Coverage Pointers - Volume XIII, No. 24

Dear Coverage Pointers Subscribers

I bring you greetings from the PLRB/LIRB Claims Conference Planning Committee Meeting. We hope you are enjoying a beautiful late spring.  Was in my first car-duck accident today, but not a feather was harmed.  Enough said.

Thanks to those of you who listened to my Bad Faith in New York – Fact or Fiction presentation at the NYS Bar program last week.  If anyone’s interested in the PowerPoint, let me know.

 

Baby Ella Has Arrived!

Our own Jen Ehman, lawyer-extraordinaire and the author of Jen’s Gems, the column that reviews lower court opinions, has taken a short term leave to spend time with her new daughter, Ella, born this week, on her due date.  We reminded Jen about the characters in Good Earth including Wang Lung and O-lan and the benefit of having babies in the field and all that, but she insisted on having her child born in the hospital instead and taking a little time off to enjoy her.  Mom, Dad and daughter are doing well.

We will spot her some time, but in the meantime, her column will live on, with a new author who has been ceded temporary custody.

Introducing a New Columnist – Marc Schulz

We have recruited our own Marc Schulz, a 2011 UB Law Graduate, to temporarily assume the responsibilities of Jen’s column.  His first offering, aptly named Marc’s Remarks appears in this issue.  We look forward to Jen’s return and welcome Marc off the bench.  Good luck Marc – the whole world is watching!

One Hundred Years Ago:

Middletown Times Press
May 25, 1912
Page 1

LORIMER TO BE URGED TO RESIGN

Washington, D. C., May 25 — His friends In the Senate will directly notify Senator Lorimer that they cannot hope to save aim in his fight to retain his seat In that body.

Although it is not admitted, Lorimer will be urged to resign and it is believed he may decide to do so.

Editor’s Note: William Lorimer was a member of Congress from Illinois and subsequently served for a short time in the US Senate and was known as the "Blond Boss" in Chicago. In 1912, however, the Senate held Lorimer's election invalid due to the use of corrupt methods and practices including vote-buying.

Lorimer was born in England, and immigrated to the US in 1866, first settling in Michigan and then moving to Chicago in 1870. Lorimer was self-educated. He had been apprenticed to a sign painter when he was ten. He worked in the Chicago meant-packing houses.

In 1894, Lorimer was elected to the first of two non-consecutive tenures (1895-1901, 1903-09) in the US House of Representatives. In 1909, he helped to engineer the blocking of the re-election of US Senator Albert Hopkins, a Republican who was an ally, now a political foe, of Lorimer's. With Hopkins' re-election bid finished, Lorimer seemed surprised when a coalition of 55 Illinois state House Republicans and 53 state House Democrats pushed his name to fill the now-vacant seat. Lorimer's name went before the state Senate, and he was elected to the US Senate. He took his seat in March 1909.

In 1910, The Chicago Times published an admission by an Illinois Assemblyman, Charles White, that Lorimer had paid $1,000 for White's vote in the election for U.S. Senator (prior to the Seventeenth Amendment, ratified in 1913, selection of U.S. Senators rested with state legislatures, rather than popular vote). On July 13, 1912, after a Senate investigation and acrimonious debate, the Senate adopted a resolution declaring "that corrupt methods and practices were employed in his election, and that the election, therefore, was invalid."

That is the same Senate Seat eventually held by Everett Dirksen, Adelei Stevenson, Carol Moseley Braun and Barack Obama and now held by Mark Kirk.

From Audrey Seeley, Queen of No Fault

With the weather being nice, I have been asked to conduct a bit more training.  I had a great session with Utica Mutual Insurance Company, part of the Utica National Insurance Group, last week on use and operation.  It was nice to see familiar faces again and thank you to everyone who attended and “stood up to be counted.”

Also, it is not too late to sign up for the New York State Bar Association’s Basic Tort and Insurance Program.  The Buffalo location program, which I am the local chair, will be held on June 13.  The program will also be presented in Albany on June 14, Long Island on June 12, and New York City on June 15.  If you need information to register please do not hesitate to send me an email at [email protected].

Finally, Cassandra reported in the last edition on the Department of Financial Services (“DFS”) seeking comments until July 2, 2012, on the proposed Fourth Amendment to 11 NYCRR 65-3 (Regulation 68-C – Claims for Personal Injury Protection Benefits).  We encourage any insurer that writes New York auto insurance to review the proposed Fourth Amendment and submit a comment to DFS.  We published with this edition the New York Insurance Association, Inc.’s (“NYIA”) comments submitted to DFS for your review as an attachment for our subscribers.  NYIA has existed for 130 years and represents the property/casualty insurance industry.  It has been a leader in promoting no-fault reform and we thank NYIA, and in particular Marc Craw, for allowing us to share with you NYIA’s comments to DFS.  Your comments on the Fourth Amendment can be sent to Hoda Nairooz, Principal Insurance Examiner, NYS Department of Financial Services, 25 Beaver Street, New York, NY 10004.  For our e-mail subscribers, the NYIA note is attached; for our website readers, contact us for a copy.

I hope that everyone has a safe and enjoyable Memorial Day Weekend!

Audrey Seeley
[email protected]

A Century Ago Today:

Several Newspapers
May 25, 1912

Cy Young Quits Baseball
Old Time Pitcher’s Arm Goes Back on Him
And He Retires Permanently

Boston – May 25, 1912 -- The report that Denton True Young, “Old Cy,” has quit baseball was confirmed at the Boston National League offices in this city.  According to dispatches received in this city the Paoli farmer left the Boston team in Pittsburgh and started for his home in Ohio.  His pitching arm has gone back on him and he will never be able to hurl them across the plate again.

Editor’s Note: Future Hall of Famer Cy Young pitched his first game for the Cleveland Spiders in 1890, then the St. Louis Perfectos in 1899.  The Perfectos changed the team name to the Cardinals in 1891 and he played with the Cards through the end of the 1901 season.  Young then jumped to the newly formed American League and signed with the Boston Americans and stayed with Boston through the 1908 season (the year that the ownership changed the team’s name to the Boston Red Stockings). 

He then moved to the Cleveland Naps (now the Indians) named after Napoleon Lajoie, the team’s star player. Young finished his career in 1911 with the Boston Rustlers, so named only in 1911.  The Rustlers had been the Boston Beaneaters from 1883 – 1906, the Boston Doves through 1910 and then changed the team’s name to the Boston Braves, the Boston Bees, the Boston Braves (again) before moving to Milwaukee and then, eventually, to Atlanta.  Cy Young scored his nickname when he tried out for a semi-pro team, throwing some pitches the catcher was unable to handle.  Someone remarked that the backstop looked like it had been hit by a cyclone and for a couple of years, Young was known as Cyclone and not Cy.

Peiper’s Perceptions:

Initially, we start this issue’s cover note by thanking those of you who came out the Bar Association’s recent Insurance Coverage Seminar.  To those of you still in need of continuing education credits, we remind you of the NY Bar Associations upcoming Basic Litigation Seminar.  The program is offered across the State, but we cordially invite you to the Buffalo location on June 13th. 

As for our reviews this week, we would direct you to the Second Department’s decision in Gilbert v. Allstate Ins. Co..  In that case, the insured (a co-owner of a property with his business partner) placed a claim for a fire loss with Allstate.  Unfortunately for Mr. Gilbert, his partner was not listed as an insured under the policy.  Therefore, Allstate was only obligated to pay for the insurable interest of its only insured (Gilbert).  In ruling for Allstate, the Court brushed aside Gilbert’s argument that since he had a 100% right to use the entirety of the premises, he was entitled to 100% reimbursement of the loss.  Not so; the Second Department ruled that insurable interest (not user rights) governed the carrier’s coverage obligations.

That’s it for this week.  Happy Memorial Day to you all.  Buy a flag, and fly it proudly this weekend for those who have sacrificed so much protecting our freedom!

Steve Peiper
[email protected]

 

This Week’s highlights, from the attached edition:

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

• Notice by an Additional Insured to an Insurer Does Not Constitute Notice by the Named Insured, Unless Those Insureds Are United in Interest
• No Acceptable Excuse Offered for Insurer’s Three Year Delay in Denying Coverage So Coverage Defenses Waived

 

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

• Gap in Treatment Is Explained by Maximum Medical Improvement
• Contradictory Evidence as to Whether Injury Is Chronic or Acute Creates Issue of Fact
• Prevailing on One Claim Entitles Recovery on All Proximately Caused Injuries
• Existence of Tear in Shoulder Ligament Is Not, in of Itself, Evidence of Serious Injury
• Gap in Treatment Is Explained by Fact That Treatment Became Palliative and Benefits Expired

 

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

• Your Comments Are Sought!

 

ARBITRATION

• Six Year Statute of Limitation Bars Arbitration
• IME’s Lack of Discussion on How Lifting Restriction Would Permit Applicant to Perform Job Insufficient to Deny Lost Wages
• Dispute Between Chiropractors on Normal ROM Is Resolved in Favor of Treating Chiropractor
• Lack of Quantifiable Palliative Benefit from Chiropractic Care Fatal to Claim
• Evidence of Plans for Summer Employment Is Insufficient to Demonstrate Entitlement to Lost Wages

 

LITIGATION

• Policy Condition Breached for Failure to Appear for Scheduled EUOs
• Unrebutted Peer Review Results in Summary Judgment In Insurer’s Favor
• Insurer Established Breach of Policy Condition to Attend Scheduled IMEs
• Affirmed Letter of Medical Necessity Creates Triable Issue of Fact
• No Triable Issue of Fact Regarding Lack of Medical Necessity

 

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

• Suing One’s Title Insurance Company, Too Quickly, Might Constitute Lack of Cooperation
• Allocation of Losses Between Sophisticated Landlord and Tenant, Couple with Insurance Coverage, Is Enforceable and Not Against Public Policy

 

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

• No Fault Fraud

 

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

• An Insurer’s Right to an Appraisal Under the Policy
• Bus Regulatory Reform Act of 1982 – Interstate vs. Intrastate Travel

 

MARC’S REMARKS
Marc A. Schulz
[email protected]

• Adding Additional Parties Where Documents Raise Issue of Fact as to Cancellation of Policy Requires Hearing
• Was He An Employee?  Documentation Crucial and If In Spanish, Contract Requires Duly Authorized Translation

 

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

Late Notice Dooms HVAC Design Claim

Have a peaceful and thoughtful Memorial Day weekend.  See you in a couple of weeks.

Dan

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

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
Marc’s Remarks
Earl’s Pearls
Across Borders

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

05/22/12       Castro v. Prana Associates Twenty One, LP
Appellate Division, First Department
Notice by an Additional Insured to an Insurer Does Not Constitute Notice by the Named Insured, Unless Those Insureds Are United in Interest
Prana wrote a letter to Northfield dated September 29, 2009 notifying the insurer of the underlying action and requesting defense and indemnification as an additional insured under the Northfield policy.  However, that letter did not trigger Northfield's duty to disclaim coverage as to Four Star, its named insured. Both insureds were required to provide notice of a claim; accordingly, notice provided by Prana could not be imputed to Four Star.  Prana and Four Star were not united in interest; they were adverse to one another.

Northfield did not receive notice from Four Star until it received notice of the suit and default judgment from Prana on May 25, 2010, and notice of the summons and complaint from Four Star's broker on June 2, 2010. Using either notice date (May 25, 2010 or June 2, 2010), Northfield's disclaimer letter, dated June 14, 2010, was timely as a matter of law.

05/17/12       How Shim Yu v. v. General Security Insurance Co.
Appellate Division, First Department
No Acceptable Excuse Offered for Insurer’s Three Year Delay in Denying Coverage So Coverage Defenses Waived
The insurer learned by August 27, 2004, that the underlying plaintiff served the summons and complaint in the underlying personal injury action on the Secretary of State on December 31, 2001, and that the Secretary of State had sent the documents to the address on file for Lep Keng, and that the documents had been returned unclaimed. Whether Lep Keng, the insured, knew or could have given timely notice is not the issue.  The insurer was aware by August 2004 of the grounds for disclaimer and did not disclaim until July 18, 2007, almost three years later, a delay that is unreasonable as a matter of law.

The insurer argues that it waited to disclaim until there was a ruling as to whether or not the insured purposely left the mail unclaimed but whether or not it did, it could and should have denied coverage in 2004.

 

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

05/24/12       Ayala v. Cruz
Appellate Division, First Department
Gap in Treatment Is Explained by Maximum Medical Improvement
The infant plaintiff and her mother claimed injuries to their lumbar spines under the permanent consequential and/or significant limitation of use categories.  Defendants’ expert orthopedists found full range of motion but one of them conceded that the injuries were caused by the accident, and defendants’ expert neurologist’s opinion was too equivocal to meet their burden with respect to causation.

In opposition, plaintiffs submitted the report of their radiologist who reviewed MRIs taken two months after the accident and which revealed numerous bulging discs and at least one herniation.  In addition, EMG tests showed lumbar radiculopathies and plaintiffs’ physician found limited ranges of motion when he tested several times and causally related the injuries to the accident.  He also explained the gap in plaintiffs’ treatment stating that they had reached maximum medical improvement and that further treatment would be palliative.  As such, the claims under the permanent consequential and/or significant limitation of use categories were reinstated.

05/22/12       Escotto v. Vallejo
Appellate Division, First Department
Contradictory Evidence as to Whether Injury Is Chronic or Acute Creates Issue of Fact
Plaintiff alleged injury to her left knee under the permanent consequential and/or significant limitation of use categories after being hit while crossing the street.  Defendants’ IME orthopedist, who examined plaintiff 19 months after the accident, found full range of motion but noted pain to patella comp0resion and that plaintiff ambulated with an unsteady gait.  He concluded that the left knee contusion/strain had resolved and that any persisting symptoms were attributable to advanced degenerative conditions including osteoarthritis and medial and meniscal tears.

However, the MRI reports of defendants’ radiologist stated that traumatic injury could not be ruled out given the ACL and meniscal tear.  Such contradictory evidence as to whether the tears were chronic or acute created issues of fact with regard to causation.  In addition, defendants failed to establish that such persisting limitations were not “consequential” or “significant”, nor did defendants’ orthopedist indicate the extent of the pain on patella compression.  As such, defendants failed to meet their burden and their motion should have been denied.

05/22/12       Martinez v. Goldmag Hacking Corp.
Appellate Division, First Department
Prevailing on One Claim Entitles Recovery on All Proximately Caused Injuries
Plaintiff claimed left knee and lumbar spine injuries under the permanent consequential and/or significant limitation of use categories.  Defendants’ orthopedic surgeon reported that she had full range of motion in the lumbar spine and that the range of motion of the left knee was identical to that of her uninjured knee.  In addition, defendants’ radiologist found no evidence of trauma or causally related injury upon review of MRIs.

Plaintiff failed to raise an issue of fact because she submitted no evidence of a recent examination and, in fact, her last examination with her treating orthopedic surgeon was just one month after surgery and 10 months before the IME.  However, she raised a triable issue with regard to her claim under the 90/180-day category by submitting the determination of her orthopedic surgeon who, during the relevant period of time, rendered her totally disabled, unable to work and that she required arthroscopic surgery to the knee.  In addition, plaintiff testimony established that she was confined to home for 8 months following the accident.  As is well established, if plaintiff is able to establish serious injury under one category, she is entitled to be compensated for all injuries proximately caused by the accident.

05/17/12       Williams v. Horman
Appellate Division, First Department
Existence of Tear in Shoulder Ligament Is Not, in of Itself, Evidence of Serious Injury
Plaintiff claimed injury to her cervical spine and right shoulder under the permanent consequential and/or significant limitation of use categories.  Defendants submitted evidence showing plaintiff had fully recovered from a mild sprain of the cervical spine and that the injury to the right shoulder was due to preexisting and degenerative conditions. 

On opposition, plaintiff failed to raise a triable issue of fact.  Her orthopedist found normal range-of-motion three months after the accident and no explanation was given for conflicting findings regarding the cervical spine by another physician.  In addition, plaintiff did not submit any recent reports rebutting defendants’ orthopedic surgeon’s findings that the injury was completely resolved or refuting defendants’ other experts that found that her spinal condition was due to preexisting conditions and not trauma.

With respect to the alleged shoulder injury, although her orthopedic surgeon opined that the rotator cuff tear was related to the accident, he did no quantify any limitations either before or after performing surgery.  Furthermore, and following a subsequent, unrelated injury, he stated that any limitations were “mild.”  The existence of a tear in the shoulder ligament or evidence of a bulging disc is not evidence of serious injury unless there is objective proof of the extent and duration of the alleged limitations.  Plaintiff offered nothing to explain or contradict the normal findings of her own orthopedist and therefore failed to raise a triable issue of fact. 

The trial court properly dismissed the complaint as against the moving defendants and, on appeal, the appellate court additionally dismissed as against non-moving defendant Horman because if threshold is not met against one defendant, it cannot be met against any other.

05/15/12       Rosario v. Chico Car Inc.
Appellate Division, First Department
Gap in Treatment Is Explained by Fact That Treatment Became Palliative and Benefits Expired
Plaintiff was seven at the time of the accident.  Defendants’ challenged the causal relationship of his alleged lumbar injury because, although their experts found significant lumbar limitations, the lumbar MRI revealed a congenital transitional vertebra, a conditional unrelated to trauma.  However, plaintiff’s physician opined that he sustained a causally related lumbar injury under the permanent consequential and/or significant limitation of use categories, thus raising a triable issue of fact.  In addition, plaintiff’s father sufficiently explained that the gap in treatment was due to the fact that the physical therapy that plaintiff attended for some five months treatment had become merely palliative and that, upon expiration of his benefits, they could not afford to pay out of pocket.  As such, plaintiff’s claim with respect to the lumbar spine was reinstated.

 

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

Your Comments Are Sought!
As Cassandra reported in her column last edition, the Department of Financial Services (“DFS”) is seeking comments until July 2, 2012, on the proposed Fourth Amendments to 11 NYCRR 65-3 (Regulation 68-C – Claims for Personal Injury Protection Benefits).  We encourage those insurers who write New York State auto insurance to submit their comments to DFS on this important first step in addressing the no-fault crisis insurers currently face. 

Attached to this newsletter, for those receiving this by e-mail, is a comment recently submitted by the New York Insurance Association, Inc. (“NYIA”) to DFS which NYIA graciously agreed to let us publish supporting the proposed fourth amendments.  For website visitors, contact us for a copy. NYIA is a well-established state trade association that has been an effective leader in representing the property/casualty insurance industry.  Thank you NYIA, and Marc Craw in particular, for letting us share your comments with all of our readers and for continuing to be a leader in support of no-fault reform.

ARBITRATION

05/21/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Six Year Statute of Limitation Bars Arbitration
The Applicant reimbursement for a February 28, 2005, electrodiagnostic test conducted on the Assignor.  The insurer denied the bill on May 26, 2005, and the arbitration was filed on August 17, 2011.

The assigned arbitrator determined that the claim was barred by the six year statute of limitations.  The accrual date for the six year statute of limitations is the 30 day period after receipt of the claim by the insurer.  Further, this period is not extended by a re-submission of the claim or any subsequent denial after consideration of further medical information.  The assigned arbitrator further indicated that the Applicant took an assignment from the eligible injured person and cannot pursue direct payment from the Assignor.  This is because the Applicant, through the assignment, had the right and responsibility to timely obtain payment for the treatment.

05/21/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
IME’s Lack of Discussion on How Lifting Restriction Would Permit Applicant to Perform Job Insufficient to Deny Lost Wages
The Applicant sought $74,664.84 in lost wages from November 3, 2010 through November 18, 2012.  The insurer denied the claim based upon the independent medical examination conducted by Dr. Kevin Nightingale.  Dr. Nightingale’s examination revealed positive orthopedic and neurological findings.  He concluded the Applicant had resolved cervical strain/sprain and resolving lumbar strain/sprain.  Dr. Nightingale found a mild disability but the Applicant could work in his job as a mechanic with a 25 pound lifting restriction.

The assigned arbitrator determined that Dr. Nightingale’s report did not specifically deny lost wages in its conclusion as was quoted by the insurer’s denial.  The assigned arbitrator indicated that common sense dictates a mechanic must lift over 25 pounds for his position.  Dr. Nightingale’s report did not discuss the Applicant’s job’s physical requirements.  Further, the Applicant had a recommendation for surgery and had attempted to work but could not do so.  Thus, the denial for lost wages was not upheld.

05/21/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Dispute Between Chiropractors on Normal ROM Is Resolved in Favor of Treating Chiropractor
The Applicant sought reimbursement for chiropractic care rendered from December 7, 2010 through November 16, 2011.  The insurer denied the treatment upon the independent chiropractic examination (“IME”) of Louis Marconi, DC.  Mr. Marconi’s IME report listed the range of motion findings, without indicating what the normal range of motion was for the cervical and lumbar spine.  He indicated that during the examination the Assignor “demonstrated systematic magnification when even the slight of touch was applied to the various areas of the examination.”  Mr. Marconi concluded that the Assignor’s cervical and lumbar sprain/strain resolved.

The Applicant submitted SOAP notes and evaluation reports which demonstrated loss of range of motion compared to the enumerated normal range of motion in the cervical and lumbar spine.

The assigned arbitrator declined to uphold the insurer’s denials.  He reasoned that the Applicant’s records documented continued limited range of motion and positive orthopedic testing.  Further, the two chiropractors appeared to differ on normal range of motion.  The assigned arbitrator indicated that the expert chiropractor should have listed the accepted range of motion with a citation to an authoritative source.

05/19/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Lack of Quantifiable Palliative Benefit from Chiropractic Care Fatal to Claim
The Applicant sought reimbursement for chiropractic care rendered to the Assignor arising out of a November 12, 2009, motor vehicle accident.  The Applicant began treating the Assignor on November 18, 2009, with complaints of low back pain.  The Assignor continued treating with the Applicant for nearly a year with the primary diagnosis, as of September 17, 2010, being a lumbar disc herniation, lumbar somatic dysfunction and myospasm, and sciatic neuralgia.  By December 6, 2010, the Assignor was complaining of left foot numbness and the Applicant’s treatment plan remained unchanged.  On December 10, 2010, the Applicant reported no significant change with her treatment plan.

The insurer denied the chiropractic care upon the IME of Michael Prentice, DC.  Mr. Prentice’s opinion was that while the Assignor had positive objective findings and positive lumbar spine MRI findings, she had 12 months of chiropractic care without benefit to resolving her lumbar spine condition.  Accordingly, no further chiropractic care was necessary.

The Applicant rebutted the IME report by stating that the chiropractic care helped the Assignor complete daily living activities and enabled her to work part time.

Mr. Prentice issued an addendum to his IME report indicating that after reviewing some additional records the Applicant’s rebuttal he was unchanged in his opinion.

The assigned arbitrator held that treatment is no longer medically necessary if it is not improving or otherwise benefiting the eligible injured person in a meaningful or necessary way.  If the treatment is not providing “curative” or “palliative” benefits it may not be medically necessary within the meaning of no-fault.  The assigned arbitrator defined palliative as treatment that lessens the pain and suffering severity and improving the quality of life without necessarily affecting a cure.

Next, the assigned arbitrator discussed what degree of palliative relief justifies reimbursement under no-fault.  The individual arbitrator is the finder of fact and is the judge of the relevance and materiality of the proffered evidence. The assigned arbitrator looking at the medical records, testimony and other evidence to determine if the Assignor could objectively quantify that the treatment provides relief for a significant period of time which permits the eligible injured person to work or perform daily living activities.  Yet, if the period of relief is minimal or provides no greater relief than a self-administered modality then the treatment may not be reimbursable.  This is a determination on a case by case basis.

Here, the Assignor was determined to have significant lumber spine injuries and the chiropractic treatment, in Mr. Prentice’s opinion, was not effective in resolving her condition.  The medical records did not document palliative benefit from chiropractic care and the rebuttal to Mr. Prentice’s IME did not adequately quantify any palliative benefit.

05/16/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Evidence of Plans for Summer Employment Is Insufficient to Demonstrate Entitlement to Lost Wages
The Applicant sought reimbursement for summer employment alleged missed due to an April 7, 2011, accident.  The Applicant was a part-time school bus monitor and her services were not needed during the summer months.  The school district indicated there was “negligible” possibility of using the Applicant during the summer bus runs due to her low seniority but she could return to her position in September.

The Applicant contended that her past employment history revealed she would have found a summer job with earning at least equal to school bus monitor position.  The Applicant contended prior to this accident she applied for flight school to become a flight attendant and made arrangements to take a lifeguarding course.  This was in spite of an on-going right wrist workers’ compensation claim from her prior summer job at a tanning facility.

The assigned arbitrator declined to award lost wages.  He reasoned that while lost wages are not limited to the Applicant’s level of earning at the time of the accident, the wages cannot be speculative.  There was no evidence of a written offer of summer employment and no substantial prior history of summer or part-time employment in a particular field to substantiate a lost wage claim.  “Although the Applicant has established she was an industrious worker who was planning for the future, such a showing is not sufficient to satisfy the intent of the regulations.”

LITIGATION

05/14/12       Leica Supply, Inc. a/a/o Roscoe Biggers v. Encompass Indem. Co.
Appellate Term, Second Department
Policy Condition Breached for Failure to Appear for Scheduled EUOs
The insurer’s cross-motion for summary judgment was properly granted upon failure to appear for scheduled EUOs.  The court rejected plaintiff’s argument that the insurer could only deny pending claim based upon breach of a policy condition requiring appearance at scheduled EUOs. 

05/11/12       BLR Chiropractic, PC a/a/o Jose Ramirez v. American Transit Ins. Co.
Appellate Term, Second Department
Unrebutted Peer Review Results in Summary Judgment in Insurer’s Favor
The insurer’s cross-motion for summary judgment should have been granted.  The insurer’s affidavit and annexed peer review report were sufficient to establish lack of medical necessity.  The burden then shifted to the plaintiff to rebut the peer review report which it failed to do.

05/11/12       BR Clinton Chiropractic, PC a/a/o Dorren Polcano v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Insurer Established Breach of Policy Condition to Attend Scheduled IMEs
The insurer’s cross-motion for summary judgment on the first, second, fourth, and fifth causes of action should have been granted.  The insurer established that the Assignor breached the policy condition by failing to appear for scheduled IMEs.  The affidavit from the insurer’s third party IME vendor established that the IME scheduling letters were timely mailed in accordance with standard office practice and procedure.  Also, the affidavit from the examining chiropractor/acupuncturist established the Assignor’s failure to attend the scheduled IMEs.  Further, the insurer’s litigation examiner’s affidavit established that the denial of claim forms were timely mailed in accordance with standard office practice and procedure only as to the aforementioned causes of action.  The plaintiff did not raise a triable issue of fact precluding summary judgment.

05/11/12       Mike Supply, Inc. a/a/o Diana Pierre v. Progressive Ins. Co.
Appellate Term, Second Department
Affirmed Letter of Medical Necessity Creates Triable Issue of Fact
The insurer’s summary judgment motion should have been denied as the plaintiff raised a triable issue of fact regarding the medical necessity of the supplies.

05/11/12       Sigma Psychological, PC a/a/o Sasha Altidor v. GEICO
Appellate Term, Second Department
No Triable Issue of Fact Regarding Lack of Medical Necessity
The insurer’s cross-motion for summary judgment upon lack of medical necessity of psychological services should have been granted.  The plaintiff did not rebut the insurer’s prima facie case of lack of medical necessity based upon a sworn peer review.

 

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

Property

05/15/12       Gilbert v. Allstate Ins. Co.
Appellate Division, Second Department
Entitlement to Insurance Proceeds is Determined by Insurable Interest
Plaintiff Gilbert purchased a property as a tenant-in-common with his business partner.  Thereafter, Gilbert procured a policy of fire insurance from Allstate coverage the same property.  Several years later, the property was destroyed by fire, and plaintiff presented a claim for damages to Allstate.  Allstate, recognizing that plaintiff only maintained a ½ interest in the property, paid plaintiff for 50% of the loss.  As the business partner was not named as an insured under the policy, Allstate refused to pay any additional amount of the loss.

Plaintiff commenced the instant claim arguing that under property rules he possessed “full use and enjoyment of the premises.”  Accordingly, Gilbert reasoned that he was entitled to 100% reimbursement. 

In affirming the trial court, the Second Department ruled that Insurance Law § 3401 limits policy obligations to the insured’s “insurable interest.”  As a tenant-in-common with a co-owner, Gilbert’s insurable interest was 50%.  Accordingly, his payments under the policy were limited to ½ of the total loss.

05/15/12       All State Properties, LLC v. Old Rep. National Title Ins. Co.
Appellate Division, Second Department
Suing One’s Title Insurance Company, Too Quickly, Might Constitute Lack of Cooperation
Old Republic established its entitlement to judgment as a matter of law by demonstrating that the plaintiff, its insured, breached the subject title insurance policy by failing to cooperate with Old Republic in connection with the plaintiff's claim.  One month after giving Old Republic notice of its claim under a title policy, plaintiff did two things.  First it brought an action to quiet title to the property and named Old Republic as a defendant in that action. Sue an insurer is not necessarily non-cooperation but here, it also precipitously brought its own action on the claim, instead of affording Old Republic a reasonable time within which to investigate the claim and determine how to proceed.  

Potpourri

05/15/12       DiBuono v. Abbey, LLC
Appellate Division, Second Department
Allocation of Losses Between Sophisticated Landlord and Tenant, Couple with Insurance Coverage, Is Enforceable and Not Against Public Policy
Plaintiffs claimed property damage alleging that Abbey, the purchaser of a service station was responsible for contamination caused by gasoline leaks.  The damage took place on or before July 25, 2005.  Abbey purchased the property from LMC subject to a lease on the property to Palisades and after the purchase, Abbey renewed the lease with Palisades.  Palisades was obligated to provide Abbey with liability insurance coverage and agreed to a hold harmless agreement running in Abbey’s favor.

The indemnification provisions in the lease were enforceable even in light of General Obligations Law § 5-321, which provides that an agreement which purports to exempt a lessor from its own negligence is void and unenforceable. This lease only allocated the responsibility between two sophisticated parties and was coupled with an insurance procurement requirement."

The court found that to the extent one of the leases required indemnification, it also required reimbursement for defense costs. However, there were no defense costs required for a claim that fell outside of the indemnification agreements.

05/15/12       Federated Retail Holdings, Inc. v Weatherley 39th Street, LLC
Appellate Division, Second Department
SIR Obligations Satisfied by an Endorsement to the Primary Policy
Weatherley owned a certain parcel which it rented to Federated.  Pursuant to the lease agreement between the parties, Federated was required to procure certain policies of insurance on behalf of Weatherley.  Apparently, the umbrella policy procured by Federated contained a fairly large Self Insured Retention figure.  Upon learning of this, Weatherley moved to terminate the lease agreement based upon Federated alleged default of its obligations.  In response, Federated maintained that its purchase of a primary policy served to cure any default raised by Weatherley.

The Court agreed, and affirmed the Trial Court’s holding that Federated had satisfied the terms of these lease obligations.

 

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]
No Fault Fraud

No-Fault fraud continues dominate the Department’s focus.  As you may recall we had previously discussed new regulations by the Department of Financial Services and the Department of Health aimed at revoking the licenses of providers involved in No-Fault fraud.  The Department has sent certified letters to 135 chiropractors, acupuncturists and physical therapists seeking an explanation regarding their “suspect billing patterns.” 

A2744-A

This bill is currently on the Assembly’s debate list.  This bill seeks to prohibit an insurer’s ability to cancel or non-renew an automobile insurance policy on the basis that there is a pending dispute with the insurer or against the insurer with the Department.  The Sponsor’s Memorandum explains that the purpose of this bill is to keep insurers who utilize their ability to cancel two percent of their policyholders without reasoning from using this provision to “retaliate against policyholders who have had disputes, or who have filed legitimate complaints against them.”

A2204A

I had previously discussed this bill which seeks to include promotion of denials as an as unfair claims practices.  It is also on the Assembly calendar for debate.

 

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

05/10/12       Amerex Group Inc. USA v. Lexington Ins. Co.
Second Circuit Court of Appeals – New York law applied
An Insurer’s Right to an Appraisal Under the Policy
This case arises out of a longstanding dispute between Amerex and its excess insurers – Lexington Insurance Company and Westchester Surplus Lines Insurance Company [“excess insurers”].  Amerex initiated suit after nearly four years of investigation of its claim by the excess insurers and mediation between the parties.  The excess insurers responded to the complaint by moving to compel appraisal according to the terms of the insurance policies.  The district court granted the insurers motion. A panel was selected and conducted a 30 month valuation and ultimately quantified Amerex’s loss at less than the value of its primary insurance contract, thus rendering the excess insurers’ policies inapplicable to Amerex’s claims. The excess insurers moved for partial summary judgment on the basis of the appraisal, and the district court granted the motion, dismissing Amerex’s complaint.

Amerex appealed both the order to compel appraisal and the subsequent order confirming the appraisal and dismissing the complaint arguing that (1) the excess insurers waived their appraisal rights by failing to demand appraisal prior to the initiation of litigation; (2) the appraisers decided questions of coverage contrary to New York law; and (3) the appraisal process became an arbitration with one-sided discovery violating Amerex’s due process rights.

The facts were essentially undisputed.  Amerex distributes outerwear in the United States, acting as an intermediary between its wholesale customers and overseas clothing manufacturers.  The company stores some of the clothing to be shipped in Avenel, New Jersey, on a large rack system that facilitated the clothing’s storage and organization.

The rack collapsed on August 3, 2001, activating the warehouse’s sprinkler system, which flooded the premises.  The water damaged not only Amerex’s merchandise, but also rendered its computer system inoperable from “one to three weeks”, preventing Amerex from making promised deliveries.  The damages associated with the collapse included lost merchandise, cancellation of orders, late charges for orders fulfilled, and lost business income.

Amerex carried three insurance policies:  (1) a primary policy issued by Fireman’s Fund with a limit of $2.5 million; (2) the Lexington excess policy; and (3) the Westchester excess policy.   Each excess policy had a limit of $5 million.

The excess policies contained substantially identical clauses that allowed either party to insist in writing on the appointment of an appraisal panel to determine the extent of losses associated with any claim.  The appraisal clause does not specify any time limit for making such a demand, instead focusing on the procedure used to appoint the Panel.

Two years after the rack collapsed Amerex submitted a claim for $8.8 million.  Fireman’s Fund paid its policy limits. After an investigation of nearly 3 years, the excess insurers rejected the claim.  The bases for the rejection were:  (1) Amerex’s failure to substantiate a number of aspects of its claim due to lack of documentary evidence; (2) alternative explanations for the loss of business income that Amerex reported, including the September 11, 2001, terrorist attacks, economic recession, and the bankruptcies of some major customers; and (3) Amerex’s improper determination of the proper “restoration period”, that is the date after which business losses could no longer be attributed to the rack collapse or computer failure.

Later, the parties agreed to mediation and the excess insurers made a final offer of settlement.  Without responding to the offer Amerex filed its declaratory judgment action.  The excess insurers wrote to Amerex demanding an appraisal and answered the complaint the next day, listing the appraisal demand among their affirmative defenses. The excess insurers then moved to compel the appraisal and the district court granted the motion.

After almost 2 ½ years of review the Panel issued its valuation decision, finding that Amerex’s damages amounted to approximately $1.3 million, just more than half the value of Amerex’s insurance policy with Fireman’s Fund.  Because the value was less that the Fireman’s Fund primary policy the district court later granted the excess insurers’ motion for summary judgment. Amerex appealed to the Second Circuit Court of Appeals [“Court”].

The first issue addressed by the Court was whether the excess insurers delay in making the appraisal demand was reasonable.  In addressing this issue the Court recognized that New York public policy favors an appraisal proceeding over a trial and damages, and under New York law, waiver of the right to an appraisal is not lightly inferred.

Amerex, citing to a Wisconsin case Lynch v. American Family Mut. Ins. Co., 473 N.W.2d 515 (Wis.Ct.App. 1991), argued that absent a policy provision to the contrary, an insurance company may not demand an appraisal of a loss after the commencement of an action by the insured on that loss when the insurance company failed to demand the appraisal prior to the lawsuit even though it had an opportunity to do so.  Since that issue has not be addressed by any New York court the Court had to determine whether the New York Court of Appeals would follow Lynch.  The Court determined that because the application of the term “reasonable” is fact sensitive, it would interpret the intent of the Court of Appeals to allow courts to address questions of timeliness on a case-by-case basis, even after litigation has commenced.  Following the framework of the district courts that have applied New York law in this area, the Court analyzed three factors, none dispositive:  (1) whether the appraisal sought is “impractical or impossible”; (2) whether the parties engaged in good-faith negotiations over valuation of the loss prior to the appraisal demand; and (3) whether an appraisal is desirable or necessary under the circumstances.

The Court concluded that when applying this framework that the excess insurers did not waive their appraisal rights by asserting them after Amerex initiated litigation.

The second issue addressed by the Court was whether it was appropriate for the district court to uphold the appraisal award where, as Amerex argues, the Panel incorrectly decided questions of law, rather than just damages. In addressing this issue, the court cited to Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 261 F.Supp.2d 293 (S.D.N.Y. 2003) and Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 279 F.Supp.2d 235 (S.D.N.Y. 2003).

The Court noted that the Duane Reade cases illustrate three principles of New York law.  First, an appraiser may not resolve coverage disputes or legal questions regarding the interpretation of the policy.  Second, the calculation of the restoration period, unless subject to legal challenges, is a factual question about damages . . . appropriately addressed by the appraiser.  Third, the presence of a coverage dispute does not preclude an appraisal demand.

The Court concluded that the Panel’s valuation of damages did not violate these principles because the Panel focused solely on determining the extent of the damages, including calculating the relevant restoration period, and did not address whether the excess insurers’ policies covered those damages.

The final issue the Court addressed was whether the appraisal process itself turned into an arbitration that, Amerex claims violated its due process rights. The Court disagreed with Amerex concluding that when the Panel determined that the extent of the loss was within the limits of Amerex’s primary insurance policy, the inexorable results of that valuation decision were that Amerex had no claim against the excess insurers, and no further legal questions needed to be addresses to resolve the dispute.  Further stating that although Amerex went in to the appraisal with significantly less information about the excess insurers than the excess insurers had about Amerex, there was no violation of Amerex’s due process rights. 

The district court decision was affirmed.

05/21/12       Lyons v. Lancer Insurance Co.
Second Circuit Court of Appeals – New York law applied
Bus Regulatory Reform Act of 1982 – Interstate vs. Intrastate Travel
In August 2006, plaintiffs were awarded a judgment in a state court negligence action against T.F.D. Bus Company [“TFD”].  One of TFD’s buses struck a vehicle operated by Lyons on February 14, 1989.  During 1989, Michael A. Thomas [“Thomas”] was employed by TFD as a bus driver.  In the 1988-1989 school year, Thomas was regularly scheduled by TFD to transport students to and from Emerson Junior High School [“Emerson”] in Yonkers, New York. Thomas picked the students up every morning and returned them each afternoon.

On February 14, 1989, at approximately 2:51 p.m., before reaching the first drop off location in Yonkers, New York, the bus driven by Thomas (identified as bus 287) collided with the vehicle operated by Lyons, which was stopped at a red light. Lyons later filed suit in State Court and TFD defaulted. Lyons eventually obtained judgment against TFD for a total of $2,470,000, plus interest from 1992.  In 2007 Lyons commenced the present action against Lancer seeking a judgment under federal statutory law; specifically, the Bus Regulatory Reform Act of 1982 [“Bus Act”].  Federal law required that a motor carrier for hire engaging in the interstate transportation of passengers provide evidence of financial responsibility.  The Bus Act provided that the Secretary of Transportation would establish regulations setting minimum permissible levels of financial responsibility . . . the minimum with respect to a vehicle having a seating capacity of 16 or more passengers would be $5,000,000.  In 1989, TFD’s buses, including bus 287, were insured by Lancer.  The Lancer-TFD insurance policy included the required Form MCS-90B, which stated that the insurer agreed to pay, within the limits of the policy to which the endorsement was attached, “any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles.”

The issue the court had to decide was whether the bus driven by Thomas was required to travel interstate at the time of the loss.  During discovery the vice president of TFD testified that on the morning of February 14, 1989, TFD had provided charter service to a group of senior citizens in Mount Vernon, taking them to Armonk, New York.  Although Mount Vernon and Armonk are within New York State, the most efficient route between the two included travels in the State of Connecticut.  The vice president also testified that on the afternoon of February 14, 1989, Thomas was supposed to have driven bus 287 to Armonk to pick up the senior citizens at 2 p.m. and bring them back to Mount Vernon, rather than to pick up students from Emerson in Yonkers.

On the other hand, Thomas testified that his regular duty in 1989 was to transport the Emerson students to and from school.  Thomas testified that although he heard something about getting a dispatch ticket for the Armonk to Mount Vernon trip on February 14, 1989, he did not get it, so he proceeded with his usual routine of picking up the student from Emerson in Yonkers.

In support of their summary judgment motion against Lancer plaintiff’s argued that Thomas’s trip to pick up the students from Emerson in Yonkers was part of his trip to pick up senior citizens in Yonkers, which would involve interstate travel.

Lancer cross-moved for summary judgment arguing that Thomas did not drive bus 287 to Armonk at any time on February 14, 1989; Thomas drove that bus along the route he usually drove for TFD; that the Emerson route had specific stops along a designated course entirely within the City of Yonkers; and, that another driver and another bus undertook to transport the senior citizens back from Armonk to Mr. Vernon.

The district court denied plaintiff’s motion for summary judgment and granted Lancer’s cross motion.   For the following reason the Second Circuit Court of Appeals [“Court”] agreed. 

First, the Court disagreed with plaintiff’s characterization of TFD as a “shipper” in its moving papers.  The Court determined that the correct characterization of TFD was that it was a carrier, and that a shipper is an entity that purchases the transportation services of the carrier.  Plaintiffs argued that “bus 287 was only dispatched because TFD had procured and begun performance of an interstate contract with senior citizens and . . . the fixed and persisting intent of TFD, as a shipper, as the time of bus 287’s dispatch was that bus 287 would be engaged in interstate transportation of those senior citizens with a final intended destination of Mount Vernon.”

Second, Lyon’s description of the transportation of students an unauthorized is contrary to the record.  There was no evidence that bus 287 was expected to transport the senior citizens from Armonk that afternoon.  In fact it was bus 287 that was used to transport students to Emerson in the morning and another bus was used to transport the senior citizens to Armonk. 

Third, although Lyons argues that the trip to pick up and drop off the Emerson students after school was only a portion of an interstate strip to Armonk, the Court found that argument to be without merit.  Indeed, the accident in Armonk took place at 2:51 p.m., yet the vice-president of TFD testified that the senior citizens were to be picked up in Armonk at 2 p.m.

The Court concluded that the district court did not err in ruling that Lancer was entitled to judgment as a matter of law on the basis of the evidence that TFD had to have intended two trips in order to perform both its honkers and its Armonk-to-Mount Vernon obligations; that the accident which occurred on the trip that was wholly intrastate; and, that the MCS-90B endorsement therefore did not apply.

 

MARC’S REMARKS

Marc A. Schulz
[email protected]

05/11/12       Nationwide Ins. Co. v. Hernandez
Supreme Court, New York County
Adding Additional Parties Where Documents Raise Issue of Fact as to Cancellation of Policy Requires Hearing
The insured, Hernandez, was a passenger in one of four vehicles involved in a pile-up.  Nationwide moved to stay arbitration and add additional parties as Hernandez alleged the other vehicles in the accident were uninsured.  The police accident report stated one vehicle was self-insured and the other three were insured.

Hernandez claimed Nationwide submitted no proof that one of the vehicles was insured by Sentry.  Sentry alleged it canceled the policy four months prior to the accident for failure to pay the premiums.  Nationwide replied that Sentry’s proof of cancellation of the policy was not in admissible form.

The court stated the validity of Sentry’s notice of cancellation may not be determined on the papers, and enjoined Sentry as a necessary party for a framed issue hearing, ordering a temporary stay pending the hearing.  The other proposed additional parties established they were not proper parties as Nationwide did not reply to their opposition papers.

05/15/12       Kerker v. Maple View Diary, Inc.
Supreme Court, New York County
Was He An Employee?  Documentation Crucial and, if in Spanish, Contract Requires Duly Authorized Translation
Kerker, as co-administrator of the estate of Mario Antonio Martinez, decedent, and Candelaria Santiago, individually, allege that while in housing accommodations owned by Mapleview, decedent died in a fire while sleeping in a trailer.  Mapleview hired decedent less than one week before the fire. 

Plaintiffs contend at the time of his death, decedent was employed by Mapleview and inside a building “owned, operated, maintained, managed, and controlled’ by Mapleview used to house persons employed, including decedent.  Kerker asserts negligence, carelessness, recklessness, and wrongful death against Mapleview, while Santiago asserts claim for loss of consortium.

Mapleview sought dismissal on the pleadings, claiming plaintiffs exclusive remedy lies with the Workers’ Comp. Bd. and that the complaint is barred by Workers’ Comp. § 11 because the written and verbal terms of decedent’s employment agreement with Mapleview required him to sleep on its premises.  According to Mapleview, decedent’s death occurred in furtherance of that employment. 

Plaintiffs replied that because the fired occurred after decedent’s shift ended, decedent did not die during the course of his employment and thus, Workers’ Comp. did not bar the action.  

Mapleview claimed the employment agreement required decedent to live on its premises and verbally advised decedent of this condition of employment but was unable to produce supporting documents.  The agreement allegedly completed by decedent was written in Spanish and Mapleview’s production of what it contended to be an English version of the same contract form failed to include a duly authorized translation of the completed Spanish document.  The court also noted that the terms of the English contract vary from those of the Spanish contract, and do not require decedent to live on the premises, merely indicating that housing arrangements are contemplated.

Further, the court stated the documents do not reference decedent’s name, Mario Antonio Martinez.  The Spanish contract’s signature line read “Salvador Cordoba Gomes.”  The from C-2 employer’s report of work-related injury/illness identified the injured employee as “Salvador Cordoba.”  However, the NYS Ins. Fund letter identifies the claimant as “Cordoba Salvador.”  Plaintiffs did not concede Gomes and decedent are the same person.  

Mapleview claimed that during the employment interview decedent stated his name was Cordoba Gomes and produced a resident alien card and photo id, and they did not learn decedent’s real name until after the fire.  Unfortunately for them, Mapleview failed to produce copies of the identification supplied by decedent during the interview.  The court also determined the allegations regarding verbal communications between Mapleview and decedent were unavailing and at best, merely raised credibility issues.  Therefore, the court held Mapleview failed to demonstrate decedent was required to sleep on the premises as a condition of employment, directing Mapleview to file an Answer.

 

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

Late Notice Dooms HVAC Design Claim

Jennings Construction Services. Corp. v Ace American Insurance Co., 2012 WL 85180 (M.D. Florida January 11, 2012).  The underlying dispute alleged a defectively designed HVAC system at an apartment complex in Orlando, Florida.  The policy contained a “claims made and reported” provision which covered claims made and reported to the insurer during the policy period, which in this case was between March 1, 2005 and March 1, 2006.

Subcontractors designed and built the HVAC system for Jennings, the contractor.  In June 2005, the subcontractors sued Jennings in Florida state courts. Apparently, Jennings settled the claim with the subcontractors and then took an assignment of the subcontractors’ right of recovery against Ace.

Jennings then sued Ace in Florida Federal Court, but in the complaint and apparently as a matter of fact, the first notice to the insurer of the underlying claim was in December 2006.  Ace moved to dismiss the complaint on the basis of late notice beyond the policy period of March 1, 2006.  Jennings asserted a Florida statute that requires an insurer to give a policyholder written notice of intent to raise a coverage defense within 30 days of when the insurer knows or should know it would raise the defense.  In essence, Jennings asserted waiver, estoppel and statutorily late notice of Ace’s late notice defense.

The Federal Court first noted that in a “claims made and reported” policy, there was no coverage for a claim reported outside the coverage period.  Therefore, the argument is that from inception there was no coverage for this claim.  The Florida statute did not apply because Ace’s late notice defense was not a “coverage defense” for purposes of the statute because such a “coverage defense” is a defense to coverage that otherwise exists or could exist under the policy.  Since there was never any coverage for this claim, Ace’s defense was not barred by the statute because, absent any late notice of intent to raise the defense, the coverage would still not have otherwise have existed under the law or policy.  Ace was not precluded from asserting the defense.   Therefore, the claim was dismissed with prejudice.

This case is a good example of the distinctions that have to be made between the covering provisions of the policy, any asserted exclusions, and then any exceptions or limitations on exclusions.  If there is no coverage in the covering language, or in this case because the loss was reported outside the policy period, other policy or statutory provisions may not apply to (in effect) grant or bestow coverage which never existed in the first place.  An insured always has the burden to establish coverage for the claim that exists under the policy as an initial threshold matter, and in this case, the insured could not satisfy that initial, basic condition.  Any alleged violation of the Florida statute, or perhaps some other policy term, could not operate to amend the policy to grant coverage contrary to its terms and provisions. 

However, this case also highlights the importance to an insurer of denying and disclaiming coverage as quickly as possible once a coverage defense is known to avoid arguments of statutory or policy waiver and estoppel.

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

05/08/12       Insurance Company of the West v. Island Dream Homes, Inc.
United States Court of Appeals for Eleventh Circuit
Roofers Escape Fall
The condominium contracted with Island Dream for roof repair. While Island Dream was conducting the repairs, a large stone veneer wall fell, causing damage to the condominium. Insurance Company, the condominium’s insurer, sued Island Dream for negligence. Island Dream alleged that the wall fell because it was structurally unsound. During trial, at the close of Insurance Company’s case, the district court granted Island Dream’s motion for judgment as a matter of law, holding that no reasonable jury could find that Island Dream was negligent because Insurance Company failed to present any evidence on the standard of care in the roofing industry. Insurance Company appealed. The court affirmed the judgment as a matter of law. The court held that the district court properly found that no reasonable jury could find that Island Dream was negligent because Insurance Company failed to present any evidence on the standard of care in the roofing industry. The roofers were not ordinary people who happened to be working on a roof. They were trained roofers, and, therefore, the question was what a reasonably prudent roofer would do under similar circumstances. Regardless of whether roofers were considered professionals in Florida, Insurance Company was required to present evidence on the standard of care in the roofing industry, either by expert testimony or by presenting testimony of roofing custom. The fact that the wall fell while the roofers were working on it was not enough to establish negligence on its own. Therefore, the court affirmed the judgment as a matter of law.
Submitted by: Mark J. Gesk and Colleen M. Aracri of Wayman, Irvin & McAuley, LLC.

05/08/12       Western World Insurance v. Markel Insurance
United States Court of Appeals for Tenth Circuit
Haunted by Escape Clause
Tyler was injured working at a haunted house when he fell into an open elevator shaft. He sued Brewer Entertainment the operator of the Haunted House. Brewer had two policies. Western World defended and settled Tyler’s action and then Markel to pay half the cost of defending and settling the claim. Markel's policy had another insurance escape clause which the Court found failed to operate to exclude this claim
Submitted by: Kay Gaffney Crowe, Barnes, Alford - Posted: 05/18/2012

Reported Decisions

How Shim Yu v. v. General Security Insurance Co.

Shayne, Dachs, Corker, Sauer & Dachs, LLP, Mineola (Jonathan A. Dachs of counsel), for appellant.
Melito & Adolfsen P.C., New York (S. Dwight Stephens of counsel), for respondent.

Order, Supreme Court, New York County (Richard F. Braun, J.), entered June 21, 2010, which granted defendant's motion for summary judgment dismissing the complaint and denied plaintiff's cross motion for summary judgment, unanimously reversed, on the law, with costs, the motion denied, the cross motion granted, and the matter remanded for further proceedings consistent herewith.

This is an action pursuant to Insurance Law § 3420(a)(2) by an injured person (plaintiff) against the insurer (defendant) of a tortfeasor (nonparty Lep Keng Corp.), which has not satisfied a judgment against it in plaintiff's favor. It is undisputed that Lep Keng's notice to defendant was late. However, "[a]n insurer's failure to provide notice as soon as is reasonably possible precludes effective disclaimer, even [where] the policyholder's own notice of the incident to its insurer is untimely" (Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772, 774 [2006] [internal quotation marks omitted]).

Defendant learned by August 27, 2004, at the latest, that plaintiff served the summons and complaint in the underlying personal injury action on the Secretary of State on December 31, 2001, that the Secretary of State had sent the documents to the address on file for Lep Keng, and that the documents had been returned unclaimed. Thus, defendant was aware by that date "of the grounds for disclaimer of liability or denial of coverage" (id. [internal quotation marks omitted]). Nevertheless, it did not disclaim until July 18, 2007, almost three years later, a delay that is unreasonable as a matter of law (see e.g. First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66 [2003]). Defendant's contention that it had to wait until the motion court in the underlying action confirmed the Special Referee's finding that Lep Keng had deliberately left mail unclaimed, is unavailing (see Republic Franklin Ins. Co. v Pistilli, 16 AD3d 477, 479 [2005]).

Because neither the motion papers below nor the briefs on appeal addressed the amount of the judgment that should be entered and whether interest should be assessed, the matter should be remanded for further proceedings.

All State Properties, LLC v. Old Republic National Title Ins. Co.,

Hutchinson & Hutchinson, P.C., Oyster Bay, N.Y. (Richard L. Hutchinson of counsel), for appellant.
Solomon & Siris, P.C., Garden City, N.Y. (Stuart Siris and Keith S. Garret of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for breach of a title insurance policy, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Galasso, J.), entered January 6, 2011, as granted that branch of the cross motion of the defendant Old Republic National Title Insurance Co. which was for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The defendant Old Republic National Title Insurance Company (hereinafter Old Republic) established its prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiff, its insured, breached the subject title insurance policy by failing to cooperate with Old Republic in connection with the plaintiff's claim. It is undisputed that, less than one month after giving Old Republic notice of its claim under the title insurance policy, the plaintiff commenced litigation seeking to quiet title to the property that is the subject of the claim, and also named Old Republic as a defendant in that action. While the mere act of commencing suit against one's insurer does not, standing alone, constitute noncooperation sufficient to relieve the insurer of its obligations under the policy (see Emigrant Mtge. Co., Inc. v Washington Tit. Ins. Co., 78 AD3d 1112, 1114), here, the plaintiff's noncooperation was established by the fact that it also precipitously brought its own action on the claim, instead of affording Old Republic a reasonable time within which to investigate the claim and determine how to proceed. Since the plaintiff failed to raise a triable issue of fact in response to Old Republic's showing that the plaintiff was in material breach of the insurance policy due to its failure to cooperate, that branch of Old Republic's cross motion which was for summary judgment dismissing the complaint insofar as asserted against it was properly granted.

DiBuono v. Abbey, LLC

Rosenblatt & McGarrity, White Plains, N.Y. (Green & Willstatter [Theodore S. Green], of counsel), for third-party defendant-appellant.
Robert P. Harmon, Larchmont, N.Y., for respondent.

DECISION & ORDER

In an action to recover damages for injury to property, the third-party defendant appeals from an order of the Supreme Court, Westchester County (Lefkowitz, J.), dated December 10, 2010, which granted those branches of the motion of the defendant Abbey, LLC, which were for summary judgment on that defendant's cross claims against it to recover damages for breach of contract for failure to procure insurance, for a judgment declaring that it is obligated to defend and indemnify the defendant Abbey, LLC, in the main action pursuant to a lease dated January 20, 1999, and for a judgment declaring, in effect, that it is obligated to indemnify Abbey, LLC, in the main action pursuant to a lease dated February 15, 2005.

ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting that branch of the motion of the defendant Abbey, LLC, which was for summary judgment on so much of its third cross claim as sought a judgment declaring that the third-party defendant is obligated to defend and indemnify it in the main action pursuant to a lease dated January 20, 1999, for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which that lease was in effect, and substituting therefor a provision denying that branch of the motion, (2) by deleting the provision thereof granting that branch of the motion of the defendant Abbey, LLC, which was for summary judgment on its sixth cross claim for a judgment declaring, in effect, that the third-party defendant is obligated to indemnify it in the main action pursuant to a lease dated February 15, 2005, and substituting therefor a provision denying that branch of the motion, (3) by adding a provision thereto searching the record and awarding summary judgment to the third-party defendant declaring that it is not obligated to defend and indemnify the defendant Abbey, LLC, in the main action for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which the lease dated January 20, 1999, was in effect, and (4) by adding a provision thereto searching the record and awarding summary judgment to the third-party defendant declaring that it is not obligated to indemnify the defendant Abbey, LLC, in the main action pursuant to the lease dated February 15, 2005; as so modified, the order is affirmed, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the third-party defendant is not obligated to defend and indemnify the defendant Abbey, LLC, in the main action pursuant to the lease dated January 20, 1999, for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which that lease was in effect and declaring that the third-party defendant is not obligated to indemnify the defendant Abbey, LLC, in the main action pursuant to the lease dated February 15, 2005.

The plaintiffs commenced this action to recover damages for injuries to their real property, alleging that on or before July 25, 2005, their property was contaminated by the leaking of petroleum from gasoline storage tanks located at three nearby service stations. The defendant Abbey, LLC (hereinafter Abbey), allegedly purchased one of the service stations from the defendant third-party plaintiff, L.M.C. Partners, LLC (hereinafter LMC), on January 13, 2004, subject to the obligations and liabilities of a lease dated January 20, 1999 (hereinafter Lease 1), between LMC and the third-party defendant, Palisades Resources, Inc. (hereinafter Palisades). Thereafter, on February 15, 2005, Abbey and Palisades allegedly agreed to a second and superseding lease (hereinafter Lease 2), which was effective from February 1, 2005, onwards. Abbey asserted cross claims against Palisades, inter alia, to recover damages for breach of Lease 1 and Lease 2 based on Palisade's failure to procure an insurance policy naming Abbey as an insured party (second and fifth cross claims), for a judgment declaring that Palisades is obligated to defend and indemnify it in the main action pursuant to Lease 1 (third cross claim), and for a judgment declaring, in effect, that Palisades is obligated to indemnify it in the main action pursuant to Lease 2 (sixth cross claim).

Abbey moved, inter alia, for summary judgment on those cross claims. The Supreme Court granted those branches of Abbey's motion, determining that Palisades breached its obligations to procure insurance coverage in Abbey's favor under Leases 1 and 2, that Palisades breached its obligations under Lease 1 to defend and indemnify Abbey in the main action, and that Palisades breached its obligation under Lease 2 to indemnify Abbey in the main action. Palisades appeals, and we modify.

Contrary to Palisades's contention, the indemnification provisions in Leases 1 and 2 were not rendered unenforceable by General Obligations Law § 5-321, which provides that an agreement which purports to exempt a lessor from its own negligence is void and unenforceable. "Where, as here, the liability is to a third party, General Obligations Law § 5-321 does not preclude enforcement of an indemnification provision in a commercial lease negotiated at arm's length between two sophisticated parties when coupled with an insurance procurement requirement" (DiBuono v Abbey, LLC, 83 AD3d 650, 653 [internal quotation marks omitted]; see Great N. Ins. Co. v Interior Constr. Corp., 7 NY3d 412, 418-419; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153; Castano v Zee-Jay Realty Co., 55 AD3d 770). Here, Abbey established, prima facie, that the purpose of the indemnification clauses in Leases 1 and 2 was not to exempt the lessor from liability to the victim, but rather to allocate the risk of liability to third parties between the lessor and the lessee (see Castano v Zee-Jay Realty Co., 55 AD3d at 772).

In opposition to Abbey's prima facie showing that Lease 1 was enforceable as between Palisades and itself, Palisades failed to raise a triable issue of fact as to whether LMC initially procured the agreement through fraudulent inducement by concealing and misrepresenting the subsurface conditions of the demised premises. While a general merger clause is ineffective to exclude parol evidence of fraud, a specific disclaimer will defeat any allegation that the contract was executed in reliance upon contrary oral representations (see Danann Realty Corp. v Harris, 5 NY2d 317, 320-321; McGowan v Winant Place Assoc., 270 AD2d 466; Busch v Mastropierro, 258 AD2d 492, 493). Here, Lease 1 contained provisions stating that Palisades had examined, and was fully familiar with, the physical condition of the demised premises, including the subsurface conditions, and that no representations or warranties, whether expressed or implied, had been made regarding the condition of the demised premises. These provisions were sufficiently specific to bar Palisades's claim that LMC fraudulently induced it into entering the contract by concealing or orally misrepresenting the subsurface conditions at the demised premises (see Kasten v Golden, 50 AD3d [*3]1098, 1098-1099; Fabozzi v Coppa, 5 AD3d 722, 723-724; Bedowitz v Farrell Dev. Co., 289 AD2d 432, 433; Platzman v Morris, 283 AD2d 561, 562-563; Busch v Mastropierro, 258 AD2d at 493; Masters v Visual Bldg. Inspections, 227 AD2d 597, 597-598). Moreover, Lease 1 contained several provisions indicating that LMC would perform certain remedial work at the demised premises. Thus, the facts which were allegedly misrepresented with respect to the subsurface conditions were "not matters peculiarly within [LMC's] knowledge, and [Palisades] ha[d] the means available to [it] of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation" (Danann Realty Corp. v Harris, 5 NY2d at 322 [internal quotation marks omitted]). Accordingly, Palisades "will not be heard to complain that [it] was induced to enter into the transaction by misrepresentations" regarding the subsurface conditions at the demised premises (id. [internal quotation marks omitted]).

Therefore, insofar as Palisades contends that it raised a triable issue of fact as to whether Lease 1 was procured by fraudulent inducement, thereby precluding summary judgment in favor of Abbey on its cross claims to recover damages for breach of contract for failure to procure insurance and for a judgment declaring that Palisades is obligated to defend and indemnify it in the main action under Lease 1, its argument is without merit.

Palisades further contends that its obligations under Lease 1 to defend, indemnify, and procure insurance coverage were dependent upon the successful completion of certain remedial work by the lessor. This contention, however, is contradicted by the provision in that agreement which states that "[t]he obligations and liabilities of Lessee hereunder in no way shall be released, discharged or otherwise affected . . . by reason of . . . any failure on the part of Lessor to comply with or perform any of the terms hereof."

However, the Supreme Court erred in granting that branch of Abbey's motion which was for summary judgment on so much of its third cross claim as sought a judgment declaring that Palisades was obligated to defend and indemnify it in the main action pursuant to Lease 1 for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which that lease was in effect. The complaint in the main action alleged that the plaintiffs sustained damages as a result of petroleum discharges from the demised premises occurring not only during the effective dates of Lease 1, but also before and after that period. Thus, Abbey was not entitled to indemnification from Palisades pursuant to Lease 1 for damages to the plaintiffs' land which arose from discharges of petroleum or other contaminants occurring before or after the period during which that lease was in effect as between Abbey and Palisades (see DiBuono v Abbey, LLC, 83 AD3d at 653).
Additionally, since Palisades is not an insurer, its duty to defend "is no broader than its duty to indemnify" under Lease 1 (Bellefleur v Newark Beth Israel Med. Ctr., 66 AD3d 807, 809; see George v Marshalls of MA, Inc., 61 AD3d 925, 931; Bryde v CVS Pharmacy, 61 AD3d 907, 908-909; Cannavale v County of Westchester, 158 AD2d 645). Thus, since Abbey is not entitled to indemnification for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which Lease 1 was in effect, it is also not entitled to a defense for those alleged damages (see DiBuono v Abbey, LLC, 83 AD3d at 653).

The Supreme Court also erred in granting that branch of Abbey's motion which was for summary judgment on its sixth cross claim for a judgment declaring, in effect, that Palisades was obligated to indemnify it in the main action pursuant to the indemnification provision in Lease 2. "The right to contractual indemnification depends upon the specific language of the contract" (George v Marshalls of MA, Inc., 61 AD3d at 930; see Bellefleur v Newark Beth Israel Med. Ctr., 66 AD3d at 809; Canela v TLH 140 Perry St., LLC, 47 AD3d 743, 744). "The promise to indemnify should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding circumstances" (George v Marshalls of MA, Inc., 61 AD3d at 930; see Bellefleur v Newark Beth Israel Med. Ctr., 66 AD3d at 809). In Lease 2, Palisades agreed to indemnify Abbey for damages or injuries "occurring on the demised premises or any part thereof." Since the damages alleged in the main action occurred on the plaintiffs' land, and not on the demised premises under Lease 2 or any part thereof, the indemnification provision in Lease 2 does not obligate Palisades to indemnify Abbey in the main action.

Accordingly, upon searching the record, we conclude that Palisades is entitled to summary judgment declaring that it is not obligated to defend and indemnify Abbey in the main action pursuant to Lease 1 for damages allegedly arising from discharges of petroleum or other contaminants occurring before or after the period during which that lease was in effect, and declaring that it is not obligated to indemnify Abbey in the main action pursuant to Lease 2.

Since Abbey, in part, sought declaratory relief, we remit the matter to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that Palisades is not obligated to defend and indemnify Abbey in the main action pursuant to Lease 1 for damages allegedly arising from discharge of petroleum or other contaminants occurring before or after the period during which that lease was in effect, and declaring that Palisades is not obligated to indemnify Abby in the main action pursuant to Lease 2 (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
 
Castro v. Prana Associates Twenty One, LP,

Kenney Shelton Liptak Nowak LLP, Buffalo (Judith Treger Shelton of counsel), for appellant.
Edward A. Frey, White Plains, for respondent.

Order, Supreme Court, Bronx County (Mary Ann Brigantti-Hughes, J.), entered April 21, 2011, which, to the extent appealed from as limited by the briefs, granted Prana's motion for summary judgment seeking enforcement of the default judgment obtained by Prana against Four Star to the extent of declaring that Northfield, Four Star's insurer, is required to indemnify Prana in the underlying action, and denied Northfield's motion for summary judgment against Prana, unanimously reversed, on the law, with costs, Prana's motion denied, and Northfield's motion granted to the extent of declaring that Northfield has no obligation to defend or indemnify Prana in the underlying personal injury action.

Prana's September 29, 2009 letter notifying Northfield of the underlying action and requesting defense and indemnification as an additional insured under the Northfield policy, did not trigger Northfield's duty to disclaim coverage as to Four Star, its named insured. Indeed, under the Northfield policy, both primary and additional insureds were required to provide notice of a claim; accordingly, notice provided by Prana could not be imputed to Four Star (Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40, 43 [2002]). This is especially true given that Prana has taken a position adverse to Four Star in the underlying litigation (id.).

Even if Prana's September 29, 2009 letter had provided sufficient notice with respect to both Prana and Four Star, Four Star's failure to provide timely notice of Prana's third-party lawsuit against it vitiated coverage under the Northfield policy (see American Tr. Ins. Co. v Rechev of Brooklyn, Inc., 57 AD3d 257, 257 [2008]). Indeed, Northfield did not receive notice from, and did not even learn that a claim had been made against, Four Star until it received notice of the suit and default judgment from Prana on May 25, 2010, and notice of the summons and complaint from Four Star's broker on June 2, 2010. Using either notice date (May 25, 2010 or June 2, 2010), Northfield's disclaimer letter, dated June 14, 2010, was timely as a matter of law (see Public Serv. Mut. Ins. Co. v Harlen Hous. Assoc., 7 AD3d 421, 423 [2004]).

 

Williams v. Horman

Mitchell & Incantalupo, Forest Hills (Thomas V. Incantalupo of counsel), for appellant.
Epstein, Gialleonardo & Rayhill, Elmsford (Daniel F. Genovese of counsel), for Erik J. Horman, respondent.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for Djiby Sy and Sunrise Limo Enterprise, respondents.

Order, Supreme Court, Bronx County (Robert E. Torres, J.), entered May 4, 2011, which granted the motion of defendants Djiby Sy and Sunrise Limo Enterprise for summary judgment dismissing the complaint as against them, unanimously modified, on the law, to dismiss the complaint as against all defendants, and otherwise affirmed, without costs. The Clerk is directed to enter judgment accordingly.

The moving defendants (defendants) established their entitlement to judgment as a matter of law by showing that plaintiff did not sustain permanent consequential or significant limitations to her cervical spine and right shoulder. Defendants submitted the affirmed report of an orthopedic surgeon, who, based upon an examination of plaintiff and a review of her medical records, concluded that plaintiff had fully recovered from a mild sprain of the cervical spine and that the injury to her right shoulder was due to a preexisting condition. Defendants also submitted the affirmed report of a radiologist who reviewed the MRIs of plaintiff's cervical spine and right shoulder, and found preexisting and degenerative conditions and no indication of traumatic injury (see Migliaccio v Miruku, 56 AD3d 393, 394 [2008]).

In opposition, plaintiff failed to raise a triable issue of fact. Plaintiff's treating orthopedist examined her three months after the accident, and found normal range of motion, and subsequent conflicting findings of limitations in the cervical spine by another physician were not explained (see Jno-Baptiste v Buckley, 82 AD3d 578 [2011]). Plaintiff also failed to submit any recent report contradicting the findings of defendants' orthopedic surgeon that her cervical sprain had completely resolved (see Feliz v Fragosa, 85 AD3d 417, 418 [2011]), and offered no medical evidence refuting the findings of defendants' experts that her cervical spine condition was attributable to preexisting conditions unrelated to trauma (see Lazu v Harlem Group, Inc., 89 AD3d 435 [2011]).

Regarding her right shoulder injury, plaintiff's orthopedic surgeon opined that the rotator cuff tear was directly related to the accident, but did not quantify any limitations in range of motion either before or after he performed surgery to repair the tear, and found only an unquantified "mild limitation of range of motion" upon recent examination following a second, unrelated injury to plaintiff's shoulder. Absent any objective medical evidence explaining or contradicting the normal findings by plaintiff's orthopedist, plaintiff failed to raise a triable issue of fact as to whether she suffered a serious injury to her shoulder following the accident (see Canelo v Genolg Tr., Inc., 82 AD3d 584, 585 [2011]; see also Winters v Cruz, 90 AD3d 412 [2011]). Moreover, the existence of a tear in a shoulder ligament and of bulging and herniated discs is not evidence of serious injury in the absence of objective proof of the extent of the alleged physical limitations resulting from the injury, and its duration (see DeJesus v Paulino, 61 AD3d 605, 608 [2009]).

Defendants established their entitlement to summary judgment dismissing the 90/180-day claim based upon, inter alia, plaintiff's deposition testimony that she stayed home only for three days after the accident, and plaintiff failed to raise an issue of fact in opposition (see Lopez v Abdul-Wahab, 67 AD3d 598, 600 [2009]).

Furthermore, although it appears that codefendant Horman did not move for summary judgment, dismissal of the complaint as against him is also warranted because "if plaintiff cannot meet the threshold for serious injury against one defendant, she cannot meet it against the other" (Lopez v Simpson, 39 AD3d 420, 421 [2007]).

Rosario v. Chico Car Inc.

Law Offices of Arnold Treco, Jr., PLLC, Bronx, (Arnold Treco of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for Chico Car Inc. and Farides Perez, respondents.
Cartafalsa, Slattery, Turpin & Lenoff, New York (Paul Loumeau of counsel), for Autorama Enterprises and Manuel A. Reyes, respondents.

Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered March 22, 2011, which, in an action for personal injuries arising out of a motor vehicle accident, granted the motion of defendants Autorama Enterprises and Manuel A. Reyes and the cross motion of defendants Chico Car Inc. and Farides Perez for summary judgment dismissing the complaint, unanimously modified, on the law, to the extent of reinstating plaintiff's claim of serious injury to his lumbar spine, and otherwise affirmed, without costs.

Defendants established prima facie their entitlement to judgment as a matter of law. Although two of defendants' experts found significant limitations in the range of motion of plaintiff's lumbar spine, defendants nevertheless established that plaintiff's alleged injury was not caused by the accident (see Spencer v Golden Eagle, Inc., 82 AD3d 589 [2011]). Defendants' radiologist viewed the MRI image of plaintiff's lumbar spine, taken about one month after the accident, and found that it revealed "a congenital variant, a transitional vertebra" that "has no traumatic basis or association with the accident."

Plaintiff, who was seven years old at the time of the accident, raised a triable issue of fact. Plaintiff submitted, inter alia, the affirmation of a doctor who, upon a physical examination and review of plaintiff's medical records, including MRI reports, opined that plaintiff suffered permanent and significant injury to his lumbar spine as a direct result of the accident (see Pommells v Perez, 4 NY3d 566, 576, 577 n 5 [2008]; Williams v Perez, 92 AD3d 528, 529 [2012]). Moreover, plaintiff adequately explained the alleged gap in treatment. His father testified that plaintiff attended physical therapy for about five months after the accident, but stopped because it became palliative, his benefits expired, and he could not afford to pay out of pocket (see Pommells at 577; Mercado-Arif v Garcia, 74 AD3d 446, 447 [2010]). 

Defendants met their burden with respect to the 90/180-day claim. Defendants relied on the deposition testimony of plaintiff and his father, and plaintiff failed to raise an issue of fact in opposition (see Gaddy v Eyler, 79 NY2d 955, 958 [1992]).

Escotto v. Vallejo

Richard G. Monaco, Bronx, for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for respondents.

Order, Supreme Court, Bronx County (Julia I. Rodriguez, J.), entered October 6, 2011, which, to the extent appealed from as limited by the briefs, granted defendants Roque Vallejo and NYLL Management Ltd's (defendants) motion for summary judgment dismissing the complaint insofar as it alleged serious injuries of plaintiff's left knee under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motion denied as to said claim. Appeal from order, same court, Justice, and date of entry, which dismissed the complaint as against the City, unanimously dismissed, without costs, as abandoned.
On April 2, 2007, plaintiff sustained injuries when a vehicle operated and owned, respectively, by defendants Roque Vallejo and NYLL Management Ltd. struck her as she was crossing the street.

Defendants failed to meet their initial burden of establishing that plaintiff did not sustain a serious injury to her knee as a result of the accident. In support of their summary judgment motion, defendants submitted the report of their orthopedist, Dr. Gregory Montalbano, who examined plaintiff in November 2008 and found full range of motion, absence of valgus and varus instability, and negative McMurray, Lachman, and anterior and posterior drawer tests. He also noted in his report pain to patella compression, and ambulation with an unsteady gait. Based on his examination and review of plaintiff's medical records, he concluded that plaintiff had sustained left knee contusion/strain, and that such condition has resolved. He also opined that any persisting symptoms were caused by advanced degenerative conditions, which included osteoarthritis and medial and lateral meniscal tears.

However, the MRI reports of defendants' radiologist, one of which was relied upon by Dr. Montalbano, concluded that a finding of traumatic injury could not be ruled out given the evidence of an ACL and a meniscal tear. Such contradictory evidence as to whether the tears were chronic or acute in nature creates issues of fact as to whether the persisting knee symptoms were causally related to the accident (see Suazo v Brown, 88 AD3d 602 [2011]). Further, defendants have not established that the persisting limitations are not "consequential" or "significant" (see Licari v Elliott, 57 NY2d 230, 236 [1982]). Dr. Montalbano did not indicate the extent of plaintiff's pain on patella compression, and noted that plaintiff was ambulating with an unsteady gait. Because defendants failed to meet their prima facie burden, their motion must be denied, regardless of the claimed insufficiency of the opposing papers (see Feaster v Boulabat, 77 AD3d 440 [2010]).

Martinez v. Goldmag Hacking Corp.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for appellants.
Pollack, Pollack, Isaac & DeCicco, New York (Brian J. Isaac of counsel), for respondent.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered August 12, 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 modified, on the law, to grant the motion as to the "permanent consequential limitation of use" and "significant limitation of use" categories of serious injury, and otherwise affirmed, without costs.
Defendants established prima facie that plaintiff suffered neither a "permanent consequential limitation of use" nor a "significant limitation of use" of her left knee or lumbar spine. The orthopedic surgeon who examined plaintiff in August 2010 reported findings of a full range of motion in her lumbar spine and a range of motion in her left knee that was identical to that of her uninjured right knee, and the finding of a mere contusion on the left knee that had since resolved. The radiologist who reviewed MRIs of plaintiff's lumbar spine and the x-ray of plaintiff's left tibia and fibula found no evidence of trauma or causally related injury (see e.g. Antonio v Gear Trans Corp., 65 AD3d 869 [2009]; Thompson v Abbasi, 15 AD3d 95 [2005]).

Plaintiff failed to present any evidence of a recent examination supporting the alleged "permanent consequential" or "significant limitation" injuries (see e.g. Shu Chi Lam v Wang Dong, 84 AD3d 515 [2011]). Her treating orthopedic surgeon had not examined her since October 2009, which was about one month after her surgery and nearly 10 months before defendants' orthopedic surgeon examined her, and did not quantify any limitations or opine as to qualitative limitations at that time (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]).
Although defendants made out their prima facie case as to plaintiff's 90/180-day claim, plaintiff raised an issue of fact by submitting her orthopedic surgeon's determination, made during the relevant period, that she was not able to work, was totally disabled, and required arthroscopic surgery to repair her knee, and her testimony that she was confined to her home for eight months after the accident and had only recently resumed her customary daily activities (see e.g. Williams v Tatham, 92 AD3d 472, 473 [2012]). We note that if plaintiff ultimately prevails on her 90/180-day claim, she will be "entitled to recover damages that justly and fairly compensate . . . her for all injuries proximately caused by the accident" (Rubin v SMS Taxi Corp., 71 AD3d 548, 549-550 [2010]; see Delgado v Papert Tr., Inc., 93 AD3d  457 [2012]).

Ayala v. Cruz

Greenstein & Milbauer, LLP, New York (Andrew W. Bokar of counsel), for appellants.
Richard T. Lau & Associates, Jericho (Kathleen E. Fioretti of counsel), for respondents.

Judgment, Supreme Court, Bronx County (Sharon A.M. Aarons, J.), entered on or about June 14, 2011, dismissing the complaint on the ground that plaintiffs did not suffer serious injuries within the meaning of Insurance Law § 5102(d), and bringing up for review an order, same court and Justice, entered on or about June 7, 2011, which granted defendants' motions for summary judgment, unanimously modified, on the law, to reinstate the claims of permanent consequential limitation and significant limitation of use of the lumbar spines against all defendants, and otherwise affirmed, without costs. Appeal from the aforesaid order unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Defendants established prima facie that plaintiffs did not suffer either significant limitation or permanent consequential limitation of use of their lumbar spines, by submitting the affirmations of two orthopedists who found full ranges of motion in all planes (see Thompson v Abbasi, 15 AD3d 95, 96 [2005]). However, defendants failed to make a prima facie showing that plaintiffs' injuries were not caused by the accident. One of their orthopedists conceded that the injuries were caused by the accident, and their neurologist's opinion was too equivocal to satisfy their burden with respect to causation (see e.g. Biascochea v Boves, 93 AD3d 548 [2012]; Mitchell v Calle, 90 AD3d 584, 585 [2011]).

Plaintiffs submitted the affirmations of a radiologist who reviewed MRI films of their lumbar spines taken about two months after the accident and found that plaintiff Quintana had bulging discs at numerous levels, and at least one disc herniation, and that plaintiff Ayala, then 18 years old, had bulging discs at three levels. In addition, plaintiffs' treating physician conducted EMG tests that showed that Quintana suffered from acute right L5-S1 radiculopathy and Ayala suffered from acute L4 radiculopathy. The physician also found upon testing on multiple occasions that plaintiffs had diminished ranges of motion in their spines (see Antonio v Gear Trans Corp., 65 AD3d 869 [2009]), and causally related those injuries to the accident (see Pommells v Perez, 4 NY3d 566, 574-575 [2008]; Yuen v Arka Memory Cab Corp., 80 AD3d 481 [2011]). With respect to the alleged gap in treatment, plaintiffs' treating physician opined that plaintiffs had reached maximum medical improvement when treatment stopped and that further treatment would only have been palliative. Either of these is a reasonable explanation sufficient to raise an issue of fact (Pommells, 4 NY3d at 577; Mitchell, 90 AD3d at 585).

Plaintiffs' 90/180-day claims are untenable in light of Quintana's testimony that she only missed two days of work because of the accident and Ayala's testimony that she did not miss any time from school because of the accident (see Gaddy v Eyler, 79 NY2d 955, 958 [1992]; Ramos v Rodriguez, 93 AD3d 473 [2012]).

Decided on May 15, 2012
Mazzarelli, J.P., Catterson, Richter, Manzanet-Daniels, JJ.

604104/06 -1859
Federated Retail Holdings, Inc. v Weatherley 39th Street, LLC

Wilk Auslander LLP, New York (M. William Scherer of
counsel), for appellant.
Loeb & Loeb LLP, New York (David M. Satnick of counsel),
for respondents.
Order, Supreme Court, New York County (Bernard J. Fried, J.), entered April 11, 2011, granting plaintiff tenant's motion and declaring it cured a lease default concerning the self-insured retention provisions of commercial insurance policies obtained for the benefit of defendant landlord and that landlord cannot terminate plaintiff's lease based upon that default, unanimously affirmed, with costs.
The primary issue on this appeal is whether tenant was able to cure a lease default caused by the presence of a self-insured retention in the excess/umbrella insurance policies obtained for the benefit of landlord. Landlord makes vague, ultimately irrelevant, policy arguments and cites to an opinion of the New York State Insurance Department which is not binding on any court (see Go11 v N.Y. State Bar Assn., 193 AD2d 126, 128 [1993]). Landlord cites no case law, regulation or other rule of law standing for the proposition that a self-insured retention may not be eliminated through the use of an endorsement to the original occurrence based policy, which covers the same policy period. Accordingly, the motion court properly granted the motion and correctly declared that the lease default has been cured and the lease cannot be terminated based upon that default.
We have considered landlord's remaining arguments and find them unavailing.
M-1859 - Federated Retail Holdings, Inc., et al., v Weatherley 39th Street, LLC, etc.
Motion for an order modifying a Yellowstone injunction denied.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
Gilbert v Allstate Insurance Company

Rider Weiner & Frankel, P.C., New Windsor, N.Y. (Michael J.
Matsler and Jeff Sculley of counsel), for appellant.
Feldman, Rudy, Kirby & Farquharson, P.C., Jericho, N.Y.
(Gerald F. Kirby of counsel), for
respondent.


DECISION & ORDER
In an action to recover additional proceeds of a fire insurance policy, the plaintiff appeals from an order of the Supreme Court, Orange County (Slobod, J.), dated May 12, 2011, which denied his motion for summary judgment on the issue of liability and granted the defendant's cross motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.
The plaintiff owned property as a tenant in common with a business partner, Alice Gardner, who is not a party to this action. In 1996 the plaintiff procured a policy of fire insurance on the property from the defendant solely in his own name. On October 2, 2009, the premises were destroyed by a fire. The defendant paid the plaintiff one-half of the value of the property on the ground that the plaintiff had only a one-half insurable interest in the property. The plaintiff, arguing that a tenant-in-common has an undivided right to the full use, enjoyment, and possession of the entire property (see Butler v Rafferty, 100 NY2d 265, 269), brought this action to recover the full value of the destroyed premises. The Supreme Court denied the plaintiff's motion for summary judgment on the issue of liability and granted the defendant's cross motion for summary judgment dismissing the complaint. We affirm.
Insurance Law § 3401 limits a contract or policy of insurance to the insured's "insurable interest" (id.). When two cotenants own real property which is damaged by a fire and insurance is procured in the name of only one contenant, recovery under the policy is limited to the insured cotenant's one-half interest in the real property (see Graziane v National Sur. Corp., 120 AD2d 773, 775; Krupp v Aetna Life & Cas. Co., 103 AD2d 252).

The plaintiff's remaining contentions are without merit.
FLORIO, J.P., BALKIN, LOTT and MILLER, JJ., concur.