Coverage Pointers - Volume XIV, No. 13

Dear Coverage Pointers Subscribers:

You have a situation? We love situations.

We wish you all a joyous Christmas and a healthy and prosperous new year.  This past year was one filled with tragedies and blessings.  Say a prayer for those who have lost so much in Connecticut this past week.

The Mayans have predicted that the world is ending today; I hope you’ve had a chance to read this week’s issue of Coverage Pointers first. Wait, you must be reading it right now, so there is hope.

According to Reuters, research firm ShopperTrak on Wednesday lowered its forecast for holiday sales, citing discounts and the impact of Hurricane Sandy as it said it now sees a rise of 2.5 percent this season, down from 3.3 percent previously.  My take on this is that ShopperTrak hasn’t considered the crush of shoppers that will flood the malls Saturday when Mayans rush to purchase Christmas gifts.

 

The Coverage Pointers App:

The COVERAGE POINTERS APP isavailable in the iPhone App Store and the Android Marketplace, for free, of course. Search for it there or for iPhone or iPad users, click here.

 

This Week’s News:

Thankfully, the Governor vetoed the SUM “opt out” bill that we have reported on over the past few weeks.  See Cassie’s column for details. And this week brings us one of the silliest decisions of the year, a lower court decision finding that a dog’s bite of a passing wayfarer – through a half-open window -- constitutes use of a vehicle for SUM purposes.  That’s covered in Jon’s offering. I discuss an interesting case on the impact of sending coverage denials to tendering carriers rather than to their insureds.

 

The Numbers Game: 101 + 830 + 5306

We will start with 101.  The attached issue contains 101 pages of summaries and reported decisions.  For those who like to print the edition, we’re recommend you opt to print the first 37 pages, the summaries.  The remaining 64 are the reported decisions.

 

Notes from Audrey Seeley, Queen of No Fault:

This is our last edition of 2012 and it has been a noteworthy year for no-fault.  There was an end of year must read decision from the Court of Appeals on use and operation as well as a decision in November from an Appellate Division on the preclusion rule.  Our firm was able to achieve a small victory in County Court on lack of medical necessity before the end of the year.  Further, there have been a number of instructive arbitration awards throughout the course of the year on sufficiency of peer reviews and IMEs.  The issue of the sufficiency of a peer review and IME report will continue into 2013 and it is important to ensure that each report is scoured before relying upon it to deny a claim.  If you are in need of any training on this issue in 2013 please keep us in mind.

In 2013, we can expect to see two new arbitrators in Upstate New York.  We welcome Arbitrators Michelle Murphy Louden and Doug Coppola to Upstate New York as no-fault arbitrators.

Also, if you are looking at planning CLE or CE programs to attend in 2013, please keep in mind DRI’s Insurance Coverage and Claims Institute from April 10-12 in Chicago.  If you would like a brochure please email me at [email protected].

We wish you a Merry Christmas and a Happy and prosperous New Year!

Audrey

Speaking of the Perfect Woman, One Hundred Years Ago, She Was Discovered:

New York Tribune
December 12, 1912
Front Page

“Perfect Woman” Found
She’s a Cornell Student, Taller than Venus de Milo

Ithaca, N.Y. – Cornell has a perfect woman, according to an announcement today by Dr. Esther S. Parker, physical examiner at Sage College of women students.

Miss Elsie Scheel, of Brooklyn, is the most perfect physically of all students that she has ever examined.  Dr. Parker declares her measurements, although she is taller and weighs more, being nearer the properties of the Venus de Milo than those of any woman at Cornell since Dr. Parker has been connected with the staff.  Miss. Scheel is an athlete and plays basketball.

The definition of beauty and perfection remains a fluid one.

Scheel was twenty-four years old, stood five feet seven inches tall, weighed in at a healthy 171 pounds (her favorite food was beefsteak), and possessed a decidedly pear-shaped figure (it measured 35-30-40), according to Lynn Peril, in her book, College Girls: Bluestockings, Sex Kittens, and Coeds, Then and Now.

Dr. Parker was the founder of the Ithaca chapter of the Zonta Club, a business and professional women's organization "to honor and encourage high ethical standards in business and professions" and its second international president.  The Zonta Club was formed in 1919 in Buffalo New York and remains a vibrant organization today.

 

Peiper Presents:

This issue marks the fifth consecutive submission that I have been out of the office on “CP Day.”  As with the most of the previous days, I spent this lovely Thursday afternoon on 42nd Street trying, unsuccessfully, to resolve a sticky Labor Law/Coverage Action.  I have since returned to Western New York, and write this with much haste as my wife awaits at her annual Holiday Party.  Last week’s issue, as you know, was brought to you from the spacious confines at 53rd and 7th Avenue in NYC.  That cover letter was likewise written in haste as I was rushing off to the networking reception at DRI’s annual Insurance Coverage Symposium.  The point of this digression is that yes, it is true, Coverage Pointers does lead to drinking (responsibly, I hope). 

SOS – Steve On Sandy  

In any event, due to my healthy travel schedule, and more healthy social schedule these days, I must advise that SOS is taking a brief hiatus.  We will, however, start the New Year off right with a spirited update/primer on Additional Living Expense issues.  I have been contacted throughout this process with ALE issues, and as those of you who have looked may attest, there ain’t much by way of authority in New York.  That will likely be changing in the coming months and years as these claims wind their way, inevitably, through the Courts.    In hopes of getting a jump on the issue, we are scouring the country in hopes of finding decisions that may point the way forward. 

While there is no update, per se, this week, I wanted to thank all of you who actually take the time to read what we prepare.  Believe it or not, I am flattered that anyone would, frankly, care about anything that I have to say.  I am even more flattered that some of you take the time to comment on something that we’ve submitted.  Even better still, sometimes you actually agree! 

As we have always maintained, our goal is to bring your attention to issues and authority.  We do not profess, nor could we ever pretend, to be a final authority.  We would recommend that everyone reading our summaries review the cases at issue, and form your own opinion.  If you have any questions, or if you want to tell us how great we are, or if you want to tell us how stupid we are (we prefer the former), we love hearing feedback.  Keep it coming.

On to the issue this week.  In the column that follows, we review a very interesting disability insurance case where the result was unexpected.  We also review two excellent third-party indemnity cases for those of you who dabble in the Labor Law.  Finally, to close out the year with a bang, we also review the latest in the ever expanding series of cases arising out of the Bernie Madoff debacle.  This one involves a very interesting discussion about the breadth of coverage available under a fidelity bond. 

Finally, I sat in my mediation today with an excellent attorney whose home address is Newtown, Connecticut.  While his family was not directly affected by the tragedy of last week, he was, like the rest of us, deeply impacted.  Our deepest sympathies to anyone who lost a family member, friend or colleague.  For those of us lucky enough to have been blessed with young children, last week’s tragedy affirmed how blessed we really are.  Best wishes on enjoying a healthy and safe Holiday Season.  See you in 2013.    

Steve Peiper
[email protected]

 

The Annual Review – 830 Summaries in this Year’s Coverage Pointers:

Lest you think the Court’s are sloughing off or that there’s nothing new under the coverage sun, this was a banner year for Coverage Pointers, the busiest in the last six.

• The CP team reported on 746 appellate cases and 84 lower court decisions for a total of 830 summaries. For the year 2012, we moved Jen from lower court decisions to a new column on Bad Faith and replaced her first with Marc Schulz and then traded him for Jon Gorski.  Of the appellate reviews, 135 decisions appeared in my column, 204 in Margo’s Musing’s, 179 in  Audrey’s Angles,  107  in Steve’s Property and Potpourri, 38 in Cassie’s, 31 in Kathie’s, 15 from Jen, 10 from Mike Perley and even one from Paul Suozzi.  There were, as indicated, 84 lower court reviews in the column Jon now prepares and a perfect 26 articles from Earl.   How do we compare to previous years? Pretty favorably.
• In 2011, we added Cassie’s Capital Connection column in April. We reported on 652 appellate decisions and 98 lower court reviews for a total of 750 decision summaries. Of the appellate reviews, 151 appeared in my column, 188 in Margo’s Musings, a record 183 in Audrey’s Angles, 87 in Steve Peiper Property and Potpourri column and 43 in Kathie’s Fijal’s Federal Focus case review. In addition to those, Jen contributed the 98 lower court summaries, Earl penned 26 weekly Pearls and Mike Perley added several Liening Tower summaries. Cassie Kazukenus gave us 22 reports from Albany. Paul Suozzi contributed a guest column on municipal law.
• In 2010, we added Jen's Gems early in the year. We reported on 641 appellate decisions and 71 lower court reviews, for a total of 712 summaries. There were a paltry 137 in my column, 214 in Margo's, 159 in Audrey's Angles, Steve tackled 89 property and potpourri opinions, Kathie covered 42 federal court decisions and Jen added 76. We also offered 28 Earl's Pearls articles, a couple from Scott Duquin's Lead Paint series, and a few from Mike Perley on the topic of Medicaid Secondary Payer.
• In 2009, we had a mere 557 appellate decisions to review, with 173 appearing in my column, 206 in Margo's, 93 in Audrey's, 81 in Steve's and four in Kathie Fijal's federal case review, which was added towards the end of the year.
• In 2008, we summarized 679 appellate coverage decisions. I had an easy year, with an even 200 summaries. Margo and her predecessor reviewed 226 "serious injury" threshold cases. Audrey was a mite busier with 176 appellate and arbitration awards covered in Audrey's Angles. Steve about tripled his workload reviewing 77 in his offering.
• In 2007, we reported on 651 New York appellate decisions involving insurance coverage. I summarized 276 opinions in my column, some 226 "serious injury" threshold cases were reviewed, and Audrey Seeley gave us angles on 123 No Fault decisions. Steve Peiper reviewed 26 first party and "potpourri" appeals.

 

Letters to the New York Times Editors – December 21, 1912:

THE SUFFRAGE INVADERS

Seek to Oust Men Speakers from
School Exercises

 

To the Editor of The New York Times:

            This morning’s mail brought me the following interesting communication from the Kings County Woman Suffrage Association:

New York.  Dec. 19, 1912

Dear Sir:

Last June a number of schools of our borough had the addresses to the graduates made by women and the result seemed to be very satisfactory.
           
The object of this letter is to ask you if you will have a woman address your graduating class at the end of this term.  From the beginning of the public schools the graduates have almost invariably been addressed by men, but as fully half of the classes are girls it would seem fitting that a woman might be permitted to address them. If you would like our association to furnish a woman speaker we will gladly undertake to do so.

Hoping to receive an early and favorable reply, I am sincerely yours,

R. C. TALBOT-PERKINS, President

I presume that other school Principals of this benighted borough has been similarly favored with the above suggestion from the K. C. W. S. A.

Now, Mr. Editor, don’t you think that it is about time for us overlords to utter a feeble protest?  Aren’t we to be given a show just once in a while, say at graduating exercises?  And won’t the dear ladies continue to grace our platforms in mute radiance as of yore?  We all know that they can talk and lecture and make speeches and address children.  With reference to these vocal qualities and abilities we men have long since emerged from the State of Missouri-like wonder.  All we ask is that we be given a change at odd seasons.

                                                                                                                                                                                                  MERE MAN

Editor’s Note:  While we don’t know who “Mere Man” might have been,  we have learned about Rebecca.C. Talbot-Perkins, a highly successful and motivated business woman whose life-span of 90 years was filled with philanthropic activities.  Admitted into the National Woman’s Hall of Fame, her biography shows her to be a true leader of her time and protector of children.  Talbot Perkins Children’s Services remains an active agency to this day.

 

And this one … Charles Darwin’s Argument in Favor of Eugenics:

BABES OF THE FUTURE

Major Leonard Darwin Tells True Purposes of Eugenics

Eugenics Education Society of Great Britain,
6 York Buildings,
Adelphi, London
Dec. 11, 1912.

To the Editor of The New York Times:

As there appears to be a good deal of doubt on both side of the Atlantic with regarding to the objects and methods of eugenic societies, perhaps you will be good enough to give me an opportunity of stating briefly what they should be in our opinion.

The main aim of the eugenist is to insure the interests of the unborn of the future always being held in view in connection with all our social customs and all our legislation.  For the sake of our fellow-creatures of today and tomorrow every effort should be without doubt be made to improve the environment of mankind by rational methods.  But, as regards the more distant future, we can now practically only beneficially affect the great stream of humanity through the agency of heredity.  We desire therefore greatly to increase the sense of responsibility in connection with all matters pertaining to human parenthood, to spread abroad a knowledge of the laws of heredity as far as now known, and to encourage further research in that domain of science. 
           
As to our other aims, they will become more definite as our knowledge increases.  We can, however, positively affirm that we do not advocate any interference whatever with the free selection of normal mates in marriage…
           
Hence we regard the educational campaign which we are carrying on as being of the greatest practical importance.  There will no doubt always remain a class quite outside the pale of all moral influence, and of these there will be a small proportion who, if they become parents, are certain to pass on some grievous mental or bodily defect to a considerable proportion of their progeny.  Here and here only must the law step in.  As to whether surgical sterilization should ever be enforced on such persons we have still an open mind, but certainly not till further information on this subject is available.  Unquestionably these unfortunates must be treated with all practical consideration and must be made to feel that they are not being punished for a crime, yet sufficient control must be maintained over them in institutions or elsewhere to prevent them from breeding…

 

Jen’s Gems and 5306:

I will pick up the count where Dan left off last year at this time.  It has now been 5306 days since any New York State appellate court has affirmed a finding of bad faith against an insurer in either a first-party or third party case.  Not since June 11, 1998, when the Court of Appeals, in Smith v. General Accident Insurance Company, affirmed a finding of bad faith in an action against a carrier for its failure to settle a case, has this occurred. 

Now, another 366 days (it was a leap year) have passed and the courts have remained consistent.  The streak remains unbroken.  So, now we must tweak the question/answer we pose to all attorneys that commence bad faith claims against our clients.  Do you know how long it has been since any New York appellate court affirmed a finding of bad faith?   We do…14 years, six months and nine days.  This is normally followed by another question.  Do you think your case is going to change that?  But, I guess we will wait and see what next year brings, and keep counting just in case.  

I hope everyone has a wonderful holiday season.  It is always a special time to spend with friends and family.  I know this year I am looking forward to celebrating my little girl’s first Christmas even if her favorite gift will be the paper her toys are wrapped in. 

Till next year.

Jennifer Ehman
[email protected].

 

Back by Request:
Christmas Coverage
or
A Policy for Saint Nicholas
Dan D. Kohane
With apologies to Clement Moore (or less)

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
Keeping the Faith with Jen’s Gems
Jon’s Journal
Earl’s Pearls
Across Borders

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

12/19/12       Sierra v 4401 Sunset Park, LLC
Appellate Division, Second Department
A Head Scratcher’s Paradise:  When a Tender Is Made by an Insurer on Behalf of Its Insured to an AI Carrier, the Insured Is Entitled to Receive Notice of Disclaimer, or Is It?
Scottsdale issued a certificate of insurance to the 4401 Sunset Park, LLC (“4401”), and Sierra Realty, in accordance with a construction agreement. On August 18, 2008, Juan Sierra, allegedly was injured while working in the subject building.

On January 6, 2009, 4401 and Sierra Realty’s own insurer, Greater New York Insurance Company (“GNY”), tendered to Scottsdale.  On February 2, 2009, Scottsdale disclaimed coverage and rejecting the tender, on the grounds that the GNY letter constituted late notice of the accident and did not comply with terms of the Scottsdale policy.  Scottsdale did not send this letter to 4401 or Sierra Realty.

Sierra Realty and 4401 moved for summary judgment declaring that Scottsdale was obligated to defend and indemnify them because they did not get notice of the disclaimer.

Where a primary insurer, like GNY, tenders a claim for defense and indemnification to an insurer, in this case Scottsdale which issued a certificate of insurance indicating that they are additional insureds, that insurer must comply with the disclaimer requirements of Insurance Law § 3420(d)(2) by providing written notice of disclaimer of coverage to the additional insureds.  The fact that the tendering insurer provided untimely notice of the accident "does not excuse the insurer's unreasonable delay in disclaiming coverage".  The failure of Scottsdale to provide written notice of disclaimer to 4401 and Sierra Realty rendered the disclaimer of coverage ineffective against them.

GNY was not the real party in interest, such that the notice of disclaimer to GNY would be rendered effective as against 4401 and Sierra Realty.
Editor’s Note:  Without explanation, the Court suggested that this case was different than Cincinnati Insurance Companies v Sirius America Insurance Company which we reported on in our May 16, 2008 edition, a decision out of the Fourth Department:

Notice of Disclaimer to Liability Carrier for Additional Insured Constitutes Notice to Additional Insured
The rule of reason has prevailed in the Fourth Department on an interesting issue of statutory compliance with the disclaimer requirements.
Section 3420(d) requires a liability carrier in a matter involving bodily injury or wrongful death to send out notices of disclaimer to the injured party and any other claimant to be effective. The term “any other claimant” is generally recognized as including co-defendants in lawsuits. In this case, the carrier did not send out the notice of disclaimer to the injured party and instead of sending it out to the co-defendants, sent it out to the liability carrier for the co-defendants. In this case, the co-defendants were also insureds under the policy, entitling them to notice.

The Fourth Department held that (a) the co-defendants had no standing to complain about a failure on the party of the carrier. Sirius, to send the letter out to the injured party (underlying plaintiff) and (b) that by sending the notice to the co-defendants liability carrier, Sirius complied with the statute. The court cited to a 1999 First Department case, Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127-128), which held: .

While defendant is correct that an insurer is not always equivalent to an attorney as an agent for receipt of notice, because the latter is an agent for all purposes while the former may have conflicts of interest with the insured, this is not such a case. Failure to serve a formal notice on the nominal party in interest does not render ineffective the denial of coverage where, under the circumstances, the party who received the notice was expected to forward it to the nominal party and had undertaken to protect the nominal party's rights

Was it different?  If so, how?

In this case, Scottsdale, the subcontractor carrier that provided additional insured coverage, receives a tender from the general contractor and owner’s carrier.  Scottsdale denies coverage by sending notification to the carrier that tendered, rather than to its’ putative AI insureds, and the court found the notice insufficient.

In the Cincinnati case, Cincinnati was the insurer for Falter Construction and the City of Buffalo, who claimed AI status under a policy issued by Sirius.  Sirius sent its disclaimer notice to Cincinnati but not to Falter or the City.  The Court held that Falter and the City had no standing to assert the statutory violation by Sirius.

“With respect to Falter and the City, although they are entitled to notice of disclaimer pursuant to Insurance Law § 3420 (d) based upon their status as insureds, the notice of disclaimer was not rendered invalid under Insurance Law § 3420 (d) based on the failure of Sirius to send it to them inasmuch as Sirius complied with the statute by sending the notice of disclaimer to plaintiff Cincinnati Insurance Companies, the insurance carrier for Falter and the City.”

12/13/12       Castlepoint Ins. Co. v Mike's Pipe Yard, et al
Appellate Division, First Department
Another Late Notice Victory for Tower
Castlepoint (Tower) correctly argued that the insured could not demonstrate the reasonableness of its delay in reporting the accident leading to the plaintiff’s injury where its principal knew of the accident the day it occurred, and of the potential for litigation almost immediately thereafter.  It was unreasonable for Mike's to think the arguments previously made and rejected would suffice to excuse late notice to its insurer in the instant action.

12/13/12       Rosier v Stoeckeler
Appellate Division, First Department
Notice to a Broker is Not Notice to an Insurer
Rosier was employed by a company hired to replace two garage doors in a building owned by Stoeckler.  In March 2007, Rosier was at the site working about three feet above the garage floor on a five or six-foot ladder disassembling a door when he fell into the garage pit.  Stoeckeler learned of the accident two to three months later from his tenant who operated the shop.

Stoeckeler notified its insurance broker in November 2008 after receiving a claim letter from Rosier’s attorney in late October 2007.  Benson the broker didn’t notify the carrier, American Western (“American”).  In February 2009 Rosier sued Stoeckeler, Stoeckeler promptly delivered the summons and complaint to Benson, who misplaced the documents and failed to notify American until June 1, 2009.

Later that month, American Western disclaimed coverage based upon the failure to provide prompt notice.  Stoeckeler sued Benson alleging negligence and American Western seeking a declaration of a duty to defend and indemnify.

This action predated the notice-prejudice statute.  Here, the policy made clear that notice was to be given to American or its agent, LoVullo Associates. Benson was a broker and not an agent of American Western or otherwise authorized in any way to receive notice for American Western.

Although Stoeckeler apparently promptly forwarded the October 2008 letter from the Rosiers' attorneys as well as the February 2009 summons and complaint to Benson, there is nothing in the record indicating that American Western had any notice of the incident until June 1, 2009.

American walks; issues relating to Benson’s negligence were not yet before the court.

12/13/12       Bond v Giebel
Appellate Division, Third Department
Progressive Wins Battle Against Collusive Default Judgment
In January 1999, Bond was hurt when the snowmobile he was operating collided with a parked car. In 2002, Bond sued the owners of two cars; the one he hit and the one alleged parked in front of it, claiming that the two autos had been parked on the roadway.

Giebel owned the car he hit and O'Rourke (insured by Progressive) insured the car in front of the one he hit. O'Rourke failed to appear in the action and a default judgment on the issue of liability was entered against them in July 2002. Because of lengthy litigation against Giebel, the inquest with regard to the default by the O’Rourkes did not take place until 2008 and damages were rendered against them for $1.2 million. When the O'Rourkes notified Progressive of the judgment shortly thereafter, Progressive disclaimed coverage on the basis that it never received notice of the lawsuit, as required by the O'Rourkes' policy.

Now the fun begins.  Bond and O’Rourke entered into an Agreement under which both could make some money.

The O'Rourkes entered into an agreement with Bond under which they assigned to plaintiff their rights against Progressive and the O'Rourkes' insurance broker. Bond agreed to pay the O'Rourkes 40% of any recovery that he received from Progressive in excess of $300,000.

Bond then sued Progressive as assignee of the O'Rourkes' rights, asserting, as pertinent here, a claim against Progressive pursuant to Insurance Law § 3420 (2) (the “direct action statute”) to recover part of the unsatisfied default judgment as well as a bad faith claim based upon Progressive's disclaimer of coverage. We note that there was no need to obtain an assignment to commence the direct action.

Bond claimed that the O'Rourkes provided timely notice to Progressive in 2002 and that Progressive failed to defend and/or indemnify them. Progressive then moved for an order vacating the default judgment against the O'Rourkes.  Progressive also sought permission to intervene in the personal injury action.   The lower court denied Progressive relief.

On appeal the court found that:

• Progressive had standing to move to vacate the default judgment even though it denied coverage.  Nobody but Progressive had an interest in vacating the default judgment, as the O'Rourkes have the potential to benefit financially by allowing that judgment to remain in effect.  In fact, the O’Rourkes were opposing the motion to vacate the default judgment rendered against them. 

 

• While the collusive nature of the assignment agreement may not have led to the default judgment, the financial benefit that the O'Rourkes stand to gain as a result of that agreement clearly provides them with an incentive to act in unison with plaintiff going forward.  The Court found that to allow such a result offended its sense of justice and propriety and cannot be condoned.

• While Progressive’s application to vacate the default judgment appears untimely, in the “interest of justice,” the court permitted it.  The collusive nature of the agreement created a disincentive for the O'Rourkes and the integrity of the judicial process under the particular circumstances of this case should be maintained.

 

• Progressive's motion for intervention should be granted.

• Issues of fact as to O’Rourke’s tort liability remain to be resolved.

 

12/12/12       Five Star Electric Corporation v Zurich American Ins. Co.
Appellate Division, Second Department
A Subcontractor That Is Not on the OCIP, Cannot Enjoy its Benefits
In February 2007, Five Star entered into a subcontract with a general contractor, Hunt/Bovis to perform electrical work for the CitiField construction project.  The owner instituted an "Owner Controlled Insurance Program" (hereinafter OCIP), in which the plaintiff did not participate. During the course of the project, the plaintiff's work allegedly was damaged by the actions of other subcontractors and sued under a builder’s risk policy.

However, Five Star was not an insured under the builder’s risk policy.  There was builder’s risk coverage under the OCIP but since Five Star didn’t subscribe, Five Star was not an insured.  It was required to procure and maintain its own coverage.

12/12/12       Chiarello v Rio
Appellate Division, Second Department
Questions of Fact on the Reasonableness of a Delay in Reporting Accident to Insurer
On July 18, 2007, the plaintiff was hurt while operating an ATV owned by the Rios while a guest of Rios’ teenage son at the Rios’ vacation home in Galway New  York. The Rios' vacation home was insured under a policy issued by Encompass.

The policy that Encompass issued to the Rios recited that Encompass did not have a duty to provide coverage under the policy unless the insured notified it of the occurrence "as soon as practical."  Since the subject policy was issued before January 17, 2009, which was the effective date of an amendment to the Insurance Law requiring an insurer to establish prejudice in order to effectively disclaim coverage based on late notice of an occurrence, Encompass does not have to establish that it was prejudiced by the failure of the Rios to comply with the notice provision in order to disclaim coverage.

While the carrier demonstrated a prima facie entitlement to judgment as a matter of law by showing that the Rios did not provide it with notice of the infant plaintiff's accident until three years after the accident had occurred, the Rios raised a triable issue of fact.

In an affidavit, Frank Rio stated that the infant plaintiff took and operated the ATV without the Rios' knowledge and contrary to their instructions; that he was told that the infant plaintiff was injured while attempting to traverse a "sand pit," which was not located on their property; and that the plaintiff was only concerned about his own potential liability for property damage to the ATV and for trespassing onto another person's property, and did not indicate any intent to assert a claim against the Rios.

In addition, the subject policy excluded coverage for any accident involving the ATV while the ATV was not being operated on the Rios' property.  Given that Frank Rio allegedly warned the infant plaintiff not to drive in the sand pit, which was not on the Rios' property, and that the infant plaintiff informed Frank Rio that the accident had occurred in the sand pit, the Rios' opposition raised a triable issue of fact as to whether it was reasonable for them to refrain from reporting the occurrence until they received a copy of the summons and complaint, which, for the first time, put them on notice that the plaintiffs alleged that the accident occurred on their property.  Accordingly, the Supreme Court properly denied that branch of Encompass's motion which was for summary judgment dismissing the first cause of action of the third-party complaint, which sought indemnification and coverage based on an alleged breach of contract.

Claims of negligence against Encompass were dismissed.  This is a contract action.  The court refused to sever the coverage case from the tort action so that there would not be inconsistent verdicts on the issue of the location of the accident.

12/12/12       Bicounty Brokerage Corp. v Burlington Insurance Company
Appellate Division, Second Department
In Procedural Morass, Retail Agent Retains Potentially Liable for Not Securing Coverage
Buckingham was a surplus lines wholesale broker with whom the defendant Burlington had contracted to act as a general managing agent.  In November 2001, P & T Contracting Corp. retained Bicounty Brokerage to procure commercial general liability insurance.  Bicounty contacted a Buckingham employee and submitted an application for a policy that would provide the requested coverage.  Bicounty received from the Buckingham employee what appeared to be a binder, binding Burlington, and providing coverage to P & T for the period from November 30, 2001, through November 30, 2002, and naming the City of New York as an additional insured.  However, after a personal injury action was commenced against the City regarding a slip-and-fall accident in P & T's work area, Burlington denied the City's claim on the ground that a search of its records revealed that no such policy had been issued.

Bicounty commenced this action seeking, inter alia, a judgment declaring that Burlington is obligated to defend and indemnify P & T in several underlying personal injury actions, and to recover damages against Buckingham for its negligence in failing to procure insurance coverage, as set forth in the binder issued by Buckingham.  In the meantime, nine other personal injury lawsuits were commenced during the time the policy was supposed to be in effect.

Burlington was successful in securing summary judgment declaring that it was not obligated to defend or indemnify P & T or the City with regard to eight of the underlying actions, based on Bicounty's failure to provide timely notice of those claims.  Buckingham had not brought a motion for summary judgment at the time of Burlington’s motion, but later sought an order dismissing the action against it on the ground that since the court had determined Bicounty’s damages were its own negligence in providing late notice, Buckingham could not be found liable for its failure to procure coverage.

The court found that it was too late for Buckingham to now seek that relief in a summary judgment motion.

 

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

12/18/12       Tyson v Nazarian
Court of Appeals
New York State’s High Court Adopts the Dissenting Opinion from the Fourth Department Finding Issue of Fact Exists Regarding Allegations of Soft-Tissue Injuries Sustained in Two Accidents
In a very brief decision, the Court in essence adopts the opinion expressed in the two-judge dissent finding that plaintiff raised a triable issue of fact under the permanent consequential and/or significant limitation of use categories of serious injury.  The Court therefore denies defendant’s motion and remits for further proceedings on the issue of negligence.  We reviewed the Fourth Department decision this past June (see below).  Unfortunately, in this decision the Court of Appeals does not offer specific guidance on the always difficult question of what showing is sufficient to establish a serious injury under the soft tissue categories when the same body parts or areas were injured in a prior accident or there are documented preexisting conditions.

The dissent in the Fourth Department’s decision reiterated that while a numeric percentage (quantitative) of loss of range of motion can be used to substantiate a claim of serious injury, a qualitative assessment is also sufficient, provided it has an objective basis and compares the claimed restrictions to the “normal function, purpose and use of the affected body organ, member, function or system.”  Any doubt that this is the rule in New York State was put to rest by the Court in Perl v Meher (18 NY3d 208 [2011]).  This is all fine and good when the alleged injuries are the result of one accident. 

The problem arises when the injured party, as was Michel Tyson’s case, already has injuries and/or preexisting conditions.  The majority’s answer was that “plaintiff was required to offer some explanation with respect to how her current limitations were caused by that accident rather than the preexisting condition.” 

One would think that if there is a prior injury, numeric range of motion restrictions were recorded at some point prior to a subsequent accident.  One would also think that any treating medical provider would be alerted to make certain to document range of motion limitations immediately whenever there is a history of prior injury/condition.  Therefore, when there have been prior injuries, a baseline should exist against which to measure and compare subsequent injuries.  For this reason, we respectfully disagree with the Tyson minority’s concern that this would set “an almost impossible standard for persons with preexisting injuries.” 

Personally, while we agree with the majority that the injuries must be differentiated and, if relevant, apportioned, we also agree that under the specific facts in Tyson’s case, she did raise an issue of fact warranting denial of defendants’ motion.  Here was our review of the earlier Fourth Department decision:

06/08/12       Tyson v. Nazarian
Appellate Division, Fourth Department
Plaintiff’s Failure to Differentiate Injuries Between Prior and Subject Accident Results in Summary Judgment to Defendants
Defendant turned left in front of plaintiff who had the right-of-way.  Plaintiff claimed that the prior back and neck injuries she sustained in a motor vehicle accident in 2002 were exacerbated by the subject accident of 2008.  She filed a motion and cross-motion for summary judgment on the issues of negligence and serious injury. 

Defendant submitted persuasive evidence that plaintiff’s alleged pain and injuries were related to her pre-existing conditions as she underwent a spinal fusion in 2006, obtained Social Security disability benefits for a “sever impairment,” and continued to complain of lumbar back problems and neck pain until the date of the subject accident.  Defendant also submitted a peer review which indicated that her symptoms before and after the 2008 accident were essentially the same, an affirmation from another physician who concluded that the imaging studies before and after were virtually identical, and an affirmation from a third physician who reviewed diagnostic films and found no evidence of traumatic injury attributable to the 2008 accident.

In opposition, plaintiff submitted the affidavit of her treating physician who noted a significant disc herniation at L4-5 on an MRI performed in 2008.  He recommended surgery which he performed in 2009, but plaintiff continued to have back pain.  Although this was sufficient to raise a triable issue of fact, given the evidence submitted by defendant plaintiff was required to offer some explanation as to how her current symptoms and limitations were caused by the 2008 accident rather than the pre-existing condition.  Her physician, even if he could not provide a quantitative comparison, was required to provide a qualitative comparison.  Simply stating that she had “persistent worsening” of symptoms was conclusory and insufficient to refute defendant’s experts.

On appeal, the trial court’s denial of plaintiff’s motion and cross-motion, and dismissal of the complaint, was affirmed with a two-judge dissent.  The dissent expressed concern that the decision of the majority sets “an almost impossible standard for persons with preexisting injuries and conditions to have their cases heard by a jury when those persons are injures in subsequent motor vehicle accidents.
Note:  The dissent cites to the standard set in Perl v Meher, the recent Court of Appeals decision specifically addressing soft tissue injuries.  With a two-judge dissent, it will not surprise us if this case also travels to Albany to seek clarification on the very problematic area of pre-existing injuries and conditions.

Note:  Is it merely coincidence that five of the decisions reviewed in this issue involve injuries sustained in multiple accidents? 

12/20/12       Barhak v L. Almanzar-Cespedes
Appellate Division, First Department
Recent Examination Revealing Full Range of Motion Defeats Claim of Permanency
Plaintiff was involved in a rear-end accident in 2009.  He claimed permanent injuries to his cervical and lumbar spine, left elbow and left shoulder.  In support of his motion, defendant submitted an affirmation from an orthopedic surgeon who, upon recent examination, found that plaintiff had full range of motion of all the allegedly injured body parts.  In addition, defendant’s radiologist reviewed an MRI taken after the accident and opined that plaintiff had extensive preexisting degenerative disc disease and desiccation multiple herniations had degenerative etiology.

In opposition, plaintiff submitted affirmations from a radiologist, who indicated the MRI films revealed a bulging disc and herniations at multiple levels, and from a neurologist who conducted EMG/NCV tests and found radiculopathy and range of motion limitations and opined that, in light of the absence of prior injuries, plaintiff’s cervical spine injuries were causally related to the accident.  Plaintiff’s treating doctor also explained that the gap in treatment was due to the fact that plaintiff had reached “maximum medical improvement.”

However, plaintiff failed to submit any objective medical evidence to support injury to his lumbar spine, left shoulder or left elbow.  In addition, his claim under the 90/180-day category was dismissed based on his deposition testimony and his bill of particulars.  As such, on appeal the trial court’s decision was modified, but only to the extent of denying defendant’s motion with respect to the claims under the permanent consequential and/or significant limitation of use categories.

12/20/12       Dorrian v Cantalicio
Appellate Division, First Department
Plaintiff Admits to Three Prior Motor Vehicle and One Work-Place Accidents
As a result of a rear-end accident, plaintiff alleged injuries to his cervical and lumbar spine and left knee.  He also admitted suffering prior back injuries in one or more prior motor vehicle accidents and one work-place accident.  He also had left knee surgery following one of the accidents.

In support of his motion, defendant submitted the affirmed report of an orthopedist that examined plaintiff and found full range of motion, and of a radiologist who found degeneration, in all the allegedly injured parts.  In opposition plaintiff submitted the examinations of his treating physician done months after the accident and indicating only minor limitations in one plane, while no explanation was given for the decline in range of motion of plaintiff’s cervical spine during a recent examination.  In addition, the physician’s opinion as to the cause of plaintiff’s lumbar injuries was based only on plaintiff’s subjective statement that he had recovered from the three prior accidents.  Furthermore, plaintiff did not plead, and his physician did not provide any basis for determining any exacerbation of the prior injuries.  On appeal, the dismissal of the complaint was affirmed.

12/19/12       Davis-Hassan v Siad
Appellate Division, First Department
Failure to Not Raise Issue of Gap in Treatment at Trial Level Results in Argument Not Being Considered
On appeal, the trial court’s decision denying defendant’s motion is affirmed where, although defendant met his prima facie burden showing that plaintiff did not sustain a serious injury to her cervical and lumbar spine, plaintiff offered sufficient evidence to raise a triable issue of fact.  Furthermore, defendant raised the issue of a gap in treatment improperly for the first time on appeal so that argument was not considered.

12/19/12       Frisch v Harris
Appellate Division, Second Department
History of Prior Accidents Not Properly Addressed by Plaintiff’s Experts Results in Speculative Opinions Regarding Causality
Plaintiff claimed injuries to her right shoulder and cervical and lumbar spine, as well as alleging injury under the 90/180-day category as a result of the subject accident.  She had been involved in accidents resulting in injury to the same parts of her body in 1993, 1996, 1998, 2001 and 2007.  Her own orthopedist concluded that the causality of her claimed injuries was “not very well established,” while her orthopedic surgeon casually related the injuries to aggravations of the preexisting injuries but did not include all the prior accidents, listed incorrect years and failed to review all the records.  As a result, his opinion about causality was speculative and insufficient.  In addition, defendants established, through plaintiff’s deposition testimony, that she did not sustain injury under the 90/180-day category and plaintiff’s papers also failed to raise a triable issue of fact with respect to that category.

12/19/12       Granela v Ruppert
                    Saldarriaga v Moreno
Appellate Division, Second Department
Plaintiff Successfully Raises Issue of Fact
In a brief decision with no details, the Granela trial court is reversed and defendant’s motion denied where, in opposition, plaintiff raised a triable issue of fact with regard to injuries allegedly sustained to her cervical and lumbar spine under the permanent consequential and/or significant limitation of use categories.

In Saldarriaga, the trial court is similarly reversed because defendant failed to address plaintiff’s 90/180-day claim set forth in his bill of particulars.  As such, it was no necessary to consider the sufficiency of plaintiff’s opposing papers.

12/19/12       Rodriguez v Zabala
Appellate Division, Second Department
Plaintiff Fails to Raise Issue of Fact
In another decision with no details, defendant established that plaintiff did not sustain a serious injury to her cervical or lumbar regions and she failed to raise a triable issue of fact.

12/13/12       Mirdita v Ash Leasing Inc.
Appellate Division, First Department
Measured Range of Motion Limitations Must Be Compared to a Normal Standard
In support of their motion, defendants submitted the affirmed report of a radiologist who opined that the MRIs of plaintiff’s cervical and thoracic spine and shoulders showed chronic preexisting conditions but no evidence of trauma or causally related injury. 

In opposition, plaintiff submitted the affirmed reports of his physician who measured plaintiff’s range of motion but did not compare the results with normal standards resulting in it not being possible to determine whether the limitations were significant.  In addition, plaintiff did not submit a recent physical examination report thus rendering the findings deficient.  Plaintiff’s expert also failed to address defendant’s radiologist’s findings that the conditions were degenerative.  This failure to present any support regarding causation also defeated plaintiff’s 90/180-day claim and the trial court correctly dismissed the complaint.

12/13/12       Marcellus v Forvarp
Appellate Division, First Department
Plaintiff’s Experts Fail to Address Prior Accident
In support of their motion, defendants submitted evidence showing that plaintiff had a prior accident in 2004 in which she injured her right shoulder.  They also submitted the operative report, an MRI report finding degenerative changes, and the report of an orthopedist that found full range of motion and opined that any right shoulder injury had fully resolved post-operatively. 

In opposition, plaintiff submitted MRI findings and evidence of recent limitations but she failed to show that the injuries were caused by the 2008 accident and her experts did not address a 2005 medical report regarding the 2004 accident in which it was noted plaintiff’s complaints of impingement and worsening shoulder pain.  In addition, no evidence was submitted explaining the effect of the prior injuries on the alleged 2008 injuries and her experts failed to address the opinion of her surgeon that the labrum tear was degenerative, or a 2009 MRI report concluding that the shoulder conditions were degenerative.  As such, on appeal the trial court’s dismissal of the complaint was affirmed.  The trial court’s denial of leave to renew was also affirmed because plaintiff’s new evidence of contemporaneous limitations did not address the issue of causation and therefore would not serve to defeat defendants’ motion.

12/13/12       Eisenberg v Guzman
Appellate Division, First Department
Plaintiff’s Testimony That He Was Confined to Home for Two Weeks and That He Did Not Work Because There Was No Work Defeats 90/180-Day Claim
On appeal, the trial court is reversed and defendant’s motion granted as defendant established that plaintiff did not sustain a serious injury to the ACL of his left knee under the permanent consequential and/or significant limitation of use categories because defendant’s radiologist found no MRI evidence of an ACL tear following the accident even though defendant’s orthopedist found range-of motion limitations in 2009.  The appellate court found that plaintiff failed to raise a triable issue of fact because, even if he had shown that his knee had not been injured during two prior surgeries, and that the ACL was actually torn, he did not present evidence that the limitations allegedly caused by the accident were significant or important.  The appellate court also found that plaintiff’s testimony that he was only confined to his home for two weeks following the accident, and that he did not work because there was no work, defeated his 90/180-day claim. 

12/13/12       Silverman v MTA Bus Co.
Appellate Division, First Department
Plaintiff’s Chiropractor Adequately Addresses Causation, Differentiating Injuries from Two Accidents
Plaintiff was 27 when her car was struck by a bus in 2007.  She claimed injuries to her cervical and lumbar spine, and left knee, shoulder and hand.  With respect to the cervical and lumbar spine, defendants relied on plaintiff’s deposition testimony where she admitted injuries to her neck and back in 2002 when she was struck by a minivan while crossing the street. 

However, in opposition, plaintiff submitted the affidavit of her chiropractor who treated her after both accidents and stated that he released her from care in 2004 as she had recovered and was asymptomatic.  His opinion was supported by a 2002 MRI showing only a bulge at L5-S1, and a 2007 MRI showing new bulges at C2-3, C3-4, C4-5, C6-7, L3-4 and L4-5, as well as a subligamentous herniation.  He also conducted EMG studies which revealed lumbar and cervical radiculopathy and measured significant limitations contemporaneously with the 2007 accident, continuously throughout treatment and recently.  Because the unaffirmed MRIs were not the only basis for his findings, they could be considered in opposition to defendants’ motion.  On the other hand, defendants did not submit an expert radiologist’s opinion disputing those findings and, on appeal, the trial court’s decision was modified to reinstate those permanent consequential and/or significant limitation claims.

With respect to the alleged injuries to the left knee, shoulder and hand, defendants established that plaintiff had full range of motion, and that the knee conditions were preexisting and not causally related to the 2007 accident.  Plaintiff failed to raise a triable issue of fact and those claims were properly dismissed.  However, on appeal plaintiff’s 90/180-day claim was also reinstated as defendants did not submit any medical evidence refuting plaintiff’s claim, set forth in her bill of particulars, that she was confined to home for four months following the accident.
Note:  Compare the evidentiary submissions in this case with the following one.  Both are good lessons on differentiating injuries where there are multiple accidents.

12/13/12       Davis v Cottrell
Appellate Division, Third Department
Plaintiff Fails to Differentiate Injuries from Prior Accident
In 2005, plaintiff was a passenger in a van driven by third-party defendant when it was struck by a vehicle driven by defendant.  Third-party defendant moved to dismiss the third-party complaint on the ground that defendant’s negligence was the sole proximate cause of the accident and to dismiss the complaint on the ground that plaintiff did not sustain a serious injury.  The trial court granted the motion on the serious injury ground dismissing the complaint and plaintiff appealed.

Plaintiff alleged injuries under the permanent loss of use, permanent consequential and/or significant limitation of use and the 90/180-day categories.  As the record did not contain proof that plaintiff lost the total use of any body organ or system as required, and her own treating physician diagnosed her with a “permanent partial disability,” her claim under the permanent loss of use category failed. 

With respect to the permanent consequential and/or significant limitation of use categories which require objective, quantitative evidence of range of motion limitations or a qualitative assessment comparing present limitations to the normal purpose, function and use of the allegedly injured part, plaintiff was involved in a prior accident in 2004 where she injured her neck, arm, leg and upper back and testified, during her 2008 deposition, that in the 2005 accident she sustained injuries to those same parts but that all except the back pain were resolved.  Her own treating physician’s office notes indicated that three months after the 2005 accident she continued to have back pain but no neck pain and an MRI performed in 2006 revealed a protrusion at L4-5 and decreased signal consistent with degeneration.  The IME doctor noted minimal damage to the van and various other reports indicating degenerative disc disease rather than trauma and subjective complaints outweighing objective findings.

Plaintiff’s submissions in opposition left only the lower back injury at issue.  Evidence of a bulge alone is not a serious injury unless there is also proof that it was caused by the accident and affected plaintiff’s normal functioning or range of motion.  While plaintiff’s physician noted that EMG studies showed radiculitis consistent with the MRI findings of a bulge at L4-5, he did not address the degeneration noted on the MRI report or explain his conclusion that the injury was caused by the 2005 accident.  In addition, he failed to explain why her preexisting injuries from the prior accident were not the source of the injuries that she attributed to the more recent accident.  Therefore, plaintiff also failed to raise an issue of fact with regard to the permanent consequential and/or significant limitation of use categories. 

With regard to plaintiff’s 90/180-day claim, her treating physician’s reports were contradictory, finding, on the one hand, that she could return to work one week after the accident, then stating she should stay of work, but then, two weeks later, stating she could work full duty.  Her own testimony described some activities she could no longer do, but other that she could.  With this third-party defendant showed that her activities were not substantially curtailed.  In opposition, plaintiff submitted reports from another one of her treating physicians who found her totally temporarily disabled and took her out of work three months after the accident for five months.  This period out of work was not dispositive, however, because the record did not show that she was prevented from performing substantially all of the material acts that constituted her usual and customary daily activities.  While plaintiff testified that she could not carry groceries, lift or stretch as usual when cleaning, she said she could cook and do laundry.  All her physician opined that she sustained significant limitations of use of the lumbar spine as a result of the 2005 accident, he did not differentiate to what extent the limitations were related to the 2005 accident versus the 2004 accident and/or degenerative changes.  In addition, he did not support his qualitative assessment with findings based on contemporaneous quantitative testing comparing the results to pre-accident levels.  Nor did he opine that the injuries producing the limitations were the type that would prevent plaintiff from performing her customary duties and activities.  Thus, absent medical evidence addressing her prior injuries and relating current limitations to the 2005 accident, plaintiff’s 90/180-day claim also failed and her complaint was correctly dismissed.

12/12/12       Reynolds v Thompson
Appellate Division, Second Department
Plaintiff Fails to Raise a Triable Issue of Fact in Opposition
In a decision with no facts, the trial court’s dismissal of the complaint is affirmed where defendant submitted competent medical evidence establishing that plaintiff did not sustain a serious injury to his cervical and lumbar spine, and plaintiff failed to raise a triable issue of fact in opposition.

12/11/12       Paduani v Rodriguez
Appellate Division, First Department
Plaintiff’s Failure to Address Degenerative Findings Warrants Dismissal
Plaintiff was a passenger and alleged that, as a result of the collision, she sustained injuries to her cervical and lumbar spine, and right shoulder, under the permanent consequential and/or significant limitation of use, and 90/180-day categories.

Defendants met their burden with regard to the cervical claim through the report of an orthopedist who found full range of motion with the exception of a minor limitation in one plane which is insufficient to establish serious injury.  With respect to the lumbar claim, defendants’ orthopedist found full range of motion and their radiologist’s MRI revealed multilevel degenerative disc disease and changes unrelated to trauma.  While plaintiff’s expert acknowledged the degenerative findings, he did not address or contest them.  Furthermore, although her radiologist’s MRI report found herniations, the radiologist did not address causation, nor did plaintiff’s expert address plaintiff’s deposition testimony wherein she admitted sustaining a back injury in a prior car accident.

With respect to plaintiff’s claim of injury to her right shoulder, defendants established lack of causation by submitting their radiologist’s non-conclusory opinion that the conditions seen in the MRI were preexisting degenerative conditions.  Plaintiff’s expert again failed to address the evidence that the condition was degenerative.

Finally, defendants also disproved plaintiff’s 90/180-day claim by submitting plaintiff’s deposition testimony wherein she stated that she was able to babysit her grandchildren following the accident and was able to go to the store about a month after the accident.  In addition, she stated in her bill of particulars that she was not confined to bed or home following the accident.  As plaintiff did not submit any evidence in opposition, her complaint was correctly dismissed.

 

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

ARBITRATION

12/17/12       KenTon Open MRI, PC v State Farm Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Know What Type of Verification Tolls the 30 Day Timeframe to Pay or Deny
The Applicant sought reimbursement for a brain MRI allegedly performed as a result of a February 4, 2011, motor vehicle accident.  The insurer received the bill on July 5, 2011, and delayed the bill to request verification in the form of an independent medical examination (“IME”).  The IME report was not received until September 26, 2011, and the claim denied October 19, 2011, based upon not only the IME report but also a peer review conducted by the same physician.

The Applicant argued that the request for an IME and/or peer review does not toll the 30 day timeframe to issue payment or denial of the bill.  The assigned arbitrator agreed despite evidence submitted that the insurer had requested the IME on July 21, 2011.  It appears that the IME was rescheduled though for September 26, 2011.  The assigned arbitrator recognized 11 NYCRR §65-3.8 which indicates that the insurer cannot interrupt the payment of benefits pending an IME unless the Applicant or its counsel is responsible for the delay.  There is no discussion in the decision whether the Applicant or eligible injured person was responsible for the rescheduling of the IME.  The assigned arbitrator further indicated that a peer review is not a verification request and thus does not toll the 30 day timeframe.  [It is noted that historically peer review has been recognized as a verification request BUT it does not toll the 30 day timeframe.]  Thus, the denial was deemed untimely.

The assigned arbitrator further notes that the IME report did indicate that the treatment was not causally related to the accident.  The insurer could have argued that the lack of causal relationship does not require a timely denial.  Yet it is unclear whether this argument was presented. 

12/17/12       Applicant v Allstate Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Gap in Treatment Does Not Equate to One Year Rule Application BUT Could Look at Casual Relationship
The insurer denied physical therapy treatment that was provided to Applicant’s assignor over two years post-accident upon the one year ascertainability rule.  The assigned arbitrator noted that the one year ascertainability rule applies only if there is no documentation of a particular injury within one year from the date of accident.  A careful review of the medical records revealed that the assignor complained on the date of the accident at the emergency room of head, neck and low back injuries.  The next record was nearly two years later from a treating orthopedist documenting neck, mid-thoracic and low back stiffness with headaches.  The record further noted that the assignor was experiencing intermittent neck pain over the past 1 ½ years and that over the last three months the pain was progressively worse.  A second report indicated that the assignor still had frontal headaches from hitting her head on the dashboard of the motor vehicle.

The assigned arbitrator determined that the one year ascertainability rule did not apply since there was a record within a year post accident documenting neck and back injuries as well as headaches.  The assigned arbitrator did, however, indicate that perhaps the insurer could have challenged, with the correct expert report, the causal relationship of the current treatment over two years post-accident.

12/14/12       Buffalo Diagnostic Imaging v A. Central Ins. Co.
Arbitrator Kent L. Benziger, Erie County
Arbitrator Will Consider Only Those Articles Sited by Medical Expert
The insurer denied a January 31, 2012, lumbar MRI study upon the peer review of Dr. Thomas Nipper.  Dr. Nipper opined, relying upon supporting medical literature that conducting a lumbar MRI less than three weeks post-accident was not medically necessary.  The assigned arbitrator upheld the denial.

The Applicant’s counsel attempted to submit a number of medical articles in support of its contentions that were not, however, relied upon by the treating physician.  The assigned arbitrator indicated that his decision must be based upon the medical evidence and authoritative sources cited by the medical experts in the case.  Thus, he afforded little weight to Applicant’s cited sources.

LITIGATION

12/11/12       Magenta Med. PC a/a/o Sandis Taveras v Clarendon Nat’l Ins. Co.
Appellate Term, First Department
Conclusory Affidavit from Plaintiff Is Insufficient to Create Issue of Fact on Medical Necessity
The insurer’s summary judgment motion should have been granted as the plaintiff failed to submit sufficient proof that the claim was timely submitted to the insurer for payment.  The plaintiff submitted an insufficient affidavit regarding proof of timely submission of the bill to the insurer as the affidavit was from an employee with no knowledge of the claim’s mailing date or the office’s procedures for mailing.

12/07/12       Morris Med. PC a/a/o Orsini Fernandez v Amex Assurance Co.
Appellate Term, Second Department
Some Claims Dismissed and Others Not upon Failure to Appear for EUO
The plaintiff was partially entitled to summary judgment as the insurer failed to demonstrate that it requested an EUO thus timely denying the claims on breach of policy condition to appear for scheduled EUOs.  However, the insurer did demonstrate with regard to some claims that it timely requested an EUO and issued a timely denial based upon failure to appear for an EUO.  The plaintiff did not challenge the reasonableness of the EUO request or rebut the insurer’s claim that plaintiff failed to respond to the EUO request in any way.

12/07/12       VE Med. Care, PC a/a/o Diana Quiroz v. Praetorian Ins. Co.
Appellate Term, Second Department
Failure to Rebut Peer Review’s Conclusion Results in Summary Judgment for Insurer
The insurer’s summary judgment motion on lack of medical necessity should have been granted as it demonstrated issuance of a timely denial as well as the denial being based upon an affirmed peer review report.  The plaintiff did not rebut the conclusions set forth in the peer review report and thus failed to raise a triable issue of fact on lack of medical necessity.

12/07/12       Huntington Hosp. a/a/o Candice Verdon v. New York Cent. Mut.
Fire Ins. Co.
Appellate Term, Second Department
Suit Premature Due to Outstanding Verification; Blanket Denial Is Not Evidence Bill Was Denied
The insurer demonstrated entitlement to summary judgment on the ground that plaintiff’s suit was premature since the insurer’s timeframe to pay or deny the claim was tolled due to outstanding verification.  The court further rejected plaintiff’s argument that it demonstrated by virtue of a blanket denial that the insurer issued a denial in response to the bill at issue on the litigation.  Instead, the court held that the denial was not specific to the bill and that the denial was issued to the eligible injured person and not the plaintiff.

 

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

Property

12/12/12       31-01 102nd Street Assoc., Inc. v ACE European Ins. Grp.
Appellate Division, Second Department
Underwriting Documents Confirm That Plaintiff’s Misrepresentation Was Material
Plaintiff commenced the instant lawsuit seeking to overturn ACE’s decision to rescind the relevant business property policy at issue.  ACE’s decision was based upon an alleged misrepresentation at the time the coverage was bound.  On appeal to the Second Department, the Court affirmed the denial therein stating that ACE’s actions were supported by its internal underwriting guidelines.  In other words, ACE established it would not have written the policy had the misrepresentation been brought to light prior to the loss.   In turn, the trial court was directed to enter an Order declaring that the ACE policy did not provide coverage to the claim property loss. 

Potpourri

12/19/12       Jacobs v Northwestern Mutual Life Insurance Co.
Appellate Division, Second Department
Plaintiff’s “Legal Disability” Was Directly Related to, if Not Caused by, His “Factual Disability” Thus Confirming Coverage Under a Disability Policy
From 2001-2007, plaintiff developed an addiction to crystal meth.  Throughout that time, however, plaintiff was able to maintain a successful plastic surgery practice on the Upper East Side of Manhattan.  As part of this practice, plaintiff saw patients at his office twice per week, and operated three times per week at local hospitals.  Unfortunately, by 2007 plaintiff could no longer keep his medical malpractice insurance current, had been charged with a myriad of malpractice claims, and was using crystal meth on a daily basis.  Plaintiff’s problems culminated in June of 2007 when he was notified that his license had been suspended as he had become a “risk to the health of the people of New York.”

In August of 2007, two months after his license was suspended, plaintiff was diagnosed with Bi-Polar II Disorder.  In September of 2007, plaintiff voluntarily forfeited his license as it became clear that he had no viable defense to the mounting claims against him.  Thereafter, plaintiff entered into a four month in-patient rehabilitation to treat his Bi-Polar condition.

While in treatment, plaintiff sought coverage under several of the disability policies that he had previously procured from Northwestern (NW).  NW denied plaintiff’s claim on the basis that his inability to work was caused by the license suspension; not, as he claimed, the Bi-Polar Disorder.  In support of its position, NW noted that plaintiff had been using crystal meth to self-medicate an undiagnosed Bi-Polar condition while maintaining a successful medical practice.  The practice stopped after he was suspended for violating medical ethical rules and demonstrating professional incompetence. 

Plaintiff responded by arguing that the crystal meth use was directly attributable to the Bi-Polar Disorder.  The Bi-Polar disorder was a disabling condition, and the root of all of the problems which ultimately resulted in the forfeiture of his medical license. 

The policies in question were triggered where it was established that the insured “was unable to perform the principal duties of his Regular Occupation.”  The Court began its analysis by noting that a person’s disability, insofar as disability insurance is concerned, is driven by a fact inquiry.  To assist that analysis, the Court noted that three factors should be consulted.  The three factors identified by the Court were:

• Is the disability medically bona fide
• Did the medical disability onset occur prior to any “legal” disability
• Did the disability prevent or hinder the insured from engaging in his or her chosen occupation.

 

The Court went on to note that, essentially, the majority rule across the country will not preclude coverage where it is established the claimed disability impaired the insured’s ability to perform the necessary work of the profession.  On the other hand, where the disability causes the insured to engage in other activity which is unrelated to the core of the occupation, coverage will be excluded.

In light of the above, the Court held that plaintiff documented (through the use of treating physicians) that he suffered from Bi-Polar II Disorder, and that his subsequent substance abuse was resultant from the medical disorder.  Moreover, the treating physicians also opined that plaintiff had been suffering from a Bi-Polar Disorder for years.  Thus, plaintiff established that his medical condition (i.e., factual disability) caused the substance abuse which resulted in the suspension of his license (i.e., legal disability).  Accordingly, pursuant to the test adopted by the First Department, coverage was affirmed.

12/06/12       Gunderman v Sure Connect Cable Installation, Inc.
Appellate Division, Third Department
Labor Law Liability Cannot Be Shifted to Injured Party Who Also Happens to Be an Independent Contractor
Plaintiff sustained injury when he fell from a ladder while upgrading an existing cable supply line.  At the time of the incident, plaintiff was an independent contractor that had been retained by Sure Connect.  Sure Connect had previously been retained to perform the upgrade by Time Warner. 

As a result of the incident, plaintiff sued both Time Warner and Sure Connect alleging violations of Labor Law § 240(1).  In turn, Time Warner cross-claimed against Sure Connect therein seeking an award of contractual indemnification.  Sure Connect then commenced a third-party action directly against plaintiff seeking common law, as well as contractual, indemnification.  

With regard to Time Warner’s contractual indemnity claim, the Court  noted that there was no evidence that Time Warner “directed, supervised or controlled” plaintiff’s actions.  Where, as here, there was no direct supervisory control, the Court reasoned that Time Warner was free of negligence.  Accordingly, its motion for contractual indemnity was granted.  In so holding, the Court also noted that Time Warner’s right to retain “general supervisory control” was insufficient to establish a common law negligence claim.

In addition, the Court dismissed Sure Connect’s claim against Gunderman.  Because liability under Labor Law § 240(1) is absolute and non-delegable, the Court refused to permit Sure Connect to shift its liability, in whole or in part, to the injured party. 

12/11/12       Jacobson Family Investment Trust, Inc. v National Union Fire Ins. Co.  of Pittsburgh, PA
Appellate Division, First Department
Tough Luck for Madoff Victims:  For a Financial “Loss” to Be Covered, It Must Actually Exist
Although the facts of this case are exceedingly complex, the dispute boils down to six investors in the Jacobson Family Trust (JFT) who sustained losses when the Bernie Madoff Ponzi scheme was uncovered.  At that time, the investors determined that not only what they had invested was gone, but all of the purported gains had been conjured out of thin air due to Madoff’s creative accounting. 

The six claimants, through plaintiff JFT, commenced the instant action seeking to recover more than $100,000,000 in losses that Madoff had reportedly been managing.  JFT maintained that Madoff’s fraud triggered several fidelity bonds that the trust had purchased from National Union to cover such losses.  National Union denied the claim by arguing that the trust, as whole, actually withdrew more money from Mr. Madoff’s firm that it invested.  As such, on the whole, JFT suffered no actual loss due to Madoff’s scheme. 

The first part of the decision required the Appellate Division to actually address, and rule upon, what constituted a “loss” under the terms of the bonds at issue.  Although the term itself was undefined, the Court found that its meaning was not ambiguous.  Simply stated, the Court ruled that one could not have lost something that did not exist in the first place.  Thus, the measure of damages in this case was not was Madoff reported had been earned, but rather what had actually been invested.  As the reported earnings never existed, they could not have been “lost” under the terms of the bonds. 

However, the Court noted that the individuals who lost money were entitled to pursue their claims individually against National Union.  They were not, as argued by National Union, without remedy simply because JFT, as a whole, had not lost money.  That said, it is noted that as individual claimants, each was required to pay the $3,000,000 deductible on each individual claim.

 

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

Veto Number 179 – SUM Bill Reject by the Governor
Governor Cuomo Vetoes A10784/S7787 Which Sought to Automatically Attach SUM Coverage to Every Automobile Liability Policy
This legislation passed at the end of session this summer had been discussed a few times in Coverage Pointers.  In short, this bill would make SUM coverage automatically a part of a policyholder’s automobile liability coverage, and if a policyholder did not want the coverage, he or she would have to specifically opt out of the coverage.  On Monday Governor Cuomo vetoed the legislation.  His veto message is set forth below:

“This bill, if enacted, would among other things, reverse existing law by requiring consumers to pay for supplementary uninsured/underinsured motorist (“SUM”) coverage unless they affirmatively opt out of such coverage.  No other optional coverage is treated this way.  Consumers should be free to choose what level of SUM coverage makes sense for them. 

I will not add to the financial burdens already faced by New York’s consumers.  The Department of Financial Services will be exploring ways to increase consumer education on the benefits of SUM coverage so consumers can make a more informed decision about whether or not to purchase it, but I will not sign into a law that places such an unacceptable choice on New Yorkers.”

Governor Cuomo Signs A10090-B/S7312-B, SUM Coverage for Volunteer Firefights and Ambulance Crews
This Legislation Seeks to Provide UM/UIM Coverage for Volunteer Firefighters and Ambulance Crews While Acting Within the Scope of Their Duties
This legislation adds to Insurance Law §3420(f) a new paragraph which requires an automobile policy that lists a volunteer fire department, ambulance service or voluntary ambulance service as the named insured to also provide the maximum uninsured or underinsured motorists coverage available to individuals employed by the named insured when such individual are acting within the scope of their duties for the named insured.  Per the sponsor’s memorandum, this legislation was created because 11 NYCRR 60-2.3 which defines “insured” under these coverages often results in a gap in coverage for these individuals thus resulting in the individual not being entitled to UM/UIM coverage under the volunteer fire department or ambulance service’s insurance policy.

In approving the bill, Governor Cuomo recognized the sponsors of the bill for taking an important step in addressing the lack of UM/UIM coverage for emergency workers injured by uninsured or underinsured drivers at the scene of an accident.  He goes on to state “however, there are certain technical deficiencies in the bill that would make it inapplicable to certain groups that the sponsors intended to cover.  With the understanding that legislation to address these concerns will be enacted, I approve this bill.” 

 

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

12/14/12       Manganella v Evanston Insurance Company v Jasmine Co.
First Circuit Court of Appeals -  Massachusetts
Did Harassment Take Place Before Retroactive Date?
In our last issue we reported on this case and whether a determination in a prior arbitration would result in issue preclusion and preclude coverage for the sexual harassment claims asserted against Manganella.  Since that time the First Circuit Court of Appeals [“Court”] rendered a decision on a second related appeal, i.e., whether third-party defendant, Jasmine Company [“Jasmine”] is entitled to a defense and indemnification for the sexual harassment claims asserted against Manganella and Jasmine as Manganella’s employer. 

Luciano Manganella was the President and sole shareholder of Jasmine Company, Inc. In July 2005, Manganella sold Jasmine to Lerner New York Inc. [“Lerner”] for $30 million and a Stock Purchase Agreement [“SPA”] was signed.  In 1998, an employee of Jasmine accused Manganella of sexual harassment.  In May 2006, after the sale there were further allegations of harassment against Manganella which prompted Jasmine to hire an outside investigator, which interviewed several employees.  One of the employees was Donna Burgess who recounted inappropriate comments that Manganella made to her in the past.  In June 2006, Manganella was fired.

Donna Burgess, a human resources manager for Jasmine from 1997-2006 filed a charge of discrimination against Manganella, Lerner and Jasmine with the Massachusetts Commission Against Discrimination (“MCAD”). 

Ten days later Manganella notified Evanston of Burgess’ claims and requested coverage under the policy.  Evanston denied coverage on the ground that it was “apparent” that the harassment alleged in the MCAD charge did not happen in its entirety subsequent to the April 28, 1999 Retroactive Date, as required for coverage.

Notably, in April 2008, Jasmine settled the MCAD charge with Burgess for $300,000.  As part of the settlement, Burgess provided Jasmine with an affidavit stating that the conduct and actions by Manganella that formed the basis of her allegations of sexual harassment did not begin until in or about October, 1999, and then continued throughout her employment.

After Manganella filed an action against Evanston seeking a defense and indemnification for the harassment charges, Evanston filed a third-party complaint against Jasmine itself, requesting a declaratory judgment that it had no duty to defend or indemnify Jasmine for the harassment claims.  The district court granted summary judgment on the third-party claims for Jasmine, holding that Evanston had to both defend and indemnify Jasmine.  Evanston appealed, and for the following reasons the Court vacated the judgment below and remanded the case to the district court.

The issue that the Court was required to address was whether there was any material issue of fact as to whether the conduct giving rise to Burgess’ MCAD charge began after the policy’s retroactive date of April 28, 1999.  The Evanston policy covered only damages paid on claims “by reason of” any Wrongful Employment Practice that happened in its entirety after the retroactive date.

The Court began its analysis by examining the MCAD charge, which describes in general terms the progression of Mr. Manganella’s harassing conduct from offensive remarks and unwelcome touching to coerced sexual activity.  The charge reported only that Burgess began working at Jasmine in 1997 and that Manganella harassed Burgess throughout her employment there.  The charge was not specific as to dates.

The Court also analyzed other statements made by Ms. Burgess which indicated that Manganella made unwelcome sexual advances toward her “since early in her employment”, explaining that she felt that he had “tried to manipulate her from the beginning”.  Further, in response to an interrogatory Ms. Burgess stated that “when she first began working for Jasmine, Manganella would make off-color comments”.  Comments which made her feel uncomfortable but that at that time she did not feel personally threatened by them.  Similarly, at a 2011 deposition Burgess testified that Manganella made sexual comments in 1997.  The comments made her uncomfortable but, at the time, she did not find them threatening.

The Court determined that when considered in the light most favorable to Jasmine, none of these statements conclusively shows that the conduct giving rise to Burgess’ MCAD charge began before April 28, 1999.

Conversely, the Court noted, that when viewed in the light most favorable to Evanston, these statements could support the inference that the harassing conduct giving rise to Burgess’ claims did include Manganella’s pre-April 1999 remarks.

As to Ms. Burgess’ affidavit provided to Jasmine after the settlement in April, 2008, the Court recognized Evanston’s concerns over the prospect of Ms. Burgess and Jasmine colluding against insurers by swapping such statements for settlement money; however, determined the affidavit was not admissible because it was not relevant to any issue before the Court on Appeal.  The Court determined that the affidavit goes to Ms. Burgess’ subjective intent, which was not relevant.  The Court also held that even if the affidavit were relevant it could not provide a basis for summary judgment because a reasonable factfinder could disbelieve it.

Simply stated, the Court found issues of fact as to whether or not the conduct giving rise to Ms. Burgess’ MCAD charge began after the policy’s retroactive date of April 28, 1999.

12/11/12       Ment Bros. Iron Works Co., Inc. v Interstate Fire & Cas. Co.
Second Circuit Court of Appeals – New York
Residential Property Exclusion
WXIV/Broadway Grand Realty, LLC [“WXIV/Broadway”], a building owner and developer, began construction at 40 Mercer Street in 2005, using Pavarini McGovern, LLC [“Pavarini”] as general contractor.  Pavarini subcontracted the welding to Ment Bros. Iron Works Co., Inc. [“Ment”].  Ment completed its work between April and July 2006.  At the time WXIV/Broadway was the sole fee owner of the building and project at 40 Mercer.

After the completion of Ment’s work Pavarini discovered damage to the penthouse windows, allegedly caused by welding sparks.  Pavarini sued Ment in New York state court.  Ment tendered its case to Interstate Fire & Casualty Co. [“Interstate”] and Interstate assigned counsel to defend.  Soon thereafter Interstate reserved its rights on the ground that the damage had occurred during the construction of a condominium, citing the residential construction exclusion.  Later, Interstate gave 30 days notice that it would relinquish the defense, so that Ment could make its own arrangements.

Ment then filed a complaint in the Southern District of New York seeking a declaration that Interstate had duties of defense and indemnity on the underlying Pavarini claim. Cross-motions for summary judgment were filed and the district court granted summary judgment to Interstate. For the following reasons the United States Court of Appeals for the Second Circuit [“Court”], reversed.

At issue was an endorsement entitled “Residential Construction Exclusion with Apartment Exception”.  As relevant here, the exclusion states:  “This insurance does not apply to  . . . “property damage” . . . arising out of the construction of “residential properties”, except “apartments”. 

The exclusion and exception are followed by qualifying language, which applies to “apartments” that are converted to “condominiums”, i.e., “In the event any “apartment” to which coverage under this policy applies is converted to a “condominium”, . . . then coverage under this policy is excluded for any claims for “property damage” arising out of, related to, caused by, or associated with, in whole or in part, the construction of said “apartments” which occur after the conversation of the “apartment” into a “condominium, townhome or multi-family dwelling”.

Under New York law once an insurer establishes that an exclusion applies, the burden shifts to the insured to prove that the exception to the exclusion applies.   Therefore, the first task for the Court was to determine whether Interstate could prove that the exclusion applied.  The exclusion foreclosed coverage for “property damage” . . . arising out of the construction of “residential properties”.  The Interstate policy defined “residential properties” to include, but not be limited to, single-family dwellings.  The Court found that 40 Mercer qualified as residential property under the ordinary meaning of the term.  Moreover, the term is defined in the contract to include properties such as single-family homes, townhomes, condominiums, or similar properties.  Notably, the parties did not dispute whether the 40 Mercer building was a new construction of a “residential property” at the time the damage occurred.

The critical question was whether coverage is preserved by the exception to the exclusion.  The exception is for “apartments” which is defined as “a unit of residential real property in a multi-unit residential building or project where all units are owned by and titled to a single person or entity.”

The Court found the record to be clear that, in 2006, 40 Mercer was an apartment building rather than a condominium.  The documentation of the mortgage obtained by WXIV/Broadway in October 2005 clearly showed that WXIV/Broadway was the owner of the entire 40 Mercer property.  There was no claim or evidence that any unit of the planned condominium had been transferred when Ment finished performing its welding subcontract in the summer of 2006.

The Court held that Ment sustained its burden of showing that the apartment exception to the residential construction exclusion applied and that it was entitled to coverage on this loss.

Although Interstate argued that condominium offering literature filed with the New York Attorney General, which shows that 40 Mercer was intended from the outset to be sold as condominiums, the Court was unpersuaded looking both to the language of the policy and New York law which states that a building does not become a condominium until a condominium declaration is filed.  WXIV/Broadway did not file a condominium declaration under February 9, 2007, after Ment had completed its work on 40 Mercer. Although everyone involved may have intended and anticipated that 40 Mercer would become a condominium, it was not a condominium under New York law until the declaration was filed in February 2007.

Moreover, the Court concluded that even if the apartment exception to the residential construction exclusion were ambiguous, any ambiguity must be construed against Interstate as the drafter of the agreement.

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman
[email protected] 

12/14/12       Schifino v Geico General Ins. Co.
United States District Court, W.D. Pennsylvania
Under Pennsylvania Law, Court Finds Question of Fact on Bad Faith Claim Based on Failure to Settle Due to Conflicting Medical Testimony
Plaintiff was a passenger in a vehicle insured by GEICO when it was rear-ended.  Plaintiff alleged that as a result of the accident he suffered severe injury to his neck and back requiring two surgical procedures.  Eventually, he collected the liability limits of the tortfeasor’s policy.  After exhausting that policy, plaintiff asserted a claim to recover the policy limits pursuant to the UIM coverage in the GEICO policy.

Plaintiff, through counsel, made a demand upon GEICO for the $300,000 limit of the UIM coverage and forwarded copies of his medical records to assist in the evaluation of the claim.  In response, three months later, GEICO made an offer of $10,000, followed by a second offer of $13,000.  Thereafter, plaintiff brought this lawsuit in which he contended that GEICO breached its contract by failing to comply with the valid demand for the policy limits under the UIM coverage and for bad faith, asserting that the manner in which GEICO handled plaintiff's claim constituted bad faith under Pennsylvania statute. 

The court began by reiterating the bad faith standard in Pennsylvania.  To prove bad faith, a plaintiff must show by clear and convincing evidence that the insurer (1) did not have a reasonable basis for denying benefits under the policy and (2) knew or recklessly disregarded its lack of reasonable basis in denying the claim.

While there was some evidence that GEICO did not thoroughly investigate the claim prior to making the offers, ultimately, the court found a question of fact noting that the carrier’s alleged bad faith was a question for the jury.  Its analysis focused on the conflicting medical testimony as to whether the surgeries plaintiff underwent post-accident were in fact related to the accident.

12/12/12       Gates v Travelers Commercial Ins. Co.
United States District Court, M.D. Florida
District Court Applying Florida Law Requires Insurer to Disclose Allegedly Privileged Documents from Underlying Action
This decision arises out of a discovery issue in a bad faith action.  The insured brought this action against his insurance carrier for failing to timely settle an underlying tort claim within the policy limits. 

Based on the facts provided, the accident occurred on August 1, 2008.  Shortly thereafter, Travelers tendered its policy to the underlying plaintiffs.  However, due to a clerical error, the check was never received.  Four months later, on December 10, 2008, when this error was discovered, Travelers attempted to resend the letter, but plaintiffs’ counsel refused to accept the check and, instead, indicated that litigation would be commenced.  On February 2, 2012, an excess verdict was entered against the insured.

With respect to discovery, Travelers took the position that it was not required to disclose documents after December 10, 2008, the date in which there was no longer an opportunity to settle the claims for the limits.  The court disagreed asserting that as the insured’s claim was broader the merely a failure to timely settle, but instead encompassed a failure to fulfill other good faith duties.  Thus, under the broad scope of federal discovery, material up to the time of judgment in the underlying action was deemed relevant.  

The next issue considered by the court was the implication of the attorney-client privilege and the work product doctrine.  The court indicated that, under Florida law, the attorney-client privilege ordinarily cannot be asserted in a third party bad faith action relating to document in the insurer’s file created before the date of judgment, and in fact documents after the judgment maybe compelled for good cause.  Since the majority of redacted documents were from the insured’s own attorney in the underlying action (who had been retained for the insured’s benefit), no privilege was found.  Further, the “work product exception” likewise did not apply to documents in the underlying action.  As noted by the court, “while such materials may have been created in anticipation of litigation underlying suit…, they were not created in anticipation of litigation in the instant action.  Also, the notes contained mental impressions of the Travelers’ agents which could not be obtained from any other source. 
Take Away:  Discovery in bad faith cases is often a sensitive issue as it is much broader than would be permitted in a traditional breach of contract case.  Based on the facts above, a New York court would likely have reached a similar conclusion with respect to the privileges asserted.  New York courts have held that the attorney-client privilege cannot be asserted to avoid discovery of materials respecting the insurer’s handling of the claim against the insured.  Inasmuch as the client in the attorney-client relationship is the insured, and not the insurer, the privilege properly belongs to the insured and is, therefore, waivable by the insured or its assignee.

 

JON’S JOURNAL

Jonathan M. Gorski
[email protected]

12/10/12       Allstate Ins. Co. v Reyes
Supreme Court, Dutchess County
Dog Bite Considered “Use of Motor Vehicle” for Purposes of Supplemental Underinsured Motorist Endorsement; Thousands Flee
The court wrote, “The underlying facts are neither complicated nor disputed.”  I agree with the court’s assessment of the facts but at the same time, I do not believe that this statement does the fact pattern justice. 

The underlying dispute arose out of a dog bite.  As the respondent-plaintiff walked past a parked car, which was illegally parked in a no-parking area in front of a gas station/convenient store, the dog reached out the rear window and bit the respondent-plaintiff in the right breast.  Geico, the insurer of the vehicle, offered the full amount of $25,000 policy in settlement of the respondent’s claim.  When the respondent-plaintiff advised the petitioner, Allstate Insurance Company (“Allstate”), of a potential underinsured motorist claim, Allstate disclaimed on the grounds that the incident did not arise out of the ownership, maintenance, or use of an underinsured vehicle but rather was the direct result of a dog bite. 

Respondent demanded arbitration under her supplementary uninsured motorist endorsement.  Allstate moved for a permanent stay of the arbitration.  The issue to be decided by the court was whether the term “use” as it relates to “uninsured motor vehicle” encompasses the facts of this incident. 

An accident arises out of the use or operation of a covered vehicle if the use of the vehicle was a proximate cause of the injury.  The vehicle need not be the proximate cause, instead there must be a showing that the vehicle was used negligently and the negligence was a cause of the injury.   The accident must result from the inherent nature of the motor vehicle and the use must be closely related to the injury.

Here, the court held that the conduct of the vehicle owner constituted “use” of the vehicle.  The court found that the transportation of pets by vehicle is now commonplace.  The court further found that the owner was negligent in parking his car in a no parking area and permitting the rear window to remain open wide enough to allow the dog to reach out and bite a passerby.  The court reasoned that the injury would not have occurred “but for” the use of the motor vehicle to haul the dog, and the negligent conduct of the owner.    
Editor’s Note:  Now that’s just ridiculous.

12/06/12       Andy Warhol Found. for the Visual Arts, Inc. v Philadelphia Indem. Ins. Co.
Supreme Court, New York County
Insurer, Relying on Professional Services Exclusion, Standstill Agreement, and Lanham Act Exclusion, Loses Motion for Summary Judgment
Philadelphia Indemnity Insurance Company (“PIIC”) moves for summary judgment in this action brought by the Andy Warhol Foundation for Visual Arts (“Foundation”) to recover its remaining defense costs pursuant to two D&O Policies.

The Foundation’s Board reviews pieces of artwork submitted to it and determines whether they are original creations of Andy Warhol.  The Foundation purchased four insurance policies from PIIC, two D&O Policies and two E&O Policies.  Plaintiff, the Foundation, claims to have purchased the policies out of fear of litigation that could ensue if/when the Board determined a piece of artwork not to be an authentic Andy Warhol.  Lo and behold, that is exactly what happened here.

The Board issued an opinion that a certain piece of artwork was not an authentic Andy Warhol.  The owner of the piece of artwork originally filed an individual complaint alleging conspiracy by the Board.  Three months later, the owner instituted a class action alleging fraud, conduct in violation of the Lanham Act, and acts of monopolization and conspiracy in violation of the Sherman Act.  Thereafter, a third complaint was filed alleging the same allegations as the class action complaint.  

PIIC initially disclaimed coverage for the actions but later agreed to cover $225,000 of the defense costs under an E&O policy but refused to cover any defense costs under either D&O policy.  The Foundation filed for arbitration and PIIC made a motion to stay arbitration.  Before the motion to stay arbitration, the two sides executed a Standstill and Reservation of Rights Agreement (Standstill Agreement”) in which PIIC offered up the $1,775,000 remaining on the E&O policy.  In turn, the Foundation agreed not to pursue coverage under either D&O policy until the actions were completely adjudicated and good faith efforts had been made to obtain reimbursement from the underlying plaintiffs. 

The cases against the Foundation were eventually dismissed.  The Foundation investigated the financial wherewithal of the underlying plaintiffs.  After deciding that an action for reimbursement would be futile, the Foundation settled the claim against the underlying plaintiffs for $0. 

After the Foundation brought the present action, PIIC moved for summary judgment advancing two arguments: (1) the actions were not covered by the D&O policies because they were excluded by the “Professional Services Exclusion” Endorsement, (2) the Foundation failed to satisfy two conditions precedent to bringing suit under the Standstill Agreement.  In addition, PIIC moved for partial summary judgment on the basis that the Lanham claims were not covered under the policies.

The court was not receptive to any of the PIIC arguments in support of summary judgment.  First, the court found that the term “professional services” as used in the policy was at best ambiguous and thus must be construed in favor of the Foundation.  The court determined that PIIC had not met their heavy burden of proving that the Board’s art authentication services constituted “professional services” and that there was no other reasonable interpretation of “professional services” that would exclude art authentication services from its definition.  The exclusion was not applicable. 

Second, the court found that the Foundation had satisfied the two conditions precedent under the Standstill Agreement.  The court would not be constrained to a literal interpretation of the phrase “completely adjudicated.”  Settlement was sufficient in this case to constitute complete adjudication.  Also, the court found that the Foundation had made good faith efforts to obtain reimbursement because the measures taken were reasonable given the circumstances.  The Foundation had hired a firm to investigate the financial capacity and after realizing that the underlying plaintiffs could not satisfy any judgment, reasonably determined that any counterclaims would have resulted in increased litigation costs with limited potential for recovery.

Finally, the court rejected PIIC’s Lanham Act argument.  The D&O policy excluded from coverage any “oral or written publication or material, done by or at the direction of the Insured with knowledge of its falsity.”  The complaint alleged that the Board and Foundation publicized the work as not an authentic with knowledge that such publication was false.  The court found that the Lanham Act claim could be proven without proving that the Board or Foundation had knowledge of its falsity.  Therefore PIIC had the duty to defend because the complaint stated a cause of action that gave rise to a reasonable possibility of recovery.

12/06/12       McNeil v Harlow Hockey
Supreme Court, Clinton County
Defendant Prevails on Serious Injury Issue with Regards to Physical Injuries but Fails on Psychic Injuries
This case originally caught my eye because I presumed from the name of the defendant that it would have something to do with the sport of hockey.  To my disappointment “Hockey” turned out to merely be the surname of the defendants.  But not all was lost as I determined that this case was worthy of Coverage Pointers. 

In this case, the defendants move for summary judgment on the issue of serious injury under Insurance Law §5102(d).  The plaintiff claims to have sustained a “serious injury”, specifically a significant limitation of use of her leg and part of her musculoskeletal system as well as a significant limitation of use of her central nervous system and her cardiology system.  In addition, plaintiff has claimed to have suffered psychic injuries.

A defendant carries the initial burden of demonstrating, through the submission of competent medical evidence, that plaintiff did not sustain serious injury.  If the defendant is successful, the burden shifts to the plaintiff to present competent medical evidence based upon objective findings and tests to support her claim of serious injury.

Here, the defendants relied upon the records of plaintiff’s healthcare providers to satisfy the initial burden of demonstrating that plaintiff did not suffer significant limitation of use of her leg, any part of her muskoskeletal system nor did she suffer a significant limitation of use of her central nervous system or her cardiology system.  The records submitted indicated that immediately post-accident the plaintiff had no physical complaints and subsequent physical examinations and tests were all negative and described as normal.  As to the first cause of action pertaining to physical injuries, the court found that the defendants met their burden. 

Plaintiff attempted to establish a triable issue of fact regarding serious injury by submitting an attorney affidavit with plaintiff’s testimony attached.  Presumably, the plaintiff relied on her own medical records, the very medical records relied upon by the defendant.  The court found that the plaintiff failed to submit competent medical evidence based upon objective medical findings of plaintiff’s significant limitation.

However, the court found that as to the second cause of action which pled psychic injuries, the defendants did not meet their burden.  The plaintiff made a “zone of danger” claim based on having witnessed certain injuries to her parents.  The plaintiff was diagnosed with post-traumatic stress disorder causally related to the accident.  The court held that in the narrow context of the motion, such psychic damages, on the evidence presented, could not be rejected as a matter of law.  The court qualified the ruling by stating that in order for the plaintiff to prevail at trial, in the absence of proven physical injury, she must still offer substantial and highly probative evidence of a proximate causal link between the violation of a duty and the psychic injury.

 

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

COMMERCIAL LIQUIDATED DAMAGES CLAUSE HELD ENFORCEABLE

A recent case decided by the Utah Supreme Court contained an extensive review and analysis of whether and to what extent courts should enforce liquidated damage clauses.  Commercial Real Estate Investment, L.C. v Comcast of Utah II, Inc. (2012 Utah LEXIS 113 [Utah, August 10, 2012]).  Comcast’s predecessor had entered into a commercial lease agreement with Commercial Real Estate investment (“CRE”).  The Lease provided for minimum and additional rent, but added a liquidated damages clause for additional rent for each day Comcast failed to conduct business operations at the property.  Comcast’s predecessor halted operations at the premises on July 2001, and a substitute tenant was not inserted into the property until many years later (February 2006).  Liquidated damages of over $1.7 Million had accrued by that time and were the subject of the lawsuit.  The trial court held the clause enforceable and awarded CRE approximately $1.7 Million in liquidated damages, and Comcast appealed.

The court conducted a thorough analysis of the enforceability of liquidated damages clauses.  Some cases focus on whether a liquidated damages clause constitutes an unlawful “penalty”.  Another line of cases states that the amount of liquidated damages has to be compared to the actual damages, and whether the liquidated damages clause bears some reasonable relationship to actual damages incurred.  A third line of cases respects the parties’ right to contract and questions whether the parties fairly bargained for liquidated damages.  These cases note the tension between allowing the right to contract, but then subjecting liquidated damages clauses to strict judicial review.

The court criticized the “penalty” cases because they are at odds with the general presumption that contract provisions are enforceable, particularly between two sophisticated companies.  The court also criticized the liquidated damages/actual damages comparison analysis because those cases always have the benefit of hindsight rather than trying to project what the parties regarded as the possible damages at the time of contract formation.  The court also questioned the analysis that the liquidated damages clause must be based upon a reasonable forecast of actual damages, but then arguing that actual damages are incapable or very difficult of accurate estimation thus supporting a liquidated damages clause.

The Court then set a “new” composite rule that, unless enforcement of a liquidated damages clause would be unconscionable, the courts should enforce contract provisions, and liquidated damages are not subject to any greater or different judicial scrutiny.  A party may challenge a liquidated damages clause on grounds normally pursued in contract cases to reverse or vacate a contract clause, such as mistake, fraud, duress or unconscionability.  The Court presented two types of unconscionability.  Procedural unconscionability deals with the negotiation of the contract, and was not a factor in the case.  Substantive unconscionability reviews the content of the agreement and, again, the Court found no such evidence with respect to this liquidated damages clause.  While the clause may have been advantageous to CRE, it was not so one sided to oppress Comcast in awarding CRE compensation for breach of the contractual duty to continuously occupy and operate the building.

Therefore, the Court affirmed the trial court award of liquidated damages.

This case presents an excellent discussion of the competing theories and judicial views on liquidated damages clauses.  Each avenue of judicial analysis has its own detours and road blocks, sometimes even switching back upon itself.  The case generally upholds the freedom of contract, particularly between sophisticated business entities, unless the circumstances or provisions are unconscionable or otherwise “shocking” to the judicial conscience.

 

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

12/19/12       Tucci v Hartford Financial Services Group
Third Circuit Court of Appeals
Third Circuit Upholds Summary Judgment in Claim for Vandalism of Property on the Basis the Items Claimed Did Not Fit the Definition of “Covered Property”
This case involved a claim for coverage due to the vandalism of property.  The property in question involved land which had been commercially leased to tenants who built and operated a hotel.  The furniture and appliances used in the operation of the hotel was owned by another entity, Vraj Brig.  The plaintiff had evicted the commercial tenant prior. Vraj Brig then offered to sell all furnishings and appliances to the plaintiff but the offer was rejected. Vraj Brig removed the furniture and movable fixtures on August 31, 2006 and on September 1, 2006 the plaintiff gained possession of the property by a writ of possession. When Plaintiff gained possession, he found that the movable fixtures and furnishings had been removed and that the premises had been vandalized and brought a claim for damages with Hartford. Plaintiff sought coverage for the items removed by Vraj Brig.

The trial court granted summary judgment finding that the items claimed did not fit the definition of “covered property” because the term “covered property” did not include property owned by residents or tenants of the plaintiff.

The court upheld the entry of summary judgment because the plaintiff could not show the removed items were covered under the policy. Plaintiff argued that the items should be considered “covered property” because he exercised care, custody, or control over them. However, the Court noted that the plaintiff was not entitled to possession of the property until September 1, 2006. Because the items were removed prior to the date plaintiff gained possession of the property, plaintiff could not show the property was in his exclusive physical control which was necessary to show the items were in his “care, custody or control” under New Jersey law.
Submitted by: John P. Craver and Robin L. Bowers of White & Steel, P.C., Denver, CO

 

REPORTED DECISIONS

Bicounty Brokerage Corp. v Burlington Insurance Company

Traub Lieberman Straus & Shrewsberry, LLP, Hawthorne, N.Y. (Christopher Russo and Lisa L. Shrewsberry of counsel), for appellant.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant Burlington Insurance Company is obligated to defend and indemnify the plaintiff's client, nonparty P & T Contracting Corp., in certain underlying personal injury actions, and to recover damages from the defendant Buckingham Badler Associates for negligence based on the failure to procure insurance, the defendant Buckingham Badler Associates appeals from so much of an order of the Supreme Court, Suffolk County (Whelan, J.), dated August 6, 2010, as denied its cross motion, denominated as one to clarify an order of the same court dated March 5, 2010, which, inter alia, granted those branches of the motion of the defendants Burlington Insurance Company which were, in effect, for summary judgment declaring that the defendant Burlington Insurance Company is not obligated to defend or indemnify nonparty P & T Contracting Corp. with regard to eight of the underlying actions, but which was, in actuality, one for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order dated August 6, 2010, is affirmed insofar as appealed from, without costs or disbursements.

The defendant Buckingham Badler Associates (hereinafter Buckingham) was a surplus lines wholesale broker with whom the defendant Burlington Insurance Company (hereinafter Burlington) had contracted to act as a general managing agent. In or around November 2001, nonparty P & T Contracting Corp. (hereinafter P & T) retained the plaintiff, Bicounty Brokerage Corp. (hereinafter Bicounty), to procure commercial general liability insurance. Bicounty contacted a Buckingham employee with whom it had dealt on a regular basis, and submitted an application for a policy that would provide the requested coverage. Thereafter, Bicounty received from the Buckingham employee what purported to be a document binding an insurance policy on behalf of Burlington, and providing coverage to P & T for the period from November 30, 2001, through November 30, 2002, and naming the City of New York as an additional insured. However, after a personal injury action was commenced against the City regarding a slip-and-fall accident in P & T's work area, Burlington denied the City's claim on the ground that a search of its records revealed that no such policy had been issued.

Bicounty commenced this action seeking, inter alia, a judgment declaring that Burlington is obligated to defend and indemnify P & T in several underlying personal injury actions, and to recover damages against Buckingham for its negligence in failing to procure insurance coverage, as set forth in the binder issued by Buckingham. Thereafter, nine additional actions were commenced against P & T during the period in which the insurance policy was to have been in effect.

After the filing of a note of issue in the instant action, Burlington timely moved for summary judgment, inter alia, declaring that it was not obligated to defend or indemnify P & T or the City in the underlying personal injury actions. Buckingham did not, at that time, cross-move for summary judgment. In an order dated March 5, 2010 (hereinafter the March 5 order), the Supreme Court granted those branches of Burlington's motion which were, in effect, for summary judgment declaring that it was not obligated to defend or indemnify P & T or the City with regard to eight of the underlying actions, based on Bicounty's failure to provide timely notice of those claims.

Thereafter, Burlington moved for leave to reargue those branches of its prior motion which had been denied by the Supreme Court. Buckingham cross-moved for an order "clarifying the order of the Court dated March 5, 2010," arguing that the previous order was "ambiguous because it did not expressly state that [Buckingham] is entitled to the same relief granted to Burlington." Buckingham argued that, since the court had found that the proximate cause of Bicounty's damages with regard to eight of the underlying actions was Bicounty's own negligence in providing late notice, Buckingham could not be found liable for its own alleged failures to procure insurance covering the claims that are the subjects of the underlying actions. In an order dated August 6, 2010, the Supreme Court denied both Burlington's motion and Buckingham's cross motion on the merits. Buckingham appeals from so much of the order dated August 6, 2010, as denied its cross motion. We affirm, albeit on grounds that were argued to the Supreme Court and to this Court, but not relied upon by the Supreme Court.

Buckingham's cross motion, while denominated as one to "clarify" the March 5 order, was, in effect, an untimely cross motion for summary judgment (see CPLR 3212[a]). Generally, a cross motion for summary judgment made more than 120 days after the filing of a note of issue may be considered on its merits if there is a timely pending motion for summary judgment made by another party on nearly identical grounds (see Grande v Peteroy, 39 AD3d 590, 591-592; Bressingham v Jamaica Hosp. Med. Ctr., 17 AD3d 496, 497; Boehme v A.P.P.L.E., A Program Planned for Life Enrichment, 298 AD2d 540; Miranda v Devlin, 260 AD2d 451). Here, however, Buckingham's cross motion, in effect, for summary judgment was not responsive to a timely, pending motion for summary judgment and, therefore, the Supreme Court was without authority to consider it on its merits (see Brill v City of New York, 2 NY3d 648, 650-651).

Buckingham's remaining contentions have been rendered academic by our determination.

Bond v Giebel

Calendar Date: October 11, 2012
Before: Mercure, J.P., Lahtinen, Malone Jr., Stein and Egan Jr., JJ.

Burke, Scolamiero, Mortati & Hurd, LLP, Albany (Sarah B. Brancatella of counsel), for proposed intervenor-appellant in action No. 1 and appellant in action No. 2.
Robert J. Krzys, Amsterdam, for respondent.

MEMORANDUM AND ORDER

Appeal from an order of the Supreme Court (Reilly Jr., J.), entered January 18, 2012 in Schenectady County, which, among other things, denied a motion by Progressive Insurance Company for, among other things, vacatur of a default judgment and leave to intervene in action No. 1.

In January 1999, plaintiff was injured when the snowmobile he was operating collided with a parked car. Plaintiff thereafter commenced an action (hereinafter action No. 1) in 2002 against the owners of two cars — the car with which he collided and the car parked directly in front of it — alleging, among other things, that both cars had been parked in the roadway. The car with which plaintiff actually collided was owned by defendant Daniel Giebel and the car parked in front of Giebel's car was owned and/or driven by defendants Theresa O'Rourke and Robert O'Rourke and insured by Progressive Insurance Company. Upon the O'Rourkes' failure to appear in the action, a default judgment on the issue of liability was entered against them in July 2002. Following protracted litigation concerning plaintiff's claims against Giebel (see generally Bond v Giebel, 14 AD3d 849 [2005]), an inquest was held with regard to the claims against the O'Rourkes and a default judgment on damages was rendered against them in 2008 for approximately $1.2 million [FN1] . When the O'Rourkes notified Progressive of the judgment shortly thereafter, Progressive disclaimed coverage on the basis that it never received notice of the lawsuit, as required by the O'Rourkes' policy.

The O'Rourkes subsequently entered into an agreement with plaintiff (hereinafter the assignment agreement) pursuant to which they assigned to plaintiff their rights against Progressive and the O'Rourkes' insurance broker, defendant Hopmeier-Evans-Gage Agency (hereinafter HEG)[FN2] . In exchange for such assignment, plaintiff agreed to pay the O'Rourkes 40% of any recovery that he received from Progressive in excess of $300,000. Plaintiff then commenced an action (hereinafter action No. 2) in April 2009, as assignee of the O'Rourkes' rights, asserting, as pertinent here, a claim against Progressive pursuant to Insurance Law § 3420 (2) to recover part of the unsatisfied default judgment in action No. 1, as well as a bad faith claim based upon Progressive's disclaimer of coverage. Both claims rely primarily upon plaintiff's allegations that the O'Rourkes provided timely notice to Progressive in 2002 and that Progressive failed to defend and/or indemnify them. Progressive moved for, among other things, an order vacating the default judgment against the O'Rourkes in action No. 1 pursuant to CPLR 5015 (a) (3) or in the interest of justice. Progressive also sought permission to intervene in action No. 1 and, upon intervention, summary judgment dismissing the complaint in that action against the O'Rourkes. Finding that Progressive's delay in seeking intervention would cause significant prejudice to plaintiff, Supreme Court denied all of the relief requested [FN3] . This appeal by Progressive ensued.

We begin with Progressive's request for vacatur of the default judgment in action No. 1. It is well settled that a judgment may be vacated by a court upon the motion of "any interested person" (CPLR 5015 [a]; accord Oppenheimer v Westcott, 47 NY2d 595, 602 [1979]). Consistent with the legislative goal of "assur[ing] that a broad class of persons, not limited to parties in the formal sense, could move [for relief pursuant to CPLR 5015]" (Oppenheimer v Westcott, 47 NY2d at 603), it has been held in this context that "all that is necessary is that some legitimate interest of the moving party will be served and that judicial assistance will avoid injustice" (Lane v Lane, 175 AD2d 103, 105 [1991] [internal quotation marks and citation omitted]). In our view, that purpose will be served under the particular circumstances present here by permitting Progressive to move to vacate the default judgment against the O'Rourkes, notwithstanding its disclaimer of coverage [FN4] . Specifically, by virtue of the assignment agreement, Progressive is the only person or entity with an interest in vacating the default judgment, as the O'Rourkes have the potential to benefit financially by allowing that judgment to remain in effect. Without the judgment, neither plaintiff nor the O'Rourkes would stand to reap any significant benefit from action No. 2 (see Lane v Lane, 175 AD2d at 105)[FN5] . Thus, the particular terms of the assignment agreement place the O'Rourkes in the unusual position of opposing Progressive's motion to vacate the substantial judgment entered against them. While the collusive nature of the assignment agreement may not have led to the default judgment, the financial benefit that the O'Rourkes stand to gain as a result of that agreement clearly provides them with an incentive to act in unison with plaintiff going forward [FN6] . At the very least, to allow such a result offends our sense of justice and propriety and cannot be condoned.

With regard to the merits of Progressive's motion to vacate the default judgment, plaintiff argues that, inasmuch as the assignment agreement was not made until after the judgment was entered, Progressive lacks grounds for vacatur pursuant to CPLR 5015 (a) (3). Additionally, plaintiff argues that Progressive's motion is untimely. In recognition of the strong preference for deciding cases on their merits, we are of the view that, even if the circumstances of this case do not fall squarely within CPLR 5015 (a) (3), Supreme Court should have exercised its inherent power to vacate the challenged default judgment in the interest of justice (see CPLR 5015; Wade v Village of Whitehall, 46 AD3d 1302, 1303 [2007]; Birsett v General Acc. Ins. Co. of Am., 241 AD2d 683, 685 [1997]; compare Dyno v Lewis, 300 AD2d 784, 785 [2002], appeal dismissed 99 NY2d 651 [2003]). As to the timeliness of the motion, we note that, although a substantial period of time had elapsed since entry of the default judgment, Progressive alleges that it had no reason to question the propriety of such judgment until it learned in September 2010 — after the commencement of action No. 2 — of the assignment agreement which could potentially result in the O'Rourkes recovering a significant sum of money in the event that plaintiff successfully recovered from Progressive. Progressive then moved to vacate the judgment in action No. 1 within a reasonable period of time after it became aware of the assignment agreement (compare Rizzo v St. Lawrence Univ., 24 AD3d 983, 984 [2005]; City of Albany Indus. Dev. Agency v Garg, 250 AD2d 991, 993 [1998]; B.U.D. Sheetmetal v Massachusetts Bay Ins. Co., 248 AD2d 856, 856-857 [1998]).

Furthermore, the collusive nature of the assignment agreement created a disincentive for the O'Rourkes to ensure that the judgment was in conformance with the law and the facts. Indeed, it is undisputed that such judgment was based upon a factual error that could impact the determination as to whether the location of the O'Rourkes' vehicle was a substantial factor in causing plaintiff's injuries — and, therefore, the extent of the O'Rourkes' liability, if any — and that the amount of the judgment exceeds the amount permitted by CPLR 3215 (b). Thus, regardless of the merits of action No. 2, vacatur of the default judgment in action No. 1 will uphold the integrity of the judicial process under the particular circumstances of this case.

For the same reasons, Supreme Court should have granted Progressive's motion for intervention. While we recognize that such intervention may result in further delay in this already protracted litigation, the question of "[w]hether there was undue delay depends on the facts and circumstances of the case" (Matter of Fink v Salerno, 105 AD2d 489, 490 [1984] lv dismissed and appeal dismissed 63 NY2d 907 [1984], lv dismissed 63 NY2d 607 [1984]). Assuming, for the purposes of the motion, the truth of Progressive's allegation that it first learned of action No. 1 after judgment was entered, the delay can be excused because it moved for relief within a reasonable time after it became aware of the assignment agreement (see generally Halstead v Dolphy, 70 AD3d 639, 640 [2010]; Poblocki v Todoro, 55 AD3d 1346, 1347 [2008]; compare Agway Ins. Co. v P & R Truss Co., Inc., 11 AD3d 975, 976 [2004]; Buckeridge v Ludlow Motor Co., Inc., 276 App Div 511, 513 [1950], lv dismissed 301 NY 609 [1950]). Moreover, a significant portion of the overall delay in the resolution of action No. 1 is attributable to the process of completing plaintiff's litigation with respect to Giebel before proceeding with an inquest on the claim against the O'Rourkes. In addition, as previously stated, given the combined effect of the assignment agreement and the factual errors in plaintiff's motion for a default judgment, we cannot conclude that it would be unjust to require plaintiff to meet its burden of proving its entitlement to relief in action No. 1 with the participation of a party who is motivated to defend that action. In our view, it is more important to reach the correct result than to conclude the matter expeditiously. While any further delay is unfortunate, a contrary result would potentially reward plaintiff and the O'Rourkes for their improvident agreement. Accordingly, Progressive's motion to intervene should have been granted (see generally Town of N. Elba v Grimditch, 96 AD3d 1305, 1306-1307 [2012]; Berkoski v Board of Trustees of Inc. Vil. of Southampton, 67 AD3d 840, 843-844 [2009]; compare Carnrike v Youngs, 70 AD3d 1146, 1147 [2010]).

Finally, although Supreme Court did not directly address the merits of Progressive's motion for summary judgment, upon our own factual review of the record, we find that questions of fact exist — for example, as to whether the O'Rourkes' vehicle was parked on the side of the road or in the roadway and, if in the roadway, whether this was the proximate cause of plaintiff's injuries — which preclude summary judgment (see Grant v Nembhard, 94 AD3d 1397, 1398-1399 [2012]). Thus, that part of Progressive's motion seeking summary judgment in action No. 1 is denied, rendering Progressive's motion for summary judgment in action No. 2 academic.

To the extent not specifically addressed herein, the parties' remaining contentions have been examined and are either academic or without merit.
Mercure, J.P., Lahtinen, Malone Jr. and Egan Jr., JJ., concur.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as denied the motion of Progressive Insurance Company to (1) vacate a default judgment in action No. 1 and (2) intervene in action No. 1; motion granted to that extent and said default judgment vacated; and, as so modified, affirmed.

Footnotes

Footnote 1: Notably, it is undisputed that liability was initially determined on the basis of an inaccurate description of the accident. Specifically, plaintiff alleged that he collided with the O'Rourkes' vehicle. In addition, the damage award was greater than the amount demanded in the summons with notice.

Footnote 2: A copy of the assignment, prepared by plaintiff's counsel, is not contained in the record on appeal, but its existence is undisputed.

Footnote 3: Although the supporting affidavit of Progressive's counsel included a request for summary judgment dismissing the complaint in action No. 2 in the event that summary judgment dismissing action No. 1 was granted, the notice of motion contained only the caption of action No. 1 and did not set forth a request for any relief in action No. 2. Progressive continues to argue on appeal that it is entitled to such relief despite Supreme Court's failure to address the request therefor in the order appealed from.

Footnote 4: Inasmuch as Progressive did not disclaim coverage until after it was notified of the default judgment, due to its alleged lack of notice of action No. 1 prior to that time, it cannot be said at this juncture that Progressive made a voluntary election to refuse to defend the O'Rourkes in action No. 1 while it was being litigated, thereby waiving its right to seek vacatur of the default judgment (see generally Shaw v Shaw, 97 AD2d 403, 404-405 [1983]; compare Schellenberg v Wiemann, 120 AD2d 659, 660 [1986], lv denied 68 NY2d 609 [1986]).

Footnote 5: Under the O'Rourke policy limits, the most that plaintiff could recover is $100,000. However, under the bad faith claim, plaintiff could recover the full amount of the default judgment — approximately $1 million.

Footnote 6: Since we do not have the benefit of reviewing the exact terms of the agreement, we do not know whether it, in fact, requires the O'Rourkes to cooperate with plaintiff to the detriment of Progressive.

Castlepoint Ins. Company v Mike's Pipe Yard and Building Supply Corp.

Avanzino & Moreno, P.C., Brooklyn (Oliver R. Tobias of counsel), for appellant.
Law Office of Steven G. Fauth, LLC, New York (Suma Samuel Thomas of counsel), for respondent.

Order, Supreme Court, New York County (Carol R. Edmead, J.), entered November 16, 2011, which, upon renewal and reargument, granted plaintiff Castlepoint Insurance Company's motion for summary judgment to declare that Castlepoint did not have an obligation to indemnify or defend defendant Mike's Pipe Yard and Building Supply Corp. (Mike's) in an underlying personal injury action brought by defendant Damon Haindl, unanimously affirmed, without costs.

The motion court providently exercised its discretion in granting Castlepoint's motion to renew and reargue its prior motion (see e.g. Meija v Nanni, 307 AD2d 870 [1st Dept 2003]). Castlepoint correctly argued that Mike's could not demonstrate the reasonableness of its delay in reporting the accident leading to Haindl's injury (Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 240 [1st Dept 2002]). Mike's principal knew of the accident the day it occurred and of the potential for litigation almost immediately thereafter. In addition, the arguments it made in opposition to the initial motion for summary judgment had been previously rejected in a similar action (Tower Ins. Co. of N.Y. v Mike's Pipe Yard & Bldg. Supply Corp., 35 AD3d 275 [1st Dept 2006]), making it unreasonable for Mike's to think they would suffice to excuse late notice to its insurer in the instant action.

Chiarello v Rio

Feeney & Associates, PLLC, Hauppauge, N.Y. (Rosa M. Feeney of counsel), for third-party defendant-appellant.
Devitt Spellman Barrett, LLP, Smithtown, N.Y. (John M. Denby of counsel), for plaintiffs-respondents.
Wolinsky, Parnell & Montgomery, LLP, Lake Ronkonkoma, N.Y. (Bruce F. Parnell of counsel), for defendants third-party plaintiffs-respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the third-party defendant appeals from an order of the Supreme Court, Suffolk County (Molia, J.), dated January 6, 2012, which denied, with leave to renew, its motion for summary judgment dismissing the third-party complaint, or, in the alternative, for severance of the third-party action from the main action.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying, with leave to renew, that branch of the third-party defendant's motion which was for summary judgment dismissing the second cause of action in the third-party complaint, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

On July 18, 2007, the infant plaintiff allegedly was injured while operating an all-terrain vehicle (hereinafter ATV) owned by the defendants third-party plaintiffs, Frank Rio and Lori Rio (hereinafter together the Rios). The infant plaintiff was a guest of the Rios' teenage son at the Rios' vacation home, located in Galway, New York. At the time of the incident, the Rios' vacation home was insured under a policy issued by the third-party defendant, Encompass Insurance Company of America (hereinafter Encompass).

In June 2010, the Rios were served with copies of a summons and verified complaint in an action commenced by the infant plaintiff and his mother. The complaint alleged that the infant plaintiff was injured on the Rios' premises while operating their ATV, and that the Rios were negligent, inter alia, with respect to the maintenance of their property. [*2]

On July 23, 2010, Encompass received a copy of the summons and complaint from the Rios. By letter dated August 5, 2010, Encompass disclaimed coverage for the plaintiffs' action on the ground that the Rios failed to notify Encompass of the occurrence within a reasonable time, and that the occurrence fell within certain exclusions of the policy.

The Rios commenced a third-party action against Encompass for indemnification, seeking to recover damages for breach of contract and negligence. After answering the third-party complaint, Encompass moved for summary judgment dismissing the third-party complaint or, in the alternative, for severance of the third-party action from the main action.

The Supreme Court denied Encompass's motion in its entirety, with leave to renew upon completion of disclosure. Encompass appeals.

The policy that Encompass issued to the Rios recited that Encompass did not have a duty to provide coverage under the policy unless the insured notified it of the occurrence "as soon as practical." Accordingly, notice is a condition precedent to the receipt of benefits under the subject policy (see Sorbara Constr. Corp. v AIU Ins. Co., 11 NY3d 805, 806; Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Argo Corp. v Greater N.Y. Mutual Ins. Co., 4 NY3d 332, 339; Courduff's Oakwood Rd. Gardens & Landscaping Co., Inc. v Merchants Mut. Ins. Co., 84 AD3d 717; McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d 981, 982-983). Since the subject policy was issued before January 17, 2009, which was the effective date of an amendment to the Insurance Law requiring an insurer to establish prejudice in order to effectively disclaim coverage based on late notice of an occurrence, Encompass does not have to establish that it was prejudiced by the failure of the Rios to comply with the notice provision in order to disclaim coverage (see Insurance Law § 3420[c][2][A]; Zimmerman v Peerless Ins. Co., 85 AD3d 1021, 1023; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d 596, 596-597).

"The insured's failure to satisfy the notice requirement constitutes a failure to comply with a condition precedent which, as a matter of law, vitiates the contract'" (Columbia Univ. Press, Inc. v Travelers Indem. Co. of Am., 89 AD3d 667, 667, quoting Argo Corp. v Greater N.Y. Mutual Ins. Co., 4 NY3d at 339; see McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d at 983; Ponok Realty Corp. v United Nat. Specialty Ins. Co., 69 AD3d at 597). Failure or delay in giving notice may be excused if the insured lacked knowledge that the accident had occurred or had a good faith and reasonable belief of his or her nonliability (see Ocean Gardens Nursing Facility, Inc. v Travelers Cos., Inc., 91 AD3d 734, 736; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597). The insured has the burden of establishing that there was a reasonable excuse for the delay (see Ocean Gardens Nursing Facility, Inc. v Travelers Cos., Inc., 91 AD3d at 736; Tower Ins. Co. of N.Y. v Alvarado, 84 AD3d 1354, 1355). The reasonableness of an insured's good faith belief in nonliability is a matter ordinarily left for trial (see Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 750; Deso v London & Lancashire Indem. Co. of Am., 3 NY2d 127, 129; St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d 1030, 1031), and will only be determined as a matter of law where the evidence, when construed in favor of the insured, establishes that the belief was inherently unreasonable or formed in bad faith (see Zimmerman v Peerless Ins. Co., 85 AD3d 1021, 1024; Courduff's Oakwood Rd. Gardens & Landscaping Co., Inc. v Merchants Mut. Ins. Co., 84 AD3d 717; McGovern-Barbash Assoc., LLC v Everest Natl. Ins. Co., 79 AD3d at 983; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597).

Here, Encompass established its prima facie entitlement to judgment as a matter of law by showing that the Rios did not provide it with notice of the infant plaintiff's accident until three years after the accident had occurred (see Utica First Ins. Co. v Vazquez, 92 AD3d 866, 867; Bigman Bros., Inc. v QBE Ins. Corp., 73 AD3d 1110, 1112). In opposition, however, the Rios raised a triable issue of fact. In an affidavit, Frank Rio stated that the infant plaintiff took and operated the ATV without the Rios' knowledge, and contrary to their instructions. He also averred that, after the accident, they were informed that the infant plaintiff was injured while attempting to traverse a "sand pit," which was not located on their property. Frank Rio further maintained that, after the accident, the infant plaintiff was solely concerned about his own potential liability for property damage to the ATV and for trespassing onto another person's property, and did not indicate any intent to assert a claim against the Rios.

In addition, the subject policy excluded coverage for any accident involving the ATV while the ATV was not being operated on the Rios' property. Given that Frank Rio allegedly warned the infant plaintiff not to drive in the sand pit, which was not on the Rios' property, and that the infant plaintiff informed Frank Rio that the accident had occurred in the sand pit, the Rios' opposition raised a triable issue of fact as to whether it was reasonable for them to refrain from reporting the occurrence until they received a copy of the summons and complaint, which, for the first time, put them on notice that the plaintiffs alleged that the accident occurred on their property. Accordingly, the Supreme Court properly denied that branch of Encompass's motion which was for summary judgment dismissing the first cause of action of the third-party complaint, which sought indemnification and coverage based on an alleged breach of contract.

However, the Supreme Court improperly denied that branch of Encompass's motion which was for summary judgment dismissing the second cause of action of the third-party complaint, which sought coverage and indemnification based on alleged negligence. A claim founded on breach of contract does not give rise to an action in tort unless a legal duty independent of the contract has been violated (see Abacus Fed. Sav. Bank v ADT Sec. Servs., Inc., 18 NY3d 675, 685; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389; Weinstein v Natalie Weinstein Design Assocs., Inc., 86 AD3d 641, 643). In separating tort claims from contract claims, the courts have "considered the nature of the injury, the manner in which the injury occurred and the resulting harm" (Sommer v Federal Signal Corp., 79 NY2d 540, 552). Here, the Rios, in their second cause of action, do not seek damages separate from those arising from Encompass's alleged breach of its contractual obligations under the insurance policy. Accordingly, the Supreme Court should have granted that branch of Encompass's motion which was for summary judgment dismissing that cause of action.

Further, the Supreme Court providently exercised its discretion in denying that branch of Encompass's motion which, in the alternative, sought severance of the third-party action from the main action. The grant or denial of a request for severance is a matter of judicial discretion, which should not be disturbed on appeal absent a showing of prejudice to a substantial right of the party seeking severance (see Bentoria Holdings, Inc. v Travelers Indem. Co., 84 AD3d 1135, 1137, revd on other grounds, NY3d 2012 NY Slip Op 07141 [2012]; Naylor v Knoll Farms of Suffolk County, Inc., 31 AD3d 726, 727). Although Encompass established the potential for prejudice since the issue of insurance coverage might be raised in the context of the underlying personal injury action (see Christensen v Weeks, 15 AD3d 330, 331-332; Schorr Bros. Dev. Corp. v Continental Ins. Co., 174 AD2d 722), that prejudice was outweighed by the possibility of inconsistent verdicts in the event that the actions were tried separately, specifically with respect to the issue of whether the accident occurred on the Rios' property, an issue common to both actions (see Pierre-Louis v DeLonghi Am., Inc., 66 AD3d 855, 855). Any "prejudice to [Encompass] can be mitigated by the trial court with the appropriate jury instructions" (id. at 856).

Encompass's remaining contentions are without merit.

Five Star Electric Corporation v Zurich American Ins. Co.

Ochs & Goldberg, LLP, New York, N.Y. (Edwin L. Doernberger and Gregory D. Podolak of counsel), for appellant.
Mound Cotton Wollan & Greengrass, New York, N.Y. (Philip C. Silverberg, Daniel Markewich, and Hilary M. Henkind of counsel), for respondents.

DECISION & ORDER

In an action to recover damages under a builder's risk insurance policy, the plaintiff appeals from an order of the Supreme Court, Queens County (Kitzes, J.), entered July 25, 2011, which denied its motion for summary judgment, in effect, on the issue of whether the plaintiff was an additional insured, and granted the defendants' cross motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.

In February 2007, the plaintiff entered into a subcontract with a general contractor, nonparty Hunt/Bovis Lend Lease Alliance II, to perform electrical work for the CitiField construction project. In connection with the construction project, the owner instituted an "Owner Controlled Insurance Program" (hereinafter OCIP), in which the plaintiff did not participate. During the course of the project, the plaintiff's work allegedly was damaged by the actions of other subcontractors. As a result, the plaintiff commenced this action to recover amounts allegedly due to the plaintiff under a builder's risk insurance policy issued by the defendants.

Thereafter, the plaintiff moved for summary judgment, in effect, on the issue of whether the plaintiff was an additional insured under the subject builder's risk insurance policy, arguing, inter alia, that although it did not participate in the OCIP, the builder's risk insurance policy and the OCIP policies were separate and distinct from one another, and the plaintiff was intended to be covered as an additional insured under the builder's risk insurance policy. The defendants, in turn, cross-moved for summary judgment dismissing the complaint. In an order entered July 25, 2011, the Supreme Court denied the plaintiff's motion and granted the defendants' cross motion. The plaintiff appeals.

"[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield v Philles Records, 98 NY2d 562, 569; see St. John's Univ., N.Y. v Butler Rogers Baskett Architects, P.C., 92 AD3d 761, 765). Here, the defendants established their prima facie entitlement to summary judgment dismissing the complaint by submitting the builder's risk insurance policy and the plaintiff's subcontract, which demonstrated that the plaintiff was not an additional insured under the builder's risk policy (cf. Carlisle SoHo E. Trust v Lexington Ins. Co., 49 AD3d 272).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's contention that builder's risk insurance was not coverage provided by the OCIP, and that it was not obligated to procure such insurance, is unavailing. The plaintiff's subcontract provided that the plaintiff "shall always be responsible to provide insurance coverage," and that it "shall obtain and maintain, at its expense, at least the insurance coverage specified in Exhibit C attached hereto." Exhibit C, the OCIP manual, specified the insurance coverage OCIP provided to enrolled members, which included builder's risk insurance. Thus, the plaintiff was required under the terms of its subcontract to procure and maintain, at its own expense, a builder's risk insurance policy.

The plaintiff's remaining contention is without merit.

Accordingly, the Supreme Court properly denied the plaintiff's motion for summary judgment, and granted the defendants' cross motion for summary judgment dismissing the complaint.

Rosier v Stoeckeler

Calendar Date: October 16, 2012
Before: Mercure, J.P., Rose, Lahtinen, McCarthy and Egan Jr., JJ.

Basch & Keegan, LLP, Kingston (Derek J. Spada of counsel), for Kenneth H. Rosier and another, appellants.
Cook, Netter, Cloonan, Kurtz & Murphy, PC, Kingston (Robert D. Cook of counsel), for Joseph P. Stoeckeler Sr., appellant in action No. 2 and respondent in action No. 1.
White, Fleischner & Fino, LLP, White Plains (Nathan Losman of counsel), for American Western Home Insurance Company, respondent.

MEMORANDUM AND ORDER

Lahtinen, J.

Appeals (1) from an order of the Supreme Court (Zwack, J.), entered June 21, 2011 in Ulster County, which denied plaintiffs' motion for summary judgment in action No. 1, and (2) from an order of said court, entered June 21, 2011 in Ulster County, which, among other things, granted a cross motion by defendant American Western Home Insurance Company for, among other things, summary judgment dismissing the complaint against it in action No. 2.

These appeals in two related actions involve a Labor Law § 240 cause of action and a disclaimer of insurance coverage. Kenneth H. Rosier was employed by a company that had contracted to replace two garage doors at an automobile repair shop in a building owned by Joseph P. Stoeckeler Sr. In March 2007, Rosier was at the site working about three feet above the garage floor on a five or six-foot ladder disassembling a door when he fell, allegedly ending up in a four to five-foot deep pit in the garage. Stoeckeler recalled that he first heard of the incident about two to three months later from his tenant who operated the shop. In late October 2008, the attorneys for Rosier and his wife sent a letter to Stoeckeler, and Stoeckeler faxed the letter in early November 2008 to his insurance broker, defendant C.S. Benson & Sons, Inc. (hereinafter Benson). Benson neglected to notify Stoeckeler's insurer, defendant American Western Home Insurance Company, or American Western's agent, LoVullo Associates. Rosier and his wife, derivatively, commenced action No. 1 in February 2009 and Stoeckeler promptly delivered the summons and complaint to Benson, who misplaced the documents and failed to notify LoVullo Associates or American Western until June 1, 2009. Later that month, American Western disclaimed coverage based upon the failure to provide prompt notice. Stoeckeler then commenced action No. 2 against Benson alleging negligence and against American Western seeking a declaration of a duty to defend and indemnify.[FN1]

In action No. 1, the Rosiers moved for summary judgment on the issue of liability in their Labor Law § 240 cause of action. In action No. 2, Stoeckeler sought, in separate motions, a default judgment against Benson and summary judgment against American Western. American Western cross-moved for summary judgment declaring that it was not obligated to defend or indemnify and for dismissal of action No. 2 as to it. Supreme Court found factual issues as to the Rosiers' Labor Law § 240 cause of action and, thus, denied their motion for summary judgment in action No. 1. In action No. 2, Supreme Court granted Stoeckeler's unopposed motion for a default judgment against Benson. However, finding that the notice given to American Western was late as a matter of law, it granted American Western's cross motion for summary judgment and dismissed the complaint against it. The Rosiers and Stoeckeler appeal.

We turn first to the Rosiers' contention that Supreme Court erred in denying their motion for summary judgment as to Labor Law § 240 in action No. 1. Not every fall from a ladder establishes that the ladder did not provide appropriate protection (see Blake v Neighborhood Hous. Servs. of N.Y. City, 1 NY3d 280, 288-289 [2003]; Beardslee v Cornell Univ., 72 AD3d 1371, 1372 [2010]). A prima facie case is established by proof that the ladder collapsed, slipped or otherwise failed, and this shifts the burden to defendant to produce "'evidence that the device furnished was adequate and properly placed and that the conduct of the plaintiff may be the sole proximate cause of his . . . injuries'" (Georgia v Urbanski, 84 AD3d 1569, 1569 [2011], quoting Ball v Cascade Tissue Group-N.Y., Inc., 36 AD3d 1187, 1188 [2007]). Although Rosier submitted an affidavit indicating that his fall occurred when the ladder "shifted and began tipping," defendant countered by producing deposition testimony of Rosier in which he testified that he simply lost his balance and that he did not know what caused him to lose his balance. He further testified at his deposition that the ladder was in good condition, he had no problems with it, and he had used this same type of ladder many times while performing similar jobs. There is conflicting proof in the record as to whether Rosier fell on the floor of the garage or into the garage pit, and it is not clear from his deposition the role, if any, his handling of a door section had in his fall (cf. McGill v Qudsi, 91 AD3d 1241, 1242-1243 [2012], lv dismissed 19 NY3d 1013 [2012]). Construing this proof most favorably to the nonmovant and further noting that an unexplained conflict between deposition testimony and a subsequent submission by the deposed party generally will not support summary judgment (see Natale v Woodcock, 35 AD3d 1128, 1129 [2006]; Stover v Robilotto, 277 AD2d 801, 804 n [2000], affd 97 NY2d 9 [2001]), we agree with Supreme Court that factual issues for trial exist on the Labor Law § 240 cause of action.

Next, we consider whether American Western was properly granted summary judgment. "Where a policy of liability insurance requires that notice of an occurrence be given 'as soon as practicable,' such notice must be accorded the carrier within a reasonable period of time" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743 [2005]; see Briggs Ave. LLC v Insurance Corp. of Hannover, 11 NY3d 377, 381-382 [2008]). Although recent legislation requires that a disclaiming insurer also show prejudice, it is undisputed that the policy in question predated the effective date of such legislation and thus American Western was not required to show prejudice (see Waldron v New York Cent. Mut. Fire Ins. Co., 88 AD3d 1053, 1054 [2011]). Further, notice of a claim or a potential claim provided by an insured only to the insured's broker, and not to the carrier or its agent, generally is not considered sufficient notice to the carrier (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimmons Corp., 31 NY2d 436, 442 n 3 [1972]; Waldron v New York Cent. Mut. Fire Ins. Co., 88 AD3d at 1054).

Here, the policy made clear that notice was to be given to American Western or its agent, LoVullo Associates. Benson was a broker and not an agent of American Western or otherwise authorized in any way to receive notice for American Western. Although Stoeckeler apparently promptly forwarded the October 2008 letter from the Rosiers' attorneys as well as the February 2009 summons and complaint to Benson, there is nothing in the record indicating that American Western had any notice of the incident until June 1, 2009. Under such circumstances, we are constrained to conclude that Supreme Court properly determined that the delay in giving notice to American Western was unreasonable as a matter of law (see e.g. Tower Ins. Co. of N.Y. v Classon Hgts., LLC, 82 AD3d 632, 634 [2011]; Juvenex Ltd. v Burlington Ins. Co., 63 AD3d 554, 554 [2009]; Whitney M. Young, Jr. Health Ctr. v New York State Dept. of Ins., Liquidation Bur., 152 AD2d 835, 836-837 [1989]).

Footnote 1:Rosier and his wife were, according to representations by counsel, later added as defendants in action No. 2. The amended complaint is not in the record.

Mirdita v Ash Leasing Inc.

Paul G. Vesnaver, PLLC, Baldwin (Victor A. Carr of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., Brooklyn (Stacy R. Seldin of counsel), for respondents.
Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered on or about September 29, 2011, which, in an action for personal injuries sustained in an automobile accident, granted defendants' motions for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Defendants established their entitlement to judgment as a matter of law by showing that the injuries plaintiff sustained to his cervical and thoracic spine and his shoulders were not serious within the meaning of Insurance Law § 5102(d). Defendants submitted, inter alia, an affirmed report of a radiologist who opined that the MRI films of the claimed injured body parts reflected a chronic preexisting condition, and found no radiographic evidence of trauma or any causally related injury (see Spencer v Golden Eagle, Inc., 82 AD3d 589, 590-591 [1st Dept 2011]).

Plaintiff's opposition failed to raise a triable issue of fact. His physician's affirmed reports of the physical examinations of plaintiff measured range of motion limitations without comparing them to a normal standard, so that any claimed deficits could not be properly assessed to see whether they are significant (see Winters v Cruz, 90 AD3d 412 [1st Dept 2011]). Moreover, plaintiff failed to tender a recent physical examination by his physician, rendering the findings deficient (see Vega v MTA Bus Co., 96 AD3d 506 [1st Dept 2012]; Townes v Harlem Group, Inc., 82 AD3d 583 [1st Dept 2011]). Plaintiff's expert also failed to address the defense doctors' findings of degeneration or provide any competent evidence supporting his conclusion (see Rosa v Mejia, 95 AD3d 402, 404 [1st Dept 2012]). Furthermore, in light of the lack of evidence of causation, plaintiff cannot establish his 90/180-day claim (see Barry v Arias, 94 AD3d 499 [1st Dept 2012]).

Marcellus v Forvarp

David M. Peterson, P.C., New York (Susan R. Nudelman of counsel), for appellant.
Hodges Walsh & Slater LLP, White Plains (Paul E. Svensson of counsel), for James M. Forvarp, respondent.
Burke, Gordon & Conway, White Plains (Ashley E. Sproat of counsel), for Dan M. Voic, respondent.

Order, Supreme Court, Bronx County (Mark Friedlander, J.), entered February 4, 2011, which, in an action for personal injuries sustained in an automobile accident, granted defendants' motions for summary judgment dismissing the complaint, and order, same court and Justice, entered February 1, 2012, which, to the extent appealable, denied plaintiff's motion to renew, unanimously affirmed, without costs.

Defendants established their entitlement to judgment as a matter of law by showing that the injuries plaintiff sustained to her right shoulder were not serious within the meaning of Insurance Law § 5102(d). Defendants submitted evidence showing that plaintiff had previously injured her right shoulder in a 2004 accident, including her surgeon's operative report and an MRI report finding degenerative changes in the shoulder, and the affirmed report of their orthopedic expert who found full range of motion and opined that any right shoulder injury had fully resolved post-operatively (see McArthur v Act Limo, Inc., 93 AD3d 567 [1st Dept 2012]).

In opposition, plaintiff failed to raise a triable issue of fact. Although plaintiff submitted medical evidence of recent limitations and MRI findings of right shoulder injuries, she failed to show such injuries were caused by the 2008 accident. In concluding that the shoulder injuries were causally related to the accident, her experts did not address a December 2005 medical report, prepared in association with the 2004 accident, noting plaintiff's complaints of worsening right shoulder pain and finding of shoulder impingement (see Zhijian Yang v Alston, 73 AD3d 562, 563 [1st Dept 2010]). Nor has plaintiff submitted any evidence explaining the effect of such prior injuries on the injuries attributable to the subject 2008 accident (see Mitrotti v Elia, 91 AD3d 449 [1st Dept 2012]).

While plaintiff's experts concluded that the accident was the competent cause of the superior labrum anterior position tear observed by plaintiff's surgeon during her shoulder surgery, they did not address the surgeon's opinion that such tear was degenerative in nature (Williams v Horman, 95 AD3d 650 [1st Dept 2012]; compare Perl v Meher, 18 NY3d 208, 218-219 [2011]). Plaintiff also did not address a September 2009 MRI report concluding that abnormalities observed in the shoulder were degenerative in nature.
Dismissal of the 90/180-day claim was warranted in light of plaintiff's bill of particulars and deposition testimony wherein she alleged that she was confined to home for several days, and missed just four days of work after the accident (see Cruz v Rivera, 94 AD3d 576 [1st Dept 2012]).

The court properly denied leave to renew since plaintiff's new evidence of contemporaneous limitations did not address the causation issue, and thus would be insufficient to defeat summary judgment.

Eisenberg v Guzman

Marjorie E. Bornes, Brooklyn, for appellant.
Paris & Chaikin, PLLC, New York (Chad P. Ayoub of counsel), for respondent.

Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered December 27, 2011, which, in an action for personal injuries sustained in a motor vehicle accident, denied defendant's motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment accordingly.

Defendant established his entitlement to judgment as a matter of law as to plaintiff's claims of "significant limitation" and "consequential limitation" of use of his anterior cruciate ligament (ACL) of his left knee. Although defendant's orthopedist found a loss of range of motion in plaintiff's left knee in 2009, defendant's radiologist found no evidence of an ACL tear on the MRI taken of the left knee after the subject accident (see Linton v Nawaz, 62 AD3d 434, 439 [1st Dept 2009], affd on other grounds 14 NY3d 821 [2010).

Plaintiff's opposition failed to raise a triable issue of fact. Even assuming that plaintiff came forward with proof that this particular body part had not been injured during his two prior surgeries (see McArthur v Act Limo, Inc., 93 AD3d 567 [1st Dept 2012]), and assuming, further, that he raised an issue of fact as to whether this ligament was actually torn, via the affirmation of his radiologist, plaintiff failed to come forward with proof of "significant" or "important" limitations caused by the accident. Indeed, the examination performed by plaintiff's physician in 2011 measured only minor limitations in range of motion (see Canelo v Genolg Tr., Inc., 82 AD3d 584, 585 [1st Dept 2011]).

Defendant met his burden as to the 90/180—day claim by relying on plaintiff's deposition testimony, where he stated that he was confined to home for only two weeks, and did not work because there was "no work" (see Arenas v Guaman, 98 AD3d 461 [1st Dept 2012]; Williams v Baldor Specialty Foods, Inc., 70 AD3d 522 [1st Dept 2010]).

Silverman v MTA Bus Co.

Charles J. Chiclacos, Glen Cove (Susan R. Nudelman of counsel), for appellant.
Sullivan & Brill, LLP, New York (Adam A. Khalil and Joseph F. Sullivan of counsel), for respondents.

Order, Supreme Court, Bronx County (Julia Rodriguez, J.), entered on or about
October 5, 2011, which granted defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, to deny the motion with respect to the claims of "permanent consequential limitation" and "significant limitation" of the cervical and lumbar spine and the 90/180-day claim, and otherwise affirmed, without costs.

Plaintiff, who was 27 years old at the time of the accident, alleges she suffered serious injuries as the result of an accident that occurred on November 26, 2007, when the car she was driving was struck by a bus owned by defendant MTA Bus Company.

As to the alleged cervical spine and lumbar spine injuries, defendants met their initial burden by relying on plaintiff's deposition testimony, where she conceded that in 2002, she injured her back and neck when she was struck by a minivan while crossing the street (see Chintam v Fenelus, 65 AD3d 946, 947 [1st Dept 2009]; Brewster v FTM Servo, Corp., 44 AD3d 351, 352 [1st Dept 2007]). In opposition, plaintiff raised an issue of fact as to those injuries by submitting the affidavit of her chiropractor, who conducted electrodiagnostic studies which revealed lumbar and cervical radiculopathy, and measured significant limitations in range of motion in every plane, contemporaneously with the 2007 accident, continuously through treatment, and recently (see Pinzon v Gonzalez, 93 AD3d 615 [1st Dept 2012]). The chiropractor adequately addressed causation by explaining that he had also treated plaintiff after her 2002 accident, and that when he released her from his care in June 2004, she had recovered and was asymptomatic. His opinion was supported by his review of MRI reports taken in 2002 and 2007, which showed that the only injury from the 2002 accident that was pre-existing was a disc bulge at L5-S1, and that the subject 2007 accident had caused new injuries, namely bulging discs at C2-3, C3-4, C4-5, C6-7, L3-4, and L4-5, and a subligamentous herniation. Defendants did not submit the opinion of an expert radiologist disputing those findings, and since the unaffirmed MRIs were not the sole basis for the chiropractor's findings, they may properly be considered in opposition to the motion (see Cruz v Rivera, 94 AD3d 576 [1st Dept 2012]; James v Perez, 95 AD3d 788 [1st Dept 2012]).

As to the claimed left knee, shoulder and hand injuries, defendants met their prima facie burden by submitting their expert orthopedist's opinion finding a full range of motion and opining that plaintiff's knee conditions were preexisting and not related to the 2007 accident (see Jno-Baptist v Buckley, 82 AD3d 578 [1st Dept 2011]; Depena v Sylla, 63 AD3d 504, 505 [1st Dept 2009], lv denied 13 NY3d 706 [2009]; Martinez v Goldmag Hacking Corp., 95 AD3d 682, 683 [1st Dept 2012]). Plaintiff failed to raise an issue of fact since she provided no evidence of permanent limitations resulting from the accident.

Defendants failed to meet their prima facie burden as to plaintiff's 90/180-day claim, since the bill of particulars alleged that plaintiff was confined to home for four months and they did not submit medical evidence contradicting her claimed disability during that period (see Quinones v Ksieniewicz, 80 AD3d 506 [1st Dept 2011]).

Davis v Cottrell

Calendar Date: October 18, 2012
Before: Mercure, J.P., Spain, Stein, McCarthy and Garry, JJ.
Finkelstein & Partners, Newburgh (Kara L. Campbell of counsel), for appellant.
Santacrose & Frary, Albany (Patrick D. Slade of counsel), for defendants and third-party plaintiffs-respondents.
Adams, Hanson, Rego, Carlin, Hughes, Kaplan & Fishbein, Albany (Gerald D. D'Amelia Jr. of counsel), for third-party defendant-respondent.

MEMORANDUM AND ORDER

McCarthy, J.
Appeal from an order of the Supreme Court (McGrath, J.), entered June 29, 2011 in Rensselaer County, which granted third-party defendant's motion for, among other things, summary judgment dismissing the complaint.

In July 2005, plaintiff was a passenger in a van driven by third-party defendant when the van was struck by a vehicle driven by defendant Katelyn Cottrell and owned by defendant Kenneth Cottrell. Plaintiff's body jerked forward, but no part of her body struck the interior of the van. Plaintiff commenced this negligence action against defendants, who then commenced a third-party action. Third-party defendant moved for summary judgment dismissing the third-party complaint on the ground that defendants' negligence was the sole proximate cause of the accident and dismissing the complaint on the ground that plaintiff did not suffer a serious physical injury as defined in Insurance Law § 5102 (d). Supreme Court granted the motion on the serious injury ground and dismissed the complaint. Plaintiff appeals.

As the movant, third-party defendant had the burden of establishing by competent medical evidence that plaintiff did not sustain a serious injury caused by the accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]).

The burden would then shift to plaintiff to raise a triable issue of fact by presenting competent proof based upon objective medical findings and tests to support any alleged serious injuries and connect them to the accident (see Larrabee v Bradshaw, 96 AD3d 1257, 1260 [2012]; Tracy v Tracy, 69 AD3d 1218, 1219 [2010]). Plaintiff alleged serious injury under four categories: permanent loss of use of a body member or system, permanent consequential limitation of use, significant limitation of use, and a nonpermanent injury that prevents performance of substantially all of one's customary daily activities for 90 out of the 180 days immediately following the accident. To address all of these categories, third-party defendant submitted deposition testimony, plaintiff's medical records from several sources and reports from an independent medical examination.

A permanent loss of use must be total to qualify as a serious injury (see Oberly v Bangs Ambulance, 96 NY2d 295, 299 [2001]; Tracy v Tracy, 69 AD3d at 1219). Because the record does not include proof that plaintiff has lost the total use of any body organ or system, and even her treating physician, James Cole, diagnosed her with a "permanent partial disability," plaintiff cannot proceed under the permanent loss of use category (see Best v Bleau, 300 AD2d 858, 860 [2002]).

To establish the permanent consequential limitation of use and significant limitation of use categories, the submitted medical evidence "must contain objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing plaintiff's present limitations to the normal function, purpose and use of the affected body organ, member, function or system" (John v Engel, 2 AD3d 1027, 1029 [2003]; accord Solis v Silvagni, 82 AD3d 1349, 1350 [2011], lv denied 17 NY3d 715 [2011]). Plaintiff was involved in a 2004 accident where she injured her neck, arm, leg and upper back. At her 2008 deposition, plaintiff testified that in the 2005 accident, she injured her leg, arm, back and neck, and that all except her back pain were resolved by the time of her testimony. She did not separately mention an injury to her shoulder. Less than a month after the accident, her treating physician, Ajit Khanuja, noted that plaintiff had good range of motion of the shoulders and fairly good range of motion of the cervical spine. Although she still had lumbar pain, Khanuja felt that plaintiff could return to work. In August 2005, her physical therapists found the active range of motion of her spine within functional limits, and she continued to make slow but steady progress. By September 1, 2005, Khanuja noted that plaintiff had been back to work for approximately two weeks, neck range of motion showed slight limitations, she had full range of motion of the shoulders and full range of motion of her back. His assessment was that the cervical strain and lumbar strain were both resolving and she could continue to work full time.

Two weeks later, the same physician noted that plaintiff had full range of motion of her back and could return to work full duty without restrictions, including 10 hours per week of mandatory overtime. By October 20, 2005, the office notes indicate that plaintiff had back pain but was "not complaining of any pain in her neck." An MRI taken in June 2006 showed a central disc protrusion at L4-L5 and decreased signal within the disc substance at that level consistent with disc degeneration.

Bryan Bilfield, a physician who reviewed plaintiff's records and performed an independent medical examination, found normal range of motion in most areas tested. He noted that photographs taken after the 2005 accident revealed no discernable damage to the van, indicating "minimal to no imparted energy to the van." Bilfield could not attribute the MRI findings to the 2005 accident, based on a review of the medical records where a chiropractor noted low back pain following the 2004 accident, the photographs indicating the minimal impact of the accident, plaintiff's status as a passenger wearing a shoulder harness seat belt, and that other doctors who had examined her felt that the problem was related to degenerative disc disease rather than trauma. The MRI report stated that the disc problem was "consistent with disc desiccation/degeneration." Bilfield also found that plaintiff's subjective complaints far outweighed the objective findings.

All of the evidence submitted by third-party defendant shifted the burden to plaintiff on these two categories.

In response to the motion, plaintiff submitted additional medical records and Cole's affidavit. Cole concluded, based on his examinations of plaintiff, her history, medical records, MRI and EMG testing, that plaintiff suffered injuries to her lumbar spine, left shoulder trauma and cervical strain caused by the 2005 accident. No objective testing that Cole performed was related to the shoulder, and Khanuja's records indicate that plaintiff had full range of motion of her shoulders shortly after the accident. The objective evidence also did not support the allegations that the cervical strain was a continuing problem. Notably, plaintiff had testified in 2008 that conditions in her arm and neck had resolved, and she did not mention a shoulder injury at her deposition.

That leaves only a lower back injury to be considered. Evidence of a disc bulge alone is not sufficient to establish a serious injury, as there must also be proof that this condition was caused by the accident and produced an effect on the plaintiff's normal functioning or range of motion (see Toure v Avis Rent A Car Sys., 98 NY2d at 353 n 4; Howard v Espinosa, 70 AD3d 1091, 1094 [2010]; Durham v New York E. Travel, 2 AD3d 1113, 1114 [2003]). While Cole noted that EMG studies showed radiculitis consistent with MRI findings of a disc bulge at the L4-L5 level, he did not address the disc degeneration noted on the MRI report nor explain his conclusory opinion that this injury was caused by the 2005 accident. Cole did not account for why plaintiff's preexisting physical injuries from the prior accident were not the source of her injuries or any limitations that she now attributes to this accident (see Boone v Milano, 96 AD3d 1195, 1197 [2012]; see also Franchini v Palmieri, 1 NY3d 536, 537 [2003]). Thus, plaintiff failed to raise a triable issue of fact on the permanent consequential limitation or significant limitation of use categories.

As to the 90/180-day category, the claim required "objective evidence linking the alleged curtailment of [plaintiff's] activities following the accident to an injury sustained in the accident" (Clark v Basco, 83 AD3d 1136, 1139-1140 [2011]).

One week after the accident, Khanuja felt that plaintiff could return to work. He later stated that she should remain out of work until August 15, 2005, but after September 1, 2005 he continually found that she could work full duty. Plaintiff's testimony described some activities she could no longer perform, but others that she could. This met third-party defendant's burden of showing that plaintiff's activities were not substantially curtailed. Cole began treating plaintiff in October 2005, found that she was suffering from a total temporary disability and kept her out of work from October 2005 until February 2006. Although she was out of work for more than 90 of the 180 days following the accident, that is not dispositive because the record must establish that she "was prevented from performing substantially all of the material acts that constituted [her] usual and customary daily activities" for the requisite time period (Amamedi v Archibala, 70 AD3d 449, 450 [2010], lv denied 15 NY3d 713 [2010]; see Uddin v Cooper, 32 AD3d 270, 271 [2006], lv denied 8 NY3d 808 [2007]). Plaintiff testified that she could not carry groceries, lift or stretch like she usually did when cleaning, but she could still cook and wash the laundry. Cole opined that, due to the 2005 accident, plaintiff suffered a significant limitation of the use of her lumbar spine "particularly respective to daily lifting, pushing, pulling, climbing stairs, and other mechanical activities, sitting and standing for extended periods." However, Cole did not differentiate to what extent these limitations were related to the 2005 accident as opposed to the 2004 accident or degenerative changes (see Howard v Espinosa, 70 AD3d at 1094). He also did not support his qualitative assessment with "findings based upon any contemporaneous quantitative testing" that compared "the results of his examination to plaintiff's pre-accident levels or opine that the injuries that caused the reduced ranges of motion were of the type that prevented plaintiff from performing her customary duties and activities" (Bowen v Saratoga Springs City School Dist., 88 AD3d 1144, 1146 [2011]). Without medical evidence addressing plaintiff's prior injuries and relating her current limitations to injuries incurred as a result of the 2005 accident, she cannot prevail on the 90/180-day category either. Accordingly, Supreme Court correctly dismissed the complaint.

Reynolds v Thompson

Sim & Record, LLP, Bayside, N.Y. (Sang J. Sim of counsel), for
appellant.

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 February 24, 2012, which granted that branch of the defendant's motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

The defendant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Fudol v Sullivan, 38 AD3d 593, 594), and that the plaintiff 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).

The plaintiff failed to raise a triable issue of fact in opposition. Thus, the Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

In view of the foregoing, we do not address the plaintiff's remaining contention.

Paduani v Rodriguez

Goldstein & Handwerker, LLP, New York (Steven Goldstein of counsel), for appellant.
Richard T. Lau & Associates, Jericho (Gene W. Wiggins of counsel), for respondent.

Order, Supreme Court, Bronx County (Kenneth L. Thompson Jr., J.), entered October 17, 2011, which, in this action for personal injuries sustained in a motor vehicle accident, granted defendants' motions for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Plaintiff was a passenger in a car owned by defendant Razia Avila and driven by defendant Kaystel Avila, when the car collided with a vehicle driven by defendant Rodriguez. Plaintiff alleged that as a result of the accident, she sustained serious injuries to her cervical spine, lumbar spine, and right shoulder under the "significant limitation of use," "permanent consequential limitation of use," and 90/180-day categories of Insurance Law § 5102(d).

Defendants established their entitlement to judgment as a matter of law as to plaintiff's injury to her cervical spine by submitting their orthopedist's report finding full range of motion with the exception of a minor limitation in one plane, and diagnosing a resolved cervical spine strain (see Castillo v Cinquina, 85 AD3d 660 [1st Dept 2011]). The orthopedist's finding of a minor limitation in one aspect of the cervical spine is insufficient to negate the prima facie showing (see Canelo v Genolg Tr., Inc., 82 AD3d 584 [1st Dept 2011]; Sone v Qamar, 68 AD3d 566 [1st Dept 2009]), and plaintiff failed to raise a triable issue of fact (see Toure v Avis Rent A Car Sys, 98 NY2d 345, 350-351 [2002]).

Defendants also met their burden as to the alleged lumbar spine injury by submitting, inter alia, the affirmed report of an orthopedist who found full range of motion, and their radiologist's MRI report finding diffuse multilevel degenerative disc disease and degenerative changes unrelated to trauma, as well as a radiograph report of plaintiff's radiologist finding severe degenerative changes (see Torres v Triboro Servs., Inc., 83 AD3d 563 [2011]; Spencer v Golden Eagle, Inc., 82 AD3d 589, 590-591 [1st Dept 2011]). Plaintiff failed to raise a triable issue of fact. While her expert acknowledged in his own report MRI findings of degenerative changes in the lumbar spine, he did not address or contest such findings, and the MRI report of her radiologist found herniations but did not address causation (see Williams v Horman, 95 AD3d 650 [1st Dept 2012]; Rosa v Mejia, 95 AD3d 402, 404-405 [1st Dept 2012]). Nor did plaintiff's expert address plaintiff's deposition testimony that she had sustained a back injury in a prior car accident (see McArthur v Act Limo, Inc., 93 AD3d 567 [1st Dept 2012]).

As to plaintiff's right shoulder, defendants established prima facie lack of causation by submitting their radiologist's non-conclusory opinion that the supraspinatus tendinosis and acromioclavicular joint disease observed in the MRI film were preexisting degenerative conditions (see Torres, 83 AD3d at 564; Spencer, 82 AD3d at 590). As with the lumbar spine, plaintiff's expert failed to address evidence that the condition was degenerative in origin (see Rosa, 95 AD3d at 404-405).

Defendants disproved a 90/180-day injury by submitting plaintiff's deposition testimony, wherein she stated that she was able to babysit her grandchildren after the accident, and was able to go to the store about a month after the accident, as well as her bill of particulars alleging that she was not confined to bed or home after the accident (see Zhijian Yang v Alston, 73 AD3d 562 [1st Dept 2010]). Plaintiff has not submitted any evidence in opposition.

Tyson v Nazarian

Submitted by Mark C. Davison, for appellant.
Submitted by Hilary C. Banker, for respondent.

MEMORANDUM:
The order of the Appellate Division should be modified, without costs, by denying defendant's motion for summary judgment and remitting to the Appellate Division for further proceedings in accordance with this memorandum, and, as so modified, affirmed.
Sufficient record evidence exists to raise a triable issue of fact as to whether plaintiff suffered a "serious injury" within the meaning of Insurance Law § 5102 (d) (see Gaddy v Eyler, 79 NY2d 955, 957 [1992]). In view of its disposition, the Appellate Division did not address plaintiff's contention that she is entitled to summary judgment on the issue of defendant's negligence. We therefore remit for that purpose.
* * * * * * * * * * * * * * * * *
On review of submissions pursuant to section 500.11 of the Rules, order modified, without costs, by denying defendant's motion for summary judgment and remitting to the Appellate Division, Fourth Department, for further proceedings in accordance with the memorandum herein and, as so modified, affirmed. Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.

Sierra v 4401 Sunset Park, LLC

Goldberg Segalla, LLP, Albany, N.Y. (Matthew S. Lerner of counsel), for third-party defendant-appellant.
Margaret G. Klein & Associates, New York, N.Y. (Brill & Associates, P.C. [Corey Reichardt], of counsel), for defendants third-party plaintiffs-respondents.
Smith Mazure Director Wilkins Young & Yagerman, P.C., New York, N.Y. (Joel M. Simon of counsel), for third-party defendant-respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, and a third-party action, inter alia, for a judgment declaring that the third-party defendant Scottsdale Insurance Company is obligated to defend and indemnify the defendants third-party plaintiffs in the main action, the third-party defendant Scottsdale Insurance Company appeals, as limited by its notice of appeal and brief, from so much of an order of the Supreme Court, Kings County (Lewis, J.), dated June 23, 2011, as granted that branch of the motion of the defendants third-party plaintiffs which was for summary judgment declaring that it is obligated to defend and indemnify the defendants third-party plaintiffs in the main action, denied its cross motion, among other things, for summary judgment declaring that it is not obligated to defend and indemnify the defendants third-party plaintiffs in the main action, and denied its separate motion, among other things, for summary judgment declaring that it is not obligated to defend and indemnify the third-party defendant LM Interiors Contracting, LLC, for claims arising out of the main action.

ORDERED that the appeal from so much of the order as denied the separate motion of the third-party defendant Scottsdale Insurance Company, among other things, for summary judgment declaring that it is not obligated to defend and indemnify the third-party defendant LM Interiors Contracting, LLC, for claims arising out of the main action is dismissed as withdrawn pursuant to a letter dated May 10, 2012; and it is further,

ORDERED that the order is affirmed insofar as reviewed, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that the third-party defendant Scottsdale Insurance Company is obligated to defend and indemnify the defendants third-party plaintiffs in the main action; and it is further, 

ORDERED that one bill of costs is awarded to the defendants third-party plaintiffs.

The third-party defendant Scottsdale Insurance Company (hereinafter Scottsdale) issued a certificate of insurance to the defendants third-party plaintiffs, 4401 Sunset Park, LLC (hereinafter 4401), and Sierra Realty Company (hereinafter Sierra Realty), in accordance with a construction agreement in connection with a project in which several apartments in the subject building were to be renovated. On August 18, 2008, the plaintiff in the main action, Juan Sierra, allegedly was injured while working in the subject building.

On January 6, 2009, the primary insurer of 4401 and Sierra Realty, Greater New York Insurance Company (hereinafter GNY), wrote to Scottsdale, tendering a claim for the defense and indemnification of the underlying action on behalf of 4401 and Sierra Realty. On February 2, 2009, Scottsdale responded with a letter to GNY disclaiming coverage and rejecting the tender, on the grounds that the GNY letter constituted late notice of the accident and did not comply with terms of the Scottsdale policy. Scottsdale did not send this letter to 4401 or Sierra Realty. Sierra Realty and 4401 moved, inter alia, for summary judgment declaring that Scottsdale was obligated to defend and indemnify them in the main action. Scottsdale cross-moved, inter alia, for summary judgment declaring that it was not obligated to defend and indemnify 4401 and Sierra Realty in the main action.

Where a primary insurer, in this case GNY, tenders a claim for a defense and indemnification to an insurer, in this case Scottsdale, which issued a certificate of insurance to the parties, indicating that they are additional insureds, that insurer must comply with the disclaimer requirements of Insurance Law § 3420(d)(2) by providing written notice of disclaimer of coverage to the additional insureds. The fact that the tendering insurer provided untimely notice of the accident "does not excuse the insurer's unreasonable delay in disclaiming coverage" (233 E. 17th St., LLC v L.G.B. Dev., Inc., 78 AD3d 930, 932; see Admiral Ins. Co. v State Farm Fire & Cas. Co., 86 AD3d 486, 488; J.T. Magen v Hartford Fire Ins. Co., 64 AD3d 266, 269; Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD3d 84, 87-88; AIU Ins. Co. v Investors Ins. Co., 17 AD3d 259, 260). The failure of Scottsdale to provide written notice of disclaimer to 4401 and Sierra Realty rendered the disclaimer of coverage ineffective against them (see Maughn v RLI Ins. Co., 68 AD3d 1067, 1068). Under the circumstances of this case, GNY was not the real party in interest, such that the notice of disclaimer to GNY would be rendered effective as against 4401 and Sierra Realty (cf. Cincinnati Ins. Cos. v Sirius Am. Ins. Co., 51 AD3d 1365; Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124).

Scottsdale's remaining contention has been rendered academic in light of our determination.

Since the third-party action is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that Scottsdale is obligated to defend and indemnify 4401 and Sierra Realty in the main action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

Davis-Hassan v Siad

Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success, N.Y. [Marshall D. Sweetbaum], of counsel), for appellant.
Frank J. Dito, Jr., Staten Island, N.Y., for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Richmond County (Fusco, J.), dated April 23, 2012, which denied that branch of his motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Fudol v Sullivan, 38 AD3d 593, 594), and that the plaintiff 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, however, the plaintiff submitted evidence raising a triable issue of fact as to whether she sustained serious injuries to the cervical and lumbar regions of her spine (see Perl v Meher, 18 NY3d 208, 218-219). Thus, the Supreme Court properly denied that branch of the defendant's motion which was for summary judgment dismissing the complaint.

We have not considered the defendant's remaining contention, regarding a gap in treatment, since it was improperly raised for the first time in his reply papers, and not considered by the Supreme Court (see Tadesse v Degnich, 81 AD3d 570, 570; see also Petito v City of New York, 95 AD3d 1095, 1095).

Frisch v Harris

Litman & Litman, P.C., East Williston, N.Y. (Jeffrey E. Litman of counsel), for appellant.
Adams, Hanson, Rego, Carlin, Hughes, Kaplan & Fishbein, Albany, N.Y. (Gerald D. D'Amelia, Jr., of counsel), for respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from a judgment of the Supreme Court, Queens County (Elliot, J.), dated September 28, 2011, which, upon an order of the same court dated March 31, 2011, granting 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, is in favor of the defendants and against her dismissing the complaint.

ORDERED that the judgment 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 defendants submitted competent medical evidence establishing, prima facie, that the plaintiff did not sustain any serious injuries to her right shoulder or to the cervical and lumbar regions of her spine (see Fudol v Sullivan, 38 AD3d 593, 594) and, in any event, that any injuries were not caused by the subject accident (cf. Jilani v Palmer, 83 AD3d 786, 787). Moreover, the defendants demonstrated, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d) by submitting the plaintiff's deposition testimony, which demonstrated that she was not prevented from performing substantially all of her usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Beltran v Powow Limo, Inc., 98 AD3d 1070, 1071).

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff has an extensive history of accidents involving injury to the parts of her body at issue in this case, specifically, according to her deposition testimony, accidents in 1993, 1996, 1998, 2001, and 2007. The affirmation of one of the plaintiff's orthopedists, Dr. George L. Unis, concluded that the causality of the plaintiff's claimed cervical, lumbar, knee and shoulder injuries "is not very well established." The plaintiff's orthopedic surgeon, Dr. Barry Katzman, causally related the plaintiff's injuries to the instant occurrence as aggravations of the pre-existing injuries. However, Dr. Katzman's summary of the plaintiff's prior accidents does not include all of the accidents, lists incorrect years for others, and, as argued by the defendants, fails to indicate that he reviewed the medical records from the prior accidents (see Cantave v Gelle, 60 AD3d 988, 989; Gentilella v Board of Educ. of Wantagh Union Free School Dist., 60 AD3d 629, 630). Accordingly, his conclusion about causality is speculative and insufficient (see Cantave v Gelle, 60 AD3d at 989). The plaintiff's papers submitted in opposition to the defendants' motion likewise fail to raise a triable issue of fact regarding the 90/180 day category of Insurance Law § 5102(d) (see Moore v Sarwar, 29 AD3d 752, 753; Sainte-Aime v Ho, 274 AD2d 569).

Accordingly, the Supreme Court properly 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.

Granela v Ruppert

Getz & Braverman, P.C. (Pollack, Pollack, Isaac & De Cicco, New York, N.Y. [Brian J. Isaac and Michael H. Zhu], of counsel), for appellant.
Eisenberg & Kirsch, Liberty, N.Y. (Robert Lefland 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, Orange County (Bartlett, J.), dated June 30, 2011, which granted the defendant's 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 defendant's motion for summary judgment dismissing the complaint is denied.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see David v Caceres, 96 AD3d 990, 990-991; Rodriguez v Huerfano, 46 AD3d 794, 795).

However, in opposition, the plaintiff raised a triable issue of fact as to whether any of the alleged injuries to the cervical and lumbar regions of her spine constituted a serious injury under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Perl v Meher, 18 NY3d 208, 215-218; David v Caceres, 96 AD3d at 991). Accordingly, the Supreme Court should have denied the defendant's motion for summary judgment dismissing the complaint.

Rodriguez v Zabala

James M. Visser, Bronx, N.Y., for appellants.
Adams, Hanson, Rego, Carlin, Hughes, Kaplan & Fishbein, Lake Success, N.Y. (Jacqueline Doody of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, etc., the plaintiffs appeal (1), as limited by their brief, from so much of an order of the Supreme Court, Queens County (Taylor, J.), dated October 5, 2011, as granted that branch of the defendant's motion which was for summary judgment dismissing the causes of action to recover damages for personal injuries on the ground that the plaintiff Marisol Rodriguez did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, and denied their cross motion, inter alia, for summary judgment on the issue of serious injury, and (2) from an order of the same court, also dated October 5, 2011.

ORDERED that the appeal from the second order dated October 5, 2011, is dismissed as abandoned; and it is further,

ORDERED that the first order dated October 5, 2011, is affirmed insofar as appealed from; and it is further,

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

The defendant met his prima facie burden of showing that the plaintiff Marisol Rodriguez 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 defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff Marisol Rodriguez's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Moran v Kollar, 96 AD3d 811; Ramkalawon v Correa, 95 AD3d 982; Rodriguez v Huerfano, 46 AD3d 794, 795).

In opposition, the plaintiffs failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the causes of action to recover damages for personal injuries.

The appeal from the second order dated October 5, 2011, must be dismissed as abandoned (see Sirma v Beach, 59 AD3d 611, 614), as the plaintiffs do not seek reversal of that order in their brief.

The plaintiffs' remaining contentions are without merit.

Saldarriaga v Moreno

Lozner & Mastropietro, Brooklyn, N.Y. (Elizabeth Mark Meyerson of counsel), for appellants.
James F. Sullivan, P.C., New York, N.Y. (Kyle B. Stefanczyk of counsel), for respondent.
Newman & Newman LLP, Jamaica, N.Y. (Erwin B. Newman of counsel), for defendant German Moreno.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Agate, J.), entered May 26, 2011, as granted that branch of the motion of the defendant Nicholas Viola which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Juan Saldarriaga against him on the ground that the plaintiff Juan Saldarriaga did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the appeal by the plaintiff Alvaro Saldarriaga is dismissed, as he is not aggrieved by the portion of the order appealed from (see CPLR 5511); and it is further,

ORDERED that the order is reversed insofar as appealed from by the plaintiff Juan Saldarriaga, on the law, and that branch of the motion of the defendant Nicholas Viola which was for summary judgment dismissing the complaint insofar as asserted by the plaintiff Juan Saldarriaga against him is denied, and a subsequent order of the same court entered December 14, 2011, is vacated; and it is further,

ORDERED that one bill of costs is awarded to the plaintiff Juan Saldarriaga, payable by the respondent.

The defendant Nicholas Viola failed to meet his prima facie burden of demonstrating that the plaintiff Juan Saldarriaga (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, 350; Gaddy v Eyler, 79 NY2d 955, 956-957). Viola's motion papers failed to adequately address the injured plaintiff's claim, clearly set forth in the bill of particulars, that he sustained a medically determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (cf. Tinsley v Bah, 50 AD3d 1019, 1019-1020).

Since Viola failed to meet his prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiffs in opposition were sufficient to raise a triable issue of fact (see generally Stukas v Streiter, 83 AD3d 18, 24).

Accordingly, the Supreme Court erred in granting that branch of Viola's motion which was for summary judgment dismissing the complaint insofar as asserted by the injured plaintiff against him. In light of our determination, a subsequent order of the same court entered December 14, 2011, which, inter alia, upon, in effect, granting reargument, adhered to the determination in the order entered May 26, 2011, granting that branch of Viola's motion, and, sua sponte, in effect, directed the dismissal of the complaint insofar as asserted against the defendant German Moreno, must be vacated.

Barhak v L. Almanzar-Cespedes

Elana Sharara, Great Neck, for appellant.
Backer, McEvoy, Morrissey & Moskovits, P.C., Brooklyn (Stacy R. Seldin of counsel), for respondent.

Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered October 20, 2011, which, insofar as appealed from, granted defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, the motion denied to the extent it sought dismissal of plaintiff's claim that he suffered "permanent consequential" and "significant limitation" injuries to his cervical spine, and otherwise affirmed, without costs.

Plaintiff alleges that as a result of a rear-end motor vehicle accident that occurred in August 2009, he sustained permanent injuries to his cervical spine, lumbar spine, left elbow, and left shoulder. Defendant met his prima facie burden by submitting, among other things, the affirmation of an orthopedic surgeon who found upon recent examination that each body part exhibited full range of motion (see Spencer v Golden Eagle, Inc., 82 AD3d 589 [1st Dept 2011]; DeLeon v Ross, 44 AD3d 545 [1st Dept 2007]). As to plaintiff's claimed cervical spine injury, defendant proffered the affirmation of a radiologist who, upon reviewing an MRI taken after the accident, opined that plaintiff had extensive degenerative disc disease and desiccation which predated the accident and the disc herniations seen at multiple levels had a degenerative etiology (see Porter v Bajana, 82 AD3d 488 [1st Dept 2011]).

Plaintiff raised an issue of fact as to his claim of serious injury to his cervical spine. He submitted the affirmations of a radiologist who found that the MRI films reveal a bulging disc and herniations at multiple levels, and his treating neurologist who conducted an EMG/NCV test showing radiculopathy, measured continuing limitations in range of motion, and opined, based on the medical evidence and absence of prior injuries, that plaintiff's cervical spine injuries were caused by the accident (see Serbia v Mudge, 95 AD3d 786, 787 [1st Dept 2012]; Yuen v Arka Memory Cab Corp., 80 AD3d 481, 482 [1st Dept 2011]). Plaintiff also adequately addressed his gap in treatment through his treating doctor's explanation that treatment had stopped because plaintiff reached "maximum medical improvement" (Ayala v Cruz, 95 AD3d 699, 700 [1st Dept 2012])

Plaintiff, however, submitted no objective medical evidence of any lumbar spine injury (see Williams v Horman, 95 AD3d 650, 651 [1st Dept 2012]), failed to adduce any evidence in support of his claimed left shoulder injury, and proffered no evidence of continuing limitations in the left elbow (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]; Martinez v Goldmag Hacking Corp., 95 AD3d 682, 683 [1st Dept 2012]).

Supreme Court properly dismissed plaintiff's 90/180-day claim in light of his deposition testimony that he lost no time from work, and the allegation in his verified bill of particulars that he was not confined to bed or home after the accident (see Mitrotti v Elia, 91 AD3d 449, 450 [1st Dept 2012]). Plaintiff failed to submit evidence sufficient to raise an issue of fact as to the 90/180-day claim.
Dorrian v Cantalicio

Krentsel & Guzman, LLP, New York (Alex Rybakov of counsel), for appellant.
Richard T. Lau & Associates, Jericho (Kathleen E. Fioretti of counsel), for respondent.

 

Order, Supreme Court, Bronx County (Sharon A.M. Aarons, J.), entered October 11, 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), and denied plaintiff's cross motion for partial summary judgment as moot, unanimously affirmed, without costs.

Plaintiff alleged that, as the result of a rear-end car accident, he sustained injuries to his cervical and lumbar spine and left knee. He acknowledged having suffered prior back injuries in one or more of three prior motor vehicle accidents and a work-place accident, and that he had left knee surgery following one of the prior accidents.

Defendant met his prima facie burden by submitting the affirmed reports of an orthopedist who found that plaintiff had full range of motion in all affected parts, and of a radiologist who found degeneration in all claimed injured body parts (see Spencer v Golden Eagle, Inc., 82 AD3d 589 [1st Dept 2011]), as well as the evidence of prior accidents which resulted in injuries to his back and knees (see Brewster v FTM Servo, Corp., 44 AD3d 351, 352 [1st Dept 2007]).

In opposition, plaintiff failed to raise an issue of fact. His treating physician measured normal range of motion in his cervical spine, with only minor limitations in one plane, at several examinations months after the accident (see Phillips v Tolnep Limo Inc., 99 AD3d 534 [1st Dept 2012]; Canelo v Genolg Tr., Inc., 82 AD3d 584 [1st Dept 2011]), and offered no explanation for the decline of plaintiff's cervical spine range of motion at his most recent examination (see Thomas v City of New York, 99 AD3d 580 [1st Dept 2012]). This failure to explain the inconsistencies between her earlier finding of near full range of motion and her present findings of deficits entitles defendant to summary judgment (see id.; Jno-Baptiste v Buckley, 82 AD3d 578, 578-79 [1st Dept 2011]).

As for the claimed left knee injury, plaintiff's physician found normal range of motion in the months following the accident and did not explain subsequent declines. Moreover, her opinion as to causation was inadequate in light of plaintiff's prior history of left knee surgery and defendant's expert's opinion that any tear was degenerative in origin (see Pines v Lopez, 88 AD3d 545 [1st Dept 2011]). Plaintiff's physician also failed to explain earlier improvements in lumbar range of motion, or to raise an issue of fact as to causation of that injury, since her opinion that plaintiff's lumbar injuries were caused by the accident was based on plaintiff's subjective statement that "he had recovered" from his three prior accidents, without reference to prior medical records or other medical evidence (see McArthur v Act Limo, Inc., 93 AD3d 567 [1st Dept 2012]; Style v Joseph, 32 AD3d 212, 214 [1st Dept 2006]). Plaintiff did not plead a claim for exacerbation of prior injuries and, in any event, his physician did not provide any basis for determining the extent of any exacerbation of plaintiff's prior injuries (see Suarez v Abe, 4 AD3d 288 [1st Dept 2004]).

Given the lack of serious injury, the issue of liability is academic (see Hernandez v Adelango Trucking, 89 AD3d 407, 408 [1st Dept 2011]).

Sosa v 46th Street Development LLC

Goldberg Segalla LLP, Garden City (Brian W. McElhenny of
counsel), for appellants.
Peisner Girsh Schaefer & Sfouggatakis, New York (Allen H.
Gueldenzopf of counsel), for respondent.

Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered December 23, 2011, which, to the extent appealed from as limited by the briefs, denied the motion of defendant Plaza Construction Corporation (Plaza) for conditional summary judgment on its cross claim seeking contractual indemnification from defendant Five Star Electrical Corp. (Five Star), affirmed, without costs.

Defendant 46 Street Development LLC (owner) hired Plaza to manage the construction of a 42-story residential building owned by the former. Plaza hired Five Star as the electrical subcontractor. Pursuant to the contract between Plaza and the owner, Plaza was solely responsible for "coordinating the construction of all portions of the work," and had broad and specific responsibilities relating to site safety. Indeed, Plaza hired an outside safety coordinator, Total Safety Consulting, to ensure that all proper safety precautions were taken on the site. The contract between Plaza and Five Star contained an indemnification and hold harmless clause, which provided that Five Star would indemnify and hold Plaza harmless for damages which "ar[i]se out of or are connected with or ... claimed to arise out of or be connected with ... performance of [w]ork by [Five Star]."

Plaintiff Enrique Sosa was an employee of non party Port Morris Tile Corporation, the tile contractor. He alleges that at about 7:15 a.m. on December 13, 2007, while engaged in tiling work in a bathroom in an apartment on the 10th floor, he sustained injuries from an electric shock after coming into contact with an exposed, hanging electric wire. When the accident occurred, Con Edison was already in the process of transforming the power supply in the building from "temporary" to "permanent." The temporary supply was made available to contractors while the superstructure of the building was being erected. Robert Marrone, who was Plaza's superintendent at the project in the year leading up to the accident, testified that power was gradually switched to permanent as the building rose and individual apartments became ready to be finished. However, even after sections of the building went to permanent power supply, that power would remain off unless a contractor specifically requested that power be supplied to the apartments. To connect the power in those apartments, Five Star was required to activate breakers at central panels which controlled power to three floors. It also had to activate breakers in the individual apartments where the requesting contractor desired to work. Plaza generally coordinated with Five Star when individual contractors needed power in an apartment.

A few days before the accident in question, Port Morris requested that the permanent power supply in the apartments be activated in two specific areas, including at the outlets providing electricity for washing machines. Port Morris planned to plug tile-cutting saws into those outlets. Five Star accommodated the request by activating breakers at the central panels and at the necessary areas in the apartments. It also went to each individual apartment to "safe off" the relevant outlets, which involved insulating the wires at those outlets to prevent the workers from sustaining electrical shocks. Chris Cote, Five Star's foreman, testified at his deposition that on the night before the accident he saw workers from contractors other than Port Morris working in apartments and using permanent electricity. The only way these workers could have accessed the electricity was to activate breakers in those apartments. However, these workers were not permitted to do so without direct authorization from Five Star. Cote reported what he saw to Plaza. This was not the first time that Cote noticed other contractors circumventing Five Star to draw more power for their work. In fact, he testified, it happened more frequently in the beginning stages of the project. The subject incident occurred toward the end of the project.

Two of Five Star's workers gave testimony that was consistent with Cote's to the extent they stated that it was not unheard of for other contractors, after the permanent power supply had been activated, to energize electric power in individual apartments without Five Star's knowledge or permission. One of the workers, Ralph Lopez, testified that from the time the permanent power supply was activated at the site, he was aware of incidents where other trades would activate breakers inside apartments without Five Star's knowledge. Bridgette Kennedy, who had been working at the job for a few weeks before the accident, testified that the problem occurred on a daily basis. She further averred that the problem was not uncommon in the industry. Finally, Kennedy testified that the issue was discussed at safety meetings run by Plaza through its contractor, Total Safety Consulting.

Plaza's superintendent on the project, William Rogers, testified that it was "possible" that there was a problem during the construction of the building with contractors activating electricity in apartments without proper authorization. He further testified that it was "possible" that the issue came up during safety meetings.

Plaza cross-claimed against Five Star for, inter alia, contractual indemnification. It then moved for conditional summary judgment on that claim. Conceding that any evidence of active negligence on its part would render the indemnification clause unenforceable, Plaza argued that "[t]he fact that a construction manager runs safety meetings, inspects the site, supervises and coordinates the work of the trades etc. is not the basis for a claim of active negligence."

In opposition, Five Star did not contest that the indemnification provision covered the subject accident. However, relying on testimony from Five Star's witnesses that there was a problem at the construction site with unauthorized activation of permanent power, it asserted that, pursuant to General Obligations Law § 5-322.1, an issue of fact existed regarding enforceability of the indemnification provision.

In a ruling from the bench, the court denied the motion. It stated that "to the extent that Plaza was coordinating the different trades within the unit, whether or not there was knowledge of them turning the circuit breakers on is a question of fact. One of [Five] Star's workers says they kept finding the circuit breakers switched on when they should have been switched off, and this is a question for the jury."

As trite as such recitations have become, this is a case that deserves a brief reiteration of the by now well-settled constraints imposed on any court considering a summary judgment motion. "On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party. Summary judgment is a drastic remedy, to be granted only where the moving party has tendered sufficient evidence to demonstrate the absence of any material issues of fact and then only if, upon the moving party's meeting of this burden, the non-moving party fails to establish the existence of material issues of fact which require a trial of the action" (Vega v Restani Constr. Corp., 18 NY3d 499, 503 [2012] [internal quotation marks omitted]). Courts may not resolve summary judgment motions by making credibility determinations, as those are exclusively within the province of the trier of fact (see Sanchez v Finke, 288 AD2d 122, 123 [1st Dept 2001]).

Applying these principles, the burden was on Plaza to demonstrate, beyond a material issue of fact, that it bore no responsibility for plaintiff's accident. Because this was an accident on a construction site, it had to show that it did not exercise any authority over the means and methods of plaintiff's work, or that, to the extent the accident arose out of a dangerous condition on the premises, it was not liable for the condition (see Cappabianca v Skanska USA Bldg. Inc., 99 AD3d 139, 148 [1st Dept 2012]). It does not appear to be in dispute that this accident falls into the latter category. Thus, Plaza was required to establish that it did not create the condition or have actual or constructive notice of its existence prior to the accident in sufficient time to take corrective measures (see Mitchell v New York Univ., 12 AD3d 200, 201 [1st Dept 2004]).

It appears from the testimony, especially that of Lopez and Kennedy, that there was some history during the project of contractors activating the electricity in individual apartments without having first received the proper authorization. Further, and significantly, Kennedy testified that the issue came up at safety meetings run by Plaza. This suggests that Plaza was concerned about the practice and considered it a possible threat to the safety of workers such as plaintiff. No one from Plaza refuted the testimony of Lopez and Kennedy. To the contrary, its superintendent Rogers stated that it was "possible" that this occurred. Under these circumstances, and giving every benefit of the doubt to Five Star as the non-moving party, we find that an issue of fact exists as to whether Plaza had the requisite notice of a dangerous condition in sufficient time to do something about it. Accordingly, summary judgment was properly denied (see Barraco v First Lenox Terrace Assoc., 25 AD3d 427, 429 [1st Dept 2006]).

In opining that there are no issues of fact whether Plaza was negligent, the dissent misapprehends the record. First, it states that Cote "testified that there was no ongoing problem with other subcontractors turning on electrical power before the plaintiff's accident". In fact, however, Cote testified that, even in the early stages of construction, contractors were "trying to bypass Five Star Electric to get more power for their work." Including Lopez and Kennnedy, the two other Five Star workers who testified, there were three witnesses who consistently testified that in the weeks prior to the accident, there was an issue with unauthorized activations of electricity.

The dissent further reads the record incorrectly when it states that Kennedy "could not remember when she worked at the project." At first she could not, when she asked to describe in absolute terms her time energizing outlets in individual apartments. However, when asked to state the period of time in terms of weeks or months, she answered, "Probably a couple of weeks." Again, this Court is not permitted to make credibility determinations and as such this testimony cannot be rejected out of hand. Further, contrary to the dissent's comment that Lopez could not say when contractors accessed electricity "with reference to the plaintiff's accident," Lopez's testimony that the problem existed was in response to a question asking if it happened "[f]rom the time the power was provided to the apartment panels and was permanent." Because Marrone testified that power was switched gradually from temporary to permanent, beginning on the lowest floors and proceeding to the higher floors, and the accident occurred on the 10th floor, an inference can be drawn that Lopez was describing a problem which began some time before the accident.

Finally, the dissent ignores Kennedy's testimony that the issue of other contractors activating electricity in individual apartments was discussed at Plaza's safety meetings. If we assume this to be true, as we must, it would evince specific awareness of the problem and an acknowledgment by Plaza that it considered it to be a significant safety concern. Accordingly, the cases cited by the dissent where the defendant only had a general awareness of a dangerous condition are completely inapposite.

Five Star has pointed to concrete evidence in the record to suggest that Plaza had notice of a dangerous condition on the construction site in sufficient time to remedy it. Accordingly, because a material issue of fact exists whether Plaza's negligence voids Five Star's contractual obligation to indemnify Plaza against plaintiff's claims, the motion court properly denied Plaza summary judgment on its cross claim against Five Star.

All concur except Catterson, J. who dissents in a memorandum as follows:

CATTERSON, J. (dissenting)

I must respectfully dissent. In my opinion, codefendant subcontractor Five Star Electrical Corp. (hereinafter referred to as "Five Star") fails to raise an issue of fact as to whether defendant Plaza Construction Corp. was actively negligent in bringing about the plaintiff's injury which was caused by a live, exposed wire while he was tiling a bathroom. Five Star contends, inter alia, that general contractor Plaza had constructive notice of a dangerous condition at the building site where other trades were allegedly turning on electrical power without authorization. In my view, the testimony upon which Five Star relies simply does not support its contention.

As set forth in greater detail below, at best the testimony of two Five Star electricians and its foreman establishes only that Plaza may have had a general awareness of a potentially hazardous condition, which precedent deems is an insufficient basis for constructive notice. Moreover, the testimony of the Five Star foreman as to a telephone call he made to Plaza regarding a situation where other tradesmen had turned on circuit breakers in some apartments also fails to raise an issue of fact as to notice. Given the timing of the call on the night before the plaintiff's accident, there is no evidence of record that Plaza could have taken any concrete steps to remedy the situation before the plaintiff's accident at 7.15 a.m. the following morning. Therefore, in my view, Plaza is entitled to contractual indemnification from Five Star, and I would grant its motion for summary judgment.

Defendant 46th Street Development LLC hired Plaza to manage the construction of a 42-story residential building. Plaza's contractual responsibility included "coordinating the construction of all portions of the work" among the trade subcontractors at the site. Plaza hired Five Star for the electrical work and nonparty Port Morris Tile Corp. for the tile work. The plaintiff, an employee of Port Morris Tile, alleges that at about 7:15 a.m. on December 13, 2007, he sustained injuries from an electric shock after touching an exposed, live electric wire while tiling a bathroom in one of the apartments in the building.

The plaintiff brought this action against, inter alia, Plaza and Five Star alleging violations of Labor Law §§ 200, 240, and 241. Plaza cross-claimed against Five Star for contractual indemnification based on a very broad indemnification and "hold harmless" provision, which stated that Five Star would indemnify and hold Plaza harmless for damages that "arise out of or are connected with [...] performance of [w]ork by the subcontractor."

At the conclusion of discovery, Plaza moved for summary judgment on its indemnity claim against Five Star on the ground that the plaintiff's accident arose out of Five Star's work. Plaza argued that the plaintiff was injured after he touched live electrical wires that the plaintiff claimed were not taped or capped to prevent shocks. Plaza contended that the broad indemnity clause applied whether Five Star was negligent or not.

Five Star did not dispute that the plaintiff's accident arose out of or was connected to Five Star's electrical work. Rather, Five Star argued that New York General Obligations Law § 5-322.1 precludes full contractual indemnification on the ground that Plaza was actively negligent. Specifically, Five Star contended that there was evidence that Plaza had notice that other subcontractors were improperly turning on circuit breakers and that Plaza failed to "coordinate the trades" at the project. The motion court agreed and denied Plaza's motion.

The majority affirms, finding that there is "concrete evidence in the record to suggest that Plaza had notice of a dangerous condition on the construction site in sufficient time to remedy it." For the reasons set forth below, I disagree. New York General Obligations Law § 5-322.1(1) states that
"[an] ... agreement ... in connection with ... a contract or agreement relative to the construction ... of a building ... purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons ... caused by or resulting from the negligence of the promisee ... whether such negligence be in whole or in part, is against public policy and is void and unenforceable."

Thus, a subcontractor seeking to avoid enforcement of an indemnity agreement has the burden of proving that the indemnitee general contractor was "negligent to some degree." Brown v. Two Exch. Plaza Partners, 146 A.D.2d 129, 539 N.Y.S.2d 889 (1st Dept. 1989), aff'd 76 N.Y.2d 172, 556 N.Y.S.2d 991, 556 N.E.2d 430 (1990). Conversely, summary judgment may be granted to a contractor on its contractual indemnity claim against a subcontractor when there is no possibility that the contractor will be found actively negligent. See Warnett v A.J. Pegno Constr. Corp., 1 AD3d 207, 767 N.Y.S.2d 107 (1st Dept. 2003); see also Itri Brick & Concrete Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 786, 658 N.Y.S.2d 903, 680 N.E.2d 1200 (1997) (absent a finding of negligence on an indemnitee's behalf, an indemnity agreement would not run afoul of GOL [*6]5—322.1).

A general contractor may be held liable for negligence when it has actual or constructive notice of a dangerous condition and fails to take corrective action. See Mitchell v New York Univ., 12 AD3d 200, 200-201, 784 N.Y.S.2d 104, 106 (1st Dept. 2004). A defendant has constructive notice of a hazardous condition when a defect is visible and apparent and exists for a sufficient length of time prior to the accident to permit the defendant's employees to discover and remedy it. Gordon v. American Museum of Natural History, 67 N.Y.2d 836, 837-838, 501 N.Y.S.2d 646, 647, 492 N.E.2d 774, 775 (1986).

Here, Five Star contends that Plaza was negligent because it failed to "keep the hands of the other trades out of the electricians' work." Five Star further contends that Plaza had constructive notice of this "recurring hazardous condition," and failed to address it in a timely and reasonable manner. In support of this argument, Five Star relies primarily on the testimony of two electricians who were responsible for capping or taping the wires as well as the testimony of its foreman.

Five Star's general foreman testified that two or three days before the plaintiff's accident, he was asked to "energize" or provide permanent power to apartments on the first 11 floors of the building. He directed two electricians to put wire nuts or tape on the wires and turn on the power to the apartments. He instructed them to then turn on the circuit breakers for "the washer unit so the tile guy would have power to the washer outlet and operate his saw, and the lighting circuit, so they had light to perform their work." All other circuit breakers, including those in the bathrooms, were to be left off.

The foreman further testified that there was no ongoing problem with other subcontractors turning on electrical power before the plaintiff's accident. However, he acknowledged that on the night before the accident, he observed that some workers in some of the apartments had turned on electrical circuits without permission. He testified that he told those workers they could not do so, and that he reported the incident to Plaza. However, he did not identify the workers or the apartments.

The two electricians testified that they capped and taped the wires and activated the two circuits in each apartment as instructed. Both of them also testified as to seeing other tradesmen improperly turning on electrical power in certain apartments. However, neither electrician could identify the location of the apartments.

One electrician testified that she saw "other trades touching electrical breakers ... [a]lmost every day ... from the time [she] started." However, she could not remember when she worked at the project. The second electrician testified that some of the trades went into the panel to turn breakers on "once in a while."However, he could not say when this occurred with reference to the plaintiff's accident. Hence the testimony of the first electrician is inconsistent with that of the second, and the testimony of both electricians is inconsistent with that of the Five Star foreman.

 

More significantly, the vagueness of the testimony precludes any conclusion that a triable issue of fact exists as to Plaza's constructive notice. At best, the testimony imputes to Plaza only a general awareness of a potentially dangerous condition and it is well settled that a "general awareness" that a dangerous condition may be present is legally insufficient to constitute constructive notice of the particular condition that caused a plaintiff's accident. Piacquadio v. Recine Realty Corp., 84 N.Y.2d 967, 969, 622 N.Y.S.2d 493, 494, 646 N.E.2d 795, 796 (1994). Thus, vague testimony, which cannot establish the length of time a hazardous condition has existed, is insufficient to raise a triable issue of fact as to constructive notice. See e.g. Kobiashvilli v. Hill, 34 AD3d 747, 747-748, 828 N.Y.S.2d 68, 69 (2d Dept. 2006) ("appellant established its entitlement to judgment as a matter of law by submitting proof that the length of time for which the [defect] existed was unknown")(internal quotation marks omitted); Reilly v. Newireen Assoc., 303 A.D.2d 214, 756 N.Y.S.2d 192 (1st Dept. 2003), lv. denied 100 N.Y.2d 508, 764 N.Y.S.2d 235, 795 N.E.2d 1244 (2003) (testimony that a hoist broke down "periodically" or "twice a week" was too vague and unspecific to state a viable claim for negligent maintenance).

Nor, in my view, does Five Star raise an issue of fact as to notice by relying on its foreman's testimony as to his phone call to Plaza on the night before the accident. Actual notice "must call attention to the specific defect or hazardous condition and its specific location, sufficient for corrective action to be taken." Mitchell, 12 AD3d at 201, 784 N.Y.S.2d at 106 (emphasis added). Here, the foreman could not identify the workers who allegedly were turning on electrical power without authorization; nor could he identify the apartments, or the floors on which they were located.

Even assuming arguendo that the foreman's telephone phone call was sufficiently specific to provide Plaza with actual notice, there is no evidence that there was time for Plaza to take any concrete steps to remedy the hazardous condition. The only evidence concerning a remedy was testimony that after the accident locks were installed on each apartment's electric panel to ensure that only Five Star would have access to the circuit breakers. Not only did Five Star's foreman admit that this was not the standard practice in the industry, but Plaza, who was allegedly notified the night before the plaintiff's accident, could not have had time to have locks installed on every apartment panel in the 42-story building when work began at 7 the following morning and the plaintiff was injured at 7:15 a.m.

Jacobs v Northwestern Mutual Life Insurance Company

APPEAL by the defendant, in an action, inter alia, to recover damages for breach of contract, as limited by its brief, from so much of an order of the Supreme Court (Randy Sue Marber, J.), dated December 23, 2010, and entered in Nassau County, as denied its motion for summary judgment dismissing the amended complaint, and CROSS APPEAL by the plaintiff, as limited by his brief, from so much of the same order as denied his cross motion for summary judgment on the amended complaint.


Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Norman L.
Tolle, Cheryl F. Korman, and Merril S. Biscone of counsel), for
appellant-respondent.
Markowitz & Rabbach LLP, Melville, N.Y. (Scott Markowitz
and Heath Olnowich of counsel), for
respondent-appellant.
OPINION & ORDER


BALKIN, J.The plaintiff, Brad J. Jacobs, was a plastic surgeon. In June 2007 his medical license was suspended by New York State's Commissioner of Health on the ground that his continued practice "constitute[d] an imminent danger to the health of the people of this state." A few months later, the plaintiff filed claims under his disability insurance policies. He asserted that even before the State suspended his license, mental illness and drug addiction had rendered him unable to perform his duties "with any degree of safety or competence." The plaintiff's insurer, the defendant Northwestern Mutual Life Insurance Company (hereinafter Northwestern), denied his claims on the ground that the plaintiff had been practicing his profession until the very day his license was suspended. The principal issue on this appeal and cross appeal is whether, under the terms of the plaintiff's disability insurance policies, his inability to practice his profession resulted from a "sickness," which may be covered under the policy, or from the loss of his medical license, which would not be covered.
I
The plaintiff had a successful medical practice located on the Upper East Side of Manhattan. He was insured under nine disability insurance policies issued by Northwestern, which provided for benefits in the event the plaintiff became disabled.

In 2001 the plaintiff began using crystal methamphetamine (hereinafter crystal meth), at first once a week, but increasing to daily use. In March 2003 he began therapy with a drug counselor, but relapsed after a short period of abstinence. Evidence adduced during discovery established that, from 2001 to June 2007, the plaintiff was making reckless treatment decisions. It also established that so many malpractice lawsuits had been filed against him that, by 2007, he did not have malpractice insurance because he could not afford the premiums.

In the first six months of 2007, the plaintiff consulted with patients on Mondays and Wednesdays, from 9:00 A.M. to 5:00 P.M., and performed surgery on Tuesdays, Thursdays, and Fridays, from approximately 7:00 A.M. to 5:00 P.M. He testified at his deposition, however, that during those six months he was sleeping little and was "in a fog" because he was ingesting crystal meth several times a week. He was also self-medicating with Xanax and Fentanyl. Crystal meth gave the plaintiff a "high" that replicated the high he felt during his bipolar upswings. The plaintiff continued using crystal meth because he believed that, without it, he would "crash" and be unable to function.

On June 18, 2007, the New York State Board for Professional Medical Conduct (hereinafter the Board) notified the plaintiff that his license to practice medicine was being suspended because his continued practice "constitute[d] an imminent danger to the health of the people of this state." The Statement of Charges iterated alleged acts of negligence, incompetence, performance of services not authorized by patients, failure to maintain records and moral unfitness. The charges pertained to 10 incidents that took place between 2001 and 2005.

In August 2007, about two months after his license was suspended, the plaintiff consulted with a psychologist, who, upon diagnosing him as suffering from Bipolar II Disorder, referred him to a psychiatrist.

On September 12, 2007, following 11 days of hearings before the Board, the plaintiff agreed to surrender his medical license, because he could not "successfully defend against acts of misconduct alleged in the Statement of Charges." The next day, the Board accepted the plaintiff's surrender of his license.

In October 2007 the plaintiff was admitted to an inpatient treatment program. He remained in the program and was treated for Bipolar II Disorder, as well as Impulse Control Disorder and Amphetamine Dependence, until January 26, 2008.

In January 2008 the plaintiff sought benefits under the "total disability" provisions of his disability insurance policies. According to his "Request for Disability Benefits," he "did not perform any job duties and [was] claiming total disability benefits" for the period from June 18, 2007—the date his license was suspended—to "present." The plaintiff claimed that he suffered from various conditions, including Bipolar II Disorder. In April 2008 Northwestern denied the plaintiff's claim on the ground that the plaintiff had ceased practicing medicine because his license was suspended, not because he was unable to perform the principal duties of his occupation. Later, Northwestern denied the plaintiff's appeal of its decision. The letter informing the plaintiff of the result of the appeal noted among other things that, "[a]lthough he may have had a condition prior to June 18, 2007, it was not that condition that caused him to stop working but rather the suspension of his license," and that nothing in the plaintiff's file "suggest[ed], let alone prove[d] that [the plaintiff] was unable to perform the principal duties of his occupation on a full time basis due to accident or sickness prior to or as of the day his license was suspended."

In December 2008, while his appeal of the denial of benefits was pending, the plaintiff commenced this action against Northwestern seeking damages for breach of contract and unjust enrichment. After discovery was completed, Northwestern moved for summary judgment dismissing the amended complaint. Northwestern acknowledged that the plaintiff was unable to practice medicine as of June 18, 2007, but argued that his "disability" resulted from the suspension of his license, not from his medical or psychological condition. The plaintiff opposed Northwestern's motion and cross-moved for summary judgment on the amended complaint. The Supreme Court denied the motion and the cross motion, finding that there were triable issues of fact as to whether the plaintiff's bipolar disorder preceded the suspension of his medical license and whether it impeded his ability to carry out his responsibilities as a plastic surgeon. Both parties appeal.

II

Unambiguous provisions of an insurance policy, like unambiguous provisions in any other contract, are accorded "their plain and ordinary meaning" (White v Continental Cas. Co., 9 NY3d 264, 267, citing Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514, 520; see Antoine v City of New York, 56 AD3d 583, 584). Here, the plaintiff's disability insurance policies provide that, in order to qualify for disability benefits, the plaintiff is required to establish that he is totally disabled and no longer able to perform the functions of the profession in which he was engaged when his illness or injury began. Eight of the plaintiff's nine policies are identical in these terms, and they define "totally disabled" as being "unable to perform the principal duties of the regular occupation." As relevant here, "regular occupation" is defined as "the occupation of the Insured at [*3]the time the Insured becomes disabled." These eight policies—the ninth is not significantly different—also provide that benefits are to be paid for the insured's total or partial disability only if:

"the Insured becomes disabled while this policy is in force;
the Insured is under the Regular Care of a Licensed Physician during disability;
the disability results from an accident or sickness; and
the disability is not excluded under Section 3."[FN1]

It is not disputed that the plaintiff's disability, whatever its nature, arose while the policies were in force. Moreover, the plaintiff was under the regular care of a physician beginning no later than August 2007, two months after the date from which he seeks benefits. Indeed, Northwestern does not even dispute that, at some point after the plaintiff's license was suspended, his mental or psychological condition rendered him "unable to perform the principal duties of" a plastic surgeon. The crux of this case is whether, under the meaning of the policies, the plaintiff's disability "result[ed] from an accident or sickness."
III
The general rule, followed by this Court and those of most other jurisdictions, is that disability insurance policies provide coverage for factual disabilities, but not for purely legal disabilities (see Gassler v Monarch Life Ins. Co., 276 AD2d 585, 586; BLH ex rel. GEH v Northwestern Mut. Life Ins. Co., 92 F Supp 2d 910, 915-916 [D Minn]; Solomon v Royal Maccabees Life Ins. Co., 243 Mich App 375, 382-383, 622 NW2d 101, 104; see generally 10A Lee Russ, Couch on Ins 3d § 146:9). The distinction between the two types of disabilities is clear:
"A factual disability is an incapacity caused by illness or injury that prevents a person from engaging in his or her occupation. A legal disability includes all circumstances in which the law does not permit a person to engage in his or her profession even though he or she may be physically and mentally able to do so. The courts have found that a legal disability may be the result of incarceration, the revocation or suspension of a professional license, surrendering a professional license as part of a plea agreement or to avoid disciplinary action, or practice restrictions imposed by a licensing board" (Massachusetts Mut. Life Ins. Co. v Jefferson, 104 SW3d 13, 26-27 [Tenn Ct App] [citations omitted]; see Gassler v Monarch Life Ins. Co., 276 AD2d at 586; Massachusetts Mut. Life Ins. Co. v Ouellette, 159 Vt 187, 190-191, 617 A2d 132, 134; see generally 43 Am Jur 2d, Insurance § 1466; 10A Lee Russ, Couch on Ins 3d § 146:9).

Nonetheless, determining whether an insured's particular disability should be categorized as primarily factual or legal may prove problematic where there is both a factual and a legal disability, especially in cases of mental illness:
"Frequently, professionals seeking disability benefits have both a legal and a factual disability because of the same condition. As one court noted, a blinded bus driver or a drug addicted pilot may [have] lost their licenses for the same condition that renders them totally disabled to drive or fly.' Grayboyes v General Am. Life Ins. Co., 1995 WL 156040, at *8, 1995 U.S. Dist. LEXIS 4233, at *21" (Massachusetts Mut. Life Ins. Co. v Jefferson, 104 SW3d at 27).

When an insured has a legal disability, but also claims a factual disability, the determination of coverage rests on three factors: first, whether the claimed factual disability is medically bona fide; second, whether its onset actually occurred before the legal disability; and, third, whether the factual disability actually prevented or hindered the person seeking disability benefits from engaging in his or her profession or occupation (see 43 Am Jur 2d, Insurance § 1466, citing Massachusetts Mut. Life Ins. Co. v Jefferson, 104 SW3d 13). Northwestern's own guidelines for certain disability policies recognize that factual and legal disabilities may exist concurrently: "[i]f it is determined that there is a disabling illness and the loss of license was secondary to this illness, a total disability claim can be administered as usual."

The most straightforward situations involving claims when the insured has both a factual and a legal disability are those in which one clearly precedes the other and precludes performance of the principal tasks of the occupation. For example, if an insured is unable, by reason of mental illness, even to attempt to perform the principal duties of the occupation and then surrenders a professional license as a result, the factual disability will be primary. Conversely, when an insured loses a professional license and, as a result, becomes mentally disabled, the legal disability is primary (see Gassler v Monarch Life Ins. Co., 276 AD2d 585).

More complicated are situations when an insured suffers from a mental illness but does not cease working at the covered occupation until a legal disability, such as a license suspension, arises. No court of this State has addressed this exact issue, but federal courts and other state courts have. Those courts have focused on whether and how the insured's mental illness brought about the legal disability. The prevalent rule is that disability insurance benefits are not precluded when an insured loses a professional license because mental illness has rendered him or her unable to perform the core tasks of the occupation safely and competently. Benefits may be precluded, however, when the mental illness has not impaired the insured's ability to practice safely and competently but causes the insured to engage in misconduct unrelated to the core tasks of the occupation (see Massachusetts Mut. Life Ins. Co. v Jefferson, 104 SW3d 13; Solomon v Royal Maccabees Life Ins. Co., 243 Mich App at 385-386, 622 NW2d at 106; Damascus v Provident Life & Acc. Ins. Co. 168 F3d 498 [table; text at 1999 WL 51490, *2, 1999 US App LEXIS 1234, * 8-9 (9th Cir)]; Massachusetts Mut. Life Ins. Co. v Millstein, 129 F3d at 691; Goomar v Centennial Life Ins. Co., 76 F3d 1059, 1063 [9th Cir 1995]; Grayboyes v General Am. Life Ins. Co., 1995 WL 156040, *, 1995 US Dist LEXIS 4233, *13 [ED Pa]; Massachusetts Mut. Life Ins. Co. v Ouellette, 159 Vt at 190-191, 617 A2d at 134; cf. Corsaut v Equitable Life Assur. Soc. of U.S., 203 Iowa 741, 211 NW 222, 224; see generally E.L. Kellett, Annotation, Mental Incapacity or Disease as Constituting Total or Permanent Disability Within Insurance Coverage, 22 ALR3d 1000).

The plaintiff contends that, notwithstanding the fact that he had a roomful of waiting patients on the day he was suspended, his mental and psychological condition rendered him "unable to perform the principal duties of" a plastic surgeon long before he was suspended. In other words, he contends that his preexisting mental illness caused him to perform his occupation incompetently and thus was the primary cause of his inability to practice his profession. The plaintiff's loss of his license, which resulted from his mental illness, was secondary.

Northwestern disagrees, arguing that the plaintiff's disability resulted from the loss of his medical license (a legal disability), not from his Bipolar II Disorder and drug abuse (factual disabilities) (see Gassler v Monarch Life Ins. Co., 276 AD2d at 585; Massachusetts Mut. Life Ins. Co. v Millstein, 129 F3d at 691-692 [2d Cir]; Solomon v Royal Maccabees Life Ins. Co., 243 Mich App at 382-383, 622 NW2d at 104). Notably, Northwestern has presented no evidence, either in support of its motion or in opposition to the plaintiff's cross motion, that the plaintiff does not suffer from bipolar disorder and the other claimed conditions. Nor has it offered any evidence that the plaintiff's conditions did not exist prior to the suspension of his license. Rather, Northwestern relies on the undisputed fact that the plaintiff treated patients right up until the date his license was suspended. Additionally, Northwestern asserts that the plaintiff stated in his application for disability benefits that he was unable to perform the duties of his occupation from the date of his suspension. Consequently, Northwestern argues, the plaintiff was not factually disabled at the time his license was suspended: he stopped practicing only because he was forbidden to practice, not because he was unable to practice.

Northwestern's approach rejects inquiry into insureds' competence at the principal tasks of their profession. It would cease the inquiry after determining whether the insured was performing those principal tasks at all. Otherwise, Northwestern argues, inquiry would be necessary as to an insured's mental or physical status on "any given day." While this approach has the benefit of clarity, it is substantially outweighed by common sense and the reasonable expectations of an insured (see Hannagan v Piedmont Airlines, Inc., 2010 WL 1235395, *, 2010 US Dist LEXIS 31472, *21-22 [ND NY]). Disability insurance is concerned with insureds' ability—not just their attempt—to do their jobs (see id.). No one would knowingly use a doctor or lawyer, or any other professional or tradesperson, who shows up for work but performs incompetently. Thus, the fact that the plaintiff's waiting room was filled with unwitting patients on the day the plaintiff's license was suspended is not the end of the inquiry (see Damascus v Provident Life & Acc. Ins. Co., 1999 WL 51490 at *2-3, 1999 US App LEXIS 1234 at *9-11). We must also examine the ability of the insured to perform the principal tasks of the profession competently.

IV

Northwestern failed to establish its prima facie entitlement to summary judgment (see Zuckerman v City of New York, 49 NY2d 557, 562). The evidence it submitted in support of its motion failed to negate, prima facie, any single prerequisite for coverage (see Scarano v Wehrens, 46 AD3d 797, 798). First, Northwestern failed to establish that the policies were not in effect when the plaintiff's disability arose. Second, its own evidence established that the plaintiff was under the regular care of a physician within a short period of time from when he sought benefits. And, third, it failed to establish that the plaintiff's disability was not the result of an accident or sickness. Accordingly, the Supreme Court properly denied Northwestern's motion (see Alvarez v Prospect Hosp., 68 NY2d 320, 324).
V
In support of his cross motion, the plaintiff presented his deposition testimony that he first began taking crystal meth in 2001 or 2002 and that in 2003 he went to see a drug therapist. He also testified that, at that time, a doctor who worked with the drug therapist prescribed Wellbutrin to treat his addiction. The plaintiff also submitted the affidavit of the drug therapist, Claudia Albetta, who stated that, during the time she treated the plaintiff, from March 2003 to November 2004, his "symptoms and behavior were fully consistent with a person suffering from Bipolar Disorder" and that it was her opinion at the time "that he was self-medicating a chemical imbalance and in complete denial of his illness."

Additionally, the plaintiff submitted evidence, in the form of affidavits or affirmations from his psychologist, Dr. Porter, and his treating psychiatrists, Drs. Hoffman, Kirschen, and Montgomery, that he suffers from Bipolar II Disorder and substance abuse secondary to that disorder. The doctors opined that the plaintiff had been suffering from Bipolar II Disorder for many years before they began treating him, and that, significantly, its effects rendered him unable to perform "the principal duties of his occupation as a plastic surgeon, let alone safely and competently" before his license was suspended. They agreed that this disorder caused the plaintiff to engage in the conduct for which he later lost his medical license.

Northwestern contends that the affidavits were conclusory, but we disagree. The doctors' opinions were based on their examinations of the plaintiff, his history, and the statement of charges against him. This evidence, coupled with the plaintiff's deposition testimony, established, prima facie, that the plaintiff's Bipolar II Disorder and drug addiction were the primary causes of the plaintiff's inability to practice his profession and that the plaintiff's loss of his medical license was secondary. Thus, in his initial moving papers on the cross motion, the plaintiff carried his burden for summary judgment on the first cause of action in the amended complaint, alleging breach of contract (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

In opposition, Northwestern, which did not submit any evidence as to the plaintiff's factual disability (see Paul Revere Life Ins. Co. v Bavaro, 957 F Supp 444, 449 [SD NY]), failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d at 324). Accordingly, that branch of the plaintiff's cross motion which was for summary judgment on the first cause of action in the amended complaint, alleging breach of contract, should have been granted. In light of this determination, we need not reach the question of whether the Supreme Court properly declined to consider the evidence submitted by the plaintiff in his reply papers.

VI

The parties' remaining contentions either are without merit or need not be addressed in light of the foregoing.

Accordingly, the order is modified, on the law, by deleting the provision thereof denying that branch of the plaintiff's cross motion which was for summary judgment on the first cause of action in the amended complaint, alleging breach of contract, and substituting therefor a provision granting that branch of the cross motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the plaintiff's cross motion which was for summary judgment on the first cause of action in the amended complaint, alleging breach of contract, and substituting therefor a provision granting that branch of the cross motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, with costs to the plaintiff.

31-01 102nd Street Associates, Inc. v Ace European Insurance Group

Kral Clerkin Redmond Ryan Perry & Van Etten, LLP,
Melville, N.Y. (Michael G. Walker of counsel), for appellant R & W
Brokerage, Inc.
Keidel, Weldon & Cunningham, LLP, White Plains, N.Y.
(Stephen C. Cunningham and Stephen
J. Romano of counsel), for appellant
Thomas A. Petropole Insurance
Agency.
Cozen O'Connor, New York, N.Y. (Melissa F. Brill of counsel),
for respondent.


DECISION & ORDER

In an action, inter alia, for a judgment declaring that a loss to the plaintiff's property, as claimed by the plaintiff, is covered under a certain insurance policy issued by the defendant Ace European Insurance Group, also known as Ace European Insurance Company, the defendants R & W Brokerage, Inc., and Thomas A. Petropole Insurance Agency separately appeal from an order of the Supreme Court, Queens County (Flaherty, J.), dated December 15, 2010, which granted the motion of the defendant Ace European Insurance Group, also known as Ace European Insurance Company, for summary judgment declaring that the loss to the plaintiff's property, as claimed by the plaintiff, is not covered under the insurance policy and denied their respective cross motions, in effect, for summary judgment dismissing the third affirmative defense asserted by that defendant, which alleged that the plaintiff made a material misrepresentation in its application for insurance. Justice Hall has been substituted for former Justice Belen (see 22 NYCRR 670.1[c]).

ORDERED that the order is affirmed, with one bill of costs.

The defendant Ace European Insurance Group, also known as Ace European Insurance Company (hereinafter Ace), established, prima facie, that the plaintiff made a material misrepresentation in its application for insurance and that, based on the relevant underwriting policies, Ace would not have issued the subject policy to the plaintiff had the correct information been disclosed in the application. Thus, Ace made a prima facie showing that the subject insurance policy is void ab initio (see Insurance Law § 3105[b][1]; Barkan v New York Schools Ins. Reciprocal, 65 AD3d 1061, 1063). In opposition to Ace's motion, the plaintiff and the appellants failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted Ace's motion for summary judgment declaring that the loss to the plaintiff's property, as claimed by the plaintiff, is not covered under the insurance policy that Ace issued to the plaintiff. For the same reason, the Supreme Court properly denied the appellants' cross motions for summary judgment dismissing Ace's third affirmative defense, which alleged that the plaintiff made a material misrepresentation in its application for insurance.

Since this is, in part, a declaratory judgment action, the matter must be remitted to the Supreme Court, Queens County, for the entry of a judgment declaring that the loss to the plaintiff's property, as claimed by the plaintiff, is not covered under the insurance policy issued by Ace to the plaintiff (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
.
Jacobson Family Investments, Inc. v National Union Fire Insurance Company of Pittsburgh, PA

Plaintiffs appeal from the order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 13, 2011, which, to the extent appealed from, denied plaintiff insureds' motion for partial summary judgment, and granted defendant insurers' cross motion for summary judgment to the extent of limiting any recovery by plaintiffs under the fidelity bonds at issue to the loss of their investment interest and dismissing plaintiffs' claim for breach of the implied covenant of good faith and fair dealing. Order, same court and Justice, entered February 29, 2012, which, to the extent appealed from, granted plaintiffs' motion for leave to renew and adhered to the original determination, and denied so much of defendants' motion for summary judgment as sought dismissal of the "net loser" plaintiffs' claims.


Kasowitz, Benson, Torres & Friedman LLP, New
York (Adam S. Ziffer, Marc
E. Kasowitz and Robin L.
Cohen of counsel), for
appellants-respondents.
Bressler, Amery & Ross, P.C., New York (Robert
Novack and Charles W.
Stotter of counsel), for
National Union Fire Insurance
Company of Pittsburgh, PA.,
respondent-appellant.
Carroll McNulty & Kull, LLC, New York (Joseph P.
McNulty and Douglas
Eisenstein of counsel), for
Continental Casualty Company,
respondent-appellant.
Eckert Seamans Cherin & Mellot, LLC, White Plains
(Geraldine A. Cheverko of
counsel), and F. Joseph
Nealon of the bar of the State of
Pennsylvania and the District
of Columbia, admitted pro
hac vice, for Fidelity and
Deposit Company of
Maryland and Great American
Insurance Company,
respondents-appellants.

MAZZARELLI, J.P.

Plaintiff Jacobson Family Investments (JFI) is an investment management company that manages the assets and businesses of the 16 other plaintiffs, which are various limited liability companies, limited partnerships, foundations and trusts established by various members of the Jacobson family and another family. JFI manages the assets of these entities by selecting outside investment advisors. In 1998, JFI made the fateful decision to select Bernard L. Madoff and his firm, Bernard L. Madoff Investment Securities LLC (BLMIS), as one of those outside investment advisors.

JFI attempted to protect its investments by purchasing fidelity bonds insulating it from theft or other dishonest acts of the outside investment advisors. The primary bond at issue in this case was sold to JFI by defendant National Union and covered the policy period from October 19, 2007 to November 1, 2008, and was later extended to March 2009. JFI also purchased several layers of excess fidelity bonds (the excess bonds) from National Union and the remaining defendants [FN1]. The bond had a $10 million single loss limit of liability, an aggregate limit of liability of $20 million, and a deductible of $3 million per single loss. The operative portion of the bond provided that coverage would be afforded for "[l]oss resulting directly from dishonest or fraudulent acts committed by an Employee [FN2] acting alone or in collusion with others." The term "loss" is not defined anywhere in the bond.

As part of its application to National Union for the bond, JFI disclosed that the amount of assets being managed by BLMIS on behalf of the various entities was at the time $123,805,948. Unbeknownst to JFI or National Union, a substantial portion of that figure represented fictitious gains in JFI's initial investment with BLMIS. Rider 9 to the bond constituted JFI's representation that the information disclosed in the application was complete, true and correct and provided that the application "constitutes part of this policy."

After Madoff's fraud was exposed in December 2008, following his arrest, it was revealed that six of the plaintiffs had contributed more money to BLMIS than they had withdrawn from it, or, in the common parlance, were "net losers." The remaining plaintiffs were "net winners," because over time they had withdrawn more money than they had invested. When the "net wins" and "net losses" of the individual plaintiffs are aggregated, the entities are shown to have had a total net win of $3,142,677. Nevertheless, JFI submitted a single proof of loss to National Union in the amount of $107,619,369.33 [FN3], which was based on the last account statement furnished by BLMIS prior to Madoff's arrest. That statement, of course, and the proof of loss which was based on it, included the millions of dollars in "gains" which Madoff infamously conjured out of thin air.

National Union denied coverage, asserting, inter alia, that JFI suffered no losses from Madoff's wrongdoing because "the non-existent profits that Mr. Madoff fraudulently attributed to his purported investments" did not constitute a loss under the bond. The excess insurers denied JFI's claim on the same grounds. JFI commenced this action, seeking a declaratory judgment that the entire claimed loss was covered by the bond, as well as damages for breach of contract and breach of the implied covenant of good faith and fair dealing.

Before discovery commenced, JFI moved for partial summary judgment declaring, inter alia, that the bond covered the full extent of the losses it claimed. Defendants jointly cross-moved for summary judgment declaring that coverage under the bond was limited to JFI's "actual losses" in its Madoff accounts, and also moved to dismiss JFI's claim for breach of the covenant of good faith and fair dealing. In an argument which they withdrew before the court decided the motions, defendants further asserted that, if their "actual losses" theory was adopted, the gains and losses of the various JFI entities should be aggregated. Because this would result in a total net win for JFI, defendants submitted that the entire complaint should be dismissed.

Supreme Court denied JFI's motion, and granted the cross motion, to the extent of finding that the bond limited coverage to JFI's "actual losses." The court concluded that because the fictitious gains recorded by BLMIS were "never owned" by JFI, they could not have been "lost." The court also dismissed JFI's claim for breach of the covenant of good faith and fair dealing, since defendants had an "arguable basis" for denying coverage.

 

After the parties had begun discovery, JFI moved for leave to renew its motion on the basis that it had gained access to information in the possession of defendants and third parties which warranted a different conclusion than the court had reached. The first new development presented by JFI had to do with the fact that a fidelity bond that National Union had issued to JFI in 2003 was expressly limited to losses of JFI's "investment interest" because of the dishonest acts of outside investment advisors, that is, the actual amount of cash which JFI entrusted to them. JFI claimed that it had discovered that National Union representatives had specifically insisted on the inclusion of that limitation in the 2003 bond, and argued that the omission of this limitation in the bond at issue was thus a purposeful act which established that National Union expected to cover more than simply lost "investment interest." The second new development which formed the basis of the renewal motion was JFI's having learned that, in calculating the bond's premium, National Union multiplied the premium by 375% to cover the total "assets at risk." According to JFI, this established that National Union understood that it was insuring the entire value of assets being managed by BLMIS at the time the bond was purchased, which, albeit unbenownst to the parties, included tens of millions of dollars of fictitious profits.

Defendants simultaneously moved for summary judgment dismissing the complaint, reviving the claim made in the original motion that, on a net, aggregated basis, plaintiffs suffered no losses, as they collectively withdrew more money than they invested with Madoff. In making the argument that plaintiffs had to be viewed as having submitted a single claim, defendants noted that JFI submitted just one proof of claim. They also cited three provisions in the bond. The first was Rider 8, which listed all of the individual entities covered by the bond and stated that they constituted the "Complete Named Insured." The second provision on which defendants relied was the definition of the term "Single Loss" in the section of the bond related to limits of liability. Because "Single Loss" was defined by the policy as "all covered loss . . . resulting from [various acts of malfeasance]," defendants argued that all of the various losses suffered by the individual plaintiff entities constituted one aggregate loss. Finally, defendants relied on the Bond's "Joint Insured" provision, which stated:
"If two or more Insureds are covered under this bond, the first named Insured shall act for all Insureds . . . . The liability of the Underwriter for loss or losses sustained by all Insureds shall not exceed the amount for which the Underwriter would have been liable had all such loss or losses been sustained by one Insured."

As further evidence that plaintiffs collectively did not suffer a loss, defendants submitted JFI's settlement agreement with the trustee for the Securities Investor Protection Corporation (SIPC), which was charged with marshalling the assets of the bankrupt BLMIS and compensating Madoff's victims. While the net loser plaintiffs were entitled to have their claims paid by SIPC, to the extent funds were available, the net winner
plaintiffs were subject to "clawback" claims from SIPC. The net losers agreed with SIPC to forego approximately $25 million worth of potential recovery in return for SIPC's release of its right to bring clawback claims against the net winners. Defendants argued that this constituted a "recovery" to JFI, and triggered the bond provision that
"[r]ecoveries, whether effected by the Underwriter or by the Insured, shall be applied net of the expense of such recovery first to the satisfaction of the Insured's loss which would otherwise have been paid but for the fact that it is in excess of either the Single or Aggregate Limit of Liability, secondly, to the Underwriter as reimbursement of amounts paid in settlement of the Insured's claim, and thirdly, to the insured in satisfaction of any Deductible Amount."

Defendants also argued that any payment to the net losers should be offset by a $2.5 million dollar cash payment to them from SIPC, as well as a $2.2 million payment to them from two of the net winners. Finally, defendants asserted that, if the court were to reject their argument and find that the net losers' claims were separate from each other, it should declare that the $3 million policy deductible applied to each of those claims.

The court granted JFI's motion for leave to renew based on the newly discovered evidence, and adhered to its original determination that the bond covered only the investment interest of each plaintiff in its individual BLMIS account. With respect to defendants' motion, the court found that the plain language of the cited bond provisions did not compel aggregation of plaintiffs' net wins and losses. The court specifically found that a "single loss" was defined as "all covered losses," not all "net losses." It found that the Joint Insured provision merely created an organized procedure for the 160 separate insureds to make claims under the bond. The court rejected defendants' argument that filing a single proof of loss suggested that JFI intended for the individual investing entities to be treated as a single insured, finding that by filing a single proof of claim JFI behaved consistently with the Joint Insured provision.

The court also rejected defendants' argument that the settlement with SIPC supported their claim that plaintiffs collectively suffered no loss, on the basis that the plain language of the bond precluded the consideration of extrinsic evidence. However, even reviewing the settlement agreement as potential evidence of a recovery by plaintiffs, the court held that it was unreasonable to consider the intangible net value JFI received as a result of the settlement agreement as a "recovery." The court also held that the $2.2 million payment to two of the net losers from two of the net winners did not constitute a "recovery" within the meaning of the bond. Because the issue of which plaintiffs suffered losses was no longer in dispute, the court dismissed the complaint as to the net winners, as they did not suffer actual losses. However, the court rejected defendants' argument that the $3 million deductible applied to eight of the net losers, finding that Madoff's fraud was one single act of malfeasance, and all claims of the net losers would therefore be subject to one deductible. Thus, the court determined that the net losers were entitled to actual losses, minus any cash payments by the SIPC Trustee and the $3 million deductible, the exact amount to be determined at trial.

Because this dispute is so dependent on the interpretation of the language in the bond, it is worthwhile to review certain construction precepts. No different from interpreting the terms of any contract, the goal of a court reviewing an insurance policy is to ascertain "whether, affording a fair meaning to all of the language employed by the parties in the contract and leaving no provision without force and effect . . . there is a reasonable basis for a difference of opinion as to the meaning of the policy" (Federal Ins. Co. v International Bus. Machs. Corp., 18 NY3d 642, 646 [2012] [internal quotation marks omitted]). If so, the policy is ambiguous, and a court may consider extrinsic evidence in attempting to resolve the ambiguity (see State of New York v Home Indem. Co., 66 NY2d 669, 671 [1985]). However, if a policy "has a definite and precise meaning, unattended by danger of misconception in the purport of the agreement itself, and concerning which there is no reasonable basis for a difference of opinion . . . a court is not free to alter the contract to reflect its personal notions of fairness and equity" (White v Continental Cas. Co., 9 NY3d 264, 267 [2007] [internal quotation marks omitted]).

JFI has the burden of proof as to whether the entire loss it claims is covered by the bond (Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218 [2002]. In arguing that the undefined term "loss" unambiguously encompasses the fictitious profits, it principally relies on two provisions in the bond. The first is Rider 9, which provides that JFI's application for the bond, which included the most recent statement from BLMIS, "constitutes part of this policy." The second is the section of the bond entitled "Ownership," which provides that "[t]his bond shall apply to loss of Property (1) owned by the Insured, (2) held by the Insured in any capacity, or (3) for which the Insured is legally liable." Conversely, JFI claims that the court, in finding that the term "loss" unambiguously embraces only the loss of "real" assets, improperly "supplied" terms to the policy that do not actually appear in the text of the bond, such as "actual" and "direct."

The sections of the bond which JFI affirmatively relies on are insufficient to carry its burden. Rider 9 is an especially slim reed to hang on. It is true that it technically makes the most recent BLMIS statement part of the bond. Nevertheless, this offers no guidance on how to define the term "loss." Moreover, it hardly serves as an estoppel against defendants taking the position that only "real" losses are covered. JFI's attempt to analogize to Haber v St. Paul Guardian Ins. Co. (137 F3d 691 [2d Cir 1998]), fails. There, the court observed that it would be reasonable to infer, where a homeowner applies for a workers' compensation policy and discloses the existence of a live-in housekeeper, that the homeowner intended for the policy to cover that employee. However, in contrast to the fictitious Madoff gains at issue here, there was no question that the employee existed. The Haber court may have reached a different conclusion had the homeowner only "thought" that the employee existed.

The "Ownership" section of the bond also fails to advance JFI's position that the term "loss" covers the phantom gains. JFI claims that, if it could not have legally "owned" the fictitious profits, it was at least "legally liable" for them to the extent that it paid taxes on them. Also, it asserts, it held the profits in the "capacity" of having a UCC "security entitlement" in them. JFI is correct that, before the Madoff scheme was exposed, the taxing authorities, like most everyone else in the world, assumed the investments were legitimate and would have had a right to collect taxes on the investment "gains." However, any such authority evaporated at the same time JFI learned it had no such "gains" to "lose." Indeed, JFI has attempted to take advantage of Internal Revenue Service procedures designed to relieve taxpayers who calculated their returns in part on "phantom" income. Similarly, any protectable UCC "interest" based on the fictitious value of securities only existed for as long as the Madoff scheme remained hidden.

JFI further argues that, even if its own effort to define the term "loss" is not directly supported by the language employed in the bond, the motion court overreached in attempting to fashion its own definition. The court's interpretation was primarily based on Horowitz v American Intl. Group, Inc. (2010 WL 3825737, 2010 US Dist LEXIS 103489 [SDNY, Sept. 30, 2010, No. 09-Civ-7312], affd 2012 WL 3332375, 2012 US App LEXIS 17055 [2nd Cir, August 15, 2012, No. 10-4408-cv]). In Horowitz, the plaintiffs purchased a homeowner's policy from the defendant with coverage for "the loss of money [or] securities . . . resulting directly from fraud, embezzlement, or forgery" (2010 WL 3825737, * 2, 2010 US Dist LEXIS 103489, *7, No. 09 Civ-7312]). They invested money with BLMIS and were net winners. However, the plaintiffs filed a claim for their vanished investment "profits." The term "loss" was, like here, undefined in the policy. The court agreed with the defendant that the policy was not ambiguous on its face. It further rejected the plaintiffs' interpretation of the term "loss" as unreasonable, finding that "it is not reasonable to contend that one can lose money that never existed in the first place" (2010 WL 3825737, *6, 2010 US Dist LEXIS 103489, *19). The Horowitz court favorably cited the decision in the Madoff bankruptcy litigation in excluding the fictitious gains in creditors' claims, which was based in part on the observation that " it would be simply absurd to credit the fraud and legitimize the phantom world created by Madoff'" (2010 WL 3825737, *7, 2010 US Dist LEXIS 103489, *29, quoting In re Bernard L. Madoff Inv. Sec. LLC, SIPA Liquidation, 424 BR 122, 140 [SDNY 2010]).

We adopt the logic of the Horowitz court and hold that no reasonable interpretation of the term "loss" in the context of the bond allows for coverage of fictitious Madoff gains. We further note that Horowitz is not alone in finding that "bookkeeping or theoretical loss[es], not accompanied by actual withdrawals of cash or other such pecuniary loss," are not covered by fidelity bonds (Cincinnati Ins. Co. v Star Fin. Bank, 35 F3d 1186, 1191 [7th Cir 1994] [internal quotation marks omitted] [endorsing position of insurance carrier for bank that bank did not stand to suffer a "loss" were it forced to reimburse payor bank for funds that insured bank received by accepting a forged check]; see also In re New Times Sec. Servs., Inc., 371 F3d 68, 88 [2d Cir 2004] [internal quotation marks omitted] [holding that Securities Investment Protection Act (SIPA) did not have to compensate Ponzi scheme victims beyond their cash investments because "basing customer recoveries on fictitious amounts in the firm's books and records would allow customers to recover arbitrary amounts that necessarily have no relation to reality"] [internal quotation marks omitted]).

JFI attempts to distinguish Horowitz by noting that the court there only considered whether the plaintiffs had parted with "something of value" within the meaning of that policy. However, this is too narrow a reading of Horowitz. The Horowitz court clearly meant to convey that no insurance policy can be interpreted to compensate an insured for something that, unbenknownst to the parties, only appeared to exist because of someone else's fraud. JFI criticizes the Horowitz court's reliance on In re Bernard L. Madoff Inv. Sec., arguing that the Bankruptcy Court was concerned with the application of SIPA, not state insurance law. However, the distinction is meaningless. Under either scenario, it is not reasonable to claim that the revelation that an asset, once thought to exist, did not exist, constitutes a "loss," whether for the purpose of a claim under SIPA or under a fidelity bond. Further, in concluding that the bond covered only "actual" or "direct" losses, the motion court did not, as defendants argue, improperly "supply" terms to the policy that do not actually appear in the text of the bond. Nothing about the court's analysis deviated from standard interpretation of contract terms, which, after all, was the court's central role in resolving this dispute.

The recent Court of Appeals decision in Simkin v Blank (19 NY3d 46 [2012]) does not compel a different result than the one reached here. There, a divorcing couple entered into a settlement agreement in which the wife received a distribution that was based on a valuation of the marital estate that included Madoff funds, which the husband retained. The husband sought to reform the agreement after it was revealed that a significant portion of the Madoff fund valuation was based on fictitious profits. The Court, in rejecting the husband's position, stated that "[t]his situation, however sympathetic, is more akin to a marital asset that unexpectedly loses value after dissolution of a marriage; the asset had value at the time of the settlement but the purported value did not remain consistent" (19 NY3d at 55). The Court's statement that the Madoff assets "had value" has no impact on this case. That observation was directly related to the court's holding that the parties did not commit a mutual mistake when they entered into the settlement agreement. It held that they did not because at the time the Madoff assets could have been redeemed in full. Here, there is no claim of mutual mistake. Rather, the analysis is strictly limited to what extent JFI's assets were protected by the bond.

Finally, JFI argues that extrinsic evidence proves that "loss" under the bond is not limited to investment interest. This evidence consists of defendants' alleged insistence on the "investment interest" limitation in the 2003 bond and the multiplication of the premium by 375% to cover the total "assets at risk." However, because we find that the term "loss" is not ambiguous, there is no reason to look outside the policy to interpret the term (see State of New York v Home Indem. Co., 66 NY2d at 671). In any event, we disagree that the evidence is sufficient to create an issue of fact whether the fictitious profits are covered by the bond. Merely because the 2003 bond stated in explicit terms that only cash outlays were covered does not, without more, lead to the conclusion that another bond issued four years later without such express language was not so limited. As for the amount of premium paid, JFI fails to present sufficient evidence for a factfinder to infer that the increase applied to the bond was predominantly related to the amount of assets being protected. To the contrary, the record reveals that, in the five years leading up to the issuance of the bond, the total amount of assets managed by outside investment advisors tripled, while the premium actually decreased over time. Further, the deposition testimony presented by JFI to support the premium theory is highly equivocal as to whether there was a direct correlation between the amount being insured and the premium, and in fact suggested that the amount was only one of several risk factors considered in calculating the premium.

Having agreed with defendants that JFI may only recover the actual cash investment it lost to Madoff's fraud, we must also conclude that plaintiffs' claim for breach of the implied covenant of good faith and fair dealing was properly dismissed, as plaintiffs did not establish that defendants had "no arguable basis" for denying coverage (Wurm v Commercial Ins. Co. of Newark, N.J., 308 AD2d 324, 329-330 [1st Dept 2003], lv denied 3 NY3d 602 [2004]). We turn instead to defendants' position that the gains and losses of each individual investing entity must be seen as one whole. Defendants maintain that the bond unambiguously provides that the individual entities were to be considered together for purpose of making a claim. Again, however, we must apply the plain meaning of the relevant terminology (see White v Continental Cas. Co., 9 NY3d at 267). Defendants assert that because Rider 8 to the bond lists the covered investment vehicles under the umbrella term "Complete Named Insured," any claim made on behalf of more than one of those entities must be considered as a single, aggregated claim. We disagree. Rider 8 is a definitional, as opposed to an operative, section of the bond. As such, it is impossible to conclude that it has anything to do with whether claims by the individual insureds are to be considered separately or aggregated together. Similarly, the "Joint Insured" provision is a housekeeping measure which has no bearing on how individual claims may be accounted for. The provision which defines "single loss" as "all covered loss" arising out of related acts of wrongdoing cannot be reasonably read as requiring a setoff for insured entities that did not suffer a loss at all. At the same time, however, consistency dictates that, if each net loser is seeking coverage for its own loss, each individual claim is subject to the $3 million Single Loss Deductible.

Finally, we reject defendants' argument that the bond requires the SIPC settlement to offset the total loss accumulated by the net loser plaintiffs. The bond unambiguously provides that any "recovery" from a third party shall be applied "to the satisfaction of the Insured's loss." Since we have already rejected defendants' argument that the individual plaintiff investment entities are not one aggregate "Insured," we must interpret this clause as requiring a "recovery" to the insured entity itself. Defendants' position, however, is that, by releasing their claims against SIPC, the "net loser" plaintiffs effected a benefit for the "net winners" in the form of a release of potential clawback claims. Accordingly, the recovery provision is not implicated by the settlement. However, on this record, it cannot be determined, as a matter of law, whether the alleged $2.2 million paid by two plaintiffs who were net winners to two plaintiffs who were net losers constituted a "recovery" under the bond. It is unclear for what purpose these payments were made and whether they were intended to compensate the two net losers for their loss such that payment by defendants would constitute a double recovery.

Accordingly, the order of the Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 13, 2011, which, to the extent appealed from, denied plaintiff insureds' motion for partial summary judgment, and granted defendant insurers' cross motion for summary judgment to the extent of limiting any recovery by plaintiffs under the fidelity bonds at issue to the loss of their investment interest and dismissing plaintiffs' claim for breach of the implied covenant of good faith and fair dealing, should be affirmed, with costs. The order of the same court and Justice, entered February 29, 2012, which, to the extent appealed from, granted plaintiffs' motion for leave to renew and adhered to the original determination, and denied so much of defendants' motion for summary judgment as sought dismissal of the "net loser" plaintiffs' claims, should be modified, on the law, to apply the $3 million single loss deductible to each net loser's recovery, if any, and otherwise affirmed, with costs.
All concur.

Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 13, 2011, affirmed, with costs. Order, same court and Justice, entered February 29, 2012, modified, on the law, to apply the $3 million single loss deductible to each net loser's recovery, if any, and otherwise affirmed, with costs.

Footnotes


Footnote 1:The excess bonds were subject to the same terms and conditions as the bond. Accordingly, any discussion of the bond herein applies to the excess bonds as well.

Footnote 2: Rider 14 to the 2007 bond extended coverage to acts of outside investment advisors such as BLMIS.

Footnote 3: The proof of loss included an account for an individual who is not a party to this appeal. Without that account, the total loss which JFI claimed as attributable to Madoff was $105,562,237.82.

Gunderman v Sure Connect Cable Installation, Inc.

Calendar Date: October 11, 2012
Before: Mercure, J.P., Lahtinen, Malone Jr., Stein and Egan Jr., JJ.


Leonard & Cummings, LLP, Binghamton (Hugh B.
Leonard of counsel), for Richard J. Gunderman and another,
appellants-respondents.
Smith, Sovik, Kendrick & Sugnet, PC, Syracuse
(Michelle M. Davoli of counsel), for Sure Connect Cable
Installation, Inc., respondent-appellant.
Bond, Schoeneck & King, PLLC, Syracuse (Jonathan
B. Fellows of counsel), for Time Warner Entertainment-
Advance/Newhouse Partnership, respondent-appellant.
MEMORANDUM AND ORDER


Egan Jr., J.

(1) Cross appeals from an order of the Supreme Court (Reynolds Fitzgerald, J.), entered October 4, 2011 in Broome County, which, among other things, partially granted a cross motion by defendant Sure Connect Cable Installation, Inc. for summary judgment and dismissed the Labor Law §§ 240 (1) and 241 (6) claims against it, and (2) appeals from an order of said court, entered January 25, 2012 in Broome County, which, upon reargument, partially granted plaintiffs' motion for, among other things, partial summary judgment.

In May 2005, defendant Time Warner Entertainment —
Advance/Newhouse Partnership contracted with defendant Sure Connect Cable Installation, Inc. to perform certain cable installations within Time Warner's franchise area, and Sure Connect, in turn, contracted with various technicians, including plaintiff Richard J. Gunderman, to perform the actual installation work. In January 2008, Gunderman was dispatched to a residence in Saratoga County to upgrade a customer's service — a task that included, among other things, replacing the "drop line" connecting the residence to the "hard line," the latter of which constituted the main cable running between the nearby utility poles (allegedly owned by defendant Niagara Mohawk Power Corporation). The hard line was supported by a steel cable known as a strand, and the drop line was connected to the strand using clamps and a device known as a messenger. Although Gunderman has no memory of the accident, photographs and other record evidence suggest that Gunderman placed a ladder over the strand and ascended the ladder, at which point the drop line either broke or was cut by Gunderman and "whipped back," causing Gunderman to fall to the pavement below and sustain serious head injuries.[FN1]

Gunderman and his wife, derivatively, thereafter commenced this action against Sure Connect, Time Warner and Niagara Mohawk alleging common-law negligence and violations of Labor Law §§ 200, 240 (1) and 241 (6). Defendants answered and, insofar as is relevant here, Time Warner cross-claimed against Sure Connect for contractual indemnification, and Sure Connect commenced what it denominated as a third-party action against Gunderman seeking contractual and common-law indemnification [FN2]. Following discovery, numerous motions and cross motions ensued; plaintiffs moved for partial summary judgment with respect to their Labor Law § 240 (1) claim, Time Warner moved for summary judgment as to its cross claims against Sure Connect, and Sure Connect cross-moved for summary judgment dismissing both Time Warner's cross claims and plaintiffs' complaint.

By order entered October 4, 2011, Supreme Court partially granted Sure Connect's cross motion and dismissed plaintiffs' Labor Law §§ 240 (1) and 241 (6) claims and denied the balance of the requested relief, prompting cross appeals by plaintiffs, Time Warner and Sure Connect. Plaintiffs thereafter successfully moved to reargue and, by order entered January 25, 2012, Supreme Court granted plaintiffs partial summary judgment with respect to their Labor Law § 240 (1) claim. Time Warner and Sure Connect appeal from that order as well.

Initially, we reject Sure Connect's contention that Supreme Court abused its discretion in granting plaintiffs' motion to reargue. The crux of plaintiffs' argument in this regard was that Supreme Court misapplied this Court's then recent decision in Randall v Time Warner Cable, Inc. (81 AD3d 1149 [2011]) and, upon further deliberation, Supreme Court agreed. Contrary to Sure Connect's assertion, there is nothing in the record to suggest that Supreme Court considered new facts in deciding the motion; indeed, Supreme Court expressly noted that it was precluded from doing so. Under these circumstances, we discern no abuse of discretion in Supreme Court's decision to grant reargument.

Turning to the merits, the case law makes clear that a utility pole "with [its] attached hardware, cable and support systems constitutes a structure within the meaning of [Labor Law § 240 (1)]" (Lewis-Moors v Contel of N.Y., 78 NY2d 942, 943 [1991]; see Smith v Shell Oil Co., 85 NY2d 1000, 1001 [1995]; McCoy v Kirsch, 99 AD3d 13, 16 [2012]; Ackley v New York State Elec. & Gas Corp., 8 AD3d 941, 942 [2004]; Widrig v Alltel N.Y., 281 AD2d 967, 968 [2001]; Fuller v Niagara Mohawk Power Corp., 213 AD2d 986, 986 [1995], lv denied 86 NY2d 708 [1995]). Hence, our inquiry distills to whether the overall work that Gunderman was performing involved "'making a significant physical change to the configuration or composition of [a] building or structure'" (Weininger v Hagedorn & Co., 91 NY2d 958, 960 [1998], quoting Joblon v Solow, 91 NY2d 457, 465 [1998]), thereby constituting an alteration (see Labor Law § 240 [1]; Belding v Verizon N.Y., Inc., 65 AD3d 414, 415 [2009], affd 14 NY3d 751 [2010]) or, alternatively, whether he was engaged in a "simple, routine activity" (Weininger v Hagedorn & Co., 91 NY2d at 960; see Smith v Pergament Enters. of S.I., 271 AD2d 870, 871 [2000]).

Here, the record indeed reflects that, at the time he was injured, Gunderman was in the process of upgrading the service provided to a residential customer — a task that entailed, among other things, replacing the drop line with a new cable capable of transmitting more data, performing certain indoor wire work and configuring the customer's computer. The record does not, however, contain any meaningful description of the nature or extent of the actual work that Gunderman was scheduled to perform. Gunderman, as noted previously, has no memory of the tasks he performed that day, the technician who completed the upgrade following Gunderman's fall apparently was not deposed and, although a Time Warner supervisor decoded the work order contained in the record on appeal, he did not offer any details regarding the actual manner in which the service upgrade was to be accomplished. Absent a more detailed description of the tasks required to complete the requested upgrade, we are unable to determine — on this record — whether the work undertaken by Gunderman on the day of his accident constituted an alteration within the meaning of Labor Law § 240 (1) (compare Weininger v Hagedorn & Co., 91 NY2d at 959-960, and Schick v 200 Blydenburgh, LLC, 88 AD3d 684, 685-686 [2011], lv dismissed 19 NY3d 876 [2012], and Randall v Time Warner Cable, Inc., 81 AD3d at 1151, and Smith v Pergament Enters. of S.I., 271 AD2d at 871, and Bedassee v 3500 Snyder Ave. Owners Corp., 266 AD2d 250, 250-251 [1999], with Lavigne v Glens Falls Cement Co., 92 AD3d 1182, 1183 [2012], lv denied 19 NY3d 813 [2012], and Rhodes-Evans v 111 Chelsea LLC, 44 AD3d 430, 432-433 [2007], and Cooper v Time Warner Entertainment-Advance/Newhouse Partnership, 16 AD3d 1037, 1038 [2005]). Accordingly, notwithstanding the liberal construction to be afforded to Labor Law § 240 (1) in order to accomplish its remedial purpose (see Lombardi v Stout, 80 NY2d 290, 296 [1992]), the award of partial summary judgment to plaintiffs with respect to their Labor Law § 240 (1) claim was premature.

With respect to the various indemnification claims, we agree that Supreme Court erred in denying Time Warner summary judgment on its cross claim for contractual indemnification against Sure Connect. The underlying contract between Time Warner and Sure Connect provides, insofar as is relevant here, that Sure Connect "shall be responsible for its own acts and the acts of its . . . subcontractors during the performance of the [s]ervices" outlined therein and, further, that it "shall defend, indemnity [sic], and hold [Time Warner] harmless with respect to . . . any liabilities, claims, demands, damages, actions, suits[,] costs or fees arising out of or resulting from its negligent acts or omissions or those of workers furnished by it." To impose liability upon Time Warner, the record must demonstrate that Time Warner was "directly, rather than vicariously, negligent, i.e., it must appear that [Time Warner] exercised supervisory control over [Gunderman's] work and had actual or constructive knowledge of the unsafe manner in which the work was being performed" (Turner v Sano-Rubin Constr. Co., 6 AD3d 910, 911 [2004]).

In this regard, although the record indeed reflects that Sure Connect and its subcontractors were subject to some limited oversight from Time Warner, "the retention of general supervisory control . . . is not sufficient to establish the control necessary to impose liability under the common law or the Labor Law" (id. at 912; see Biance v Columbia Washington Ventures, LLC, 12 AD3d 926, 927 [2004]). As the record before us is devoid of proof that Time Warner personnel "exerted any actual control or supervision over [Gunderman] or the manner in which [his] work was performed" (Fassett v Wegmans Food Mkts., Inc., 66 AD3d 1274, 1276 [2009]), Time Warner cannot be deemed to be directly negligent here (see Turner v Sano-Rubin Constr. Co., 6 AD3d at 911). Accordingly, Time Warner is entitled to contractual indemnification from Sure Connect (see id.).

We also agree that Sure Connect's first counterclaim seeking contractual and/or common-law indemnification from Gunderman must be dismissed. Even assuming that the agreement contained in the record on appeal represents the actual subcontractor agreement in effect between Sure Connect and Gunderman during the relevant time period, the hold harmless provision contained therein does not — to our reading — constitute an express waiver by Gunderman of his Labor Law § 240 (1) claim. Further, the liability imposed by Labor Law § 240 (1) is absolute and nondelegable; hence, Sure Connect "cannot avoid or shift liability, wholly or in part, by alleging that [Gunderman] was at fault" (Horning v Gore, 87 AD2d 34, 36 [1982], lv denied 57 NY2d 604 [1982]). The parties' remaining contentions, to the extent that they are properly before us, have been examined and found to be lacking in merit.

Mercure, J.P., Lahtinen, Malone Jr. and Stein, JJ., concur.

ORDERED that the order entered October 4, 2011 is modified, on the law, without costs, by reversing so much thereof as (1) granted that part of the cross motion by defendant Sure Connect Cable Installation, Inc. dismissing plaintiffs' Labor Law § 240 (1) claim, (2) denied plaintiffs' motion for summary judgment dismissing the indemnification claim asserted against plaintiff Richard J. Gunderman by defendant Sure Connect Cable Installation, Inc., and (3) denied the motion of defendant Time Warner Entertainment-Advance/Newhouse Partnership for summary judgment on its cross claim for contractual indemnification against defendant Sure Connect Cable Installation, Inc.; said cross motion denied to that extent and said motions granted to that extent; and, as so modified, affirmed.

ORDERED that the order entered January 25, 2012 is reversed, on the law, without costs, and plaintiffs' motion for partial summary judgment on their Labor Law § 240 (1) claim is denied.
Footnotes

Footnote 1:At the time of the incident, Gunderman's safety harness and hard hat were in the back of his truck.

Footnote 2:Although Sure Connect's third-party claims against Gunderman are actually counterclaims against an existing party, we will disregard this procedural irregularity and address the merits (see CPLR 2001, 3026; Bollinger v Borden, 30 AD2d 607, 607 [1968]).