Coverage Pointers - Volume XIV, No. 2

Dear Coverage Pointers Subscribers:

We hope you are enjoying this warm, dry summer. This is my kind of summer.  We’re off to Steamboat Springs, Colorado for a good friend’s son’s wedding, a quick weekend trip. 

Where in the World are H&F Attorneys?

Do remember, our work in state-wide and national in scope, with most of our coverage practice now in New York City and its environs.  Our Albany office is staffed as well and we’re prepared to help those in that part of the state.

Continuing Education

We were honored to serve as Program Chair for the National Foundation for Judicial Excellence’s annual symposium in Chicago last week.  The program was on Class Actions and Aggregate Litigation and the audience was 119 state appellate judges representing 36 states. 
On August 18th, I’ll be speaking at the New York State Bar Association’s Torts, Insurance & Compensation Law Section (TICL) Meeting in Montreal on Top 10 Insurance Hits: An Update on Insurance Law. 

Diary this one:  September 28, 2012 in Buffalo: TICL’s Law School for Claims Professionals.  There is a great program planned and designed for the non-lawyer.  I’m the local chair for the program and have put together a top-notch array of speakers.  Here’s a sneak preview:

Accident Scene Investigation – What You Need to Know
What actions should you undertake to assist in the defense of a case; Spoliation and how to protect materials from discoverability
Joel Schechter – Watson Bennett Colligan & Schechter LLP

Update on Developments Regarding Notice, Disclaimers, Right to Independent Counsel and Direct Actions
Elsa Schmidt and Jessica Foscolo -- Kenney Shelton Liptak Nowak LLP

Social Media and Claims-recent developments, case law and the implications of the various platforms in defending a lawsuit and issues regarding the use of the platforms by claims
Sarah Delaney – Goldberg Segalla LLP

Update on the Law Regarding Premises Liability - Practical knowledge for better claims handling as well as indemnity and additional insured issues
Dan D. Kohane – Hurwitz & Fine, P.C.

Liens, Subrogation Rights, and the Present Status of Medicare Set Asides
J. Michael Hayes – Law Offices of J. Michael Hayes

Mock Trial – Cause and Origin of a Fire
Plaintiff Attorney –    Linda Marsh, Esq.                Marsh Ziller LLP
Defense Attorney – Michael Perley, Esq.            Hurwitz & Fine, P.C.
Expert –                     Richard Shiah, F.G.             James O’Neill
                                                                                    Investigations, Inc.
The presentation will demonstrate effective use of scientific testing as well as scene analysis in a complex cause and origin lawsuit. The presentation will demonstrate analysis of possible sources of combustion and burn patterns in eliminating or including different causes for the fire.  The presentation will be conducted by experience trial attorneys and an experienced cause and origin expert.

Interested?  Let me know and I’ll be sure you get a brochure when the program is officially released and registration opens.

One Hundred Years Ago Today:

Philadelphia Philly Sherry Magee stole home twice in one game, being the fifth player to do so and the first of three to accomplish that feat in 1912. 

I knew you were wondering how often this feat was accomplished.  Eleven players have stolen home twice in one game, the last time being 1958, nicknames provided where available:

• Honus (“The Flying Dutchman” ) Wagner of the Pittsburgh Pirates on June 20, 1901
• Ed “The Candy Kid” Konetchy of the St. Louis Cardinals on September 30, 1907
• Joe Tinker of the Chicago Cubs on June 28, 1910 (Tinkers to Evers to Chance, fame)
• “Laughing” Larry Doyle of the New York Giants on September 18, 1911
• Sherwood “Sherry” Magee of the Philadelphia Phillies on July 20, 1912
• “Shoeless” Joe Jackson of the Cleveland Indians on August 11, 1912
• Guy Zinn of the New York Highlanders on August 15, 1912
• Eddie “Corky” Collins of the Philadelphia Athletics on September 6, 1913
• “Whispering” Bill Barrett of the White Sox on May 1, 1924
• Walter Paul “Doc” Gautreau of the Boston Braves on September 3, 1927  
• Victor Pellot a/k/a Vic Power of the Cleveland Indians on August 14, 1958           

 

Mom?  Why did you throw out my baseball cards?  Why do you ask?  Speaking of these ballplayers …

At a recent baseball card auction, a Honus Wagner baseball card sold for $1.2 million while a card that misspelled the last name of early 20th century Philadelphia Phillies outfielder Sherry Magee (misspelled as "Magie") fetched $80,000.  You can buy a Vic Power baseball card, with his autograph, at sportsmemorabilia.com for $30.60.  A Barrett baseball card is available for under $1.00.

Guy Zinn’s rookie card was on auction for $250,000 back in 2010.  There is only one original of that card known to exist. Zinn's biggest claim to fame as a major-leaguer came on April 20, 1912. As lead-off hitter for the New York Highlanders (the team that later became the Yankees), Zinn started the Red Sox – Yankee rivalry by drawing a walk and later scoring as the first major-league batter in the history of Fenway Park in Boston.  He was also listed as the starting left-fielder in an article on Jews and Sports… Stop Laughing: The Rabbi of Swat, The Spy, and The Most Fascinating Jewish Baseball Team.

Peiper’s Prognostications:

The Summer Slowdown is upon us.  Without any new first party cases to report, and without any new developments in third-party practice, our efforts are focused on the CPLR this week.  More particularly, we focus on decisions that deal with motion to open, vacate, restore, etc.  Although not used very often, as they say “when you need this case law, you really need it.” 

If you’re a claims professional, this column is probably not particularly useful for you this week.  At a minimum, we’d invite you to take a look at the Second Department’s decision dismissing bad faith claims in a third-party action.    After that, you’re free to go. 

If, however, you’re a practitioner (or have a curiosity about the nuts and bolts of civil litigation), take a quick moment to review the standards for vacating defaults, restoring matters to the trial calendar, and for fixing faux pas during motion practice.  Hopefully, you’ll never need these in your practice, but, if you do, it’ll be nice to have them at your fingertips. 

That’s it for this week.  Best wishes until next time.

Steven E. Peiper
[email protected]

A Century Ago:

Olean Evening Times
July 20, 1912
Page 1

THREATEN DEATH TO MR.  WHITMAN

District Attorney of New York is Warned Against Proceeding Further in Rosenthal Case
Threats of Death Conveyed in Many Letters Received by Him and the Lawyer for the Men from the Automobile from Which Rosenthal Was Killed is Also Threatened by Desperate Criminal Who Are Alleged to Have Police Protection

Instead of a reprint of the article, with due credit to Joe Bruno’s “On The Mob” Website, we offer you the story:

It was common knowledge that many New York police officers were on the take in the early part of the 20th century. One was Police Lieutenant Charles Becker, head of the "Strong Arm Squad" in New York City in the early 1900's. While Becker and his crew were supposed to be ridding the city of vices, such as gambling and prostitution, he was, in fact, making deals with the proprietors of such illegal establishments, where he'd receive substantial amounts of cash from them, and in return, he would turn a blind eye to their activities. It was reported, that even though Becker 's annual salary was only $2,250, he had amassed a fortune of over $100,000.

Herman "Beansy" Rosenthal was a small-time crook of very little distinction. Every time Rosenthal opened a gambling house, it was closed down in a matter of weeks. Finally, Rosenthal found the place of his dreams on West 45th Street near Broadway and took in as a partner, none other than Police Lieutenant Charles Becker. This arrangement went quite well for a while, but New York Mayor William Jay Gaynor began hearing rumors that maybe Becker was not quite doing his job in a proper manner. Mayor Gaynor started putting the screws to Becker, so Becker decided he had to make a big splash, therefore displaying his proper allegiance to the law. Becker knew no one would care less what happened to the un-connected Rosenthal, so he raided Rosenthal's gambling den, which was part Becker's, and even arrested Rosenthal's nephew to boot.

Rosenthal told Becker this was not the correct way for a "partner" to be acting. Becker said not to worry; that it was all a show for the Mayor. Becker promised that Rosenthal's nephew would soon be released, and that the joint would be back in working order in no time. Yet District Attorney Charles Whitman felt different. He immediately indicted Rosenthal, Rosenthal's nephew and several employees of Rosenthal's gambling den. Rosenthal saw right through the double-cross. He ran straight to Whitman and spilled the beans about his connections to Becker. At first, Whitman turned a deaf ear to Rosenthal, so Rosenthal repeated his story to Herbert Bayard Swope, a crime reporter for "The New York World." Swope wrote several articles parroting what Rosenthal had said about the actions of the New York City police department, which forced Whitman to finally take strong action.

On July 16, 1912, Rosenthal was scheduled to testify before a grand jury. Becker knew he was in dire danger of going to jail for a long time, so he contacted Big Jack Zelig, whom the police considered "The Most Dangerous Man in New York City," to take care of the Rosenthal situation. The price was $1000, and Zelig sub-contracted out the work to four of his best men; Harry "Gyp the Blood" Horowitz, Frank "Whitey Lewis" Muller, Lewis "Lefty" Rosenberg and Frank "Dago Frank" Ciroficci.

At 2 am on the morning he was set to testify, Rosenthal had just finished eating in the dining room of the Hotel Metropole on West 43rd Street. As he stepped outside into the warm night air, the four gunmen shot Rosenthal dead with lead, and then escaped in a getaway car. Within an hour, Swopes woke Becker from a deep sleep, and Becker immediately launched an investigation into Rosenthal's murder. The first one arrested was Zelig, and he spilled the beans immediately, implicating Becker. The four gunmen went into hiding, but were captured a few weeks later.

On July 29, 1912, based on Zelig's testimony, Becker was arrested for murder of Herman "Beansy" Rosenthal. But even from jail, Becker had long tentacles. His next move was to make sure Zelig didn't testify against him in court. On October 5, 1912, the day before he was set to tattle on Becker officially, Zelig, now to Becker, "The Most Dangerous Rat in New York City," was shot dead on a street car by "Red Phil" Davidson.

Even without Zelig, the case against Becker and the four killers was just too strong. All five were tried, convicted and sentenced to die in the electric chair at Sing Sing prison. The four gunmen were put to death on April 13, 1914, but Becker would not give up without a fight. His last chance at saving his life was an appeal of clemency to the new Governor, who just happened to be the same Charles Whitman, who had arrested Becker and prosecuted his case. Whitman refused to commute his sentence and Becker was electrocuted in July of 1915.

Editor’s Note:  By the way, the lawyer who was threatened with death in 1912, mentioned in the headline, was Assemblyman Aaron Jefferson Levy, who as a Tammany Hall member of the Assembly, moved onto serve as a city judge and then for 27 years as a New York State Supreme Court Justice.  He died in Florida, of a heart attack at the age of 74. Whitman riding high on his prosecution of Becker, was elected NYS Governor and served from January 1, 1915 to December 31, 1918.  His grandson, John Whitman married Christine Todd, who became Governor of New Jersey.

 

In This Week’s Coverage Pointers:

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

• Disagreement of Breadth of Employee Exclusion Does Not Rise to Level of GBL §349 Claim
• An Offending Motorist That Has Excess Coverage Is Not Uninsured if His Primary Carrier Is Insolvent

 

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

• Defendant’s Experts’ Reports Fail to Support Motion
• Bulging Disc May Meet Serious Injury Threshold
• Failure to Address Claimed Psychological Injuries Wins Reversal
• Plaintiff’s “Lack of Candor” During Deposition Results in Granting of Defendants’ Motion for Renewal

 

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

ARBITRATION

• Absent Explanation of Relationship Between Applicant and Independent Contractor, Applicant Lacks Standing for Reimbursement for Services Independent Contractor Rendered
• Expert Report Needs to Specifically Address Why Durable Medical Equipment Not Necessary
• Second Time Claim Partially Denied as Premature Due to Outstanding Verification
• IME Persuasive on Lack of Causal Relationship
• Partial Award of Benefits as Applicant Demonstrated Palliative Benefit from Treatment
• Applicant Entitled to Lost Wages When Able to Work But Employer Had no Work Available

 

LITIGATION

• In Loss Transfer Arbitration, Failure to Seek Timely Stay Regarding Arbitrability of Issue Results in Waiver
• Different Medical Provider = Different Right to Choose Dispute Resolution Forum
• Plaintiff Failed to Rebut Insurer’s Prima Facie Case of Lack of Medical Necessity
• Peer Review Insufficient to Establish Lack of Medical Necessity
• Insurer’s Motion Denied as Plaintiff Proffered Letter of Medical Necessity

 

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

• Failure to Proffer a Reasonable Excuse Results in Default Judgment
• Or Not, Meritorious Defense Saves Default Judgment Proceeding
• Motion to Restore Should be Granted When Timely Made
• CPLR Provides Relief for Minor Mistakes in Motion Practice
• Motion to Vacate Should be Granted When Timely Made

 

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

• Changes to the Mandatory DWI Information Statement

 

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

• Reinsurance Dispute Between an American Insurance Company and a Canadian Insurance Company

 

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

• Verification Needed for Insured to Comply with 24 Hour Notice Requirement
• Expert Reports Should Bolster Summary Judgment Motion, Not Weaken It
• Summary Judgment Inappropriate Where Conflicting Medical Reports Exist
• Defendants Expert Reports Should Not Contain Contradictory Findings
• Providing Insurer Third-Party Summons & Complaint Insufficient to Establish Notice of a Claim
• Physician’s Affirmation Repeating Injuries in BOP Insufficient to Grant Summary Judgment
• Insurer Claims Investigation Files Prepared in Ordinary Course of Business Still Discoverable Even Though Prepared by Counsel   

 

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

ONE SECURITY COMPANY BEATS THE RAP FOR A BANK HEIST; ANOTHER MAY TAKE THE FALL

Well, that’s it from here.  With all best wishes for a healthy summer, we bid you adieu until our next issue in two short weeks.

I celebrated by 35th anniversary with Hurwitz & Fine on July 14th, having started as a law clerk during the summer between my first and second year of law school.  It’s all about working with great people and doing interesting work.

Remember, if you have a situation, we LOVE situations.

Dan

Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:     [email protected]
Website:  www.hurwitzfine.com
LinkedIn: www.linkedin.com/in/kohane

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

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

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

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

ASSOCIATE EDITOR
Audrey A. Seeley
[email protected]

ASSISTANT EDITOR
Margo M. Lagueras
[email protected]

 

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

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

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

Jody E. Briandi
Steven E. Peiper

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

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
 
Scott M. Duquin
Diane F. Bosse

Index to Special Columns

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

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

07/11/12       Vescon Construction, Inc. v. Gerelli Insurance Agency, Inc.
Appellate Division, Second Department
Disagreement of Breadth of Employee Exclusion Does Not Rise to Level of GBL §349 Claim
Utica First Insurance Company issued a general liability insurance policy to Vescon which contained an exclusion for bodily injury to an employee of an insured if it occurred in the course of employment.  A Vescon employee was injured in the course of his employment at a construction project, and the employee commenced an action against Volmar, the general contractor for the project.  Volmar then commenced a third-party action against Vescon, a subcontractor on the project, seeking, inter alia, indemnification.

Vescon requested that Utica First defend and indemnify Volmar pursuant to the blanket additional insured endorsement in the subject policy.  Utica First denied Vescon's request, Vescon commenced this action against, among others, Utica First, inter alia, to recover damages for unjust enrichment and for a violation of General Business Law § 349.

The elements of a cause of action to recover damages for deceptive business practices under General Business Law § 349 are that the challenged act or practice was a consumer oriented act or practice that is misleading in a material way, and caused injury to the plaintiff.  Here, the conduct was not consumer-oriented within the meaning of General Business Law § 349 but rather a private contract dispute over policy coverage and the processing of Vescon's claims, not conduct affecting the consuming public at large, and thus do not state a cause of action under section the GBL.

07/06/12       Bobak v. AIG Claims Services
Appellate Division, Fourth Department
An Offending Motorist That Has Excess Coverage Is Not Uninsured if His Primary Carrier Is Insolvent
When reviewing an arbitration award arising of an uninsured motorist proceeding, the court looks to see whether it has any evidentiary support or it is arbitrary and capricious.  Here, the injured party was insured by New Hampshire Insurance Company under a policy of insurance that provided $1,000,000 in SUM (Supplementary Uninsured/Underinsurance Motorists) benefits.  The other vehicle involved in the accident had been insured by Reliance Insurance which was rendered insolvent.  Insolvency, by statute, would render the other motorist uninsured and generally lead to a determination that the claimant would be entitled to recover SUM benefits from New Hampshire Insurance Company.

Although the evidence before us establishes that the other vehicle's primary insurer is insolvent and that no benefits will be afforded to petitioner by the guarantee funds, which assumed the liabilities of that insolvent company, the evidence also establishes that there is an excess policy over the Reliance policy, issued by Travelers, and that Travelers did not disclaim coverage. Since that policy had $1,000,000 in coverage, the driver of the Reliance/Travelers vehicle was not uninsured.

A lone dissenting Justice argued that the existence of excess coverage should not change the fact that the driver was uninsured for primary coverage

 

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

07/18/12       Tudy v. Sandoval
Appellate Division, Second Department
Defendant’s Experts’ Reports Fail to Support Motion
On appeal, the trial court is reversed and defendant’s motion is denied where defendant’s own medical experts found plaintiffs had significant range-or-motion restrictions that were caused by the accident.  Therefore, defendant did not meet his prima facie burden and his motion should not have been granted, irrespective of the sufficiency of plaintiffs’ opposing papers.

07/12/12       Schmidt v. Meehan
Appellate Division, Third Department
Bulging Disc May Meet Serious Injury Threshold
Plaintiff was a passenger in a parked car when defendant’s vehicle collided with it.  She claimed serious injuries to her spine under the permanent consequential and significant limitation of use categories. 

In support of his cross-motion for summary judgment, defendant submitted plaintiff’s medical records, including MRIs which revealed several mild, broad-based disc bulges or protrusions.  A bulge may meet threshold if it results in a quantifiable loss in range-of-motion.  Defendant’s examining neurologist reported mildly restricted cervical range-of-motion to 45 degrees.  Plaintiff was able to touch her chin to her chest.  However, he did not identify or explain the tests he used or what the normal range-of-motion was in comparison to her results.  Therefore, his conclusion that the limitations were not serious was insufficient to meet defendant’s burden and summary judgment should not have been granted, regardless of plaintiff’s responding submissions.

07/11/12       Haque v. City of New York
Appellate Division, First Department
Failure to Address Claimed Psychological Injuries Wins Reversal
On appeal, the trial court is reversed and defendants’ motion denied because defendants did not adequately address plaintiff’s claim that he sustained psychological injuries as a result to the accident.  As such, defendants did not meet their prima facie burden and their motion should have been denied without consideration of plaintiff’s opposing papers.

07/10/12       Torres v. Gamma Taxi Corp.
Appellate Division, First Department
Plaintiff’s “Lack of Candor” During Deposition Results in Granting of Defendants’ Motion for Renewal
Plaintiff claimed he sustained injuries to his cervical and lumbar spine as a result of the subject 2005 accident.  During his deposition, however, he was less than ‘candid’ and failed to mention that de sustained injuries to the same body parts as the result of two prior accidents in 1999 and 2001.  Defendants only learned of this after their prior motion had been decided so they brought a motion for renewal, which was granted, the court finding that plaintiff’s lack of candor was a reasonable excuse for not having presented those facts on the prior motion.

Upon renewal, defendants met their prima facie burden that the injuries were not caused by the 2005 accident by submitting affirmed reports of a radiologist stating that cervical and lumbar MRIs revealed multilevel degenerative disc disease, as well as the affirmation of their expert neurologist stated that the earlier accidents caused the injuries and the current symptoms were merely recurrences of the same symptoms.  In opposition, plaintiff’s expert merely stated that he reviewed the newly discovered records from the earlier accidents but did not explain their effect on his updated opinion as to causation. The trial court found this opinion to be speculative, and the appellate court agreed, with a two-judge dissent.

The dissent disagreed and stated that the majority was allowing the so-called “lack of candor” to distract them from the evidence.  Specifically, the MRIs performed after the two prior accidents were essentially normal and did not reveal disc bulging or herniations and defendants’ expert never opined that the alleged 2005 injuries were actually sustained in the prior accidents.  The dissent also found that the plaintiff’s expert’s opinion was not speculative because, after reviewing the prior records, which were negative, he attributed the injuries to the 2005 accident. 

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

ARBITRATION

07/13/12       Zenith Medical PC v. Respondent
Arbitrator Veronica K. O’Connor, Erie County
Absent Explanation of Relationship Between Applicant and Independent Contractor, Applicant Lacks Standing for Reimbursement for Services Independent Contractor Rendered
The Applicant sought reimbursement for a lower extremity EMG/NCV study performed upon the assignor as a result of injuries allegedly sustained from an October 22, 2010, motor vehicle/bicycle accident.  The electrodiagnostic testing was performed by Dr. James Lawrence who appeared to be an independent contractor to Applicant operating under the company of Sports Medicine of WNY.  Yet, the Applicant billed for the testing.  The Applicant while afforded additional time to explain the relationship between Dr. Lawrence and the Applicant did not submit anything.

The Insurance Department, in two General Counsel Opinions, addressed the issue of independent contractors and determined that if the services are rendered by an independent contractor then the partnership corporation should not be considered a “licensed provider” authorized to bill under no-fault.  Instead, the independent contractor should bill in his own name and the partnership corporation is not entitled to receive reimbursement under no-fault.

The assigned arbitrator determined that the Applicant lacked standing to proceed with the arbitration.

07/12/12       RS Medical v. Respondent
Arbitrator Veronica K. O’Connor, Onondaga County
Expert Report Needs to Specifically Address Why Durable Medical Equipment Not Necessary
The Applicant sought reimbursement for an interferential unit prescribed to the assignor due to injuries allegedly sustained during a May 5, 2011, motor vehicle accident.  The insurer denied the durable medical equipment upon the peer review of Dr. Melvin Brothman.  Dr. Brothman opined that the cervical and lumbar spine MRIs revealed disc disease without clinical evidence of same.  Dr. Brothman recommended physical therapy and generally found no need for durable medical goods. 

The assigned arbitrator declined to uphold the denial as Dr. Brothman’s report identified positive orthopedic findings and continued treatment with no explanation as to why durable medical equipment was not necessary.

07/12/12       RS Medical v. Respondent
Arbitrator Kent L. Benziger, Erie County
Second Time Claim Partially Denied as Premature Due to Outstanding Verification
The Applicant sought reimbursement for an RS interferential muscle stimulator while the insurer claimed the case was premature as there was outstanding verification.  This case was subject to a prior arbitration wherein the insurer raised the same defense. The assigned arbitrator determined that the claim was premature due to outstanding verification.

After the prior arbitration, the Applicant’s counsel submitted a partial response to the insurer but did not supply the “smart card” data that verified the usage of the equipment.  The Applicant re-filed this arbitration and the insurer claimed outstanding verification in the form of the “smart card” data. 

The assigned arbitrator denied part of the arbitration based upon outstanding verification and issued the warning that if the arbitration was re-filed and determined premature costs and sanctions should be awarded.  With regard to one service date the assigned arbitrator found in the applicant’s favor finding the independent chiropractic examination report was not persuasive.  This is because it conflicted with reports from the treating chiropractor and did not review any of the chiropractic reports.

07/11/12       Applicant v. Respondent
Arbitrator Thomas J. McCorry, Erie County
IME Persuasive on Lack of Causal Relationship
The Applicant, eligible injured person, sought reimbursement for physical therapy due to injuries allegedly arising out of a July 3, 2009, motor vehicle accident.  The insurer denied the bills upon an independent medical examination (“IME”) conducted by Dr. James McGlowan.  It was noted that the Applicant had extensive pre-existing injuries to her cervical and thoracolumbar spine resulting in 12 prior spinal fusions.  Dr. McGlowan opined that the treatment was not causally related to the accident.  Rather, relying upon medical journals, Dr. McGlowan concluded that any disc changes at adjacent levels to the fused discs is associated with a natural history of adjacent level disease and not any injury from the accident.  The assigned arbitrator found Dr. McGlowan’s report persuasive and upheld that denial.

07/10/12       Chiropractic Care of WNY LLC v. Respondent
Arbitrator Kent L. Benziger, Erie County
Partial Award of Benefits as Applicant Demonstrated Palliative Benefit from Treatment
The Applicant sought reimbursement for chiropractic services rendered to the assignor allegedly as a result of a September 15, 2010, motor vehicle accident.  The insurer denied the treatment based upon the IME of John Gaiser, D.C.  Mr. Gaiser noted that the assignor had not improved from chiropractic treatment and that there were positive objective findings.

The Applicant submitted subsequent treatment records which the last record demonstrated a number of positive findings relatively unchanged from visits over the past 10 months.  One record during that 10 month timeframe, in January 2011, noted that the assignor felt good on days of treatment.  Yet, all subsequent notes did not document any curative or palliative relief.
The assigned arbitrator awarded reimbursement from January 2011 through February 2011 as it was the only documented palliative benefit that could be reimbursed.

07/10/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Applicant Entitled to Lost Wages When Able to Work But Employer Had no Work Available
The Applicant sought reimbursement for lost wages as she was cleared by her treating physician to return to work but for a period of time her employer was unable to reinstate her to her prior position.  The Applicant eventually obtained employment in a different position.

The assigned arbitrator awarded lost wages during the timeframe the Applicant’s employer was unable to reinstate her to her prior position.  He relied upon an Insurance Department General Counsel position letter from May 14, 2009, which stated that lost wages were due where a claimant was prepared to return to work but unable to do so through no fault of her own.

LITIGATION

07/06/12       In the Matter of the Arbitration Between Philadelphia Ins. Co.
                    and Utica Nat. Ins. Grp.
Appellate Division, Fourth Department
In Loss Transfer Arbitration, Failure to Seek Timely Stay Regarding Arbitrability of Issue Results in Waiver
Philadelphia Insurance Company (“Philadelphia”) commenced a proceeding under CPLR §7511(b) to vacate a loss transfer arbitration award under Insurance Law §5105(a) on the ground that the arbitration panel exceeded its power since arbitration was not available as neither vehicle involved in the accident was used principally for the transportation of person or property for hire.  The Court held that since Philadelphia did not timely seek to stay the arbitration before the arbitration occurred it waived its contention that Utica National Insurance’s (“Utica National”) claim for first party benefits was not arbitrable under Insurance Law §5105.  Due to Philadelphia’s waiver, the Court held that it was precluded from seeking to vacate the arbitration award on the ground that the panel exceeded its power.

The two dissenting justices in this decision reasoned that Philadelphia did not waive its contention that Utica National’s first party benefits claim under Insurance Law §5105 was not arbitrable.  The dissent points to Insurance Law §5105(b) which provides that mandatory arbitration is the sole remedy regarding disputes between insurers over the responsibility of first party benefit payments to support its rationale.  The dissent stated that this provision has a broad scope requirement of arbitration and that Philadelphia properly submitted the issue of whether the vehicles involved were principally used for the transportation of persons or property for hire to the arbitration panel.  Further, Philadelphia did not raise in the arbitration that the claim was not arbitrable.  Rather, Philadelphia argued the merits of the case that Utica National could not recover first party benefit payments as neither vehicle was principally used for the transportation of persons or property for hire.  Philadelphia’s participation in the arbitration without seeking a stay of the arbitration first is not a waiver of its contention that none of the vehicles involved were principally used for the transportation of persons or property for hire.  Thus, Philadelphia could proceed with a petition to vacate the arbitration award on the ground that the decision was arbitrary and capricious.
[Overall, a brief review of the case law in this area reveals a division in some of the departments.  Further, the dissent has a valid point that Insurance Law §5105(b) has a broad scope requiring as the sole remedy for an insurer seeking to resolve the issue of the responsibility of first party benefits payments to submit same to arbitration.  Since this decision had two dissents we will keep our eye on this to see if it proceeds to the Court of Appeals.]

06/28/12       Alev Med. Supply, Inc. a/a/o Donald Joachim v. Allstate Prop. & Cas. Ins. Co.
Appellate Term, Second Department
Different Medical Provider = Different Right to Choose Dispute Resolution Forum
The complaint was improperly dismissed as the current plaintiff was not required to submit to arbitration because a different medical provider commenced an arbitration seeking reimbursement for no-fault benefits rendered to the same assignor arising out of the same accident.  Likewise, the doctrine of collateral estoppel did not apply in this case as the defendant did not demonstrate that plaintiff was a party, or in privity with a party, to the prior arbitration proceeding.

06/28/12       Dr. Todd Goldman, D.C., P.C. a/a/o Rose Saunders v. Kemper Cas. Ins. Co.
Appellate Term, Second Department
Plaintiff Failed to Rebut Insurer’s Prima Facie Case of Lack of Medical Necessity
The insurer was entitled to summary judgment as it demonstrated lack of medical necessity based upon an IME.  The plaintiff did not rebut the insurer’s prima facie showing.  

06/28/12       Eagle Surgical Supply, Inc. a/a/o Alan Fenelon v. Mercury Cas. Co.
Appellate Term, Second Department
Peer Review Insufficient to Establish Lack of Medical Necessity
The insurer’s summary judgment motion on lack of medical necessity was properly denied.  The insurer’s peer review report indicated insufficient documentation and information which is not a factual basis or medical rationale for the doctor’s determination of lack of medical necessity.  Likewise, the insurer did not demonstrate that it sought such information by verification.

06/28/12       Richmond Radiology, P.C. a/a/o Joseph Santana v. State Farm Ins. Co.
Appellate Term, Second Department
Insurer’s Motion Denied as Plaintiff Proffered Letter of Medical Necessity
The insurer’s cross-motion for summary judgment on lack of medical necessity should have been denied.  While the insurer submitted two sworn peer reviews establishing lack of medical necessity, the plaintiff proffered an affirmed letter of medical necessity creating an issue of fact precluding summary judgment.

 

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

07/18/12       Walker v George
Appellate Division, Second Department
Plaintiff’s Bad Faith Claim Dismissed for Failure to State a Cause of Action
Plaintiff commenced the instant action seeking to recover bodily injury damages against George, as well as extra-contractual damages against Progressive Insurance Company.  In the pleading, plaintiff alleged that Progressive had breached its duty of good faith and fair dealing under a policy that it had issued to Charles Robertson. 

The Second Department dismissed the claim on the basis that plaintiff had not stated a cause of action under the Court of Appeals’ decision in Pavia v State Farm. 

Peiper’s Point - There are several unanswered questions in this case.  The foremost of which is how plaintiff even had standing to bring this action.  As the injured party, plaintiff would have no standing to bring a bad faith claim unless she obtained a judgment against Mr. Robertson, and took an assignment of that part of the judgment that was in excess of Mr. Robertson’s policy with Progressive.  Without an assignment, anything Progressive may (or may not) have done to Mr. Robertson was irrelevant to Ms. Walker. 

07/18/12       US Bank NA v Stewart
Appellate Division, Second Department
Failure to Proffer a Reasonable Excuse Results in Default Judgment
A reminder to be careful what you agree to.  Defendant refused to submit an Answer because it alleged that it was not properly served with the Complaint.  Then, in open court, counsel for the defendant acknowledged that, in fact, service was proper.  Seizing on this admission, the trial court ruled that the defendant had defaulted, and because it acknowledged proper service it could not proffer a reasonable excuse for the failure to appear.  Accordingly, default judgment was entered against the defendant. 

On appeal, the Second Department noted that where, as here, the defendant could not proffer a reasonable excuse; the fact that it possessed a meritorious defense was of little consequence.

07/18/12       Arias v First Presbyt. Church in Jamaica
Appellate Division, Second Department
Or Not, Meritorious Defense Saves Default Judgment Proceeding
Another default judgment proceeding.  In this case, defendant realized shortly after its Answer was due that it was in default.  As such, it immediately reached out to plaintiff’s counsel for an extension.  The reply was a motion for default judgment. 

On appeal, the Second Department noted that Tick Tock acted diligently and never intended to abandon its defense.  The court also noted that there was no prejudice to the plaintiff, and that the defendant had a meritorious defense.  Accordingly, the Appellate Division ordered that plaintiff accept defendant’s Answer, and vacated plaintiff’s attempt to default.

Peiper’s Point – If you can tell me how the Second Department reached this decision, and came to the exact contrary position in US Bank NA. 

07/11/12       Gordon v Ratner
Appellate Division, Second Department
Motion to Restore Should be Granted When Timely Made
When plaintiff’s counsel failed to file the Note of Issue per the terms of the Scheduling Order, plaintiff’s case was automatically dismissed due a failure to prosecute.  Thereafter, on motion pursuant to CPLR § 3216, plaintiff moved to vacate the dismissal and for leave to restore the matter to the trial calendar.  That motion was denied by the Trial Court, and the instant appeal followed.

In reversing the trial court, the Appellate Division noted that CPLR § 3216 is an “extremely forgiving” statute.  Where there is a justifiable excuse (here law office failure was offered), the Court noted that the trial court abused its discretion in refusing to permit plaintiff to restore the matter to the active calendar.  Absent prejudice to the defendants, the Appellate Division noted that restoration of a matter to the trial calendar was entirely appropriate.
07/11/12       Avalon Gardens Rehabilitation & Health Care Ctr. V Morsello
Appellate Division, Second Department
CPLR Provides Relief for Minor Mistakes in Motion Practice
Defendant moved for summary judgment but inadvertently attached the wrong Answer to his Attorney Affirmation.  Plaintiff moved to dismiss the motion due to a violation of CPLR § 3212(b) which requires a copy of all pleadings to be presented with dispositive motions. 

In reply, defendant included a copy of the proper Answer.  In addition, the defendant argued that CPLR § 2001 permits a court to overlook minimal errors and/or omissions if there is no substantial prejudice.  Accordingly, it permitted defendant to cure the defect in its reply submission. 

In so holding, the Court ruled that this case was distinguishable from cases where the movant simply did not include a pleading in its moving papers.  Here, recall that defendant inadvertently attached the wrong pleading.  It was not like the other cases where the inclusion of prior pleadings was entirely omitted.  

07/05/12       Jacobs v Johnston
Appellate Division, Second Department
Motion to Vacate Should be Granted When Timely Made
Defendant moved to vacate the note of issue pursuant to 22 NYCRR 202.12(e).  As the motion was timely, the Court noted that the movant only needed to establish that the case was not “trial ready.”  The movant was not, on the other hand, required to establish what additional discovery was needed and why such discovery was necessary. 

Accordingly, the trial court’s denial was reversed in its entirety.

 

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

Circular Letter 7 (2012)
Changes to the Mandatory DWI Information Statement
On July 9, 2012, the Department of Financial Services issued Circular Letter 7 which supersedes previously issued Circular Letter 11 (2003).  The DWI Information Statement required by VTL §312(a) was revised as a result of legislation passed this past session.  As a result, insurers must begin using the updated statement by September 1, 2012 for new policies, and October 1, 2012 with regard to renewal policies.

VTL §312(1) requires insurers, upon issuance or renewal of a private passenger automobile policy, to provide the insured with an information statement outlining the legal and financial consequences of convictions for operating a motor vehicle under the influence of alcohol or drugs.

NY has made numerous changes in an effort to strengthen the impaired driving laws in the past few years, such as Leandra’s Law, which increases the penalties for driving while impaired with a child in the vehicle, and the change to the No-Fault law requiring reimbursement for emergency room treatment if involved in an accident while intoxicated. 

As stated above, the DWI Information Statement has been revised and must be updated.  Insurers may revise the format of the statement, but must submit any variation in the text to DFS for review.  The submission must explain the deviation.  DFS must supply the DWI Information Statement to insurers.

 

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

07/11/12       OneBeacon Amer. Ins. Co. v. Commercial Union Assur. Co. Canada 
First Circuit Court of Appeals –Massachusetts law applied
Reinsurance Dispute Between an American Insurance Company and a Canadian Insurance Company
In the early 1980’s, OneBeacon American Insurance Company [“OneBeacon”] and Aviva Insurance Company of Canada [“Aviva”] were both affiliated members of the Commercial Union Group of insurance companies.  On March 28, 1980, OneBeacon issued an insurance policy [“1980 OneBeacon Policy”] to two U.S. based subsidiaries of Harrisons & Crosfield (Canada) Ltd:  Harrisons & Crosfield (America), Inc. and Harrison & Crosfield (Pacific), Inc., (collectively “Harrisons US”).  The policy contained Endorsement Number 4, which provided that the policy or any renewal thereof is 100% reinsured by Aviva.  The premium listed on the 1980 OneBeacon policy is “Canadian $45,530.”

Also on March 28, 1980, Aviva issued an insurance policy [“1980 Aviva Policy”] to Harrisons & Crosfield (Canada) Ltd. [“Harrisons Canada].  The Aviva policy contained a “Differences in Conditions Endorsement” [“1980 Aviva Endorsement”] which provides that in consideration of the premium charged, the Insurer agrees that this policy is placed in conjunction with and reinsures the 1980 One Beacon Policy, or any renewal therefore, in respect of insureds Harrisons & Crosfield (America) Inc., Harrisons & Crosfield (Pacific) Inc.  The policy contained the following Exception:  “This insurance differs from the policy which it follows in the following particulars:  (a) Premium:”  $45,530 (Canadian Funds-Deposit) The Limit of Liability under either or both policies shall not exceed $1,000,000 as set forth in the 1980 Aviva and the 1980 OneBeacon policy, or any renewal policies issued by Aviva.”

On November 26, 1980, Aviva issued to OneBeacon a reinsurance certificate [“Facultative Certificate”].  The Facultative Certificate states that Aviva reinsures policy the 1980 OneBeacon Policy, and the reinsurance premium listed was $45,530.00 Canadian. The Facultative Certificate’s policy period was never extended, nor does a separate facultative certificate exist for any subsequent policy period.  The Facultative Certificate was the only direct written agreement between Aviva and OneBeacon on the record.

Next, OneBeacon issued policies for 1981 and 1982 to Harrisons US.  The named insureds on the 1981 One Beacon Policy were Harrisons U.S. and Harcros, Inc., and the listed “Additional Insureds” are Harrisons & Crosfield Ltd. and Wilkinson Linatex.  The premium amount listed one the 1981 OneBeacon policy was $24,000 U.S.  The 1981 OneBeacon Policy did not contain “Endorsement Number 4” or any similar provision indicating that the 1981 OneBeacon Policy was reinsured by any Aviva policy. 

Around the same time, Aviva issued an endorsement [“1981 Aviva Endorsement”] to the 1980 Aviva policy that extended the policy period from March 28, 2981 to March 28, 1981. The 1981 Aviva Endorsement explicitly excluded Harrisons U.S. from coverage under the 1980 Aviva policy.

The 1982 OneBeacon Policy was issued to Harrisons U.S.  It was agreed that the 1982 policy was a renewal of the 1981 policy.  In 1981 Aviva again extended the term of its policy issued to Harrisons Canada by one year.

In 1998, OneBeacon received notice of lawsuits against Harrisons U.S. for asbestos-related injuries.  One Beacon requested that Aviva fully indemnify OneBeacon for costs incurred in connection with the Harrisons U.S. claims.  Aviva responded stated that it would reimburse OneBeacon only one-third of defense expenses and indemnity payments – those related to the 1980 policy period. OneBeacon filed suit in district court. The district court agreed with Aviva and for the following reasons the First Circuit Court of Appeals [“Court”] affirmed.

As noted by the district court, the only direct agreement between OneBeacon and Aviva is the Facultative Certificate and the certificate clearly indicated that the term of Aviva’s reinsurance obligation was during the 1980 OneBeacon policy period.

OneBeacon argued that the agreement between it and Aviva was created by the 1980 OneBeacon and Aviva Policies rather than by the Facultative Certificate.  Further arguing that 1980 Aviva Policy reinsures the 1980 OneBeacon Policy and any renewals, and that the Facultative Certificate, which was issued several months after the 1980 policies, was a mere confirmation of the reinsurance relationship that already existed between the two insurance companies. The Court was not persuaded stating that even if it assumed that the 1980 Aviva and OneBeacon Policies formed the parties’ agreement in 1980, the record makes clear that the parties changed the terms of their agreement in 1981.

The Court noted that the 1981 Aviva Endorsement explicitly changed the scope of Aviva’s obligations.  The Differences in Condition Endorsement in the original 1980 Aviva Policy stated that Aviva would reinsure OneBeacon’s coverage to Harrisons US.   However, the 1981 Aviva Endorsement stated that Harrisons U.S. was “specifically excluded from this policy which shall not inure to its benefit in any way.”

Although OneBeacon contended that the 1981 Aviva Endorsement only eliminated Aviva’s direct insurance obligations to Harrisons U.S. while leaving undisturbed Aviva’s agreement to reinsure the 1980 OneBeacon policy and its renewals, the Court concluded that given that Harrisons U.S. is excluded from the 1981 Aviva Policy , and given that Aviva is not a party to the 1980 OneBeacon policy, it defied logic to say that the two policies in combination create an ongoing obligation that Aviva reinsure OneBeacon with respect to Harrison US.  The 1981 Aviva Policy has nothing to do with Harrisons U.S., and the 1980 OneBeacon policy on its own cannot bind Aviva – a non-party to that policy.

In addition, the Court pointed out that the 1981 OneBeacon policy did not contain the 1980 OneBeacon Endorsement Number 4 or any similar provision indicating that the 1981 and 1982 OneBeacon Policies were reinsured by Aviva. Further noting that when considering any argument that ambiguity exists Massachusetts law allows the Court to examine extrinsic evidence to determine whether the parties intended for the reinsurance arrangement to continue after the end of the first year. In reviewing the extrinsic evidence, the Court noted that:  (1) there was no Facultative Certificate between Aviva and OneBeacon for the second and third policy years; and (2) the flow of premium payments supports the view that Aviva terminated its reinsurance obligation after the first year.

The Court concluded that because there was no evidence that Aviva agreed to provide reinsurance beyond the first policy year, OneBeacon’s motion for summary judgment was properly denied and Aviva’s properly granted by the district court.

 

MARC’S REMARKS

Marc A. Schulz
[email protected]

07/05/12       Matter of Portillo v. Motor Veh. Acc. Idem. Corp.
Supreme Court, Queens County
Verification Needed for Insured to Comply with 24 Hour Notice Requirement
Plaintiff allegedly was operating a bicycle when he was struck by a vehicle on July 1, 2011.  The vehicle continued on without stopping.  Plaintiff received treatment at a hospital for several injuries, including arthroscopic surgery on his left knee on August 16, 2011.  Neither Plaintiff nor any member of his family owned an insured automobile at the time of the accident.

Plaintiff sought to commence action against MVAIC to recover damages from the hit-and-run.  MVAIC objects to petition on ground that Plaintiff did not report the accident with 24 hours to a “police, peace or judicial officer.”  However, the court stated Ins. Law § 5208(a)(2)(A) allows satisfaction of the 24-hour notice requirement by supplying notice to the Commissioner of the Dept. of Motor Vehicles via a properly completed and timely filed MV-104 form.

In this case, Plaintiff allegedly filed his MV-104 with the commissioner with 24 hours of the accident as it was dated “7/2/11.”  However, the form is devoid of any time-stamp, receipt, or other manner of verification as when it was actually submitted.  The place on the form where said stamp would usually appear was blank on Plaintiff’s form.  Therefore, the court held this matter requires an evidentiary hearing to determine if, in fact, Plaintiff did so comply with the 24-hour requirement.    

07/09/12       Herrera v. Rojas
Supreme Court, Queens County
Expert Reports Should Bolster Summary Judgment Motion, Not Weaken It
As a result of a motor vehicle accident, Plaintiff allegedly sustained a partial tear of the rotator cuff of the right shoulder, requiring arthroscopic surgery, herniated discs, and disc bulges.  Defendant moved for summary judgment on ground that Plaintiff did not suffer a “serious” injury. 

In support of their motion, Defendant submitted an affirmed medical report of an orthopedic surgeon that found significant limitations in the range of motion of Plaintiff’s cervical spine, lumbar spine, and right shoulder and concluded that the decreased range of motion is a subjective finding.  The report stated Plaintiff has no disability and is capable of working.  Defendant also submitted a report of a neurologist who failed to perform any range of motion testing on Plaintiff’s shoulder yet stated Plaintiff exhibited full range of motion of cervical and thoracolumbar spine.

The court determined Defendant failed to make a prima facie showing that Plaintiff did not sustain a serious injury and denied their motion.  In any event, Plaintiff raised triable issues of fact by submitting their own affirmed medical report of Plaintiff’s treating orthopedist, which found significant limitations in range of motion of both shoulders both contemporaneous to the accident and in a recent examination, and concluded that said limitations were significant and permanent and resulted from trauma causally related to the accident.    

07/09/12       Kang v. Demelio
Supreme Court, Queens County
Summary Judgment Inappropriate Where Conflicting Medical Reports Exist
In another Queens County motor vehicle accident, Plaintiff alleges that as a result of the accident, he required arthroscopic surgery of the right knee due to a torn meniscus and sustained herniated discs and disc bulges.  Defendant moved for summary judgment on ground that Plaintiff did not suffer a “serious” injury. 

In support of their motion, Defendant submitted an orthopedist report finding Plaintiff sustained a cervical spine sprain – resolved; lumbar spine sprain – resolved; and no disability as Plaintiff is capable of working without restrictions/limitations.  Further, an MRI revealed disc bulges due to pre-existing degenerative changes and no meniscal tear.  Thus, the court held Defendant’s proof was sufficient to establish its prima facie burden by demonstrating Plaintiff did not sustain a serious injury.

In opposition, Plaintiff submitted MRI reports from a radiologist who observed evidence of an oblique tear involving posterior horn of the medial meniscus and as well as disc bulges.  Plaintiff also submitted the affirmed medical report of an orthopedic surgeon who first examined Plaintiff one month after the accident and re-examined Plaintiff almost two years later.  The reports found significantly reduced range of motion in Plaintiff’s cervical spine, lumbar spine, and right knee; and stated Plaintiff’s injuries to right knee and lower back/neck are permanent and resulted in permanent consequential limitation caused by the accident.  Therefore, the court held Plaintiff raised triable issues of fact as to whether he sustained serious injury under permanent consequential and/or signification limitation of use categories, and denied Defendant’s motion.   

07/09/12       Alcala v. Roth
Supreme Court, Suffolk County
Defendants Expert Reports Should Not Contain Contradictory Findings
Plaintiff sought recovery for injuries allegedly sustained resulting from a motor vehicle accident, including a disc bulge at L4-L5, lumbar radiculitis, lumbar spine strain, and internal derangement of the left knee.  Defendants moved for summary judgment, arguing plaintiff failed to meet the “serious injury” threshold. 

After examining Plaintiff, Defendants’ three experts each concluded plaintiff did not sustain a “serious injury” to his lumbar spine as a result of the accident.  One expert examined the plaintiff more than two years after the accident, and although he failed to provide any range of motion measurements for plaintiff’s left knee, he did find range of motion limitation in the right knee.  He further found significant range of motion limitation in the lumbar spine.  However, this report was contradicted by another one of the experts examining plaintiff more than two years after the accident, who found plaintiff to possess full range of motion of the lumbar spine.     

The court held that where conflicting medical evidence is offered on the issue of whether a plaintiff’s injuries are permanent or significant, and varying inferences may be drawn from them, an issue of credibility for the jury has been presented.  In light of this conflicting expert medical testimony, the court held that defendants failed to carry their burden of proving plaintiff did not suffer “serious injury.”  Thus, the court denied Defendant’s motion, holding that their contradictory medical expert testimony failed to make a prima facie showing that plaintiff had not suffered a “serious injury.”

07/10/12       QBE Ins. Corp. v. M&R European Constr. Corp.
Supreme Court, New York County
Providing Insurer Third-Party Summons & Complaint Insufficient to Establish Notice of a Claim
In these declaratory judgment actions, third-party plaintiffs sent a letter to M&R’s insurance broker providing notice of a claim against Great American’s insured, M&R.  The letter did not identify third-party plaintiffs as additional insured or address the claims against them, nor request their defense or indemnification in the underlying action.

The court held “notice of a third-party complaint against an insured does not fulfill the obligations of an additional insured to give notice of a claim against it.”  Moreover, even if the letter provided the requisite notice, it was not sent until nearly two years after the occurrence and one year after the underlying action was commenced.  As the third-party plaintiffs were unable to provide a reasonable excuse for their delay, the court granted Great American’s motion dismissing the third-party complaint.  

07/11/12       Rodriguez v. Emanuele
Supreme Court, Bronx County
Physician’s Affirmation Repeating Injuries in BOP Insufficient to Grant Summary Judgment
Defendant Vega’s car allegedly came into contract with Defendant Emanuele’s car, causing Emanuele’s car to crash into Plaintiff on the sidewalk.  Plaintiff moves for summary judgment on the issue of serious injury, submitting her affidavit stating her treating physician, who plaintiff fails to name, instructed her to remain out of work and refrain from engaging in normal daily activities.  Plaintiff also submitted an affirmation from her treating physician stating plaintiff was incapacitated from 172 days of 180 days following her accident.

Defendant Emanuele alleged Plaintiff failed to disclose which tests were performed by her treating physician and that he merely restated the injuries listed in Plaintiff’s BOP, adding only that plaintiff’s injuries were the result of the incident.  Defendant Emanuele further alleges Plaintiff’s affirmation fails to indicate if the report was contemporaneous with the incident and that the record lacks evidence of the tests, procedures, and medical documents upon which the doctor based his findings.

The court stated that “lack of contemporaneous quantitative measurements is not fatal to a plaintiff’s motion for summary judgment on serious injury.”  However, summary judgment is inappropriate where a plaintiff fails to produce objective medical findings in an acceptable form to substantiate the seriousness of injuries.  Thus, the court denied Plaintiff’s motion because her treating physician’s affirmation lacked any mention of how he arrived at his conclusions, the types of tests performed, dates he met with Plaintiff, or even any description of how Plaintiff was limited in her specific activities. 

07/16/12       Melworm v. Encompass Indem. Co.
Supreme Court, Nassau County
Insurer Claims Investigation Files Prepared in Ordinary Course of Business Still Discoverable Even Though Prepared by Counsel    
In response to a discovery request, Defendants produced a redacted electronic claims diary as part of defendants claim file claiming the redacted information is protected by the attorney client privilege.  According to defendants, counsel was retained in 2005 to advise defendant with respect to its rights under a boat policy with plaintiffs, provide legal advice, and conduct an EUO of the insured.  The issues are whether the redacted information between the insured and insurer is protected by attorney-client privilege as it was examined by defendant’s counsel and secondly, whether the attorney-client privilege belongs to plaintiff’s insured or defendant’s insurer.

The court stated reports prepared by insurance investigators, adjusters, or attorneys, before the decision is made for payment or rejection of a claim, are made in the regular course of business.  Moreover, evaluating the extent of potential liability of the insured, even though having been conducted by retained counsel, is also within the ordinary course of business. Therefore, those communications which occurred before the date that defendants had reasonable grounds to reject the claim are not protected from discovery.

In this case, counsel was retained by Defendants to investigate and give legal advice to the insurer, not to defend the insured.  The Court ruled that the paramount interest counsel represents is the property casualty insurer, and therefore the assertion of attorney-client privilege is properly with the insurer and not the insured.  Therefore, the Court ruled to conduct an in-camera inspection of the redacted information to determine if they are primarily reports of an investigation of plaintiff’s claim because if so, then they are discoverable even though prepared by counsel.

 

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

ONE SECURITY COMPANY BEATS THE RAP FOR A BANK HEIST; ANOTHER MAY TAKE THE FALL

In the case of Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (March 22, 2012), the New York Court of Appeals addressed issues concerning waiver of subrogation clauses and other contract insurance language.  The Abacus Federal Savings Bank was broken into by burglars over a weekend.  They got into a bank vault and safe deposit areas and made off with $1.5 Million.  Two separate security companies contracted with Abacus to supply security services.  The bank sued both companies to recover its losses, and one company obtained dismissal of the action, but one did not.

One of the companies, Diebold, earned a complete dismissal of the action because its contract contained a property insurance and waiver of subrogation clause that required Abacus to look “solely to its insurer” for any such losses.  The contract with ADT, the second company, had no similar waiver of subrogation language.  It provided only, and somewhat cryptically, that it was the bank’s responsibility to obtain “insurance, if any, covering personal injury and property loss or damage.” 

The Court of Appeals noted prior law that, as a general rule, parties may enter into contracts that absolve them from liability for their own negligence, but not for gross negligence.  In cases of “gross negligence”, New York public policy will not allow contractual insulation or loss shifting.  The Court noted that “gross negligence” could be found and alleged against both defendants within the complaint, so it then proceeded to review the respective contract provisions concerning securing of insurance.  The Court raised the distinction between contracts which seek to exempt a party from liability, and contracts which require one of the parties to provide insurance for other parties. 

The Court of Appeals held that the Diebold contract fell under the second category because the waiver of subrogation clause required Abacus to seek recovery only against its own insurance.  The court distinguished that the ADT contract did not fall within this category because it did not require the bank to obtain insurance to cover losses arising from ADT’s gross negligence.  The ADT contract language was held insufficient to require Abacus to obtain insurance for all parties, even for their gross negligence.

The Abacus case addresses interesting issues on several fronts:

• It re-affirms the New York rule that, absent special circumstances or other legislation, parties in New York may contract for indemnity or insulation from liability for their own negligence, but not for “gross negligence”.

 

• Waiver of Subrogation clauses, which are becoming increasingly frequent, if they are broad enough, may be upheld to require the owner (or other designated party) to look to its own insurance to cover any losses and forgo recovery against other parties or their insurance carriers.

• The courts will closely scrutinize contractual language, and if there is a fair, reasonable reading and interpretation that does not provide full or universal protection, a party still may be held in as a party potentially responsible for a loss.

 

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

06/29/12       Evanston Ins. Co. v. Legacy of Life
Texas Supreme Court
Court Upholds an Insurer’s Denial of Coverage for Claims Brought Against a Charity Sued for Allegedly Harvesting Organs in Violation of the Stated Wishes of the Decedent Donor on the Grounds that Emotional Distress Does Not Qualify as “Bodily Injury”
The Court further held that the decedent’s daughter did not have a property interest in her mother’s body parts so as to have suffered “property damage.”
The Texas Supreme Court held that the general liability insurance policy’s definition of “personal injury” does not include mental anguish, unrelated to physical damage to or disease of the daughter’s body. While describing the duty to defend inquiry as “exceedingly close”, the district court declared that the insurer had a duty to defend the charity, holding that: (1) personal injury covers extreme mental and emotional distress; and, (2) a Texas court could potentially find human tissues to be property. The Fifth Circuit Court of Appeals certified the personal injury and property damage questions to the Texas Supreme Court.

The underlying action emanated from a daughter’s donation of her terminally ill mother’s organs to an organ donation charity upon her death.

The daughter subsequently learned that the charity would profit from harvesting her deceased mother’s organs and filed suit seeking compensatory damages, mental anguish damages, restitution, exemplary damages, and attorney’s fees.  Notably, the daughter did not allege that she or her mother suffered a physical injury. Instead, the daughter alleged that “her mother’s estate as the legal and rightful owner of the remains was wrongfully deprived of them, causing restitution damages to the estate and mental anguish damages to [daughter].”  The Court agreed with the insurer’s interpretation of “personal injury” as “bodily injury, sickness or disease . . . “to require an accompanying physical injury.  The Court also held that the loss of use of tangible property did not include the loss of use of the mother’s tissues by daughter or by her deceased mother’s estate.
Submitted by: Barbara O’Donnell, Zelle McDonough & Cohen LLP

 

REPORTED DECISIONS

Bobak v. AIG Claims Services

Appeal from a judgment (denominated order and judgment) of the Supreme Court, Erie County (Joseph G. Makowski, J.), entered December 22, 2008 in a proceeding pursuant to CPLR article 75. The appeal was held by this Court by order entered April 30, 2010, decision was reserved and the matter was remitted to Supreme Court, Erie County, for further proceedings (72 AD3d 1651). The proceedings were held and completed (Paula L. Feroleto, J.).

Goldberg Segalla LLP, Buffalo (Paul D. McCormick of Counsel), for Respondents-Appellants.
The Cosgrove Law Firm, Buffalo (Edward C. Cosgrove of Counsel), for Petitioner-Respondent.

It is hereby ORDERED that the judgment so appealed from is reversed on the law without costs, the petition seeking to confirm the arbitration award is dismissed and the arbitration award is vacated.

Memorandum: Respondents appeal from a judgment confirming an arbitration award. We previously held this case, reserved decision and remitted the matter to Supreme Court for a determination, after a framed-issue hearing, whether the third-party vehicle at issue was covered by any other insurance that would negate the supplemental uninsured/underinsured motorist (SUM) coverage afforded by the policy issued by respondent New Hampshire Insurance Company (NHIC) (Matter of Bobak [AIG Claims Servs., Inc.], 72 AD3d 1651). We also reversed the order in a related appeal that denied NHIC's petition seeking a permanent stay of arbitration, and we remitted the matter to Supreme Court for, inter alia, a new determination on that petition (Matter of New Hampshire Ins. Co. [Bobak], 72 AD3d 1647, 1649-1650). Upon remittal in each case, the court conducted the framed-issue hearing based only on submitted documents and oral arguments. The court concluded that NHIC's SUM coverage was not implicated because Travelers Insurance Company (Travelers) had issued an excess policy that would provide $1,000,000 of coverage to petitioner. The court also, inter alia, granted a temporary stay of arbitration that would become permanent upon payment to petitioner of the benefits afforded by the Travelers policy.

Initially, we note that the order entered by the court upon remittal applies only to the order reversed in Matter of New Hampshire, and we further note that no appeal has been taken from that order entered upon remittal. Consequently, the contentions of the parties with respect to the stay of arbitration granted therein are not before us. Nevertheless, we conclude that the evidence presented at the framed-issue hearing and the court's factual findings in that order are applicable to the issue that is before us after remittal in Matter of Bobak. Thus, in the interest of judicial economy, we deem the factual findings made by the court in the order entered upon remittal in Matter of New Hampshire to be applicable to the appeal from the judgment before us.

We conclude that petitioner's contention that the court erred in failing to join Travelers and the Ohio Insurance Guaranty Association (OIGA) as necessary parties is raised for the first time on appeal and thus is not properly before us (see Levi v Levi, 46 AD3d 519, 520; cf. Matter of Dioguardi v Donohue, 207 AD2d 922, 922).

We agree with NHIC that the court erred in confirming the arbitration award. In a case such as this "[w]here arbitration is compulsory, our decisional law imposes closer judicial scrutiny of the arbitrator's determination under CPLR 7511 (b) . . .

To be upheld, an award in a compulsory arbitration proceeding must have evidentiary support and cannot be arbitrary and capricious" (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223; see Matter of Mangano v United States Fire Ins. Co., 55 AD3d 916, 917). Here, we conclude that there is no evidentiary support for the arbitrator's conclusion that petitioner was entitled to collect SUM benefits from NHIC. The SUM policy provisions state that it affords coverage where, inter alia, a person covered by the policy is involved in an accident with a motor vehicle that is uninsured, which includes a situation in which the other vehicle's insurer disclaims coverage or becomes insolvent. Although the evidence before us establishes that the other vehicle's primary insurer is insolvent and that no benefits will be afforded to petitioner by the OIGA, which assumed the liabilities of that insolvent company, the evidence also establishes that there is an excess policy issued by Travelers, and that Travelers did not disclaim coverage. We therefore reverse the judgment, dismiss the petition seeking to confirm the arbitration award and vacate the arbitration award.

All concur except Carni, J., who dissents and votes to affirm in the following Memorandum: I concur with the conclusion of my colleagues that the interest of judicial economy is served by deeming the factual findings made by Supreme Court in the order entered upon remittal in Matter of New Hampshire Ins. Co. (Bobak) (72 AD3d 1647) to be applicable to this appeal. I further concur with the conclusion of my colleagues that petitioner's contention that the court erred in failing to join Travelers Insurance Company (Travelers) and Ohio Insurance Guaranty Association as necessary parties is not properly before us.
I disagree, however, with the conclusion of my colleagues that petitioner is not entitled to collect supplementary uninsured/underinsured motorist (SUM) benefits from respondent New Hampshire Insurance Company (NHIC). Inasmuch as I conclude that the court properly confirmed the arbitration award, I respectfully dissent.

Petitioner was seriously injured when a truck that he was driving for his employer was struck by rolls or coils of aluminum that fell off of a truck owned by B-Right Trucking Company (B-Right) and operated by Eugene Hughes, now deceased (Hughes). Hughes and B-Right (collectively, tortfeasors) were insured under a motor vehicle liability policy issued by Reliance Insurance Company (Reliance) insuring the B-Right truck. In addition, B-Right was insured under a "Form Excess Liability Policy," also entitled a "Commercial General Liability" policy, issued by Travelers and having a coverage limit in the amount of $1 million (Travelers excess policy). Petitioner is a covered person under the SUM endorsement issued by NHIC to petitioner's employer, which has a coverage limit in the amount of $1 million (SUM endorsement).

Petitioner and his wife commenced a personal injury action against the tortfeasors, among others, and a jury awarded petitioner personal injury damages against Hughes in the sum of $3,315,000. Petitioner sought arbitration of his SUM claim and the arbitrator concluded that the value of petitioner's injuries exceeded the limits of NHIC's SUM coverage and awarded petitioner the SUM coverage limit of $1 million. Ultimately, this Court directed a framed-issue hearing on the question of "insurance coverage" (New Hampshire Ins. Co., 72 AD3d at 1650).

I agree with the majority that the evidence at the hearing establishes that Reliance is insolvent. Thus, the court properly identified the threshold issue to be whether the B-Right truck was an "uninsured motor vehicle" under the SUM endorsement and the parties have extensively addressed that issue both before the court and on appeal.

Section I (c) (3) (iii) of the SUM endorsement defines an "uninsured motor vehicle" as "a motor vehicle . . . for which . . . [t]here is a bodily injury liability insurance coverage or bond applicable to such motor vehicle at the time of the accident, but . . . [t]he insurer writing such insurance coverage or bond denies coverage, or . . . becomes insolvent." Inasmuch as there is no dispute that the tortfeasors' insurer, Reliance, is insolvent, there is no question that petitioner's SUM coverage is "triggered" by that section (see Matter of Metropolitan Prop. & Cas. Ins. Co. v Carpentier, 7 AD3d 627, 628; American Mfrs. Mut. Ins. Co. v Morgan, 296 AD2d 491, 494; see also Insurance Department Regulations [11 NYCRR] § 60-2.3 [f] [I] [c] [3] [iii]). NHIC contends that, regardless of Reliance's insolvency, the Travelers excess policy constitutes a "bodily injury liability insurance coverage or bond applicable" to the tortfeasors that prevents the "triggering" of SUM coverage because the combined Reliance and Travelers policy limits exceed the SUM coverage available to petitioner. In other words, NHIC effectively seeks to combine the coverage limits of the Reliance motor vehicle liability policy with the coverage limits of the Travelers excess policy for purposes of determining whether the B-Right truck was an "uninsured motor vehicle" under the SUM endorsement.

The court concluded and the majority agrees that, notwithstanding Reliance's insolvency, the B-Right truck did not constitute an "uninsured motor vehicle" under the SUM endorsement because B-Right had $1 million in coverage under the Travelers excess policy, and that consequently NHIC's SUM coverage was not implicated. Thus, the majority concludes that there was no evidentiary support for the arbitrator's conclusion that petitioner was entitled to collect SUM benefits from NHIC. I disagree.

Section I (c) (1) of the SUM endorsement also defines an "uninsured motor vehicle" as a vehicle for which "[n]o bodily injury liability insurance policy or bond applies." In my view, the only way the majority can determine that the B-Right truck is not an "uninsured motor vehicle" is to conclude that an excess policy is a "bodily injury liability insurance policy" under the SUM endorsement, the Insurance Law, the Vehicle and Traffic Law and the Insurance Department Regulations. Thus, the issue presented is whether the term "uninsured motor vehicle" includes a vehicle that is covered under a motor vehicle liability policy issued by an insolvent insurance company when the vehicle is also covered under a commercial general liability excess policy.

I conclude that where, as here, a vehicle is insured by a motor vehicle liability policy issued by an insolvent insurance company and is thus an "uninsured motor vehicle," the existence of an excess insurance policy does not change its status as such. In other words, an excess or umbrella policy does not constitute a "bodily injury liability insurance policy" for purposes of determining whether a motor vehicle is "an uninsured motor vehicle" triggering SUM coverage. I further conclude that the amount of a tortfeasor's coverage under a motor vehicle liability policy may not be combined with the amount of his or her coverage under a commercial general liability excess policy in determining whether SUM coverage is implicated.

Those conclusions are supported by an analysis of article 7 of the Vehicle and Traffic Law, entitled the Motor Vehicle Safety Responsibility Act, which requires motor vehicle owners and operators to obtain a specific type of insurance, namely, a "motor vehicle liability policy" (Vehicle and Traffic Law § 330 et seq.). Vehicle and Traffic Law § 345 (a) defines a "motor vehicle liability policy" as "an owner's or an operator's policy of liability insurance certified as provided in [section 343] . . . as proof of financial responsibility, and issued . . . by an insurance carrier . . . to or for the benefit of the person named therein as insured." Vehicle and Traffic Law § 343 provides that "[p]roof of financial responsibility may be made by filing with the commissioner [of motor vehicles] the written certificate of any insurance carrier duly authorized to do business in this state, certifying that there is in effect a motor vehicle liability policy for the benefit of the person required to furnish proof of financial responsibility. Such certificate shall give the effective date of such motor vehicle liability policy . . . " (emphasis added). Thus, it is clear from the Vehicle and Traffic Law and the regulatory scheme that owners and operators of motor vehicles are required to obtain "motor vehicle liability policies."

Although obvious, I further note that excess policies exist only if there is an underlying policy. Therefore, there must be an underlying "motor vehicle liability policy" before there can be excess insurance coverage. Likewise, in order for an owner or operator of a motor vehicle to be in compliance with the Motor Vehicle Safety Responsibility Act and be financially secure or "insured" under that Act, the owner or operator must have a "motor vehicle liability policy" (Vehicle and Traffic Law §§ 343, 345). Thus, one cannot meet the financial security requirements of article 7 of the Vehicle and Traffic Law through excess insurance alone. Here, the insurance company issuing the tortfeasors' "motor vehicle liability policy," Reliance, is insolvent and the Travelers excess policy provides that it does not "drop down" in the event of the insolvency of the insurance company issuing any underlying policy. Consequently, as a practical matter, the B-Right truck does not have a primary "motor vehicle liability policy" in place. Even if the Reliance policy were still in effect, NHIC could not combine the coverage limits of that policy with the coverage limits of the Travelers excess policy in order to avoid triggering SUM coverage.

Although not directly on point, analogous case law of the Second Department supports that proposition. Specifically, the Second Department has rejected attempts by SUM claimants to trigger SUM coverage by combining the liability coverage limits from a motor vehicle liability policy and an umbrella policy in order to establish that the tortfeasor's bodily injury liability limits were less than those of the claimant (see Matter of State Farm Mut. Auto. Ins. Co. v Roth, 206 AD2d 376, lv denied 84 NY2d 812; see also Matter of Federal Ins. Co. v Reingold, 181 AD2d 769, 770-771, lv denied 80 NY2d 755). In Matter of Astuto v State Farm Mut. Auto. Ins. Co. (198 AD2d 503, 504), the Second Department held that "[t]he petitioner's attempt to base his claim on a consideration of the existence of an umbrella policy issued by a different insurer by which he was also covered is precluded by the pertinent provision of the policy on which he has made his claim." Thus, if under the existing decisional law a claimant cannot combine coverage limits from different types of policies in order to trigger SUM coverage, it logically follows that insurers are precluded from combining coverage limits from different types of policies to prevent a SUM trigger.
NHIC further contends that the "all bodily injury liability bonds and insurance policies" language of Insurance Law § 3420 (f) (2) (A) includes excess policies. Simultaneously, NHIC contends that the arbitration should have been stayed because petitioner has not exhausted the limits of the excess policy.

Likewise, in the framed-issue hearing, the court concluded that petitioner was required to exhaust all applicable policy limits, including the Travelers excess policy, as a condition precedent to obtaining SUM benefits or proceeding to arbitration. A comparison of NHIC's contentions, however, reveals the fatal flaw in its analysis.

Condition 9 of the SUM endorsement, entitled "Exhaustion Required," states that NHIC "will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies" (emphasis added). An excess policy, however, is not a "motor vehicle liability policy" (Vehicle and Traffic Law § 345). Therefore, it is logically inconsistent to posit that a vehicle is not an "uninsured motor vehicle" because the owner or operator is covered under an excess policy when that policy is clearly not subject to the exhaustion requirement because it is not a "motor vehicle liability policy."
Insurance Law § 3420 (f) (2) (A) provides that, "[a]s a condition precedent to the obligation of the insurer to pay under the [SUM] insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements."

I conclude that the phrase "all bodily injury liability . . . insurance policies" contained in that section does not encompass excess policies (see Matter of Matarasso [Continental Cas. Co.], 82 AD2d 861, 862, affd 56 NY2d 264; Mass v U.S. Fidelity and Guar. Co., 222 Conn 631, 639-643, 610 A2d 1185, 1190-1192). Insurance Department Regulation 35-D, "implements" section 3420 (f) (2) of the Insurance Law and "establish[es] a standard form for SUM coverage [the prescribed SUM endorsement], in order to eliminate ambiguity, minimize confusion and maximize its utility" (11 NYCRR 60-2.0 [a], [c]; see 60-2.3 [f]). The purpose of Regulation 35-D "is to interpret section 3420 (f) (2) of the Insurance Law, in light of ensuing judicial rulings and experience" (11 NYCRR 60-2.0 [c]). Condition 9 of the prescribed SUM endorsement is identical to Condition 9 of the NHIC SUM endorsement, and provides in pertinent part that the insurer "will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies or bonds applicable at the time of the accident" (11 NYCRR 60-2.3 [f] [emphasis added]). Thus, Regulation 35-D confirms that the exhaustion requirement of Insurance Law § 3420 (f) (2) (A) relates to "motor vehicle bodily injury liability" policies—not excess policies. Therefore, because the excess policy is not a "motor vehicle bodily injury liability insurance polic[y]" (11 NYCRR 60-2.3 [f]), I conclude that petitioner has no obligation to "exhaust" the Travelers excess policy in order to obtain SUM benefits under the SUM endorsement.

The next question concerns what effect, if any, the excess policy has on NHIC's obligation to pay (as opposed to the question of coverage) its SUM coverage limits to petitioner. This issue raises the specter of "offsets" and duplication of benefits. Clearly, petitioner has a fixed and quantified SUM claim because his damages exceed $3 million dollars. NHIC contends that, because the Travelers excess policy and the SUM endorsement provide the same coverage limits, Condition 6 of the SUM endorsement, entitled "Maximum SUM Payments," precludes payment under the SUM endorsement because those policies, in effect, cancel each other out. Thus, the question of "offsets" is clearly raised on appeal. Condition 6 of the SUM endorsement, setting forth the terms mandated under Regulation 35-D, provides that "the maximum payment under this SUM endorsement shall be the difference between (a) the SUM limit; and (b) the motor vehicle bodily injury liability insurance or bond payments received" from any negligent party involved in the accident (emphasis added) (see 11 NYCRR 60-2.3 [a] [2]). Thus, because the excess policy is not a "motor vehicle bodily injury liability insurance" policy, payments made thereunder cannot serve as an "offset" to the SUM coverage limit (see 11 NYCRR 60-2.1 [c]).

Therefore, we must look to the "Non-Duplication" condition of the SUM endorsement in order to determine whether the Travelers excess policy affects NHIC's obligation to pay SUM benefits. Condition 11 (e) of the SUM endorsement states, "[t]his SUM coverage shall not duplicate . . . [a]ny amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds" (emphasis added). Thus, the language of that condition suggests that it does not preclude duplication of insurance coverage but, rather, it precludes duplication of recovery by a SUM claimant. The "sources" for purposes of non-duplication of recovery could include any personal assets of the tortfeasor applied towards the money judgment or, as in this case, excess or umbrella insurance payments from non-motor vehicle policies.

Therefore, I conclude that, pursuant to Condition 11 (e), NHIC is not required to pay any amounts for bodily injury damages that duplicate the amounts recovered by petitioner (see 11 NYCRR 60-2.3 [f]). I emphasize that in interpreting Condition 11 (e), there is a significant distinction between "covered" by and is "recovered" from excess or umbrella policies (see Matter of CGU Ins. Co. v Nardelli, 188 Misc 2d 560, 568). In other words, that condition is intended to prevent a double recovery for the same damages and to thereby prevent the injured party from receiving a windfall (see Matter of Fazio v Allstate Ins. Co., 276 AD2d 696, 697; see also CNA Global Resource Mgrs. v Berry, 10 Misc 3d 1074[A], 2006 NY Slip Op 50069[U]. Petitioner simply cannot get paid or recover twice for the same damages. Under the facts presented here, if Travelers and NHIC both pay the full limits of their policies, there still can be no double recovery of damages by petitioner. The value of petitioner's injuries exceeds $3 million and there is only $2 million in available SUM and excess insurance coverage. Under the best case scenario, at least with respect to the SUM and excess insurance limits, petitioner is not going to recover his damages twice. In fact, he would not recover them once.

Vescon Construction, Inc. v. Gerelli Insurance Agency, Inc.

Robert N. Isseks, Middletown, N.Y., and Bloom & Bloom, P.C., New Windsor, N.Y. (Kevin D. Bloom of counsel), for appellant (one brief filed).
Farber Brocks & Zane, LLP, Mineola, N.Y. (Audra S. Zane of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, to recover damages for unjust enrichment and for a violation of General Business Law § 349, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Orange County (McGuirk, J.), dated July 5, 2011, as granted that branch of the motion of the defendant Utica First Insurance Company which was pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it.

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

The defendant Utica First Insurance Company (hereinafter Utica First), issued a general liability insurance policy to the plaintiff, Vescon Construction, Inc. (hereinafter Vescon), which contained an exclusion for bodily injury to an employee of an insured if it occurred in the course of employment. A Vescon employee was injured in the course of his employment at a construction project, and the employee commenced an action against Volmar Construction, Inc. (hereinafter Volmar), the general contractor for the project. Volmar then commenced a third-party action against Vescon, a subcontractor on the project, seeking, inter alia, indemnification.

Vescon had requested that Utica First defend and indemnify Volmar in the underlying personal injury action pursuant to the blanket additional insured endorsement in the subject policy. After Utica First denied Vescon's request, Vescon commenced this action against, among others, Utica First, inter alia, to recover damages for unjust enrichment and for a violation of General Business Law § 349. In an order dated July 5, 2011, the Supreme Court granted that branch of Utica First's motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it.

"In determining a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory'" (Henderson v Kingsbrook Jewish Med. Ctr., 91 AD3d 720, 721, quoting Leon v Martinez, 84 NY2d 83, 87-88). [*2]

Applying these principles here, the complaint failed to state a viable cause of action against Utica First to recover damages for a violation of General Business Law § 349. "The elements of a cause of action to recover damages for deceptive business practices under General Business Law § 349 are that the challenged act or practice was a consumer oriented act or practice that is misleading in a material way, and caused injury to the plaintiff" (Ludl Elecs. Prods. v Wells Fargo Fin. Leasing, 6 AD3d 397, 398; see Wilner v Allstate Ins. Co., 71 AD3d 155, 161-162; Flax v Lincoln Natl. Life Ins. Co., 54 AD3d 992, 994). Here, the conduct complained of is not consumer-oriented within the meaning of General Business Law § 349 (see Ludl Elecs. Prods. v Wells Fargo Fin. Leasing, Inc., 6 AD3d at 398). Rather, "[t]hese allegations, liberally construed, at best show a private contract dispute over policy coverage and the processing of [Vescon's] claims, not conduct affecting the consuming public at large, and thus do not state a cause of action under section 349" (Continental Cas. Co. v Nationwide Indem. Co., 16 AD3d 353, 354).

Further, the cause of action to recover damages for unjust enrichment is a quasi-contract claim, and therefore, is not viable against Utica First where, as here, the parties entered into an express agreement (see Shovak v Long Is. Commercial Bank, 50 AD3d 1118, 1120; Morales v Grand Cru Assoc., 305 AD2d 647, 647).

Accordingly, the Supreme Court properly granted that branch of Utica First's motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it.

Torres v. Gamma Taxi Corp.

Ogen & Sedaghati, P.C., New York (Eitan A. Ogen of counsel), for appellant.
Wilson Elser Moskowitz Edelman & Dicker LLP, White Plains (Lindsay J. Kalick of counsel), for respondents.

Order, Supreme Court, Bronx County (Robert E. Torres, J.), entered March 25, 2011, which granted defendants' motion for renewal and, upon renewal, granted their 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), modified, on the law, to deny the motion as to the claims for property damage, and otherwise affirmed, without costs.

After their prior motion was decided, defendants discovered that plaintiff had been involved in two previous motor vehicle accidents resulting in injuries to the very body parts at issue here (see CPLR 2221[e][2]). Plaintiff's lack of candor at his deposition about the earlier injuries constitutes a reasonable excuse for defendants' failure to present these facts on the prior motion.

Defendants established prima facie that plaintiff's alleged injuries were not caused by the subject accident, by submitting a radiologist's affirmed reports stating that plaintiff's lumbar and cervical spine MRIs revealed multilevel degenerative disc disease, and a neurologist's affirmation stating that the earlier accidents caused plaintiff's injuries and that plaintiff's present symptoms were mere recurrences of the earlier symptoms (see Pommells v Perez, 4 NY3d 566, 579-580 [2005]). Plaintiff's expert states conclusorily that he reviewed plaintiff's newly discovered records from the earlier accidents, but fails to explain their effect on his updated opinion as to causation, and therefore his opinion is too speculative to raise an issue of fact (see id.; Arroyo v Morris, 85 AD3d 679, 680 [2011]).

Plaintiff's claim of property damage is distinct from his personal injury claim. Indeed, defendants' motions were directed at the latter only. For that reason, we reject their contention that plaintiff failed to preserve this argument.
All concur except Acosta and Manzanet-Daniels, JJ. who dissent in part in a memorandum by Manzanet-Daniels, J. as follows:

MANZANET-DANIELS, J. (dissenting in part)

I would deny 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). While plaintiff, admittedly, had been involved in two prior motor vehicle accidents, one in 1999, and the other in 2001, the record demonstrates that plaintiff sustained only cervical and lumbar strains and sprains and a torn medial meniscus in connection with those accidents. The record, including earlier MRIs of plaintiff's knee and lumbar spine, refute the notion that plaintiff had pre-existing lumbar and cervical bulges and herniations. Indeed, a 2001 MRI of plaintiff's cervical spine was "unremarkable," and specifically found no "bulge, herniation protrusion or extrusion." A 1999 MRI of plaintiff's lumbar spine found "slight narrowing of the L5-S1 disc space" and mild lumbar spondylosis, but was otherwise unremarkable.

Magnetic resonance imaging of plaintiff's spine following the 2005 accident, on the other hand, demonstrates posterior disc bulging at L5-S1, as well as posterior disc herniation at the level of C5-C6.

We must not let what the majority describes as plaintiff's "lack of candor" distract us from the record evidence, which demonstrates the existence of a triable issue of fact as to whether his current injuries are attributable to the 2005 accident.

Defendants' expert never opined that the injuries sustained in the 2005 accident, i.e., cervical disc herniation and lumbar disc bulge, were caused by or are in any way similar to the injuries plaintiff sustained in the two prior accidents [FN1] . In the absence of any such allegation, defendants have failed to make a prima facie showing that the plaintiff's alleged injuries were caused by a prior accident (see Bray v Rosas, 29 AD3d 422, 423-24 [2006]; Giangrasso v Callahan, 87 AD3d 521, 523 [2011]; Jin Ying Zi v Vandoulakis, 85 AD3d 975, 977 [2011]; Messiana v Drivas, 85 AD3d 744 [2011]; Jean-Baptiste v Tobias, 88 AD3d 962 [2011] [although defendants submitted evidence that plaintiffs had been involved in prior accidents where they had injured some of the same regions of the body they claim to have injured in the subject accident, the defendants failed to make a prima facie showing that the plaintiffs' claimed injuries in the subject accident were actually caused by the prior accidents]).

In any event, plaintiff raised a triable issue of fact as to whether his current injuries were caused by the subject accident sufficient to defeat the motion. Plaintiff's expert reviewed and considered the records from the prior accidents, and nonetheless opined that plaintiff's injuries were attributable to the 2005 accident. This opinion cannot be dismissed as "speculative" in light of the record evidence that earlier MRI studies of plaintiff's cervical and lumbar spines were negative.

I would accordingly deny the motion for summary judgment.

Footnotes

Footnote 1: Defendant's expert states only that the 2005 accident caused a "recurrence of similar symptoms of sprain and strain in the cervical and lumbar spine," a clever way of sidestepping the issue of whether plaintiff's current injuries, cervical disc herniation and lumbar disc bulge (as opposed to transient symptoms such as sprains or strains) were caused by the prior accidents.

Schmidt v. Meehan

Calendar Date: May 22, 2012
Before: Mercure, J.P., Rose, Lahtinen, Stein and McCarthy, JJ.

Finkelstein & Partners, LLP, Newburgh (James W. Shuttleworth III of counsel), for appellants.
Carter, Conboy, Case, Blackmore, Maloney & Laird, PC, Albany (Alaina K. Laferriere of counsel), for respondent.
MEMORANDUM AND ORDER

McCarthy, J.

Appeal from an order of the Supreme Court (Hummel, J.), entered September 6, 2011 in Rensselaer County, which, among other things, granted defendant's cross motion for summary judgment dismissing the complaint.
Plaintiff Hilda Schmidt (hereinafter plaintiff) was a passenger in a parked vehicle being operated by her husband, plaintiff Peter Schmidt, when defendant's car collided with plaintiffs' stationary vehicle. Plaintiff and her husband, derivatively, commenced this action alleging that plaintiff sustained a serious physical injury (see Insurance Law § 5102 [d]). Peter Schmidt moved for summary judgment dismissing defendant's counterclaim against him. Defendant cross-moved for summary judgment dismissing the complaint on the grounds that plaintiff did not sustain a serious injury and the emergency doctrine relieved him of liability. Supreme Court granted defendant's cross motion on the serious injury ground. Plaintiffs appeal.

Defendant did not establish his entitlement to summary judgment because questions of fact exist regarding whether plaintiff suffered a serious injury to her spine. If a plaintiff establishes that he or she sustained an injury within any of the categories that satisfy the no-fault threshold, the serious injury issue is removed from the case and the plaintiff may recover for all injuries caused by the accident (see O'Neill v O'Neill, 261 AD2d 459, 460 [1999]; Preston v Young, 239 AD2d 729, 731 n [1997]). Defendant submitted plaintiff's medical records, which include her continuing complaints of back pain. MRIs revealed several mild, broad-based disc bulges or protrusions. Under certain circumstances, a bulging disc can constitute a serious injury "if it results in a quantifiable loss in an individual's range of motion" (Mahar v Bartnick, 91 AD3d 1163, 1165 [2012]). Defendant submitted a report and affidavit of neurologist James Storey, who examined plaintiff and reviewed her medical records. Storey noted that his physical exam revealed a mildly restricted cervical range of motion to 45 degrees, with plaintiff able to bring her chin down to her chest. He did not identify or explain what range of motion tests he performed, or what the normal range of motion is to compare to her performance (see Chiara v Dernago, 70 AD3d 746, 746-747 [2010]; Spektor v Dichy, 34 AD3d 557, 558 [2006]; Chui Fong Lam v Spring Scaffolding, Inc., 33 AD3d 955, 955-956 [2006]; see also MacMillan v Cleveland, 82 AD3d 1388, 1389 [2011]; Hayes v Johnston, 17 AD3d 853, 854 [2005]). Storey's conclusions that plaintiff's injuries were not serious, without an explanation of his opinion regarding quantified results, failed to meet defendant's burden of showing that plaintiff did not qualify under the permanent consequential loss of use or significant limitation of use categories of serious injury. Thus, we need not address plaintiffs' submissions in response; defendant's cross motion for summary judgment on the ground of serious injury should have been denied.

Defendant was not entitled to summary judgment on the basis of the emergency doctrine. Defendant asserted that his vehicle suddenly accelerated, but the vehicle was never inspected after the accident because it was totaled. His assertion, without any proof of a mechanical defect, merely raised questions of fact regarding whether a true emergency existed, whether any emergency was of defendant's own making and whether defendant responded as a reasonable person would under the circumstances (see Schlanger v Doe, 53 AD3d 827, 828 [2008]).

ORDERED that the order is modified, on the law, with costs to plaintiffs, by reversing so much thereof as granted defendant's cross motion for summary judgment; cross motion denied; and, as so modified, affirmed.

Haque v. City of New York

Scott A. Wolinetz, New York, N.Y. (Ephrem Wertenteil of counsel), for appellant.
Michael A. Cardozo, Corporation Counsel, New York, N.Y. (Edward F.X. Hart and William K. Chang of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Kerrigan, J.), dated September 24, 2010, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants failed to adequately address the plaintiff's claim that as a result of the subject accident, he sustained certain psychological injuries constituting a serious injury within the meaning of Insurance Law § 5102(d) (see Krayn v Torella, 40 AD3d 588; see generally Kranis v Biederbeck, 83 AD3d 903; Krivit v Pitula, 79 AD3d 1432; Chapman v Capoccia, 283 AD2d 798).

Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint, regardless of the sufficiency of the plaintiff's opposition papers (see Krayn v Torella, 40 AD3d at 588).

Tudy v. Sandoval

Mark A. Siesel (Stephen D. Chakwin, Jr., New York, N.Y., of counsel), for appellants.
Mead, Hecht, Conklin & Gallagher, LLP, White Plains, N.Y. (Sara Luca Salvi of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiffs appeal from an order of the Supreme Court, Westchester County (Murphy, J.), entered March 14, 2011, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that neither of them sustained 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 Supreme Court should have denied the defendant's motion for summary judgment dismissing the complaint on the ground that neither plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d). The medical reports of the defendant's own examining physicians contained evidence that both plaintiffs had significant range-of-motion limitations, and that these limitations were causally related to the subject accident. Accordingly, the defendant failed to establish his prima facie entitlement to judgment as a matter of law (see Gaddy v Eyler, 79 NY2d 955, 956-957; Kasper v N & J Taxi, Inc., 60 AD3d 910; Gibson-Wallace v Dalessandro, 58 AD3d 679, 680).

Since the defendant failed to meet his prima facie burden, it is unnecessary to consider whether the plaintiffs' opposition papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538).

Avalon Gardens Rehabilitation & Health Care Center, LLC v Morsello,

DECISION & ORDER

In an action to recover damages, inter alia, for breach of contract, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Costello, J.), dated May 4, 2010, as granted those branches of the motion of the defendant Alicia Pititto which were for summary judgment dismissing the causes of action alleging breach of contract and fraudulent conveyance insofar as asserted against her and that branch of the motion of the defendant Michael Morsello which was for summary judgment dismissing the cause of action alleging fraudulent conveyance insofar as asserted against him.

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

The defendant Alicia Petitto met her prima facie burden of establishing her entitlement to judgment as a matter of law dismissing the breach of contract and fraudulent conveyance causes of action insofar as asserted against her (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557, 559; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067). Further, the defendant Michael Morsello (hereinafter Morsello) met his prima facie burden of establishing his entitlement to judgment as a matter of law dismissing the fraudulent conveyance cause of action insofar as asserted against him. The plaintiff failed to raise a triable issue of fact in opposition to those showings (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Zuckerman v City of New York, 49 NY2d at 562).
We reject the plaintiff's contention that the Supreme Court erred in considering Morsello's motion for summary judgment on the merits. Morsello, in his initial moving papers, rather than annexing his answer as an exhibit, inadvertently annexed the answer of codefendant Frank Morsello. This problem was rectified in the reply affirmation of Morsello's counsel, which annexed a copy of the correct pleading as an exhibit. While CPLR 3212(b) requires that motions for summary judgment be supported by, inter alia, a copy of the pleadings, CPLR 2001 permits a court, "[a]t any stage of an action," to disregard a party's mistake, omission, defect, or irregularity if a substantial right of a party is not prejudiced. Here, no substantial right of the plaintiff was prejudiced by the corrective inclusion of a copy of Morsello's answer with his reply affirmation, and the Supreme Court properly exercised its discretion under CPLR 2001 to consider his summary judgment motion on the merits (cf. Crossett v Wing Farm, Inc., 79 AD3d 1334; Breytman v Olinville Realty, LLC, 46 AD3d 484, 485; Mahone v Washington, 17 AD3d 1059). The circumstances presented in this action are distinguishable from those in other cases, where the moving parties altogether failed to submit a copy of the pleadings (see Fiber Consultants, Inc. v Fiber Optek Interconnect Corp., 84 AD3d 1153, 1154; Liberty Doorworks, Inc. v Baranello, 83 AD3d 1011; Matter of Fraternal Order of Eagles v Board of Assessors, 73 AD3d 770).
Accordingly, the Supreme Court properly granted those branches of Pititto's motion which were for summary judgment dismissing the breach of contract and fraudulent conveyance causes of action insofar as asserted against her, and also properly granted that branch of Morsello's motion which was for summary judgment dismissing the fraudulent conveyance cause of action insofar as asserted against him.
DILLON, J.P., DICKERSON, HALL and SGROI, JJ., concur.
Arias v First Presbyterian Church in Jamaica

Linda T. Ziatz, P.C., Forest Hills, N.Y., for appellant.
Andrea G. Sawyers, Melville, N.Y. (Scott W. Driver of counsel),
for respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Grays, J.), entered February 16, 2012, as denied that branch of her motion which was for leave to enter a judgment on the issue of liability against the defendant Tick Tock Boutique, Inc., upon its default in appearing or answering, and granted the cross motion of the defendant Tick Tock Boutique, Inc., in effect, to vacate its default in appearing or answering and pursuant to CPLR 3012(d) to compel the plaintiff to accept its late answer.

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

The Supreme Court providently exercised its discretion in denying that branch of the plaintiff's motion which was for leave to enter a judgment against the defendant Tick Tock Boutique, Inc. (hereinafter Tick Tock), upon its default in appearing or answering, and in granting Tick Tock's cross motion, in effect, to vacate its default and to compel the plaintiff to accept its late answer (see CPLR 2004, 3012[d]). While Tick Tock promptly sought an extension of time to answer, the plaintiff ignored this request and instead moved for leave to enter a judgment against Tick Tock upon its failure to appear or answer. Thereafter, less than two months after its time to answer had expired, Tick Tock served an answer. Tick Tock acted diligently and never intended to abandon its defense or counterclaim (see Covaci v Whitestone Constr. Corp., 78 AD3d 1108; Sitigus Foods Corp. v 72-02 N. Blvd. Realty Corp., 293 AD2d 597; Buderwitz v Cunningham, 101 AD2d 821, 823). Moreover, in light of the lack of prejudice to the plaintiff resulting from the short delay in serving an answer, the lack of willfulness on the part of Tick Tock, the existence of a potentially meritorious defense, and the public policy favoring the resolution of cases on the merits, that branch of the plaintiff's motion which was for leave to enter judgment on the issue of liability against Tick Tock was providently denied (see CPLR 2004; Klughaupt v Hi-Tower Contrs., Inc., 64 AD3d 545, 546; Finkelstein v Sunshine, 47 AD3d 882; Stuart v Kushner, 39 AD3d 535, 536; Schonfeld v Blue & White Food Prods. Corp., 29 AD3d 673, 674), and Tick Tock's cross motion, inter alia, to compel the plaintiff to accept its late answer was providently granted (see CPLR 3012 [d]).

U.S. Bank National Association v Stewart

DECISION & ORDER

In an action to foreclose a mortgage, the defendants appeal from an order of the Supreme Court, Nassau County (Adams, J.), dated July 27, 2010, which denied their motion, inter alia, to vacate a judgment of foreclosure and sale dated September 7, 2007, entered upon their default in appearing or answering, and a stipulation of settlement dated December 4, 2008.

ORDERED that the order is affirmed, without costs or disbursements.

The Supreme Court properly denied that branch of the defendants' motion which was to vacate the judgment of foreclosure and sale dated September 7, 2007, entered upon their default in appearing or answering the complaint. A defendant seeking to vacate a default in appearing or answering must demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action (see CPLR 5015[a][1]; Deutsche Bank Natl. Trust Co. v Luden, 91 AD3d 701, 701; Fremont Inv. & Loan v Bertram, 90 AD3d 988; Citimortgage, Inc. v Brown, 83 AD3d 644, 645). Here, while the defendants initially alleged that copies of the summons and complaint were improperly served upon them, pursuant to a stipulation resolving that issue made in open court on December 4, 2008, they subsequently acknowledged proper service.
Since the defendants failed to demonstrate a reasonable excuse for their default, it was unnecessary to determine whether they demonstrated the existence of a potentially meritorious defense (see Tribeca Lending Corp. v Correa, 92 AD3d 770, 771; Wells Fargo Bank, N.A. v Cervini, 84 AD3d 789, 790).

Contrary to the defendants' contention, the Supreme Court also properly denied that branch of their motion which sought to vacate the stipulation of settlement (see Reid v C & S Realty Mgt., LLC, 94 AD3d 732; see generally Hallock v State of New York, 64 NY2d 224, 230).

The defendants' remaining contentions are without merit.

Gordon v Rattner

DECISION & ORDER

In an action to recover damages for medical malpractice, the plaintiffs appeal (1), as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Sher, J.), entered March 25, 2011, as denied their motion to vacate the dismissal of the action pursuant to CPLR 3216, to restore the action to the pretrial calendar, and to set a new deadline for the filing of the note of issue, and (2) from an order of the same court entered August 5, 2011, which denied their motion, in effect, for leave to reargue the prior motion.

ORDERED that the order entered March 25, 2011, is reversed insofar as appealed from, on the facts and in the exercise of discretion, the plaintiffs' motion to vacate the dismissal of the action pursuant to CPLR 3216, to restore the action to the pretrial calendar, and to set a new deadline for the filing of the note of issue is granted, and the matter is remitted to the Supreme Court, Nassau County, for further proceedings consistent herewith; and it is further,

ORDERED that the appeal from the order entered August 5, 2011, is dismissed, as no appeal lies from an order denying a motion for leave to reargue and, in any event, the appeal from the order entered August 5, 2011, has been rendered academic in light of our determination on the appeal from the order entered March 25, 2011; and it is further,

ORDERED that the plaintiffs are awarded one bill of costs payable by the defendants appearing separately and filing separate briefs.

"CPLR 3216 is an extremely forgiving' statute (Baczkowski v Collins Constr. Co., 89 NY2d 499, 503 [1997]), which never requires, but merely authorizes, the Supreme Court to dismiss a plaintiff's action based on the plaintiff's unreasonable neglect to proceed'" (Kadyimov v Mackinnon, 82 AD3d 938, 938, quoting Davis v Goodsell, 6 AD3d 382, 383). Although the statute prohibits the Supreme Court from dismissing a complaint based on failure to prosecute whenever a plaintiff has shown a justifiable excuse for the delay and the existence of a potentially meritorious cause of action, such a dual showing is not strictly necessary in order for a plaintiff to escape such a dismissal (see Kadyimov v Mackinnon, 82 AD3d at 938-939).

Under the circumstances of this case, including the minimal three-day delay in filing the note of issue, the excuse of law office failure which the Supreme Court properly accepted as reasonable, the fact that the defendants did not claim any prejudice, and the lack of evidence of a pattern of persistent neglect and delay in prosecuting the action or of any intent to abandon the action, the Supreme Court improvidently exercised its discretion in declining to excuse the plaintiffs' failure to meet the deadline for filing the note of issue (id. at 939; see Ferrera v Esposit, 66 AD3d 637, 638; Zito v Jastremski, 35 AD3d 458; Diaz v Yuan, 28 AD3d 603; cf. Sicoli v Sasson, 76 AD3d 1002, 1003-1004; Nowell v NYU Med. Ctr., 55 AD3d 573). Accordingly, the Supreme Court should have granted the plaintiffs' motion to vacate the dismissal of the action pursuant to CPLR 3216, to restore the action to the pretrial calendar, and to set a new deadline for the filing of the note of issue.
DILLON, J.P., ENG, AUSTIN and SGROI, JJ., concur.

Jacobs v Johnston, Jr.

Hodges Walsh & Slater LLP, White Plains, N.Y. (Paul E.
Svensson of counsel), for appellant.
Hecht, Kleeger, Pintel & Damashek (The Law Office of Judah
Z. Cohen, PLLC, New York, N.Y., of counsel), for
respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals, as limited by his brief, from so much of an order of the Supreme Court, Richmond County (Minardo, J.), dated February 16, 2012, as denied that branch of his motion which was pursuant to 22 NYCRR 202.21 to vacate the note of issue and, in effect, to compel the deposition of a nonparty witness, and granted the plaintiff's cross motion to quash a subpoena served upon the nonparty witness.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the defendant's motion which was to vacate the note of issue and, in effect, to compel the deposition of a nonparty witness is granted, and the plaintiff's cross motion to quash the subpoena is denied.

Since the defendant moved to vacate the note of issue within the time prescribed for doing so pursuant to 22 NYCRR 202.21(e), and clearly demonstrated that the case was not ready for trial, that branch of the defendant's motion which was to vacate the note of issue and, in effect, to compel the deposition of a nonparty witness should have been granted (see CPLR 2103[b][2]; Gallo v SCG Select Carrier Group, L.P., 91 AD3d 714; Tirado v Miller, 75 AD3d 153, 157). Furthermore, since the defendant timely moved to vacate the note of issue, he was required only to demonstrate why the case was not ready for trial, and was not required to establish that additional discovery was necessary because unusual or unanticipated circumstances had developed subsequent to the filing of the note of issue (see 22 NYCRR 202.21[d], [e]; Mosley v Flavius, 13 AD3d 346; Rizzo v DeSimone, 287 AD2d 609, 610; Perla v Wilson, 287 AD2d 606; Audiovox Corp. v Benyamini, 265 AD2d 135, 139).

In opposition to the plaintiff's cross motion to quash the subpoena served by the defendant upon the nonparty witness, the defendant demonstrated, inter alia, that the disclosure sought was relevant, material, and necessary to the defense of the action (see CPLR 3101[a][4]; Kondratick v Orthodox Church in Am., 73 AD3d 708, 709; Tenore v Tenore, 45 AD3d 571, 571-572; Thorson v New York City Tr. Auth., 305 AD2d 666; Maxwell v Snapper, Inc., 249 AD2d 374). Contrary to the plaintiff's contention, the defendant did not waive his right to seek discovery from the nonparty witness by failing to raise an objection with respect thereto at the certification conference. Since the identity of the nonparty witness was not made known to the defendant until after the date of the certification conference, and the defendant timely moved to vacate the note of issue, the defendant could not be deemed to have waived his right to compel the nonparty witness to comply with the subpoena and to appear for a deposition (cf. Jones v Grand Opal Constr. Corp., 64 AD3d 543, 544; James v New York City Tr. Auth., 294 AD2d 471, 472). Accordingly, the plaintiff's cross motion to quash the subpoena should have been denied.
The plaintiff's remaining contentions are either without merit or improperly raised for the first time on appeal.
RIVERA, J.P., ENG, CHAMBERS, SGROI and MILLER, JJ., concur.
Walker v George

Alicia Walker, Brooklyn, N.Y., appellant pro se.
Morris Duffy Alonso & Faley, New York, N.Y. (Anna J.
Ervolina of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries and breach of the covenant of good faith and fair dealing implied in an insurance contract, the plaintiff appeals from an order of the Supreme Court, Kings County (Solomon, J.), dated July 13, 2011, which granted the motion of the defendant Progressive Corporation pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it for failure to state a cause of action.

ORDERED that the order is affirmed, with costs.

The Supreme Court properly granted the motion of the defendant Progressive Corporation (hereinafter Progressive) pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it for failure to state a cause of action. The complaint fails to state a cause of action to recover damages based on Progressive's alleged violation of the covenant of good faith and fair dealing implied in the insurance contract issued to the defendant Charles Robertson (see generally Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 452-454; CBLPath, Inc. v Lexington Ins. Co., 73 AD3d 829, 830-831). With regard to the plaintiff's allegations that Progressive engaged in fraudulent conduct, the complaint fails to allege any injury or damages sustained as a proximate result of Progressive's alleged fraudulent conduct (see generally Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; New York Univ. v Continental Ins. Co., 87 NY2d 308, 318; Introna v Huntington Learning Ctrs., Inc., 78 AD3d 896, 898; Daly v Kochanowicz, 67 AD3d 78, 89).

The plaintiff's new theory of liability, which was not raised before the Supreme Court, is improperly raised for the first time on appeal and will not be addressed (see Pierre v Lieber, 37 AD3d 572, 573; Wheeler v Town of Hempstead, 238 AD2d 580, 581; Gordon v Hong, 126 AD2d 514, 514).

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