability coverage and then the lost SUM coverage, we suppose.
10/21/10       Ruiz v. Frog Co., LLC
Appellate Division, First Department
When Policy Limits Exhausted, Defense Counsel Can Withdraw
There was a $6,000 limit on defense cost in the employer’s liability policy which was exhausted.  Defense counsel permitted to make an application to withdraw.  It need not work for free.  If this were a disclaimer, the carrier would have to commence a declaratory judgment.
10/19/10       Balbert v. 302 96th Street Owners Corp
Appellate Division, Second Department
That the Plaintiff Was a Member of the Board of Directors of the Insured Defendant Does Not Excuse a Later Report of an Accident
Balbert was hurt in a slip and fall accident in a cooperative apartment building located at 302 96th Street in Brooklyn. Balbert is an attorney and lives in the building and served the Board of Directors of 302 96th Street Owners Corp, the Owner. INSCO, the Owner’s carrier on the basis of a later report of an accident.
The underlying incident giving rise to Balbert's claim occurred on June 27, 2007. However, the Owner did not notify INSCO of Balbert's accident until 11 months later on May 27, 2008. The court held that the 11-month delay between the occurrence and notice to INSCO was unreasonable in light of the fact that the Owner was aware of Balbert's accident on the date that it occurred, and it was aware that Balbert had been removed by ambulance in a stretcher, had undergone surgery, and was seen walking with a cane after the accident.
Under the circumstances, the owner failed to demonstrate a good faith belief in nonliability so as to excuse its failure to timely serve notice of the occurrence based upon its belief that Balbert would not sue because she was a Board member.

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

10/28/10       Doty v. McInerny
Appellate Division, Third Department
Claim of Fracture, First Raised in Opposition to Defendants’ Motion, Will Not Be Considered:  And She Is Not Disfigured Either
Plaintiff, Sarah’s mother and guardian, appealed the dismissal of her complaint asserting that a question of fact existed as to whether or not Sarah sustained a fracture of the right foot.  The court determined that the trial court properly refused to consider the claim of fracture because it was first raised in opposition to defendants’ motion and did not appear in either the complaint or the bill of particulars. 

The court further determined that the two scars she sustained, one measuring 1½ centimeters on her right foot, and the other 1 centimeter on the right side of her forehead, were not “unattractive, objectionable or the subject of pity or scorn” and therefore did not constitute a significant disfigurement, even though her doctor stated that they were permanent, discolored, and visible from 3 meters away. 

10/26/10       Posa v. Guerrero
Appellate Division, Second Department
Once Again, Soft Tissue Categories Must Be Supported With Contemporaneous Findings
On appeal, the order is reversed and summary judgment is granted to defendants because plaintiff failed to raise a triable issue of fact where she did not proffer any competent medical evidence that was contemporaneous with the accident in support of her claims under the permanent loss, permanent consequential limitation and/or significant limitation of use categories.  In addition, many of the reports submitted were not affirmed.  She also failed to submit any competent and objective medical evidence in support of her claim under the 90/180-day category.

10/26-10       Brightly v. Dong Liu
Appellate Division, Second Department
Leave to Renew Should Have Been Granted Based on Law Firm Error
After defendant‘s motion for summary judgment was granted because the court properly refused to consider plaintiff’s chiropractor’s affirmation, plaintiff move for leave to renew submitting a properly notarized affidavit from his chiropractor and an affidavit from the law office employee explaining that she mistakenly thought the chiropractor was actually a physician and that an affirmation was sufficient.  On appeal, the court determined that leave should have been granted under the circumstances.

The affidavit of plaintiff’s treating chiropractor relating significant restrictions of the cervical and lumbar spine based on contemporaneous examination and similar restrictions noted on recent examination, as well as MRI evidence of herniated and bulging discs, were sufficient to defeat defendant’s motion.

10/19/10       Peluso v. Janice Taxi Co., Inc.
Appellate Division, First Department
Conclusion Based on Physical Exam Days After Accident Was Sufficient to Show Causal Relationship and Rebut MRI
Over a very comprehensive two-judge dissenting opinion, the trial court’s denial of summary judgment to defendants was affirmed.  The majority agreed with the trial court that the physical examination that plaintiff underwent six days after the accident was sufficient to rebut an MRI taken six weeks after the accident which revealed that a bulging disc was the result of a pre-existing degenerative condition.  Having causally related the injury, the court also determined that plaintiff’s expert’s conclusion that the limitations were permanent and significant was based on objective evidence qualitatively related.  Unsworn MRI reports were admissible because they were incorporated into the expert’s sworn report.  The court also accepted plaintiff’s explanation that the gap in treatment was due to the termination of benefits and her inability to pay out-of-pocket.

The dissent noted that plaintiff, who was a professional football player, had a prior lawsuit due to a car accident, as well as a work related injury, and had undergone physical therapy and chiropractic care.  The IME report indicated that the MRI performed six weeks after the accident revealed diffuse degenerative disc bulging pre-existing the accident and the IME doctor concluded that there was no evidence of traumatic injury.  The only report post-dating the IME proffered by plaintiff did not address the IME findings of pre-existing degenerative conditions or rebut the conclusion that there was no evidence of trauma.  According to the dissent, plaintiff did not rebut defendants’ claim of lack of causation as required under Pommels and which, given her prior history and employment, was especially significant, and summary judgment should have been granted to defendants.

10/19/10       Britt v. Bustamante
Appellate Division, Second Department
Finding of Significant ROM Limitations 3 Years After Accident Warranted Denial of Summary Judgment
This matter had a long history going back to 2008 when, upon remitter from the appellate court, summary judgment was granted to defendants, Bustamante and County of Suffolk.   Now, on the second go-around, plaintiff prevails.  The court determines that defendants did not meet their prima facie burden because they relied on the report of an orthopedist who examined plaintiff more than three years after the accident and found significant range-of-motion limitations in her cervical spine.  Therefore, and regardless of plaintiff’s opposing papers, summary judgment should not have been granted.

10/19/10       Zawaski v. Salzano
Appellate Division, Second Department
Plaintiff’s Failure to Submit Any Proof in Admissible Form as to Treatment Received Warrants Dismissal
On appeal the trial court is reversed and plaintiff’s motion on the issue of liability is denied as academic as defendant’s motion on serious injury is granted.  In opposition to defendant’s prima facie showing, plaintiff did not submit any affirmations or affidavits from treating physicians, or any medical records in admissible form as to what, if any, treatment he received for the alleged injuries.

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley

ARBITRATION
10/21/10       Conover Chiropractic PC v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Chiropractic IME Upheld Despite Personal Attacks Against Insurer and Chiropractor
The Applicant sought reimbursement for chiropractic treatment rendered to the eligible injured person (“EIP”) as a result of an October 10, 2004, motor vehicle accident.  The insurer denied further chiropractic care based upon the independent chiropractic examination conducted by Louis Marconi, DC.  Mr. Marconi’s report opined that the EIP was orthopedically, neurologically, and chiropractically intact with regard to her cervical and thoracic spine.  Thus, she was at pre-accident status and no further causally related treatment was necessary.

The Applicant requested the insurer reconsider the declination of chiropractor benefits.  Mr. Marconi was asked to review the file again and his opinion did not change.  Mr. Marconi noted that the Applicant attacked and demeaned the insurer and all subsequent doctors that examined the EIP.

The assigned arbitrator upheld the denial reasoning that the Applicant did not refute the findings and conclusions set forth in Mr. Marconi’s report.  Specifically, there was no rebutting record to document objective findings that were causally related to the accident warranting further treatment.

10/20/10       A. Marc Tetro, MD v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Failure to Address Shoulder Injury in IME Fatal to Denial of Claim for Treatment to Shoulder
The Applicant sought reimbursement for orthopedic care rendered to the EIP as a result of a shoulder injury that the Applicant causally related to a bus accident in June 2009. 

The insurer denied treatment to the shoulder based upon the independent orthopedic examination conducted by Dr. Robert Bauer.  Dr. Bauer concluded that the EIP had degenerative disc disease in the cervical and lumbar spine with neuropathy entrapment in the upper extremities.  Dr. Bauer opined that the neuropathy entrapment was not causally related to the June 2009 accident but the spinal condition was partially related.

The assigned arbitration did not uphold the insurer’s denial because Dr. Bauer’s opinion does not support a conclusion that orthopedic treatment to the shoulder is not causally related to the accident.  In fact, the report was silent on whether the shoulder injury was causally related to the June 2009 accident.

10/18/10       Applicant v. Respondent
Arbitrator Thomas J. McCorry, Erie County
Despite Untimely Denial, EIP Must Still Establish Medical Disability From Work to Recover Lost Wages
The Applicant, eligible injured person (“EIP”), sought lost wages in the form of substitute help services in the amount of $14,314.00.  The insurer issued three separate denials of which only one was determined to specifically address the lost wage claim.  Further, that time was untimely. 

Despite this, the assigned arbitrator determined that the Applicant did not establish a prima facie case entitlement to wages based upon an unspecified Insurance Department Opinion letter dated January 11, 2000.  The assigned arbitrator determined that the Applicant did not submit any record demonstrating disability from work.  Further, the Applicant’s bare testimony that he could not obtain a record due to lack of fund to treat for his injury was not an excuse.

LITIGATION

10/22/10       New Millennium Medical Supply a/a/o Gibson Stayman v. Clarendon Nat’l Ins. Co.
Appellate Term, First Department
Accrual Is Date Claim Overdue, Not Date of Insurer’s Untimely Denial
The insurer’s summary judgment motion should have been granted as the plaintiff failed to timely interpose its claim within six year from the date the claim became overdue.  The Court rejected plaintiff’s contention that the cause of action accrued, and therefore must be commenced within six years, the date of the insurer’s untimely denial.

10/5/10         Friendly Physician PC a/a/o Catherine Moore v. GEICO Ins. Co.
Appellate Term, Second Department
Motion Denied for Failure to Submit Evidence of Mailing Procedures at Time of Denial
The insurer’s cross-motion for summary judgment was properly denied as the affidavit executed by the claim representative was insufficient due to the representative not being employed at the time the denials were issued and there was no other evidence of what the actual mailing procedure was at the time of the denials.

10/5/10         Park Slope Med. & Surg. Supply, Inc. v. GEICO Ins. Co.
Appellate Term, Second Department
Insurer Establishes Failure to Appear for IME and Breach of Condition to Policy Precluding Coverage
The plaintiff’s summary judgment motion should have been denied as the insurer’s affidavit was sufficient to establish standard office practice and procedure on the mailing of the denial of claim form.

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

Of Property

10/28/10       Calderone v Wiemeier
Appellate Division, Third Department
Family Trust Is a Necessary Party to Litigation Under the CPLR
Plaintiff commenced this action against his broker after his policy began “under-performing.”  Five years prior to the lawsuit, plaintiff, allegedly at the suggestion of defendant, converted two life insurance policies into a single policy with the plaintiff as the insured and the Family Trust as a beneficiary.

In the instant case, defendant moved to dismiss for plaintiff’s failure to name all interested parties under CPLR § 1001(a) (or, in the alternative, compel plaintiff to add the Trust as a party).  The Third Department agreed that the Trust was a necessary party, and as such Ordered its inclusion in the lawsuit.  In so holding, the Court noted that necessary joinder is “compulsory…to avoid multiplicity of actions and to protect non-parties whose rights should be jeopardized if they have a material interest in this subject matter.”

And Potpourri

10/28/10       Federated Retail Holdings, Inc. v Weatherly 39th Street, LLC
Appellate Division, First Department
Tenant’s Large SIR Does Not Satisfy an Insurance Procurement Clause
This case involved the plaintiff’s motion to dismiss certain counter-claims advanced by defendant/landlord Weatherly.  Among those counter-claims asserted by Weatherly was an argument that plaintiff’s procurement of a policy with a $1,000,000 self insured retention was in violation of the lease agreement’s insurance procurement clause. 

The lease provided that Federated would procure liability insurance with a $1,000,000 limit, as well as an umbrella policy with a $5,000,000 limit.  The trial court held that a $1,000,000 self insured retention could still satisfy the terms of the agreement.  However, in reversing the trial court’s ruling, the First Department noted that Weatherly reasonably expected that Federated would perform the terms of the lease as they were written.  Relying upon a large self insured retention, as Federated attempted to do in the instant case, would “render insubstantial or even illusory the benefits of the insurance coverage for which landlord [Weatherly] bargained.” 

In so holding, it is noteworthy that the Court also ruled that a tenant could not transfer the insurance procurement requirement to a sub-tenant.  The court reasoned that a landlord is not required to rely upon the acts of a subtenant to whom it has no privity and no legal recourse if the insurance obligations of the lease are not satisfied.  

10/21/10       Hughley v Rhm-88, LLC
Appellate Division, First Department
Landlord Cannot Contract Away Its Duty to Provide a Safe Premises, But It Can Recover Any Liability from Third Parties by Way of Contractual and/or Common-Law Indemnification
Plaintiff in this case was injured when he slipped and fell on ice outside of his condominium.  Plaintiff sued United Nations Plaza Condominiums (“UNPC”), United Nations Development Corporation (“UNDC”) Pritchard Industries (“Pritchard”) and Cushman & Wakefield (“C&W”).  Pritchard appears to have been a cleaning agency employed by UNPC/UNDC, and in that capacity was responsible for snow and ice removal.  C&W was hired by UNPC/UNDC to repair and maintain the allegedly leaky gutter which gave rise to the icy situation in the first place.  Given the multiplicity of parties, not surprisingly this case gave rise to a multiplicity of motions.  We will deal with each one, insofar as they are relevant, below.

UNPC first moved for summary judgment against the plaintiff on the theory that it had contracted away all of its responsibility for the maintenance and upkeep of the premises to Pritchard and C&W, respectively.  In denying the motion, the Court held that UNPC could be held liable for the negligence of its agents (i.e. C&W or Pritchard).  Further, as an owner of the premises, UNPC had a non-delegable duty to provide a safe condition at the property.   

Pritchard moved for summary judgment seeking to be dismissed from the plaintiff’s action on the basis that it did not owe a duty to the plaintiff.  Pritchard, as the contractor for snow and ice removal, was in a similar situation as snowplow operator.  As such, under the famous Espinol line of cases, the Court agreed that plaintiff did not possess a valid claim against Pritchard. 

In addition, UNPC, Pritchard and C&W all moved for contractual and common-law indemnification against one another.  With respect to UNPC and Pritchard’s motions, the Court granted conditional Orders indemnification.  To the extent it was not negligent; UNPC would be entitled to indemnity/contribution from both Pritchard and C&W.  Likewise, to the extent it was not negligent; C&W is entitled to indemnity/contribution from Pritchard. 

Pritchard, on the other hand, did not have a contractual indemnity claim against either UNPC or C&W.  Moreover, because plaintiff was an employee of C&W, and he admittedly did not sustain a “grave injury,” Pritchard’s claims for common-law indemnification against C&W were likewise barred by Section 11 of the Workers’ Compensation law.

10/19/10       Nesterczuk v. Goldin Mgt., Inc.
Appellate Division, Second Department
Settlement, Where Indemnity Cross-Claims Are Known and Preserved, Does Not Preclude a Later Indemnity Claim
Plaintiff was injured when he was assaulted by an intruder at a parking lot at his condominium.  Thereafter, plaintiff commenced the instant lawsuit against the owner of the condominium (“Park Slope”), the real estate management company at the condominium (“Goldin”) and the general contractor that developed the condominium (“Alisa”).  Prior to the incident, Alisa agreed to indemnify and hold harmless Park Slope, as well as any representative of Park Slope. 

After motions for summary judgment filed by Park Slope, Goldin and Alisa were all denied, Park Slope and Goldin’s insurance carrier entered into a settlement agreement with plaintiff.  However, at this point, both Park Slope and Goldin maintained their respective cross-claims against Alisa.  At the conclusion of a liability trial to apportion fault, Alisa was held 100% responsible for the attack. 

Armed with 100% liability against Alisa, both Park Slope and Goldin moved for summary judgment on their respective contractual and common-law indemnification claims.  Where, as here, Park Slope is without negligence, and where, as here, Alisa is 100% responsible, Park Slope was entitled to complete contractual indemnification.  This includes all fees and costs incurred in the defense of the matter prior to the settlement, as well as the actual settlement itself.

The Court noted that the “volunteer doctrine” does not apply where, as here, the cross-claims were made known to the Alisa (as the proposed indemnitor) prior to the settlement.  The Second Department also noted that because Park Slope obtained contractual indemnity over Alisa, any claims for common-law indemnification were rendered moot. 

With respect to Goldin’s motion for contractual and/or common-law indemnification, the Court first noted that Goldin did not have a direct contract with Alisa.  Rather, Goldin’s argument was that it qualified as a “representative” of Park Slope.  As such, Goldin argued that because the Park Slope/Alisa contract provided that Alisa would indemnify “representatives” of Park Slope; it followed that Alisa owed contractual indemnity to Goldin. 

The Second Department disagreed, and stated that there was no proof that Alisa intended to provide contractual indemnification to Goldin.  As indemnity provisions are meant to be strictly construed, absent any clear indication of Alisa’s intent to provide protection, Goldin’s claim must be deemed insufficient.  

Finally, Goldin’s claim for common-law indemnification also failed where, as here, the initial claims made against Goldin were based on its active negligence.  Goldin is not entitled to common-law indemnity for the legal expenses it incurred in defending the action where the claims were premised upon negligence.  The court noted that the outcome would have been different (meaning Goldin would have had a common-law claim) if the claims presented by the injured party were based upon strict and/or statutory liability. 

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

10/8/10         Arrowood Surplus Lines Ins. Co. v. Westport Ins. Co.,
Second Circuit Rejects Follow-the-Fortunes Argument on Occurrences Outside Reinsurance Contract’s Express Time Limitation
The Second Circuit Court of Appeals, in a summary order without precedential effect, has reiterated the principle that a follow-the-fortunes provision cannot expand coverage beyond the express terms of a reinsurance contract.  In this case, the cedent sought recovery under a reinsurance contract for a settlement of a claim under an underlying insurance policy that was extended for a three-year period.  The reinsurance contract only covered occurrences taking place before the termination date of the agreement or, if run-off was elected, through the anniversary of an underlying policy’s inception.  The agreement provided that for multiple year policies, they became effective on the anniversary of their inception.  The policy in issue was issued on December 15, 1999 and the cedent elected run-off coverage through December 15, 2000.  The underlying settlement involved periods beyond December 15, 2000.

The district court concluded that the settlement fell outside the time limitation of the reinsurance agreement.  The cedent appealed arguing that the reinsurer was bound to the additional periods because of the follow-the-fortunes provision in the reinsurance agreement.  The Second Circuit rejected this argument holding that the follow-the-fortunes provision only applied to “matters falling under the” reinsurance agreement.  Because the settlement fell outside the agreement’s time limitation, it was not subject to the follow-the-fortunes provision.  The Second Circuit reiterated its holding in Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 903 F.2d 910, 913 (2d Cir. 1990), that a follow-the-fortunes clause cannot override a contract limitation.  The circuit court also rejected the cedent’s claim that the annual period term was ambiguous as applied to single year policies subsequently modified to multi-year polices.
Editor’s Note: Reproduced from the Recent Developments section of the Reinsurance Law Page on DL.com with permission of author Larry P. Schiffer and Dewey & LeBoeuf LLP.  

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

10/21/10       Hon v. Allstate Indemnity Co.
Supreme Court, New York County
Question of Fact as to the Application of a Two Year Statute of Limitations Clause Where Counsel Fails to Rebut Insured’s Assertion that it Never Received a Copy of the Specific Policy Relied upon by Defendant
On or about February 12, 204, plaintiff’s premises sustained damage as a result of ongoing excavation work at an adjoining premise.  Plaintiff made a claim under a Deluxe Homeowners-Primary Residence Policy issued by defendant.  Defendant denied coverage citing applicable exclusions.

In October 2009, plaintiff commenced this action seeking to recover damages from defendant for disclaiming coverage for the loss.  Defendant moved to dismiss the complaint asserting that, pursuant to a two-year limitations period in the policy, the suit was time-barred.  The policy contained a clause which shortened the statute of limitations from the normal six years for an action upon contracts to two years.

Plaintiff asserted that the policy he received did not include any provision reducing the statute of limitations period.  In reply, defendant asserted that it requested documentation regarding the materials that were sent directly to plaintiff; however, defendant failed to establish its procedures for mailing policies to insureds.  Although defendant attempt to remedy this error by submitting a supplemental affirmation in opposition, the court would not accept it noting that it was an improper sur-reply.  Accordingly, the court held that defendant did not adequately rebut the assertion that plaintiff never received a copy of this policy.  At a minimum, the court found a question of fact as to the applicable statute of limitations.

10/7/10         Travelers Indemnity Co. v. Fred Todino & Son, Inc.
Supreme Court, New York County
Court Allow Insurer to Deny Coverage and Rescind Policy Where Insureds Failed to Pay Defense Costs Pursuant to SIR or Maintain Approved Claims Adjustment Service as Required in the Policy
Travelers issued a commercial general liability policy to defendants.  The policy required, among other things, that defendants maintain a contract with an approved claims adjustment service at their own expense, give timely notice and cooperate in any investigation conducted by Travelers.  The policy also had a $50,000 per occurrence SIR.

Starting in 2002, fifteen personal injury claims were filed against defendants.  These claims all arose out of incidents that allegedly occurred within the policy period.  After Travelers was notified of the first lawsuit, it advised defendants of the SIR requirements.  Thereafter, Travelers learned that defendants failed to pay defense counsel and that defense counsel had withdrawn from representation.  It also discovered that defendants had terminated their contract with an approved claims-adjustment service.

Travelers disclaimed coverage for the lawsuits based on defendants’ failure to maintain defense counsel.  It then issued several additional letters reiterating its disclaimer. 

Travelers eventually brought this action seeking a declaration that it had no duty to defend or indemnify defendants in the lawsuits.  It also sought to rescind the policy.  The court reasoned that to show deliberate failure to cooperate, an insurer must establish that it diligently sought the insured’s cooperation, that its efforts were reasonably calculated to bring about the insured’s cooperation, and that the insured’s attitude was one of willful and avowed obstruction.  According to the court, for six years Travelers repeatedly demanded in writing that defendants retain defense counsel, retain an approved claims adjustment company and pay the sums due under the policy.  Despite these attempts, defendants never responded.  Thus, the court held that Travelers had established sufficiently that the defendant deliberately chose not to cooperate. 

Moreover, the court granted a judgment against defendants noting that Travelers had a right to reimbursement for amounts it spent in defending the underlying actions.  Lastly, the court held that Travelers was entitled to rescind the policy due to defendants’ non-cooperation.   

10/4/10         Liberty Architectural Products v. A-Tech Restoration
Supreme Court, New York County
No Coverage for Additional Insured Where Policy Renewal Contained a Broader Employee Exclusion

Two A-Tech employees were injured, and one killed, while using scaffolding provided by plaintiff, Liberty Architectural Products.  Thereafter, a lawsuit was commenced against both Liberty and A-Tech by the employees. 

Prior to the accident, Liberty entered into a contract with the property owners to erect a scaffold on its premises.  A-Tech entered into a separate contract with the property owners to perform asbestos abatement.  The A-Tech contract provided, in relevant part, that it would “procure insurance coverage for claims for damages because of bodily injury, sickness or disease, or death of the Contractor’s employees and for claims involving contractual liability insurance applicable to the Contractor’s obligations related to indemnity.”  The contract further required that Liberty be named as an additional insured on A-Tech’s insurance policies.

A-Tech was issued a commercial general liability policy by ASCI.  The 2005-2006 policy issued to A-Tech excluded bodily injury to an employee of an insured arising out of his or her employment; however, this exclusion did not apply to liability assumed by the Insured under an “insured contract.”  Interestingly, when the 2005-2006 policy was renewed, ASCI’s underwriter e-mailed A-Tech’s insurance broker enclosing a new employee exclusion, which applied to liability assumed in an “insured contract.”  Accordingly, as the accident occurred during the renewal period, ASCI denied Liberty’s request for coverage under its policy citing this exclusion.  It is noted that the broker never notified A-Tech in writing of the change. 

Liberty then commenced the present action against A-Tech and ASCI seeking defense and indemnification under the ASCI policy.  A-Tech answered and alleged a cross-claim against ASCI, seeking a declaration that it was required to defend and indemnify it in the underlying actions, and a counterclaim against Liberty.  In addition, A-Tech brought a third-party complaint against its broker and Liberty’s broker, for their alleged failure to procure appropriate insurance. 

In a series of summary judgment motions, the court considered all issues presented.  It first considered whether ASCI’s delay of 102 days in disclaiming to A-Tech and Liberty was untimely.  The court noted that the insured, A-Tech, was a New Jersey insured, the policy was issued in New Jersey, and A-Tech did business in New Jersey.  Thus, as §3420(d)(2) only applies to policies issued for delivery in New York, it did not act to preclude ASCI from asserting the employee exclusion. 

Next, the court considered what law would apply to the interpretation of the contract.  A-Tech sought to apply New Jersey law claiming that under this law the employee endorsement in the renewal would have been invalidated.  ASCI sought to apply Georgia law, pursuant to the choice-of-law provision in its policy, as it would have preserved the endorsement.  The court held that Georgia law should apply as courts generally will enforce a choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction.  The court also held that the public policy exception to this rule did not apply herein as Georgia law on this issue was not offensive to New York public policy.  Thus, neither Liberty nor A-Tech were entitled to defense or indemnify for the accident.

Lastly, the court considered Liberty’s alternative argument that if ASCI had no obligation to defend or indemnify it, then A-Tech or its broker should be obligated to defend.  The court held that the contract between A-Tech and the property owner required that Liberty be named as an additional insured under the renewal policy.  Based on the employee exclusion, Liberty was not afforded the full coverage it was entitled to; thus, A-Tech breached the contract.  However, as Liberty had its own insurance to cover this matter, it was only entitled to recover its full cost of insurance (i.e., premiums it paid for its own insurance, any out-of-pocket costs that may have been incurred and any increase in future premiums).  It was not entitled to full recovery of the costs incurred as a result of the underlying actions.  The court further noted that Liberty could not recover from A-Tech’s broker as there was no privity of contract.
Editor’s Note:  We thank Kenneth Bloom, Esq., Gartner & Bloom, P.C., for bringing this case to our attention. 

9/21/10         Farm Family Casualty Ins. Co. v. James Calise
Supreme Court, Suffolk County
Claimant who Sustained Injury While Pushing a Vehicle off a Concrete Parking Barrier Not Entitled to Uninsured/Underinsured Motorist Coverage
On September 17, 2008, while in a parking lot of a local post office, James Calise injured his right bicep tendon while he and two other men voluntarily helped lift and push an unknown woman’s vehicle off a concrete parking barrier.  Apparently, the men were pushing while the woman applied her accelerator.  During this action, Mr. Calise felt a “pop” in his bicep as the vehicle “jerked” forward off the barrier. 

As the woman was unknown, Mr. Calise served plaintiff with a demand for arbitration under the uninsured/underinsured motorist endorsement in his auto policy.  His claim was based on the theory that his injury arose from the use of an unidentified vehicle with which he had physical contract. 

The court stayed the arbitration reasoning that §5217 provides that the protection of the Motor Vehicle Accident Indemnification Corporation Act shall apply to such innocent victims only if “bodily injury…arose out of physical contact of the motor vehicle causing the injury with the qualified person.”  Thus, according to the court, it is clear that physical contract is a condition precedent to an arbitration based upon a hit and run accident involving an unidentified vehicle.  In other words, it must involve the continued transmission of force indirectly or simultaneously through an intermediate agency, and the initial impact must be of a collision between the unidentified vehicle and claimant.  In this situation, the court found that Mr. Calise’s knowing, voluntary and intentional act of lifting and pushing a vehicle to assist the operator does not constitute the physical impact contemplated by New York Insurance Law. 
Editor’s Note:  We thank Debra Marano-O’Reilly, Farm Family Casualty Insurance, for bringing this case to our attention. 

THE LIENING TOWER OF PERLEY

Michael F. Perley
[email protected]

Developments
Strategies for Effective Defense Handling of Medicare Issues

In a previous article we noted that the Northern District of Alabama was considering a motion to dismiss filed by the defendants in United States v. Stricker (09-cv02423), based on the statute of limitations. The District Court has dismissed the claims of the United State Government for Medicare payments up to the time of the settlement. It  applied the three year, tort, statute of limitations to the defendants and their insurance carriers and a six year, contract, statute of limitations to the plaintiffs themselves.

Practitioners should only be cautiously optimistic as a result of this decision. The
Court did not consider, or address, issues arising out of post-settlement Medicare payments. As a result, there is little guidance for either plaintiffs or defendants from the judge's decision.

A hearty thank you to a loyal CP subscriber who forwarded to me a Superior Court of Connecticut decision involving the state's prompt payment statute: Hackley v. Garofano (2010 WL 3025597 (Can. Super)) involved a small settlement in the case of an infant. The carrier sought the infant's Social Security Number and the request was rebuffed by Plaintiff’s counsel. Significantly, the carrier had sought the same information prior to negotiating a settlement and had been refused at that point as well. When the insurance company did not receive that information with the other closing papers it refused to pay the plaintiff who, thereafter, made an application for a default judgment in the Superior Court pursuant to Connecticut statute. Fortunately for the carrier, and the defendant, the Court held that there was not a complete and total agreement on the terms of settlement.

As a result, it denied the application of the plaintiff, but did not rule on whether or not the request for the Social Security number was proper. The judge ended his decision with a note of caution, stating, "Counsel would therefore be well advised to be aware of developments in this area of the law and take them into account in fashioning unambiguous settlement agreements." Timelier words were never spoken.

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

WHAT IS THE PROPER MEASURE OF DAMAGES: 
THE FOREST OR THE TREES?

In examining a claim, issues with respect to damages are frequently ignored or put on the back burner with liability analysis first and foremost.  However, from the inception, care should be taken to evaluate the proper theory and strategy with respect to damages.  A recent decision by an intermediate appeals court in Kansas is instructive on the differences between diminution in value and restoration cost damages.  Evenson v. Lilley, 228 P.3d 420 (Kansas Ct. of Appeals, April 8, 2010).

The Evensons own a 160 acre piece of land which they use primarily for recreation.  On this property were a number of trees, as well as a utility building and some outbuildings.  The structures were made of wood with tin roofs.  The Evensons leased a portion of the property for production of crops. 

The unfortunate Mr. Lilley leased pastureland on property adjacent to the Evensons’ parcel for grazing cattle.  In April 2006, Lilley started a “controlled” burn (an oxymoron) on his leased pasture land which went out of control and crossed over to the Evensons’ property, essentially burning out the entire parcel. 

Since they were burned up about their loss, the Evensons filed suit against Lilley for negligence claiming damages in excess of $75,000.  Lilley filed a request for an actual amount of damages, and the Evensons responded that their property suffered damages totaling $125,000.

Lilley then filed a motion for a ruling on the proper measure of damages to be used in the case.  Lilley argued that the damage to the property was “permanent” under Kansas law, and that the damage award could not exceed the fair market value of the property prior to the fire.  Lilley also obtained an appraisal which estimated that the price difference between the value of the property before and after the fire was only about $5,000.  This estimate included a depreciated replacement value of the buildings.  The Evensons argued that the property was remediable and that the measure of damages should be the cost to repair the fire damage and return the property to “pre-fire status”.  The Evensons submitted an estimate of over $300,000 to replace damaged trees on their property.  They also submitted an estimate of nearly $25,000 to replace the buildings with new metal buildings of the same size.  The Evensons moved to amend their damages claim to over $330,000, or $160,000 if damages were capped at the real property value under Kansas law. 

The District Court ruled that the damage to the property was permanent and that the proper measure of damages was the diminution in value of the property under Kansas law.  The court, therefore, denied the Evensons’  motion to increase their claim for damages.  The case was then presented to the court on stipulated facts and, after a hearing, the court adopted appraisal values submitted by Lilley, plus a debris clean up cost submitted by the Evensons, awarding the Evensons a total of $7,687.00 plus interest.

On appeal, the sole issue was whether the District Court applied the correct measure(s) of damages.  The Evensons essentially argued that the proper measure of damages was the cost of replacing or restoring the damaged trees, outbuildings, etc. 

The appeals court first referenced a Kansas statute which makes the question of damages to real property dependent on whether the damage is deemed permanent or temporary.  Lilley clearly viewed the damage from the perspective of the property as a whole.  In contrast, the Evensons focused on damage to specific items upon the property such as the trees and outbuildings.  In essence, the court ruled that the Evensons were advocating the adoption of a new rule that would provide for a restoration measure of damages.  On appeal, the claimants were essentially asking the court to allow them to recover the replacement value of their trees and buildings, for the most part irrespective of the cost of replacement.  The Evensons cited several cases from other jurisdictions as evidence of a growing trend in negligence law to permit recovery of restoration or replacement costs when real property has some personal value and use rather than merely commercial or economic value.

The Evensons’ request for restoration costs to replace full grown trees for over $300,000 was deemed to be patently unreasonable in terms of the damage inflicted in this case.  The property is primarily agricultural use land, and the property was only worth $160,000 prior to the fire.  The requested restoration costs were nearly twice the highest estimate of the value of the property prior to the loss.  Although the Evensons’ claim that it is now easier to replace large trees than it was in the past, the court still did not consider this to be a reasonable approach or result.  Furthermore, under Kansas law, the court concluded that precedent clearly rejected replacement cost alone as an accurate valuation of property loss. 

The appeals court ultimately held that the proper measure of damages was the difference between the market value of the property before and after the fire.  The district court therefore did not err in valuing the damages to the property by hearing evidence concerning the alleged diminution in value. 

With respect to the negligently destroyed building structures, the measure of damages was the reasonable value of the buildings at the time and place of their destruction.  Although the claimants did provide an estimate of the cost to replace the buildings, the evidence did not show reasonable value and the proposed replacements were not of the same type as the structures destroyed.  Recovery of the cost of new metal buildings to replace old wooden ones was not the natural and probable result of the negligence.  Accordingly, the District Court was affirmed in this regard as well. 

The lessons of Evenson are that the items and valuation of damages should be carefully scrutinized with respect to their components and legal basis.  It is also important for a defendant to arrive at a coherent overall theory of defense with respect to damages such as whether the proper theory of damages is diminution in value or replacement/restoration costs.  It is also important to consult any insurance policy language in terms of what damages are covered and how those damages are measured in making the analysis (i.e. replacement cost, ACV, appraisal rights, etc.). 

In Evenson, the defense selected the most favorable damages theory, presented evidence at the hearing in terms of appraisal evidence to support that theory, and consistently adhered to that theory at trial and on appeal.  While some portion of the Evenson case can be explained to particulars of Kansas law, review and adjustment of property damage claims should generally proceed through very similar analysis. 

It is especially important to contest the legal measure of damages where the “replacement cost” or “restoration claim” is unreasonable, and out of proportion to the value of the loss.  It is also instructive that in Evenson the issue of the measure of damages was the subject of pre-trial motions and/or motions in limine to try to resolve or narrow the issues.  Based on the trial court’s pre-trial ruling, the defendant knew they were on the right track and put in their proof accordingly. 

Another important point in Evenson is to know the measure(s) of damages and then put in market values, proof of costs, appraisals, expert testimony, etc. to mirror and coincide with the legal measure(s) of damages.  It is also important to realize that different measures of damages may apply to different parts of the claim such as the land, trees and buildings in Evenson.

ACROSS BORDERS
Courtesy of the FDCC Website
www.thefederation.org
10/22/10       Warren Hosp. v. American Cas. Co. of Reading
Third Circuit Court of Appeals
A Nurse’s Personal Policy is Excess over Hospital’s $1,000,000 SIR
A patient who had undergone a procedure at Warren Hospital in Phillipsburg New Jersey sued the hospital and a nurse for malpractice. Warren Hospital had multiple coverages which layered on top of a $1,000,000 self insurance retention, all of which covered employees including the Defendant nurse. The nurse had her own $1,000,000 policy with a different carrier which had an “other insurance” clause which provided, among other things, that if there is other insurance that is available, it must pay first. The provision further indicated that the intent of the provision is only to cover losses that exceed other insurance, including deductibles or self-insurance amounts. The Appellate court rejected the arguments of the Hospital that its coverage, including the SIR, covered different risks and held that the nurse’s insurance policy would be excess over the SIR and coverages available to the Hospital.
Submitted by: James B. Thompson Jr. (Thompson Goodis Thompson Groseclose Richardson and Miller PA).

REPORTED DECISIONS
Peluso v. Janice Taxi Co., Inc.

The Sullivan Law Firm, New York (Timothy M. Sullivan of
counsel), for appellants.
Craig L. Davidowitz, P.C., New York (Nolan Matz of counsel),
for respondent.
Order, Supreme Court, New York County (Paul Wooten, J.), entered September 28, 2009, which denied defendants-appellants' motion for summary judgment dismissing the complaint for lack of a serious injury, affirmed, without costs.
On the issue of causation, plaintiff's expert's conclusion that plaintiff sustained injuries as a result of the accident is based on a physical examination of plaintiff just days after the accident and is sufficient to rebut defendants' evidence that the disc bulging revealed on an MRI taken some six weeks after the accident was the result of a preexisting degenerative condition (see Linton v Nawaz, 62 AD3d 434 [2009], affd on other grounds 14 NY3d 821[2010]). On the issue of seriousness, plaintiff's expert's conclusion that plaintiff has sustained permanent, significant losses and limitations to her spine is supported by objective evidence, in particular, MRIs revealing injuries to her spine that he qualitatively relates to plaintiff's losses and limitations (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 353 [2002]). The motion court properly considered these unsworn MRI reports as they were incorporated into the expert's sworn report (see Thompson v Abbasi, 15 AD3d 95, 97 [2005]). Plaintiff adequately explains the gap in treatment by offering proof of the termination of her insurance benefits, and her own statement that she could not continue physical therapy out of pocket (see Wadford v Gruz, 35 AD3d 258, 258-259 [2006]). We have considered and rejected defendants' other arguments.
All concur except Friedman, J.P. and Nardelli, J. who dissent in a memorandum by Nardelli, J. as follows:

NARDELLI, J. (dissenting)
Since I believe that plaintiff failed to meet her burden of demonstrating the existence of factual issues as to whether her injuries were the result of a preexisting condition, and thus as to whether she incurred a serious injury, I would reverse and dismiss the complaint.
In moving for summary judgment, defendants Janice Taxi Co. and Nicholas Caamo, the owner and driver, respectively, of the taxicab which was involved in a collision with the vehicle in which plaintiff was driving, offered, inter alia, the affirmed report of Dr. David Milbauer, dated August 5, 2007. He, in turn, referenced an MRI taken of plaintiff's spine, dated March 15, 2005, approximately six weeks after her accident. Dr. Milbauer stated that the MRI showed "[d]iffuse degenerative disc bulging at LS-51 and minor disc bulging ... elsewhere, without significant compromise of the canal or neural foramina throughout." Dr. Milbauer further concluded, "The examination demonstrates no findings to indicate that a traumatic injury of the lumbar spine was sustained in the accident of February 5, 2005." The doctor then stated, without equivocation, "The disc bulging present is degenerative in etiology and preexists the accident of February 5, 2005."
Plaintiff admittedly had suffered injuries to her neck as a result of a prior automobile accident, and had instituted a lawsuit in connection with that accident. She also testified at her deposition that she had previously received physical therapy and chiropractic adjustments for work-related back pain, and was a professional football player. In opposition to the motion, plaintiff offered various reports, including one from Dr. Gideon Hedrych dated July 25, 2008, approximately one year after Dr. Milbauer's report. Only this July 25 report postdates the report by Dr. Milbauer. Nowhere in his July 25 report does Dr. Hedrych, even obliquely, refer to or address the findings in Dr. Milbauer's report that the symptoms displayed in the MRI demonstrated only the existence of a preexisting degenerative condition. While Dr. Hedrych opined that plaintiff's symptoms were "causally related to the injuries sustained in the accident of 2/5/05," he did not even attempt to rebut the observation, provided by Dr. Milbauer as a medical conclusion, that plaintiff's symptoms did not result from trauma, but were purely degenerative and preexisted the accident. This failure to address Dr. Milbauer's findings is particularly perplexing in view of plaintiff's admitted prior medical history, as well as her occupation as a professional football player.
The Court of Appeals has made clear that when a showing is made that a "plaintiff's alleged pain and injuries were related to a preexisting condition, plaintiff [has] the burden to come forward with evidence addressing defendant's claimed lack of causation" (Pommel's v Perez, 4 NY3d 566, 580 [2005]). Failure to specifically address a defendant's expert's informed opinion that the condition results from a degenerative condition warrants dismissal, as this Court has noted on many occasions (see e.g., Eichinger v Jone Cab Corp., 55 AD3d 364, 365 [2008]; Chong Sim Kim v Amaya, 51 AD3d 487, 488 [2008]).
Thus, since plaintiff, despite having been put on notice by a non-conclusory medical report of defendants' position that her condition was degenerative, and not the result of the accident, did not respond to the proffered evidence on the motion, where the laying bare of her evidence was required, summary judgment dismissing the complaint for want of serious injury should have been granted.

Matter of Falzone (New York Central Mutual)

JONES, J.:
In this CPLR article 75 proceeding arising from respondent's determination denying petitioner's claim for supplementary uninsured motorist (SUM) benefits, the primary issue before this Court is whether the SUM arbitrator exceeded the scope of his authority by not giving preclusive effect to a prior arbitration award involving the same parties and accident.
On May 15, 2004, petitioner was involved in a two-car collision. Subsequently, she filed a claim for no-fault benefits with respondent insurer, alleging she had injured her shoulder. When respondent denied petitioner's no-fault claim on the ground that her shoulder injury was not related to the accident, petitioner challenged the denial in arbitration. Disagreeing with respondent's denial, the no-fault arbitrator, in May 2008, ruled that respondent's denial based on lack of relatedness was inappropriate and awarded petitioner $4,354.56 in no-fault benefits.
After petitioner settled her lawsuit against the driver of the other vehicle for that driver's $25,000 policy limit, she sought SUM benefits in the amount of $75,000 from respondent insurer. Citing the prior denial of no-fault benefits as being unrelated to the accident, respondent denied the claim for SUM benefits. On February 28, 2008, during the pendency of the no-fault arbitration, petitioner sought to challenge the denial of SUM benefits in a separate arbitration proceeding.
At the hearing in the SUM arbitration, held about two months after the decision in the no-fault arbitration, respondent again argued that the injury was unrelated to the accident, while petitioner countered that the SUM arbitrator was bound by the prior determination of the no-fault arbitrator under the doctrine of collateral estoppel. After the hearing, in August 2008, the SUM arbitrator issued an award in favor of respondent denying SUM benefits. In a finding directly opposite that of the no-fault arbitrator, the SUM arbitrator concluded that petitioner's injury was not caused by the accident, and also found that her recovery from the other driver was more than adequate compensation for any injuries sustained in the accident.
Thereafter, petitioner commenced this CPLR article 75 proceeding to set aside the SUM arbitration award in respondent's favor. Petitioner argued that respondent was collaterally estopped from relitigating the causation issue. Respondent sought confirmation of the award.
Supreme Court vacated the SUM arbitration award and ordered that a new arbitration be scheduled before a different arbitrator. The court concluded that although it is within an arbitrator's discretion to determine the preclusive effect of a prior arbitration award, here, there was nothing in the SUM arbitrator's decision to indicate whether petitioner's collateral estoppel argument was even considered.
By a 3-2 vote, the Appellate Division reversed Supreme Court's order and confirmed the SUM arbitration award (64 AD3d 1149 [4th Dept 2009]). The majority concluded that (1) "[t]he fact that a prior arbitration award is inconsistent with a subsequent award" is not a ground, pursuant to CPLR 7511, for vacating an arbitration award, (2) it is within the arbitrator's sole discretion to determine the preclusive effect of a prior award, and (3) "the SUM arbitrator was not required to state that he had considered" the collateral estoppel argument raised before him. The dissenting Justices countered that the SUM arbitrator exceeded his power by disregarding the preclusive effect of the prior no-fault arbitration award, which involved the same parties and was based on the same facts. Petitioner appeals as of right pursuant to CPLR 5601 (a); we now affirm.
It is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power (see Matter of New York City Tr. Auth. v Transport Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d 332, 336 [2005]; Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, 79 [2003]; CPLR 7511 [b] [1] [iii]). Even where an arbitrator has made an error of law or fact, courts generally may not disturb the arbitrator's decision (see Transport Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d at 336 ["[C]ourts are obligated to give deference to the decision of the arbitrator. This is true even if the arbitrator misapplied the substantive law in the area of the contract (citations omitted)."]). Here, petitioner's claim —- that the arbitrator erred in failing to apply collateral estoppel to preclude litigation of the causation issue in the SUM arbitration — falls squarely within the category of claims of legal error courts generally cannot review.
In this appeal, we are merely applying this State's well-established rule that an arbitrator's rulings, unlike a trial court's, are largely unreviewable (see Board of Educ. of Patchogue-Medford Union Free School Dist. v Patchogue-Medford Congress of Teachers (48 NY2d 812, 813 [1979] [this Court, addressing the doctrine of res judicata, held that if a grievance is within the scope of the arbitration agreement and would do no harm to the State's public policy in favor or arbitration, further judicial inquiry into arbitrability is foreclosed and "any remaining questions, including whether a prior award constitutes a bar to the relief sought, are within the exclusive province of the arbitrator to resolve" [citations omitted]; Matter of City School Dist. of City of Tonowanda v Tonawanda Educ. Assn., 63 NY2d 846, 848 [1984] ["The effect, if any, to be given to an earlier arbitration award in subsequent arbitration proceedings is a matter for determination in that forum."]; compare with Clemens v Apple, 65 NY2d 746 [1985] and Matter of American Ins. Co. [Messinger—Aetna Cas. & Sur. Co.], 43 NY2d 184, 191 [1977] [holding that if an issue between identical parties is resolved in an arbitration proceeding, the determination as to that issue may be binding on subsequent court proceedings under the doctrine of collateral estoppel where the parties have had a full and fair opportunity to litigate the issue]). Thus, if a court makes an error and fails to properly apply collateral estoppel, the issue can be reviewed and corrected on appeal. By contrast, if an arbitrator erred in not applying collateral estoppel, the general limitation on judicial review of arbitral awards precludes a court from disturbing the decision unless the resulting arbitral award violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power.
Here, the prior (no-fault) arbitration award involved the same parties, the same accident, the same injuries, and resolution of the same issue (causation) as the subsequent (SUM) arbitration award. Respondent insurer, a party to the prior arbitration, lost on the causation issue. Petitioner, the prevailing party on that issue in the prior arbitration, reasonably argued that collateral estoppel should apply to bar relitigation of the causation issue in the subsequent SUM arbitration. The SUM arbitrator rejected petitioner's argument, had the parties relitigate the causation issue and, contrary to the no-fault arbitrator's determination, found in respondent insurer's favor on the causation issue.
It is not for us to decide whether the SUM arbitrator erred in not applying collateral estoppel (i.e., not giving preclusive effect to the no-fault arbitrator's determination on the issue of causation). Because the SUM arbitration award was not patently irrational or so egregious as to violate public policy, the instant SUM arbitration award (and whether the SUM arbitrator erred or exceeded his authority) is beyond this Court's review powers.
Since the instant claim involves the doctrine of collateral estoppel, not res judicata, petitioner's reliance on Appellate Division decisions barring subsequent arbitrations on res judicata grounds is misplaced.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Matter of Falzone v New York Central Mutual Fire Ins. Co
No. 164

PIGOTT, J.(dissenting) :
I respectfully dissent. In my view, the SUM arbitrator exceeded his authority in disregarding the no-fault arbitrator's finding on the issue of causation and substituting his own, when the identical parties had previously litigated the identical issue.
Insurance Law § 5106, titled "Fair claims settlement," was designed for its titled purpose: to provide a forum where persons sustaining injuries in auto accidents could quickly adjudicate whether or not their no-fault carriers would pay their claims (see Roggio v Nationwide Mut. Ins. Co., 66 NY2d 260, 264 [1985]). Here, petitioner applied for no-fault benefits and the insurer denied those benefits because its physician concluded that the shoulder injury was not related to the accident. Petitioner sought arbitration of that decision, taking a significant risk that a negative outcome on the causation issue would preclude her from bringing a civil suit to recover against her tortfeasor and, subsequently, her SUM carrier, for her shoulder injury (see Clemens v Apple, 65 NY2d 746, 748-749 [1985]).
Petitioner submitted her own medical evidence to counter the insurer's, and prevailed at the no-fault arbitration. The arbitrator concluded that petitioner's shoulder injury was causally related to the accident and awarded her approximately $4,300. The insurer did not move to vacate or modify the award even though Insurance Law § 5106 (c) provides that "an award by an arbitrator shall be binding except where vacated or modified by a master arbitrator in accordance with simplified procedures to be promulgated or approved by the superintendent" (emphasis supplied).
Having lost at the no-fault arbitration and paying, in full, the sum awarded to petitioner for her shoulder injury, the insurer thereafter consented to petitioner's settlement with the tortfeasor's insurer for the face amount of the tortfeasor's policy. However, the insurer again challenged causation relative to petitioner's shoulder injury, this time during the SUM arbitration and over petitioner's objection.
Apparently, what is sauce for the goose is no longer sauce for the gander. Had the arbitrator during the original no-fault arbitration found against the petitioner, any direct action against the tortfeasor would have been met with the defense of issue preclusion, with the tortfeasor relying on the no-fault arbitrator's finding of no causation (see Clemens, 65 NY2d 746). That, in turn, would have precluded petitioner from even bringing a SUM claim against her carrier, as it would have been impossible for her to succeed on such a claim without first exhausting the tortfeasor's policy limits.
When a claim is initially denied, a no-fault claimant is faced with making the difficult choice: either (1) potentially losing at the no-fault arbitration and being precluded from bringing a civil suit, or (2) not seeking arbitration of the no-fault carrier's denial of benefits so that the claimant can preserve his or her ability to bring a civil suit at a later date against the tortfeasor, thereby transferring the cost of the claimant's medical care to his or her private insurance carrier, public insurance, or delaying payment.
These results, however, contradict the primary legislative purpose behind the no-fault law, namely, to ensure "'that every auto accident victim will be compensated for substantially all of his economic loss promptly and without regard to fault,'" such that the insurer has nothing to lose and everything to gain from denying no-fault claims (Norman H. Dachs and Jonathan A. Dachs, Time to Reconsider Clemens v Apple?, NYLJ, Nov. 14, 1995, at 3, col 1 quoting Rep of the Joint Legislative Comm on Ins Rates, Regulation and Recodification of the Ins Law, NY Leg Doc 1973, No 18, at 7; Norman H. Dachs and Jonathan Dachs, Collateral Estoppel and Res Judicata in Arbitration, NYLJ, Feb. 13, 1990, at 3, col 1). Simply put, under the majority holding there is a great deal of incentive for a no-fault carrier to deny claims because even if it loses at arbitration, it can revisit the issue in a later SUM proceeding.
In my view, petitioner should be permitted to rely on the no-fault arbitration causation findings in support of any subsequent arbitration involving the same issue against the same party, just as the tortfeasor and insurer would have been able to rely on that initial finding had petitioner been unsuccessful and instituted a civil suit. It cannot be reasonably argued that the insurer did not have a full and fair opportunity to litigate causation in the no-fault proceeding. After all, it submitted medical proof from its own physician after he conducted an examination that petitioner was contractually obligated to attend.
Moreover, the majority's holding directly contradicts the dictates of Insurance Law § 5106 (c) that arbitration awards are binding unless vacated or modified by a master arbitrator because it allows an unsuccessful insurer to do an end run around that statute to the extent that it effectively nullifies the findings of the no-fault arbitrator. By accepting the SUM arbitrator's "discretion" to disregard the findings of an arbitrator on an identical issue between the same parties, this Court grants the arbitrator more authority than a trial court, appellate court, or this Court, none of which are accorded the power to review the arbitrator's rejection of petitioner's issue preclusion argument.
All of the cases cited by the majority involve arbitrations arising from the invocation of arbitration provisions contained in either collective bargaining agreements or inter-company insurance arbitration agreements—parties of equal size and nature who together agree to submit to the resolution of their claims in a non-judicial forum. Petitioner, like so many motorists, is forced by a sophisticated insurer to choose between arbitration and engaging, at her own expense, in the costly litigation that is itself discouraged by the statute. Having done so, she finds herself in a hall of mirrors where winning in arbitration is only the beginning, not the end of her travail.
Finally, I note that the mere finding of a causal relation between the accident and petitioner's shoulder injury at the no-fault arbitration stage would not have necessarily resulted in a finding that petitioner was entitled to recover damages for non-economic loss in the SUM arbitration. Petitioner would still be required to prove that her damages exceeded the amount of any policy of insurance that covered the original tortfeasor (see Raffellini v State Farm Mut. Automobile Ins. Co., 9 NY3d 196, 205 [2007]). Indeed, that was the issue before the SUM arbitrator in this case, yet he never reached the "serious injury" threshold issue, opting instead to revisit the previously-determined causation finding and reach a different conclusion. Based on the foregoing, it is my view that the SUM arbitrator exceeded his authority by not granting the no-fault arbitrator's causation finding preclusive effect, and I would therefore reverse.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Jones. Chief Judge Lippman and Judges Ciparick, Graffeo, Read and Smith concur. Judge Pigott dissents and votes to reverse in an opinion.

Balbert v. 302 96th Street Owners Corp

Thomas D. Hughes, New York, N.Y. (Richard C. Rubinstein and
David D. Hess of counsel), for third-party defendant-appellant.
Kenneth L. Kutner, New York, N.Y., for third-party plaintiff-
respondent 302 96th Street Owners
Corp.
Friedman, Khafif & Sanchez, LLP, Brooklyn, N.Y. (Albert
Khafif of counsel), for third-party
plaintiff-respondent Live Right
Management Corp. (no brief filed).

DECISION & ORDER
In an action to recover damages for personal injuries, the third-party defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Kramer, J.), dated March 24, 2009, as denied that branch of its motion which was to dismiss the third-party complaints.
ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs, and that branch of the third-party defendant's motion which was to dismiss the third-party complaints is granted.
The plaintiff, Colleen Balbert, allegedly was injured when she slipped and fell in the lobby of her cooperative apartment building located at 302 96th Street in Brooklyn. Balbert is an attorney who resides in the building, and is a member of the building's Board of Directors. The building is owned by the defendant third-party plaintiff 302 96th Street Owners Corp. (hereinafter the Owner), managed by the defendant third-party plaintiff Live Right Management Corp. (hereinafter Live Right), and insured by the third-party defendant, Insurance Company of Greater New York (hereinafter INSCO). INSCO disclaimed coverage against the Owner on the ground that it failed to provide timely notice of the occurrence in accordance with the terms of the insurance policy. The Owner and Live Right filed third-party complaints alleging that INSCO's disclaimer was improper.
It is well established that a provision in an insurance policy that requires the insured to give the insurer written notice of an occurrence "as soon as practicable" mandates that such notice be given within a reasonable time under the circumstances (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436; Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742).
The underlying incident giving rise to Balbert's claim occurred on June 27, 2007. However, the Owner did not notify INSCO of Balbert's accident until 11 months later on May 27, 2008. The 11-month delay between the occurrence and notice to INSCO was unreasonable in light of the fact that the Owner was aware of Balbert's accident on the date that it occurred, and it was aware that Balbert had been removed by ambulance in a stretcher, had undergone surgery, and was seen walking with a cane after the accident.
Under the circumstances, the owner failed to demonstrate a good faith belief in nonliability so as to excuse its failure to timely serve notice of the occurrence based upon its belief that Balbert would not sue because she was a Board member (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235).
SKELOS, J.P., SANTUCCI, LEVENTHAL and HALL, JJ., concur.

Ruiz v. Frog Co., LLC

Flynn, Gibbons & Dowd, New York (Ann Teresa McIntyre of
counsel), for appellant.
Barry McTiernan & Moore, New York (Laurel A. Wedinger of
counsel), for respondent.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered January 29, 2010, which granted the motion of nonparty law firm Barry McTiernan & Moore (BMM) for leave to withdraw as counsel for third-party defendant Aldo's Iron Works, Inc. (Aldo's), unanimously affirmed, without costs.
Aldo's was plaintiff's employer when plaintiff sustained injuries at his workplace. Aldo's liability carrier, National Contractors Insurance Company, Inc. (NCIC), provided coverage under the policy up to $6,000 per occurrence and advised Aldo's that it would no longer pay to defend the claim or indemnify it in the case of liability since the $6,000 limit had been reached.
Although a motion for withdrawal by counsel is an improper vehicle to test the disclaimer of coverage by the insurer (see e.g. Sojka v 43 Wooster LLC, 19 AD3d 266, 267 [2005]), NCIC did not disclaim coverage (see Dillon v Otis El. Co., 22 AD3d 1 [2005]). Rather, the contractually agreed-to limitation on defense costs was exhausted and under these circumstances, BMM should not be compelled to continue representation without compensation (see Cullen v Olins Leasing, 91 AD2d 537 [1982], appeal dismissed 61 NY2d 867 [1984]).

Britt v. Bustamante

Wallace, Witty, Frampton & Veltry, P.C., Brentwood, N.Y. (Peter
J. Graff of counsel), for appellant.
Christine Malafi, County Attorney, Hauppauge, N.Y. (Diana T.
Bishop of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (R. Doyle, J.), entered March 3, 2009, which, upon remittitur from this Court (see Britt v Bustamante, 55 AD3d 858), granted that branch of the motion of the defendants Antonio L. Bustamante and County of Suffolk which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, and that branch of the motion of the defendants Antonio L. Bustamante and County of Suffolk which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is denied.
The defendants Antonio L. Bustamante and County of Suffolk (hereinafter together the defendants) failed to meet 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 support of their motion, the defendants relied, inter alia, on the affirmed medical report of an orthopedist who examined the plaintiff more than three years after the accident, and noted significant range-of-motion limitations in the plaintiff's cervical spine. In view of the orthopedist's findings, the defendants failed to establish their prima facie entitlement to judgment as a matter of law (see Fields v Hildago, 74 AD3d 740; Smith v Hartman, 73 AD3d 736; Leopold v New York City Tr. Auth., 72 AD3d 906; Catalan v G & A Processing, Inc., 71 AD3d 1071, 1072; Kjono v Fenning, 69 AD3d 581; Buono v Sarnes, 66 AD3d 809, 810).
Since the defendants failed to meet their prima facie burden, the Supreme Court should have denied their motion regardless of the sufficiency of the plaintiff's opposing papers (see Kjono v Fenning, 69 AD3d at 582; Buono v Sarnes, 66 AD3d at 810; Held v Heideman, 63 AD3d 1105, 1106).

Zawaski v. Salzano

Richard T. Lau, Jericho, N.Y. (Keith E. Ford of counsel), for
appellant.
Johannesen & Johannesen, PLLC, Rocky Point, N.Y. (Annmarie
R. Johannesen of counsel), for
respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Suffolk County (Costello, J.), dated January 14, 2010, which granted the plaintiff's motion for summary judgment on the issue of liability, and denied his cross motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed, on the law, with costs, the defendant's 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) is granted, and the plaintiff's motion for summary judgment on the issue of liability is denied as academic.
In support of his cross motion, the defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; see also Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff failed to submit any affirmations or affidavits of his treating physicians, or medical records in admissible form indicating what treatment, if any, he received for his alleged injuries (see Kivelowitz v Calia, 43 AD3d 1111).
Since the plaintiff failed to raise a triable issue of fact in opposition, the Supreme Court should have granted the defendant's cross motion for summary judgment dismissing the complaint. Accordingly, the plaintiff's motion for summary judgment on the issue of liability should have been denied as academic (see Kuperberg v Montalbano, 72 AD3d 903).

Hughey v RHM-88, LLC

Litchfield Cavo, LLP, New York (Joseph E. Boury of counsel),
for One United Nations Plaza Condominium, appellant-
respondent/appellant-respondent.
Russo, Keane & Toner, LLP, New York (Thomas F. Keane of
counsel), for Pritchard Industries, Inc., respondent-appellant.
Mischel & Horn, P.C., New York (Naomi M. Taub of counsel),
for Cushman & Wakefield, Inc., for respondent-appellant.
Order, Supreme Court, New York County (Doris Ling-Cohan, J.), entered April 15, 2009, which, to the extent appealed from, denied the motion of defendant One United Nations Plaza Condominium (UNPC) to dismiss the complaint for plaintiffs' failure to serve a notice of claim; granted defendant Pritchard's motion for summary judgment dismissing plaintiffs' claims against it; qualified the conditional order of contractual indemnification in favor of UNPC as against second third-party defendant Cushman & Wakefield (C & W); conditionally granted contractual indemnification in favor of UNPC and C & W against Pritchard; and conditionally awarded contractual indemnification in favor of Pritchard and UNPC against C & W, unanimously modified, on the law, the conditional award in Pritchard's favor against C & W vacated, and otherwise affirmed, without costs.
The court correctly held that plaintiffs were not required to file a notice of claim prior to suing UNPC. Unlike defendant United Nations Development Corporation (UNDC), UNPC is not a public benefit corporation entitled to notice under General Municipal Law § 50-i(1). UNPC offers no support for its novel argument that it is the alter ego of the City.
Nor is there any merit to UNPC's alternative arguments: (1) that plaintiffs' complaint against it should have been dismissed because it delegated full responsibility for the two forces that allegedly caused this injury — maintenance and repair of the canopy and gutter, and removal of snow and ice from the sidewalks — to C & W and Pritchard, respectively, thus precluding a charge of constructive notice of any allegedly dangerous condition created as a result of these other entities' failures to fulfill the requirements of their contracts; (2) that in any event, it is the UNPC Board, not UNPC, that has control over and responsibility for the common areas. UNPC and its Board are one and the same for purposes of this lawsuit. Moreover, an issue of fact exists as to whether UNPC had constructive notice of the recurring ice formation as a result of the leaky gutter, inasmuch as the Millennium Hotel and UNDC, which are closely intertwined and employ high-level personnel in common with UNPC, were both named as defendants in another case in which the plaintiff there claimed to have been injured in the same manner and in the same location as plaintiffs herein. In any event, UNPC can be held liable to plaintiffs as C & W's principal for any negligence committed by C & W, even if UNPC were not itself actively and directly negligent. Moreover UNPC, as a landowner, may not delegate its duty to keep its premises in a safe condition with regard to third parties. Rather, its recourse is to secure an indemnification agreement from the party to whom it delegates specific responsibilities, and "allocate the risk of liability to third parties by the procurement of liability insurance for their
mutual benefit" (Morel v City of New York, 192 AD2d 428, 429 [1993]).
The court also properly dismissed plaintiffs' claims against Pritchard, correctly holding that Pritchard owed no duty to the injured plaintiff because the Cleaning Services Agreement was between Pritchard and UNPC, and the injured person was neither a party to, nor an intended third-party beneficiary of, that contract (see Eaves Brooks Costume Co. v Y.B.H. Realty Corp., 76 NY2d 220, 226 [1990]). Nor do any of the exceptions set forth in Espinal v Melville Snow Contrs. (98 NY2d 136 [2002]) apply to justify imposing tort liability against Pritchard in favor of plaintiffs.
With respect to the cross claims for contractual indemnification among UNPC, C & W and Pritchard, there is evidence to indicate all three parties may have had at least constructive notice of the dangerous condition that allegedly caused the accident herein. The injured plaintiff testified that the water that formed the ice came from a leaky gutter located on the bottom part of the glass canopy. UNPC had overall responsibility for this dangerous condition as the landowner, C & W had responsibility pursuant to the Property Management Agreement to repair and maintain the leaky gutter, and Pritchard had responsibility pursuant to the Cleaning Services Agreement to remove ice and snow from the sidewalks. The injured plaintiff added that he had observed water leaking from the gutter on the day of his accident and on numerous prior occasions, that ice accumulated on the sidewalk as a result of water leaking from the gutter approximately a dozen times a year, and that he had heard about other people falling on the ice in the past. There is evidence that C & W knew about the recurring icy sidewalk condition based on this testimony that the injured plaintiff had told his supervisor at C & W about the condition but was unaware of any efforts made to stop the leak. If Pritchard was aware of ice forming on the sidewalk on a regular basis, it would be obligated to tell someone at C & W or UNPC about it so those entities could take the necessary precautions during the days/hours Pritchard's porters were not on site to remove it. In any event, all three parties could have had constructive notice by virtue of the prior lawsuit stemming from a virtually identical accident in which UNPC, C & W and, eventually, Pritchard, were named.
The extent to which the parties will be entitled to indemnification, however, will depend on the extent to which each party's negligence is determined to have contributed to the accident. Hence, the court correctly granted a conditional order of contractual indemnification in favor of UNPC against C & W. The agreement contains a sufficiently clear and unambiguous provision requiring C & W to indemnify UNPC for any liability arising out of C & W's negligence not otherwise covered by insurance, and the provision only purports to indemnify UNPC to the extent it was not itself negligent (see General Obligations Law § 5-322.1[1]; Brooks v Judlau Contr., Inc., 11 NY3d 204, 210 [2008]; Rodrigues v N & S Bldg. Contrs., Inc., 5 NY3d 427, 433 [2005]; Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co., 89 NY2d 786, 795 [1997]; Collins v Switzer Constr. Group, Inc., 69 AD3d 407, 408 [2010]). On the other hand, the Property Management Agreement also expressly requires UNPC to obtain a comprehensive general liability insurance policy and to name C & W as an additional insured under that policy, which UNPC concedes it failed to do. The court thus properly qualified that conditional order of indemnification to account for any out-of-pocket costs C & W might be entitled to recover from UNPC for the latter's failure to procure insurance for C & W (see Inchaustegui v 666 5th Ave. Ltd. Partnership, 96 NY2d 111, 114 [2001]).
The court also correctly granted UNPC and C & W conditional orders of contractual indemnification against Pritchard. The Cleaning Services Agreement expressly requires Pritchard to indemnify UNPC and its agent, C & W, for any liability arising out of Pritchard's negligence, and contains the requisite saving language, "to the fullest extent permitted by law," to ensure that UNPC and C & W will only be indemnified to the extent they are not responsible for the injured plaintiff's accident.
The court erred, however, in granting conditional orders of indemnification in favor of Pritchard against C & W. Pritchard did not assert any cross claims for indemnification, based on common law or contract. Even if Pritchard had asserted a cross claim against C & W for common-law indemnification, it would be barred by Workers' Compensation Law § 11 because the injured party has not sustained a "grave injury." Furthermore, no contract exists between C & W and Pritchard that obligates C & W to indemnify Pritchard, thus precluding any claim by Pritchard for contractual indemnification against C & W.
We have considered the parties' remaining contentions and find them unavailing.

Nesterczuk v Goldin Management, Inc.,

Thomas D. Hughes, New York, N.Y. (Richard C. Rubinstein of
counsel), and Daniel O. Dietchweiler, Old Bethpage, N.Y., for
appellants-respondents (one brief filed).
Rubin, Fiorella & Friedman, LLP, New York, N.Y. (Stewart B.
Greenspan of counsel), for respondent-
appellant.

DECISION & ORDER
In an action to recover damages for personal injuries, etc., the defendants Goldin Management, Inc., and Park Slope Terrace, LLC, appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Kings County (Partnow, J.) entered September 22, 2008, as, upon a jury verdict in favor of them and against the defendant Alisa Construction Co., Inc., in the total sum of $120,625.35, and, upon an order of the same court dated November 20, 2007, inter alia, denying that branch of the renewed joint motion of the defendants Goldin Management, Inc., and Park Slope Terrace, LLC, which was for summary judgment on the cross claim of Park Slope Terrace, LLC, for contractual indemnification against the defendant Alisa Construction Co., Inc., to the extent it sought reimbursement of a settlement payment in the total sum of $475,000, paid by its insurer to the plaintiffs on behalf of the defendants Goldin Management, Inc., and Park Slope Terrace, LLC, and denying those branches of the renewed joint motion which were for summary judgment on the cross claims of the defendant Goldin Management, Inc., for common-law indemnification and, in effect, for contractual indemnification against the defendant Alisa Construction Co., Inc., awarded the defendant Park Slope Terrace, LLC, the total sum of only $120,625.35 on its cross claim for contractual indemnification against the defendant Alisa Construction Co., Inc., and the defendant Alisa Construction Co., Inc., cross-appeals from the same judgment, which, upon a jury verdict finding it 100% at fault for the happening of the incident, is in favor of the defendant Park Slope Terrace, LLC, and against it in the total sum of $120,625.35, and awarded the defendant Park Slope Terrace, LLC, prejudgment interest on the award for contractual indemnification.
ORDERED that the judgment is modified, on the law, by deleting from the first decretal paragraph thereof the total sum of $120,625.35; as so modified, the judgment is affirmed insofar as appealed and cross-appealed from, with costs payable to the defendant Park Slope Terrace, LLC, by the defendant Alisa Construction Co., Inc., that branch of the renewed joint motion of the defendants Goldin Management, Inc., and Park Slope Terrace, LLC, which was for summary judgment on the cross claim of the defendant Park Slope Terrace, LLC, for contractual indemnification against the defendant Alisa Construction Co., Inc., for reimbursement of the settlement payment made by its insurer to the plaintiffs on its behalf is granted, the order dated November 20, 2007, is modified accordingly, and the matter is remitted to the Supreme Court, Kings County, for a hearing to determine what portion of the settlement payment in the sum of $475,000 was paid on behalf of the defendant Park Slope Terrace, LLC, and for the entry thereafter of an appropriate amended judgment.
On June 16, 2004, the plaintiff Christopher Nesterczuk was assaulted by an intruder in the parking lot of certain premises that are part of the defendant Park Slope Terrace Condominium (hereinafter the condominium). The injured plaintiff and his wife, derivatively, commenced this action to recover damages for personal injuries, against, among others, the defendants Park Slope Terrace, LLC, the sponsor and developer of the condominium (hereinafter the sponsor), Goldin Management, Inc., the management company of the condominium (hereinafter the management company), and Alisa Construction Co., Inc., the general contractor (hereinafter the contractor). In their joint verified answer to the supplemental complaint, the sponsor and the management company, inter alia, interposed cross claims for contractual and common-law indemnification against the contractor.
Pursuant to a construction contract to develop the condominium between the sponsor and the contractor, the contractor agreed, inter alia, to indemnify the sponsor and its representatives against all claims, demands, or liability for damages (including attorney's fees) to persons or to property arising out of the execution of its work, and at its own expense to defend any suit or action brought against the sponsor and its representatives founded upon the claim of such damage. The contractor also agreed to be responsible and liable for all costs, disbursements, and expenses, including attorney's fees, incurred by the sponsor, only, as a result of the sponsor having to defend or take part in any action or proceeding which directly or indirectly related to acts or omissions of the contractor (hereinafter the indemnification clause).
Before the trial, the management company moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against it, the sponsor separately moved for conditional summary judgment on its cross claims for contractual and common-law indemnification against the contractor, and the contractor cross-moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against it. The Supreme Court denied the motions and cross motion, finding issues of fact requiring a trial. Thereafter, the sponsor and management company settled with the plaintiffs for the total sum of $475,000, which their insurer, Greater New York Mutual Insurance Company, paid on their behalf. A trial on the issue of liability ensued at which the jury found the contractor 100% at fault for the happening of the incident. Thereafter, the sponsor, inter alia, renewed that branch of its motion which was for summary judgment on its cross claim for contractual indemnification against the contractor. The management company joined in that motion, seeking summary judgment on its cross claim for common-law indemnification.
In an order dated November 20, 2007, the Supreme Court, upon determining that the management company was not a representative of the sponsor, granted the renewed motion only to the extent that the sponsor was awarded its presettlement defense costs and expenses. The Supreme Court, however, denied that branch of the renewed motion which was for summary judgment on the sponsor's cross claim for contractual indemnification against the contractor to the extent it sought reimbursement of the settlement payment in the total sum of $475,000, and denied that branch of the renewed motion which was for summary judgment on the management company's cross claim for common-law indemnification against the contractor. The Supreme Court further determined that to the extent the management company was seeking contractual indemnification against the contractor, such relief also was not available.
Contrary to the contractor's contention, on its motion for summary judgment it failed to meet its prima facie burden of establishing that it did not owe a duty to the injured plaintiff based on one of the three exceptions to the general rule that breach of a contractual obligation is insufficient to impose tort liability to a non-contracting third party (see Church v Callanan Indus., 99 NY2d 104; Golisano v Keeler Constr. Co., 74 AD3d 1915; Musilli v Kohler Co., 50 AD3d 1600). One of the recognized exceptions to this rule exists where the plaintiff has suffered injury as a result of reasonable reliance upon the defendant's continuing performance of a contractual obligation (see Church v Callanan Indus., 99 NY2d at 111-112; Espinal v Melville Snow Contrs., 98 NY2d 136, 139-141; see also Prosser and Keeton, Torts § 92, at 658 [5th ed]; Restatement [Second] of Torts § 324A[c]; cf. Vignapiano v Herbert Constr. Co., 46 AD3d 544, 545).
Here, the contractor failed to establish, prima facie, that the injured plaintiff did not sustain injury because he reasonably relied upon the contractor's continuing performance of certain security measures it undertook at the condominium during its construction. Since the contractor failed to meet its initial burden as the movant, this Court need not review the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).
Contrary to the Supreme Court's determination, the sponsor was entitled to reimbursement of the settlement payment made on its behalf to the plaintiffs. "When an indemnitor has notice of the claim against it, the general rule is that the indemnitor will be bound by any reasonable good faith settlement the indemnitee might thereafter make" (Coleman v J.R.'s Tavern, 212 AD2d 568, 568; see Goldmark Indus. v Tessoriere, 256 AD2d 306). Where the record establishes that the indemnitor received such notice, the indemnitee made a reasonable settlement in good faith, and the indemnitee "could have been held liable if it had proceeded to trial," the indemnitor is obligated to indemnify the indemnitee for the settlement amount (Fidelity Natl. Tit. Ins. Co. of N.Y. v First N.Y. Tit. & Abstract Ltd., 269 AD2d 560, 561-562).
Here, the sponsor established its entitlement to judgment as a matter of law on that portion of its cross claim which was for contractual indemnification covering the settlement it paid to the plaintiffs by showing that the contractor was on notice of the plaintiffs' claims against the sponsor, the reasonable possibility that those claims were encompassed by the indemnification clause, that the settlement was reasonable and made in good faith, and that the sponsor could have been found liable to the plaintiffs (see Slepian v Motelson, 66 AD3d 871, 872). Furthermore, contrary to the contractor's contention, the voluntary payment doctrine is not applicable to the sponsor's settlement payment to the plaintiffs (cf. Dillon v U-A Columbia Cablevision of Westchester, Inc., 100 NY2d 525) and thus, is not a bar to the sponsor's contractual indemnification cross claim against it (see Cunha v City of New York, 12 NY3d 504, 509; Rosado v Proctor & Schwartz, 66 NY2d 21). Since we find that the sponsor is entitled to contractual indemnification from the contractor, it is not necessary to address its cross claim for common-law indemnification (see Cunha v City of New York, 12 NY3d at 510).
However, the Supreme Court properly denied that branch of the management company's renewed cross motion which was for summary judgment, in effect, on its cross claim for contractual indemnification against the contractor. When a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed (see Levine v Shell Oil Co., 28 NY2d 205, 211; Kurek v Port Chester Hous. Auth., 18 NY2d 450, 456). The intention to indemnify should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances (see Hooper Assoc. v AGS Computers, 74 NY2d 487, 491-492; Margolin v New York Life Ins. Co., 32 NY2d 149, 153; Niagara Frontier Transp. Auth. v Tri-Delta Constr. Corp., 107 AD2d 450, 452, affd 65 NY2d 1038, 1040).
Here, the management company failed to establish that pursuant to the contract between the sponsor and the contractor, the management company was considered to be the sponsor's "representative" and, thus, entitled to indemnification from the contractor. Rather, the evidence established that the management company, although retained by the sponsor before the first election of the condominium's board of managers, was retained on behalf of, and at all times was employed by, the condominium.
Further, as to the management company's claim for common-law indemnification against the contractor, since the management company was sued for its own active negligence, and not based on a theory of vicarious liability or a nondelegable duty, it was not entitled to common-law indemnification from the contractor (see Esteva v Nash, 55 AD3d 474, 475).
Contrary to the contractor's contention, the sponsor was entitled to prejudgment interest on the award for contractual indemnification, computed from the date of its settlement with the plaintiff (see Bethlehem Steel Corp. v Youngstown Cartage Co., 79 AD2d 902; see generally 23 NY Jur 2d Contribution, Indemnity and Subrogation § 99, at p. 208-209; JPMorgan Chase & Co. v Travelers Indem. Co., 73 AD3d 9). Finally, in light of the contractor's settlement with the plaintiffs during the trial on the issue of damages, and our determination that the contractor is liable for contractual indemnification but not common-law indemnification, the contractor's remaining contention that the jury's apportionment of fault between it and the nonparty assailant was contrary to the weight of the evidence is without merit (see CPLR 1602[1][a]).
SKELOS, J.P., SANTUCCI, DICKERSON and LEVENTHAL, JJ., concur.

Federated Retail Holdings, Inc. v Weatherly 39th Street, LLC

Siller Wilk LLP, New York (M. William Scherer of counsel),
for appellant.
Loeb & Loeb LLP, New York (David M. Satnick of counsel),
for respondents.
Order, Supreme Court, New York County (Bernard J. Fried, J.), entered April 3, 2009, which, inter alia, denied defendant landlord's motion for partial summary judgment on its first through sixth counterclaims on the issue of whether plaintiff tenant breached the subject lease by failing to purchase proper insurance naming landlord as an additional insured, without a self-insured retention, as allegedly required by the lease, and granted the cross motion of tenant and co-plaintiff subtenant for summary judgment dismissing the first through sixth counterclaims, unanimously reversed, on the law, with costs, the cross motion denied, the motion granted, and tenant's remaining time to cure will commence to run upon service on tenant of a copy of this order with notice of entry.
The court erroneously determined that section 7.02 of the lease, which requires tenant to maintain insurance coverage for the benefit of itself and landlord "in limits of at least One Million ($1,000,000) Dollars for injury to any one individual and Three Million ($3,000,000) Dollars for any one accident . . . plus an umbrella policy of $5,000,000," was not violated by tenant's use of self-insured retentions in the amount of $1,000,000 each for both the primary and umbrella policies. In construing the lease, the court improperly declined to consider the reasonable expectations of the parties and purpose of this business contract (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 716 [2007]; Sport Rock Intl., Inc. v American Cas. Co. of Reading, Pa., 65 AD3d 12, 28 [2009]), incorrectly concluding that to do so was tantamount to consideration of parole evidence —- to the contrary, it is a proper approach to contract construction. Moreover, the court's reading of the unambiguous insurance provision would permit tenant to render meaningless the requirement that it purchase the specified amounts of insurance (see Helmsley-Spear, Inc. v New York Blood Ctr., 257 AD2d 64, 69 [1999]).
As landlord correctly notes, clarity and predictability are important considerations in contract interpretation (see Sport Rock Intl., Inc., 65 AD3d at 28). Although our interpretation of the contract is consistent with those considerations, the motion court's reading would leave the issue of insurance uncertain, as tenant could simply choose to buy a policy with such a high self-insured retention (and concomitantly low premium) as to render insubstantial or even illusory the benefits of the insurance coverage for which landlord bargained. Such a reading does not comport with well settled precepts of contract interpretation that require a court to "endeavor to give the [contract] construction most equitable to both parties instead of the construction which will give one of them an unfair and unreasonable advantage over the other" (Metropolitan Life Ins. Co. v Noble Lowndes Intl., 84 NY2d 430, 438 [1994] [internal quotation marks omitted]) and that disfavor "[l]anguage in contracts placing one party at the mercy of the other" (id. [internal quotation marks omitted]).
Subtenant's insurance does not cure this defect, as landlord is not required to accept subtenant's performance in lieu of tenant's (see 185 Madison Assoc. v Ryan, 174 AD2d 461 [1991]; 214 W. 39th St. Corp. v Miss France Coats, Inc., 274 App Div 597, 599-600 [1948]). Subtenant could choose, at any time, to discontinue its insurance naming landlord as an additional insured, and landlord would have no recourse, as it is not in privity with subtenant. Nor does tenant's fronting policy, purchased after the instant action was commenced, cure the defect. The fronting policy purportedly provides "first dollar" coverage, so that the issuer of the policy generally would be responsible for paying the self-insured retention for the primary policy. Tenant concedes that the issuer of the fronting policy would not be required to pay the $1,000,000 self-insured retention provided for in the umbrella policy if the primary coverage were to be exhausted, but argues that the possibility of exhaustion of the primary policy is remote. However, whether or the extent to which that possibility is remote is irrelevant to the issue of whether tenant complied with the insurance provision in the lease. Landlord did not bargain for insurance protection against only non-remote risks.

M-5592 - Federated Retail Holdings, Inc., et al. v Weatherley 39th Street LLC, etc.
Motion to strike brief denied.

Calderone v Wiemeier, Jr.

Calendar Date: September 7, 2010
Before: Cardona, P.J., Mercure, Spain, Lahtinen and Garry, JJ.

Hancock & Estabrook, L.L.P., Syracuse (Alan J.
Pierce of counsel), for appellant.
Nixon Peabody, L.L.P., Buffalo (Benjamin R. Dwyer
of counsel), for respondent.
MEMORANDUM AND ORDER
Lahtinen, J.
Appeal from a judgment of the Supreme Court (O'Shea, J.), entered August 27, 2009 in Chemung County, which, among other things, granted defendant's motion to compel joinder of a necessary party.
In 2003, plaintiff converted two life insurance policies into a single policy that names him as the insured and the Joseph E. Calderone Family Trust as its beneficiary and owner. Approximately five years later, plaintiff commenced this action alleging, among other things, that the policy was underperforming and that defendant, an insurance agent, had fraudulently induced him into consenting to the conversion. As relevant here, defendant moved to dismiss the complaint on the ground that plaintiff failed to join a necessary party — the trust. Although Supreme Court denied the motion to dismiss the complaint, it granted defendant's alternative motion to compel plaintiff to add the trust as a party plaintiff. Plaintiff appeals.
We affirm. Necessary parties are those who might be inequitably affected by a judgment in the action or who ought to be parties if complete relief is to be accorded to the persons who are parties to the action (see CPLR 1001 [a]). Moreover, "[t]he primary reason for compulsory joinder of parties is to avoid multiplicity of actions and to protect nonparties whose rights should not be jeopardized if they have a material interest in the subject matter" (Joanne S. v Carey, 115 AD2d 4, 7 [1986]; see Matter of Storrs v Holcomb, 245 AD2d 943, 945-946 [1997]). Here, the complaint alleges that the policy "has not performed as represented by [defendant] . . . and is burning itself out." With the issue so framed, Supreme Court properly concluded that an ultimate ruling as to the potentially diminished value of the policy could inequitably affect the trust's interests (see generally Town of Brookhaven v Chun Enters., 71 NY2d 953, 954 [1988]). Such a ruling — absent the trust's involvement here — might likewise subject defendant to further litigation regarding the same subject matter. Accordingly, Supreme Court's judgment should be affirmed.

Brightly v. Dong Liu

Harmon, Linder, & Rogowsky, New York, N.Y. (Mitchell Dranow
of counsel), for appellant.
Cheven Keely & Hatzis, New York, N.Y. (William B. Stock of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Kings County (Bayne, J.), dated November 10, 2009, which, upon an order of the same court dated December 18, 2008, granting 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 upon so much of an order of the same court dated May 14, 2009, as denied that branch of his motion which was for leave to renew his opposition to the prior motion, is in favor of the defendant and against him dismissing the complaint.
ORDERED that the judgment is reversed, on the law, with costs, the complaint is reinstated, that branch of the plaintiff's motion which was for leave to renew is granted, upon renewal, the order dated December 18, 2008, is vacated, the defendant's motion for summary judgment is denied, and the order dated May 14, 2009, is modified accordingly.
In opposition to the defendant's motion for summary judgment dismissing the complaint, the plaintiff submitted an affirmation of his treating chiropractor, not an affidavit. Consequently, this submission was not considered by the Supreme Court. After the defendant's motion was granted, the plaintiff moved, inter alia, for leave to renew, submitting a properly notarized affidavit from his treating chiropractor and an affidavit from an employee of the law firm that represented the plaintiff, explaining that she mistakenly thought that the plaintiff's treating chiropractor was a physician and therefore she had not advised him that he needed to sign a notarized affidavit instead of an affirmation. Under the circumstances, the Supreme Court improvidently exercised its discretion in denying that branch of the plaintiff's motion which was for leave to renew (see Acosta v Rubin, 2 AD3d 657). Upon renewal, the defendant's motion for summary judgment should have been denied.
The chiropractor's affidavit submitted on behalf of the plaintiff specifying the significant contemporaneous restrictions in the plaintiff's lumbar and cervical spine range of motion, and evidence of herniated and bulging discs as confirmed by magnetic resonance image tests, as well as recent range of motion testing showing similar limitations in the plaintiff's cervical and lumbar spine range of motion, were sufficient to raise a triable issue of fact as to whether the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Acosta v Rubin, 2 AD3d at 657; see also Tai Ho Kang v Young Sun Cho, 74 AD3d 1328).

Posa v. Guerrero

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Timothy M. Sullivan of counsel), for appellants.
Frank J. Santo, P.C., Brooklyn, N.Y. (William R. Santo of
counsel), for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Jacobson, J.), dated April 8, 2010, 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 is granted.
The Supreme Court correctly determined that the defendants, in support of their motion, 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 plaintiff failed to raise a triable issue of fact as to whether she sustained a serious injury under the permanent loss, permanent consequential limitation of use, and/or significant limitation of use categories of Insurance Law § 5102(d) because she failed to submit competent medical evidence that revealed the existence of a significant limitation in her cervical spine, lumbar spine, right shoulder, right elbow, or right wrist that was contemporaneous with the subject accident (see Srebnick v Quinn, 75 AD3d 637; Catalano v Kopmann, 73 AD3d 963; 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). In addition, the report of Dr. David Lifschutz dated October 11, 2007, and the reports of Dr. Andrew Miller, except those dated August 3, 2007, and October 28, 2009, respectively, were insufficient to raise a triable issue of fact because they were unaffirmed (see Grasso v Angerami, 79 NY2d 813; Resek v Morreale, 74 AD3d 1043; Bleszcz v Hiscock, 69 AD3d 890; Singh v Mohamed, 54 AD3d 933; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514).
The plaintiff 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).

Doty v. McInerny

Calendar Date: September 9, 2010
Before: Mercure, J.P., Rose, Malone Jr., Kavanagh and Stein, JJ.

Law Office of Jacob P. Welch, Corning (Anna Czarples
of counsel), for appellant.
Levene, Gouldin & Thompson, L.L.P., Binghamton
(David F. McCarthy of counsel), for respondents.
MEMORANDUM AND ORDER
Malone Jr., J.
Appeal from an order of the Supreme Court (O'Shea, J.), entered February 10, 2010 in Chemung County, which granted defendants' motion for summary judgment dismissing the complaint.
Plaintiff, as the parent and guardian of Sarah Doty, commenced this action alleging that Doty sustained serious injuries within the meaning of Insurance Law § 5102 (d) as a result of a motor vehicle accident. Defendants moved for summary judgment dismissing the complaint and plaintiff cross-moved for partial summary judgment on the issue of defendants' negligence. Supreme Court granted defendants' motion and plaintiff appeals.
As limited by her brief, plaintiff initially contends that Supreme Court erred by granting defendants' motion for summary judgment because a question of fact exists as to whether Doty sustained a fracture to her right foot. However, neither the amended complaint nor the bill of particulars contain allegations that Doty sustained a serious injury to her foot in the form of a fracture and, accordingly, Supreme Court properly refused to consider this claim, which was first raised in opposition to defendants' motion (see Lee v Laird, 66 AD3d 1302, 1303 [2009]; MacDonald v Meierhoffer, 13 AD3d 689, 689 [2004]).
Plaintiff next contends that summary judgment dismissing the complaint was improper because she raised a triable issue of fact with respect to her claim of a significant disfigurement. However, as the proponents of the summary judgment motion, defendants presented sufficient medical evidence that neither the approximately one-centimeter scar on the right side of Doty's forehead nor the approximately 1½-centimeter scar on her right foot constitutes a significant disfigurement (see Licygiewicz v Stearns, 61 AD3d 1254, 1255 [2009]). In opposition, plaintiff produced the affidavit of Doty's treating physician, who described the two scars as permanent, indicated that they were each discolored and visible from three meters away and opined, in a conclusory manner, that they constituted a serious injury [FN1] . However, the photographs that were included in the record refute any claim that a reasonable person viewing these scars would consider them to be "unattractive, objectionable or the subject of pity or scorn" so as to constitute a significant disfigurement with the meaning of the Insurance Law (Baker v Thorpe, 43 AD3d 535, 537 [2007]; see Maldonado v Piccirilli, 70 AD3d 785, 786 [2010]). Accordingly, Supreme Court appropriately granted defendants' motion for summary judgment dismissing the complaint.

Footnotes

Footnote 1: Although plaintiff also submitted Doty's affidavit in which Doty avers, among other things, that the scars make her feel self-conscious, Doty's subjective claims are insufficient to raise a triable issue of fact (see e.g. Toure v Avis Rent-A-Car Sys., 98 NY2d 345, 350 [2002]).