Coverage Pointers - Volume XIV, No. 3

Dear Coverage Pointers Subscribers:

We bring you greetings from Whistler, British Columbia.  I am attending the Annual Meeting of the Federation of Defense & Corporate Counsel.  This is surely a beautiful venue; I enjoyed the opportunity to throw snowballs in August.

Pardon the briefness of this note, but scheduling challenges today makes a lengthy letter impossible.  I know you appreciate that.  A little too much travel this summer.

My son Jacob and his fiancé Kat were married this past week.  Mazel Tov.

 

Continuing Education:

Again, 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 is a reprise of the 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
• Update on Developments Regarding Notice, Disclaimers, Right to Independent Counsel and Direct Actions
• 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
• Update on the Law Regarding Premises Liability - Practical knowledge for better claims handling as well as indemnity and additional insured issues
• Liens, Subrogation Rights, and the Present Status of Medicare Set Asides
• Mock Trial – Cause and Origin of a Fire 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 experienced trial attorneys and an experienced cause and origin expert.

 

I am keeping a list of those who want the brochure when it is printed.  Let me know if you’re interested.

 

Peiper’s Pontifications:

We start off this week with a confession.  Maybe it was the post-July 4th hangover, maybe it was the pre-vacation giddiness, but I admittedly missed a fairly interesting property damage case out of the Fourth Department.  In our review of the Platek decision, you’ll find an Appellate Division sharply divided over the application of exceptions to exclusions.  The majority’s discussion, and the dissent’s counter-discussion, on the application of exclusions and exceptions, and who carries what burdens, is a must read.  We apologize for not getting it to you sooner, but better late than never as they say. 

In addition, please take a moment to review the Reyes v Post & Broadway decision.  While understandable given the facts of the case, it would certainly appear that the Court freed itself from the prism of “strict construction” that usually governs indemnity agreements.  Something to keep in mind.

In any event, that’s all that is fit to print this week.  See you in two weeks.

Steve
[email protected]

 

One Hundred Years Ago:

Washington Post
August 3, 1912
Page 1

WIFE SENTENCES HUSBAND
Thirty Days in Jail, She Thinks About What He Needs.
Special to Washington Post

New York — In the police court at Bayonne, N. J., today, James Fanning of 265 Broadway, was charged by his wife, Mary, with being disorderly. Recorder Hugh Mara informed Mrs. Fanning that she would be allowed to pass sentence on her husband. She said she thought about 30 days to jail would do him good. Fanning accordingly was sent away for one month

One Hundred Years Ago:  August 3, 1912:

At the Polo Grounds‚ the Giants score runs on two solo homers by Fred “Bonehead” Merkle and one by Beals Becker‚ off Art Fromme‚ to beat the Reds‚ 3-2. In a typical game‚ Mathewson scatters 10 hits and walks none for the win. Armando Marsans is 4-for-4 for the Reds. With the 4-0 win yesterday and today's win‚ the Giants have won 15 straight.  The streak lasted to 16; the Washington Senators had a 17-game winning streak in 1912 as well.

The longest in MLB history?  It was the same Giants team in 1916 with 26 games without a loss (although, there was a tie in there).

Why was Fred Merkle known as Bonehead? We told that story a couple of years back.

 

In This Week’s Coverage Pointers:

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

• Failure to Deny Coverage Timely Renders Business Pursuits Exclusion Inapplicable.  Pure Umbrella Policy Is Excess Over Another Policy Because of “Other Insurance” Language
• Policy Limits Offered to SUM Claimant by Reason of High-Low Arbitration Held Without SUM Carrier’s Consent Will Not Compromise Right to Recover Underinsurance Benefits Unless Claimant Was Compelled to Issue Release Following Arbitrator’s Determination

 

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

• Plaintiff’s 90/180-Day Claim Fails Where He Only Missed Three Days of School Before Summer Vacation and None After
• Motion to Renew Is Not Meant to Be a Second Bite of the Apple
• Evidence of Pre-Existing Injuries Requires That Plaintiff Submit Evidence Addressing Claimed Lack of Causation
• Summary Judgment Is Denied Where Defendants’ Expert Fails to Explain Belief That ROM Limitations Are Self-Imposed
• Denial Affirmed As Defendants Failed to Address 90/180-Day Category
• Plaintiff’s Bill of Particulars Alleged Exacerbation of Prior Injuries and Defendants’ Expert Failed to Distinguish

 

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

ARBITRATION

• Chiropractic IME Upheld and Question Raised Regarding Credibility of Treatment Notes

 

LITIGATION

• Insurer Prevails on Failure to Appear for Scheduled EUO
• Plaintiff’s Opposition of Unsworn Medicals in Lack of Medical Necessity Case Insufficient
• Doctor Affidavit Fails to Meaningfully Refer to or Rebut IME Conclusions Resulting in Insurer Prevailing on Summary Judgment
• Follow Up IME Letter Not Timely Mailed Results in Loss of Defense

 

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

Property

• Exception for “Explosion” Creates Water Damage Coverage; Two Justice Dissent Says “No Way”

 

Potpourri

• Plaintiff’s Claim Against Tortfeasor’s Insurance Agent Goes No Where Due to Lack of Privity
• Court Infers a Contractual Indemnity Agreement from the Intent of the Parties

 

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

• New Legislation Making Consistent the Rules Regarding Providing Notice of Claim to State Entities

 

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

• Interpretation of Title Insurance Policy – ALTA 9 Endorsement

 

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

• Insufficient Examination of Plaintiff Precludes Summary Judgment
• Where Underlying Action Dismissed Against “Named Insured”, Insurer that Issued Policy to “Named Insured” Relieved of Duty to Defend Any “Additional Insured”
• 35-Day Delay in Issuing Disclaiming Unreasonable Where Previous Tender Letter Contained Sufficient Facts to Conclude Insured Breached Notice Provision

 

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

A UNILATERAL ARBITRATION CLAUSE MAY BE ENFORCEABLE

Under the Federal Arbitration Act, there is a clear and strong preference for enforcing and upholding arbitration clauses.  This policy preference was carried through by the court here, although it ostensibly did review and at least in part base its decision on its perception of Maine state law. 

That’s all for now.

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]

08/01/12       Utica Mutual Insurance Company v. GEICO
Appellate Division, Second Department
Failure to Deny Coverage Timely Renders Business Pursuits Exclusion Inapplicable.  Pure Umbrella Policy Is Excess Over Another Policy Because of “Other Insurance” Language
Pursuant to Insurance Law § 3420(d)(2), an insurer seeking to deny coverage of a claim involving death or bodily injury must give written notice "as soon as is reasonably possible" except there the claim does not fall within the grant of coverage.  A timely disclaimer is required when a claim falls within the coverage terms but is denied based on a policy exclusion.  GEICO sought to deny coverage based on a business pursuits exclusion and therefore had to deny timely or lose its right to rely on that policy defense.  GEICO's disclaimer, issued approximately 21 months after it received notice of the accident from its insured, was not issued as soon as was reasonably and therefore GEICO was not entitled to rely on the "business pursuits" exclusion of its policy.

On “other insurance” issues, an umbrella policy of insurance issued by Utica Mutual is excess to the GEICO umbrella policy at issue in this matter.  "[A]n insurance policy which purports to be excess coverage but contemplates contribution with other excess policies or does not by the language used negate that possibility must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies.  The GEICO policy states that it is "excess over any insurance" without any reference to contribution, whereas the Utica policy states that it "is excess over, and shall not contribute with any of the other insurance, whether primary, excess, contingent or on any other basis."  Accordingly, since the Utica policy expressly negates contribution and the GEICO policy does not, the Supreme Court properly determined that the GEICO policy must be exhausted first.

07/26/12       Warner v. New York Central Mutual Fire Insurance Company
Appellate Division, Third Department
Policy Limits Offered to SUM Claimant by Reason of High-Low Arbitration Held Without SUM Carrier’s Consent Will Not Compromise Right to Recover Underinsurance Benefits Unless Claimant Was Compelled to Issue Release Following Arbitrator’s Determination
In January 2004, plaintiff was injured in a two-car accident and sued the operator of the other car. He also notified his own carrier, NY Central that he would be claiming underinsurance benefits (SUM).  In February 2006, shortly after speaking by telephone with an associate liability examiner employed by defendant, plaintiff's counsel sent a letter to defendant advising that the policy limit had not yet been offered, that trial was scheduled to commence in March 2006 and that "there [was] a possibility that the case [would] be arbitrated instead."  The letter confirmed a phone conversation, stating that the examiner had advised that "regardless of whether the [tortfeasor's] $25,000 policy limit is paid as a result of settlement, trial or arbitration, there would be no effect on [plaintiff's] right to pursue his SUM claim."  NY Central did not respond.

Plaintiff’s counsel and tortfeasor agreed to a high-low arbitration by which plaintiff would receive at least $7,500 on the low side and no more than $25,000 on the high side.  If the arbitrator felt that the case was worth more than $25,000, the arbitrator would advise of that conclusion, without specifying a dollar amount.

The arbitrator advised that the claim was worth more than $25,000 and then the plaintiff’s counsel requested that NY Central consent to settlement of plaintiff's claim for the full amount of the tortfeasor's policy.  On May 25, 2006, defendant disclaimed coverage on the ground that plaintiff had violated the policy terms by entering into arbitration without defendant's written consent and by compromising defendant's subrogation rights.  Thirty days having gone by, plaintiff executed a general release settling the claim against the tortfeasor and brought the action to recover SUM benefits.

An insured that settles with a tortfeasor without the SUM insurer's written consent, or otherwise prejudices the insurer's subrogation rights, forfeits SUM benefits, unless the insured shows that the insurer waived this requirement or acquiesced in the settlement.  Under Condition 10 of the SUM policy, if there is a policy limit offer and that is conveyed to the SUM carrier, a "release may be executed with such party after [30] calendar days actual written notice [to defendant], unless within this time period [defendant] agree[s] to advance such settlement amounts to the insured in return for the cooperation of the insured in [defendant's] lawsuit on behalf of the insured."  The policy further provides that "[the] insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired," and prohibits the insured from prejudicing defendant's subrogation rights, except as set forth above.

The court found that upon the record presented, issues of fact precluded summary judgment for either party.  Although NY Central argued that plaintiff entered "binding" arbitration, it is unclear whether plaintiff was in fact bound to accept the policy offer from the tortfeasor and, if plaintiff was not so bound, then the arbitration proceeding did not impair, or even affect, defendant's subrogation rights.

Plaintiff argued that the arbitration was only designed to determine whether or not the tortfeasor’s carrier would offer the policy limits.  Upon receiving the policy limit offer, plaintiff duly notified defendant, as required.  If in fact defendant's rights were fully preserved at that point, then, in accord with the policy terms, defendant could have advanced the proposed settlement funds to plaintiff and stepped into the litigation, requiring plaintiff's cooperation in the pending claim.  In that case, the court rightly determined that there was no reason why the parties' obligations under the SUM policy should be altered merely because the policy limits were tendered as the result of an arbitration proceeding, rather than through negotiation.

There was, however, nothing in the record confirming that arrangement and if the plaintiff was required to accept the policy limits and execute a general release, he would have destroyed the subrogation rights and lose his claim for SUM coverage.  Accordingly, summary judgment was not proper.  

There is a further factual issue as to whether defendant should be estopped from disclaiming coverage based upon its alleged representations and acquiescence to plaintiff regarding participation in the arbitration.
Editor’s Note:  I liked this decision and believe it was rightly decided.  So long as the plaintiff was not bound to accept the $25,000 and issue a release, he had not destroyed subrogation rights.  Should make no difference HOW the carrier makes its decision to offer the policy limits.

 

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

08/01/12       Tinyanoff v. Kuna
Appellate Division, Second Department
Plaintiff’s 90/180-Day Claim Fails Where He Only Missed Three Days of School Before Summer Vacation and None After
On May 15, 2010, plaintiff was involved in a motor vehicle accident.  Plaintiff claimed serious injuries to his cervical spine under the permanent loss of use, permanent consequential loss of use and significant limitation categories as well as making a 90/180-day claim.  In support of their motion, defendants submitted medical evidence establishing that plaintiff’s alleged injuries did not constitute a serious injury.  In addition, defendants submitted the deposition testimony of plaintiff wherein plaintiff testified that he missed only three days of school prior to the end of the school year in June, and that in September he missed no time due to the injuries allegedly sustained in the accident.  In opposition, plaintiff failed to raise any triable issue of fact.  As a result, on appeal the trial court was reversed and summary judgment granted to defendants.

08/01/12       Yebo v. Cuadra
Appellate Division, Second Department
Motion to Renew Is Not Meant to Be a Second Bite of the Apple
Plaintiff allegedly was injured in a motor vehicle accident in 2001.  In 2008, when plaintiff was not represented by counsel, defendant moved for summary judgment.  In opposition, plaintiff submitted a brief affidavit from his physician stating only that he had been totally and permanently disabled as a result of the accident and that his disability was not related to prior accidents. 

The trial court granted defendant’s motion and plaintiff filed a notice of appeal and then retained counsel.  Counsel then moved for leave to reargue and renew and submitted, in support, an additional affirmation of the same physician describing in some detail the injuries and disputing some of the findings in the reports submitted by defendant.  The trial court denied the motion for leave to renew.  It determined, and on appeal the appellate court agreed, that the motion for leave to renew “is not a second chance freely given to parties who have not exercised due diligence in making their factual presentation.”  The doctor’s affirmation was based on the same facts that were available at the time of his original affidavit, and the fact that plaintiff was not represented by counsel does not, in of itself, constitute a reasonable justification for his failure to obtain a sufficient affidavit.  In addition, although the affirmation provided more detail than the original affidavit, it still was insufficient to support a different outcome.

07/26/12       Ostroll v. Nargizian
Appellate Division, Third Department
Evidence of Pre-Existing Injuries Requires That Plaintiff Submit Evidence Addressing Claimed Lack of Causation
Plaintiff was a passenger in defendant’s vehicle and claimed that as a result of the collision, she sustained injuries to her neck, shoulder, spine and upper arm under the permanent consequential and significant limitation of use categories.

Defendant asserted that her injuries were not caused by the accident at issue, but rather by a prior accident in 1999.  In support of his motion, he submitted medical records revealing a significant history of chronic neck and back pain since the prior accident.  He also submitted medical reports of a neurosurgeon and physician that saw plaintiff prior to the recent accent, as well as an IME performed after the accident.  All reports established that plaintiff’s injuries pre-dated the subject accident and were not causally related.

In opposition, plaintiff submitted the affidavit of her chiropractor who had been treating her since the 1999 accident.  Although he stated that her injuries were the result of the subject accident, he did not allege that he performed any range-of-motion or other diagnostic tests and he failed to distinguish her past limitations from her current ones.  As such, his affidavit did not raise a triable issue of fact regarding causation and the complaint was properly dismissed.

07/25/12       India v. O’Connor
Appellate Division, Second Department
Summary Judgment Is Denied Where Defendants’ Expert Fails to Explain Belief That ROM Limitations Are Self-Imposed
On appeal, the trial court is reversed as defendants’ failed to meet their burden.  They submitted, in support of their motion, the affirmed report of an orthopedic surgeon who, upon examination of plaintiff, found significant range-of-motion limitation in plaintiff’s lumbar spine.  In addition, he failed to explain or substantiate his belief that plaintiff’s restrictions were self-imposed.  Because defendants did not meet their prima facie burden, it was not necessary to consider plaintiff’s opposing papers.

07/25/12       Krisilas v. Katsimichas
Appellate Division, Second Department
Denial Affirmed As Defendants Failed to Address 90/180-Day Category
On appeal, the trial court’s denial of defendants’ motion was affirmed, but on different grounds.  The Appellate Court determined that defendants did not adequately address plaintiff’s claim under the 90/180-day category and, therefore, defendants did not meet their prima facie burden, making it unnecessary to consider plaintiff’s opposing papers.

07/25/12       Little v. Ajah
Appellate Division, Second Department
Plaintiff’s Bill of Particulars Alleged Exacerbation of Prior Injuries and Defendants’ Expert Failed to Distinguish
Defendants’ expert orthopedist examined plaintiff five years after the subject accident and noted significant range-of-motion limitations in plaintiff’s cervical spine, right knee and right hip.  While he opined that the injuries might be caused by a prior accident, he did not demonstrate that the noted limitations were caused by the prior accident rather than from exacerbations caused by the subject accident as plaintiff alleged in his bill of particulars.  Defendants failed to meet their burden and the trial court’s decision denying summary judgment was affirmed.

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

ARBITRATION
07/24/12       Stephen A. Novelli, DC v. Respondent
Arbitrator Kent L. Benziger, Erie County
Chiropractic IME Upheld and Question Raised Regarding Credibility of Treatment Notes
The Applicant sought reimbursement for chiropractic care rendered to the assignor from December 6, 2010 through September 26, 2011.  The assignor was involved in a December 20, 2008, motor vehicle accident and an MRI revealed a C6/7 cervical disc herniation.  In September 2009, the Applicant commenced chiropractic treatment of the assignor.  By end of August 2010, the Applicant’s treatment notes revealed the assignor complained of a slight degree of reduced neck pain and modest improvement in right shoulder and arm pain.  The 2010 assessments or conclusions in the reports almost all stated that the patient was responding well to treatment and showing significant reduction in symptom severity.

By early July 2011, the treatment notes revealed slightly better cervical pain along the midline.  There was also slight improvement noted in the assignor’s right shoulder and arm pain.  The Applicant reported the assignor was responding well and showing a significant reduction in symptom severity.  The recommendation was to continued chiropractic care.

The insurer denied the treatment upon the independent chiropractic examination (“IME”) of Anthony Magnano, DC.  Mr. Magnano conducted two IMEs and by the second IME the assignor had full cervical spine range of motion with some tenderness.  The remainder of the examination was negative.

The assigned arbitrator determined that IME report was more persuasive than Applicant’s treatment notes.  The assigned arbitrator reasoned:

Almost every progress note mentions the Assignor reporting some improvement in the midline neck and shoulder pain with a worsening condition in [sic] shoulder and no change in the right lower back.  This arbitrator questions how many times a report can consecutively note improvement in areas without there being a resolution of the pain or injury.  The assessments in almost every report stated that the patient was responding well with a significant reduction in symptom severity.  This arbitrator questions how many consecutive times there can be such a positive assessment with significant improvement without it appearing self-serving.  In addition, the Applicant has also not given credible evidence of any significant palliative benefits.

Accordingly, the denials were upheld.

LITIGATION

07/26/12       Searay Med., PC v. Praetorian Ins. Co.
Appellate Term, First Department
Insurer Prevails on Failure to Appear for Scheduled EUO
The insurer was entitled to summary judgment on failure to appear for scheduled EUOs as it established timely and proper mailing of EUO notices with non-appearance.  The plaintiff failed to specifically deny the assignor’s nonappearance or otherwise raise a triable issue of fact.

07/24/12       Hillside Surgicare Diagnostic and Treatment Center, LLC a/a/o Christina Centeno-Guity v. Utica Mut. Ins. Co.
Appellate Term, First Department
Plaintiff’s Opposition of Unsworn Medicals in Lack of Medical Necessity Case Insufficient
The insurer was entitled to summary judgment on lack of medical necessity.  The insurer’s peer review notably revealed no signs of instability or positive orthopedic signs regarding an alleged shoulder injury.  Further, the arthroscopic procedure was performed to the left shoulder when the assignor’s primary complaint at the initial consultation was the right shoulder.  The plaintiff’s opposition papers failed to raise a triable issue of fact as they consisted of an attorney affirmation with inadmissible, unsworn medical records attached.

07/13/12       Midtown Med. Assoc., PC a/a/o Simeon Johnson v. Clarendon Nat’l Ins. Co.
Appellate Term, Second Department
Doctor Affidavit Fails to Meaningfully Refer to or Rebut IME Conclusions Resulting in Insurer Prevailing on Summary Judgment
The insurer’s summary judgment motion on, inter alia, lack of medical necessity should have been granted.  The insurer established timely mailing of the denials and that those denied on lack of medical necessity were based upon a sufficient IME report.  The plaintiff’s physician’s affidavit submitted in opposition did not meaningfully refer to, let alone rebut, the IME report conclusions.

07/12/12       Brooklyn Heights Physical Therapy, PC a/a/o Stephanie Bundrick v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Follow Up IME Letter Not Timely Mailed Results in Loss of Defense
The insurer did not establish that it timely mailed its IME notices to which the assignor failed to appear.  The court held that the initial IME scheduling letter was timely issued.  Yet, the follow-up IME scheduling letter was not timely mailed and thus the insurer’s 30 day time period to pay or denial the claims was not tolled.  As a result, the denials were not timely and the insurer was precluded from raising the defense of a breach of the policy condition to appear for scheduled IMEs.

 

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

Property

07/06/12       Platek v Town of Hamburg
Appellate Division, Fourth Department
Exception for “Explosion” Creates Water Damage Coverage; Two Justice Dissent Says “No Way”
Plaintiff’s commenced the instant action against Allstate after they sustained water damage at their home.  The water infiltrated the home after a water main ruptured near the premises.  Upon receipt of the claim, Allstate immediately disclaimed under the “water damage” exclusion which removes coverage for property damage caused by “water on or below the surface which…flows, seeps or leaks through the residence premises."

Plaintiff challenged Allstate’s denial by arguing the exception for physical loss caused by fire, explosion or theft caused by water infiltration preserved coverage.  Essentially, plaintiff argued that the water damage, as a whole, was removed from coverage, but the exception restored coverage for water damage that arose from an explosion.  Put to the current facts, plaintiff argued that because there was an “explosion” of the water main, the water damage exclusion did not apply. 

To reach this conclusion, the Court was also asked to determine that a water main could, in fact, explode.  The Court relied upon the dictionary definition of “explosion” which described the act as “to burst violently as a result of pressure from within.” 

In opposition, Allstate argued that the “explosion” exception was an “ensuing loss” provision.  In essence, Allstate argued that any loss, regardless of how, that was related to flood waters was categorically excluded.  However, if there was an additional event (i.e., fire, explosions, theft), and additional property damage that was occasioned as a result of the additional event, coverage would apply to cover the additional property damage.

The Court held that the both interpretations of the water exclusion, and the subsequent exception, were plausible.  Under such a situation, the Court ruled that an ambiguity existed in the policy and confirmed that Allstate could not rely upon the water exclusion in this case. 

In a well-reasoned dissent, Justices Peradotto and Martoche argued that the Court had strained the intent and plain meaning of the water damage exclusion to create an illogical result.  As aptly noted by the dissent, to adopt the Court’s view would be an acceptance that fire could cause a flood…or that theft could cause a flood.  Either way, the policy is cover water damage and eviscerating the intent of the exclusion.

The Court’s adoption of plaintiff’s argument put the cart before the horse.   The policy does not cover, in the dissent’s view, water damage under any circumstance.  The policy will cover, however, damage that arises from “fire, explosion or theft” after the flood occurs.  Thus, if someone breaks in and steals items from a flooded house, the theft would be covered. 

As noted above, this is a 3-2 split.  We will be monitoring to see if this matter ends up at the Court of Appeals.

Peiper’s Point - We are not so sure the general public would think a water main rupture was an “explosion,” just sayin’.   

Potpourri

08/01/12       Ramsarup v Rutgers Cas. Ins. Co.
Appellate Division, Second Department
Plaintiff’s Claim Against Tortfeasor’s Insurance Agent Goes No Where Due to Lack of Privity
The facts of this case are fairly straightforward.  Plaintiff hired Rutgers’ insured to perform some home renovations.  Apparently, the renovations where so poorly performed the residence had to be demolished (I am guessing he didn’t make Angie’s List). 

Prior to the loss, the woebegone contractor provided plaintiff with a certificate of insurance indicating coverage for a previous policy term.  After the loss, plaintiff requested a confirmation of coverage from the tortfeasor’s agent.  The agent repeatedly advised that the contractor did not have coverage with Rutgers on the date of the loss.  

At some point, however, plaintiff confirmed that the Rutgers’ policy was actually in effect on the date of loss.  Plaintiff immediately tendered the matter to Rutgers, and Rutgers denied on late notice grounds. 

Plaintiff proceeded to obtain a judgment against the contractor, and commenced the instant action when the judgment was not satisfied.  In addition to claims against Rutgers, plaintiff also asserted fraud and material misrepresentation grounds against the contractor’s agent, Lyons General Agency. 

Lyons immediately moved to dismiss; therein alleging that plaintiff had not properly stated a fraud cause of action and lacked privity.  The trial court agreed, and dismissed both claims against Lyons. 

On appeal, the Second Department also agreed that plaintiff had no privity with the tortfeasor/contractor’s insurance agent.  Accordingly, the material misrepresentation cause of action was properly dismissed.  However, with regard to the remaining claim, the Court noted that privity was not a prerequisite for proving fraud.  As plaintiff had sufficiently asserted a cause of action for fraud, at the pleading stage, the Court permitted this cause of action to proceed. 

07/25/12          Reyes v Post & Broadway, Inc.
Appellate Division, Second Department
Court Infers a Contractual Indemnity Agreement from the Intent of the Parties
Plaintiff was injured after he fell from a scaffold while in the course of his employment TNT.  As a result of injuries he sustained, plaintiff commenced a Labor Law § 240(1) claim against Post & Broadway (as owner) OK Management (as construction manager).  Upon being named as defendants, Post & Broadway and OK Management commenced a third-party action seeking contractual indemnification from TNT. 

TNT opposed the contractual indemnity request, and as a result Post and OK proceed to trial in the main-party action.  After a non-jury trial, plaintiff was awarded $3.4 million.  Immediately thereafter, Post and OK again requested contractual indemnification from TNT. 

The dispute revolved around the fact that the principal from OK and the principal from TNT had apparently agreed that TNT would assume all liabilities which arose from TNT’s work at the jobsite.  To that end, the phrase “contractor [TNT] assumes all liabilities” was written on the back of the purchase order executed between the two parties. 

TNT opposed the contractual indemnity claim on the basis that the clause was void as vague and ambiguous.  OK, however, rebutted TNT’s claims be arguing that OK’s principal wrote the above-referenced phrase on the back of a contract provided by TNT only after the indemnity agreement had been acknowledged by TNT’s principal. 

Because TNT could not rebut OK’s position that the parties agreed that TNT would indemnify and hold harmless OK, the trial court affirmed OK’s motion for summary judgment.  The fact that TNT could not offer any proof to dispute the sworn testimony from OK that there had been a meeting of the minds prior to the loss appeared to be the deciding factor. 

In affirming the trial court’s ruling, the Second Department initially noted the legal maxim that indemnity agreements must be strictly construed to avoid reading an obligation that was not intended by the parties at the time of formation.   The Appellate Division noted that the contract broadly provided indemnity protection to OK for all liabilities.  That fact, coupled with the unrebutted testimony from OK’s principal, persuaded the Appellate Division to uphold the indemnity agreement. 

It is noted that the Court also addressed OK’s claims for attorneys’ fees and litigation expenses.  While the Court noted the issue of attorneys’ fees was not addressed in the motions before the trial court, it also noted that there was no merit to OK’s claims for those asserted damages.  This is because, presumably, the “indemnity clause” in question made no reference to costs or fees related to litigation. 

Peiper’s Point - Remember, if you wish to recover attorneys’ fees through a contractual indemnity agreement, the agreement must specifically reference attorneys’ fees as a recoverable item.

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

S7641-B – The Uniform Notice of Claim Act
New Legislation Making Consistent the Rules Regarding Providing Notice of Claim to State Entities
At the end of session both the Senate and the Assembly passed what was commonly referred to as the Uniform Notice of Claim Act.  Per the Sponsor’s Memo, the purpose of the bill is to provide plaintiffs with “uniform, fair and statutorily consistent procedure” for serving a notice of claim of intention to commence suit against State entities.  At this time, it does not appear the Governor has signed or vetoed the legislation.

This legislation amends the CPLR to state that all notices of claim served on any entity entitled to notice as a condition precedent to the commencement of an action are subject to the requirements of General Municipal Law §50-e.  General Municipal Law §50-e requires the notice to be filed within 90 days of the incident.  It also amends the statute of limitations, except in wrongful death actions, to the longer of one year and ninety days or a time period specified elsewhere in the law.

This legislation also amends the General Municipal Law to allow the notice of intention to file a claim to be served on the Secretary of State.  Service of the notice will be deemed complete when served on the Secretary of State.  The Secretary of State will then be responsible for forwarding the notice to the entity. 

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

07/24/12       Nationwide Life Ins. Co. v. Commonwealth Land Title Ins. Co. 
Third Circuit Court of Appeals – Pennsylvania law applied
Interpretation of Title Insurance Policy – ALTA 9 Endorsement
Commonwealth Land Title Insurance Company [“Commonwealth”] issued the title insurance policy at issue in this case to Nationwide Life Insurance Company [“Nationwide”] in connection with real property in the Franklin Mills Mall in Philadelphia County, Pennsylvania – a large shopping center specializing in retail stores.  The property was owned by Liberty Mills Limited Partnership [“Liberty Mills”].  Liberty Mills entered into a Master Declaration and Agreement of Easements, Covenants, Conditions and Restrictions [“Master Declaration”] with Liberty Mills Residual Limited Partnership in 1988, which governs all stores in the Mall.  Later that year PMI Associates [“PMI”] purchased the Property from Liberty Mills, at which time PMI and Liberty Mills also entered into a Declaration of Restrictions.  The Declaration of Restrictions vested Liberty Mills with, inter alia, the right to prior approval of future purchases of the Property and an express option to purchase.

PMI borrowed $3.5 million from Nationwide in 2001, using the property as collateral.  Nationwide purchased a tile insurance policy [“Policy”] from Commonwealth to insure its lender’s interest in the Property. The Policy contained the ALTA 9 endorsement, which states in relevant part:

The Company insures the owner of the indebtedness secured by the insured mortgage against loss or damage sustained by reason of:

1.       The existence at Date of Policy of any of the following:

                                        ********
(b)      Unless expressly excepted in Schedule B.

(2)      Any instrument referred to in Schedule B as containing covenants, conditions or restrictions on the land which, in addition, (i) establishes an easement on the land; (ii) provides a lien for liquidated damages; (iii) provides for a private charge or assessment; (iv) provides for an option to purchase, a right of first refusal or the prior approval of a future purchaser or occupant.

Among the documents listed in Schedule B Part I were the Declaration of Restrictions and the Master Declaration, but no specific restriction found within those documents was explicitly listed.

PMI defaulted on its loan from Nationwide in 2003 and conveyed the Property to Nationwide by fee simple deed in lieu of foreclosure.  Nationwide attempted to sell the property to Ironwood Real Estate [“Ironwood”], but the Franklin Mills Limited Partnership refused to approve Ironwood as a buyer in accordance with the rights conferred by the Declaration of Restrictions.

Nationwide submitted a claim for coverage to Commonwealth, asserting that the restrictions relied upon by Franklin Mills to justify its refusal of Ironwood as a purchaser rendered the Property unusable and unsalable.  The district court granted Commonwealth’s motion and Nationwide appealed.

The United States Court of Appeals for the Third Circuit [“Court”] reversed and remanded the district court’s order.  On remand, Nationwide filed an amended complaint.  Next, both parties filed cross-motions for summary judgment.  This time, the district court denied Commonwealth’s motion in its entirety and granted Nationwide’s motion, in part, holding that the Policy with the ALTA 9 Endorsement affords insurance coverage for losses and damages incurred with Nationwide as a result of the Declaration of Restrictions.  Commonwealth filed a motion for reconsideration but granted a certificate of appealability.

The issue addressed by the Court was whether the scope of coverage under ¶ 1(b)(2) of the ALTA 9 Endorsement encompasses losses resulting from entire instruments, or whether the coverage is limited to losses caused by the particular types of encumbrances listed in that paragraph.

Commonwealth argued only that its listing of the Declaration of Restrictions on Schedule B excluded losses arising from that instrument from coverage, except as to the 1(b)(2) restrictions found therein, which must be expressly listed in Schedule B to be excluded from coverage.  The district court held that “any loss arising as a result of any portion of that instrument – and not from any particular provision contained therein – falls within the scope of the ALTA 9 Endorsement coverage.”  The district court reasoned that “by its plain language the Endorsement only defines what types of instruments are covered and then clearly insures against any loss sustained from the instrument itself.” The district court also noted that “had the Endorsement meant otherwise, it would have eliminated the language ‘any instruments’”.

The Court agreed holding that the ALTA 9 Endorsement provides coverage to losses arising from entire instruments that fit within the plain language, not just the 1(B)(2) restrictions within those instruments that have been expressly excepted. If 1(b)(2) was not intended to cover losses arising due to entire instruments, then the phrase “any instrument” would have been omitted, as it was in ¶ 1(b)(1), (3), (4) and (5) of the same ALTA 9 Endorsement.

Commonwealth also argued that a plain language interpretation of the ALTA 9 Endorsement provides far more coverage to the insured than the interpretation that is accepted by the vast majority of the title insurance industry.  The Court was not persuaded, recognizing case law which required the court to follow the plain language of the ALTA 9 Endorsement rather than deferring to industry custom and usage that does not give the phrase “any instrument” special meaning, but instead simply ignores that language.

 

MARC’S REMARKS

Marc A. Schulz
[email protected]

07/19/12       Johnston v. Peluso
Supreme Court, Suffolk County
Insufficient Examination of Plaintiff Precludes Summary Judgment
Plaintiff alleged that, as a result of the underlying accident, she sustained multiple shoulder injuries; disc bulging; loss of range of motion of the cervical spine; and pain, weakness, tingling and numbness in the cervical spine and upper extremities.  Numerous deficiencies in defendant’s moving papers created factual issues which precluded summary judgment.  The defense’s expert submitted a sworn statement that he had examined plaintiff and reviewed multiple medical records and reports from examinations of plaintiff conducted by other physicians.  However, these records and reports were never submitted in defendant’s moving papers.  Additionally, the submitted curriculum vitae for the defendant’s expert did not even indicate he was licensed to practice medicine.

The court noted that even if defendant’s moving papers were corrected, they still would not have prevailed because the defense expert’s examination of the plaintiff raised numerous factual issues as well.  The expert physician failed to use one definitive range of motion value when assessing plaintiff’s range of motion for her spine and shoulders.  He did not comment on plaintiff’s allegation of disc bulging.  He commented on apparent injuries plaintiff did not allege arose out of the subject accident.  He made numerous conclusory opinions for which he stated no basis.  Finally, he did not examine plaintiff during the statutory period of 180 days after the accident. 

Thus, the defense could not demonstrate its entitlement to summary judgment on the issue of whether plaintiff was unable to perform her customary daily activities for a time in excess of 90 days during the 180 day period following the accident.  The defendant’s expert did not even offer an opinion with regard to this category of serious injury.  In light of these reasons, the defendant’s summary judgment motion was denied. 

07/23/12       Flushing Terrace, LLC v Nationwide Mut. Fire Ins. Co.
Supreme Court, Queens County
Where Underlying Action Dismissed Against “Named Insured”, Insurer that Issued Policy to “Named Insured” Relieved of Duty to Defend Any “Additional Insured”
Flushing Terrace retained Criterion as a general contractor for the construction of a residential building. Criterion entered into subcontracts with S & J Industrial Corp for the plumbing, M & V for the concrete; and with Bosko for the masonry.  A plumber employed by S & J sustained personal injuries when he was hit in the back of the head, neck, and shoulder with a piece of concrete cinder block. Mr. Ginter commenced a personal injury action.

Flushing Terrace and Criterion commenced this declaratory judgment against Nationwide, S & J, General Casualty, M & V, Bosko and Scottsdale insurance company. Criterion entered into a separate subcontract with M & V.  M & V obtained an insurance policy from General Casualty.  Plaintiffs allege they, as additional insureds, tendered notice to General Casualty of their claims for additional insurance coverage, defense and indemnity and now move for summary judgment seeking a declaration that General Casualty has a duty to defend and indemnify plaintiffs in the underlying action and to pay the defense costs.  Defendant, General Casualty, cross moves for summary judgment seeking a declaration that it does not have a duty to defend and indemnify plaintiffs in the underlying action.

An insurer’s duty to defend “arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy.  Here, General Casualty’s policy defined as additional insured as any organization to whom M & V was obligated, by virtue of a written contract, to provide liability insurance, but “only with respect to liability for ‘bodily injury’ … caused in whole or in part, by (a) Your [M & V’s] acts or admissions; or (b) The act or admissions of those acting on your [m & V’s] behalf, in the performance of your [M & V’s] operations for the insured.”  According to the court, this provision limiting coverage liability requires there be “some causal relationship between the injury and the risk for which coverage is provided.”  As Flushing Terrace and Criterion cannot demonstrate the existence of such a causal relationship, their summary judgment motion was denied and General Casualty’s cross-motion granted.

07/25/12       Corporate Elec. Group Inc. v. Nova Cas. Co.
Supreme Court, Queens County
35-Day Delay in Issuing Disclaiming Unreasonable Where Previous Tender Letter Contained Sufficient Facts to Conclude Insured Breached Notice Provision
Defendant filed motion for summary judgment declaring it has no duty to defend or indemnify Plaintiff in an underlying personal injury action in which a Corporate Electric employee seeks to recover for injuries sustained when he fell from a ladder on a construction project.

Corporate Electric received a tender letter from Zurich, the insurer for the general contractor in the underlying action, seeking defense and indemnification.  Corporate Electric emailed the Zurich letter to its broker, Island Risk, who emailed the letter to Specialty Claims, the claims administrator for Defendant Nova.  The claims administrator then retained an investigator, and Nova ultimately disclaimed coverage based upon late notice of the claim.

In opposition to Nova’s summary judgment motion, Corporate Electric asserts that its sixty-one (61) day notice was reasonable in view of all the circumstances.  The court held an insurer’s explanation is insufficient, as a matter of law, where the basis for denying coverage was or should have been readily apparent before the onset of the delay.

Here, the court held Nova’s ground for disclaimer was or should have been readily apparent upon receipt of the Zurich tender letter, which contained sufficient facts to allow the Nova claims analyst to conclude that its insured breached the notice provisions of the insurance policy requiring the accident to Nova 61 days after learning of it.  Thus, even though Corporate Electric’s notice of the incident was untimely, Nova’s failure to provide notice of disclaimer as soon as was reasonably possible precluded effective disclaimer.  

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

A UNILATERAL ARBITRATION CLAUSE MAY BE ENFORCEABLE

A recent case by a District Court in Maine deals with the issue of an allegedly unilateral, over-reaching arbitration clause.  U.S. f/u/b/o Maverick Construction Services, Inc. v Consigli Construction Company, 2012 U.S. Dist. LEXIS 77718 (D.C. Maine 6/5/12).  The case originated at a construction project in a naval shipyard when the general contractor, Consigli, terminated a subcontract with Maverick “for convenience”.  Maverick sued Consigli and its surety for approximately $2 Million in cost overruns and delay damages.  The defendants moved to compel arbitration under the subcontract arbitration clause.  Maverick opposed enforcement of the arbitration clause, among other reasons arguing that it was “illusory” and void because it was unilateral.  The court disagreed and granted the motion to compel arbitration.

Maverick first argued that the arbitration clause really did not bind Consigli to the results of arbitration, which argument the court rejected.  The clause included the AAA Arbitration Rules for the construction industry which, inter alia, require the parties to the arbitration to enter a judgment in connection with the arbitration award in an appropriate Federal or State Court, thus binding the parties to the arbitration result. 

Maverick next argued that the arbitration clause was unilateral and therefore lacked “consideration”.  The federal court noted that the Maine state courts had not definitively commented on the validity of a “unilateral” arbitration clause, but the District Court ruled that, as a matter of state law, such clauses would not be rendered void for “lack of mutuality, lack of consideration, or on grounds of public policy”.  The Trial Court did note that in some jurisdictions such unilateral arbitration clauses have been rejected, but this generally occurs where the parties have unequal economic bargaining power, such as where the clause is “crammed down” to consumers or customers by a manufacturer or supplier.  The Court doubted that cases questioning or invalidating unilateral arbitration clauses in such consumer cases would be applicable in this instance.  Essentially, the Trial Court ruled that, if the contract as a whole is supported by consideration and mutuality, the fact that a provision such as the arbitration clause is “unilateral” or can only be invoked by one side is not invalid for lack of consideration or mutuality. 

The clause in this case is not unusual in government contracts.  If the claim is caused by fault or reason of the owner, the subcontractor’s remedy is to make and pursue its claims through the general contractor.  Most other claims are to be resolved in court or arbitration at the general contractor’s election.  Note that in these instances, the initial procedural question and hurdle for a subcontractor is whether to first pursue claims against the owner going through the general contractor, or go to court or arbitration against the general contractor.

Under the Federal Arbitration Act, there is a clear and strong preference for enforcing and upholding arbitration clauses.  This policy preference was carried through by the court here, although it ostensibly did review and at least in part base its decision on its perception of Maine state law. 

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

07/27/12       South Carolina Farm Bureau Mut. v. Kennedy
South Carolina Supreme Court
Temporal Continuum of Accident Necessarily Includes Events Immediately Surrounding the Initial Impact and the Point in Time that the Last Injury was inflicted
Employer had a Commercial Auto Policy with Farm Bureau that covered a truck which had UIM coverage of $50,000 per individual and $100,000 per occurrence. Kennedy sought UIM coverage under his employer's insurance policy, but Farm Bureau denied coverage on the basis that Kennedy was not pinned to his employer's vehicle that Kennedy was standing by his employer's vehicle and not in actual physical contact with it when the accident occurred. Farm Bureau claimed the accident did not meet the policy's definition of "occupying" the vehicle. A bench trial revealed Kennedy had left the engine running on his employer's truck, with a dog inside, and that Kennedy had a brief conversation with Teddie Robinson at the back of the employer's truck after performing the errand for his employer.

The Supreme Court observed that the proper question was whether or not Kennedy had actual physical contact with the insured truck when he was injured, which was a question of fact for the trial court, which it answered in the affirmative. The Court held that the Farm Bureau erroneously assumes this accident begins and ends at the exact moment of contact between the Counts vehicle and Kennedy. This assumption is flawed because it ignores the unfolding events surrounding the accident. To interpret the physical contact requirement in a manner that would require Kennedy to succumb to the approaching danger rather than relinquish physical contact would be unreasonable and unconscionable. Kennedy's conduct was reasonably to be expected from one acting under similar circumstances when faced with a hazard encountered in the ordinary use of a vehicle.
Submitted by: Michael T. Glascott; Goldberg Segalla, LLP

07/25/12       In Re: American Capital Equipment
Third Circuit Court of Appeals
A Bankruptcy Court Has the Authority to Determine at the Disclosure Statement Stage that a Chapter 11 Plan is Unconfirmable Without First Holding a Confirmation Hearing
At the time Skinner and American Capital filed for bankruptcy, over 29,000 asbestos claims were pending against Skinner. Skinner claimed entitlement to insurance coverage under primary comprehensive general liability and excess policies. In its fifth bankruptcy plan since filing bankruptcy, Skinner proposed removing the temporary injunction against judgments for Asbestos Claimants who chose to pursue traditional tort remedies and included a 20% surcharge for Asbestos Claimants who decided to opt in to the plan’s settlement process. The surcharge would be used to pay creditors the Plan Payment Fund. Skinner acknowledged the plan would not work without the surcharge. The debtor appellants raised several issues on appeal, but argued specifically that the Bankruptcy Court erred in finding the Fifth Plan unconfirmable without holding a confirmation hearing. The Court held that a bankruptcy court may address the issue of a plan confirmation where it is obvious at the disclosure statement stage that a later confirmation would be futile because the plan described by the statement is patently unconfirmable. The Court observed a plan is patently unconfirmable where (1) confirmation defects cannot be overcome by creditor voting results and (2) those defects concern matters upon which all material facts are not in dispute or have been fully developed at the disclosure statement hearing.
Submitted by: Michael T. Glascott; Goldberg Segalla, LLP

REPORTED DECISIONS

Warner v. New York Central Mutual Fire Insurance Company 

Calendar Date: April 25, 2012
Before: Peters, P.J., Rose, Lahtinen, Malone Jr. and Garry, JJ.

Abdella Law Offices, Gloversville (Robert Abdella of counsel), for appellant.
Boeggeman, George & Corde, PC, Albany (Paul A. Hurley of counsel), for respondent.

MEMORANDUM AND ORDER

Garry, J.

Appeal from an order of the Supreme Court (J. Sise, J.), entered April 21, 2011 in Montgomery County, which, among other things, granted defendant's cross motion for summary judgment dismissing the complaint.

In January 2004, plaintiff was injured in a two-car accident in the Town of Mohawk, Montgomery County. Plaintiff subsequently commenced a personal injury action against the operator of the other vehicle (hereinafter the tortfeasor) and notified defendant, as his insurer, that he would be claiming supplemental uninsured/underinsured motorist (hereinafter SUM) coverage. The parties thereafter exchanged correspondence, information, and documents. In February 2006, shortly after speaking by telephone with an associate liability examiner employed by defendant, plaintiff's counsel sent a letter to defendant advising that the policy limit had not yet been offered, that trial was scheduled to commence in March 2006 and that "there [was] a possibility that the case [would] be arbitrated instead." This correspondence further confirmed the phone conversation, stating that the examiner had advised that "regardless of whether the [tortfeasor's] $25,000 policy limit is paid as a result of settlement, trial or arbitration, there would be no effect on [plaintiff's] right to pursue his SUM claim." Defendant did not respond to this letter.

Shortly thereafter, plaintiff and the tortfeasor agreed to determine the amount of plaintiff's claim through a high/low arbitration procedure, by which plaintiff would receive at least $7,500 regardless of the arbitrator's decision and, if the arbitrator found that the case was worth at least $25,000, the tortfeasor's carrier would tender the policy limit. In April 2006, the arbitrator determined that the claim was worth "in excess of $25,000," without specifying the amount. On May 2, 2006, plaintiff advised defendant in writing of this decision, and requested defendant's consent to settlement of plaintiff's claim for the full amount of the tortfeasor's policy. On May 25, 2006, defendant disclaimed coverage on the ground that plaintiff had violated the policy terms by entering into arbitration without defendant's written consent and by compromising defendant's subrogation rights. On June 19, 2006, plaintiff executed a general release settling the claim against the tortfeasor. Plaintiff thereafter commenced this action against defendant seeking a declaration that defendant is obligated to provide SUM coverage. After joinder of issue, plaintiff moved and defendant cross-moved for summary judgment. Supreme Court denied plaintiff's motion and granted defendant's cross motion. Plaintiff appeals.

An insured who settles with a tortfeasor without the SUM insurer's written consent or otherwise prejudices the insurer's subrogation rights forfeits SUM benefits, unless the insured shows that the insurer waived this requirement or acquiesced in the settlement (see Matter of Central Mut. Ins. Co. [Bemiss], 12 NY3d 648, 659 [2009]; New York Cent. Mut. Fire Ins. Co. v Danaher, 290 AD2d 783, 784-785 [2002]). A condition of plaintiff's policy provides that if a claim against a negligent party is settled for the available limits of the party's policy, a "release may be executed with such party after [30] calendar days actual written notice [to defendant], unless within this time period [defendant] agree[s] to advance such settlement amounts to the insured in return for the cooperation of the insured in [defendant's] lawsuit on behalf of the insured." The policy further provides that "[the] insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired," and prohibits the insured from prejudicing defendant's subrogation rights, except as set forth above. These provisions mirror the language of the SUM endorsements mandated by the regulations governing such coverage set out in 11 NYCRR subpart 60-2, commonly referred to as Regulation 35-D (see 11 NYCRR 60-2.3 [f], conditions 10, 13; Matter of Central Mut. Ins. Co. [Bemiss], 12 NY3d at 652, 656-658).

Upon the record presented, issues of fact preclude summary judgment for either party. Although defendant argued that plaintiff entered "binding" arbitration, it is unclear whether plaintiff was in fact bound to accept the policy offer from the tortfeasor and, if plaintiff was not so bound, then the arbitration proceeding did not impair, or even affect, defendant's subrogation rights. Plaintiff alleges that his oral agreement with the tortfeasor would have guaranteed him an award of at least $7,500, but if the arbitrator found the value was in excess of the $25,000 policy limit, "he would just so state, and not assign a specific monetary value." In that event, the "full extent" of the agreement was that the tortfeasor would be obligated to tender the policy (compare Matter of State Farm Mut. Auto. Ins. Co. [Perez], 94 AD3d 1314, 1315-1316 [2012]). Upon receiving the policy limit offer, plaintiff duly notified defendant, as required. If in fact defendant's rights were fully preserved at that point then, in accord with the policy terms, defendant could have advanced the proposed settlement funds to plaintiff and stepped into the litigation, requiring plaintiff's cooperation in the pending claim (see Matter of New York Cent. Mut. Ins. Co. v Reinhardt, 27 AD3d 751, 752 [2006])[FN1] . In that case, we discern no reason why the parties' obligations under the SUM policy should be altered merely because the policy limits were tendered as the result of an arbitration proceeding, rather than through negotiation. However, the record is devoid of any testimony from the tortfeasor or his counsel supporting or confirming this understanding of the oral agreement. In the absence of such proof, we find a material issue of fact as to whether plaintiff preserved defendant's right to proceed with the litigation.

There is a further factual issue as to whether defendant should be estopped from disclaiming coverage based upon its alleged representations and acquiescence to plaintiff regarding participation in the arbitration (compare McEachron v State Farm Ins. Co., 7 AD3d 929, 930 [2004]; Matter of New York Cent. Mut. Fire Ins. Co. [Cavanagh], 265 AD2d 787, 788 [1999], lv denied 94 NY2d 760 [2000]). Plaintiff met his initial burden on this issue with the detailed affidavit of his attorney setting forth the representations allegedly made by an employee of defendant, together with the attorney's contemporaneous letter confirming the discussion, as set forth above. Defendant's submission of an affidavit by this employee denying that consent was ever given presents a factual dispute.

These conclusions make it unnecessary to address the parties' remaining contentions.

Peters, P.J., Rose, Lahtinen and Malone Jr., JJ., concur.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as granted defendant's cross motion for summary judgment dismissing the complaint; cross motion denied; and, as so modified, affirmed.

Footnotes

Footnote 1: If defendant's rights were fully protected at the time plaintiff formally notified defendant of the policy limits offer, then execution of the general release more than 30 days later was also proper; following passage of the requisite time period, plaintiff was free to execute the release without safeguarding defendant's subrogation rights, and he would not forfeit SUM benefits by doing so (see 11 NYCRR 60-2.3 [f]; Matter of Central Mut. Ins. Co. [Bemiss], 12 NY3d at 659; compare Day v One Beacon Ins., 96 AD3d 1678 [2012]).

India v. O'Connor

Steven Cohn, P.C., Carle Place, N.Y. (Mitchell R. Goldklang of counsel), for appellant.
Martyn, Toher & Martyn (Bello & Larkin, Hauppauge, N.Y. [John C. Meszaros], 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, Suffolk County (Mayer, J.), dated August 23, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

Contrary to the Supreme Court's determination, 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 contended, inter alia, that the alleged injuries to the lumbar region of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d). However, the defendants' examining orthopedic surgeon recounted, in an affirmed report submitted in support of the defendants' motion for summary judgment dismissing the complaint, that range-of-motion testing performed during the examination revealed a significant limitation of motion in the lumbar region of the plaintiff's spine (see Scott v Gresio, 90 AD3d 736, 737; Nelms v Khokhar, 12 AD3d 426, 427). Further, the defendants' orthopedic surgeon failed to adequately explain and substantiate his belief that the limitation of motion in the lumbar region of the plaintiff's spine was self-imposed (cf. Perl v Meher, 18 NY3d 208, 219; Gonzales v Fiallo, 47 AD3d 760).

Since the defendants failed to meet their prima facie burden of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Cues v Tavarone, 85 AD3d 846, 846-847).

Krisilas v. Katsimichas

Cheven, Keely & Hatzis, New York, N.Y. (William B. Stock of counsel), for appellants.
Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Amara Trucking Corp. and Michael J. Spedaleri appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Markey, J.), dated May 10, 2011, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

While we affirm the order appealed from, we do so on a ground different from that relied upon by the Supreme Court. The defendants Amara Trucking Corp. and Michael J. Spedaleri (hereinafter together the appellants) 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 appellants' motion papers failed to adequately address the plaintiff's claim that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his ususal and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Aujour v Singh, 90 AD3d 686, 686-687; Bangar v Man Sing Wong, 89 AD3d 1048, 1049).

Since the appellants failed to meet their prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact (see Aujour v Singh, 90 AD3d at 687; Bangar v Man Sing Wong, 89 AD3d at 1049).

 

Accordingly, the appellants' motion for summary judgment dismissing the complaint insofar as asserted against them was properly denied.

Little v. Ajah

Russo & Toner, LLP, New York, N.Y. (John J. Komar, Naomi M. Taub, and Matthew E. Kelly of counsel), for appellants.
Harmon, Linder, & Rogowsky (Mitchell Dranow, Sea Cliff, N.Y., of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Kramer, J.), dated November 28, 2011, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them by the plaintiff Dwayne Little on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

The Supreme Court determined that the defendants failed to meet their prima facie burden of showing that the plaintiff Dwayne Little (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. We agree, albeit on grounds different from those upon which the Supreme Court relied.

In support of their motion for summary judgment dismissing the complaint insofar as asserted by the injured plaintiff, based on the issue of serious injury, the defendants relied upon, inter alia, the affirmed medical report of Dr. Gregory Montalbano, their expert orthopedist. This report failed to eliminate all triable issues of fact, and the defendants, thus, failed to meet their prima facie burden. Dr. Montalbano examined the injured plaintiff almost five years after the accident. During his examination of the injured plaintiff, he noted significant limitations in the ranges of motion of the cervical region of the injured plaintiff's spine, as well as his right hip and right knee (see Scott v Gresio, 90 AD3d 736; Desulme v Stanya, 12 AD3d 557, 558; Espinoza v Dinicola, 8 AD3d 225). The injured plaintiff, in his bill of particulars, alleged exacerbations of preexisting injuries to these areas. While Dr. Montalbano opined that these injuries may be causally related to a prior accident, he failed to demonstrate that the limitations he noted were the result of the prior accident, rather than from exacerbations caused by the subject accident (see Edouazin v Champlain, 89 AD3d 892, 894-895).

Since the defendants failed to meet their prima facie burden, it is unnecessary to consider whether the injured plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Winegard v New York Univ. Med. Ctr., 64 NY2d 851, 853; Cues v Tavarone, 85 AD3d 846, 846-847; Grisales v City of New York, 85 AD3d 964, 965; Pero v Transervice Logistics, Inc., 83 AD3d 681, 683; Coscia v 938 Trading Corp., 283 AD2d 538).

The defendants' remaining contention is without merit (see Johnson v Dow, 56 AD3d 1288, 1289).

Ostroll v. Nargizian

Calendar Date: May 21, 2012
Before: Rose, J.P., Spain, Malone Jr., Kavanagh and Egan Jr., JJ.

Mark Lewis Schulman, Monticello, for appellant.
Eustace & Marquez, White Plains (Patricia A. Mooney of counsel), for
respondent.

MEMORANDUM AND ORDER

Malone Jr., J.

Appeal from that part of an order of the Supreme Court (Meddaugh, J.), entered April 18, 2011 in Sullivan County, which granted defendant Raymond A. Nargizian's motion for summary judgment dismissing the complaint against him.
Plaintiff commenced this action alleging that, as a result of a motor vehicle accident, she sustained serious injuries as provided by Insurance Law § 5102 (d) under the permanent consequential and significant limitation of use categories. Specifically, plaintiff alleged that she sustained serious injuries to her neck, shoulder, spine and upper arm. Following discovery, defendant Raymond A. Nargizian (hereinafter defendant), the owner and operator of the vehicle in which plaintiff was a passenger at the time of the accident, successfully moved for summary judgment dismissing the complaint against him. Plaintiff appeals.[FN1]
Defendant satisfied his initial burden as the proponent of summary judgment dismissing the complaint against him by providing competent medical evidence that the injuries complained of by plaintiff were not caused by the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]; Howard v Espinosa, 70 AD3d 1091, 1092 [2010]). Specifically, defendant submitted plaintiff's medical records revealing a significant history of chronic neck and back pain attributed to the motor vehicle accident that occurred in 1999. Defendant also submitted the medical reports of a neurosurgeon and a physician, both of whom examined plaintiff prior to the subject accident, as well as the report of a physician who conducted an independent medical examination of plaintiff subsequent to the subject accident. These reports all established that plaintiff's injuries preexisted the subject accident and were not causally related (see Howard v Espinosa, 70 AD3d at 1092-1093; Felton v Kelly, 44 AD3d 1217, 1219 [2007]).

The burden thus shifted to plaintiff to proffer medical evidence that "'contain[ed] objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing [her] present limitations to the normal function, purpose and use of the affected body organ, member, function or system'" (Dean v Brown, 67 AD3d 1097, 1098 [2009], quoting John v Engel, 2 AD3d 1027, 1029 [2003]; accord Peterson v Cellery, 93 AD3d 911, 913 [2012]). In addition, in light of defendant's evidence of preexisting injuries, plaintiff was required to provide "'evidence addressing defendant's claimed lack of causation'" (Wolff v Schweitzer, 56 AD3d 859, 861 [2008], quoting Pommells v Perez, 4 NY3d 566, 580 [2005]). In that regard, plaintiff submitted the affidavit of her chiropractor, who began treating her following the 1999 motor vehicle accident. Significantly, however, while the chiropractor generally avers that plaintiff's alleged injuries are the result of the subject accident, he does not allege that he ever performed any objective medical tests of plaintiff's range of motion or other diagnostic tests, and his affidavit is devoid of evidence distinguishing plaintiff's current limitations from those that predated the subject accident (see Anderson v Capital Dist. Transp. Auth., 74 AD3d 1616, 1617 [2010], lv denied 15 NY3d 709 [2010]; Howard v Espinosa, 70 AD3d at 1093-1094). Inasmuch as the chiropractor's report did not establish that an issue of fact existed regarding causation, Supreme Court properly granted defendant's motion for summary judgment dismissing the complaint against him (see Franchini v Palmieri, 1 NY3d 536, 537 [2003]; Foley v Cunzio, 74 AD3d 1603, 1604-1605 [2010]).

To the extent not specifically addressed, plaintiff's remaining contentions have been considered and found to be without merit.

Rose, J.P., Spain, Kavanagh and Egan Jr., JJ., concur.

ORDERED that the order is affirmed, with costs.
Footnotes

Footnote 1:Defendant Ghouse J. Farouqui joined defendant's motion for summary judgment and Supreme Court ultimately dismissed the complaint against him as well. That part of the court's order is not at issue on this appeal.

Utica Mutual Insurance Company v. GEICO

Jones, LLP, Scarsdale, N.Y. (Daniel W. Morrison of counsel), for appellant.
Lester Schwab Katz & Dwyer, LLP, New York, N.Y. (Eric A. Portuguese and Aaron Brouk of counsel), for respondents.

DECISION & ORDER
In an action for a judgment declaring that the defendant is obligated to indemnify the plaintiff Brian Finneran in an underlying personal injury action entitled Hippolite v State Bancorp., Inc., pending in the Supreme Court, Queens County, under Index No. 5174/08, and that a policy of insurance issued by the plaintiff Utica Mutual Insurance Company is excess to the policy issued by the defendant, the defendant appeals from an order of the Supreme Court, Nassau County (Phelan, J.), entered January 20, 2011, which granted the plaintiffs' motion for summary judgment declaring that the defendant is obligated to indemnify the plaintiff Brian Finneran in the underlying action, and that a policy of insurance issued by the plaintiff Utica Mutual Insurance Company is excess to the policy issued by the defendant.

ORDERED that the order is affirmed, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that the defendant is obligated to indemnify the plaintiff Brian Finneran in the underlying action, and that the policy of insurance issued by the plaintiff Utica Mutual Insurance Company is excess to the policy issued by the defendant.

Pursuant to Insurance Law § 3420(d)(2), an insurer seeking to deny coverage of a claim involving death or bodily injury must give written notice "as soon as is reasonably possible." "A disclaimer is unnecessary when a claim does not fall within the coverage terms of an insurance policy" (Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648). "Conversely, a timely disclaimer pursuant to Insurance Law § 3420(d) is required when a claim falls within the coverage terms but is denied based on a policy exclusion" (id. at 648-649). Here, the defendant, Government Employees Insurance Company (hereinafter GEICO), sought to disclaim coverage under the "business pursuits" provision of its policy, which "constitutes an exclusion [from coverage] rather than a limitation of coverage" (Matter of Transportation Ins. Cos. v Sellitto, 267 AD2d 462, 463; see City of New York v St. Paul Fire & Mar. Ins. Co., 21 AD3d 978, 981). Accordingly, the Supreme Court properly determined that GEICO was under a duty to disclaim coverage in a timely manner.

Further, under the circumstances of this case, GEICO's disclaimer, issued approximately 21 months after it received notice of the accident from its insured, was not issued as soon as was reasonably possible (see Matter of American Express Prop. Cas. Co. v Vinci, 18 AD3d 655, 656; Moore v Ewing, 9 AD3d 484, 488; Matter of Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391), and therefore GEICO is not entitled to rely on the "business pursuits" exclusion of its policy.

We also agree with the Supreme Court's determination that an umbrella policy of insurance issued by the plaintiff Utica Mutual Insurance Company (hereinafter Utica) is excess to the GEICO umbrella policy at issue in this matter. "[A]n insurance policy which purports to be excess coverage but contemplates contribution with other excess policies or does not by the language used negate that possibility must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies" (State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 375-376; see Stout v 1 E. 66th St. Corp., 90 AD3d 898). Here, the GEICO policy states that it is "excess over any insurance," without any reference to contribution, whereas the Utica policy states that it "is excess over, and shall not contribute with any of the other insurance, whether primary, excess, contingent or on any other basis." Accordingly, since the Utica policy expressly negates contribution and the GEICO policy does not, the Supreme Court properly determined that the GEICO policy must be exhausted first (see State Farm Fire & Cas. Co. v LiMauro, 65 NY2d at 375-376; Vassar Coll. v Diamond State Ins. Co., 84 AD3d 942, 945).

GEICO's contentions regarding a policy of insurance allegedly written by the nonparty Ohio Casualty Insurance Company (hereinafter Ohio Casualty) are not properly raised in this action, as the complaint only sought declaratory relief relating to the policies issued by GEICO and Utica, and Ohio Casualty was never made a party to this action. We therefore decline to address them.

GEICO's remaining contention is academic in light of our determination that its disclaimer was untimely.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment declaring that GEICO is obligated to indemnify the plaintiff Brian Finneran in the underlying action, and that the policy of insurance issued by Utica is excess to the policy issued by GEICO (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).

DILLON, J.P., BALKIN, BELEN and CHAMBERS, JJ., concur.

Tinyanoff v. Kuna

DeSena & Sweeney, LLP, Hauppauge, N.Y. (Shawn P. O'Shaughnessy of counsel), for appellants.
Chelli & Bush, Staten Island, N.Y. (Richard J. Zeitler, Jr., of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Richmond County (Maltese, J.), dated December 12, 2011, as denied those branches of their motion which were for summary judgment dismissing the second and third causes of action on the ground that the plaintiff Jonathan Tinyanoff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the defendants' motion which were for summary judgment dismissing the second and third causes of action are granted.

The defendants met their prima facie burden of showing that the plaintiff Jonathan Tinyanoff (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The plaintiffs alleged, inter alia, that as a result of the subject accident, the injured plaintiff sustained injuries to the cervical region of his spine. The defendants provided competent medical evidence establishing, prima facie, inter alia, that those alleged injuries did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795).

In opposition, the plaintiffs failed to raise a triable issue of fact as to whether the injured plaintiff sustained a serious injury to the cervical region of his spine under the permanent loss of use, the permanent consequential limitation of use, or the significant limitation of use categories of Insurance Law § 5102(d). The affidavit of the injured plaintiff's treating chiropractor failed to quantify, on the basis of objective testing, the limitations which he found in the injured plaintiff's cervical spine during a recent examination, and failed to compare those limitations to what would be considered normal (see Jean v Labin-Natochenny, 77 AD3d 623, 624; Tobias v Chupenko, 41 AD3d 583, 584).

In addition, the defendants met their prima facie burden of establishing that the injured plaintiff did not sustain injuries as a result of the subject accident which rendered him unable to perform substantially all of his daily activities for not less than 90 days of the first 180 days thereafter (see Insurance Law § 5102[d]). In support of their motion, the defendants submitted evidence showing that the subject accident occurred on May 15, 2010. The defendant also submitted the injured plaintiff's deposition testimony in which he admitted that he missed only three days of school as a result of the subject accident before the school year ended in June, and that he missed no school as a result of the accident when school began the following September (see McIntosh v O'Brien, 69 AD3d 585, 587). In opposition, the plaintiffs failed to raise a triable issue of fact. Contrary to the plaintiffs' contention, the injured plaintiff's deposition transcript was in admissible form pursuant to CPLR 3116(a) (see Boadu v City of New York, 95 AD3d 918; Rodriguez v Ryder Truck, Inc., 91 AD3d 935).

Accordingly, the Supreme Court should have granted those branches of the defendants' motion which were for summary judgment dismissing the second and third causes of action.

Yebo v. Cuadra

Tamara M. Harris, New York, N.Y., for appellant.
James G. Bilello, Westbury, N.Y. (Andrew Gentile of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Ambrosio, J.), dated July 29, 2009, which denied his motion for leave to reargue and renew his opposition to the defendant's prior motion, inter alia, 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, which had been granted in an order of the same court dated February 9, 2009.

ORDERED that the appeal from so much of the order dated July 29, 2009, as denied that branch of the plaintiff's motion which was for leave to reargue is dismissed, as no appeal lies from an order denying reargument; and it is further,

ORDERED that the order dated July 29, 2009, is affirmed insofar as reviewed; and it is further,

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

On November 22, 2001, the plaintiff allegedly sustained personal injuries when a vehicle owned and operated by the defendant struck his vehicle. In August 2008, at a point in the litigation when the plaintiff was not represented by counsel, the defendant moved, inter alia, for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The plaintiff opposed the motion, relying upon a brief affidavit from his treating physician, which addressed the issue of serious injury by stating only that the plaintiff had been totally and permanently disabled as a result of the November 2001 accident, and that his disability was not related to prior automobile accidents. In an order dated February 9, 2009, the Supreme Court granted that branch of the defendant's motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. Shortly after filing a notice of appeal from the order dated February 9, 2009, the plaintiff, now represented by counsel, moved for leave to reargue and renew his opposition to the defendant's prior motion. In support of the branch of his motion which sought leave to renew, the plaintiff submitted an additional affirmation from his treating physician, which described the injuries the plaintiff had allegedly sustained in the November 2001 accident, and disputed some of the findings set forth in the various physicians' reports that the defendant had offered in support of his summary judgment motion. In an order dated July 29, 2009, the Supreme Court denied the plaintiff's motion for leave to reargue and renew. The plaintiff also appealed from the order dated July 29, 2009. While the second appeal was pending, this Court dismissed the plaintiff's earlier appeal for failure to perfect in accordance with the rules of this Court (see 22 NYCRR 670.8[h]).

Contrary to the defendant's contention, the dismissal of the earlier appeal does not preclude our review of so much of the order dated July 29, 2009, as denied that branch of the plaintiff's motion which was for leave to renew. As a general rule, we do not consider any issue raised on a subsequent appeal that was raised, or could have been raised, in an earlier appeal that was dismissed for lack of prosecution, although we have the inherent jurisdiction to do so (see Rubeo v National Grange Mut. Ins. Co., 93 NY2d 750; Bray v Cox, 38 NY2d 350). Here, since the issue of whether the plaintiff should have been granted leave to renew based upon the submission of an additional affirmation from his treating physician could not have been raised on the prior appeal, the rule articulated in Rubeo and Bray is inapplicable.

The Supreme Court providently exercised its discretion in denying that branch of the plaintiff's motion which was for leave to renew. A motion for leave to renew "shall be based upon new facts not offered on the prior motion that would change the prior determination" (CPLR 2221[e][2]) and "shall contain reasonable justification for the failure to present such facts on the prior motion" (CPLR 2221[e][3]). The requirement that a motion for renewal be based on new facts is a flexible one, and the Supreme Court has the discretion to grant renewal based upon facts known to the moving party at the time of the original motion if the movant provides a reasonable excuse for the failure to present those facts on the prior motion (see Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 700; Rowe v NYCPD, 85 AD3d 1001, 1003; Gonzalez v Vigo Constr. Corp., 69 AD3d 565, 566). Nevertheless, a motion for leave to renew "is not a second chance freely given to parties who have not exercised due diligence in making their first factual presentation" (Renna v Gullo, 19 AD3d 472, 473 [internal quotation marks omitted]; see Bazile v City of New York, 94 AD3d 929; Andrews v New York City Hous. Auth., 90 AD3d 962, 963). Here, the additional affirmation from the plaintiff's treating physician was based on facts that were known to the plaintiff and his physician at the time the original motion for summary judgment was made in August 2008, and the fact that the plaintiff was not represented by counsel at that time does not, standing alone, constitute a reasonable justification for his failure to obtain an adequate affirmation from his physician (see Calloway v Calloway, 17 AD3d 286; see generally Matter of Evert, 72 AD3d 1081, 1082; Walter v Jones, Sledzik, Garneau & Nardone, LLP, 67 AD3d 671, 672). In any event, while the treating physician's additional affirmation was more detailed than his original affidavit, it nevertheless failed to provide a sufficient basis to change the Supreme Court's prior determination awarding summary judgment to the defendant (see Ramirez v Khan, 60 AD3d 748, 749).

PLATEK v TOWN OF HAMBURG

Appeal from an order of the Supreme Court, Erie County (Ralph A. Boniello, III, J.), entered May 12, 2011 in a breach of contract action. The order granted the motion of plaintiffs for summary judgment, declared that plaintiffs' loss is covered by the subject insurance policy, directed defendant Allstate Indemnity Company to pay plaintiffs' claim and denied the cross motion of defendant Allstate Indemnity Company for summary judgment.


KENNEY SHELTON LIPTAK NOWAK LLP, BUFFALO (ALAN J. DEPETERS OF COUNSEL), FOR DEFENDANT-APPELLANT.
LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (PATRICK J. MACKEY OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.


It is hereby ORDERED that the order so appealed from is modified on the law by vacating the declaration and as modified the order is affirmed without costs.

Memorandum: Plaintiffs commenced this action for, inter alia, breach of contract, alleging that defendant Allstate Indemnity Company (Allstate) breached its insurance contract with plaintiffs by failing to provide coverage for water damage to the basement of their home after an abutting water main ruptured and water flooded their property. Allstate disclaimed coverage pursuant to an exclusion in the insurance policy, denominated "item 4," which states that Allstate does not cover losses caused by "[w]ater . . . on or below the surface of the ground, regardless of its source . . . [,] includ[ing] water . . . which exerts pressure on, or flows, seeps or leaks through any part of the residence premises." Plaintiffs moved for summary judgment, seeking a declaration that the insurance policy covered their claimed loss and directing Allstate to pay their claim. Plaintiffs relied upon a provision in the insurance policy setting forth an exception to the exclusion relied upon by Allstate, which provides that Allstate covers "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from item[] . . . 4 . . . ." Plaintiffs averred that the exception applies because their claimed loss was caused by an "explosion" of the water main. Allstate cross-moved for summary judgment dismissing the complaint against it on the ground that the insurance policy does not cover plaintiffs' loss.

Supreme Court granted the motion and denied the cross motion, declaring that plaintiffs' loss is covered under the insurance policy and directing Allstate to pay plaintiffs' claim in accordance with the policy provisions. Although we conclude that the court properly granted summary judgment to plaintiffs on the issue of liability, we further conclude that the court erred in "declaring" that plaintiffs' claimed loss is covered under the policy, inasmuch as the action against Allstate is for breach of contract and not a declaratory judgment (see Gravino v Allstate Ins. Co., 73 AD3d 1447, 1448, lv denied 15 NY3d 705). We therefore modify the order by vacating the declaration.

The parties disagree with respect to whether the exception to item 4 under the policy exclusions applies, and they offer conflicting interpretations of that exception. Allstate characterizes the exception as an "ensuing loss" provision, and it thus interprets the exception to provide that any initial loss to the insured's property caused by the conditions set forth in item 4, i.e., "[w]ater . . . on or below the surface of the ground," is not covered under the policy but that, in the event that there is an "explosion . . . resulting from" that initial loss, any secondary or ensuing loss caused by the explosion is covered. Plaintiffs disagree that there must be a secondary or ensuing loss, and they assert that the exception applies because there was an "explosion [of the water main] resulting from" the conditions set forth in item 4, i.e., "[w]ater . . . below the surface of the ground," and causing "sudden and accidental direct physical loss" to their property.

In our view, both interpretations are "reasonable" (Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 NY3d 302, 308), and we therefore conclude that the exception "is ambiguous and thus should be construed in favor of plaintiffs, the insureds" (Trupo v Preferred Mut. Ins. Co., 59 AD3d 1044, 1045; see generally White v Continental Cas. Co., 9 NY3d 264, 267; Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383). Contrary to Allstate's contention, the relevant language of the insurance policy does not specify that the exception applies only to a secondary or ensuing loss or that the explosion must result from a loss to the insured's property caused by the conditions set forth in item 4. Rather, the policy states that the exception applies where the loss to the insured's property was "caused by [an] explosion . . . resulting from item[] . . . 4 . . . ."

We further conclude that plaintiffs established their entitlement to summary judgment by demonstrating that the exception at issue applies to their claimed loss (see generally Topor v Erie Ins. Co., 28 AD3d 1199, 1200). The term "explosion" is not defined in the insurance policy, and we thus "afford that term its plain and ordinary meaning' " (Gallo v Travelers Prop. Cas., 21 AD3d 1379, 1380). Webster's Third New International Dictionary defines "explosion" as "an act of exploding" (Webster's Third New International Dictionary 802 [2002]), and to "explode" is "to burst violently as a result of pressure from within" (id. at 801). Here, plaintiffs submitted evidence, i.e., the affidavits of plaintiff Frederick J. Platek and an expert engineer, sufficient to establish as a matter of law that there was an "explosion" of the water main abutting their property caused by the build up of pressure therein; that the pressure in the water main "result[ed] from" the conditions set forth in item 4, i.e., "[w]ater . . . below the surface of the ground"; and that the explosion of the water main caused "sudden and accidental direct physical loss" to plaintiffs' property. Plaintiffs thus met their initial burden on the motion, and Allstate failed to raise a triable issue of fact in opposition inasmuch as it did not oppose plaintiffs' factual showing (see generally Zuckerman v City of New York, 49 NY2d 557, 562).

All concur except Peradotto and Martoche, JJ., who dissent and vote to reverse in accordance with the following Memorandum: We respectfully dissent because, in our view, the homeowners insurance policy at issue specifically excludes plaintiffs' loss and the exception to the exclusion relied upon by plaintiffs does not apply. We would therefore reverse the order, deny plaintiffs' motion for summary judgment, and grant the cross motion of defendant Allstate Indemnity Company (Allstate) for summary judgment dismissing the complaint against it. We note at the outset that we agree with the majority that Supreme Court erred in "declaring" that the claimed loss is covered under the policy because this is a breach of contract action and not a declaratory judgment action (see Gravino v Allstate Ins. Co., 73 AD3d 1447, 1448, lv denied 15 NY3d 705). We therefore also would vacate the declaration.

Plaintiffs are the owners of certain residential real property in defendant Town of Hamburg, which property was insured under a policy of insurance issued by Allstate (policy). The policy provides, in relevant part, that Allstate does not cover "loss to the property . . . consisting of or caused by: 1. Flood, including, but not limited to, surface water . . . [;] 2. Water . . . that backs up through sewers or drains[;] 3. Water . . . that overflows from a sump pump, sump pump well or other system designed for the removal of subsurface water . . . [; or] 4. Water . . . on or below the surface of the ground, regardless of its source . . . [,] includ[ing] water . . . which exerts pressure on, or flows, seeps or leaks through any part of the residence premises" (water loss exclusion). In September 2010, plaintiffs' property was damaged when an abutting water main ruptured and water flooded their property, causing water damage to the basement of their home. Allstate disclaimed coverage under "item 4" of the water loss exclusion.

Plaintiffs commenced this action alleging that Allstate breached its insurance contract with plaintiffs by failing to provide coverage for the water damage to their home. Plaintiffs relied upon an exception to the water loss exclusion (exception), which provides that Allstate covers "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from items 1 through 4," i.e., the four categories of water incursion set forth in the water loss exclusion. Specifically, plaintiffs averred that the exception applies because their claimed loss was caused by an "explosion" of the water main. As noted by the majority, plaintiffs moved for summary judgment seeking a declaration that their loss is covered by the policy and directing Allstate to pay their claim. Allstate cross-moved for summary judgment dismissing the complaint against it on the ground that the policy does not cover plaintiffs' loss. The court granted the motion, denied the cross motion, declared that plaintiffs' loss is covered under the policy and directed Allstate to pay plaintiffs' claim in accordance with the policy provisions. We would reverse, deny plaintiffs' motion, thus vacating the improper declaration, and grant the cross motion of Allstate for summary judgment dismissing the complaint against it.

It is undisputed that the loss occurred when a water main ruptured outside plaintiffs' residence, causing water to enter the basement of their home. It is therefore further undisputed that the loss falls within item 4 of the water loss exclusion precluding coverage for "loss to the property . . . consisting of or caused by . . . [w]ater . . . on or below the surface of the ground, regardless of its source . . . [,] includ[ing] water . . . which exerts pressure on, or flows, seeps or leaks through any part of the residence premises." "[B]ecause the existence of coverage depends entirely on the applicability of [an] exception to the [water loss] exclusion," plaintiffs bear the burden of demonstrating the applicability of the exception (Borg-Warner Corp. v Insurance Co. of N. Am., 174 AD2d 24, 31, lv denied 80 NY2d 753; see Hritz v Saco, 18 AD3d 377, 378; Redding-Hunter, Inc. v Aetna Cas. & Sur. Co., 206 AD2d 805, 807, lv denied 86 NY2d 709).

In construing an insurance contract, the "parties' intent is to be ascertained by examining the policy as a whole, and by giving effect and meaning to every term of the policy" (Oot v Home Ins. Co. of Ind., 244 AD2d 62, 66 [internal quotation marks omitted]; see Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221-222 ["We construe the policy in a way that affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect" (internal quotation marks omitted)]). "[W]ords and phrases are to be understood in their plain, ordinary, and popularly understood sense, rather than in a forced or technical sense" (Oot, 244 AD2d at 66). "Where the provisions of the policy are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement" (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [internal quotation marks omitted]).

Unlike the majority, we conclude that, when viewing the policy as a whole, the claimed loss is not covered under the clear and unambiguous language of the policy. Plaintiffs did not purchase, and Allstate did not provide, what may generally be characterized as flood insurance. The water loss exclusion broadly exempts from coverage losses consisting of or caused by the entry of water into the insured premises "regardless of its source." The exception to that exclusion covers "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from items 1 through 4 listed above"(emphasis added), i.e., the four types of excluded water events. In our view, the exception should not be construed as intending to create coverage for water intrusion inasmuch as such a reading of the exception would supplant the water loss exclusion (see generally Narob Dev. Corp. v Insurance Co. of N. Am., 219 AD2d 454, lv denied 87 NY2d 804). Rather, we agree with Allstate that the exception is properly characterized as an "ensuing loss provision," excluding from coverage any initial loss to the insured's property caused by "[w]ater . . . on or below the surface of the ground," but covering secondary or ensuing loss caused by fire, explosion or theft that occurs as the result of an excluded water event (see id. ["Where a property insurance policy contains an exclusion with an exception for ensuing loss, courts have sought to assure that the exception does not supersede the exclusion by disallowing coverage for ensuing loss directly related to the original excluded risk"]).

As noted above, the exception provides that Allstate covers "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from" the entry of water into the residence as described in items 1 through 4 of the water loss exclusion. The phrase "resulting from" in the exception does not mean "caused by," nor should it be interpreted in that manner. Indeed, interpreting the exception to cover a loss where an explosion is caused by water outside the residence, as plaintiffs urge, contravenes the purpose of the water loss exclusion, which is to preclude coverage for losses caused by water entry into the residence (see ITT Indus. v Factory Mut. Ins. Co., 303 AD2d 177, 177 [rejecting plaintiff's "untenable interpretation that the policy provided coverage for a resulting loss of an excluded risk"]). Rather, the language "resulting from" is properly interpreted as referring to an "ensuing loss," i.e., a loss that follows or takes place after an excluded event (Goldner v Otsego Mut. Fire Ins. Co., 39 AD2d 440, 442; see Narob Dev. Corp., 219 AD2d at 454). In other words, the exception refers to a separate occurrence—fire, explosion or theft—that results from the water damage to the residence, and does not refer to the water damage itself. For example, a fire or explosion triggered by water damage to a circuit breaker or appliance, or a theft that occurs in an empty house rendered uninhabitable by water damage would constitute an ensuing loss. Our interpretation of the phrase "resulting from" is consistent with the dictionary definition of "resulting" ("[t]o come about as a consequence," "synonym[]" to follow), or "resultant" ("[i]ssuing or following as a consequence or result") (The American Heritage Dictionary 1487 [4th ed 2000]). Thus, in our view, the only reasonable interpretation of the exception is that it covers losses caused by fire, explosion or theft that follows one of the excluded water events set forth in items 1 through 4 of the water loss exclusion.

Given the nature of the water loss exclusion, we discern no other plausible way to read the exception. The water loss exclusion is for loss "consisting of or caused by" water intrusion; the coverage in the exception is for loss "direct[ly] . . . caused by" fire, explosion, or theft that "result[s] from" water intrusion. In order to adopt plaintiffs' interpretation, we would have to read the exception to cover a loss caused by an explosion that in turn is caused by water. The difficulty with that interpretation is exposed when the same interpretation is applied to a loss from "theft," also a part of the exception. Under plaintiffs' interpretation, the exception covers a loss caused by a theft that is caused by water—an illogical, if not absurd, reading. The weakness of plaintiffs' proposed interpretation is further exposed in reviewing the exception that covers "sudden and accidental direct physical loss caused by . . . theft . . . resulting from earth movement." Theft cannot be "caused" by earth movement, although theft might logically follow an earthquake if, for example, the door to the residence is damaged, the windows are shattered, or the house is rendered uninhabitable by the earthquake.

Because, in our view, plaintiffs' interpretation of the exception is unreasonable, we would reverse the order, deny plaintiffs' motion for summary judgment, thus vacating the improper declaration, and grant Allstate's cross motion for summary judgment dismissing the complaint against it.

Ramsarup v Rutgers Casualty Insurance Company

Law Office of Marc M. Isaac, PLLC, Freeport, N.Y., for
appellants.
Kral, Clerkin, Redmond, Ryan, Perry & Van Etten, LLP,
Melville, N.Y. (Michael G. Walker
of counsel), for respondents.
Bivona & Cohen, P.C., New York, N.Y. (Elio M. Di
Berardino of counsel), for defendant
Rutgers Casualty Insurance Company.


DECISION & ORDER

In an action, inter alia, to recover damages for fraud and negligent misrepresentation, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Sher, J.), entered August 24, 2010, which granted the motion of the defendants Lyons General Insurance Agency, Inc., and Anthony Kammas for summary judgment dismissing the complaint insofar as asserted against them.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of the defendants Lyons General Insurance Agency, Inc., and Anthony Kammas which was for summary judgment dismissing the cause of action to recover damages for fraud insofar as asserted against them, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, with costs to the plaintiffs.

In April 2006, the plaintiff homeowners entered into a home renovation contract with H. Ramjit Home Improvement, Inc. (hereinafter Ramjit). Prior to commencing its work, Ramjit provided the plaintiffs with a certificate of liability insurance which identified the defendant Rutgers Casualty Insurance Company (hereinafter Rutgers) as its insurer. Ramjit had obtained a one-year commercial general liability policy with coverage commencing February 23, 2005, through its insurance broker, Lyons General Agency, Inc. (hereinafter Lyons). The defendant Anthony Kammas was Lyons' president at that time. The policy was subsequently renewed for an additional year, commencing February 23, 2006. However, the certificate of insurance given to the plaintiffs, which was signed by Kammas, only reflected a period of coverage from February 23, 2005, through February 23, 2006. In June 2006, the plaintiffs' home had to be demolished, allegedly as a result of the faulty renovation work performed by Ramjit.

Thereafter, in or around August 2006, the plaintiffs commenced an action against Ramjit (hereinafter the underlying action), seeking damages for the demolition of their home. According to the plaintiffs, while the underlying action was pending, beginning in or around October 2006, the plaintiffs and their counsel contacted Lyons and Kammas multiple times, informed them [of the loss, and inquired as to whether the insurance policy issued to Ramjit had been renewed to cover the period during which their loss had occurred. At each instance, either a staff member of Lyons, or Kammas himself, told them that, at the time of the loss in June 2006, the policy had expired and had not been renewed. Nevertheless, during the course of the underlying action, the plaintiffs discovered that contrary to the representations of Lyons and Kammas, the policy had actually been renewed for the period commencing February 23, 2006, and was in full force and effect until cancelled at the end of September 2, 2006, for nonpayment of the premium and, thus, Ramjit was covered during the period of the plaintiffs' loss. As a result, the plaintiffs forwarded the summons and complaint in the underlying action to Rutgers, requesting that it provide coverage to Ramjit. However, Rutgers disclaimed coverage for failure to receive timely notice and based on other policy exclusions.

Thereafter, the plaintiffs obtained a judgment against Ramjit, which was not satisfied. In September 2009, the plaintiffs commenced this action against, amongst others, Lyons and Kammas, to recover upon this unsatisfied judgment, alleging, insofar as is pertinent to this appeal, fraud and negligent misrepresentation regarding the incorrect information conveyed to them by Lyons and Kammas as to the effective dates of the policy.

Lyons and Kammas subsequently moved for summary judgment dismissing the complaint insofar as asserted against them. The sole argument set forth in their moving papers was that they lacked privity with the plaintiffs and, thus, they could not be held liable for fraud or negligent misrepresentation. The Supreme Court granted the motion. As to both causes of action, it determined that Lyons and Kammas lacked privity of contract with the plaintiffs, and had no special relationship with the plaintiffs which approached privity. As to the fraud cause of action, the Supreme Court also determined that the plaintiffs failed to plead fraud with the requisite particularity. The plaintiffs appeal. We modify.

As for the plaintiffs' fraud cause of action, contrary to the Supreme Court's determination, Lyons and Kammas failed to make a prima facie showing of their entitlement to judgment as a matter of law, as a lack of privity of contract between the parties does not bar recovery for claims sounding in fraud (see e.g. Binyan Shel Chessed, Inc. v Goldberger Ins. Brokerage, Inc., 18 AD3d 590). Additionally, the Supreme Court should not have considered the contention that the plaintiffs failed to allege fraud with sufficient particularity, as Lyons and Kammas raised that contention for the first time in reply papers (see Kearns v Thilburg, 76 AD3d 705, 708).

As for the plaintiffs' negligent misrepresentation cause of action, in order to prevail on a cause of action sounding in negligent misrepresentation, a plaintiff is required to demonstrate "(1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148). Here, as the Supreme Court correctly determined, Lyons and Kammas established, prima facie, that they lacked privity of contract with the plaintiffs, and had no special relationship with the plaintiffs which approached privity, and the plaintiffs failed to raise a triable issue of fact in opposition (see Parrott v Coopers & Lybrand, 95 NY2d 479, 483-484).
RIVERA, J.P., FLORIO, DICKERSON and LOTT, JJ., concur.

Reyes v Post & Broadway, Inc.

Mintzer Sarowitz Zeris Ledva & Meyers LLP, New York, N.Y.
(Thomas G. Darmody of counsel), for third-party defendant-
appellant.
Margaret G. Klein & Associates (Shaub, Ahmuty, Citrin &
Spratt LLP, Lake Success, N.Y.
[Christopher Simone and Robert M. Ortiz],
of counsel), for defendants third-party
plaintiffs-respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, the third-party defendant appeals from a judgment of the Supreme Court, Westchester County (Adler, J.), entered October 4, 2010, which, upon a decision of the same court (Colabella, J.), dated November 2, 2009, made after a nonjury trial, is in favor of the defendants third-party plaintiffs and against it on the third-party cause of action for contractual indemnification in the principal sum of $3,400,000, and awarded the defendants third-party plaintiffs an attorney's fee, litigation costs, and litigation expenses in the principal sum of $148,340.17.

ORDERED that the judgment is modified, on the law and in the exercise of discretion, by deleting the provision thereof awarding the defendants third-party plaintiffs an attorney's fee, litigation costs, and litigation expenses in the principal sum of $148,340.17; as so modified, the judgment is affirmed, without costs or disbursements.

On March 8, 2006, the plaintiff, an employee of the third-party defendant (hereinafter the appellant), allegedly was injured when he fell from a scaffold while performing exterior stucco renovation work on premises owned by the defendant Post & Broadway, Inc., and managed by the defendant OK Management, Inc. (hereinafter together the defendants). The work was performed pursuant to a construction contract entered into by the defendants and the appellant. The plaintiff commenced an action against the defendants to recover damages for personal injuries, asserting, among other things, causes of action to recover damages for violations of Labor Law § 240(1) and § 240(2). The defendants commenced a third-party action against the appellant seeking contractual indemnification under the subject construction contract. After the plaintiff settled his Labor Law § 240(1) and § 240(2) causes of action against the defendants, and the defendants tendered the plaintiff the settlement amount, a nonjury trial was conducted on the third-party complaint.

At that trial, the parties stipulated that the defendants were not negligent in the happening of the accident. In addition, evidence was adduced that the subject construction contract (hereinafter the contract) provided that the appellant was obligated to stucco the back side of the subject premises for a stated price.

The contract recited that the "[c]ontractor assumes all liabilities." Before entering into the contract, the defendants' principal and the appellant's principal agreed that the appellant would assume responsibility for any accidents at the work site. The appellant's principal told the defendants' principal that he would "protect" him. The defendants' principal drafted the contract on a blank form supplied by the appellant's principal. With respect to the phrase "[c]ontractor assumes all liabilities," the unrebutted testimony of the defendants' principal was that he and the appellant's principal agreed that this phrase meant that the appellant agreed to assume any liability that arose on the part of the defendants as a result of the work performed pursuant to the contract. Based on the foregoing, the Supreme Court concluded that this provision constituted an agreement by the appellant to indemnify the defendants. A judgment was ultimately entered in favor of the defendants and against the appellant in the amount of the defendants' liabilities to the plaintiff, as reflected in the settlement between the defendants and the plaintiff in the main action. The judgment also awarded the defendants an attorney's fee, as well as litigation costs and litigation expenses they incurred in the third-party action.

The appellant argues on appeal that the defendants were not entitled to contractual indemnification, but that the contract, properly construed, only obligated the appellant to secure insurance covering the defendants. The appellant further argues that the Supreme Court erred in awarding the defendants an attorney's fee, litigation costs, and litigation expenses.

Upon review of a determination rendered after a nonjury trial, this Court's authority "is as broad as that of the trial court," and this Court may "render the judgment it finds warranted by the facts, taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses" (Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499 [internal quotation marks omitted]; see Vitiello v Merwin, 87 AD3d 632, 632-633).

A party's right to contractual indemnification depends upon the specific language of the contract (see Alfaro v 65 W. 13th Acquisition, LLC, 74 AD3d 1255, 1255; Sherry v Wal-Mart Stores E., L.P., 67 AD3d 992, 994; Canela v TLH 140 Perry St., LLC, 47 AD3d 743, 744). Where there is no legal duty to indemnify, "a contractual indemnification provision must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed'" (Alfaro v 65 W. 13th Acquisition, LLC, 74 AD3d at 1255-1256, quoting Hooper Assoc. v AGS Computers, 74 NY2d 487, 491; see Baginski v Queen Grand Realty, LLC, 68 AD3d 905, 907). "The promise [to indemnify] should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances" (Hooper Assoc. v AGS Computers, 74 NY2d at 491-492; see Alfaro v 65 W. 13th Acquisition, LLC, 74 AD3d at 1255-1256).

Here, the contract provision at issue broadly provided that the appellant "assumes all liabilities" of the defendants. This contractual language, combined with the unrebutted testimony of the defendants' principal that the appellant's principal agreed to provide complete "protection" to the defendants in the event of any accidents at the work site, contractually obligated the appellant to indemnify the defendants. Accordingly, the Supreme Court properly determined that the defendants were entitled to contractual indemnification from the appellant under the contract.

The defendant's entitlement to an award of an attorney's fee, litigation costs, and litigation expenses was never adjudicated before the Supreme Court and, thus, there was no basis for including such an award in the judgment (see Abreu v Manhattan Plaza Assoc., 214 AD2d 526, 527; Fulmer v Ashton, 17 AD2d 650; see also Peripheral Equip. v Farrington Mfg. Co., 29 AD2d 11, 14). There is no merit to the defendants' remaining contentions with respect to this award. Accordingly, the judgment must be modified by deleting the award of an attorney's fee, litigation costs, and litigation expenses to the defendants.
DILLON, J.P., FLORIO, CHAMBERS and MILLER, JJ., concur.