Dear Coverage Pointers Subscribers:

A reprise offered from an issue two years ago:

"I got a situation ."

I ran into a friend of mine on Thursday evening and she wondered whether I still enjoyed coming to work every day. She asked: "don't you get tired of doing the same thing over and over again?"

You know, I've been at it for better than three decades but there is still nothing (during business hours, anyway) more fun and more rewarding than answering my phone and hearing a familiar (or unfamiliar) voice with those four magic words, "I got a situation."

And I laugh aloud, because almost every call starts that way. I tell that to the caller, and after the laughter dies down, we can often map out a plan to move the matter forward towards resolution.

It makes no difference whether the call is from an insurance claims professional with whom I've been working for many, many years or someone just hired and struggling for some guidance or a brother or sister lawyer from somewhere in the United States or Europe, or a former student of my Buffalo Law School Insurance Law class to whom I have promised a free call or one of the almost 2000 subscribers of this bi-weekly missive. The phone rings, or my e-mail alert sounds, and I'm doing what I enjoy the most - and we're doing, in our office, what we enjoy the most - providing those who need it with strategic guidance, offering the kind of advice that empowers the caller to move forward and resolve a problem (so often, without having to pay a lawyer even a nickel).

You got a situation? We LOVE situations. Give us a call.

 

Welcome to another action-packed issue of Coverage Pointers.  Whomever believed that insurance coverage can be so much fun.  A Happy St. Patrick’s Day to all of our Irish friends and wannabes.

We attended the Winter Meeting of the Federation of Defense & Corporate Counsel (FDCC) in Scottsdale last week.  Great venue, great educational programming (learned all about new legal apps for the iPad-3). The weather was spectacular.  We must note, however, that on three of the seven days we were there, it was warmer in Buffalo in the morning than it was in the Arizona desert.  That tells you something about this Western New York winter.

Among the interesting cases in this week’s issue, is the often litigated question of whether bat guano is a pollutant under a Pollution Exclusion.  It’s a Wisconsin case and you’ll find it in the “Across Borders” section of the newsletter.  Those cases and contributions are courtesy of the FDCC website’s HOT CASES section, www.thefederation.org.  If you like this newsletter and you want to see cases similarly formatted from across the country, visit that website as often as you can, as it is updated daily.

Bi-Economy Update

Surely, we haven’t heard the last of Bi-Economy, the Court of Appeals case allowing the recovery of consequential damages in certain kinds of dispositions.  What follows is Steve Peiper commentary on a case on which her reported on in this issue:

Peiper’s Peccadilloes:

Despite another relatively quiet couple of weeks, we have a very interesting decision to offer in this issue’s Property Section. In Gruenspecht v. Balboa Ins. Co., the First Department, relying upon Bi-Economy, acknowledged the possibility of a consequential damages claim where the owner/insured lost an opportunity to sell the insured premises while the claim process was ongoing.  Essentially, because the owner argued that it lost an opportunity as a result of the carrier’s failure to timely adjust a claim, he had been damaged accordingly.  Importantly, the Court DID NOT rule that the insured had established its claim for consequential damages.  However, its refusal to dismiss the claim for failure to state a cause of action remains problematic nonetheless. 

It is noteworthy that the Court did not reference any of the long standing first party bad faith cases (e.g., NYU v. Continental and Rocanova) in support of its decision.  Unfortunately, the Court likewise did not offer any guidance on what constitutes standing to assert a consequential damages claim.  Reference is made, however, that the insured/plaintiff’s claim alleged that the carrier did not act timely and in good faith.  Taking those claims as true (as is required when considering a motion to dismiss), the Court was compelled to deny the carrier’s motion. 

If we can read the tea leaves for a moment, this would appear to mean that the First Department understands and appreciates the difference between a consequential damages claim (per Bi-Economy) and a first-party bad faith claim (per Rocanova and NYU v. Continental).   We would submit that this decision also portends that the Court would require a breach of the duty of good faith and fair dealing for a consequential damages claim to made.  Again, it is noted that the Court specifically cited plaintiff’s reference that the carrier did not act in good faith in allegedly delaying the adjustment of the claim. 

All of these things are positive developments, correct?  So what’s our problem with the decision you ask?   We note that the consequential loss being claimed was a failure of the assured to be able to act on an offer he received during the claims process. This does not seem like a consequential damage to us.  As noted by the Court of Appeals in Bi-Economy:

In Kenford, we stated that

In order to impose on the defaulting party a further liability than for damages [which] naturally and directly [flow from the breach], i.e., in the ordinary course of things, arising from a breach of contract, such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting" (73 NY2d at 319 [internal quotation marks and citations omitted]).

We later explained that "[t]he party breaching the contract is liable for those risks foreseen or which should have been foreseen at the time the contract was made" (Ashland Mgt. v Janien, 82 NY2d 395, 403 [1993]). It is not necessary for the breaching party to have foreseen the breach itself or the particular way the loss occurred, rather, "[i]t is only necessary that loss from a breach is foreseeable and probable" (id., citing Restatement [Second] of Contracts § 351; 3 Farnsworth, Contracts § 12.14 [2d ed. 1990]).

To determine whether consequential damages were reasonably contemplated by the parties, courts must look to "the nature, purpose and particular circumstances of the contract known by the parties . . . as well as 'what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made' " (Kenford, 73 NY2d at 319, quoting Globe Refining Co. v Landa Cotton Oil Co., 190 US 540, 544 [1903]).

Consequential damages are, as defined by the Court of Appeals, " those risks foreseen or which should have been foreseen at the time the contract was made.”   It appears to us that the possibility that an insured may not be able to act on an offer because the claims process is ongoing is too remote to have been contemplated by the parties at the time of the contracting.  Regardless of how it is pleaded, this doesn’t seem to be a consequential damage. 

We would humbly submit that this is the next horizon on consequential damage litigation.  While it may be possible to make a claim that survives a motion to dismiss on procedural grounds, one must still be able to prove the claimed loss is consequential under the above-referenced parameters.  Accordingly, we would suggest that a carrier responding to a similar claim attack it on (a) the lack of a breach of the covenant of good faith and fair dealing and (b) the lack of the damages qualifying under the already well- established standards for consequential loss.    The latter argument, of course, permits one to move to dismiss prior to answering, the former (as established in this case) does not.

Steve Peiper
[email protected]

One Hundred Years Ago:

 

New York Times
March 16, 1912
Page 1

COURT CENSURED CARUSO: He Did Promise to Wed, but Girl, Being Innocent, Gets No Damages

Milan – Signor Caruso has been severely censured and condemned to pay the costs in Signora Ganelli’s suit for breach of promise, but applying an old principle of Roman jurisprudence that a promise of marriage does not involve the obligation of celebrating the same nor oblige the person thus promising to fulfill any agreement made in the event of not redeeming his promise, Milan Judges refused to allow damages, which the Ganelli family set at $50,000.

The Court, in pronouncing judgment, said:

“There is no doubt that Signor Caruso promised Signora Ganelli to make her his lawful wife, not merely to take her as a governess or a maid, as he would make believe here.  There were no just motives for failing to fulfill his promise,

It remains a morally deplorable act on Signor Caruso’s part that, with the outlook of an imperishable love and a life abounding in splendor and ease, he should have inveigled an inexperienced, ingenuous and upright girl, afterward to abandon her, without any reasons to her fate.

Whereas it is clear that notwithstanding Signor Caruso’s blandishments and gushing love letters, she succeeded in maintaining a spotless life, she cannot claim reparation for any damage.”

Notes from Audreyville:

It’s March 16, 2012, in Buffalo, New York and I am looking at a weather forecast with a prediction of 70 degrees this Saturday.  I have nothing more to say about the weather but do have much to say about no-fault.   I am unfortunately experiencing laryngitis, which may have some of my opponents that spoke with me today internally thrilled, so I am relegated to tapping away at my computer to verbalize my ideas.

One trend that we continue to see is the evaluation of whether each party sufficiently supported their position in arbitration based upon necessity, or lack thereof, of medical treatment.  There are two arbitration awards reported that provide a good review of the issues that both sides can have in their evidence at arbitration which requires review.  Beginning with the Applicant, it may not be beneficial to only submit the medical bills.  Perhaps an assumption should be made that the Respondent will be able to establish lack of medical necessity through their peer review or IME report which will shift the burden to rebut that presumption.  It may behoove you as an Applicant to ensure that the prescription for a type of treatment, the letter of medical necessity, and the medical records at the time of an IME or peer review are submitted with the initial filing.  In the event a referring physician’s report outlines why a treatment or device is being prescribed it may not be a bad idea to include that report in the initial evidence submission.  Turning to the Respondent, the issue on peer review and IME insufficiency generally comes back to the expert not addressing positive objective findings during the exam or in records reviewed.  In essence, the expert cannot gloss over these findings but must at least acknowledge them and discuss why they are not critical in altering the expert’s opinion.

Finally, if you have not signed up for the DRI Insurance Law Committee’s Insurance Coverage and Claims Institute from March 28-30 in Chicago there is still time!  You can also walk in to the program the day of and register to attend.  If you need any information on how to register please do not hesitate to email me at [email protected]

If you celebrate St. Patrick’s Day then I hope you enjoy it (within reason). 

Audrey Seeley

Remember the Maine? 
On March 16, 1912, after removal of the bodies of the sailors who died in its 1898 explosion, the U.S.S. Maine was towed to sea into international waters, three miles from Havana Harbor, and sunk again to a depth of 620 fathoms (roughly 3,700 feet or 1,100 meters).

A Century Ago:

New York Times
March 16, 1912
Page 1

Pulitzer School Bars Girls
Course in Newspaper Work not Open to Feminine Students

The Pulitzer School of Journalism at Columbia University will not be open to feminine students. Dr. A.L. Jones, Chairman of the Committee on Admissions, said yesterday that the administrative and advisory boards of the University have decided that girls and not to be allowed to enter the new school.  This, he explained, was done on the general theory that Columbia University is not co-educational.  There is no provision in Mr. Pulitzer’s will to this effect and there is some disappointment in Barnard College over the decision. 

Dr. Jones said that girl students might not even enter the class-room and receive the benefit of instruction…

Editor’s Note:  The Pulitzer School did in fact open for the fall semester but, contrary to the decision made earlier that year, admitted “feminine students” from the outset. 

The School of Faculty of Fine Arts admitted women in 1912 as well.  Both the School of Library Service and the School of Journalism opened that year and admitted women from the outset.

 

 

In This Week’s Coverage Pointers, Issue Attached:

 

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

  • Unsworn Police Report Identifying Owner of Hit-and-Run Vehicle Not Admissible as “Present Sense Impression” of Police Officer Who Secured Information from Witness in Framed Issue Hearing
  • No Excuse Offered for Lateness of Notice to Carrier and Coverage Lost

 

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

[email protected]com

  • On Appeal, Plaintiffs Win Reversal
  • Physician’s Statements Advising Plaintiffs to Avoid Activities That Cause Pain or Discomfort Are Too General
  • Once Serious Injury Is Established, It Is Not Necessary to Address Additional Injuries to Defeat Summary Judgment
  • Another Left Knee Injury, This One Not Qualifying
  • Defendants’ Examining Orthopedist’s and Neurologist’s Reports Defeat Defendants’ Motions
  • Scars from Spinal Fusion and Implant Surgeries Are Sufficient to Raise Issue of Fact with Regard to the “Significant Disfigurement” Category
  • Thin, Healed Scar on Hand Is Not “Significant Disfigurement”

 

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

[email protected]

ARBITRATION

  • Broad IME Report Insufficient to Deny Treatment
  • Lack of Contemporaneous Medical Records to IME Report and Rx for PT Fatal to Claim
  • Lost Wage Claim Properly Denied Based on 90-Day Rule
  • Work Loss Data Institute Guidelines Authoritative Source Without Contradictory Evidence

 

LITIGATION

  • Plaintiff Failed to Rebut Peer Review on Summary Judgment
  • Electronic Stamped Signature on Report Admissible as Placed There by Doctor Performing Peer Review
  • Assignor Not an EIP and, by the Way, Insurer Not Precluded from This Defense Even if Assumed the Denial Was Defective or Untimely
  • Affirmed Letter of Medical Necessity Creates Triable Issue of Fact.
  • Affidavit on Billing in Excess of Fee Schedule Only Created Triable Issue of Fact
  • Yet Again, Failure to Rebut Peer Review Report Leads to Complaint’s Dismissal
  • Another Complaint Dismissed When Rebuttal to Peer Review Is Unsworn Medical Record
  • Complaint Dismissed as Insurer Demonstrated Claim Timely Paid at Fee Schedule
  • Yet Another Case Where Electronic Signature Did Not Render Report Inadmissible 

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

Property

  • Loss of an Opportunity MAY Give Rise to Consequential Damage Claim
  • Where Carrier Cannot Produce Evidence of a Final and Complete Settlement, Its Accord and Satisfaction Defense Is Lost

 

Potpourri

  • Sealed Criminal Proceedings Prohibits Plaintiff’s Notice to Admit
  • Contractor’s Failure to Investigate May Have Been Breach of Duty

 

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

  • Focus on Fraud
  • Hearing re: Issues with Flood Insurance

           

FIJAL’S FEDERAL FOCUS
Katherine A. Fijal

[email protected]

  • Proof of Loss Required Pursuant to Terms of Standard Flood Insurance Policy

 

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

  • Carrier Cannot Wait to Disclaim on Late Notice While Investigating Other Grounds for Disclaiming
  • Court Refuses to Consider Unsworn Statement of the Insured
  • No Cognizable Claim Against the Insurance Agency
  • Plaintiff Not Permitted to Amend Complaint to Add Bad Faith Cause of Action; Failure to Anticipate Court’s Decision on Coverage Was Not Bad Faith

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

“ECONOMIC LOSS RULE” EXPLAINED AND CLARIFIED

 

That’s all for now.  Got a situation?  Pick up the phone.  That’s my direct dial number below.

Dan

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

Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:  [email protected]
H&F Website:  www.hurwitzfine.com
LinkedIn: www.linkedin.com/in/kohane

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]

ASSOCIATE EDITOR
Audrey A. Seeley
[email protected]

ASSISTANT EDITOR
Margo M. Lagueras
[email protected]

 

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman
Diane F. Bosse

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
[email protected]

Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
 

Scott M. Duquin
Diane F. Bosse

Index to Special Columns

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

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

 

03/13/12         Allstate Insurance Company v. Stricklin
Appellate Division, Second Department
Unsworn Police Report Identifying Owner of Hit-and-Run Vehicle Not Admissible as “Present Sense Impression” of Police Officer Who Secured Information from Witness in Framed Issue Hearing

On March 2, 2009, Stricklin was injured in a hit-and-run accident while riding as a passenger in a motor vehicle insured by Allstate which was struck by an unidentified vehicle that drove away from the scene.  Stricklin made a claim for uninsured motorist benefits.  Allstate sought to permanently stay arbitration.  At the “framed issue” hearing, Stricklin claimed that within five minutes of the accident, he was given a piece of paper with the license plate number of the hit-and-run vehicle.  Stricklin gave the piece of paper to a police officer and the police officer included that information in the police report.  The owner of that car was identified as Langlois, who testified that she owned a vehicle insured by the Autoone but her car was never in an accident. The hearing court admitted the uncertified police report and ruled that the UM proceeding should be stayed because of evidence of coverage.

The Second Department ruled that the police accident report was not admissible because the police report was not based on “present sense impressions” of the police officer and the evidence at the hearing did not establish how much time elapsed between the imparting of the license plate information to the officer and the preparation of the police accident report.  Since there was no other evidence of the identity of the other vehicle than the evidence in the police report, Allstate failed to establish the existence of other coverage and the UM proceeding should proceed.

03/06/12         Konig v. Hermitage Insurance Company
Appellate Division, Second Department
No Excuse Offered for Lateness of Notice to Carrier and Coverage Lost
Plaintiff was injured on August 6, 2008, when she slipped on an exterior staircase of a building located in Brooklyn (hereinafter the subject property), which was owned by 5324 New Utrecht Realty, Inc. (“insured”).  At the time of the accident, the plaintiff was walking down the stairs from Boro Park Copy Corner, Inc. (hereinafter Copy Corner), to the sidewalk.

Harleysville provided coverage to the insured for the property and the insured was obligated under the policy to give prompt notice of any occurrence and suit.

The insured and Copy Corner were sued on October 1, 2008 with process served on the Secretary of State.  In December, the plaintiff’s counsel advised the insured that a default would be taken if an answer was not interposed within 20 days.  With no answer served, the plaintiff made an application in January 2009 for a default against both.  On February 10, 2009, the insured's insurance agent faxed a copy of the plaintiff's default judgment motion to Harleysville.  The agent also faxed an Acord form indicating that a "Mr. Heiman" was the contact for the insured.

On February 26, 2009, Harleysville disclaimed based on late notice of the accident and suit.  Harleysville stated that its investigation revealed that the insured had been aware of the accident on the date that it had occurred and that the Secretary of State had been served with the summons and complaint on October 1, 2008.  The default was entered for about $150,000 and the plaintiff, now judgment creditor, sued Harleysville to enforce the judgment (a direct action under the Insurance Law).

An injured party has an independent right to give notice, but here there was no evidence that the injured party ever tried to do so.

The process server’s affidavit of service was prima facie proof that the summons and complaint were served on the Secretary of State.  The insured’s statement, without more, that it did not receive the process is insufficient to rebut the proof of service.  No excuse was offered for the late notice and thus coverage was lost.
Editor’s Note:  This is a pre-prejudice case.  For policies issues on or after January 18, 2009, Harleysville would have been required to demonstrate material prejudice of its ability to investigate the facts or defend the insured.

 

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

03/13/12         Fernandez v. P.S. Vera-Carrion
Appellate Division, Second Department
On Appeal, Plaintiffs Win Reversal

Plaintiff claimed injuries of the cervical spine and right shoulder under the permanent consequential and/or significant limitation of use categories.  Although defendants met their prima facie burden showing that the injuries were neither serious nor causally related to the accident, plaintiff submitted sufficient competent medical evidence to refute defendants’ showings, and in additional provided a reasonably explanation for the cessation of treatment.  As such, summary judgment should not have been granted to defendants.

03/13/12         Ramos v. Rodriguez
Appellate Division, First Department
Physician’s Statements Advising Plaintiffs to Avoid Activities That Cause Pain or Discomfort Are Too General

On appeal, plaintiffs’ 90/180-day claim is dismissed as their deposition testimony stated they were confined to bed for only one week and their physician’s statements to avoid any activities causing pain or discomfort were too general to raise an issue of fact. 

However, defendants’ motions for summary judgment were denied with regard to plaintiffs’ claims under the permanent consequential and/or significant limitation of use categories.  With respect to plaintiff Ramos, who claimed injuries to her right knee and cervical spine, defendants submitted expert reports noting full range-of motion, and MRI reports of a radiologist who opined the injuries were preexisting, degenerative conditions.  With respect to plaintiff Benvenutty, who claimed injury to his lumbar spine, defendants’ submitted similar evidence.

In opposition, Ramos submitted the affirmation of a radiologist who reviewed MRIs taken a month after the accident which revealed disc herniations and a meniscal tear, and also of her physician who conducted objective tests and found limited ranges of motion and causally related the injuries to the accident and not to degenerative conditions.  Benvenutty submitted similar medical evidence.  Therefore, the trial court’s dismissal of defendants’ motion with regard to those categories was affirmed.

03/08/12         Delgado v. Papert Transit, Inc.
Appellate Division, First Department
Once Serious Injury Is Established, It Is Not Necessary to Address Additional Injuries to Defeat Summary Judgment

Plaintiff, a pedestrian, was struck by a taxi.  Although defendants’ examining orthopedist concluded plaintiff’s left knee exhibited no range-of-motion limitations, plaintiff’s orthopedist and surgeon attested to qualitative limitations, both at the time of the accident and more recently, based upon examinations, testing, and observations during the arthroscopic surgery.  As plaintiff raised a triable issue of fact with regard to the knee injury, it was unnecessary to address any additional injuries and the trial court correctly denied defendants’ motion.

03/06/12         Hoon Choi v. Duchatellier
Appellate Division, Second Department
Another Left Knee Injury, This One Not Qualifying

In a decision without any detail, the decision of the trial court granting defendant’s motion if affirmed as defendant met her prima facie burden and plaintiff failed to submit evidence to raise a triable issue of fact with regard to the alleged injury to his left knee

03/06/12         Jones v. Anderson
Appellate Division, Second Department
Defendants’ Examining Orthopedist’s and Neurologist’s Reports Defeat Defendants’ Motions

The trial court had granted the separate motions of the defendants and, upon searching the record, had also dismissed the complaint as against another defendant as well as against Elrac, Inc.  On appeal, however, the Court determined that the affirmed reports of defendants’ examining orthopedic surgeon and examining neurologist both noted significant range-of-motion limitations of plaintiff’s lumbar spine.  Defendants did not, therefore, meet their burden and the motions should have been denied without the need to consider plaintiff’s opposing papers.  Given this result, the court should not have searched the record and dismissed with respect to the non-moving defendants either.

03/01/12         Peterson v. Cellery
Appellate Division, Third Department
Scars from Spinal Fusion and Implant Surgeries Are Sufficient to Raise Issue of Fact with Regard to the “Significant Disfigurement” Category

Plaintiff was rear-ended in January 2007 by defendant Cellery.  She drove herself to an urgent care center, was given pain medication and released.  Her physician diagnosed her with cervical, thoracic and lumbar sprain for which she underwent physical therapy.  In April 2007, she was hit again by defendant Picotte.  This time she was taken on a backboard to the hospital.  Upon her release, she continued treating for back problems which she claimed were significantly worse after the second accident.  In July 2007, an MRI revealed degenerative disc desiccation with posterior tear at L5-S1 and mild bulge at L4-L5.  Ultimately, she had a spinal fusion in May 2008, followed by two spinal implant procedures to alleviate pain.  The two actions were consolidated.

On appeal, the Court affirmed the trial court’s dismissal as to defendant Cellery.  X-rays and MRIs performed between the two accidents were normal and revealed no traumatic injury.  Plaintiff’s physical therapy records from February and March 2007 noted significant improvement in her neck pain and she had only mild restriction in cervical ROM and good lumbar ROM.  She returned to work a month after the accident and a neurological IME indicated to evidence of any neurological condition attributable to the January 2007 accident.  In opposition, plaintiff failed to raise a triable issue of fact under the significant limitation of use category.  Although her physician noted spasms in the month following the accident, his statement that she suffered a significant limitation was conclusory because he made no comparison (no quantitative or qualitative assessment) such as would differentiate mild from serious injuries. 

Defendant Picotte moved to dismiss plaintiff’s claims under the significant limitation of use and significant disfigurement categories.  In support, defendant submitted the affidavit of a physician who opined that there was no objective medical evidence to support a finding of any serious or permanent injury as a result of the April 2007 accident and that the x-rays, MRI and nerve studies performed in April and August 2007 were unremarkable and/or normal. 

In opposition, plaintiff submitted the affidavit of her chiropractor who opined that she had significant limitations as a result of the second accident.  His opinion was based on diagnostic tests, the July 2007 MRI, and his own examinations in which he quantified her range-of-motion with a digital dual inclimometer.  He concluded that her injuries were causally related to the second accident.  In addition, plaintiff submitted the affidavits of her neurosurgeon and her treating physician whose opinions were based on their physical examinations of plaintiff, MRI results, objective medical evidence and findings upon performing the May 2008 surgery.  They both unequivocally stated that plaintiff’s injuries were caused by the second accident and were sufficient to raise an issue of fact under the significant limitation of use category with regard to her lower back.

With respect to her claim of significant disfigurement, the five inch surgical scar resulting from the fusion, and the three inch surgical scar resulting from the surgical implants, was sufficient to raise an issue of fact as to whether a reasonable person would regard plaintiff’s back as unattractive or objectionable.  In addition, plaintiff’s submissions raised an issue of fact as to whether the second accident was the proximate cause for the need for surgery and thus, the resultant scars.

03/01/12         Brackenbury v. Franklin
Appellate Division, First Department
Thin, Healed Scar on Hand Is Not “Significant Disfigurement”

On appeal, the trial court’s dismissal of the complaint and denial of plaintiff’s application to amend his bill of particulars is affirmed.  Plaintiff sought to add a claim for “significant disfigurement” but the Court agreed with the lower court that the healed, thin scar on plaintiff’s hand was not sufficient to raise an issue of fact under that category.  The Court also agreed with the lower court that there was no evidence to support a claim of “fracture” as there was no contemporaneous report diagnosing any fracture and plaintiff’s doctor’s observation that a “probable healed fracture” was seen in an x-ray taken a year and a half after the accident was insufficient.

 

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley
aas@hurwitzfine.com

ARBITRATION
03/13/12         Zenith Med. PC v. GEICO Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Broad IME Report Insufficient to Deny Treatment

The Applicant sought reimbursement for treatment from March 2, 2010 through January 18, 2011, rendered to the assignor arising out of an August 20, 2009, motor vehicle accident.  The Applicant began treating the assignor on February 2, 2010, for complaints of neck and back pain.  On the first visit the Applicant prescribed further aqua therapy and refilled medications as well as recommended continued use of a heating pad and electrical stimulator.  The Applicant treated the assignor on a monthly basis with progress noted and minor changes in treatment recommendations.  It is noted that the assignor underwent a cervical spine MRI which revealed multi-level disc herniations.

The insurer denied the treatment upon the December 9, 2010, independent orthopedic examination by Dr. John Ring.  The assignor had multiple positive objective testing and was diagnosed with cervical, dorsal and lumbar strain.  Dr. Ring concluded that while the assignor had restricted range of motion in the cervical and lumbar spine without fully resolved symptoms he recommended additional aquatic therapy.  It was noted that the assignor had discontinued physical therapy.  Dr. Ring opined that no further benefit would be achieved with additional physical therapy.  He also opined that treatment with a neurosurgeon and family physician was adequate but did not recommend orthopedic treatment.  Based upon this examination, the insurer denied orthopedic, physical therapy, internist, diagnostic testing, medical supplies, and surgery.

The assigned arbitrator determined that Dr. Ring’s examination was insufficient to uphold the denial of Applicant’s treatment.  Dr. Ring’s report indicated positive findings with recommending continuing treatment in some specialties.  However, Dr. Ring did not provide a medical basis for determining orthopedic care was not medically necessary.  Also, the report failed to address the cervical spine MRI, which had positive findings.  The assigned arbitrator did note that perhaps a peer review may have been the approach with regard to this Applicant’s treatment instead of a broader scope IME report.

03/13/12         Zenith Med. PC v. Allstate Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Lack of Contemporaneous Medical Records to IME Report and Rx for PT Fatal to Claim

The Applicant sought reimbursement for physical therapy services rendered to the assignor from April 15, 2011 through June 1, 2011, arising out of a July 27, 2010, motor vehicle accident.  The Applicant submitted “SOAP” progress notes but no reports from a treating physician.

The insurer denied the treatment upon the February 3, 2011, independent medical examination of Dr. Dorothy Scarpinato.  Dr. Scarpinato’s report indicated that the assignor complained of back pain, which was improving, and resolved neck pain.  On examination, the cervical and lumbar spine range of motion was normal.  The only positive finding was midline tenderness of the lumbar spine.

The assigned arbitrator found the IME report persuasive in the absence of any medical records from the assignor’s treating physicians.  Also, there were no contemporaneous reports submitted to rebut Dr. Scarpinato’s examination. Further, it was noted that the Applicant did not submit any examination reports where physical therapy was prescribed or any prescriptions for physical therapy.  The Workers’ Compensation fee schedule, physical medicine ground rule two requires a thorough examination as well as periodic evaluations prior to the commencement or continuation of physical therapy. 

03/08/12         Applicant v. GEICO Ins. Co.
Arbitrator Thomas J. McCorry, Erie County
Lost Wage Claim Properly Denied Based on 90-Day Rule

The Applicant, a 20 year old female, was involved in an April 22, 2006, motor vehicle accident and sought lost wages.  The Applicant contended at the time of the accident she was working for temporary agent performing factory work.  She testified that she was not working at the time of the accident but was expecting to be called.  In early May a call was made to the Applicant’s grandmother for another assignment.  The Applicant further claimed that an attorney came to her home within a week of the accident and helped her fill out forms but the Applicant was not aware what the forms were that were filled out.

The insurer claimed that it has no record of a lost wage claim until March 2011, to which the insurer issued a blanket denial based upon violation of the 90-day rule.  The insurer’s submission also contained a denial dated July 10, 2006, which denied lost wages based on an IME. 

The assigned arbitrator noted that the Applicant did not file for arbitration until five year post accident and the alleged employer was out of business.  Therefore, no employment verification records were available and the former employer could not be located.  The assigned arbitrator also determined that the Applicant’s testimony at the hearing was charitable, at times confusing, and somewhat misleading.  Accordingly, the insurer’s denial was appropriate.

03/04/12         Applicant v. Travelers Home & Marine Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Work Loss Data Institute Guidelines Authoritative Source Without Contradictory Evidence

The Applicant sought reimbursement for MRI studies conducted on the assignor’s cervical and lumbar spine and brain seven days after a February 12, 2011, motor vehicle accident.  The MRIs of the cervical and lumbar spine contained positive findings but concluded that the findings were age indeterminate.  The brain MRI revealed a small pineal cyst with no evidence of a hematoma.  The assignor was referred for neurosurgical consultation, physical therapy, and ultimately pain management.

The insurer denied the MRIs upon a peer review conducted by Dr. Marlon Seliger.  Dr. Seliger determined the cervical and lumbar MRIs were not medically necessary by relying upon literature complied by the Work Loss Data Institute.

The assigned arbitrator found the peer review report persuasive.  There was a substantive discussion regarding Dr. Seliger’s reliance upon the Work Loss Data Institute (“the Institute”) literature.  The Institute’s website was accessible by password.  The assigned arbitrator indicated that from his research, which was not a basis for the decision, the Institute is an independent data base development company that publishes medical care guidelines and focuses on workplace health and productivity.  The Institute’s guidelines were also incorporated into the National Guideline Clearinghouse which serves as a public resource for evidence-based clinical practice guidelines.  Since there was no contradictory evidence, the assigned arbitrator accepted the guidelines Dr. Seliger summarized in the peer review report as an authoritative source.

However, the brain MRI was determined to be medically necessary and the fee schedule required reimbursement at the full rate of the test and not under the multiple procedures pursuant to the radiology ground rules of the Workers’ Compensation fee schedule.

LITIGATION

03/06/12         Queens Med. Supply, Inc. a/a/o Vyacheslav Deykin v. Tri State Consumer Ins. Co.
Appellate Term, Second Department
Plaintiff Failed to Rebut Peer Review on Summary Judgment

The insurer’s cross-motion for summary judgment was properly granted as the peer reviewer’s report was sufficient to demonstrate lack of medical necessity. 

The report contained a factual basis and medical rationale for the determination of lack of medical necessity which the plaintiff did not rebut.

03/06/12         Quality Heath Products a/a/o Marisa Trottman v. GEICO Gen. Ins. Co.
Appellate Term, Second Department
Electronic Stamped Signature on Report Admissible as Placed There by Doctor Performing Peer Review

The insurer’s cross-motion for summary judgment was properly granted.  The peer review report was sufficient to demonstrate lack of medical necessity.  Further, the plaintiff’s assertion that the peer review report contained an electronic stamped facsimile of the peer reviewer’s signature thus rendering the report inadmissible was rejected.  The record revealed that signature on the report was placed there by the doctor performing the peer review.

03/06/12         Rally Chiropractic, PC a/a/o Narabia Oakley v. Nationwide Mut. Ins. Co.
Appellate Term, Second Department
Assignor Not an EIP and, by the Way, Insurer Not Precluded from This Defense Even if Assumed the Denial Was Defective or Untimely

The insurer demonstrated that plaintiff’s assignor was not an “eligible injured person” as she did not regularly reside with the insured at the time of the accident.  The court also noted that the insured demonstrated a timely denial but even if the denial were untimely or defective, the insurer was not precluded from asserting this defense as it was a defense of lack of coverage not subject to the preclusion rule.

03/06/12         Complete Radiology, PC a/a/o Jerrell Jacobs v. GEICO Ins. Co.
Appellate Term, Second Department
Affirmed Letter of Medical Necessity Creates Triable Issue of Fact.

A triable issue of fact existed precluding summary judgment as the plaintiff submitted an affirmed letter of medical necessity in opposition to the insurer’s cross-motion for summary judgment

03/05/12         Perfect Point Acupuncture, PC a/a/o Paul Bowen v. Clarendon Ins. Co.
Appellate Term, Second Department
Affidavit on Billing in Excess of Fee Schedule Only Created Triable Issue of Fact

The insurer’s claims examiner’s affidavit only created a triable issue of fact on whether plaintiff’s charges exceeded the workers’ compensation fee schedule for acupuncture treatment.  The affidavit did not warrant dismissal of plaintiff’s complaint.

03/05/12         Crotona Heights Med., PC a/a/o Kenia Gil v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Yet Again, Failure to Rebut Peer Review Report Leads to Complaint’s Dismissal

The insurer’s cross-motion for summary judgment was properly granted as the plaintiff failed to submit an affirmation from a doctor rebutting the peer review report’s conclusions.

03/02/12         Medical Assoc, PC a/a/o Siu Ong Lee Chan v. Interboro Ins. Co.
Appellate Term, Second Department
Another Complaint Dismissed When Rebuttal to Peer Review Is Unsworn Medical Record

The insurer’s cross-motion for summary judgment was properly granted as the plaintiff submitted only an unsworn medical report to rebut the affirmed peer review.  The court noted that the insurer was not required to demonstrate the medical records reviewed and referenced by the peer reviewer in the report were in admissible form.  The purpose of the peer review was not to prove injury as documented in the medical records or that treatment occurred as set forth in the records.  Rather, it was to establish lack of medical necessity of the treatment.

03/02/12         MIA Acupuncture a/a/o Ladasha Horan v. Integon Gen. Ins. Corp.
Appellate Term, Second Department
Complaint Dismissed as Insurer Demonstrated Claim Timely Paid at Fee Schedule

The insurer’s evidence in the form of a claims representative and a third-party employee responsible for mailing denials was sufficient to establish payment of the acupuncture services at the Workers’ Compensation fee schedule rate.

03/02/12         Right Aid Diag. Medicine, PC a/a/o Amable Robles v. GEICO Ins. Co.
Appellate Term, Second Department
Yet Another Case Where Electronic Signature Did Not Render Report Inadmissible 

The insurer’s cross-motion for summary judgment was properly granted as the plaintiff’s physician affirmation did not meaningfully refer to or rebut the conclusions set forth in the affirmed peer review report.  The court rejected the argument that the electronic stamped facsimile of the peer reviewer’s signature rendered the report inadmissible.  This is because the record indicates that the facsimile signature was placed on the report by the doctor who performed the peer review or at his direction.

 

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

Property

03/13/12         Gruenspecht v Balboa Ins. Co.
Appellate Division, First Department
Loss of an Opportunity MAY Give Rise to Consequential Damage Claim
Plaintiff appears to have sustained a property loss due to flooding.  After the parties could not come to an agreement to settle the claim, plaintiff commenced the instant lawsuit.  Among the allegations, plaintiff sought consequential damages occasioned due to the alleged loss of an opportunity to sell the premises.  Specifically, plaintiff alleges that he had an offer on the premises which did not close due to Balboa’s failure to timely and appropriately adjust the claim.

Balboa immediately moved to dismiss the claim on the basis that plaintiff did not state a justiciable cause of action.  The Court denied Balboa’s motion, therein stating that because Balboa was aware of the offer, and the possibility that it would be lost if the claim was not promptly adjusted, plaintiff may have stated a valid claim.  As such, Balboa’s motion to dismiss was denied as premature. 

03/13/12         Fleishman v New York Life Insurance and Annuity
Appellate Division, First Department
Where Carrier Cannot Produce Evidence of a Final and Complete Settlement, Its Accord and Satisfaction Defense Is Lost
Although the facts are a bit spotty on this one, it appears that New York Life made partial payment of plaintiff’s claim.  Plaintiff then commenced the instant action, and New York Life opposed by arguing “accord and satisfaction” as an affirmative defense.  However, where neither the settlement check, nor the enclosure letter, conditioned acceptance of the draft on full satisfaction of the claim, the Court held that there was not clear manifestation of the parties’ intent.  Accordingly, New York Life’s motion was denied.

Potpourri

03/06/12         Auto Collection, Inc. v C. P. (Anonymous)
Appellate Division, Second Department
Sealed Criminal Proceedings Prohibits Plaintiff’s Notice to Admit
Plaintiff commenced the instant action against its former employee when it was revealed that the employee may have stolen several checks that were intended to be used toward to purchase of vehicles.  In the course of discovery, plaintiff served defendant with a Notice to Admit therein seeking confirmation that defendant had pled guilty to several grand larceny charges in a companion criminal action. 

The plaintiff refused to respond to the Notice to Admit on the basis that the criminal proceeding had been sealed by Court Order.  The Appellate Division agreed with defendant, and stated that allowing a Notice to Admit in these circumstances would amount to a circumvention of the criminal court’s decision to seal the criminal record. 

03/06/12         St. Paul Travelers v. Joseph Mauro & Son
Appellate Division, Second Department
Contractor’s Failure to Investigate May Have Been Breach of Duty
Mauro, an electrical contractor, was hired to repair a sizzling sound which was coming from an electrical box which was located at premises owned by Shore.  It appears as though Mauro fixed the sizzling sound by replacing a circuit breaker.  However, Mauro did not investigate underlying problem which was an overheating problem located within the electrical box. 

Unfortunately, a fire later broke out and destroyed Shore’s premises as well as several neighboring premises.  The instant matter involves several consolidated subrogation actions against Mauro.  Mauro opposed all matters by arguing that it did not owe a duty to investigate the underlying source of the issue. 

With regard to the subrogation action commenced by Shore’s insurers, the Court held that Mauro, as the electrical contractor, owed a duty to, at a minimum, investigate the actual cause of the problem.  Where there was no evidence that Mauro even looked into the source of the problem at Shore’s premises, it follows that Mauro’s motion for summary judgment was denied.

With regard to the subrogation actions of all other damaged premises, the Court again refused to grant Mauro’s motion for summary judgment.  However, the Court acknowledged that Mauro did not owe a duty to third-party’s unless it created an unreasonable risk of harm (i.e., launched an instrument of harm).  In the motion, Mauro only pointed out the deficiencies in the subrogation insurers’ various claims.  It failed, however, to affirmatively establish why it did not create the risk of harm.  As such, it had failed to meet its burden on a motion for summary judgment.

Peiper’s Point A good reminder on burdens of proof in motion practice.  Remember, it is not enough to point out what your opponent cannot prove, but rather what you can prove on behalf of your client. 

 

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

Focus on Fraud

As we near April 1st, Albany’s focus is on the budget, and the creation of a Tier VI pension plan which passed the Assembly as I was drafting this.  Despite the budget deadline approaching, Governor Cuomo and the DFS have making headlines for cracking down on No-Fault Insurance scams which was headlined by the arrest of 10 doctors who were allegedly running a $275 million No-Fault Scam.  In response the DFS has adopted emergency insurance regulation No. 68-E (11 NYCRR 65-5).

Regulation 68-E (11 NYCRR 65-5)

Insurance Law §5109 requires the DFS in consultation with the Commissioners of Health and Education to establish standards and procedures for the investigation and suspension or removal of a provider of health services’ authorization to demand or request payment for services under Article 51 of the Insurance Law.

Under this new regulation, the Superintendent of DFS may investigate any reports made under Insurance Law §405 or resulting from any other information or allegations that allege providers of health services are engaging in unlawful activities set forth under Ins. Law §5109(b) (i.e., fraudulent billing, practicing outside scope of license etc.).  After the investigation, DFS will send the Commissions of Health and Education a list of providers believed to be engaged in any of the unlawful activities.  Within 45 days, the Commissioners of Health and Education must notify DFS in writing whether they confirm DFS has a reasonable basis to proceed with notice and a hearing.  The hearing will be to determine whether the provider should be deauthorized from demanding or requesting payments for medical services in connection with any claim under Article 51 of the Ins. Law.

Notice must be given at least 30 days prior to any hearing in writing by registered or certified mail.  If the provider wishes to participate in a hearing, the provider must notify the noticing commissioner within 10 days receipt of the notice that a hearing is demanded.  An answer may be filed to any charges at least 10 days prior. 

The hearing may be held before the Superintendent of DFS, Commissioner of Health, the Commissioner of Education, any deputy, or any designated salaried employee of the Departments.  The person conducting the hearing will have the power to administer oaths, examine witness and receive documentary evidence. 

Pending a final determination, the provider may be temporarily barred from requesting any payment for medical services.  DFS or the commissioners may issue a final order prohibiting the provider from requesting any payment for medical services and require the provider to refrain from subsequently treating, for money, any person seeking medical treatment under Article 51.

Hearing re: Issues with Flood Insurance

On March 12, 2012, a Senate hearing convened to discuss the insurance industry’s response to the flooding resulting from Tropical Storm Irene.  Participating in the hearing were insureds, insurance industry executives, FEMA officials and Superintendent Lawsky.  Generally, the insureds who participated spoke of delays and the inability to get a fair offer for their damages.  Superintendent Lawsky reported through mid-December, the insurance industry paid about $546 million with about $146 million coming from federal flood insurance program.  He also stated that while there were cases of delays “the industry for the most part is doing a pretty good job.”  However, DFS is considering regulatory changes to make flood insurance work better.  For instance, there is consideration being given to require the insurer assign a specific adjuster who remains on the claim, and requiring FEMA to hold more training so more adjusters can be certified in assessing flood damage.

Not surprisingly, although no regulations have been proposed at this time, it appears additional regulation is on the horizon. 

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

03/06/12         Robert Jacobson v. Metropolitan Property & Casualty Ins. Co.
Second Circuit Court of Appeals – New York
Proof of Loss Required Pursuant to Terms of Standard Flood Insurance Policy
Between 2004 and 2006, Jacobson experienced seasonal flooding nine times, including a June 2006 flood of “historic proportions”.  These floods destroyed stairs that Jacobson had constructed to lead into a creek and washed away approximately 50-75 feet of his land. 

In 2007, Jacobson took out a Standard Flood Insurance Policy [“SFIP”] from Metropolitan, in its capacity as a Write-Your-Own [“WYO”] Program carrier under the National Flood Insurance Act of 1968, 42 U.S.C. §§4001-4127 [“NFIA”].  The policy was administered by Metropolitan on behalf of the Federal Emergency Management Agency [“FEMA”].  Like all federally subsidized flood insurance policies purchased through the National Flood Insurance Program [“NFIP”], the terms or Jacobson’s SFIP was governed by regulations issued by FEMA.

Two claim requirements and two exclusions contained in the SFIP are relevant to this case.  First, the policy requires that “in case of a flood loss to insured property, the insured must . . .  give prompt written notice to the insurance company.  Second, the policy requires that within 60 days after loss the insured send the company proof of loss.

The SFIP also specifically excludes two types of claims.  First, the SFIP does not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date the policy term begins or coverage is added at your request.  Second, the policy does not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood.

In June 2007, the creeks around the Jacobson residence flooded again, this time rising over 46 feet and washing away another 50 feet of Jacobson’s land.  The water never entered Jacobson’s home and he did not report any incident to Metropolitan.  Jacobson first noticed damage to his house in December 2007, after an extended vacation.  Jacobsen put Metropolitan on notice of claim on January 22, 2008.

Metropolitan proceeded to investigate the claim; and, on February 4, 2008, Metropolitan notified Jacobson that the terms of the SFIP required that Jacobson provide a proof of loss.  At the same time, Metropolitan notified Jacobson that a claim filed without a proof of loss would potentially “be closed without payment” consistent with the terms of the policy.  Jacobson partially complied, but failed to designate a specific amount of damages, instead listing the value of the loss as “undetermined”.  On February 13, 2009, Metropolitan sent Jacobson a letter rejecting the claim on the basis of the incomplete proof of loss.  Metropolitan’s letter also noted that Jacobson could appeal the decision to FEMA.

Jacobson appealed and FEMA rejected the appeal on October 3, 2008.  The agency based its decision, not on the incomplete proof of loss, but on three separate grounds:  (1) failure to promptly notify after the alleged damage occurred; (2) the actual damage resulted from nine floods that preceded the June 2007 floor; and (3) that the engineers hired by both parties concurred that “land subsidence was the proximate cause of damage to the insured building.”

Jacobson then sued Metropolitan in district court arguing that Metropolitan’s initial denial of coverage on the basis of Jacobson’s incomplete proof of loss amounted to “repudiation” under New York law, and that such repudiation relieved Jacobson of the proof of loss requirements which he admittedly failed to comply.

After discovery, the district court granted Metropolitan’s motion for summary judgment noting that “every circuit to address the requirements of recovery under SFIP has had that an insured’s claim cannot be paid unless he has timely submitted a complete proof of loss which is signed and sworn to.”  The Second Circuit [“Court”] affirmed for the following reasons.

The Court pointed out that pursuant to its authority under 42 U.S.C. §408(a), FEMA created the WYO Program, which allows private insurers, to issue and administer flood-risk policies under NFIP.  Although FEMA may also issue policies directly, more than 90% are written by WYO companies.  WYO companies such as Metropolitan may act as “fiscal agents for the United States,” but they are not general agents and therefore must strictly enforce the provision set out in the regulations, varying the terms of a policy only with FEMA’s express written consent.  Thus, while the private insurance companies administer the federal program, it is the Government, not the companies, that pays the claims.

Jacobson’s argument was based on the idea that the SFIP at issue here must be interpreted like any private insurance contract, thus allowing him the benefit of a more liberal interpretation of the proof of loss requirement.

Since this was a case of first impression to the Court it looked to precedent set in other jurisdictions, noting those courts have uniformly held that the proof of loss requirements must be strictly construed and enforced.  The Court adopted the same standard.  The Court stated that “Where federal funds are implicated, the person seeking those funds is obligated to familiarize himself with the legal requirements for receipt of such funds.”  In addition stating that in the context of federal insurance policies, the Supreme Court has long held that an insured must comply strictly with the terms and conditions of such policies.  See, Fed. Corp. Ins. Corp. v. Merrill, 332 U.S. 380 (1947). 

Jacobson also argued that, as a matter of both federal and New York law, he was excused from complying with his responsibilities under the policy in light of Metropolitan’s rejection of his claim.  Jacobson essentially interpreted Metropolitan’s February 13, 2008, rejection as constituting a wholesale repudiation of the contract, thereby excusing his compliance with the proof of loss requirements.

The Court rejected Jacobson’s argument stating that it is well established that the actions of an insurance company under the NFIP cannot waive requirements set by the government, or operate as an estoppel against the government. The Court pointed out that Metropolitan did not disavow the policy, nor contend that is was not bound by its terms, and did not attempt to return premiums paid under the policy.  Instead, Metropolitan acknowledged the validity of the policy, investigated the claim, and rested its rejection of Jacobson’s claim on its interpretation of the provisions of the policy, which unquestionably included the requirement that the insured file a proof of loss.

The Court found Jacobson’s argument to make little sense.  The Court noted that if Jacobson’s version of repudiation would carry the day, there would be no circumstance under which a party would be required to file proof of loss.  Under Jacobson’s proposed approach, a WYO company that rejects a claim for failure to comply with the requirement could be deemed to have repudiated the policy, retroactively excusing the claimant’s need for compliance with the proof of loss requirement.  The Court rejected what it called an “illogical rule”.  On the facts of this case, the Court concluded that Metropolitan denied liability, but did not disclaim the validity of the contract. 

Accordingly, the Court affirmed the district court’s decision which granted Metropolitan’s motion for summary judgment.

 

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

03/08/12         Quality Bldg. Constr., Inc. v. Delos Ins. Co.
Supreme Court, New York County
Carrier Cannot Wait to Disclaim on Late Notice While Investigating Other Grounds for Disclaiming
This is a case where the court found that the carrier’s 49 day delay in disclaiming on late notice was unreasonable as a matter of law.  On April 8, 2005, an employee of Vanlo, Inc. (“Vanlo”) was injured on a jobsite owned by 24 Fifth Owners, Inc. (“24 Fifth”).  24 Fifth hired Quality Building Contractors, Inc. (“QBC”) to perform construction services at the premises. QBC then hired Vanlo.

Following the accident, on November 14, 2006, the injured worker commenced an action against 24 Fifth and QBC.  QBC asserted that it was never served with the original complaint. 

Thereafter, by letter dated January 4, 2007, 24 Fifth’s insurance carrier tendered its insured’s defense to QBC’s carrier.  Four days later, the letter was also faxed to QBC.  

Upon receipt of the letter, QBC’s carrier investigated the claim including issues regarding the timeliness of QBC’s notice and potential application of a relevant exclusion.  Apparently, the investigator provided a report on January 31, 2007.  Thereafter, on March 21, 2007, QBC’s carrier denied coverage to QBC. 

In considering these facts, the court held that although the timeliness of a disclaimer generally presents a question of fact, where the basis for the disclaimer was, or should have been readily apparent before the onset of the delay, any explanation by the insurer for the delay will be insufficient as a matter of law.  The interesting aspect of this decision is a discussion by the court concerning the impact of additional grounds for the disclaimer.  The court explained that while an earlier holding in the First Department case, DiGuglielmo v. Traveler’s Prop. Cas. (6 AD3d 344 [1st Dept. 2004]), stated that “an insurer is not required to disclaim on timeliness grounds before conducting a prompt, reasonable investigation into other grounds for disclaimer;” this decision was expressly overruled in Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh (937 NYS2d 164, 167 [1st Dept. 2012]).  In that decision, the court held that an insurer is precluded from delaying issuance of a disclaimer on a ground that the insurer knows to be valid while investigating other possible grounds for disclaiming.

Ultimately, the court determined that at a minimum the carrier waited 49 days to disclaim based on late notice, which was unreasonable. 

02/29/12         Castlepoint Ins. Co. v. Santana
Supreme Court, New York County
Court Refuses to Consider Unsworn Statement of the Insured
Castlepoint brought this action seeking a declaration that it had no obligation to defend or indemnify its insured for a slip and fall on its property.  Castlepoint issued a homeowners policy, which contained an exclusion for “bodily injury” arising out of a premises rented to another by an insured that is not an “insured location.”  To qualify as an “insured location,” the insured was required to reside at the premises. 

Castlepoint denied coverage asserting that the subject premises was purely a rental property.  In support of its motion for summary judgment, it submitted a statement of the insured obtained by an investigator, which indicated that the insured read the statement and signed the bottom of each page to attest to its accuracy.  The court held that this statement was insufficient as it was unsworn.  Further, in the court’s opinion, there was no proof that the transcript of the statement was accurate especially considering that there were several alternations and edits throughout the statement.  Thus, it denied Castlepoint’s motion.  

02/28/12         Carner v. Seneca Ins. Co., Inc.
Supreme Court, New York County
No Cognizable Claim Against the Insurance Agency
In this case, the court granted the defendants, Jackson Agency’s, motion to dismiss plaintiff’s complaint against it.  Based on the facts provided by the court, plaintiff asked the Jackson Agency to obtain an insurance policy on a piece of property identified as 17 Carr Avenue.  On that same day, the plaintiff advised that he would be going out of town and directed that the quotes be sent to his associate. 

The next day, the agency spoke with the associate who advised that there was a mix-up on the addresses and that the correct address was 1 Carr Lane.  The associate also indicated that he inspected the subject premises and it was both occupied and renovated.  As a consequence of this conversation, the agency e-mailed a revised quote to the associate. 

As always happens in these cases, 17 Carr Avenue (the one premises plaintiff actually needed coverage for) was damaged by fire.  Notice of the fire was provided to Seneca Insurance who commenced an investigation.  Despite repeated requests from Seneca for information concerning the fire nothing was provided.  Thus, Seneca denied the claim.  In addition, it also notified plaintiff that the policy it issued provided coverage for 1 Carr Lane, not 17 Carr Avenue; thus, the fire did not occur at a covered location.  Also, the application of insurance contained a misrepresentation regarding the property being occupied. 

In considering the claim against the agency, the court initially noted that all the claims in the complaint were directed at Seneca, not the agency.  It clarified that the Jackson Agency was plaintiff’s agent, not Seneca’s agent.  Moreover, the court went on to hold that even if there was a direct cause of action against the agency, the documentary evidence established that the agency did only what it was directed to do. 

Further, an insurance broker is not liable for information contained in an insurance application that was reviewed and approved by the insured.  Accordingly, the court dismissed the claims against the agency. 

02/23/12         Estee Lauder Inc. v. OneBeacon Ins. Group, LLC
Supreme Court, New York County
Plaintiff Not Permitted to Amend Complaint to Add Bad Faith Cause of Action; Failure to Anticipate Court’s Decision on Coverage Was Not Bad Faith
This decision arises out of defendants’ opposition to plaintiff’s motion seeking leave to amend its complaint to add a fourth and fifth cause of action alleging bad faith.  In brief, in this action, plaintiff seeks coverage for three administrative and court proceedings in which it was alleged to have discharged, or to have caused to be discharged, toxic wastes in certain landfills located in Long Island.   Defendants had denied coverage for these claims (which appear to have taken place between 1968 and 1971) because they could not locate a policy which was in effect during the time of the alleged pollution.  The earliest policy identified was issued in 1971 and contained a pollution exclusion. 

The proposed fourth cause of action alleged that all disclaimers issued by defendants with regard to the pollution claims were made in bad faith, inasmuch as defendants had in their possession, at the time of the disclaimers, the 1971 policy, which by its terms was a renewal policy, and thus, constituted proof of the one-time existence of an earlier policy.  The court rejected this cause of action.  It considered an earlier decision made in this action by the Appellate Division which found that while there is a presumption of continuity of policy terms, defendants had not met their burden of proving that the lost policy contained a pollution exclusion during the entire policy period.  According to the court, in this decision, defendants’ failure to anticipate this holding by the Appellate Division is not evidence of bad faith, let alone constituting an extraordinary showing of disingenuous or dishonest failure to carry out a contract as required by New York law. 

With regard to the proposed fifth cause of action, it alleged that defendants’ failure to pay any part of its defense costs in the underlying actions, despite its grant of summary judgment in this action and an Order from the Appellate Division that they should be paid promptly, was evidence of bad faith.  The court did not dismiss this cause of action due to evidence that defendants received unredacted invoices evidencing plaintiff’s legal expenses in June 2010; yet, to date, nothing had been paid.

02/08/12         NGM, Inc. Co. v. CHB Constr., Inc.
Supreme Court, Nassau County
Injured Party’s Notice Did Not Cure Named Insured’s Late Notice
This is another late notice case arising out of a construction accident.  The main issue considered by this court was when the injured party provided notice of the accident to a subcontractor, CHB’s, insurance carrier.  The accident occurred on February 19, 2008; thereafter, on October 7, 2009, counsel for the injured party sent a letter to the subcontractor advising it of plaintiffs’ claims and asking that it put its carrier on notice of same.  CHB then immediately forwarded the letter to its carrier, NGM.  In a letter dated December 10, 2009, NGM issued a disclaimer letter to CHB copying the injured party denying coverage based on CHB‘s late notice.  The denial was due to information gathered during NGM’s investigation which indicated that CHB was notified of the accident through an employee a few days after it occurred.  Following the denial, on January 27, 2010, the injured party through counsel sent a letter to NGM enclosing a copy of the pleadings against its insured. 

The injured party attempted to challenge the disclaimer.  Initially, counsel for the injured party argued that he provided timely notice to NGM and that NGM did not validly disclaimer with respect to the notice he provided. In considering this challenge, the court held that the law is clear that if the injured party provides notice of the claim to the insurer, a denial based solely on the insured’s failure to provide timely notice of the claim is invalid against the injured party.  However, here, CHB’s forwarding of the letter from the injured party’s counsel did not constitute notice by the injured party to the insurer.  Accordingly, any notice provided by the injured party did not come until January 27, 2010 (if that was even notice).  At that point, NGM had already disclaimed coverage (a letter that the injured party was copied on).  In the court’s opinion, any subsequent disclaimer would have been redundant inasmuch as the injured party was already aware of the disclaimer. 

Moreover, the court rejected the injured party’s argument that his late notice should be excused because he acted diligently in attempting to ascertain the identity of the insurer. It found no evidence in support of this assertion.     

 

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

“ECONOMIC LOSS RULE” EXPLAINED AND CLARIFIED

An economic loss may be remedied in tort if the injury relates to the breach of a tort duty arising independently of a contract.  The Washington Supreme Court recently ruled in a case that a landlord had a cause of action for waste at common law and was not limited to a contractual action for breach of a lease.  The case of Eastwood v. Horse Harbor Found, Inc., 241 P.3d 1256 (Washington, November 4, 2010) involved a lease for part of a ranch which obligated the tenant to maintain the farm and return it in a good condition.  The lessee, a horse rescue operation, allegedly failed to maintain the premises and was sued, along with some of its officers and board members, for breach of the lease, and commission of waste.  The trial court ruled in favor of the plaintiff lessor, but at no point did the court or parties raise the “economic loss rule”.

On the first appeal, defendants argued that the trial court erred by finding that their conduct rose to the level of “gross negligence”, but again the parties did not cite the economic loss rule.  The first appellate court characterized the claims as economic losses and held that the economic loss rule applied and limited the plaintiff to recovery only for the breach of the lease.  The Washington Supreme Court granted petition to review. 

The Washington Supreme Court observed that historically landlords had been able to recover damages for the “tort” of waste.  Washington by statute also allows landlords to maintain an action at law for damages arising from a tenant’s waste.  The Court essentially ruled that a breach of the lease could simultaneously be a breach of a tort duty that arose independent of the lease terms.  In short, an independent tort duty can co-exist with a contractual obligation. 

The Washington Supreme Court noted that the term “economic loss rule” is a false name since it gives the impression that if there is economic loss only there can never be recovery in tort.  The Court rejected this concept noting that an injury may be remedial in tort if it traces back to the breach of a duty arising independently of the contract, and the Court found that the economic loss rule does not bar recovery in tort when defendant ‘s alleged misconduct violates a duty independent of the lease/contract. 

The Court noted that the test is not simply whether the injury is an economic loss arising from a breach of contract, but whether the injury relates to breach of a tort law duty of care apart from the contract.  The Court stated that what is commonly referred to as the “economic loss rule” is perhaps more accurately described as the “independent duty rule”. 

Applying these concepts of “independent duty”, the Court held that the duty not to cause waste was a tort duty that arose independently of the lease agreement, and the plaintiff could pursue damages concurrently under theories of tort and breach of contract.  The Court found there was ample evidence in the record to find proximate cause and damages against both the corporate defendant and officers and directors for individual liability for permitting waste. 

Lastly, the Court ruled that the lease provided for attorneys’ fees, and the Washington waste statute also provides for an award of reasonable attorneys’ fees, so the court granted the plaintiff’s request for attorneys’ fees as allowed under both theories.

The Eastwood case explains the nature and origin of the economic loss rule, and highlights that the real issue is whether a claimant can allege a claim involving economic loss under a tort theory separate and apart from breach of contract.  If not, the economic loss doctrine may apply.  However, if there is an independent tort duty, or perhaps in the case of Washington State a statutory duty, then a claim might be stated for economic loss in addition to or in conjunction with breach of contract theories.  The Eastwood case notes that the emphasis is not whether or not the loss claimed is economic in nature, but whether the claim or duty arises independent of contractual rights and remedies.

 

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

03/08/12         Westfield Ins. Co. v. Ken’s Service
Michigan Court of Appeals
Leaning Against a Vehicle at the Time of a Collision Is Not “Occupying” the Vehicle and the Individual Leaning Is Not an Insured under a UIM Policy
An employee of a tow truck company was injured after another driver sideswiped his tow truck as he was operating the control levers on the side of the truck to help a police officer remove his vehicle from a ditch. The employee made a claim against his employer’s underinsured motorist carrier after receiving the limits of the other driver’s liability policy. The UIM coverage defined “insured” to include “anyone [besides the named insured or a family member] ‘occupying’ a covered ‘auto.’” “Occupying” was defined to mean “in, upon, getting in, on, out or off.” The employee had both feet on the ground and had been out of the tow truck for several minutes before the collision. However, he claimed that he was “occupying” the tow truck in that he was leaning “upon” the truck at the time of the collision. Noting that physical contact alone may not be enough to show that a person was “upon” a vehicle so as to be “occupying” it, the Court of Appeals held that the fact that the employee was leaning against the vehicle for support and balance at the time of the collision was not sufficient to show that he was “upon” the truck. As a result, he was not an insured under the policy in that he was not “occupying” the insured vehicle at the time of the collision.
Submitted by: John F. Cooney and Kevin E. Myers, Danna McKitrick, P.C

03/06/12         Hirschorn v. Auto-Owners Ins. Co.
Wisconsin Supreme Court
Loss Claimed to Result from Accumulation of Bat Guano in Vacation Home Is Not Covered Under Homeowners Insurance Policy Due to Pollution Exclusion
The insureds made a claim under their homeowners policy alleging that bat guano had accumulated between the siding and walls, rendering the home uninhabitable due to the smell. After the claim was denied, the insureds demolished the house and built a new house in its place. The insureds then filed an action for breach of contract and bad faith against their homeowners carrier. The policy had an excluded from coverage any “loss resulting directly or indirectly from: . . . discharge, release, escape, seepage, migration or dispersal of pollutants.” “Pollutants” were defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gases and waste.” The Supreme Court of Wisconsin concluded that bat guano, “composed of bat feces and urine,” fell unambiguously within the policy definition of the term “pollutants” in that it was undoubtedly “waste.” The Court then determined that the insured’s loss resulted from the “discharge, release, escape, seepage, migration or dispersal” of the bat guano. The Court stated that “the bat guano, deposited and once contained between the home’s siding and walls, emitted a foul odor that spread through the inside of the home, infesting it to the point of destruction” and that “implicit in [the insureds’] claim is an allegation that the bat guano somehow separated from its once contained location between the home’s siding and walls and entered the air, only to be absorbed by the furnishings inside the home.” As a result, the loss resulting from the bat guano was excluded under the policy’s pollution exclusion.
Submitted by: John F. Cooney and Kevin E. Myers, Danna McKitrick, P.C. - Posted: 03/13/2012

 

Reported Decisions

Brackenbury v. Franklin


Adam D. White, New York (Steven B. Kaufman of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovitz, P.C., New York (Stacy R. Seldin of counsel), for respondents.

Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered January 20, 2011, which, to the extent appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the complaint, and denied plaintiff's application for leave to amend or supplement his bill of particulars to assert a claim of serious injury under the categories of "significant disfigurement" and "fracture" of Insurance Law § 5102(d), unanimously affirmed, without costs.

Photographs of plaintiff's healed, thin scar on his hand were not sufficient to establish an issue of fact as to whether plaintiff sustained a "significant disfigurement" as a result of the accident. Similarly, plaintiff failed to present evidence sufficient to establish a prima facie claim based on a fracture of his fourth metacarpal. No fracture was diagnosed by his doctor contemporaneous with the accident, and the doctor's equivocal observation of a "[p]robable healed fracture" in an X ray taken a year and a half after the accident is insufficient (see Glover v Capres Contr. Corp., 61 AD3d 549, 550-551 [2009]; O'Bradovich v Mrijaj, 35 AD3d 274 [2006]).

Peterson v. Cellery


Calendar Date: January 5, 2012
Before: Peters, J.P., Rose, Lahtinen, Kavanagh and Garry, JJ.

Carter, Conboy, Case, Blackmore, Maloney & Laird, P.C., Albany (Jessica A. Desany of counsel), for appellants.
Epstein & Rayhill, Latham (Jeffery T. Culkin of counsel), for respondent.
The DeLorenzo Law Firm, L.L.P., Schenectady (Thomas E. DeLorenzo of counsel), for respondents-appellants.

MEMORANDUM AND ORDER:   Peters, J.P.

Appeals from an order of the Supreme Court (Kramer, J.), entered May 5, 2011 in Schenectady County, which partially denied a motion by defendants David H. Picotte and William B. Picotte for summary judgment dismissing the complaint and granted defendant Mary Cellery's motion for summary judgment dismissing the complaint.

In January 2007, plaintiff Kathryn Peterson (hereinafter plaintiff) was rear-ended by a vehicle driven by defendant Mary Cellery. Following the accident, plaintiff drove herself to an urgent care center where she was given pain medication and released. She later sought follow-up care with her primary physician, who diagnosed her with a cervical, thoracic and lumbar sprain and recommended physical therapy. In April 2007, plaintiff's vehicle was struck by a vehicle driven by defendant David H. Picotte and owned by defendant William B. Picotte. Plaintiff was removed from the car on a backboard, taken to the hospital and, following her release, continued seeking treatment for back problems, which she states worsened significantly after the second accident. A July 2007 MRI of plaintiff's lower back revealed a degenerative disc dessication with a posterior tear at L5-S1 and mild posterior disc bulge at L4-L5. Plaintiff thereafter received various treatments for her back, which included prolotherapy injections, and ultimately underwent spinal fusion surgery in May 2008. Three months later, plaintiff underwent two consecutive surgical procedures for spinal implants to alleviate pain.

Plaintiff and her husband, derivatively, commenced personal injury actions against Cellery and the Picottes. The actions were consolidated and defendants separately moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Supreme Court granted Cellery's motion in its entirety, but only partially granted the Picottes' motion, finding a question of fact as to the significant disfigurement and significant limitation of use categories. The Picottes appeal from so much of that order as denied their motion, and plaintiffs appeal from that part of the order as granted Cellery's motion.

First addressing plaintiffs' appeal from the award of summary judgment in favor of Cellery, we find that Cellery met her initial burden of establishing that plaintiff did not suffer a serious injury as a result of the January 2007 accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]; Clark v Basco, 83 AD3d 1136, 1137 [2011]). In support of the motion, Cellery presented evidence that X rays and MRIs of plaintiff's cervical and lumbosacral spine performed between the two accidents were normal and revealed no evidence of a traumatic injury. Plaintiff's physical therapy records indicated that her neck pain had markedly improved following the first accident and medical records from February 2007 and March 2007 indicated that she only had a mildly diminished range of motion of the cervical spine and "good range of motion" in her lumbar spine. Further, plaintiff's deposition testimony acknowledged that she returned to work approximately a month after that accident, began working full time shortly thereafter and continued to do so until the second accident. Defendant also submitted the sworn report of Christopher Calder, a neurologist who reviewed plaintiff's medical records and performed an independent medical examination of plaintiff in 2010. Calder concluded that, although plaintiff may have suffered a minor cervical sprain as a result of the January 2007 accident, there was no objective evidence of any neurological condition or impairment attributable to that accident.

In response to this proof, plaintiffs failed to raise an issue of fact as to whether plaintiff suffered a significant limitation of use of any body function or system as a result of the first accident [FN1] . To establish a claim under that category, "'the medical evidence submitted by plaintiff[s] must contain objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing plaintiff's present limitations to the normal function, purpose and use of the affected body organ, member, function or system'" (Dean v Brown, 67 AD3d 1097, 1098 [2009], quoting John v Engel, 2 AD3d 1027, 1029 [2003]; accord Clark v Basco, 83 AD3d at 1137). Here, plaintiffs submitted the affidavit of Steven Balsamo, plaintiff's treating physician, who averred that, in the month following the first accident, he detected spasms upon palpation in the sternocleidomastoid as well as the posterior cervical muscles. While the detection of spasms through palpation constitutes objective medical evidence of an injury (see Clements v Lasher, 15 AD3d 712, 713 [2005]; Santos v Marcellino, 297 AD2d 440, 442 [2002]; Barbagallo v Quackenbush, 271 AD2d 724, 725 [2000]), critically absent is any quantitative or qualitative assessment of plaintiff's limitations. Balsamo's conclusory statement that plaintiff suffered "a significant limitation of [her] cervical spine, thoracic spine and lumbar spine" which "was not mild but significant and hindered her movements of her cervical, thoracic and lumbar spine areas" makes no meaningful comparison so as to differentiate serious injuries from mild or moderate ones, and was thus insufficient to establish a significant limitation of use (see Gonzalez v Green, 24 AD3d 939, 940-941 [2005]; Clements v Lasher, 15 AD3d at 713; see also Wilber v Breen, 25 AD3d 836, 836-837 [2006]; compare Santos v Marcellino, 297 AD2d at 441-442; Barbagallo v Quackenbush, 271 AD2d at 725). Accordingly, Cellery's motion for summary judgment was properly granted.

We next address the Picottes' assertion that Supreme Court should have dismissed plaintiffs' claims under the significant limitation of use and significant disfigurement categories of serious injury. In support of their motion, the Picottes offered the affidavit of physician Daniel Silverman, who opined that, based upon his review of plaintiff's medical records, no objective medical evidence exists to support the finding of any serious or permanent injury as a result of the April 2007 accident. Silverman noted that X rays of plaintiff's lumbar spine, left hip and pelvis taken immediately following the second accident and an August 2007 MRI of plaintiff's cervical spine were essentially unremarkable, and electrodiagnostic studies of the lower back and left lower extremity performed in April and August 2007 produced normal results. He noted further that plaintiff's subjective complaints of back and neck pain were present following the first accident and that the abnormalities shown in the July 2007 MRI of plaintiff's lumbar spine were mild and did not correlate with plaintiff's symptomology. This evidence was sufficient to shift the burden to plaintiffs to provide competent medical evidence to "'support [their] claim of serious injury and to connect the condition to the [second] accident'" (Anderson v Capital Dist. Transp. Auth., 74 AD3d 1616, 1617 [2010], lv denied 15 NY3d 709 [2010], quoting Wolff v Schweitzer, 56 AD3d 859, 861 [2008]; see Pommells v Perez, 4 NY3d 566, 580 [2005]).

In opposition, plaintiffs submitted the affidavit of her treating chiropractor Craig Nelson, who opined that plaintiff suffered significant limitations of function in her lower back as a result of the second accident. His conclusions were based on his physical examinations of plaintiff, diagnostic tests and the July 2007 MRI of plaintiff's lumbar spine reflecting an annular tear at L5-S1 and disc bulge at L4-L5. Nelson also quantified the limitation of plaintiff's range of motion in her cervical and lumbar ranges, as measured by a digital dual inclimometer system, and noted that the limitations in plaintiff's lumbar spine progressively worsened over time. Nelson averred that the test results were consistent with his diagnoses and plaintiff's symptoms, as well as his exam of plaintiff and the range of motion test results, and concluded that, based on plaintiff's medical history and his clinical evaluations, plaintiff's symptoms and injuries were causally related to the second accident. Plaintiffs also submitted the affidavits of Edward Scheid, plaintiff's treating neurosurgeon, and Balsamo, who examined plaintiff on separate occasions after each accident, both of whom stated unequivocally that the injuries sustained by plaintiff were caused by the second accident. Their opinions in that regard were supported by their physical examinations of plaintiff and objective medical evidence, including plaintiff's MRI results as well as spinal instability and bilateral compression of the nerve roots at L4, L5 and S1 found upon performing the May 2008 surgery. These submissions were sufficient to raise an issue of fact as to whether plaintiff sustained a significant limitation of the use of her lower back as a result of the April 2007 accident (see Chunn v Carman, 8 AD3d 745, 747 [2004]; McGuirk v Vedder, 271 AD2d 731, 732 [2000]; Evans v Hahn, 255 AD2d 751, 751-752 [1998]; Pietrocola v Battibulli, 238 AD2d 864, 866 [1997]).

Finally, as to plaintiffs' claim of significant disfigurement, the photographs submitted in opposition to the motion, which depict on plaintiff's back a five-inch-long vertical scar from the spinal fusion surgery and a nearly three-inch-long horizontal scar from the subsequent implant surgery, were sufficient to create a question of fact as to whether a reasonable person viewing her back would regard it as unattractive or objectionable (see Matula v Clement, 132 AD2d 739, 740 [1997], lv denied 70 NY2d 610 [1987]; Savage v Delacruz, 100 AD2d 707, 707-708 [1984]; compare Pietrocola v Battibulli, 238 AD2d at 865; Caruso v Hall, 101 AD2d 967, 968 [1984], affd 64 NY2d 843 [1985])[FN2] . Moreover, plaintiffs' submissions raised a factual issue as to whether the April 2007 accident was the proximate cause of plaintiff's need for the surgeries and, therefore, whether the resultant surgical scars were causally related to that accident (see Kilmer v Strek, 35 AD3d 1282, 1282-1283 [2006]; Johnson v Grant, 3 AD3d 720, 721-722 [2004]).

Rose, Lahtinen, Kavanagh and Garry, JJ., concur.

ORDERED that the order is affirmed, without costs.

Footnotes

Footnote 1: Although plaintiffs' bill of particulars alleged additional categories of serious injury, these have not been pursued on appeal and are therefore deemed abandoned (see D'Auria v Kent, 80 AD3d 956, 957 n 2 [2011]; Santos v Marcellino, 297 AD2d 440, 441 [2002]).

Footnote 2: Despite the Picottes' assertion to the contrary, Supreme Court did not abuse its discretion in considering the photographs under the circumstances of this case. At least four of the six photographs submitted by plaintiffs were taken for the purpose of opposing the motion to show the appearance of the scars and, thus, could not have been disclosed earlier. Moreover, notwithstanding the fact that plaintiffs' bill of particulars set forth plaintiff's claim that the scars from the surgeries constituted a serious disfigurement, the Picottes chose not to have a physical examination conducted of plaintiff, which would have allowed viewing of the scars, and have failed to allege any prejudice as a result of the timeliness of the disclosures. In any event, even in the absence of such photographs, plaintiff's description of the scars was sufficient to create a question of fact regarding serious disfigurement (see Lewis v General Elec. Co., 145 AD2d 728, 729 [1988]).

Delgado v. Papert Transit, Inc.


Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for appellants.
Gorayeb & Associates, P.C., New York (John M. Shaw of counsel), for respondent.

Order, Supreme Court, New York County (Manuel J. Mendez, J.), entered May 23, 2011, which denied defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.

In this action for personal injuries in which plaintiff, a pedestrian, was struck by a taxi, defendants made a prima facie showing of entitlement to judgment as a matter of law with respect to plaintiff's injury to his left knee by submitting the affirmed report of an orthopedist, who concluded, after examination and testing of ranges of motion, that plaintiff had no range-of-motion limitations (see Toure v Avis Rent A Car Sys., 98 NY2d 345 [2002]; Singer v Gae Limo Corp., __ AD3d __, 2012 NY Slip Op 00303 [1st Dept 2012]). Plaintiff, however, raised an issue of fact with respect to that injury by submitting the affirmed report of his treating orthopedist and surgeon, who attested to qualitative limitations observed at the time of the accident and continuing through July 2010, which findings were based upon objective tests and personal observations made during arthroscopic surgery (see Mitchell v Calle, 90 AD3d 584 [2011]; Suazo v Brown, 88 AD3d 602 [2011]; DeJesus v Cruz, 73 AD3d 439 [2010]).

We need not address plaintiff's additional injuries since he raised a triable question of fact as to whether he suffered a serious injury that was causally related to the accident. Once a serious injury has been established, it is unnecessary to address additional injuries to determine whether the proof is sufficient to withstand defendants' motion for summary judgment (see Linton v Nawaz, 14 NY3d 821 [2010]; Rubin v SMS Taxi Corp., 71 AD3d 548, 549 [2010]).

Defendants failed to establish entitlement to judgment as a matter of law with respect to plaintiff's 90/180-day claim. Their conclusory assertions and mischaracterization of plaintiff's testimony regarding a conversation with his treating surgeon more than 1½ years after the accident is insufficient and well beyond the relevant statutory period (see Insurance Law § 5102 [d]; Singer v Gae Limo Corp., __ AD3d __, 937 NYS2d 39 [1st Dept 2012], supra).

We have considered defendants' remaining contentions, and find them unavailing.

Hoon Choi v. Duchatellier


Sim & Park, LLP, New York, N.Y. (Marc Andrew Williams of counsel), for appellant.
Russo, Apoznanski & Tambasco, Westbury, N.Y. (Susan J. Mitola of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (K. Murphy, J.), entered February 10, 2011, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.
The defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The plaintiff alleged, inter alia, that as a result of the subject accident, he sustained certain injuries to his left knee. The defendant submitted evidence establishing, prima facie, that the alleged injuries to the knee did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614).

In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint.

Jones v. Anderson


Andrew Hirschhorn, Rosedale, N.Y., for appellant.
Robert P. Tusa, Garden City, N.Y. (Donald W. Sweeney of counsel), for respondents Glendon Anderson and Hughette Wong.
Peknic, Peknic & Schaefer, LLC, Long Beach, N.Y. (Brian Peknic of counsel), for respondents Abraham Geus and Elrac, Inc.
Gallo, Vitucci & Klar, LLP, New York, N.Y. (Yolanda Ayala of counsel), for respondents Floyd McMillan and Melvia Ashby.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Satterfield, J.), dated October 1, 2010, which granted the separate motions of the defendants Floyd McMillan and Melvia Ashby, and the defendants Glendon Anderson and Hughette Wong, for summary judgment dismissing the complaint insofar as asserted against each of them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and, upon, in effect, searching the record, awarded summary judgment to the defendants Abraham Geus and Elrac, Inc., dismissing the complaint insofar as asserted against them on the same ground.

ORDERED that the order is reversed, on the law, with one bill of costs, and the separate motions of the defendants Floyd McMillan and Melva Ashby, and the defendants Glendon Anderson and Hughette Wong, for summary judgment dismissing the complaint insofar as asserted against each of them are denied.

The defendants Floyd McMillan and Melvia Ashby, and the defendants Glendon Anderson and Hughette Wong (hereinafter collectively the defendants), failed to meet their respective prima facie burdens 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). The plaintiff alleged, inter alia, that the lumbar region of his spine sustained certain injuries as a result of the subject accident. Although the defendants asserted that those alleged injuries did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 352; Gaddy v Eyler, 79 NY2d at 955-956), the defendants' examining orthopedic surgeon and examining neurologist both recounted, in affirmed reports submitted in support of the defendants' motions for summary judgment, that range-of-motion testing performed during the examinations revealed the existence of a significant limitation in the region (see Scott v Gresio, 90 AD3d 736, 737; Watter v Walch, 88 AD3d 872, 873; Cues v Tavarone, 85 AD3d 846).
Since the defendants failed to meet their respective prima facie burdens, the Supreme Court should have denied their motions for summary judgment without considering whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Scott v Gresio, 90 AD3d at 737), and should not have, upon, in effect, searching the record, awarded summary judgment to the defendants Abraham Geus and Elrac, Inc.

Konig v. Hermitage Insurance Company

Gallo Vitucci & Klar LLP, New York, N.Y. (Kimberly A. Ricciardi of counsel), for appellant.
Bruce S. Reznick, P.C. (Pollack, Pollack, Isaac & DeCicco, New York, N.Y. [Brian J. Isaac and Jillian Rosen], of counsel), for respondent.

DECISION & ORDER
In an action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against the defendants' insureds, the defendant Harleysville Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Solomon, J.), dated April 14, 2011, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it or, alternatively, pursuant to CPLR 3211(a)(7) to dismiss the complaint and all cross claims insofar as asserted against it.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the motion of the defendant Harleysville Insurance Company which was for summary judgment dismissing the complaint and all cross claims insofar as asserted against it is granted, and that branch of the motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint and all cross claims insofar as asserted against it is denied as academic.

On August 6, 2008, the plaintiff was injured when she slipped on an exterior staircase of a building located in Brooklyn (hereinafter the subject property), which was owned by 5324 New Utrecht Realty, Inc. (hereinafter the insured). At the time of the accident, the plaintiff was walking down the stairs from Boro Park Copy Corner, Inc. (hereinafter Copy Corner), to the sidewalk.

Between February 6, 2008, and February 6, 2009, the subject property was insured under a deluxe business owners policy issued by the defendant Harleysville Insurance Company (hereinafter Harleysville) to the insured. The terms of the policy required the insured to notify Harleysville promptly of "an occurrence' that may result in a claim." The policy also provided that if a suit was brought against the insured, the insured was required to provide Harleysville with prompt written notice of it. The insured was also required to immediately forward any "demands, notices, summonses or legal papers" received by it to Harleysville.

The plaintiff commenced an action against the insured and Copy Corner to recover damages for personal injuries (hereinafter the underlying action). She effectuated service on the insured in the underlying action by delivering two copies of the summons and complaint to the Secretary of State on October 1, 2008. Thereafter, in December 2008, the plaintiff's counsel sent copies of the summons and complaint and affidavit of service to the insured and Copy Corner pursuant to CPLR 3215(g)(4) with a cover letter advising them that he would move for leave to enter a default judgment against them if they failed to interpose answers to the complaint within 20 days.

Neither the insured nor Copy Corner answered the complaint. Consequently, in January 2009, the plaintiff moved for leave to enter a default judgment against both of them in the underlying action.

On February 10, 2009, the insured's insurance agent faxed a copy of the plaintiff's default judgment motion to Harleysville. The insurance agent also faxed a "General Liability Notice of Occurrence/Claim" form, dated February 9, 2009, which identified a "Mr. Heiman" as the contact for the insured.

In a letter dated February 26, 2009, Harleysville informed the insured that it was disclaiming coverage to the insured with respect to the underlying action on the ground that the insured failed to provide timely notice of the accident or of the underlying action, in violation of the terms of the policy Harleysville had issued to the insured. Harleysville stated that its investigation revealed that the insured had been aware of the accident on the date that it had occurred and that the Secretary of State had been served with the summons and complaint on October 1, 2008.

In a subsequent letter to counsel for the insured dated May 9, 2009, Harleysville advised that Heiman had stated that he was the owner of the building, which he leased to a business, and that he had been alerted about the accident on the date that it had occurred. Harleysville further stated that Heiman had no explanation as to why the accident was not reported earlier and that the insured had been served in the underlying action on October 1, 2008.

In March 2009, the Supreme Court granted the plaintiff's motion for leave to enter a default judgment against the insured and Copy Corner in the underlying action. On May 7, 2010, a judgment in the underlying action in favor of the plaintiff and against them in the total amount of $151,977.50 was entered.

The plaintiff then commenced this action against Harleysville and Copy Corner's insurer (hereinafter the subject action) pursuant to Insurance Law § 3420(a)(2) to recover the amount of the unsatisfied judgment. After answering the complaint, Harleysville moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against it, or, alternatively, pursuant to CPLR 3211(a)(7) to dismiss the complaint and all cross claims insofar as asserted against it. After hearing oral argument, the Supreme Court, inter alia, denied both branches of Harleysville's motion. Harleysville appeals, and we reverse the order insofar as appealed from.

Pursuant to Insurance Law § 3420(a)(2), an injured person who has obtained an unsatisfied judgment against a tortfeasor may commence an action against the tortfeasor's insurer to recover the amount of the unsatisfied judgment, up to the policy limit (see Insurance Law § 3420[a][2]; Lang v Hanover Ins. Co., 3 NY3d 350, 352; Marsala v Travelers Indem. Co., 50 AD3d 864, 865).

Further, Insurance Law § 3420(a)(3) gives the injured party an independent right to give notice of the accident to the insurer and to satisfy the notice requirement of the policy. "[W]hile an insured's failure to provide notice may justify a disclaimer vis-à-vis the insurer and the insured, it does not serve to cut off the right of an injured claimant to make a claim as against the insurer" (Becker v Colonial Coop. Ins. Co., 24 AD3d 702, 704). As such, the injured person " is not to be charged vicariously with the insured's delay'" (id. at 704, quoting Lauritano v American Fid. Fire Ins. Co., 3 AD2d 564, 568, affd 4 NY2d 1028). "However, where an injured party fails to exercise the independent right to notify the insurer of the occurrence, a disclaimer issued to an insured for failure to satisfy the notice requirement of the policy will be effective as against the injured party as well" (Maldonado v C.L.-M.I. Props., Inc., 39 AD3d 822, 823; see Viggiano v Encompass Ins. Company/Fireman's Ins. Co. of Newark, N.J., 6 AD3d 695; see also Tower Ins. Co. of N.Y. v Alvarado, 84 AD3d 1354, 1355; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689, 690).

Here, there is no evidence that the plaintiff independently notified Harleysville of her accident or the underlying action. Therefore, the viability of the subject action as against Harleysville hinged upon the validity of Harleysville's disclaimer to the insured based upon the insured's alleged failure to give timely notice of the occurrence and/or of the underlying action to Harleysville.
Provisions of an insurance policy requiring that an insured provide notice of an accident or claim "as soon as practicable" have been uniformly interpreted to require that "notice be given within a reasonable time under all the circumstances" (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; see Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d 689). Where no excuse or mitigating factor is offered, the reasonableness of the delay is determined as a matter of law (see Deso v London & Lancashire Indem. Co. of Am., 3 NY2d 127, 129-130; Vernet v Eveready Ins. Co., 89 AD3d 725).

Here, Harleysville established, prima facie, its entitlement to judgment as a matter of law dismissing the complaint and all cross claims insofar as asserted against it by submitting an affidavit from one of its litigation specialists, who stated that the insured failed to provide notice of the underlying action to Harleysville until February 10, 2009, more than four months after the Secretary of State had been served with process on October 1, 2008. Harleysville also submitted a copy of the plaintiff's process server's affidavit stating that two copies of the summons and complaint had been delivered to the Secretary of State on behalf of the insured with respect to the underlying action (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742; Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 750; McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d 981, 983; Evangelos Car Wash, Inc. v Utica First Ins. Co., 45 AD3d 727; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d 719).

In addition, a process server's affidavit of service ordinarily constitutes prima facie evidence of proper service (see Goralski v Nadzan, 89 AD3d 801, 801; Francis v Francis, 48 AD3d 512, 512). Service was properly effectuated upon the insured, a corporation, in the underlying action when the plaintiff delivered a copy of the summons and verified complaint to the Secretary of State (see Business Corporation Law § 306[b][1]; CPLR 3215[g][4]; Thas v Dayrich Trading, Inc., 78 AD3d 1163, 1164).

In opposition, the plaintiff failed to raise a triable issue of fact as to whether the insured had not been served in the underlying action and, thus, as she contended, the insured did not have notice of the underlying action until it received Harleysville's disclaimer letter dated February 26, 2009. Since the insured claimed to lack knowledge of the underlying action, it was the plaintiff's burden to demonstrate that the insured actually lacked knowledge of the underlying action (see e.g. White v City of New York, 81 NY2d 955, 957; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 441). With respect to this issue, the affidavit of the principal of the insured, which the plaintiff submitted with her opposition papers, simply indicated that the insured did not receive the summons and complaint in the underlying action, without offering any explanation as to the reason. Conclusory denials of service are insufficient to raise an issue of fact (see US Natl. Bank Assn. v Melton, 90 AD3d 742, 743; Thas v Dayrich Trading, Inc., 78 AD3d 1163; Levine v Forgotson's Cent. Auto & Elec., Inc., 41 AD3d 552). Thus, the plaintiff failed to raise a triable issue of fact with respect to whether the insured received the summons and complaint in the underlying action in October 2008. Consequently, no excuse was provided for the insured's failure to promptly notify, and immediately forward the pleadings to, Harleysville after being served with the summons and complaint by the Secretary of State and, subsequently, by plaintiff's counsel.

The plaintiff's remaining contention regarding summary judgment is not properly before this Court.
Accordingly, the Supreme Court should have granted that branch of Harleysville's motion which was for summary judgment dismissing the complaint and all cross claims insofar as asserted against it.

Harleysville's remaining contentions have been rendered academic in light of our determination.

Fleischman v New York Life Insurance and Annuity Corporation


Drinker Biddle & Reath LLP, New York (Stephen R. Harris of counsel), for appellant.
Lipsius-BenHaim Law, LLP, Kew Gardens (Ira S. Lipsius of counsel), for respondent.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered September 19, 2011, which denied defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.

The motion, which was based on the theory of accord and satisfaction, was properly denied since defendant failed to show that there was a "clear manifestation of intent by the parties that the payment was made, and accepted, in full satisfaction of the claim" (Nationwide Registry & Sec. v B & R Consultants, 4 AD3d 298, 300 [2004]; see Manley v Pandick Press, 72 AD2d 452 [1980], appeal dismissed 49 NY2d 981 [1980]). Here, there was nothing on the refund check or in the letter enclosing the check that indicated that the check was tendered only on the condition that it was in full payment of the disputed claim (see Nadel v Manhattan Life Ins. Co., 211 AD2d 900, 902 [1995]; compare Sarbin v Southwest Media Corp., 179 AD2d 567 [1992]).

St. Paul Travelers Companies, Inc. v Joseph Mauro & Son, Inc.


Guararra & Zaitz LLP, New York, N.Y. (Michael J. Guararra of counsel), for appellant.
Badiak & Will, LLP, Mineola, N.Y. (Alfred J. Will and Lisa A. Scognamillo of counsel), for plaintiff-respondent in Action No. 1.
Gwertzman Lefkowitz Burman Smith & Marcus, New York, N.Y. (Robert J. Finn of counsel), for plaintiff-respondent in Action No. 2.
Robinson & Cole LLP, New York, N.Y. (Gregory J. Ligelis of counsel), for plaintiff-respondent in Action No. 3.
Faust Goetz Schenker & Blee, LLP, New York, N.Y. (Lisa De Lindsay of counsel), for plaintiff-respondent in Action Nos. 4 and 5.
O'Connor, O'Connor, Hintz & Deveney, LLP, Melville, N.Y. (Eileen M. Baumgartner of counsel), for respondent in Action No. 6.

DECISION & ORDER
In six related subrogation actions, inter alia, to recover damages for negligence, the defendant Joseph Mauro & Son, Inc., appeals from (1) so much of an order of the Supreme Court, Suffolk County (Jones, Jr., J.), dated April 16, 2010, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in Action No. 1, (2) so much of a second order of the same court, also dated April 16, 2010, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in Action No. 2, (3) so much of a third order of the same court, also dated April 16, 2010, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in Action No. 3, (4) so much of a fourth order of the same court, also dated April 16, 2010, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in Action No. 4, (5) so much of a fifth order of the same court, also dated April 16, 2010, as denied its motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in Action No. 5, and (6) an order of the same court dated June 30, 2010, which denied its motion for summary judgment dismissing the complaint in Action No. 6.
ORDERED that the five orders dated April 16, 2010, are affirmed insofar as appealed from; and it is further,
ORDERED that the order dated June 30, 2010, is affirmed; and it is further,

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

These six subrogation actions arise from a fire which occurred on October 24, 2002. The fire originated from premises leased to the defendant Shore Drugs, Inc. (hereinafter Shore Drugs), and damaged Shore Drugs' premises and neighboring premises. The plaintiffs, who are insurers, commenced these actions, as subrogees of various business and premises owners who sustained losses as a result of the fire, against, among others, the defendant Joseph Mauro & Son, Inc., named in Action No. 3 as Joseph Mauro & Sons (hereinafter Mauro). Mauro is an electrical repair company which was hired by Shore Drugs to perform repair work on an electrical panel box at Shore Drugs' premises several days before the fire. The plaintiffs alleged, inter alia, that Mauro negligently repaired the electrical panel box by merely replacing a burned-out circuit breaker without determining the underlying cause of an overheating problem, and that this negligence was a proximate cause of the fire. Mauro moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against it in each action. With respect to Action No. 6, which was commenced by Shore Drugs' subrogee, Mauro argued, among other things, that the duty of care it owed to Shore Drugs was limited to fixing the problem for which it was called to repair, a "sizzling" sound coming from the electrical panel box. With respect to the other subrogation actions, Mauro argued, inter alia, that it owed no duty of care to the plaintiffs' noncontracting third-party insureds pursuant to Espinal v Melville Snow Contrs. (98 NY2d 136). The Supreme Court denied Mauro's motions for summary judgment.

Before a defendant may be held liable for negligence, there must first be a legal duty owed by that defendant to the plaintiff (see Pulka v Edelman, 40 NY2d 781, 782; Krinick v Sharac Rest., 144 AD2d 440). Whether a duty exists is a question of law for the court (see Eiseman v State of New York, 70 NY2d 175, 187), which must consider the social consequences of imposing a duty and then tailor the duty in order to limit the legal consequences to a controllable degree (id.; see Bodaness v Staten Is. Aid, 170 AD2d 637, 638; see also Parks v Hutchins, 162 AD2d 666, 670, affd 78 NY2d 1049). With regard to Shore Drugs, we conclude that Mauro owed a duty to use ordinary care and skill in its electrical panel box repair activities to avoid danger and injury to the person and property of others, and this duty included investigating the underlying cause of the problem which it was hired to fix under the circumstances presented (see Sutherland v Thering Sales & Serv., Inc., 38 AD3d 967; Hayes v Niagara Mohawk Power Corp., 261 AD2d 748, 750; Northern Assur. Co. v Nick, 203 AD2d 342, 343). In moving for summary judgment, Mauro failed to establish, prima facie, that it did not breach this duty when it performed repair work on the electrical panel box at Shore Drugs' premises, or that any breach of this duty was not a proximate cause of the fire.

As to the noncontracting third-party insureds, generally, a contractual obligation, standing alone, is insufficient to give rise to tort liability in favor of a noncontracting third party (see Espinal v Melville Snow Contrs., 98 NY2d at 138). However, an exception to this general rule exists where "the promisor, while engaged affirmatively in discharging a contractual obligation, creates an unreasonable risk of harm to others, or increases that risk, sometimes described as conduct that has launch[ed] a force or instrument of harm'" (Regatta Condominium Assn. v Village of Mamaroneck, 303 AD2d 739, 740, quoting Moch Co. v Rensselaer Water Co., 247 NY 160, 168; see Espinal v Melville Snow Contrs., 98 NY2d at 140-142; Bienaime v Reyer, 41 AD3d 400, 403). Contrary to Mauro's contention, it failed to meet its initial burden of demonstrating, as a matter of law, with competent evidence, that while repairing the electrical panel box, it did not create an unreasonable risk of harm to others, or increase that risk, as the subrogees of the noncontracting third-party insureds alleged. Instead of affirmatively demonstrating the merit of its defense, Mauro merely pointed to gaps in its opponents' proof, which is insufficient to make out a prima facie showing of entitlement to judgment as a matter of law (see Peskin v New York City Tr. Auth., 304 AD2d 634).

Mauro's remaining contentions are without merit.

Accordingly, the Supreme Court correctly denied Mauro's motions for summary judgment, regardless of the sufficiency of the opposition papers (see Zuckerman v City of New York, 49 NY2d 557).

Gruenspecht v Balboa Insurance Company


White & McSpedon, P.C., New York (Joseph W. Sands of counsel), for appellants.
Heller, Horowitz & Feit, P.C., New York (Stuart A. Blander of counsel), for respondent.

Order, Supreme Court, New York County (Richard F. Braun, J.), entered September 6, 2011, which, to the extent appealed from as limited by the briefs, denied defendants' motion to dismiss the complaint in its entirety, unanimously affirmed, with costs.

Accepting the allegations in the complaint as true and resolving all inferences in plaintiff's favor on this motion to dismiss (see generally Leon v Martinez, 84 NY2d 83, 87 [1994]), the complaint sufficiently states a cause of action for recovery of consequential damages arising from defendants' failure to adjust and pay plaintiff's claim for flood damage to his home in a timely and good-faith manner (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 192-193 [2008]). Defendant was aware that plaintiff had received an offer on his house and that without prompt funding of the repairs needed the offer on the property would be lost (id.).

We have considered defendants' remaining contentions and find them unavailing.

Auto Collection, Inc. v C. P. (Anonymous)


Bahn Multer & Gold, LLP, New York, N.Y. (Andrew Multer of counsel), for appellant.
Grunwald & Seman, P.C., Melville, N.Y. (Barnes & Barnes, P.C. [Leo K. Barnes, Jr.], of counsel), for respondents.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, the defendant C. P. appeals from an order of the Supreme Court, Kings County (Demarest, J.), entered February 4, 2011, which granted the plaintiffs' motion to strike his opposition to a certain notice to admit and to deem the facts stated therein admitted unless he responded, under oath, to the notice to admit within 20 days. By decision and order on motion dated March 2, 2011, this Court granted the motion of the defendant C. P. to stay enforcement of the order entered February 4, 2011, pending the hearing and determination of the appeal.

ORDERED that the order is reversed, on the law, with costs, the plaintiffs' motion to strike the opposition to the notice to admit and to deem the facts stated therein admitted is denied, and the notice to admit is stricken.

This action, commenced by a used car dealership and its owners against, among others, their former employee, the defendant C. P. (hereinafter the appellant), arose out of numerous complaints made by the dealership's customers who had allegedly paid for vehicles that they never received, and ensuing civil actions commenced by those customers against the dealership. The plaintiffs served upon the appellant a notice to admit that he pleaded guilty to a seven-count indictment charging him with grand larceny predicated upon his alleged conduct of stealing certain checks or funds intended for the purchase of automobiles. The appellant opposed the notice to admit on the ground, inter alia, that the criminal proceedings on the indictment had been sealed. The plaintiffs thereafter moved to strike the appellant's opposition to the notice to admit and to deem the facts stated therein admitted. The Supreme Court granted the plaintiffs' motion to the strike the opposition to the notice to admit, unless the appellant responded to it, under oath, within 20 days.

The appellant properly opposed the notice to admit on the ground that it sought the admission of facts that were the subject of a sealed criminal proceeding. This Court has held that, in the face of a statutory grant of confidentiality to records related to youthful offender adjudications, a youthful offender could not be compelled by notice to admit to divulge the contents of the confidential records (see State Farm Fire & Cas. Co. v Bongiorno, 237 AD2d 31, 34-35, 37). The Court reasoned that requiring such disclosure through the discovery device of a notice to admit would undermine the statutory grant of confidentiality (id. at 35). The same reasoning applies here. The plaintiffs, through the device of a notice to admit, cannot be allowed to circumvent an order of a court sealing a proceeding.

Moreover, contrary to the plaintiffs' contention, the appellant did not waive the confidentiality of the sealed criminal proceeding by asserting cross claims for indemnification against the dealership in two actions commenced by customers against the dealership and the appellant. The cross claims were not asserted in the action at issue on this appeal, and thus, the appellant has not placed his conduct at issue in this action through the assertion of any cross claims, since he has not asserted any (cf. Green v Montgomery, 95 NY2d 693).

The parties' remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, the Supreme Court should have denied the plaintiffs' motion to strike the appellant's opposition to the notice to admit and to deem the facts stated therein admitted, and the notice to admit should have been stricken.

Allstate Insurance Company v. Stricklin


Picciano & Scahill, P.C., Westbury, N.Y. (Albert Galatan of counsel), for appellants.
Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y. [Marshall D. Sweetbaum], of counsel), for petitioner-respondent.

DECISION & ORDER

In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Autoone Insurance Company and Javonna Langlois appeal from a judgment of the Supreme Court, Suffolk County (Mayer, J.), dated May 16, 2011, which, after a framed-issue hearing, granted the petition and permanently stayed the arbitration.

ORDERED that judgment is reversed, on the law, with costs, the petition is denied, and the proceeding is dismissed.

On March 2, 2009, Marcus Stricklin was injured in a hit-and-run accident while riding as a passenger in a motor vehicle insured by Allstate Insurance Company (hereinafter Allstate), which was struck by an unidentified vehicle that drove away from the scene. Stricklin made a claim for uninsured motorist benefits and, thereafter, Allstate commenced this proceeding seeking, inter alia, to permanently stay the arbitration of the claim. At a framed-issue hearing concerning the possible identity of the hit-and-run vehicle, Stricklin testified that, within "about five minutes" after the accident, an unidentified individual handed him a piece of paper on which the license plate number of the car which fled the scene allegedly was written. Stricklin further stated that this individual told him that he "went down the road and retrieved the plate number." While Stricklin was "headed into the ambulance" which had arrived at the accident site, he gave the piece of paper to a police officer. Stricklin never observed the plate number of the other vehicle. The plate number and identifying information was included in the subsequently prepared police accident report. This report stated, inter alia, that the "offending" vehicle was owned by the appellant Javonna Langlois, who testified at the hearing that, at the time of the accident, she owned a Honda vehicle insured by the appellant Autoone Insurance Company (hereinafter Autoone). She also testified that her vehicle was never in an accident. The hearing court admitted the uncertified police report into evidence even though no police officer testified, and concluded that "there is another tortfeasor for which there is coverage." As a result, the hearing court entered judgment granting the petition to permanently stay arbitration of the uninsured motorist claim.

Contrary to the appellants' contention, the police accident report was not admissible under the present sense exception to the hearsay rule. To be admissible under this exception, a statement must be made "substantially contemporaneously" with the witness's observations, and the declarant's description of the relevant events must be "sufficiently corroborated by other evidence" (People v Brown, 80 NY2d 729, 734). As stated by this Court in the case of Matter of Phoenix Ins. Co. v Golanek (50 AD3d 1148, 1150):
"After [the eyewitness] wrote [the plate] number on a piece of paper, [he] was no longer relying upon a present sense of the number, but was relying entirely on the contents of [his] own writing [and thus] . . . the police accident report generated sometime later did not reflect a present sense impression rather than a recalled or recast description of events that were observed in the recent past' (People v Vasquez, 88 NY2d 561, 575 [1996])."

Morever, the evidence at the hearing did not establish how much time elapsed between the imparting of the license plate information to the officer and the preparation of the police accident report. In addition, it was not established that the officer who received the piece of paper at the accident scene was the same one who prepared the police report. Moreover, even assuming that the license plate information was "substantially contemporaneous" with the unidentified witness's observation, there was insufficient evidence of corroboration (cf. Matter of Irizarry v Motor Veh. Indem. Corp., 287 AD2d 716).

Accordingly, under all of the circumstances, it was error to admit the police report into evidence. Since there was no other evidence that the vehicle insured by Autoone was involved in the subject accident, Allstate's petition to stay arbitration of Stricklin's uninsured motorist claim should have been denied, and the proceeding dismissed.

Ramos v. Rodriguez,

Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for appellant-respondent.
Law Offices of Nancy L. Isserlis, Long Island City (Lawrence R. Miles of counsel), for respondents-appellants.
Steven I. Fried, New York, for respondents.

Order, Supreme Court, Bronx County (Julia Rodriguez, J.), entered June 23, 2011, denying defendants' motions for summary judgment dismissing the complaint based on the failure to establish a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, to grant the motions to the extent of dismissing plaintiffs' 90/180-day claims, and otherwise affirmed, without costs.

Defendants made a prima facie showing of entitlement to judgment as a matter of law as to plaintiff Ramos's claims of "permanent consequential limitation of use" and "significant limitation of use" of her right knee and cervical spine, and plaintiff Benvenutty's similar claims of serious injury to his lumbar spine. Defendants submitted expert medical reports finding normal ranges of motions in the subject areas, as well as the MRI reports of a radiologist who opined that plaintiffs' MRI studies indicated preexisting and degenerative conditions (see Spencer v Golden Eagle, Inc., 82 AD3d 589, 590-591 [2011]). In opposition, plaintiffs raised a triable issue of fact. Plaintiff Ramos submitted the affirmation of a radiologist who found disc herniations and a meniscal tear on MRI films taken a month after the accident. Ramos also submitted the affirmation of her treating physician who, based on objective tests, found limitations in the range of motion of Ramos's right knee and cervical spine, opined that her injuries were causally related to the accident, and were not degenerative. In addition, she submitted an affirmation from the surgeon who performed surgery on her right knee in which he opined that her knee injury was causally related to the accident and was not degenerative (see Spencer, 82 AD3d at 591).

Plaintiff Benvenutty submitted the affirmation of his radiologist who found a herniated disc on an MRI film of his lumbar spine taken a month after the accident, and the affirmation of his treating physician who, based on objective tests, found limitations in the range of motion of Benvenutty's lumbar spine and opined that his injury was causally related to the accident and was not degenerative (see Perl v Meher, 18 NY3d 208, 218-219 [2011]; Bonilla v Abdullah, 90 AD3d 466, 467 [2011]).

Plaintiffs' deposition testimony refuted their 90/180-day claims, since they alleged that they were confined to bed for only one week after the accident (see Byong Yol Yi v Canela, 70 AD3d 584, 585 [2010]). In addition, their treating physician's statements advising them to avoid activities that caused pain and discomfort were too general to raise an issue of fact with respect to those claims (see Antonio v Gear Trans Corp., 65 AD3d 869, 869-870 [2009]).

Fernandez v. P.S. Vera-Carrion


Richard M. Kenny, New York, N.Y. (James M. Sheridan, Jr., of counsel), for appellants.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Stacy R. Seldin of counsel), for respondents.

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Queens County (Brathwaite-Nelson, J.), entered May 11, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Antonio Fernandez 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 denied.

The defendants met their prima facie burden of showing that the plaintiff Antonio Fernandez (hereinafter the injured 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). The plaintiffs alleged, inter alia, that as a result of the subject accident, the injured plaintiff sustained certain injuries to the cervical region of his spine and to his right shoulder. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical region of the injured plaintiff's spine and his right shoulder did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795), and, in any event, were not caused by the subject accident (see Jilani v Palmer, 83 AD3d 786, 787).

In opposition, the plaintiffs submitted competent medical evidence raising a triable issue of fact as to whether the alleged injuries to the cervical region of the injured plaintiff's spine and his right shoulder constituted serious injuries under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Perl v Meher, 18 NY3d 208, 215-218). Furthermore, the plaintiffs also submitted competent medical evidence raising a triable issue of fact as to whether the alleged injuries to the cervical region of the injured plaintiff's spine and to his right shoulder were caused by the subject accident (id. at 218-219; Jaramillo v Lobo, 32 AD3d 417, 418), and provided a reasonable explanation for the cessation of the injured plaintiff's medical treatment (see Pommells v Perez, 4 NY3d 566, 574). Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.