Coverage Pointers - Volume XIII, No. 25

Dear Coverage Pointers Subscribers:

We hope that you are enjoying this glorious month of June with an excellent summer still before us.  We are pleased to share the penultimate issue in this volume of Coverage Pointers.  Our next offering will complete our 13th year of service to the insurance and legal community with this publication.

Happy Anniversary to Us:

Hurwitz & Fine, P.C. celebrated its 35th anniversary on June 1.  That’s pretty neat. 

Founded by Shelly Hurwitz, who passed away a few months after our 25th anniversary and Bob Fine (who continues to actively practice) and two associates, we’ve grown to enjoy the company of friends and clients all over North America.  

We’re particularly proud of our attorney longevity – besides Bob, of our 30 attorneys, 14 of us have been here in excess of a decade and nine of those, in excess of 20 years. Celebrating 10+ years’ service anniversaries at H&F this year include yours truly (35 years – two of those years as a law clerk), Larry Franco (33 years), Ann Evanko (32 years), Paul Suozzi (32 years), Roger Ross (31 years), Harry Mooney (22 years), Larry Ross (22 years), Diane Church (21 years), Andrea  Schillaci (15 years), Jodi Briandi (15 years), Kevin Zanner (13 years), Audrey Seeley (11 years) and Mike Perley (10 years).

Thanks to all that have helped us grow and prosper.

Court of Appeals and the “Stage Hand” Exclusion:

We’re delighted to report on our success at the Court of Appeals, the state’s highest court, on a case involving a “stage hand” exclusion.  The insurer denied coverage based on an exclusion in the policy's "Restaurant, Bar, Tavern, Night Clubs, Fraternal and Social Clubs Endorsement." That exclusion provided that “the coverage under this policy does not apply to bodily injury . . . or any injury, loss or damage arising out of . . . [i]njury to any entertainer, stage hand, crew, independent contractor, or spectator, patron or customer who participates in or is a part of any athletic event, demonstration, show, competition or contest.” The plaintiff was bringing sound equipment out of the show site when he fell off the loading dock.   Did it arise out of the show?  In December, the Fourth Department found the exclusion ambiguous, and in a 3-2 vote, awarded coverage.  The Court of Appeals unanimously reversed.  Read about the Dzielski case in this week’s edition.

Aggregation of Claims in Asbestos Context:

Recommended for your careful review is the Mt. McKinley decision out of the First Department.  Should thousands of asbestos-related claims be one occurrence or thousands of separate occurrences for purposes of deductible?  The court considers the aggregation language in the “occurrence” definition and suggests that claims arising out of the same location and taking place around the same time may be grouped as one occurrence, depending on policy language.

One Hundred Years Ago, Wireless Telephony Was In The News:

New York Times
June 8, 1912
Page 1

Wireless Music 434 Miles
Much Success Attends French Tests of Wireless Telephony
By Marconi Transatlantic Telegraph to the United States

Paris – Further information concerning the wireless telephone experiments at Toulon states that the Prince of Monaco installed aboard the Hirondelle a wireless station with a radius of 600 to 700 kilometers.  This apparatus gave a continuous current with musical sounds, producing all the notes of the octave.

The sounds were easily heard by an operator, who was able to distinguish them from the subsidiary sounds which are always produced during an electrical disturbance of the atmosphere.

Experiments in wireless telephony were made during the recent naval maneuvers off Villefranche between warships Verite and Justice.  At that time, wireless telegraphy could not be worked on account of atmospheric disturbance caused by heavy gunfire but telephone worked admirably at a distance of nearly 150 kilometers (93 miles).

Baseball’s Been Very, Very Bad to Me:

Paul Suozzi, the head of our Municipal Law Team (and overall sports enthusiast) returns for a guest column this week, reporting on a Court of Appeals decision rendered on June 5 with regard to liability (if any) arising out of a line drive striking the pitcher. Look for his column in today’s edition.

Peiper’s Perspective:

Another traveling note this week. this time from the friendly confines of NYC's Penn Station.   Between a number of downstate appearances, and preparation for an upcoming trial upstate, I hope you all will forgive (if not welcome) the brevity of the following. 

This week's column offers a little bit of everything.  If you read for the first party write ups, we've got two interesting decisions out of the First Department this week.  The first addresses the term "vandalism", and what acts will fall within that distinction as a named peril.  The second decision, and we're still scratching our head over it, finds that an insured's nearly four year delay in commencing a lawsuit was excusable due to the conduct of the carrier.  While no one will argue that insurance coverage will put you to sleep, four years seems excessive for just about everyone save Rip Van Winkle.

If you're not into first party decisions, check out the Third Department's well needed updating of the Slander Per Se rules.  In a landmark decision, the Appellate Division decided that wrongfully referring to someone's sexual orientation is no longer so stigmatizing that it does not constitute a tort without the existence of special damages.  

The pigeons flying around the inside of the station are becoming more aggressive, so with this I bid you adieu.  So long until June 22nd.   

Steve Peiper
[email protected]

Liening Tower of Perley:

As he does from time to time, Mike Perley offers some insight into recent Secondary Payer issue in today’s issue. He reports:

From the shores of Lake Erie, we travel to the Central District of California for a decision from the United States District Court that dismissed a suit brought directly against the Department of Health and Human Services to resolve a Medicare interest.  The dismissal based on sovereign immunity helps us to more clearly define the interest of Medicare.

See his column in today’s Coverage Pointers.

One Hundred Years Ago Today:

Universal Pictures was incorporated by Carl Laemmle as the "Universal Film Manufacturing Company", bringing together a consortium of six motion picture companies (Laemmle's Independent/IMP, Powers, Rex, Champion, Nestor and New York); supposedly, Laemmle was inspired to the name when a wagon of the "Universal Pipe Fittings" company passed beneath his window.

Earl’s Pearls:

I am forever amazed at Earl Cantwell’s ability to come up with a new story for each issue.  Today’s column speaks to coverage for demolition.  Thanks, Earl. 

A Century Ago: World’s Record Set:

Lima (Ohio) News
June 9, 1912

SMASHED WERE THREE WORLD'S
ATHLETIC RECORDS IN TRYOUTS

Stadium, Soldiers’ Field, Cambridge Mass, June 8 – Three world’s athletic records were smashed amid the enthusiasm of more than 30,000 spectators in the Olympic tryouts here this afternoon.

Abel Kiviat, New York Irish-American athletic club severing 1,500 meters in 3 minutes 55 4/5 seconds lowered the world’s record set by himself, by one second. Marc S. Wright, Dartmouth, in the pole vault, did 13 feet, 2 1/4 inches, beating the record set by Gardner Yale by 2 1/4 inches. William J. Kramer, Long Island Athletic Club, lowered the 10,000 meter record by 13 1/3 seconds, when he covered the distance in 31 minutes.

Editor’s Note:

The current outdoor record for the 1500 meter is held by Moroccan Hicham El Guerrouj with a time of 3:26, almost a half-minute faster than Kiviat’s world record.

Abel Kiviat of the United States broke the world record for running the 1,500 meter race, in the 1912 Olympic trial and set the first record recognized by the IAAF, with a time of 3:55.8 at the U.S. Olympic Trials in Cambridge, Massachusetts. He ended up with a silver medal in that event a month later. The record would stand for five years. He lived to age 99, and before his death, was the oldest living American Olympian.

Mr. Kiviat was born June 23, 1892, on the Lower East Side of Manhattan. His family soon moved to Staten Island. There he became New York City's all-star schoolboy shortstop in baseball and its half-mile and mile champion in track while at Curtis High School.

Audrey’s Angle:

The continuing theme is the sufficiency of IME/peer review reports.  The denial of surgery always seems the most difficult.  There is one arbitration decision this edition addressing a surgical denial that is worth a review.  Again, the report needs to comport with the current case law.  A discussion is required as to how the procedure deviated from the generally accepted medical practice.  Further, we report on one arbitration decision that should be reviewed by both sides on conduct during the claims handling phase of a no-fault file.

It is still not too late to sign up for the New York State Bar Association’s Practical Skills – Basic Tort and Insurance Law Practice!  It is being held June 12th in Melville, June 13th in Buffalo, June 14th in Albany, and June 15 in New York.  If you need information to register please email me at [email protected].

I will be back for the July 6th edition as I am gone for a vacation in New England.  If I don’t speak with you, have a happy and safe Fourth of July!

Audrey Seeley

Labor Law Pointers:

To subscribe, drop a note to Dave Adams[email protected]

We know you love insurance coverage but many of you also have an interest in New York State Labor Law cases involving Sections 240(1), 241(6) and 200 and indemnity agreement.  Dave Adams heads our Labor Law team and publishes one of our two sister newsletters, Labor Law Pointers on a monthly basis.  The June edition was just released and, to give you a sense of its breadth, it contained more than 25 case reviews, with summaries and commentary.  For example:

5/31/12            Albert Lazri v. Kingston City Consolidated School District
Appellate Division, Third Department
http://www.courts.state.ny.us/reporter/3dseries/2012/2012_04266.htm
Plaintiff fell to the ground and was injured while installing a drip edge on the roof of a building.  The plaintiff was not provided safety devices on the day of the accident.  Plaintiff brought suit, alleging negligence and violations of provisions of the Labor Law.  The real issue however is that plaintiff, an employee of a sub, was working on a Sunday and the job site was to be a Monday to Friday job site absent specific permission of the Construction manager.  The plaintiff said that he was directed by his employer to work on the Sunday and the construction Manager said that no one asked for permission to work on Sunday. The trial court found that because discovery had not yet been conducted, plaintiff’s motion for partial summary judgment was premature and held it in abeyance.  The Third Department however held that there was a question of fact as to whether the job site was closed at the time of plaintiff’s accident, and thus, plaintiff’s motion for summary judgment should not have been held in abeyance but rather denied.   

Practice Point: The interesting question not addressed is that if the construction manager did not give permission for anyone to work on Sunday, and the plaintiff’s employer told him to work on Sunday, where does it leave the plaintiff.  He would not have known that he was not to work on Sunday, or that his employer did not have permission for him to do so.  Recall that the plaintiff must be on the site validly to be a proper plaintiff.  Thus, if the site was closed and plaintiff knew he was not to be there, it would be Summary Judgment for the defendant.  However this case seems to be different, where the construction manager did not give permission to the plaintiff’s employer how can they, or for that matter the owner, be held liable under the labor law where they have no knowledge that anyone is even working.  The plaintiff does and cannot have a valid cause of action as against own employer who told him to work at that time.  Interesting case, should be fun to watch and see what happens if and when it comes back around. 

One Hundred Years Ago Today: Call for Impeachment of Federal Judge:

New York Times
June 8, 1912
Page 24

MOVES IMPEACHMENT OF JUDGE HANFORD

Berger Declares Oleson’s Papers Were Annulled
on a Frivolous Charge
Arraigns Federal Judges
Socialist Congressman Says Some Are Corrupt and are A Menace
Because Appointed For Life

WASHINGTON, June 7 – Representative Victor L. Berger, the only Socialist in Congress, today offered in the House his resolution calling for the impeachment of Federal Judge Cornelius H. Hanford of the Western District of Washington at Seattle.  It was Judge Hanford who annulled the naturalization certificate of Leonard Oleson on the ground that he admitted himself to be a Socialist, which action of the court is now being investigated by Attorney General Wickersham by direction of President Taft.

Rising to a question of highest privilege, Representative Berger accused Judge Hanford of ”high crimes and misdemeanors,” charging him especially with having annulled Oleson’s naturalization papers on a “frivolous charge,” in violation of the Constitution, also with being a “habitual drunkard,” with having been guilty of a “long series of unlawful and corrupt decisions,” with having issued an injunction in the intrest of the Seattle, Renton & Southern Railway in “the collusive suit of Augustus Peabody” against that road…”

Editor’s Note: On July 22, 1912, Judge Cornelius Holgate Hanford (1849-1926), appointed in 1890 as Washington State's first federal district court judge, resigned under pressure during the course of an impeachment investigation conducted in Seattle by members of the U.S. House of Representative's Judiciary Committee. Hanford's troubles started when he revoked the naturalized citizenship of a Tacoma man on the grounds that the man was an admitted Socialist. Widespread outrage over this decision led to charges that Judge Hanford was a drunkard and made corrupt rulings favoring large corporations and influential attorneys of his acquaintance. He resigns after several weeks of hearings and just before scheduled testimony that is believed might implicate powerful interests in the Pacific Northwest. The House drops its investigation after Hanford's resignation, and the former judge will go on to enjoy moderate success as an author.

Berger, a Wisconsin Socialist, served in Congress from 1912 – 1914, and then lost races in 1914, 1916 and 1918.   Berger's continued opposition made him a target. He and four other Socialists were indicted under the Espionage Act in February 1918; the trial followed on December 9 of that year, and on February 20, 1919, Berger was convicted and sentenced to 20 years in federal prison. The trial was presided over by Judge Kenesaw Landis who later became the first commissioner of Major League Baseball. His conviction was appealed, and ultimately overturned by the Supreme Court on January 31, 1921, which found that Judge Landis had improperly presided over the case after the filing of an affidavit of prejudice.

In spite of his being under indictment at the time, the voters of Milwaukee elected Berger to the House of Representatives in 1918. When he arrived in Washington to claim his seat, Congress formed a special committee to determine whether a convicted felon and war opponent should be seated as a member of Congress. On November 10, 1919 they concluded that he should not, and declared the seat vacant. Wisconsin promptly held a special election to fill the vacant seat, and on December 19, 1919, elected Berger a second time. On January 10, 1920, the House again refused to seat him, and the seat remained vacant until 1921, when Republican William H. Stafford claimed the seat after defeating Berger in the 1920 general election.  Second stint in Congress Berger defeated Stafford in 1922 and was reelected in 1924 and 1926.
Berger’s famous quote about World War I was “You’ve got nothing out the War except the flu and prohibition.”

In this Week’s Coverage Pointers, attached:

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane

[email protected]

Court of Appeals

  • Ahh.  Justice.  New York High Court Agrees That Injury That Occurs When Removing Sound Equipment from Band Performance “Arises Out of” That Performance

 

Appellate Division

  • “Aggregation Language” in “Occurrence” Definition Considered in Asbestos-Claim Context; “Same General Conditions” Leads to Grouping of Claims Arising in Same Location at Around the Same Time
  • Claimant Demonstrated “Due Diligence” in Trying to Ascertain Underinsured Status of Tortfeasor, Thereby Excusing Later Notice to SUM Carrier
  • Excess Carrier’s 38-Day Delay in Denying Coverage Based on Late Notice by the Insured Was Too Long
  • Questions of Fact Exist on Timeliness of Disclaimer Including Need for Investigation
  • Question of Fact Existed About Insured’s Knowledge of Claim Prior to Inception of E&O Policy, Precluding Summary Judgment
  • Auto Policy Cannot Be Retroactively Rescinded or Canceled.  However, Issues of Permissive Use Are Subject to Framed Issue Hearing
  • Failure to Notify the Secretary of State of an Address Change Leading to a Failure to Receive Notice of an Action Commenced Does Not Excuse Late Notice to a Liability Carrier
  • Five Months Plus Delay to Disclaim on Late Notice is Too Long

 

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

[email protected]

  • Plaintiff’s Failure to Establish Causation Results in Dismissal on Appeal
  • Plaintiff Successfully Rebuts Motion
  • Range of Motion Limitations Raise Issue of Fact as to Permanency of Injury Following Arthroscopic Surgery
  • Preclusion of Plaintiff’s Experts’ Reports Ruled Improvident Exercise of Discretion
  • Fracture “of Indeterminate Age” Fails to Meet Causation Requirement for Threshold
  • Failure to Provide Reasonable Explanation for Cessation of Treatment Renders Opinion on Causation Speculative
  • Examining Expert’s Report Noting Significant Limitations Will Not Support Summary Judgment Motion

 

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

ARBITRATION

  • Both Sides Found at Fault And Result Is to Essentially Begin Again on EUO Request
  • Three Plus Year Treatment Gap and Surgery Consideration Renders Imaging Study Not Causally Related to Injury from Accident
  • Surgery Denial Not Upheld as Lacking Discussion on Inconsistency with Generally Accepted Practice

 

LITIGATION

  • Signed Certified Mail Receipt Trumps Mere Assertion of Non-receipt of Bill and Insurer Did Not Support Lack of Coverage Defense to Survive Summary Judgment
  • Plaintiff’s Affidavit Insufficient to Defeat Summary Judgment Motion on Outstanding Verification

 

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

  • Second Department Defines the Named Peril of “Vandalism”
  • Question of Fact Precludes Application of Two Year Suit Limitation Clause

 

Potpourri

  • Two and a Half Year Delay In Answering a Notice to Admit is Impermissibly Late
  • Question of Fact Over "Actual" Terms of the Contract Precludes Summary Judgment on Contractual Indemnity Claim
  • Wrong Allegation of Sexual Orientation is NO LONGER Slander Per Se in the Third Department

 

CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus

[email protected]

  • On hiatus this week.

 

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

  • Allocation of Defense Costs

 

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

  • Insured Must Read Policy
  • Failure to Rebut Expert Reports Costly
  • Must Comply with CPLR Requirements
  • Procedures for Objecting to Carrier’s Verification Requests
  • Carriers Cannot Abuse No-Fault Verification Process

 

PAUL’S MUNICIPAL LAW POINTERS
Paul J. Suozzi
[email protected]

  • Pitcher Assumes Risk of Line Drive

 

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

  • Suit Against United States Barred by Doctrine of Sovereign Immunity – Medicare’s Interest is Not a Lien

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]  

  • Coverage “Demolished” for Demolished Building

 

We’ll see you in a couple of weeks..

All the best.  Remember, if you’ve got a situation, we love situations.

 

Dan

Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Office:      716.849.8942
Mobile:     716.445.2258
Fax:          716.855.0874

E-Mail:     [email protected]
Website:  www.hurwitzfine.com
LinkedIn: www.linkedin.com/in/kohane

 

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

Paul’s Municipal Law Pointers
Liening Tower of Perley
Earl’s Pearls
Across Borders

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

Court of Appeals

06/05/12       Dzielski v. Essex Insurance Company
New York State Court of Appeals
Ahh.  Justice.  New York High Court Agrees That Injury That Occurs When Removing Sound Equipment from Band Performance “Arises Out of” That Performance
This one was particularly sweet, because it’s ours.  We reported on the 3-2 Fourth Department decision in our January 6, 2012 edition.  We were on the short end of that decision, but the Court of Appeals has unanimously reversed, adopting the dissenters’ opinion at the Appellate Division. 

Plaintiffs commenced this action seeking judgment declaring that Essex was obligated to indemnify its insured in an underlying personal injury action commenced by plaintiffs, in which insured had defaulted.  Dzielski fell from the loading dock after exiting the rear door of a nightclub owned and operated by defendant's insured. He has provided sound equipment for a band that performed at the nightclub, and the accident occurred while plaintiff was carrying equipment from the nightclub to his truck after the concert had concluded. He claimed that defects in the loading dock led to his injuries.

Essex denied coverage based on “stage hand exclusion in the policy's "Restaurant, Bar, Tavern, Night Clubs, Fraternal and Social Clubs Endorsement." That exclusion provided that “the coverage under this policy does not apply to bodily injury . . . or any injury, loss or damage arising out of . . . [i]njury to any entertainer, stage hand, crew, independent contractor, or spectator, patron or customer who participates in or is a part of any athletic event, demonstration, show, competition or contest.”

At the Appellate Division, a three-judge majority agreed with the lower court and the plaintiff that the language "participates in or is a part of any . . . show" is ambiguous because it could be read two different ways.  Essex argued, and the court acknowledged, that the language could encompass all persons who performed any tasks in connection with the show, including loading and unloading sound equipment.  However, the majority found that it could be read narrowly to encompass only those persons who actually performed in the show or were injured as a result of activities occurring during the show.

The court did reduce the amount recovered to the monetary limitations contained in the policy and not the entire judgment.

The two-judge dissent, now adopted by the Court of Appeals as the opinion of that Court, found no ambiguity in the endorsement, agreeing with Essex that the exclusionary language is clear, subject to no other reasonable interpretation, and applies in this particular case.

The exclusion thus applies where two conditions are met: (1) the injured party is an entertainer, stage hand, crew member, independent contractor, spectator, patron or customer who "participates in or is a part of" an athletic event, demonstration, show, competition or contest; and (2) the injury "arises out of" such participation.

If the exclusion was intended to apply only to those persons who "actually performed" in a show, then the language "spectator, patron or customer" in the exclusion would be superfluous.  Second, such an interpretation imposes a temporal limitation on the exclusion where no such limitation appears therein. Other exclusions are more limiting.  For example, the medical payments coverage provision specifically excludes expenses for bodily injury "[t]o a person injured while taking part in athletics."  Here, by contrast, the absence of such limiting language in the exclusion in question reflects an intent to provide a broad exclusion for all injuries arising from participation in shows or other special events.  Moreover the term “arising out of” language is broadly read to mean “originating from, incident to, or having connection with".
Editor’s Note: Kohane and Fijal, on the appeal.

Appellate Division

06/07/12       Mt. McKinley Insurance Company v. Corning Incorporated
Appellate Division, First Department
“Aggregation Language” in “Occurrence” Definition Considered in Asbestos-Claim Context; “Same General Conditions” Leads to Grouping of Claims Arising in Same Location at Around the Same Time
The insurers provided primary, excess and umbrella CGL coverage to Corning during the period from 1962 through 1985. The question before the court was the coverage obligations to provide coverage for asbestos-containing products. One product was spacer material sometimes distributed (but not manufactured) by Corhart (originally 50% owned by Corning, later a Corning division).  The other product was Unibestos, an asbestos-containing piping insulation manufactured by Pittsburgh Corning Corporation, an entity that was 50% owned by Corning.

Most of the insurers moved for partial summary judgment declaring that each of the many thousands of subject claims constitutes a separate "occurrence" under the subject policy and is therefore individually subject to a deductible before the moving insurers' coverage is implicated.

New York courts apply the unfortunate-event test to determine whether a set of circumstances amounts to one occurrence or multiple occurrences unless the parties agree to define “occurrence” differently.  Each of the policies at issue here contains similar language:

For purposes of determining the limit of the company's liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.

The court below found that discovery was not complete so the moving insurers failed to establish that each of the thousands of claims constitutes a separate "occurrence" under the relevant policy language as a matter of law.

Courts have interpreted identical or similar grouping provisions as combining into a single occurrence exposures emanating from the same location at a substantially similar time. Thus, while all of the thousands of claims apparently cannot be said to have arisen from a single occurrence, any group of claims arising from exposure to an asbestos condition at a common location, at approximately the same time (for example, at the same steel mill or factory), may be found to have arisen from the same occurrence.  

Distinguishable are cases in which the policy or policies, although including "exposure" to "conditions" in the definition of "occurrence," did not contain the aggregating language "shall be considered as arising out of one occurrence."

06/06/12       Gilliard v. Progressive
Appellate Division, Second Department
Claimant Demonstrated “Due Diligence” in Trying to Ascertain Underinsured Status of Tortfeasor, Thereby Excusing Later Notice to SUM Carrier
In the underinsured motorist context, it is the claimant’s obligation to demonstrate that he or she has given notice of a claim as soon as practicable, which is measured by the date the claimant knew or should have known that the tortfeasor was underinsured. In determining whether notice was timely, factors to consider include, whether the claimant has offered a reasonable excuse for any delay, such as latency of his/her injuries, and evidence of the claimant's due diligence in attempting to establish the insurance status of the other vehicles involved in the accident.  

Here, the plaintiff established that he provided notice of his claim to the carrier as soon as practicable, and that he exercised due diligence in ascertaining the alleged tortfeasor's insurance status. With respect to the issue of due diligence, the plaintiff met his burden by submitting the correspondence which he sent within two weeks of the underlying accident to the alleged tortfeasor, the vehicle owner, and the insurer of the alleged tortfeasor and vehicle owner, seeking its policy limits, as well as a subsequent discovery demand for the policy limits he served in the course of litigating a related personal injury action

06/05/12       Brother Jimmy's BBQ, Inc. v. American International Group
Appellate Division, First Department
Excess Carrier’s 38-Day Delay in Denying Coverage Based on Late Notice by the Insured Was Too Long
Once the primary carrier exhausted its coverage, the excess carrier was required to step in.  Illinois National Insurance Company's disclaimer of coverage was untimely.  The ground alleged as support for disclaimer was clear from the face of the notice of claim and other documents submitted to Illinois National, making the 38-day delay before issuance of the notice of disclaimer unreasonable as a matter of law under Insurance Law § 3420(d).

06/05/12       The City of New York v. General Star Indemnity Co.
Appellate Division, First Department
Questions of Fact Exist on Timeliness of Disclaimer Including Need for Investigation
In the underlying action, an employee of MVN was injured in the course of his employment.  MVN secured liability insurance coverage under a "master policy" that General Star issued to the "Marine Contractors Alliance."  The master policy identified only the named insured, while MVN, as an insured under the policy, and the City, as an additional insured, were identified only on certificates of insurance which contained numbers and effective dates that did not match the master policy.

The City claims that General Star received notice of the claim on June 27, 2002. Assuming so, questions of fact exist as to whether the information received which failed to identify the named insured or the number of the master policy, provided a sufficient basis for disclaimer, or if sufficient documentation was not provided until July 8, 2002, as claimed by General Star.  General Star commenced its investigation on July 8 and denied coverage on August 7. General Star claims that it had to gather information from multiple sources to identify the policy and program applicable to the underlying claim and issues exist as to whether it conducted a "diligent" investigation.

 

05/31/12       Ulster County v. CSI, Inc. and Admiral Ins. Co.
Appellate Division, Third Department
Question of Fact Existed About Insured’s Knowledge of Claim Prior to Inception of E&O Policy, Precluding Summary Judgment
In March 2006, Ulster County (“County”) reported to its claims administrator, CSI, that an employee had filed a discrimination claim against it. CSI allegedly failed to notify plaintiff's insurer until February 2008, after plaintiff again brought its employee's claim to CSI's attention. Two months later, the County’s insurer, denied coverage based on late notice.

County sued CSI for malpractice and CSI sought coverage under its Errors & Omission policy from Admiral. Admiral's policy contained a prior knowledge exclusion, however, and Admiral disclaimed coverage on the ground that CSI knew or should have known that plaintiff would have a claim against it prior to September 5, 2008, the effective date of Admiral's claims made policy.

The parties agreed that the appropriate legal standard for determining whether the prior knowledge exclusion relied on by Admiral is applicable requires a subjective determination of the insured's knowledge of the relevant facts and an objective determination of whether a reasonable person in the insured's position should have expected such facts to be the basis of a claim. .

Unsworn statements and letters from CSI employees submitted in support of Admiral’s motion do not qualify as evidentiary proof in admissible form absent evidence that the employees were authorized to speak on CSI's behalf (see Gstalder v State of New York, 240 AD2d 541, 542 [1997]; Vozdik v Frederick, 146 AD2d 898, 900 [1989]). Accordingly, questions of fact exist as to whether CSI knew, prior to the Admiral Policy being issued, that the County’s insurer had denied coverage.

05/30/12       In the Matter of GEICO v. Allen
Appellate Division, Second Department
Auto Policy Cannot Be Retroactively Rescinded or Canceled.  However, Issues of Permissive Use Are Subject to Framed Issue Hearing
Allen was hurt on August 7, 2010, when in a car operated by Jordan and insured by Infinity, under a policy issued to Pemberton.  In a letter dated September 1, 2010, Infinity disclaimed coverage on the grounds that Pemberton had died in 2003 and that Jordan was operating the vehicle without permission of the owner.

Allen made a claim against GEICO for uninsured motorists coverage and GEICO sought to stay arbitration on the ground that Infinity insured the Pemberton vehicle.  Infinity contended that the policy it issued to Pemberton had been validly "rescinded ab initio" based on Pemberton's death in 2003 and that it validly disclaimed coverage based on lack of permissive use.

The disclaimer based rescission was struck down.  The right to cancel a contract of automobile insurance retroactively on the grounds of fraud or misrepresentation, where mandatory coverages are in play, has been overwritten by the Insurance Law.  The cancellation of a contract pursuant to its provisions may only be effected prospectively.  This provision places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured's negligence"

However, the issue of permissive use can be validly litigated and there is insufficient proof to decide that question without a hearing.  The fact that Pemberton had died seven years prior to the accident does not conclusively resolve this issue in favor of Infinity, since after Pemberton's death, the vehicle could have come under the ownership of another individual who gave Jordan express or implied permission to operate it.

05/30/12       AH Property, LLC v. New Hampshire Insurance Co.
Appellate Division, Second Department
Failure to Notify the Secretary of State of an Address Change Leading to a Failure to Receive Notice of an Action Commenced Does Not Excuse Late Notice to a Liability Carrier
New Hampshire Insurance Company (“NHIC”) established that its insured, the plaintiff, AH Property, LLC (“AH”), did not comply with the condition in the policy requiring the insured to give it notice of an occurrence "as soon as practicable." AH Property did not notify NHIC until November 20, 2009, of an action commenced against it on March 17, 2009, to recover damages for personal injuries. The accident took place in October 2008 and AH was served through the Secretary of State on March 24, 2009.

AH Property alleged that the delay resulted from the failure of its former attorney, who had listed his name and office address as the address to which the Secretary of State shall forward copies of any process against it, to notify the Secretary of State of his new office address, and his failure to inform AH Property of the need to update its corporate address with the Secretary of State.  The Court of Appeals has previously held that failure to notify the Secretary of State of an address change does not provide a reasonable excuse.

05/29/12       The City of New York v. Greenwich Insurance Company
Appellate Division, First Department
Five Months Plus Delay to Disclaim on Late Notice is Too Long
Under Insurance Law § 3420(d)(2), an insurer wishing to deny coverage for death or bodily injury must give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage. When an insurer fails to do so, it is precluded from disclaiming coverage based upon late notice, even where the insured has in the first instance failed to provide the insurer with timely notice of the accident.

Plaintiffs' May 17, 2007 notice of claim letter contained only the date of loss and did not indicate when plaintiffs first learned of the subject accident.  Greenwich's investigation did not even begin until June 21, 2007, more than 31 days after receipt of the May 17, 2007 letter, and continued for approximately five and one half months.  While the carrier may conduct an investigation, the 31-day delay and the five plus month investigation was not "expedited."  Greenwich did not explain why anything beyond a cursory investigation" was necessary to determine whether plaintiffs had timely notified it of the claim.

The disclaimer was found invalid.

 

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

[email protected]

06/06/12       DiGioia v. Reyes
Appellate Division, Second Department
Plaintiff’s Failure to Establish Causation Results in Dismissal on Appeal
DiGioia alleged injuries to the cervical and lumbosacral regions of his spine, as well as to his right shoulder.  Defendants established that the cervical and lumbosacral injuries were not serious injuries and, in any event, were not caused by the accident.  Defendants also established that the alleged injury to the right shoulder was not a serious injury and that plaintiff did not sustain a serious injury under the 90/180-day category.

In opposition, plaintiff, DiGioia, failed to raise a triable issue of fact with regard to the causation of the cervical and lumbosacral injures.  In addition, he failed to raise triable issues of fact with respect to the right shoulder and claim under the 90/180-day category.  As such, the trial court should have dismissed the complaint insofar as asserted by DiGioia.

06/06/12       Lim v. Flores
Appellate Division, Second Department
Plaintiff Successfully Rebuts Motion
Defendants met their burden by submitting competent medical evidence, including the affirmed report of their examining orthopedist who, upon objective testing, found no limitations in the range-of-motion of plaintiff’s left shoulder and cervical and lumbar regions of her spine.  However, contrary to the determination of the trial court, plaintiff raised a triable issue of fact with respect to both the shoulder and spine injuries sufficient to defeat defendants’ motion.

05/31/12       James v. Perez
Appellate Division, First Department

Range of Motion Limitations Raise Issue of Fact as to Permanency of Injury Following Arthroscopic Surgery
The 28-year old plaintiff was a passenger in a taxi that collided with another vehicle.  She claimed permanent and significant injuries to her right knee and lumbar spine, as well as under the 90/180-day category.  In support of their motion, defendants submitted reports of an orthopedic surgeon and a neurologist, both of which found plaintiff had full range of motion in the knee and lumbar spine.  They also submitted evidence that the minor disc bulges and flap tear and lateral displacement in the knee were not causally related but rather degenerative and aggravated by her weight.

In opposition, plaintiff submitted the affirmation of her treating orthopedist, which reviewed her MRIs and the unaffirmed reports of her arthroscopic surgeon, and concluded that she sustained permanent injuries caused by the accident.  In support, he included quantified limitation which correlated with the MRI findings.  He also compared the post-surgery limitation in the right knee with her uninjured left knee and concluded that the injuries were permanent.  In addition, he opined that the injuries were traumatic in nature and consistent with the MRI findings and the fact that plaintiff had no prior history of injuries to the lumbar spine or right knee.

With respect to the 90/180-day claim, defendants did not dispute that plaintiff was out of work for more than three months during which time she had the arthroscopic surgery, or that she was unable to perform her usual and customary activities, but they submitted that the injuries were not causally related.  However, the evidence submitted by plaintiff discussed above was sufficient to raise an issue of fact warranting reversal of the trial court’s grant of summary judgment to defendants.

05/31/12       Serbia v. Mudge
Appellate Division, First Department”

Preclusion of Plaintiff’s Experts’ Reports Ruled Improvident Exercise of Discretion
Defendants established that plaintiff had full range of motion in her lumbar spine and that the herniated disc seen in an MRI was not caused by the accident.  However, the trial court erred in precluding the reports of plaintiff’s experts because defendants relied on them and similarly were untimely in serving their radiologist’s report.  As such, defendants could not show prejudice by the late exchange of documents.  The report of plaintiff’s radiologist sufficiently rebutted defendants’ expert opinion regarding the cause of plaintiff’s herniated disc, while the report of her physician causally related her injuries based on his examination performed shortly after the accident.  In addition, plaintiff explained that the gap in her treatment was due to the cut-off of her no-fault benefits and her inability to pay out-of-pocket for treatment.  Therefore, on appeal, the trial court was reversed and defendants’ motion denied.

05/30/12       Alexander v. Gordon
Appellate Division, Second Department
Fracture “of Indeterminate Age” Fails to Meet Causation Requirement for Threshold
Plaintiff claimed serious injury to her cervical and lumbar spine.  Defendants moved for summary judgment on the issue of serious injury and plaintiffs cross-moved on the issues of serious injury and liability.  The trial court granted defendants’ motion and denied, as untimely and academic, plaintiffs’ cross-motion. 

On appeal, defendants’ motion was denied as they failed to meet their prima facie burden.  Their examining orthopedic surgeon found significant limitations in both the cervical and lumbar spine on examination.  In addition, they did not address plaintiff’s 90/180-day claim, or that she sustained a fracture. 

With regard to plaintiffs’ cross-motion, on appeal the court agreed that it was untimely and that plaintiffs did not show ‘good cause’ for the delay.  However, because defendants’ motion was based on the issue of serious injury, that branch of plaintiffs’ motion could be entertained even though untimely.  However, that branch of the cross-motion on the issue of liability could not be entertained as that issue was not raised in defendants’ motion. 

However, although plaintiffs submitted evidence that one of her vertebrae sustained a fracture, because the evidence showed that it was “of indeterminate age,” they failed to sustain their burden of causally relating the injury to the accident.  Therefore, plaintiffs’ cross-motion on the issue of serious injury was also denied.

05/30/12       Islam v. Apjeet Singh Makkar
Appellate Division, Second Department
Failure to Provide Reasonable Explanation for Cessation of Treatment Renders Opinion on Causation Speculative
Defendants established that plaintiff did not sustain a serious injury to his cervical or lumbar spine, his right knee or his right shoulder.  In opposition, plaintiff did not provide a reasonable explanation for his cessation of treatment.  This rendered the opinion on causation of his treating physician speculative.  In addition, plaintiff’s deposition testimony that he was only out of work as a cab driver for two weeks following the accident defeated his 90/180-day claim.  As such, defendants’ motion was correctly granted.

05/30/12       Wedderburn v. Simmons
Appellate Division, Second Department
Examining Expert’s Report Noting Significant Limitations Will Not Support Summary Judgment Motion
Because defendant’s examining orthopedist reported significant limitations in plaintiff’s cervical spine, and defendant failed to support his allegations that plaintiff’s injury was not caused by the accident, his motion for summary judgment should have been denied, even without considering the sufficiency of plaintiff’s opposing papers.

 

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

ARBITRATION
06/05/12       Zenith Medical PC v. GEICO Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Both Sides Found at Fault And Result Is to Essentially Begin Again on EUO Request

The Applicant sought reimbursement for medical services allegedly provided to the assignor as a result of a motor vehicle accident.  The insurer denied the treatment upon a policy violation for Dr. Conrad William’s failure to attend two scheduled EUOs.  The assigned arbitrator determined that the insurer had the right to and properly noticed Dr. Williams for EUOs.  It was discussed that the Applicant or its counsel objected to the EUOs either in writing or a phone call and ultimately Dr. Williams was never produced for the EUO. 

The insurer wanted an EUO of Dr. Williams as it contended that:

Zenith is located in Buffalo NY.  Dr. Williams also allegedly owns and operates Targeee [sic] Medical Services PC (“Targee”) which is located at 460 Midland Avenue State [sic] Island, NY 10306.  GEICO has received billing form [sic] both Zenith and Targee for services allegedly rendered by Dr. Williams for the same dates of service on more than one occasion.  Given the distance between the two facilities (approximately 408 miles) this is questionable.  Requests to perform a site inspection of the Zenith location and an interview with Williams were denied.

The Applicant, at the arbitration, produced Yves-Richard Blanc, Zenith’s administrator and business development director for testimony.

The assigned arbitrator in his rationale with regard to the failure to appear for an EUO stated:

For whatever reason, Applicant’s counsel has gone to great lengths to prevent the EUO of Dr. Williams.  Counsel produced Mr. Blanc, director business development/Administrator [sic], on two occasions.  Counsel has no authority for her contention that the Applicant or the party served with a specific EUO request has the first right to determine who to produce.  Further, as a finding of fact, Mr. Blanc failed to adequately answer questions as to Dr. Williams’ specific involvement in evaluations and supervision of nurse practitioners and record reviews.

The assigned arbitrator further stated that the insurer provided the Applicant with opportunity to reschedule the EUO at a reasonably convenient date, time and location.  If the Applicant believed the EUO to be improper, it or its counsel still had a duty to communicate with the insurer regarding the EUO request.

The Applicant argued that the insurer allegedly abused its verification request for a multitude of documents.  The insurer requested a number of documents during the verification process which Applicant claims had no relevance to the service rendered.  Applicant’s counsel interposed an Affidavit recounting her efforts to resolve her client’s issues with the insurer’s verification requests.  The Affidavit indicates that she eventually had a meeting with the insurer’s representative who stated she could ignore the verification requests.

The assigned arbitrator before beginning his analysis of this argument stated:

Although Counsel effectively conveys the Carrier’s alleged abuses of verification requests, her affidavit also relies on emotional arguments that are not based on reason and logic.  For example, counsel contends: [sic] that: 1) the supervising physician has been targeted because he is African American; 2) the supervising physician is ‘very well loved’ by his patients, ‘works late into the evening’, and that she (referring to counsel) always had ‘a good feeling about him even though she had never met him’.  In addition, counsel claims she has been a ‘victim’ of Carrier’s verification requests.  Counsel [sic] reliance on emotion rather than careful legal analysis detracts from her arguments.

The assigned arbitrator proceeded to reason that an arbitrator possesses equitable powers to promote the swift handling of verification requests which furthers the goal of prompt payment of legitimate claims.  The assigned arbitrator further reasoned that an insurer should not be routinely re-requesting information on a provider such as licensing or business structure if previously provided or is readily available from public sources.  Further, “a Carrier should have a common database or repository for basic provider information such as licensing, structure and other relevant facts that are not claim specific.”  The insurer should have this information accessible by all personnel to prevent unnecessary duplicate verification demands.  The assigned arbitrator further warned, “in the event of continued filing of excessive and repeated demands, and [sic] arbitrator has the equitable powers to find such request invalid and even award sanctions if the Carrier has previously been provided said information.”

The assigned arbitrator recognized though that much of the information the insurer sought was not provided to it until after the arbitration was filed and through the testimony of Mr. Blanc.  Despite this, the insurer could not equitably expect the denial upon policy violation to be upheld when it served what the arbitrator deemed excessive, repetitive verification demands.  The assigned arbitrator stated, “this barrage of verification requests on numerous claims all with different dates made compliance difficult, and violated the principles of the Fair Claims Act.”

The assigned arbitrator denied the entire claim without prejudice to afford Dr. Williams the ability to comply with the insurer’s EUO demand.  The parties were reminded, “again, both parties must comply with the principles of the Fair Claims Act and communicate and work together for resolution of the claims.”

06/04/12       Buffalo Neurosurgery Grp. v. GEICO
Arbitrator Thomas J. McCorry, Erie County
Three Plus Year Treatment Gap and Surgery Consideration Renders Imaging Study Not Causally Related to Injury from Accident

The Applicant sought reimbursement for spinal imaging studies performed after three and one half year treatment gap post-accident.  The Applicant argued that a three and one half year treatment gap did not mean that the assignor did not have pain at some time and could not undergo additional spinal imaging.  It was noted that the assignor declined surgery.

The insurer denied the claim upon the peer review conducted by Dr. Joseph Mormino.  Dr. Mormino opined that the large gap in treatment rendered him unable to causally relate the imaging study to any injury from a motor vehicle accident.

The assigned arbitrator upheld the denial and also stated that in his view if surgery were a consideration then the current imaging studies would be necessary. 

05/29/12       Buffalo Neurosurgery Group v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Surgery Denial Not Upheld as Lacking Discussion on Inconsistency with Generally Accepted Practice

The Applicant sought reimbursement for an October 12, 2002, L4/5 microdiscectomy performed on the assignor as a result of a March 4, 1993, motor vehicle accident.  The Applicant argued that the assignor injured his back in the 1993 accident and underwent a L5/S1 discectomy in 1995.  The assignor recently before the L4/5 microdiscectomy experienced an increase in pain and imaging studies revealed a significant disc herniation at L5/S1 and L4/5.  Thereafter, additional surgery was recommended and conducted.

The insurer denied the surgery upon a peer review conducted by Dr. Ish Kumar.  Dr. Kumar opined that it “becomes obvious” there was no L5/S1 disc herniation at the time of the 1995 surgery.  The assignor had a normal discogram, myelogram, and MRI.  Rather, there were only degenerative changes.  Also, Dr. Kumar notes that the assignor worked on his car one day postop and was intellectually challenged which should have raised a warning sign about proceeding with surgery.  Dr. Kumar opines that the 1995 and 2002 surgeries were not warranted.

The assigned arbitrator declined to uphold the denial as Dr. Kumar’s report did not demonstrate how the surgery was inconsistent with generally accepted medical or professional practice.

LITIGATION

05/30/12       Westchester Med. Ctr. a/a/o Shaheen Akhtar v. Hereford Ins. Co.
Appellate Division, Second Department
Signed Certified Mail Receipt Trumps Mere Assertion of Nonreceipt of Bill and Insurer Did Not Support Lack of Coverage Defense to Survive Summary Judgment

The plaintiff’s summary judgment motion should have been granted as it established its prima facie case that it submitted prescribed statutory billing forms to the insurer within the required 30 day timeframe.  The insurer did not raise a triable issue of fact precluding summary judgment.  The insurer’s mere denial of receipt of the bill was insufficient to create an issue of fact when there was a presumption of receipt based upon the signed certified mail receipt.  Thus, the insurer was precluded from asserting most defenses as no denial was issued within the requisite 30 days, including the plaintiff failing to provide timely notice of the accident and proof of claim.  The Court reiterated that the insurer is not precluded from arguing lack of coverage but the insurer’s submissions were insufficient to raise a triable issue of fact regarding lack of insurance coverage.

5/29/12         Comprehensive Neurological Services, PA a/a/o Aleksander Gurvich v. Tri-State Consumer Ins. Co.
Appellate Term, First Department
Plaintiff’s Affidavit Insufficient to Defeat Summary Judgment Motion on Outstanding Verification

Plaintiff failed to raise a triable issue of fact precluding summary judgment in the insurer’s favor on what appears to be the issue of outstanding verification.  The plaintiff’s medical billing supervisor’s affidavit failed to aver that the affiant or anyone else in plaintiff’s billing department checked the “computer system” to determine whether verification letters were received.

 

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

06/06/12       Garnar v. New York Central Mutual Fire Ins. Co.
Appellate Division, Second Department
Second Department Defines the Named Peril of “Vandalism”
Plaintiffs commenced this action after they discovered a large quantity of fuel oil in the basement of their home.  NY Central disclaimed on the basis that the loss did not arise from a named peril in the policy.  Plaintiff opposed by arguing that the loss constituted vandalism under the policy which, in fact, is a named peril.

Upon review of the New York Central’s motion for summary judgment, the Court noted that “vandalism is the malicious or ignorant destruction of public or private property.”  In the instant case, the Court noted that New York Central had not met its burden, and as such, denied its motion on a question of fact.  The Court did not provide any guidance as to why New York Central’s motions papers were insufficient.

05/31/12       Fox v. Allstate Ins. Co.
Appellate Division, Second Department
Question of Fact Precludes Application of Two Year Suit Limitation Clause
Plaintiff sustained a water loss on October 25, 2005.  Three and a half years later, on May 15, 2009, plaintiff instituted the above-captioned matter.  Allstate immediately moved to dismiss on the basis of the two year suit limitation clause. 

The Appellate Division denied the motion on the basis that there remained a question of fact as to whether Allstate lulled plaintiff into inactivity.  Under such a circumstance, plaintiff was permitted to proceed.

Peiper’s Point -  We have a hard time with this one.  Rip Van Winkle was more alert than Mssr. Fox; yet Mr. Fox lives to fight another day.

Potpourri

05/31/12       Hernandez v City of New York
Appellate Division, First Department
Two and a Half Year Delay In Answering a Notice to Admit is Impermissibly Late
Defendant, NYC, waited more than 2 ½ years to answer plaintiff’s Notice to Admit seeking information regarding the ownership of a certain metal gate.  Upon answering, NYC simply denied the facts “on information and belief” and objected to the demands. 

In precluding NYC from submitting untimely answers to plaintiff’s Notice to Admit, the Court noted that NYC failed to “unequivocally” answer the demand.  Moreover, it noted that a request for ownership of the grate was proper because it did not request an admission of a material issue of fact.  Finally, the Court noted the prejudice to plaintiff because NYC’s untimely denial of ownership precluded the plaintiff from seeking out the “actual” owner of the metal grate in question. 

05/31/12       Wolfe v Irving Tissue, Inc.
Appellate Division, Third Department
Question of Fact Over "Actual" Terms of the Contract Precludes Summary Judgment on Contractual Indemnity Claim
Plaintiff sustained injury when he fell down a set of stairs at defendant’s plant.  Plaintiff’s fall was caused due to the buildup of construction debris.  Upon being named as a defendant, Irving commenced a third-party action against its janitorial service, North Country, and its management services contractor, Rust. 

With respect to Irving’s contractual indemnity claim against North Country Janitorial, the Court found a question of fact as to whether a valid contract existed.  It appears as though North County had performed janitorial services for Irving for a number of years.  This included a proposal every year, as well as the inclusion, by reference, of “general terms and conditions.”  The “general terms and conditions” provided, among other things, the contractual indemnity language at issue.

Irving maintained that the “general terms and conditions” was incorporated into the 2009 service contract at issue.  North Country, on the other hand, argued that the “general terms and conditions” were not specifically incorporated into the 2009 agreement.  Accordingly, a question of fact existed as to whether North Country accepted the 2009 agreement with the “general terms and conditions” included, or whether North Country’s actions in performing the agreement resulted to North Country’s acceptance of the terms that had been part of the preceding years’ contracts.

 

05/31/12       Yonaty v Mincolla
Appellate Division, Third Department
Wrong Allegation of Sexual Orientation is NO LONGER Slander Per Se in the Third Department
In this really interesting case, Mincolla allegedly passed along information which alleged that plaintiff was a homosexual.  This information was eventually passed along to Mr. Yonaty’s girlfriend.  Unfortunately, it is alleged that Mr. Yonaty’s relationship soured as a result of the allegation.  Mr. Yonaty maintains that he is, in fact, not gay.  

After the breakup, Mr. Yonaty commenced the instant action against Mincolla alleging Slander and Intentional Infliction of Emotional Distress.  Mincolla moved to dismiss on the basis that Mr. Yonaty could not establish any special damages a result of the allegation.  In denying the motion, the Trial Court referenced prevailing law which previously established that false references to someone’s sexual orientation constituted “slander per se”.  Importantly, slander per se does not require any proof of special damages.  

Upon appeal, the Third Department noted that previous case law had established that wrongful allegations of sexual orientation did constitute slander per se.  This placed the act alongside such other unsavory acts as (1) claiming someone committed a serious crime, (2) claiming something to injure another’s business, (3) claiming someone had a loathsome disease and/or (4) in the case of woman, accusing her of being unchaste. 

In overturning the previous case law, the Third Department looked at length at the many advancements made for homosexuals under New York law.  This included discrimination protections for sexual orientation added to the Human Rights law and, most recently, the Marriage Equality Act.  In short, the Court noted that despite past prejudices and stigmatisms, society has developed to point where homosexuality is no longer comparable to a loathsome disease or a serious crime.  Accordingly, the Court held that an accusation of sexual orientation is not a slander per se.  As such, where, as here, the plaintiff could not establish special damages, his claim was not actionable under New York law. 

Finally, the Court noted that defendant’s conduct was not so outrageous to support a claim for intentional infliction of emotional distress.  In turn, this aspect of the claim was dismissed as well.

Peiper’s Point  - It is noted that the Lambda Legal Defense and Education Fund, as well as the Empire State Pride Agenda, both submitted amicus briefs in support of defendant’s position that society no longer supported the supposition that sexual orientation was akin to a serious disease or criminal activity.

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

On hiatus.

 

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

05/30/12       Continental Casualty Co v. North Am. Capacity Ins. Co.
Fifth Circuit Court of Appeals – Texas/California law applied
Allocation of Defense Costs
Valero Refining Company [“Valero”] contracted with Encompass Power Services [“Encompass”] to design, engineer, and construct a co-generation facility at Valero’s oil refinery in Benicia, California.  Encompass then entered into a subcontract with ECCO Engineering & Construction Company [“ECCO”] to perform electrical work for the project.

For purposes of the Valero project, Encompass was a named insured on four insurance policies:  (1) a primary CGL policy issued by Continental Casualty Company [“Continental”] with limits of $1,000,000/$2,000,000; (2) a professional liability policy issued by Columbia Casualty Company [“Columbia”] with an SIR of $250,000 and a $20,000,000 aggregate per-claim limit; (3) a commercial umbrella policy issued by National Union Fire Insurance Company [“National Union”] that was excess to the primary CGL policy with a $25,000,000 aggregate limit; and, (4) Encompass was an additional insured on the CGL policy issued by ECCO as part of its subcontract with Encompass – that policy was issued by North American Capacity Insurance [“North American”] with limits of $1,000,000/$2,000,000.

In May and June of 2002, the Valero project experienced three separate power outages and a fire in the refinery causing significant damage. Valero later alleged that Encompass and tis subcontractors’ negligence gave rise to the power outages, the third of which caused the fire.  Valero sought over $40 million in damages from Encompass.

In November 2002, Encompass filed for Chapter 11 bankruptcy protection.  In May 2003, the bankruptcy court approved a settlement agreement between Encompass and Valero that allowed Encompass to receive payment from Valero for its work on the refinery project but also permitted a lifting of the automatic stay so that Valero could pursue the claims against Encompass.  Valero paid $1.5 million to Encompass’s bankruptcy estate and agreed not to seek any damages beyond what insurance policies would pay.  In exchange, Encompass assigned Valero any rights and claims that it had against its insurers.  No liability was conceded to Valero, nor was the contractual obligation of Encompass’s insurers impaired.

In June 2003, Valero invoked contractual arbitration against Encompass, alleging that Encompass’s negligence in designing, engineering, and constructing the co-generation facility caused the power outages and ensuing fire. 

Continental provided the initial defense of Encompass during the early stages of arbitration.  In 2004 and 2005, Columbia and North American denied they had any obligation to defend.  Columbia maintained that its policy did not provide coverage because Encompass’s conduct did not fall within its professional services clause and Encompass failed to satisfy its $250,000 self-insured retention limit prior to requesting coverage.  North American contended that its policy was not implicated because ECCO’s work did not prompt the power outages or fire.  North American also argued that even if there was coverage its policy was excess to Encompass’s primary insurers.

In 2005, Continental filed a declaratory judgment action against North American in Texas state court, arguing that North American was obligated to defend Encompass as an additional insured under its policy with ECCO.  North American removed the suit to federal court based on diversity.  National Union intervened in December 2005 on the ground that it had an interest in the court’s coverage determinations, and it later filed an amended complaint impleading Columbia.

On December 28, 2005, Encompass purported to assign to Valero all claims, including the right to demand a defense that it had against Continental and Columbia that stemmed from the Valero project.  The express purpose was to facilitate a settlement among Continental, Columbia and Valero. One Day later, Continental and Columbia agreed to a separate settlement with Valero.  That settlement provided that Continental and Columbia would immediately pay Valero $3 million and guaranteed that Valero would be paid an additional $5.5 million.  The payment would include Continental’s $1 million CGL policy, with the remainder to come from amounts that Continental or Columbia recovered from insurers or from subcontractors.

Continental claimed that the settlement had satisfied its duty to defend Encompass, while Columbia disclaimed any duty to defend or indemnify.  On December 30, 2005 Continental tendered Encompass’s defense to the excess insurer, National Union, which took over the defense in January 2007 subject to a reservation of rights.

National Union defended Encompass until 2007, when the arbitration was fully settled and Valero released all remaining claims stemming from the refinery fire.  Continental, Columbia, North American and National Union entered into a joint release agreement in which they resolved their duties to indemnify Encompass.  Each reserved its claims against the others regarding the proper allocation of defense costs in arbitration.  By the time of the arbitration settlement, Continental had incurred approximately $2.7 million in defense costs and National Union had expended approximately $3 million.

After the arbitration concluded, the insurers filed opposing summary judgment motions in the instant litigation.  The district court held that Columbia and North American were both primary insurers and were liable for paying 1/3 shares of the total amount that Continental had expended in Encompass’s defense before turning the defense over to National Union.  As to National Union the district court concluded that National Union was entitled to both contractual and equitable subrogation against the other three insurers as a result of taking over Encompass’s defense.  It also held, however, that National Union could not recover its defense costs as a subrogee, reasoning that the right of an insurer to recover through subrogation depends on “standing in the shoes” of the insured.  The court held that Encompass assigned its defense rights under the insurance policies to Valero in the 2003 bankruptcy agreement, and then no longer could assert those rights and neither could National Union by way of subrogation.  The court also held that National Union did not have a right to contribution from the primary insurers because that remedy is available only among primary insurers – not excess insurers who have a common duty to a shared insured.  Appeals ensued and for the following reasons the Fifth Circuit Court of Appeals [“Court”] affirmed as to the allocation of defense costs among the primary insurers and reversed to award defense costs to the excess insurer.

With respect to its appeal National Union argued that it should have prevailed under theories of contractual subrogation, equitable subrogation, or contribution.  It further argued that Encompass’s purported assignment of rights to Valero was invalid.  On the other hand, the primary insurers argued that National Union was not entitled to subrogation because Encompass’s assignment of rights to Valero meant that National Union stepped into empty shoes.

The Court agreed with National Union that it should have been able to recover based on contractual subrogation.   In analyzing Texas law the Court determined that even if the shoes of the insured are purportedly empty of rights against the primary insurer does not necessarily bar an excess insurer from recovering under a theory of subrogation from a primary carrier who should have paid its share or indemnity or defense.  The Court pointed out that the three primary insurers here refused to defend their insured in the midst of arbitration, with two of the insurers denying any obligation to indemnify.  With the insured left unprotected, National Union stepped in to take over the defense to which Encompass was entitled from third-parties. Referring to the subrogation clause in the National Union policy the court held that National Union was entitled to reimbursement from the insurers who should have borne the costs that it paid.  Further stating, that disallowing National Union recovery from the primary insurers where those insurers had an obligation to protect the insured would encourage the primary insurers to breach their duties to defend rather than place their insured’s interests above their own by defending and seeking reimbursement later.

As to the appeals by Continental and Columbia the court noted that the insurers entered into a single settlement with Valero in 2005.  The insurers argued on appeal that said settlement fully satisfied their obligations to Encompass.  Continental argued that it exhausted its policy limit by spending $2.7 million on Encompass’s defense and by contributing the full $1 million of coverage under its policy to the 2005 settlement.  Columbia argued that it had no duty to defend and that this settlement simply recognized that.  The Court did not agree.

Analyzing the policies the Continental policy the Court noted that Continental’s “right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments of settlements.”  The Court agreed with the district court that Continental’s settlement with Valero did not satisfy the plain meaning of this provision because there was no judgment ending even part of the arbitration against Encompass.  Further concluding, there was no settlement as intended by the policy because no lawsuit or dispute was ended.

With respect to Columbia’s obligation to provide a defense, Columbia argued that coverage under its policy never arose because Encompass failed to pay the required $250,000 SIR.  The Court held that although it is undisputed that Encompass never paid its SIR, the policy does not explicitly require the insured to pay the amount itself. The Court noted that both Continental and National Union spent millions of dollars on Encompass’s defense, thereby satisfying the SIR limit.  Based on this information the Court determined that the SIR was met on the insured’s behalf thereby triggering Columbia’s policy. 

Next, North American argued that it owed no defense to Encompass because the allegations in Valero’s complaint did not mention any involvement by ECCO, its insured. Analyzing California law, which controlled the North American policy, the court noted that the North American policy covers Encompass for any losses that take place as a result of ECCO’s work.  Since ECCO provided electrical subcontracting work for Encompass at  the Valero refinery where the fire and work stoppage occurred; the work included installing wiring and other electrical components for the project; Valero alleged incorrect design, engineering and testing of electrical hardware by Encompass and its subcontractors; and, Valero claimed that the loss was caused by the negligence of Valero and its subcontractors, the Court held that this was sufficient to trigger North American’s duty to defend, absent extrinsic evidence definitively proving otherwise.

Finally, in allocating defense costs between Continental, Columbia and North American, the Court analyzed the Other Insurance clauses of all three policies and determined that the three policies conflict.  As a result the Court, pursuant to Texas law, excised the conflicting language and looked to the remaining language to determine if any policy should provide sole primary insurance to Encompass.  The Court held that based on its analysis each policy provided complete, primary coverage to Encompass.

MARC’S REMARKS

Marc A. Schulz
[email protected]

05/24/12       Metro Missions, Inc. v US 1 Holdings
Supreme Court, Kings County
Insured Must Read Policy
MM’s amended complaint against Barth and US1 frames the malfeasance of Barth as a failure to obtain “theft and collision” insurance as it specifically requested primary liability insurance to sufficiently register its vehicles in NYS, but Barth instead executed a plan which amount to an excess liability policy requiring MM to be certified as “self-insurer.”  US1 Holdings is the successor in interest of DWP. 

Although MM requested “basic insurance,” the court stated that “an insured has an obligation to read [the] policy and is presumed to have consented to its terms.”  The policy here clearly stated the retained amount is the responsibility of the insured, and that payment of defense expenses will only be provided when such expenses, in combination with damages, exceed the retained amount.  Thus, MM was precluded from arguing that it had been misled into believing primary or first dollar coverage was available under the policy. 
The court concluded the liability of Barth/US1 is limited to the damages sustained by reason of its inability to register vehicles i.e. losses sustained as a result of not having vehicles on the road because MM still operated its vehicles and provided its free services throughout the policy terms.  MM failed to do so, arguing instead it sustained damages by paying $400K in premiums for insurance it did not request/expect, relying on Dornberger for the proposition that premiums paid for a policy which does not provide what was expected constitutes recoverable damages.  The court distinguished this case from Dornberger, stating the insufficiency of MM’s policy for vehicle registration did not render it illegal under NY VTL §§ 312 and 316, as those statutes do not prohibit the issuance of excess liability policies to a vehicle owner.  

05/24/12       Brandon v. Blowers
Supreme Court, New York County
Failure to Rebut Expert Reports Costly
Plaintiffs Cheryl and Terri alleged “serious injuries” under the permanent consequential limitation and significant limitation categories of § 5102(d) resulting from a car accident.  Defendant’s experts found no evidence of herniations for Cheryl and reported her bulging discs are not posttraumatic but rather degenerative.  Conversely, Cheryl’s experts found posterior disc bulges as well as disc herniation and straightening of the normal lumbar lordosis, however, the report did not opine as to causation of the radiological findings.  The court deemed Cheryl’s evidence insufficient to rebut Defendants prima facie case.      

Terri’s expert stated her MRI revealed disc herniations, disc bulges, and ventral cord abutments.  Another expert’s review of her lumbar spine MRI prior to the accident reported her thoracic spine was normal.  In opposition, Defendants’ expert reports stated Terri may have sustained a cervical and lumbar strain injury, but it has resolved. Another expert reported degeneration throughout lower thoracic and lumbar region consistent with spondylosis and longstanding chronic degenerative disc disease and concluded the MRI findings are degenerative and unrelated to the accident.  The court held Terri’s experts provided objective evidence of her injuries even though Defendants sufficiently raised causation concerns regarding Terri’s prior accident and degeneration, and held Terri’s § 5102(d) claim survived summary judgment. 

05/3012        Garden Med. Diagnostics, P.C. v Progressive Cas. Ins. Co.
District Court of Suffolk County, Fourth Dist.
Must Comply with CPLR Requirements
In this action to recover first party no-fault benefits, Progressive asserted the fraudulent incorporation defense in its answer and served disclosure demands on Garden Med. to produce its owner for an EBT and for other various documents.  Garden’s Med. failed to respond and Progressive sought Order directing Garden Med. to produce documents and owner.  Garden Med. opposed on grounds that Progressive failed to adequately plead fraudulent incorporation defense and that demands are overly broad. 

Garden Med. failed to timely object to Progressive’s demands (25 days under CPLR § 3120) and the court held it is obligated to produce documentation sought except as to palpably improper or privileged matters i.e. defenses which defendant is precluded from raising and overly broad demands.  Further, the court stated “defendant is not required to plead a defense predicated upon fraudulent incorporation with particularity … as it adequately raised this affirmative defense by pleading it in its answer…”  Therefore, the court granted Progressive’s motion to extent that Garden Med. must produce various documents and its owner because Progressive satisfied CPLR § 3106 requirements and Garden Med. failed to use the procedures in same section for sending another person.  The court also denied Garden Med.’s cross-motion to take deposition of Progressive’s employee because it failed to comply with CPLR § 3107 requirements.    

06/04/12       Victory Med. Diagnostics v. Nationwide Prop. & Cas. Ins. Co.
District Court of Nassau County, First Dept.
Procedures for Objecting to Carrier’s Verification Requests
This case involves the “troublesome development” of claims to obtain payment of first party no-fault benefits where the insurer requests claimant-provider furnish as verification information about claimant-provider’s corporate structure and ownership.  When claimant-provider fails/refuses and brings an action to recover first party no-fault benefits, the insurer moves for summary judgment on grounds that the claimant-provider is unresponsive to verification requests.  The court framed the issues as: (1) can a provider object to verification request; and (2) what is the effect of the objection to the verification request?

Pursuant to 11 NYCRR 65-3.5(c), the court stated an insurer can request “… all items necessary to verify the claim directly from the parties from whom such verification was requested,” but an insurer should not “… demand verification of facts unless there are good reasons to do so.”  As neither the no-fault law nor regulations establish a procedure by which a claimant-provider can contest/challenge a request for verification, the court fashioned a rule holding a provider who receives an improper, unduly burdensome, unfounded, harassing and/or unnecessary verification can raise and preserve objections to verification request by responding and objecting to such requests and advising the carrier of the basis of its objection.   

The court determined here Nationwide’s reasons for requesting copies of Victory’s leases and management agreements by way of verification do not pass muster.  A provider must have a method it can use to object to a verification request and preserve the issue for judicial determination, noting after an objection, the issue of whether the requested material and objections were proper are preserved and become questions of fact for the trier of fact.  Where the insurer can establish it had a reasonable, good faith factual basis for requesting the verification, then the failure to furnish such material will result in dismissal of the action.  Conversely, where the insurer cannot do so, then the insurer will be required to pay the claim.  

06/06/12       Island Chiropractic Testing, P.C. v Nationwide Ins. Co.
District Court of Suffolk County, Third Dist.
Carriers Cannot Abuse No-Fault Verification Process
Nationwide moved for summary judgment on grounds that Plaintiff did not respond to its verification and follow-up verification requests.  Defendant’s affidavit of the claims specialist who sought corporate status documents via additional verification failed to establish by personal knowledge his mailing of timely requests.  Assuming arguendo Nationwide could establish its verification letters were timely mailed, the court held such requests were impermissible and improper as they sought copies of “sale of shares or transfer of ownership (and) lease agreements.”

The court stated Nationwide may request relevant written documents as part of post-joinder written discovery or commence declaratory judgment action seeking to declare medical provider ineligible to recover benefits.  However, “requesting this type of information by way of claim verification is abusive of the no-fault verification process.”  Nationwide also failed to establish it had good cause to seek fraudulent incorporation documentation at time of verification requests and according to the court, “permitting an insurer to obtain written documents such as tax returns, incorporation agreements or leases regarding a potential fraudulent incorporation “Malella” defense as part of the verification process defeats the stated policy and purpose of the no-fault law and carries with it the potential for abuse.” 

Nationwide was therefore required to respond to Plaintiff’s claims as it had received them and not issued a denial because the verification requests did not toll Nationwide’s thirty-day time to deny/pay the claim and Plaintiff timely responded to verification requests objecting to the Mallea discovery.    

 

PAUL’S MUNICIPAL LAW POINTERS

Paul J. Suozzi
[email protected]

06/05/12       Bukowski v. Clarkson University
New York State Court of Appeals
Pitcher Assumes Risk of Line Drive
On June 5, 2012, the New York Court of Appeals issued a unanimous decision in Bukowski v. Clarkson University (2012 NY Slip Op 04274).  Penned by Chief Judge Lippman, it affirms a 3-2 Appellate Division decision that applied the primary assumption of risk doctrine to a college pitcher who was struck by a batted ball during indoor practice.  In its holding, the Court cited several of its prior decisions and noted “[t]he assumption of risk doctrine applies where a consenting participant in sporting and amusement activities ‘is aware of the risks; has an appreciation of the nature of the risk; and voluntarily assumes the risks.’” 
The plaintiff was pitching to a live batter indoors, without the use of an L-screen that is often used to protect a pitcher during batting practice.  The trial court had denied summary judgment.  At trial, plaintiff’s theory was that the risk of being hit by a batted ball was enhanced due to the multi-colored pitching backdrop, low lighting and the failure to use the L-screen.  The trial court directed a verdict for defendants at the close of proof. 

The Court of Appeals noted that a participant may assume the risk where conditions are not optimal and where the risks are fully comprehended or perfectly obvious.  Here, the plaintiff was an experienced baseball player who acknowledged he was aware of the risk of being hit by a batted ball, had seen other pitchers get hit by batted balls and had played under a wide variety of conditions.

The Court distinguished cases involving defective conditions which are risks beyond those assumed.  The Court also noted that there were no NCAA Rulebook violations.

LIENING TOWER OF PERLEY

Michael F. Perley
[email protected]

SUIT AGAINST THE UNITED STATES BARRED OF DOCTRINE OF SOVEREIGN IMMUNITY – MEDICARE’S INTEREST IS NOT A “LIEN”

 

United States Liability Insurance Company v. Sebelious, 2012 U.S. Dist LEXIS 77380

The United States Liability Company brought suit against the Department of Health and Human Services to resolve issues under the Medicare Secondary Payer Act and was met first, with the removal of the case to federal court and then a motion to dismiss based on the Doctrine of Sovereign Immunity.  U.S. Liability contended that the interest of Medicare was a lien, a phrase commonly used by attorneys in discussing Medicare’s interest.  U.S. Liability raised the argument that, were the interest of Medicare to be a lien, the Doctrine of Sovereign Immunity would not apply.  The United States and, ultimately, the court disagreed noting that the interest of Medicare is a “title interest,” and not a lien.  Under the Medicare Secondary Payer Act, the government seeks reimbursement based on its title interest and, therefore, has not waived sovereign immunity.

These cases, and others like it, bring into focus the danger of mischaracterizing the interest of Medicare through shorthand phrases.  While most practitioners refer to the interest of Medicare as a lien or a “super lien,” it is neither.  I have suggested to others that those who either pay or receive money from a primary payer in which Medicare would have an interest, have to look at the money as trust fund money to which Medicare is absolutely entitled.  Analyzed this way, the interest of Medicare and the responsibility of primary payers and those who receive payment are brought more clearly into focus.

 

EARL’S PEARLS
Earl K. Cantwell

[email protected] 

Coverage “Demolished” for Demolished Building

An insured incurred $1.2 Million in costs to stabilize and demolish a historic building in St. Louis after it partly collapsed during a storm.  However, the insurance company was not required to cover and indemnify the demolition costs.  Clarinet LLC v Essex Insurance Co., 2012 W 182529 (E.D. Mo. 1/23/12).

In 2006, the storm destroyed large portions of the building, and bricks and debris were falling onto a city-owned bridge and electrical substation.  The insured tried to save the building and stabilize it at a cost of more than $550,000.00, but ultimately the building was condemned, and in June 2007 and it was demolished at a cost of more than $650,000.00.  The insured had a policy with Essex Insurance Company that covered property damage losses, but the policy contained an exclusion barring coverage for the insured’s owned property, “including prevention of injury to a person or damage to another’s property”.

The City sued the insured for damage to its bridge and substation.  The insured tendered the defense to Essex, and also claimed coverage for its shoring, stabilization and demolition costs.  Essex agreed to defend and indemnify the insured against the City’s lawsuit, but denied coverage for the stabilization and demolition costs.  The insurer removed the case to Federal Court and moved for summary judgment on the basis of the exclusion.  The insurer argued that the exclusion precluded coverage for damages to the insured’s own property and property rented.  The insurer’s motion for summary judgment was granted.

The policy exclusion barred coverage for maintenance for the insured’s own property, including efforts to prevent injury or damage to another person or the property of another person.  The U.S. Magistrate Judge argued that the policy language was unambiguous and barred coverage for the costs the insured incurred to stabilize the building and then demolish it to avoid damage to the city’s nearby structures.  As an additional reason, the Court ruled that the insured was required under the policy to get the insurance company’s permission before incurring such expenditures, which apparently was not done.  Therefore, the insured’s claims for the stabilization and demolition costs were dismissed.

This case is a good example of policy language affording the insured some coverage such as defense and indemnification from the City’s third party property damage suit, but denying and rejecting coverage for the first party claim to the insured’s own property under either the covering or exclusion language of the policy.

In this case, it was an exclusion that precluded coverage for maintenance for the insured’s own property including costs or damages for prevention of injury to third party persons or property.  While the property involved was a historic building in St. Louis, the grounds for dismissal of the lawsuit were equally well-settled and historic based upon the Court’s application of policy language it found to be clear and “unambiguous.”

 

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

05/31/12       QBE Insurance Corp. v. Chalfonte Condo. Apt. Assoc., Inc.
Florida Supreme Court

Limitations on First Party Bad Faith in Florida
A substantial jury verdict was rendered in behalf of a condo association Chalfonte, in Chalfonte v. QBE, related to Hurricane Wilma damage, which verdict included damages for breach of implied warranty of good faith and fair dealing for delays in claims handling.  On Appeal, the Eleventh Circuit certified 5 questions to the Florida Supreme Court: 1- Does Florida recognize a claim for breach of implied warranty of good faith and fair dealing in a first party claim, separate from a claim for statutory bad faith ; 2- If such a claim for breach of implied warranty is recognized as a matter of common law and apart from a claim for statutory bad faith; can such a claim proceed with the coverage action; 3- May an insured bring a claim for a violation of type size requirements in insurance policy language which require that the hurricane deductible be printed in 18 pt. font and specifically use the term “hurricane” rather than “windstorm”; 4- Does failure to comply with language and type size requirements established by statute, render a non-compliant hurricane deductible provision void and unenforceable; 5- Can judgment entered at the trial level, require insurer to pay a verdict, prior to appeal under a contract provision requiring payment “upon entry of judgment”, if the insurer has met all procedural requirements for appeal and posting a bond?

As to each of these issues, the Florida Supreme Court issued an opinion yesterday which responded in the negative: 1-2 --Independent first party claim for breach of implied warranty: “…the Court answers the first certified question in the negative and concludes that such first-party claims are actually statutory bad-faith claims, which must be brought under section 624.155 of the Florida Statutes.  Since we have answered the first certified question in the negative, the second certified question is rendered moot.”  Thus, the Florida Supreme Court has confirmed that there is no independent common law claim for implied warranty of good faith and fair dealing which can be brought in a first party action, and such claims must be made pursuant to the Florida bad faith statute.

Moreover, such claims must be bi furcated from the coverage litigation.  Recently, several United States District Courts have found otherwise, including a decision out of Jacksonville (M.D.) last week; the Supreme Court decision questioned lower federal court authority (or lack thereof) for these rulings. 3-4 – Impact of Failure to Comply with Statutory language and font size requirements with respect to hurricane deductibles:  The Court found that the violation of language and type size requirements for hurricane deductibles, (requirement that language be capitalized in Bold 18 pt. font ) does not create a separate cause of action, …”there is nothing in the text of section 627.701(4)(a) from which one could deduce that the Legislature intended an insured to have a private right of action against an insurer for failure to follow the notice requirements.”

The Court also held “failure to strictly comply with the notice requirements specified in section 627.401(4)(a)” does not render the “hurricane deductible void and unenforceable.”  The trial Judge “correctly noted that the Legislature did not specify any penalty or consequence for failure to comply with the requirements of section 627.701(4)(a).  This argument is raised repeatedly, and again the Supreme Court decision should put the argument to rest. 5 - Impact of contractual language requiring “payment upon entry of judgment” on insurer’s right to stay and posting of bond on Appeal: Finally, the Court held “that a contractual provision mandating payment of benefits upon “entry of final judgment” does not waive the insurer’s procedural right to post a bond pursuant to rule 9.310(b) to stay execution of a money judgment pending resolution of the appeal.”
Submitted by: Rebecca Levy-Sachs Managing Attorney Robinson & Cole LLP

05/24/12       McClellan v. Life Insurance Company of North America
Eighth Circuit Court of Appeals
ERISA Plan Providing Coverage for Accidental Loss of Life Did Not Preclude Coverage Where Decedent Drove His Motorcycle at Excessive Speeds with a Blood Alcohol Level of Over .20
The decedent worked as a machinist for Graco.  Graco provided life insurance coverage under an ERISA plan for “accidental” death.  The Plan provided $250,000 of coverage for loss of life as a result of a covered “accident.”  The decedent died after driving his motorcycle at excessive speeds, weaving in and out of traffic, and with a blood alcohol content of over .20.  The decedent also was not wearing a helmet.  The Eighth Circuit found that the death was an accident and noted that the decedent had plans for other activities later in the day.  The Court found that he did not reasonably expect to die on the date of the accident.  His death was therefore an accident within the meaning of the policy. However, in awarding attorneys’ fees to the plaintiff, the Court found that attorneys’ fees in the amount of over $134,000 were excessive in light of the total policy limit of $250,000.  The total fee award was reduced to $85,000.
Submitted by: Stacy Broman, Meagher & Geer, PLLP

Reported Decisions

The City of New York v. Greenwich Insurance Company

Ahmuty Demers & McManus, Albertson (Glenn A. Kaminska of counsel), for appellants.
Law Offices of Todd M. McCauley, LLC, New York (David Tavella of counsel), for respondents.

Order, Supreme Court, New York County (Jeffrey K. Oing, J.), entered April 19, 2011, which denied plaintiffs' cross motion for summary judgment declaring that defendant has a duty to defend and indemnify plaintiffs, and denied defendants' motion for summary judgment dismissing the complaint, unanimously modified, on the law, to grant the cross motion and declare that defendant insurer has a duty to defend and indemnify plaintiffs in the underlying personal injury action, and otherwise affirmed, without costs.

Under Insurance Law § 3420(d)(2), an insurer wishing to deny coverage for death or bodily injury must "give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage." "When an insurer fails to do so, it is precluded from disclaiming coverage based upon late notice, even where the insured has in the first instance failed to provide the insurer with timely notice of the accident" (Hunter Roberts Constr. Group, LLC v Arch Ins. Co., 75 AD3d 404, 408-409 [2010]). Although the timeliness of such a disclaimer generally presents a question of fact, where the basis for the disclaimer was, or should have been, readily apparent before the onset of the delay, any explanation by the insurer for its delay will be insufficient as a matter of law (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 69 [2003]).

Even assuming that some investigation was necessary, as plaintiffs' May 17, 2007 notice of claim letter contained only the date of loss and did not indicate when plaintiffs first learned of the subject accident, Greenwich's investigation did not even begin until June 21, 2007, more than 31 days after receipt of the May 17, 2007 letter, and continued for approximately five and one half months. Despite the fact that the dates on which plaintiffs responded to Greenwich are disputed, insurers have a duty to "expedite" the disclaimer process (First Fin. Ins. Co., 1 NY3d at 68), and Greenwich does not explain, given the facts made known by Temco's May 17, 2007 submission, "why anything beyond a cursory investigation" was necessary to determine whether plaintiffs had timely notified it of the claim (Hunter Roberts Constr. Group, 75 AD3d at 409). Accordingly, the 5 1/2-month delay in disclaiming on this ground was unreasonable as a matter of law.

AH Property, LLC v. New Hampshire Insurance Co.


Beth Zaro Green, Brooklyn, N.Y. (Charmagne A. Padua of counsel), for appellant.
Jonathan S. Roller, Brooklyn, N.Y., for respondent.

DECISION & ORDER 

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Bernard v AH Property, LLC, commenced in the Supreme Court, Kings County, under Index No. 6356/2009, the defendant appeals from an order of the Supreme Court, Kings County (Lewis, J.), dated August 19, 2011, which denied its motion for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff in the underlying action and, in effect, directed the entry of a judgment declaring that it is obligated to defend and indemnify the plaintiff in the underlying action.

ORDERED that the order is reversed, on the law, with costs, the defendant's motion is granted, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify the plaintiff in the underlying action.

"Where an insurance policy requires that notice of an occurrence be given as soon as practicable,' notice must be given within a reasonable time in view of all of the circumstances" (Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d 596, 597; see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Columbia Univ. Press, Inc. v Travelers Indem. Co. of Am., 89 AD3d 667). "[T]he absence of timely notice of an occurrence is a failure to comply with a condition precedent which, as a matter of law, vitiates the contract" (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339; see Sorbara Constr. Corp. v AIU Ins. Co., 11 NY3d 805, 806).

Here, in support of its motion for summary judgment, the defendant insurer, New Hampshire Insurance Company (hereinafter NHIC), established, prima facie, that its insured, the plaintiff, AH Property, LLC (hereinafter AH Property), did not comply with the condition in the policy requiring the insured to give it notice of an occurrence "as soon as practicable." AH Property did not notify NHIC until November 20, 2009, of an action commenced against it on March 17, 2009, to recover damages for personal injuries. Process was served upon AH Property through the Secretary of State on March 24, 2009, and the action arose from an alleged accident which took place on October 17, 2008, in a building owned by AH Property. Accordingly, NHIC properly disclaimed coverage on the ground of untimely notice (see Briggs Ave. LLC v Insurance Corp. of Hannover, 11 NY3d 377, 381; SP & S Assoc., LLC v Insurance Co. of Greater N.Y., 80 AD3d 529). In opposition, AH Property failed to raise a triable issue of fact as to whether its delay was excusable. AH Property alleged that the delay resulted from the failure of its former attorney, who had listed his name and office address as the address to which the Secretary of State shall forward copies of any process against it, to notify the Secretary of State of his new office address, and his failure to inform AH Property of the need to update its corporate address with the Secretary of State (see Briggs Ave. LLC v Insurance Corp. of Hannover, 11 NY3d at 381). "It was unquestionably practicable for [AH Property] to keep its address current with the Secretary of State, and thus to assure that it would receive, and be able to give, timely notice of the lawsuit" (id.; see Limited Liability Company Law §§ 211-A[a], 301[c], [e]).

Further, because the subject policy was issued in 2007, the amendment to Insurance Law § 3420, which became effective for policies issued on or after January 17, 2009, and which allows an insurer to disclaim coverage only upon a showing of prejudice to it, is not applicable. Thus, the common-law rule that an insurer may disclaim coverage for untimely notice, even without prejudice, applies (see Briggs Ave. LLC v Insurance Corp. of Hannover, 11 NY3d at 382; Columbia Univ. Press, Inc. v Travelers Indem. Co. of Am., 89 AD3d 667; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 596-597). Accordingly, the Supreme Court should have granted NHIC's motion for summary judgment declaring that it is not obligated to defend and indemnify AH Property in the underlying action.

Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that NHIC is not obligated to defend and indemnify AH Property in the underlying action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert. denied 371 US 901).

In the Matter of GEICO v. Allen


Torino & Bernstein, P.C., Mineola, N.Y. (Kenneth A. Bernstein of counsel), for proposed additional respondent-appellant.
Gail S. Lauzon (Montfort, Healy, McGuire & Salley, Garden City, N.Y. [Donald S. Neumann, Jr.], of counsel), for petitioner-respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Infinity Auto Insurance Company appeals from an order of the Supreme Court, Queens County (Rios, J.), entered June 22, 2011, which, without a hearing, granted the petition and permanently stayed arbitration.

ORDERED that the order is reversed, on the law, without costs or disbursements, the matter is remitted to the Supreme Court, Queens County, for a hearing on the issue of whether the subject vehicle was being operated without permission of the owner at the time of the accident and, thereafter, for a new determination of the petition, and the arbitration is temporarily stayed pending the hearing and determination.

On August 7, 2010, Edward Allen allegedly was injured while a passenger in a vehicle operated by Clifton Jordan. The vehicle was insured by Infinity Auto Insurance Company (hereinafter Infinity) under a policy issued by Infinity to Sarah L. Pemberton. In a letter dated September 1, 2010, Infinity disclaimed coverage on the grounds that Pemberton had died in 2003 and that Jordan was operating the vehicle without permission of the owner.

After Allen subsequently made a claim against the petitioner, his own insurance carrier, for uninsured motorist coverage, the petitioner commenced this proceeding to permanently stay arbitration of the claim, contending that the vehicle was insured by Infinity. In opposition to the petition, Infinity contended that the policy it issued to Pemberton had been validly "rescinded ab initio" based on Pemberton's death in 2003. Infinity also contended that it validly disclaimed coverage based on lack of permissive use, submitting a transcript of a recorded conversation in which Jordan gave a statement that could be interpreted as indicating that he "had no business" driving the subject car, which had belonged to his ex-wife's deceased mother and was sitting outside the home of his ex-wife, who never used it. The Supreme Court, without a hearing, granted the petition and permanently stayed arbitration.

Contrary to Infinity's contention, the Supreme Court correctly found that Infinity did not validly disclaim coverage on the ground that it rescinded the subject policy upon learning, after the accident occurred, that Pemberton had died in 2003. "Vehicle and Traffic Law § 313(1)(a) supplants an [insurer's] common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively. This provision places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured's negligence" (Matter of Global Liberty Ins. Co. of NY v Pelaez, 84 AD3d 803, 803 [internal quotation marks and citations omitted]; see Matter of Metlife Auto & Home v Agudelo, 8 AD3d 571, 572; Matter of Integon Ins. Co. v Goldson, 300 AD2d 396, 397-398).

However, the Supreme Court erred in determining, as a matter of law, that Infinity did not validly disclaim coverage on the ground that Jordan was operating the vehicle without permission of the owner at the time of the accident. The evidence submitted by Infinity in opposition to the petition, which included the transcript of Jordan's statement, raised a triable issue of fact as to whether Jordan lacked express or implied permission to use the vehicle (see Matter of Fiduciary Ins. Co. of Am. v Morris, 84 AD3d 802; Matter of State Farm Mut. Auto Ins. Co. v Fernandez, 23 AD3d 480, 481; Matter of Aetna Cas. & Sur. Co. v Arhaniotis, 202 AD2d 497, 498). The fact that Pemberton had died seven years prior to the accident does not conclusively resolve this issue in favor of Infinity, since after Pemberton's death, the vehicle could have come under the ownership of another individual who gave Jordan express or implied permission to operate it. Accordingly, the matter must be remitted to the Supreme Court, Queens County, for a hearing on the issue of whether the subject vehicle was being operated without permission of the owner at the time of the accident and, thereafter, for a new determination of the petition, and the arbitration must be temporarily stayed pending the hearing and determination.

Ulster County v. CSI, Inc. and Admiral Ins. Co.


Calendar Date: April 18, 2012
Before: Peters, P.J., Mercure, Rose, Lahtinen and Egan Jr., JJ.

Keane & Beane, P.C., White Plains (Edward J. Phillips of counsel), for appellant.
Lewis & Cote, L.L.C., White Plains (Deborah A. Summers of counsel), for respondent.

MEMORANDUM AND ORDER

Rose, J.

Appeal from an order of the Supreme Court (Gilpatric, J.), entered March 22, 2011 in Ulster County, which, among other things, granted a motion by defendant Admiral Insurance Company for summary judgment seeking a declaration in its favor.

In March 2006, plaintiff reported to defendant CSI, Inc., its third-party claims administrator, that an employee had filed a discrimination claim against it. CSI allegedly failed to notify plaintiff's insurer until February 2008, after plaintiff again brought its employee's claim to CSI's attention. In April 2008, plaintiff's insurer denied coverage for the claim on the basis of late notice. Plaintiff eventually commenced this action against CSI for malpractice, alleging that CSI had negligently failed to give timely notice of the employee's claim to plaintiff's insurer. CSI then sought coverage for plaintiff's malpractice action from its own professional liability carrier, defendant Admiral Insurance Company. Admiral's policy contained a prior knowledge exclusion, however, and Admiral disclaimed coverage on the ground that CSI knew or should have known that plaintiff would have a claim against it prior to September 5, 2008, the effective date of Admiral's claims made policy. In an amended complaint, plaintiff sought a declaratory judgment holding that Admiral was obligated to defend and indemnify CSI. After joinder of issue, but prior to any discovery, Admiral moved for summary judgment seeking, among other [*2]things, a declaration that it was not obligated to defend and indemnify CSI against the claim asserted by plaintiff. Supreme Court granted Admiral's motion and plaintiff appeals [FN1] .

The parties agree that the appropriate legal standard for determining whether the prior knowledge exclusion relied on by

Admiral is applicable requires a subjective determination of the insured's knowledge of the relevant facts and an objective determination of whether a reasonable person in the insured's position should have expected such facts to be the basis of a claim (see Liberty Ins. Underwriters Inc. v Corpina Piergrossi Overzat & Klar LLP, 78 AD3d 602, 604-605 [2010]). Plaintiff contends that reversal is warranted here because Admiral failed to establish CSI's subjective knowledge of the relevant facts with proof in admissible form. We agree.

Admiral argues that the allegations in plaintiff's own amended verified complaint are a sufficient basis to warrant summary judgment. Those allegations are not conclusive evidence, however, when read in light of CSI's verified answer. Although there is no dispute that plaintiff notified CSI of the discrimination claim in March 2006, CSI answered by denying the allegation that it failed to notify plaintiff's insurer until February 2008. CSI also denied knowledge or information sufficient to form a belief as to whether plaintiff's insurer then disclaimed coverage in April 2008.

Contrary to Admiral's contention that Supreme Court could have relied on unsworn statements and letters from CSI employees submitted in support of the motion, we note that Supreme Court did not do so. In any event, those writings are not acknowledged as required by CPLR 4538 and, thus, do not qualify as evidentiary proof in admissible form (see CPLR 3212 [b]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Nor do they qualify as an admission absent evidence that the employees were authorized to speak on CSI's behalf (see Gstalder v State of New York, 240 AD2d 541, 542 [1997]; Vozdik v Frederick, 146 AD2d 898, 900 [1989]). As the unsworn writings are inadmissible hearsay, they are insufficient to support the motion for summary judgment (see Matter of Patricia YY. v Albany County Dept. of Social Servs., 238 AD2d 672, 674 [1997]; Welch v Prevost Landowners, 202 AD2d 803, 804 [1994]).

In short, Admiral failed to meet its burden on the motion for summary judgment with proof in admissible form establishing the relevant facts of when CSI reported the claim and whether CSI was aware that plaintiff's insurer disclaimed coverage prior to the effective date of Admiral's policy. The pleadings, which are the only proof in admissible form, did not provide Supreme Court with a basis on which to conclude that CSI had subjective knowledge of those relevant facts. Accordingly, we reverse the order to the extent that it declared that Admiral was not required to defend and indemnify CSI (see Ames v Paquin, 40 AD3d 1379, 1380 [2007]; Valentino v County of Tompkins, 284 AD2d 898, 899 [2001]; Patterson v Palmieri, 284 AD2d 852, 853 [2001]).

Peters, P.J., Mercure, Lahtinen and Egan Jr., JJ., concur.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as granted the motion of defendant Admiral Insurance Company for summary judgment declaring that it was not required to defend and indemnify defendant CSI, Inc.; motion denied to that extent; and, as modified, affirmed.
Footnotes

Footnote 1: Admiral also sought dismissal of CSI's cross claims for breach of contract against it. CSI did not oppose the motion and Supreme Court granted it.

Dzielski v. Essex Insurance Company


Submitted by Dan D. Kohane, for appellant.
Submitted by Kathleen M. Reilly, for respondent.

On review of submissions pursuant to section 500.11 of the Rules, order reversed, with costs, plaintiffs' motion for summary judgment denied, defendant's motion for summary judgment granted, and judgment granted to defendant declaring that it has no obligation to indemnify its insured in the underlying personal injury action, for the reasons stated in the dissenting memorandum at the Appellate Division (90 AD3d 1493, 1495-1497 [2011]).

Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.

Brother Jimmy's BBQ, Inc. v. American International Group, Inc


Sedgwick LLP, New York (Jessika Moon of counsel), for appellant.
Garbarini & Scher, P.C., New York (William D. Buckley of counsel), for Brother Jimmy's BBQ, Inc., Brother Jimmy's NYC Restaurant Holdings, LLC, Brother Jimmy's Franchising, LLC, Josh Leibowitz, Michael Daquino and Kevin Bulla, respondents.
Kramer, Dillof, Livingston & Moore, New York (Matthew Gaier of counsel), for Lauren Sclafani, respondent.

Order, Supreme Court, New York County (Emily Jane Goodman, J.), entered May 17, 2011, which granted plaintiffs' cross motion for summary judgment to declare that defendant insurer Illinois National Insurance Company (defendant), in its capacity as plaintiffs' excess carrier, was required to defend and indemnify plaintiffs in the underlying personal injury action once the primary insurance was exhausted, and denied defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.

The motion court correctly determined that defendant-appellant Illinois National Insurance Company's disclaimer of coverage was untimely. Regardless of the timeliness of plaintiffs' notice of claim, the ground alleged as support for disclaimer was clear from the face of the notice of claim and other documents submitted to Illinois National, making the 38-day delay before issuance of the notice of disclaimer unreasonable as a matter of law under Insurance Law § 3420(d) (see Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772, 774 [2006]; [*2]e.g. George Campbell Painting v National Union Fire Ins. Co. of Pittsburgh, Pa., 92 AD3d 104 [2012]).

The City of New York v. General Star Indemnity Co.


Michael A. Cardozo, Corporation Counsel, New York (Julian L. Kalkstein of counsel), for appellant.
Marshall, Conway & Bradley, P.C., New York (Christopher T. Bradley of counsel), for respondent.

Order, Supreme Court, New York County (Cynthia S. Kern, J.), entered February 9, 2011, which denied the City's motion for leave to renew its motion for summary judgment declaring that defendant General Star Indemnity Company had a duty to indemnify the City and reimburse its defense costs in the now settled underlying personal injury action, unanimously affirmed, without costs.

This declaratory judgment action stems from an underlying action in which the plaintiff therein, an employee of MVN Associates, Inc. (MVN), was allegedly injured during the course of his employment. MVN purchased liability insurance coverage under a "master policy" that General Star issued to the "Marine Contractors Alliance." The master policy identified only the named insured, while MVN, as an insured under the policy, and the City, as an additional insured, were identified only on certificates of insurance which contained numbers and effective dates that did not match the master policy.

The City asserts that it is now clear from discovery that General Star received notice of the claim on June 27, 2002. Even if notice of claim was received on that date, questions of fact exist as to whether the information received, which failed to identify the named insured or the number of the master policy, provided a sufficient basis for disclaimer, or if sufficient documentation was not provided until July 8, 2002, as claimed by General Star (see Hunter Roberts Constr. Group, LLC v Arch Ins. Co., 75 AD3d 404, 409 [2010]). Accordingly, issues of fact also exist as to the timeliness of General Star's investigation, which was not commenced until July 9, 2002, and subsequent disclaimer, issued on August 7, 2002 (id.). Although General Star claims that it had to gather information from multiple sources to identify the policy and program applicable to the underlying claim, issues exist as to whether it conducted a "diligent" investigation (see id.).

Serbia v. Mudge


Mitchell Dranow, Sea Cliff, for appellant.
Law Office of Lori D. Fishman, Tarrytown (Michael J. Latini of counsel), for respondents.

Order, Supreme Court, Bronx County (Lizbeth González, J.), entered March 9, 2011, which granted defendants' motion for summary judgment dismissing the complaint based on the failure to establish a serious injury within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motion denied.

Defendants made a prima facie showing of entitlement to summary judgment as to plaintiff's claims of "significant limitation of use" of her lumbar spine, by submitting expert medical reports finding normal ranges of motion, as well as the report of a radiologist who opined that the herniated disc shown in an MRI of the plaintiff was not acute or caused by the accident (Insurance Law § 5102[d]).

The trial court’s preclusion of plaintiff's expert neurologist's and radiologist's reports was an improvident exercise of discretion, since defendants relied on plaintiff's neurologist's report, were equally untimely in serving their radiologist's report and thus cannot show prejudice by the lateness of the exchange (see Martin v Triborough Bridge & Tunnel Auth., 73 AD3d 481, 482 [2010], lv denied 15 NY3d 713 [2010]; Browne v Smith, 65 AD3d 996 [2009]).

In opposition, plaintiff submitted competent medical evidence raising an issue of fact as to her lumbar spine injuries, including the report of the radiologist who submitted a nonconclusory opinion sufficiently rebutting defendants' expert opinion regarding the cause of plaintiff's herniated disc, and of her treating physician, who opined, after a full examination soon after the accident, that her injuries were causally related to the accident (see Ramos v Rodriguez, 93 AD3d 473 [2012]).

Plaintiff adequately explained the gap in treatment by asserting in her affidavit that she stopped receiving treatment for her injuries when her no-fault insurance benefits were cut off, and she lacked income to continue treatment (see Browne v Covington, 82 AD3d 406 [2011]).

James v. Perez


Pollack, Pollack, Isaac & DeCicco, New York (Jillian Rosen of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for Argel A. Perez, respondent.
Skenderis & Cornacchia P.C., Long Island City (Louis T. Cornacchia III of counsel), for Reyes Catalino and Duarte Corp., respondents.

Order, Supreme Court, Bronx County (John A. Barone, J.), entered January 31, 2011, which granted defendants' motions for summary judgment dismissing the complaint based on the failure to establish a serious injury pursuant to Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motions denied.

Plaintiff claims to have suffered permanent serious injuries as result of a motor vehicle accident between a livery cab in which she was a passenger and a second car. Defendant Perez made a prima facie showing that plaintiff's claimed injuries were not permanent or significant by submitting affirmed reports of an orthopedic surgeon and a neurologist who found she had a full range of motion in her right knee and lumbar spine, with no evidence of neurological damage (see Insurance Law § 5102[d]; Grant v United Pavers Co., Inc., 91 AD3d 499 [2012]). In addition, defendants Catalino and Duarte Corp. made a prima facie showing that plaintiff's injuries were not causally related to the accident by submitting reports of their expert radiologist, Dr. Tantleff, who opined that the minimal disc bulges in plaintiff's lumbar spine and the abnormalities in her right knee, including a flap tear and lateral displacement, were degenerative in nature, aggravated by her weight, and not inconsistent with her age.

In opposition, plaintiff raised triable issues of fact by presenting the affirmation of her treating orthopedist, who reviewed her MRI films and the unaffirmed reports of the orthopedic surgeon who performed arthroscopic surgery on the right knee. He concluded, based on the medical records and following a series of examinations, that plaintiff had suffered permanent injuries including lumbar disc herniations and tears of the medial and lateral meniscus, caused by the accident (see Duran v Kabir, 93 AD3d 566 [2012]). He found limitations in lumbar spine range of motion which correlated with the MRI findings of lumbar disc herniations (see Gonzalez v Vasquez, 301 AD2d 438, 439 [2003]), and made positive findings of qualitative limitations in function of the right knee, as compared to the uninjured left knee, raising an issue as to permanent injury to the right knee persisting after her arthroscopic surgery (see Suazo v Brown, 88 AD3d 602 [2011]; Mitchell v Calle, 90 AD3d 584, 584-585 [2011]). Plaintiff's expert also opined that the injuries were traumatically induced as the result of the accident, consistent with evidence in the MRI films and the 28-year-old plaintiff's lack of pre-accident right knee or lumbar spine injuries or complaints, thereby raising an issue of fact as to causation (see Duran, 93 AD3d at 567; Yuen v Arka Memory Cab Corp., 80 AD3d 481, 482 [2011]).

With respect to plaintiff's 90/180-day claim, defendants did not dispute that she did not return to her work as a nurse's aid for over three months after the accident, during which time she had arthroscopic surgery after an unsuccessful course of physical therapy, or provide any medical evidence that she was able to perform her usual and customary activities for at least 90 of the 180 days following the accident (Insurance Law § 5102[d]; see Quinones v Ksieniewicz, 80 AD3d 506 [2011]). Defendants, however, did submit evidence that plaintiff's injuries were not caused by the accident (see Towne v Harlem Group, Inc., 82 AD3d 583 [2011]). Nevertheless, for the reasons stated above, the opinion of plaintiff's treating physician, as well as the medical reports relied upon, were sufficient to raise an issue of fact as to the 90/180-day claim (id.).

Alexander v. Gordon


Mirman, Markovits & Landau, P.C., New York, N.Y. (Thomas Torto and Jason Levine of counsel), for appellants.
Adams, Hanson, Finder, Hughes, Rego, Kaplan & Fishbein, Lake Success, N.Y. (Edward B. Suh of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Kings County (Bayne, J.), dated March 11, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Jeannie Alexander did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and denied, as untimely and academic, their cross motion, in effect, for summary judgment on the issues of serious injury and liability.

ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Jeannie Alexander did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and substituting therefor a provision denying the motion, (2) by deleting the provision thereof denying, as untimely and academic, that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the issue of serious injury, and substituting therefor a provision denying that branch of the cross motion on the merits, and (3) by deleting the provision thereof denying, as untimely and academic, that branch of the plaintiffs' cross motion, in effect, which was for summary judgment on the issue of liability, and substituting therefor a provision denying that branch of the cross motion as untimely; as so modified, the order is affirmed, without costs or disbursements.

The defendants failed to meet their prima facie burden of showing that the plaintiff Jeannie Alexander (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). Although the defendants asserted that the alleged injuries to the cervical and lumbar regions of the injured plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 352; Gaddy v Eyler, 79 NY2d at 955-956), the defendants' examining orthopedic surgeon recounted, in an affirmed report submitted in support of the defendants' motion for summary judgment, that range-of-motion testing performed during the examination revealed significant limitations in the regions (see Jones v Anderson, 93 AD3d 640, 641; Cues v Tavarone, 85 AD3d 846). In addition, the defendants failed to adequately address the plaintiffs' claim that as a result of the subject accident, the injured plaintiff sustained a medically-determined injury or impairment of a nonpermanent nature which prevented her from performing substantially all of the material acts which constituted her usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Rouach v Betts, 71 AD3d 977). Finally, the defendants failed to adequately address the plaintiffs' claim that as a result of the subject accident, one of the injured plaintiff's bones sustained a fracture (see Brourman v Gorokhovsky, 89 AD3d 660). Since the defendants failed to meet their prima facie burden, the Supreme Court should have denied their motion for summary judgment dismissing the complaint, without considering whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact (id. at 660; see Cues v Tavarone, 85 AD3d at 846-847; Rouach v Betts, 71 AD3d at 977-978).

The plaintiffs' cross motion for summary judgment was untimely (see McNally v Beva Cab Corp., 45 AD3d 820, 821). Furthermore, the plaintiffs failed to establish "good cause" for their delay in making the cross motion (CPLR 3212[a]; see Miceli v State Farm Mut. Auto. Ins. Co., 3 NY3d 725, 726; Brill v City of New York, 2 NY3d 648, 652). However, a court may entertain an untimely cross motion for summary judgment if the court is deciding a timely motion for summary judgment made on nearly identical grounds (see Grande v Peteroy, 39 AD3d 590, 591-592). Thus, because the defendants made a timely motion for summary judgment dismissing the complaint on the ground that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), that branch of the plaintiffs' cross motion which was, in effect, for summary judgment on the issue of serious injury can be entertained (see Grande v Peteroy, 39 AD3d at 591-592; cf. Lennard v Khan, 69 AD3d 812, 814). In contrast, that branch of the plaintiffs' cross motion which was for summary judgment on the issue of liability cannot be entertained, as the issue of liability is a "matter separate from the issue of" serious injury (Reid v Brown, 308 AD2d 331, 332).

Contrary to the plaintiffs' contention, they failed to demonstrate their entitlement to judgment as a matter of law with respect to their claim of serious injury based on the alleged fracture. A plaintiff moving for summary judgment on the issue of serious injury must establish, prima facie, that he or she sustained a serious injury within the meaning of Insurance Law § 5102(d), and "that the [serious] injury was causally related to the accident" (Kapeleris v Riordan, 89 AD3d 903, 904; see Elshaarawy v U-Haul Co. of Miss., 72 AD3d 878, 881). Although the plaintiffs submitted certain evidence establishing, prima facie, that one of the injured plaintiff's vertebrae had a fracture, the plaintiffs, who submitted certain evidence showing that the fracture was "of indeterminate age," failed to establish, prima facie, that the fracture was caused by the accident (cf. Diliberto v Barberich, 94 AD3d 803, 804; Dabbs v Kelly, 245 AD2d 482, 482-483). Accordingly, that branch of the plaintiff's civil motion which was, in effect, for summary judgment or the issue of summary judgment must be denied on the merits.

Islam v. Apjeet Singh Makkar


H. Bruce Fischer, P.C., New York, N.Y., for appellant.
Nancy L. Isserlis, Long Island City, N.Y. (Lawrence R. Miles of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Agate, J.), entered May 13, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The plaintiff alleged, inter alia, that as a result of the subject accident, he sustained injuries to the cervical and lumbar regions of his spine, as well as his right knee and right shoulder. The defendants provided competent medical evidence establishing, inter alia, prima facie, that those alleged injuries did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Cantave v Gelle, 60 AD3d 988; Morris v Edmond, 48 AD3d 432; Rodriguez v Huerfano, 46 AD3d 794, 795).

In opposition, the plaintiff failed to provide a reasonable explanation for a cessation of his medical treatment, rendering his treating physicians' conclusions regarding causation speculative (see Pommells v Perez, 4 NY3d 566, 574; Hall v Hecht, 92 AD3d 721), and, thus, failed to raise a triable issue of fact. In addition, the plaintiff testified at his deposition that he returned to work as a cab driver two weeks after the accident, which, under the circumstances, demonstrated that his injuries did not prevent him from performing substantially all of the material acts constituting his usual and customary daily activities during at least 90 out of the first 180 days following the accident (see Cantave v Gelle, 60 AD3d at 989; Scott v Hing Chee Leung, 287 AD2d 612). Accordingly, the Supreme Court correctly granted the defendants' motion for summary judgment dismissing the complaint.

Wedderburn v Simmons


Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of counsel), for appellant.
James G. Bilello & Associates, Westbury, N.Y. (Patricia McDonagh of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Martin, J.), dated May 25, 2011, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is reversed, on the law, with costs, and the defendant's motion for summary judgment dismissing the complaint is denied.

The defendant failed to meet his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). Although the defendant asserted that the alleged injuries to the cervical region of the plaintiff's spine did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 352; Gaddy v Eyler, 79 NY2d at 955-956), the defendant's examining orthopedist recounted, in his affirmed report submitted in support of the motion, that the range-of-motion testing he performed during his examination revealed the existence of a significant limitation in the region (see Cues v Tavarone, 85 AD3d 846; Fields v Hildago, 74 AD3d 740). In addition, although the defendant asserted that the alleged injuries to the region were not caused by the subject accident (see Pommells v Perez, 4 NY3d 566, 579), he provided no competent medical evidence supporting that argument (see Cues v Tavarone, 85 AD3d at 846; Hightower v Ghio, 82 AD3d 934, 935).

Since the defendant failed to meet his prima facie burden, the Supreme Court should have denied the defendant's motion for summary judgment and it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Fields v Hildago, 74 AD3d at 740).

Bukowski v. Clarkson University

Peter G. Barber, for appellant.
Norah M. Murphy, for respondents.

LIPPMAN, Chief Judge:
Almost every day, we are reminded of the injury risks attendant to participation in organized sports. The question presented in this personal injury action is whether a college baseball pitcher assumed the risk of injury associated with his participation in indoor practice. We conclude that plaintiff Bukowski assumed the inherent risk of being hit by a line drive and affirm the order of the Appellate Division.
Plaintiff had played organized baseball since he was five years old and pitched at the varsity level in high school for three years. He was recruited by Clarkson University to play on their Division III baseball team as a pitcher. During the winter of his freshman year, Bukowski began indoor training in February and was informed by his coaches that he would be practicing "live" in a nylon cage, meaning the pitcher would throw from an artificial mound at regulation distance to the batter and catcher. On the day before his accident, Bukowski observed pitchers throwing "live" practice without an L-screen [FN1] in the indoor facility. Despite never having practiced "live" indoors and without an L-screen, Bukowski entered the cage on March 2, 2006, threw about six pitches without batter contact, and then threw a fastball which the batter hit directly back at him, striking Bukowski in the jaw and breaking his tooth.
Plaintiff brought suit against Clarkson University and head coach James Kane to recover damages for injuries sustained. After discovery, Supreme Court denied defendants' motion for summary judgment. Plaintiff's theory at trial was that the risk of being hit by a batted ball was enhanced due to the multi-colored pitching backdrop and low lighting at the indoor facility, which made it harder to see the white ball, and the failure to use an L-screen. At the close of evidence, the trial court granted defendants' motion for directed verdict on the ground that plaintiff assumed the commonly appreciated risk in baseball of being hit by a line drive. The Appellate Division affirmed, and the appeal followed based on the two-Justice dissent in the court (see CPLR 5601[a]). For the reasons that follow, we affirm.
The assumption of risk doctrine applies where a consenting participant in sporting and amusement activities "is aware of the risks; has an appreciation of the nature of the risks; and voluntarily assumes the risks" (Morgan v State, 90 NY2d 471, 484 [1997]). An educational institution organizing a team sporting activity must exercise ordinary reasonable care to protect student athletes voluntarily participating in organized athletics from unassumed, concealed, or enhanced risks (see Benitez v New York City Bd. of Educ., 73 NY2d 650, 658 [1989]). "If the risks of the activity are fully comprehended or perfectly obvious, plaintiff has consented to them and defendant has performed its duty" (Turcotte v Fell, 68 NY2d 432, 439 [1986]). Relatedly, risks which are commonly encountered or "inherent" in a sport, such as being struck by a ball or bat in baseball, are "risks [for] which various participants are legally deemed to have accepted personal responsibility" (Morgan, 90 NY2d at 484). The primary assumption of risk doctrine also encompasses risks involving less than optimal conditions (see Sykes v County of Erie, 94 NY2d 912, 913 [2000] [playing on an irregular surface is a risk inherent in outdoor basketball activities]; Maddox v City of New York, 66 NY2d 270, 274 [1985] [baseball player assumed the risk of playing on a wet and muddy field]; see also Martin v State of New York, 64 AD3d 62, 64 [3d Dep't 2009], lv denied 13 NY3d 706 [2009]).
Here, plaintiff was an experienced and knowledgeable baseball player who assumed the inherent risk of being hit by a line drive. Plaintiff testified at trial that he was aware of the risk of getting hurt in baseball, had seen other pitchers get hit by batted balls, had experienced balls being batted back at him, and had hit batters with his own pitches. Bukowski also testified that in over 13 years of playing baseball, he played on numerous fields and facilities under a wide variety of conditions, including variations in lighting and pitching backdrops. Plaintiff was also aware of the obvious risk of pitching without the protection of an L-screen, and he had the opportunity to observe the lighting in the facility as well as the color of the pitching backdrop prior to his accident. Bukowski testified at trial that despite his appreciation of the conditions, he decided "to go along with how the coach set up practice." Defendant fulfilled its duty of making the "conditions as safe as they appear to be" (Morgan, 90 NY2d at 484), and there were no concealed risks unknown to Bukowski.
Even if Clarkson's pitching backdrop and indoor lighting were considered less than optimal for baseball, they still did not constitute risks beyond those assumed by plaintiff. In Siegel v City of New York (90 NY2d 471, 488-489 [1997] [decided with Morgan v State of New York, supra]), we found that the plaintiff did not assume the risk of tripping on a torn tennis net, as the risk of playing with a torn net is not inherent to the sport of tennis. Likewise, in Owen v RJS Safety Equip., (79 NY2d 967 [1992]), this Court found that a professional race car driver did not assume the risk of racing with a defective guard rail and faulty track design, which were risks that did not "inhere in the sport" of racing (id., at 967). There is a distinction between accidents resulting from defective sporting equipment and those resulting from sub-optimal playing conditions. In the present case, the risks of pitching in an indoor facility without a protective screen were inherent to the sport of baseball and readily apparent to plaintiff. There was expert testimony at trial that multi-colored pitching backdrops were common in many college baseball practice facilities, since resources had to be shared with other sports teams. Furthermore, fans sitting behind home plate commonly wear white or multi-colored shirts; it is only the batter that gets the benefit of a dark background to see the pitched ball, not the pitcher. Therefore, the conditions in the indoor facility did not create "a dangerous condition over and above the usual dangers that are inherent in the sport" (Morgan, 90 NY2d at 485 [internal quotation marks and citation omitted]).
Tellingly, plaintiff does not assert that the Clarkson coaching staff violated any established safety protocol or the NCAA Rulebook by holding their indoor pitching practices without an L-screen or a dark backdrop. Bukowski's reliance on Zmitrowitz v Roman Catholic Diocese of Syracuse, (274 AD2d 613, 614 [2000]) and Baker v Briarcliff School Dist., (205 AD2d 652, 653 [1994]) is misplaced because both cases involved coaches who allegedly failed to enforce established safety standards. The only mention in the NCAA Rulebook of an L-screen was that one must be available to a visiting team for batting practice.
As this Court stated in Trupia v Lake George Cent. School Dist., sporting activities possess "enormous social value" but also "significantly heightened risks" (14 NY3d 392, 395 [2010]). The doctrine of assumption of risk "facilitate[s] free and vigorous participation in athletic activities" (Trupia, 14 NY3d at 395, quoting Benitez v New York City Bd. of Educ., 73 NY2d 650, 657 [1989]) and shields college athletics from potentially crushing liability. Clarkson University, a college located in upstate New York, should be able to allow its sports teams to practice indoors during the cold winter months without fear of liability for inability to replicate the ideal conditions of the outdoor spring season. Plaintiff's injuries are simply the result of a "luckless accident arising from [] vigorous voluntary participation in competitive . . . athletics" (Benitez, 73 NY2d at 659).
Considering the facts in the light most favorable to the plaintiff, there was insufficient evidence from which a jury could have concluded that plaintiff faced an unassumed, concealed, or enhanced risk, even though it was his first time pitching live in the cage.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Chief Judge Lippman. Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.
Decided June 5, 2012
Footnotes

Footnote 1:A L-screen is a net strung on a thin, metal frame shaped like a block L that protects pitchers from balls that are batted back at them.
DiGioia v. Reyes


Scalzi & Nofi, PLLC, Hicksville, N.Y. (Vincent J. Nofi of counsel), for appellants.
Daniel Henthorne, New York, N.Y. (Michael R. Marino of counsel), for respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Molia, J.), dated March 4, 2011, as denied that branch of their motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted by the plaintiff Christopher DiGioia on the ground that that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Christopher DiGioia is granted.
The defendants met their prima facie burden of showing that the plaintiff Christopher DiGioia (hereinafter the respondent) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted evidence establishing, prima facie, that the alleged injuries to the cervical and lumbosacral regions of the respondent's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795), and, in any event, were not caused by the subject accident (see Jilani v Palmer, 83 AD3d 786, 787). The defendants also submitted evidence establishing, prima facie, that the alleged injuries to the respondent's right shoulder did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Staff v Yshua, 59 AD3d 614). Finally, the defendants submitted evidence establishing, prima facie, that the respondent did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see Richards v Tyson, 64 AD3d 760, 761).
In opposition, the respondent failed to raise a triable issue of fact as to whether the alleged injuries to the cervical or lumbosacral regions of his spine were caused by the subject accident (see Maffei v Santiago, 63 AD3d 1011, 1012). He also failed to raise a triable issue of fact as to whether the alleged injuries to his right shoulder constituted a serious injury within the meaning of Insurance Law § 5102(d). Finally, he failed to raise a triable issue of fact as to whether he sustained a serious injury under the 90/180-day category of Insurance Law § 5102(d).
Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted by the respondent.
Lim v. Flores


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

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Adams, J.), entered August 2, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is denied.
The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; Rodriguez v Huerfano, 46 AD3d 794, 795). The plaintiff alleged that the subject automobile accident caused her to sustain injuries to her left shoulder and the cervical and lumbar regions of her spine. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the plaintiff's left shoulder and cervical and lumbar regions of her spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d). The defendants submitted, inter alia, the affirmed report of their examining orthopedist, who found no limitation in motion upon objective and quantitative range-of-motion testing of the plaintiff's left shoulder and cervical and lumbar regions of her spine (see Kearse v New York City Tr. Auth., 16 AD3d 45).
However, in opposition to the defendants' prima facie showing, the plaintiff submitted competent evidence raising a triable issue of fact as to whether the alleged injuries to her left shoulder and to the cervical and lumbar regions of her spine constituted serious injuries within the meaning of Insurance Law § 5102(d) (see Perl v Meher, 18 NY3d 208, 215-218; Seifeldin v Braick, 94 AD3d 857; Broughal v Moss, 94 AD3d 798; Torres v Ozel, 92 AD3d 770).
Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

Gilliard v. Progressive


Hausman & Pendzick, Harrison, N.Y. (Elizabeth M. Pendzick of
counsel), for appellant.
Adams, Hanson, Finder, Hughes, Rego, Kaplan & Fishbein,
Yonkers, N.Y. (Michael A. Zarkower
of counsel), for respondents.


DECISION & ORDER

In an action for a judgment declaring, inter alia, that the defendants are obligated to provide supplementary uninsured/underinsured motorist benefits to the plaintiff in connection with an accident that occurred on January 25, 2007, the plaintiff appeals from an order of the Supreme Court, Queens County (Rios, J.), entered April 20, 2011, which granted the defendants' motion for summary judgment, in effect, declaring that they are not so obligated and denied his cross motion for summary judgment, in effect, declaring that the defendants are so obligated.

ORDERED that the order is reversed, on the law, with costs, the defendants' motion is denied, the plaintiff's cross motion is granted, and the matter is remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the defendants are obligated to provide supplementary uninsured/underinsured motorist benefits to the plaintiff in connection with the accident that occurred on January 25, 2007.

"Where, as here, an insured is required to provide notice of a claim as soon as practicable, such notice must be given within a reasonable time under all of the circumstances" (Matter of State Farm Mut. Auto. Ins. Co. v Bombace, 5 AD3d 782, 782; see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; Matter of Liberty Mut. Ins. Co. v Gallagher, 68 AD3d 772). "In the context of supplementary uninsured/underinsured motorist (hereinafter SUM) claims, it is the claimant's burden to prove timeliness of notice, which is measured by the date the claimant knew or should have known that the tortfeasor was underinsured" (Matter of Progressive Northeastern Ins. Co. v McBride, 65 AD3d 632, 633; see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 495; Matter of Liberty Mut. Ins. Co. v Gallagher, 68 AD3d at 773). "Timeliness of notice is an elastic concept, the resolution of which is highly dependent on the particular circumstances" (Matter of Progressive Northeastern Ins. Co. v McBride, 65 AD3d at 633; see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d at 494; Matter of Liberty Mut. Ins. Co. v Gallagher, 68 AD3d at 773). "In determining whether notice was timely, factors to consider include, inter alia, whether the claimant has offered a reasonable excuse for any delay, such as latency of his/her injuries, and evidence of the claimant's due diligence in attempting to establish the insurance status of the other vehicles involved in the accident" (Matter [*2]of Progressive Northeastern Ins. Co. v McBride, 65 AD3d at 633; see Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d at 493; Matter of Liberty Mut. Ins. Co. v Gallagher, 68 AD3d at 773).

Here, the plaintiff established, prima facie, that he provided notice of his claim to the defendants as soon as practicable, and that he exercised due diligence in ascertaining the alleged tortfeasor's insurance status. With respect to the issue of due diligence, the plaintiff met his prima facie burden by submitting the correspondence which he sent within two weeks of the underlying accident to the alleged tortfeasor, the vehicle owner, and the insurer of the alleged tortfeasor and vehicle owner, seeking its policy limits, as well as a subsequent discovery demand for the policy limits he served in the course of litigating a related personal injury action (see Matter of Progressive Northeastern Ins. Co. v McBride, 65 AD3d 632; see also Insurance Law § 3420[f][2][A]). Accordingly, the defendants' motion for summary judgment should have been denied, and the plaintiff's cross motion for summary judgment declaring that the defendants are obligated to provide supplementary uninsured/underinsured motorist benefits to him should have been granted, since the defendants failed to raise a triable issue of fact in opposition to the plaintiff's cross motion.

Since this is a declaratory judgment action, the matter must be remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the defendants are obligated to provide supplementary uninsured/underinsured motorist benefits to the plaintiff in connection with an accident that occurred on January 25, 2007 (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Fox v Allstate Insurance Company


Feldman, Rudy, Kirby & Farquharson, P.C., Jericho, N.Y. (Brian
R. Rudy of counsel), for appellant.
Koenig & Samberg, Garden City, N.Y. (Arnold Koenig of
counsel), for respondent.


DECISION & ORDER
In an action to recover damages for breach of an insurance contract, the defendant appeals from an order of the Supreme Court, Queens County (Lane, J.), dated February 18, 2011, which denied its motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.
The defendant issued a homeowners policy of insurance to the plaintiff. The plaintiff sustained a water loss on October 25, 2005. On or about May 15, 2009, the plaintiff commenced this action to recover amounts allegedly due under the policy. The defendant moved for summary judgment dismissing the complaint, contending that the action was time-barred based on a two-year limitations provision set forth in the policy.
By citing the insurance policy's two-year limitations period, the defendant satisfied its burden of producing evidence which, if uncontroverted, was sufficient to warrant judgment in its favor as a matter of law (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966). In opposition, however, the plaintiff raised triable issues of fact as to whether the defendant, by engaging in conduct which allegedly lulled the plaintiff into not pursuing her rights under the insurance contract upon the belief that the defendant would satisfy her claim, waived its right to assert, or was estopped from asserting, the period of limitations as a defense (see Greenpoint Bank v Security Mut. Ins. Co., 247 AD2d 583; Burke v Nationwide Ins. Co., 108 AD2d 1098; cf. Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966; McGivney v Liberty Mut. Fire Ins. Co., 305 AD2d 559; Minichello v Northern Assur. Co. of Am., 304 AD2d 731). Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint.
BALKIN, J.P., LEVENTHAL, HALL and COHEN, JJ., concur.
Garnar v New York Central Mutual Fire Insurance Company


Jacobson & Schwartz, LLP, Jericho, N.Y. (Henry J. Cernitz of
counsel), for appellant.
Craig A. Blumberg, New York, N.Y., for respondents.


DECISION & ORDER
In an action to recover damages for breach of contract, the defendant appeals from an order of the Supreme Court, Nassau County (Cozzens, Jr., J.), entered December 12, 2011, which denied its motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.
The plaintiffs alleged that, in February 2010, they discovered that a large quantity of oil had been deposited by unknown persons into the basement of their home. The plaintiffs' home is heated by natural gas. The plaintiffs filed a claim under an insurance policy issued by the defendant. The defendant denied the claim on the ground that the loss was not caused by a named peril under the policy. The plaintiffs then commenced this action to recover damages for breach of contract, alleging that they sustained damage to their property as a result of vandalism, a named peril under the policy. The defendant moved for summary judgment dismissing the complaint and the Supreme Court denied the motion. The defendant appeals, and we affirm.
To prevail on its motion for summary judgment dismissing the complaint, the defendant was required to establish its entitlement to judgment as a matter of law by demonstrating that the plaintiffs' loss was not the result of vandalism (see Wai Kun Lee v Otsego Mut. Fire Ins. Co., 49 AD3d 863, 864; see also Lobell v Graphic Arts Mut. Ins. Co., 83 AD3d 911, 912-913). In construing an insurance contract, the tests to be applied are "common speech" (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398) and "the reasonable expectations of the average insured upon reading the policy" (Matter of Mostow v State Farm Ins. Co., 88 NY2d 321, 326-327; see NIACC, LLC v Greenwich Ins. Co., 51 AD3d 883, 884; Penna v Federal Ins. Co., 28 AD3d 731, 732). "The common meaning of the term vandalism' is the malicious or ignorant destruction of public or private property'" (Wai Kun Lee v Otsego Mut. Fire Ins. Co., 49 AD3d at 865, quoting Webster's New World Dictionary [2d ed 1978]; see MDW Enters. v CNA Ins. Co., 4 AD3d 338, 338). Moreover, even if the term "vandalism" is susceptible of two reasonable interpretations, and is therefore ambiguous, it must be construed in favor of the insured (see Wai Kun Lee v Otsego Mut. Fire Ins. Co., 49 AD3d at 865).
Here, the defendant failed to meet its prima facie burden of establishing, as a matter of law, that the plaintiffs' loss resulted from a cause other than vandalism (id.). This failure warranted the denial of the defendant's motion, regardless of the sufficiency of the plaintiffs' opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).
The defendant's remaining contention is not properly before this Court, as it was raised for the first time on appeal in its reply brief (see Gartner v Unified Windows, Doors & Siding, Inc., 68 AD3d 815, 816).
Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint.
DILLON, J.P., DICKERSON, HALL and SGROI, JJ., concur.
Hernandez v The City of New York


Peña & Kahn, PLLC, Bronx (Diane Welch Bando of counsel),
for appellant.
Wallace D. Gossett, Brooklyn (Lawrence Heisler of counsel),
for respondent.
Order, Supreme Court, Bronx County (Larry S. Schachner, J.), entered on or about January 25, 2011, which, in this personal injury action, denied plaintiff's motion for an order deeming the facts in her notice to admit as having been admitted by defendant-respondent and to strike the portion of defendant's answer that denied those facts, unanimously reversed, on the law, without costs, and the motion granted.
Defendant is deemed to have admitted the facts contained in plaintiff's notice to admit, as it did not timely respond to the notice (see CPLR 3123[a]; see also New Image Constr., Inc. v TDR Enters. Inc., 74 AD3d 680, 681 [2010]). Indeed, defendant did not respond to the notice to admit until 2½ years later, and then simply objected to the requests as improper and denied the facts "on information and belief." Contrary to defendant's contention, the notice to admit, which addressed matters regarding the ownership, control and duty to maintain the metal grating upon which plaintiff allegedly fell, did not demand answers to material issues of fact. Indeed, defendant's answer did not unequivocally deny the allegation that it "had charge" of the metal grating and a duty to maintain it. Further, the notice to admit properly addressed factual issues likely to be within defendant's knowledge or which it could ascertain upon reasonable inquiry (see Villa v New York City Hous. Auth., 107 AD2d 619, 620 [1985]). Absent any explanation for the belated and patently inadequate response to the notice (see Rosenfeld v Vorsanger, 5 AD3d 462, 463 [2004]), plaintiff's motion should have been granted.
Plaintiff is especially entitled to the relief she requests, given that defendant failed to proffer any proof on the issue of ownership or control of the grating. Moreover, defendant's belated response, after the expiration of the statute of limitations on plaintiff's negligence claim, prejudiced plaintiff as she was unable to bring a claim against the purported actual owner of the grating. By contrast, defendant has impleaded the purported actual owner and may be able to prevail on its claim for common-law indemnification.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
YONATY v MINCOLLA


Calendar Date: April 23, 2012
Before: Mercure, J.P., Stein, Garry and Egan Jr., JJ.


Pope & Schrader, L.L.P., Binghamton (Alan J. Pope
of counsel), for defendant and third-party plaintiff-appellant-
respondent.
Sassani & Schenck, P.C., Liverpool (Michael N.
Livingston of counsel), for third-party defendant-respondent-
appellant.
McDonough & Artz, P.C., Binghamton (Philip J. Artz
of counsel), for respondent-appellant.
Thomas W. Ude Jr., Lambda Legal Defense and
Education Fund, Inc., New York City, for Lambda Legal Defense and
Education Fund, Inc. and another, amici curiae.


Mercure, J.P.
Cross appeals from an order of the Supreme Court (Rumsey, J.), entered June 10, 2011 in Broome County, which, among other things, denied third-party defendant's motion for summary judgment dismissing the third-party complaint.
This appeal presents the issue of whether statements falsely describing a person as lesbian, gay or bisexual constitute slander per se. Given this state's well-defined public policy of protection and respect for the civil rights of people who are lesbian, gay or bisexual, we now overrule our prior case to the contrary and hold that such statements are not defamatory per se.
After a nonparty allegedly told defendant that plaintiff was gay or bisexual, defendant relayed that information to third-party defendant, a close family friend of plaintiff's long-time girlfriend, with the hope that the girlfriend would be told. Plaintiff maintains that defendant's actions caused the deterioration and ultimate termination of his relationship with his girlfriend. He commenced this action against defendant, alleging slander, intentional infliction of emotional distress and prima facie tort. Defendant then commenced the third-party action, seeking indemnification based upon the republication of the statements.

Supreme Court subsequently denied third-party defendant's motion for summary judgment dismissing the third-party complaint, and partially granted defendant's motion for summary judgment by dismissing plaintiff's claims of intentional infliction of emotional distress and prima facie tort. The court denied defendant's motion insofar as she sought dismissal of plaintiff's slander claim. As relevant here, the court concluded that it was bound to follow prior appellate case law holding that statements falsely imputing homosexuality constitute defamation per se and, thus, plaintiff's slander claim need not be dismissed despite his failure to allege special damages. The parties cross-appeal, and we now modify by dismissing the complaint and third-party complaint in their entirety.

Whether particular statements are susceptible of a defamatory meaning — and therefore actionable — presents a question of law (see Golub v Enquirer/Star Group, 89 NY2d 1074, 1076 [1997]; Aronson v Wiersma, 65 NY2d 592, 593 [1985]). Only "[i]f the contested statements are reasonably susceptible of a defamatory connotation [does] it become[] the jury's function to say whether that was the sense in which the words were likely to be understood by the ordinary and average [person]" (James v Gannett Co., 40 NY2d 415, 419 [1976] [internal quotation marks and citation omitted]). A statement has defamatory connotations if it tends to expose a person to "public hatred, shame, obloquy, contumely, odium, contempt, ridicule, aversion, ostracism, degradation or disgrace, or to induce an evil opinion of [a person] in the minds of right-thinking persons" (Kimmerle v New York Evening Journal, Inc., 262 NY 99, 102 [1933]; accord Bytner v Capital Newspaper, Div. of Hearst Corp., 112 AD2d 666, 667 [1985], affd 67 NY2d 914 [1985]; see Golub v Enquirer/Star Group, 89 NY2d at 1076). Because the defamatory tendency of a statement depends "upon the temper of the times [and] the current of contemporary public opinion," a statement that is "harmless in one age . . . may be highly damaging to reputation at another time" (Mencher v Chesley, 297 NY 94, 100 [1947]).

Generally, a plaintiff asserting a cause of action sounding in slander must allege special damages contemplating "the loss of something having economic or pecuniary value" (Liberman v Gelstein, 80 NY2d 429, 434-435 [2003] [internal quotation marks and citation omitted]; accord Wadsworth v Beaudet, 267 AD2d 727, 728 [1999]). Plaintiff has not done so and, thus, he cannot maintain his slander claim unless the challenged statements constitute "slander per se" — those categories of statements that are commonly recognized as injurious by their nature, and so noxious that the law presumes that pecuniary damages will result (see Liberman v Gelstein, 80 NY2d at 435). The four established "per se" categories recognized by the Court of Appeals are "statements (i) charging [a] plaintiff with a serious crime; (ii) that tend to injure another in his or her trade, business or profession; (iii) that [a] plaintiff has a loathsome disease; or (iv) imputing unchastity to a woman" (id.). As Supreme Court noted, the Appellate Division Departments, including this Court in dicta, have recognized statements falsely imputing homosexuality as a fifth per se category (see Klepetko v Reisman, 41 AD3d 551, 552 [2d Dept 2007]; Tourge v City of Albany 285 AD2d 785, 786 [3d Dept 2001]; Nacinovich v Tullet & Tokyo Forex, 257 AD2d 523, 524 [1st Dept 1999]; Matherson v Marchello, 100 AD2d 233, 241-242 [2d Dept 1984]; Privitera v Town of Phelps, 79 AD2d 1, 3 [4th Dept 1981], lv dismissed 53 NY2d 796 [1981]).

We agree with defendant and amici [FN1] that these Appellate Division decisions are inconsistent with current public policy and should no longer be followed. Defamation "necessarily . . . involves the idea of disgrace" (Bytner v Capital Newspaper, Div. of Hearst Corp., 112 AD2d at 667). Defendant and amici argue — correctly, in our view — that the prior cases categorizing statements that falsely impute homosexuality as defamatory per se are based upon the flawed premise that it is shameful and disgraceful to be described as lesbian, gay or bisexual. In fact, such a rule necessarily equates individuals who are lesbian, gay or bisexual with those who have committed a "serious crime" — one of the four established per se categories (see Liberman v Gelstein, 80 NY2d at 435).

That premise is inconsistent with the reasoning underlying the decision of the Supreme Court of the United States in Lawrence v Texas (539 US 558 [2003]), in which the Court held that laws criminalizing homosexual conduct violate the Due Process Clause of the Fourteenth Amendment of the United States Constitution (id. at 578). The Court stated that people who are homosexual "are entitled to respect for their private lives" (id. [emphasis added]), but "[w]hen homosexual conduct is made criminal by the law of the State, that declaration in and of itself is an invitation to subject homosexual persons to discrimination in both the public and in the private spheres" (id. at 575). These statements of the Supreme Court simply cannot be reconciled with the prior line of Appellate Division cases concluding that being described as lesbian, gay or bisexual is so self-evidently injurious that the law will presume that pecuniary damages have resulted.

In regard to New York in particular, we locate "the public policy of [this] state in the law as expressed in statute and judicial decision and also [by] consider[ing] the prevailing attitudes of the community" (Debra H. v Janice R., 14 NY3d 576, 600 [2010], cert denied ___ US ___, 131 S Ct 908 [2011] [internal quotation marks and citations omitted]; see Dickerson v Thompson, 73 AD3d 52, 54 [2010]). Rather than countenancing the view that homosexuality is disgraceful, the Human Rights Law, since 2002, has expressly prohibited discrimination based on sexual orientation in employment, public accommodations, credit, education and housing (Executive Law § 296). Most revealing of the respect that the people of this state currently extend to lesbians, gays and bisexuals, the Legislature passed the Marriage Equality Act (Domestic Relations Law § 10-a, as amended by L 2011, ch 95, § 3) in June 2011, which was strongly supported by the Governor and gave same-sex couples the right to marry in New York, thereby granting them all the benefits of marriage, including "the symbolic benefit, or moral satisfaction, of seeing their relationships recognized by the State" (Hernandez v Robles, 7 NY3d 338, 358 [2006]). Even prior to the Marriage Equality Act, this Court had previously explained that "the public policy of our state protects same-sex couples in a myriad of ways" — including numerous statutory benefits and judicial decisions expressing a policy of acceptance (Dickerson v Thompson, 78 AD3d at 54). Similarly "evidenc[ing] a clear commitment to respect, uphold and protect parties to same-sex relationships[,] executive and local orders extend[] recognition to same-sex couples and grant[] benefits accordingly" (id.; see Godfrey v Spano, 13 NY3d 358, 380-381 [2009] [Ciparick, J., concurring] [detailing the many statutes and court decisions reflecting a public policy of acceptance of lesbians, gays and bisexuals]).

We note that the most recent Appellate Division decision considering the issue in depth was decided nearly 30 years ago (Matherson v Marchello, 100 AD2d 233, 241-242 [2d Dept 1984], supra). In that case, the Second Department concluded that it was "constrained . . . at this point in time" to hold that a statement imputing homosexuality was defamatory per se in light of the then-existing "social opprobrium of homosexuality" and "[l]egal sanctions imposed upon homosexuals in areas ranging from immigration to military service" (id. at 241 [emphasis added]). Ultimately, the Court held that "the potential and probable harm of a false charge of homosexuality, in terms of social and economic impact, cannot be ignored" (id. at 242). In light of the tremendous evolution in social attitudes regarding homosexuality, the elimination of the legal sanctions that troubled the Second Department in 1984 and the considerable legal protection and respect that the law of this state now accords lesbians, gays and bisexuals, it cannot be said that current public opinion supports a rule that would equate statements imputing homosexuality with accusations of serious criminal conduct or insinuations that an individual has a loathsome disease (see Stern v Cosby, 645 F Supp 2d 258, 273-275 [SD NY 2009]; Albright v Morton, 321 F Supp 2d 130, 136-139 [D Mass 2004], affd on other grounds 410 F3d 69 [2005]; Donovan v Fiumara, 114 NC App 524, 528-531, 442 SE2d 572, 575-577 [1994]; Hayes v Smith, 832 P2d 1022, 1023-1025 [Colo 1991]; Boehm v Bankers Ins. Group, Inc., 557 So 2d 91, 94 and n 1 [Fla 1990], review denied 564 So 2d 1085 [Fla 1990]; but see Gallo v Alitalia-Linee Aeree Italiane-Societa per Azioni, 585 F Supp 2d 520, 549-550 [2008] [relying, in part, on our decision in Tourge v City of Albany (285 AD2d 785 [2001], supra) in concluding that statements imputing homosexuality remain slanderous per se under New York law]). While lesbians, gays and bisexuals have historically faced discrimination and such prejudice has not been completely eradicated, "the fact of such prejudice on the part of some does not warrant a judicial holding that gays and lesbians [and bisexuals], merely because of their sexual orientation, belong in the same class as criminals" (Stern v Cosby, 645 F Supp 2d, at 275).

In short, the disputed statements in this case are not slanderous per se and, thus, plaintiff's failure to allege special damages requires that the remaining cause of action for slander be dismissed. Inasmuch as the complaint did not adequately allege extreme and outrageous conduct sufficient to support plaintiff's claim of intentional infliction of emotional distress or special damages to support a prima facie tort claim (see Howell v New York Post Co., 81 NY2d 115, 121-122 [1993], mod 82 NY2d 690 [1993]; Freihofer v Hearst Corp., 65 NY2d 135, 142-143 [1985]), Supreme Court properly dismissed those causes of action. Accordingly, the complaint and third-party complaint should be dismissed in their entirety.

Stein, Garry and Egan Jr., JJ., concur.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as partially denied defendant's motion for summary judgment dismissing the complaint and denied third-party defendant's motion for summary judgment dismissing the third-party complaint; motions granted in their entirety and complaint and third-party complaint dismissed; and, as so modified, affirmed.

Footnotes


Footnote 1:An amicus curiae brief was filed by Lambda Legal Defense and Education Fund, Inc. and Empire State Pride Agenda.

Mt. McKinley Insurance Company v. Corning Incorporated


Walker Wilcox Matousek LLP, Chicago, IL (Fred L. Alvarez of
the bar of the State of Illinois, admitted pro hac vice, of
counsel), for Mt. McKinley Insurance Company and Everest
Reinsurance Company, appellants.
Havkins Rosenfeld Ritzert & Varriale, LLP, Mineola (Gail L.
Ritzert of counsel), and Charlston, Revich & Wollitz LLP, Los
Angeles, CA (Stephen P. Soskin, of the bar of the State of
California, admitted pro hac vice, of counsel, for Kemper Insurance
Company, appellant.
Dickstein Shapiro LLP, New York (Edward Tessler of counsel),
for Corning Incorporated, respondent.
O'Melveny & Myers LLP, New York (Tancred V. Schiavoni,
III and Gary Svirsky of counsel), for Century Indemnity
Company and Westchester Fire Insurance Company, respondents.
Mendes & Mount, LLP, New York (Stephen Thomas Roberts
of counsel), for Certain Underwriters at Lloyd's, London and
Certain London Market Insurance Companies and North River
Insurance Company, respondents.

Order, Supreme Court, New York County (Eileen Bransten, J.), entered June 15, 2010, which denied the motions by plaintiffs and certain defendant insurers for partial summary judgment declaring that each of the asbestos-related claims at issue constituted a separate occurrence under the applicable insurance policies, unanimously affirmed, with costs.

The insurers that are parties to this action provided primary, excess and umbrella comprehensive general liability coverage to defendant Corning Incorporated during the period from 1962 through 1985. At issue in this declaratory judgment action are the coverage [*2]obligations of the insurers to cover Corning for claims against it arising from the distribution and/or manufacture of two asbestos-containing products by Corning subsidiaries or divisions. One product was a paper-like spacer material sometimes distributed (but not manufactured) by Corhart (originally 50% owned by Corning, later a Corning division) with Corhart's refractory bricks and mortar, which were used in the construction of open-hearth steel mills. The other product was Unibestos, an asbestos-containing piping insulation manufactured by Pittsburgh Corning Corporation, an entity that was 50% owned by Corning. Before the completion of discovery, all but two of the insurers moved for partial summary judgment declaring that each of the many thousands of subject claims constitutes a separate "occurrence" under the subject policy and is therefore individually subject to a deductible before the moving insurers' coverage is implicated. Corning and the two nonmoving insurers opposed the motion. Supreme Court denied the motion (28 Misc 3d 893 [2010]), and we affirm.

In the absence of contractual language in a policy of liability insurance resolving the issue, New York courts apply the unfortunate-event test to determine whether a set of circumstances amounts to one occurrence or multiple occurrences (see Appalachian Ins. Co. v General Elec. Co., 8 NY3d 162 [2007]; Arthur A. Johnson Corp. v Indemnity Ins. Co. of N. Am., 7 NY2d 222 [1959]). However, parties are free "to define occurrence in a manner that group[s] incidents based on [other] approaches" (Appalachian, 8 NY3d at 173). Each of the policies at issue here contains similar language addressing the definition of what constitutes a single "occurrence" for purposes of bodily injury resulting from "exposure" to "conditions." The following provision is representative: "For purposes of determining the limit of the company's liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence."[FN1] The Court of Appeals recognized in Appalachian that this language is one "way[] that parties to an insurance contract can provide for the grouping of claims" and that such a provision "indicat[es] an intent that certain types of similar claims be combined" (id. at 173 n 3).

On the present record, and taking into account that discovery was not complete at the time the motions were made, Supreme Court correctly determined that the moving insurers failed to make out a prima facie case that each of the thousands of claims constitutes a separate "occurrence" under the relevant policy language as a matter of law. Courts have interpreted identical or similar grouping provisions as combining into a single occurrence exposures emanating from the same location at a substantially similar time (see Ramirez v Allstate Ins. Co., 26 AD3d 266 [2006]; see also Fina, Inc. v Travelers Indem. Co., 184 F Supp 2d 547, 551 [ND Tex 2002]; Metropolitan Life Ins. Co. v Aetna Cas. & Sur. Co., 255 Conn 295, 308—309, 765 A2d 891, 898 [2001]). Thus, while all of the thousands of claims apparently cannot be said to have arisen from a single occurrence, any group of claims arising from exposure to an asbestos condition at a common location, at approximately the same time (for example, at the same steel mill or factory), may be found to have arisen from the same occurrence (cf. Bausch & Lomb Inc. v Lexington Ins. Co., 414 Fed Appx 366, 369 [2d Cir 2011] [holding that a grouping provision using substantially similar language did not apply to claims arising from consumer use of a defective product, which claims "involv(ed) differing times, locations, and circumstances"]). A [*3]more fully developed evidentiary record is required before the number of "occurrences" into which the underlying claims can be grouped may be determined. The parties may also pursue discovery concerning the intended meaning of the relevant policy language and the insurers' underwriting guidelines and procedures insofar as there is any ambiguity concerning the application of the grouping provision to the circumstances of the underlying claims.

Distinguishable are cases in which the policy or policies, although including "exposure" to "conditions" in the definition of "occurrence," did not contain the aggregating language "shall be considered as arising out of one occurrence" (see Appalachian, 8 NY3d at 173 n 3 [while a provision "allow(ing) continuous or repeated exposure to substantially the same general conditions (to) be considered as arising out of one occurrence' . . . indicat(es) an intent that certain types of claims be combined," the default unfortunate-event test was applied because "(t)here is no such language in the (subject) policies"] [emphasis added]; International Flavors & Fragrances, Inc. v Royal Ins. Co. of Am., 46 AD3d 224, 229-231 [2007] [in finding that the subject policies did not aggregate claims arising from exposure to a toxin at one plant, this Court distinguished Ramirez v Allstate Ins. Co. (26 AD3d 266 [2006], supra) as involving policies that contained grouping provisions similar to those at issue here]). Even further afield from this case is In re Prudential Lines Inc. (158 F3d 65 [2d Cir 1998]), in which the subject policies did not even define the term "occurrence" (id. at 76). The Prudential court also expressly noted that its decision "may have limited application" to cases involving policies that contain grouping provisions such as those at issue here (id. at 82 n 9).

Also inapposite is this Court's decision in ExxonMobil Corp. v Certain Underwriters at Lloyd's, London (50 AD3d 434 [2008], lv denied 11 NY3d 710 [2008]), which involved claims arising from the use of two allegedly defective industrial products manufactured by the policyholder. Although the ExxonMobil policies did contain a grouping provision, that provision differed significantly from those at issue here. The ExxonMobil policies provided that "all damages arising out of . . . exposure to substantially the same conditions existing at or emanating from each premises location of the Assured shall be considered as arising from out of one occurrence" (id. at 434 [emphasis added]). Thus, the ExxonMobil provision aggregated only claims arising from exposure to a condition at the policyholder's premises. Claims arising from exposure to a condition at a location where the policyholder was not conducting operations, such as the premises of a customer of the policyholder, were not grouped into one occurrence by this provision. Since it appears that the claims at issue in ExxonMobil arose from exposure created by the use of the product by the policyholder's customers (see id. at 435), the grouping provision did not apply.

Newsletter Sign-up

Fill in the form to register to receive any of our free electronic newsletters: