Dear Coverage Pointers Subscribers:

You have a situation?  We love situations.  Just call:  716-849-8942 – that’s my direct dial number.

Congratulations to Audrey, the Queen of No Fault, who makes a special announcement at the conclusion of her letter below.

Greetings from Montreal where I’m attending the summer meeting of the New York State Bar Association’s Torts, Insurance & Compensation Law Section. There is a great group of speakers and we’re in a beautiful venue.  If you were here on Saturday, you would hear my presentation on the Top Ten (or so) Most Important NY Insurance Coverage Decisions in the Past Twelve Months (but if you have been a faithful reader, you’ve read them all here when they first were decided). If you want a copy of the list and summaries of each, just ask.

Steve Peiper and I had the pleasure of traveling to Massachusetts earlier this week to present two topics before a top-notch claims team at a very special client.  We talked about the Good and Bad Faith Claim Handling and the Relationship Between Primary and Excess Carriers. We always love providing training.

The courts are quiet during the summer siesta season, for our issue is a mere 30 pages or so, about half the normal length.  No complaints from us.

 

Books, Books and More Books:

A must read:  The Mobile Wave: How Mobile Intelligence Will Change Everything is a 2012 best-selling nonfiction book (published June 26, 2012) by technologist and science historian Michael J. Saylor. The book argues – and quite convincingly – that mobile devices will be essential tools for life in the modern day, changing how businesses operate and how entire industries and economies are powered.

Also:  The Accidental Creative:  How to Be Brilliant at a Moment’s Notice by Todd Henry.

What am I reading now?  I knew you were curious.  Double Cross: The True Story of the D-Day Spies by Ben Macintyre.

 

One Hundred Years Ago Today:

Clarence S. Darrow, the famous American lawyer, was successful in winning another verdict of acquittal in a criminal trial — his own. Darrow had been charged with having attempted to bribe a juror in the Los Angeles Times bombing case.
Darrow, the Chicago lawyer associated for years with the cause of labor, was charged with bribery and attempting to influence jurors in the trial of James B. McNamara. From 1886 to 1917, Harrison Gray Otis was the owner and publisher of the Los Angeles Times. The newspaper was a conservative publication with strong anti-union editorials.
On October 1, 1910, in the middle of a strike called to unionize the metal trades of the city, the Los Angeles Times building was dynamited. There was a loss of life of at least 20, and about the same number injured, and the event was called, the "crime of the century" for many years thereafter.

The mayor hired a private investigator that was able to implicate a number of men in the bombing, including Ortie McManigal, James B. McNamara, and his brother John J. McNamara (secretary-treasurer of the International Union of Bridge and Structural Iron Workers). McManigal agreed to testify against the McNamara brothers.

Samuel Gompers, president of the American Federation of Labor as well as  other union officials looked at the criminal prosecution as an attack on the union movement, and hired Clarence Darrow to defend the brothers. However, by the time the trial began, Darrow had come to the conclusion that the brothers were guilty. He convinced the brothers to plead guilty. That decision stunned the city and angered the union leadership.

James McNamara received a life sentence, while his brother received a sentence of 15 years. Two others were later implicated and received life sentences. The damage from the trial was to plague Clarence Darrow for the rest of his life. Darrow himself was tried twice on charges that he attempted to bribe jurors in the case. He was acquitted in the first trial and there was a hung jury in the second. The prosecution agreed to forgo a third prosecution if Darrow promised never to practice law in California.

 

New Column Coming:

Jen Ehman has returned to the office after a short sabbatical which followed her new baby.  Finding that Marc Schulz has been ably handling her former column, the two prepared for a duel to resolve the conflict.

In order to prevent screaming and gnashing of teeth and the cost of removing coagulated blood from the office rugs, Marc will continue reviewing lower court coverage decisions and Jen will begin a new column on an entirely different topic in the next issue.  Stay tuned.

 

Liening Tower of Perley:

On July 24, 2012, United States District Court Senior Judge Dickinson Debevoise, wrote an opinion captioned “Not for Publication.”  Nonetheless, at 2012 WL 3156807 (the Westlaw Site), the decision in Sipler v. Trans Am Trucking, Inc., has been published.  Plaintiffs’ attorneys may latch on to this decision in an effort to avoid settlement discussions involving Medicare Set-Asides, however, as we will discuss, such an interpretation is overly simplistic and not an accurate reading of the case.  See a discussion in my column.

Michael F. Perley
[email protected]

 

A Century Ago Today:
New York Times
August 17, 1912
Page 1

109 HOURS A WEEK'S LABOR.;
State Officials Find Women Overworked in Buffalo Factories

Buffalo, Aug 16. -- The State Factory Investigating Commission of which Senator Robert F. Wagner of New York is Chairman, completed a tour of inspection of fifty manufacturing establishments here today.  The commission found many violations of the labor laws.

In certain canneries it was learned that in the busy canning season, women worked 100 hours a week.  Some manufacturers frankly admitted doctoring their time books to deceive labor officials.  In certain industries women testified that they worked all night while their husbands looked after their children.

Miss Mary E. Dreir of Brooklyn, a member of the Commission, was shocked and insisted the conditions generally affected the employment of women and children in manufacturing plants in this state and should be remedied.
Editor’s Note:  [With thanks the US Department of Labor Website]: After the horrendous Triangle Shirtwaist Fire on March 25, 1911, this Commission was established to examine the working conditions for women and children in New York.  The Factory Investigating Commission's achievements led to a total of 20 laws providing stricter regulation of occupational safety and health conditions, and the commission had fostered a greater public awareness of the nature and extent of the problem. Many of the manufacturers investigated had not known about conditions in their own plants. Public authorities in several cities were prompted to do investigations of their own. As the commission put it, "A general awakening has taken place throughout the State." As a delayed result of the commission's work, in 1919 the state adopted an industrial commission to set safety and health rules administratively. Frances Perkins was named to this body. Years later, Perkins termed the Factory Investigating Commission a "turning point" in American attitudes toward social responsibility. 

For an earlier story about the Triangle Shirtwaist fire, click here.

Attaboy Harry:

Harry F. “Keep’m Rolling” Mooney has been appointed as Vice-Chair of the ABA Tort Trial and Insurance Practice Section Commercial Transportation Litigation General Committee for the 2012-2013 fiscal year. Well deserved.

From Audrey Seeley:

The summer is slowly winding down and there has not been much of a reprieve from decisions in the no-fault world.  The arbitration decisions continue to focus around the sufficiency of peer reviews in denying durable medical equipment.  I have tried to pull out some of the decisions this time that explain why a peer review report is unpersuasive.  Again, the assigned arbitrators focus on whether the peer reviewer is reviewing and substantively commenting on all of the records and particularly addressing those records with positive objective findings.  Further, in one decision both sides were mildly criticized for using boilerplate language and medical journal citations.

Another issue that we continue to see as well as receive questions about is the sufficiency of peer reviews to deny surgery.  There is one reported arbitration decision in this edition worth reviewing on this issue.  In short, denying a surgery is difficult but has been successfully done.  The expert physician needs to ensure that all reports are thoroughly reviewed and discussed.  If there are any positive objective findings on an MRI or CT scan then they must be addressed.   Also, if there are pre-existing conditions, a careful analysis is required explaining why the pre-existing condition is the sole cause of the surgery.  It is also helpful to know whether the accident aggravated any pre-existing condition leading to the recommended surgery.  If no aggravation exists (which generally there is some temporary aggravation) then there should be some discussion referencing medical records demonstrating that it does not exist.

For those seeking training there are a few DRI programs coming up.  DRI’s Annual Meeting will be in New Orleans from October 24-28.  Featured speakers are Dee Dee Myers, Ambassador Karen Hughes, Niall Ferguson, and Roy Blount, Jr.  The Insurance Law Committee also has a blockbuster program featuring Curtis Wilkie, author of the Fall of the House of Zeus speaking about the downfall of powerful plaintiff’s lawyer, Dickie Scruggs.  You can register for the Annual Meeting by going to www.dri.org and clicking on the Annual Meeting link at the top of the site.

Also, DRI’s Insurance Law Committee is presenting its annual Insurance Coverage and Practice Symposium in New York from December 6-7.  The American Law Institute reporter and key participants, Tom Baker, Richard Neumeier, and Douglas Richmond, will be discussing the ALI’s ambitious project to create “principles” of liability insurance to guide insurers, insureds, and courts.  If you are an insurer and are interested in attending this conference at potentially no cost or little cost please send me an email at [email protected] for details.

Finally, on a personal note, I wanted to share with you that my husband and I are expecting our first child in February 2013!  We are excited and everyone is healthy.

I hope you enjoy the rest of summer and I will see you again before Memorial Day.

Audrey

In this week’s issue, attached:

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

  • Failure to Notify DMV of Policy Cancellation Voids Policy Termination, and Offending Motorist Not Uninsured
  • Proof Was Sufficient to Demonstrate That Offending Motor Vehicle Was (Self-) Insured for Purposes of UM Benefits
  • Excess Policy That Listed Specific Required Underlying Insurance Did Not Serve as Excess to Other Policies Not Listed
  • Absent a Special Relationship, Claim Against Insurance Broker Fails With Respect to Involvement in Workers Comp Trust

 

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

[email protected]

  • It is wonderful to be able to report that everyone in Serious-Injury Land is alive and well and enjoying a rare two-week vacation from both good and bad news.

 

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

  • District Court Does Not Impose Requirement for a Set-Aside After Settlement Negotiations Have Concluded

 

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley

aas@hurwitzfine.com

ARBITRATION

  • Chiropractic Care Not Medically Necessary Is Not Equal to Massage Therapy Not Medically Necessary
  • Durable Medical Equipment Not Medically Necessary Despite Goal of Decreasing Costly Chiropractic Visits
  • Durable Medical Equipment Prescribed at Initial Visit Not Medically Necessary
  • Partially Boilerplate Reports by Both Sides Leads to Split On Medical Necessity
  • Spinal Surgery Denial Upon Peer Review Not Persuasive

 

LITIGATION

  • Insurer Prevails on Failure to Appear for Scheduled EUO
  • Insurer’s Evidence Failed to Establish IME Scheduling Letters Mailed
  • Substitute Peer Doctor Should Have Been Permitted to Testify at Bench Trial
  • Insurer Demonstrated Failure to Appear for IME with Affidavits from Doctor and IME Company

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

Property

  • Failure to Identify What Damages Were Attributable to What Accident Is Fatal to Plaintiff’s Subrogation Claim for Paid Property Damage

Potpourri

  • No Common Law Liability Where Plaintiff’s Injuries Were Caused by the Same Debris that He Was Required to Clear
  • Law Office Failure Can, in Rare Instances, Provide a Reasonable Excuse for a Default

 

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

  • Governor Cuomo Vetoes Bill Which Sought to Allow Service Upon the Secretary of State to Occur at any of the Department of State Offices Rather Than Only the Albany Office

 

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

  • Allegations of Disparagement of Property Not Covered under Policy

 

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

  • Back Surgery After Failing to Appear for IME Constituted Spoliation of Evidence
  • Post-Concussion Syndrome Constitutes Significant Limitation of Use Survives Summary Judgment as Expert Found Anxiety, Depression, Anger, and Severe Personality Changes Caused By Repeat Trauma
  • Reliance on Potential Coverage Based on Certification of Insurance Insufficient to Establish Privity

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

  • Bad Faith Meets Procedural Jurisdiction

 

The summer is winding down.  Enjoy every minute.

Dan

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

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

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

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

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

NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

ASSOCIATE EDITOR
Audrey A. Seeley
[email protected]

ASSISTANT EDITOR
Margo M. Lagueras
[email protected]

 

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

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

Marc A. Schulz
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”
Liening Tower of Perley 
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]

08/15/12       In the Matter of GEICO v. Phillip
Appellate Division, Second Department
Failure to Notify DMV of Policy Cancellation Voids Policy Termination, and Offending Motorist Not Uninsured
On April 13, 2009, a GEICO insured vehicle was involved in a collision with a vehicle owned by Gaspard, and allegedly insured at that time by Allstate. Phillip, a passenger in the GEICO vehicle, was injured and Allstate, Gaspard’s carrier, claimed it had cancelled Gaspard’s policy four years before the accident.

When Phillip filed for Uninsured Motorist Arbitration, GEICO moved for a permanent stay of that arbitration claiming that Allstate did not properly cancel the policy. 

Allstate conceded that GEICO demonstrated that Allstate had issued the policy and then it was Allstate’s burden to prove the policy was properly terminated. Vehicle and Traffic Law § 313(2)(a) requires an insurance carrier to file with the Commissioner of Motor Vehicles a notice of cancellation within 30 days after the cancellation of an automobile insurance policy. Allstate could not prove that it filed that notice so its termination was ineffective.

GEICO wins its stay and Allstate is on the hook.

08/08/12       In the Matter of Metropolitan Property & Casualty v. Singh
Appellate Division, Second Department
Proof Was Sufficient to Demonstrate That Offending Motor Vehicle Was (Self-) Insured for Purposes of UM Benefits
In a proceeding to permanently stay arbitration of a claim for uninsured motorist benefits, the claimant's insurer has the initial burden of proving that the alleged offending vehicle was insured at the time of the accident, and thereafter the burden is on the party opposing the stay to rebut that prima facie showing,

Metropolitan made a prima facie showing that the alleged offending vehicle was a bus owned by a self-insurer, the New York City Transit Authority (hereinafter the NYCTA), by submitting, inter alia, the police accident report and portions of deposition testimony from a personal injury action commenced by the claimant against the NYCTA.  Singh, did not rebut Metropolitan's prima facie showing that the offending vehicle was self-insured and, thus, the Supreme Court properly granted Metropolitan's petition to permanently stay the uninsured motorist

08/08/12       Hasbani v. Nationwide Mutual Insurance Company
Appellate Division, Second Department
Excess Policy That Listed Specific Required Underlying Insurance Did Not Serve as Excess to Other Policies Not Listed
In 2008, Nationwide issued a personal umbrella policy (“PUP”) to Hasbani.  The Policy provided that it would pay damages in excess of the "retained limit," which it defined as "the total amount of the limit of liability of the Required Underlying Insurance."  The Policy's declaration page listed several "Required Underlying Insurance Coverages," including an automobile liability policy issued by a different insurer, GEICO, with a specific policy number ending in “58”.

While the Policy was in force the plaintiff Sylvia Safina-Hamadani (“Sylvia”) was involved in an automobile accident while operating a vehicle owned by Hasbani, and she and Hasbini were sued.  Nationwide denied coverage because the vehicle Safina-Hamadani was driving at the time of the accident was not covered by GEICO policy number ending in 58, but rather was covered under a different GEICO policy ending in “64”.  Nationwide took the position that the Policy only covered vehicles covered under the 58 GEICO policy number.

Nationwide met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the plaintiffs were not entitled to defense and indemnification because the 64 GEICO policy was not listed as one of the "Required Underlying Insurance Coverages" in the Policy, so vehicles covered under that GEICO policy were not covered under the Policy.

The provisions of the umbrella policy were clear and unambiguous, and did not apply to any and all automobile accidents and liabilities, including those outside of the "Required Underlying Insurance Coverages" named in the Policy.  A disclaimer pursuant to Insurance Law § 3420(d) is unnecessary when a claim does not fall within the coverage terms of an insurance policy.  An insurer is not required to deny coverage where none exists.

07/25/12       Consolidated Bus Transit, Inc. v. Treiber Group, LLC
Appellate Division, Second Department
Absent a Special Relationship, Claim Against Insurance Broker Fails With Respect to Involvement in Workers Comp Trust
Plaintiffs were all involved in the transportation business. From October 1, 2003 to January 1, 2005, they were insured for workers compensation as "Members" of the "Transportation Industry Workers Trust", ("TIWT"), a Group Self Insured Workers Compensation Trust, formed under Section 50 of the New York Worker's Compensation Law, ("WCL").  The TIWT was administered by Compensation Risk Managers, LLC, ("CRM"), and regulated by the New York Worker's Compensation Board.

Prior to being accepted for membership in the Trust, in accordance with statutory requirements, Plaintiffs submitted applications for workers compensation insurance and signed Joinder and Indemnification Agreements that explicitly stated that each Member, if accepted in the Trust, would be jointly and severally liable for all the obligations under the WCL of the Trust in which it was a member.

In 2008 the WCB discovered that CRM was mismanaging the TIWT and that the Trust was underfunded by millions of dollars.  Under the WCL, and in accordance with the Joinder and Indemnification Agreements, the WCB assessed the Members of the TIWT up to several million dollars each to make up for the funding short fall for the 2003-2004 period.

Plaintiffs sued their insurance broker for placing them in the TIWT alleging that prior to the execution of those agreements, their broker mislead them to believe that they would not be jointly and severally liable claiming that had they known they would have chosen to be insured by a standard carrier.  Plaintiffs also alleged that their insurance broker mislead them as to the financial status of the Trust and the administrative ability of CRM; failed to properly analyze the funding and business model of the trust; made a material misrepresentation that the trust was a "good deal" and generally breached a fiduciary duty.  The complaint alleged causes of action for fraud, fraudulent concealment, breach of contract, material misrepresentation, negligent misrepresentation, negligence, punitive damages, breach of a special relationship and breach of a fiduciary duty.

After the exchange of documentary discovery but before depositions, defendants moved for dismissal under CPLR §§ 3211(a) (1), (a) (7) and 3212. Justice Schmidt of the Supreme Court Kings County, in a detailed 17 page decision, granted summary judgment and dismissed the complaint in its entirety.  Plaintiffs appealed.

By decision dated July 25, 2012 the Second Department upheld Justice Schmidt's decision on all grounds stating that the defendants established, as a matter of law, that they did not have a special relationship giving rise to a fiduciary duty.

As to the claim of fraud and fraudulent concealment, the court found that these causes of action required, among other elements, the material misrepresentation of an "existing" fact, and thus "a representation of an opinion or a prediction of something which is hoped for or expected to occur in the future will not sustain an action for fraud".
Editor’s Note:  Kudos to Attorney Howard Kronberg of Keidel, Weldon & Cunningham, LLP, who successfully litigated this matter and prepared this summary.

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

[email protected]

It is wonderful to be able to report that everyone in Serious-Injury Land is alive and well and enjoying a rare two-week vacation from both good and bad news.

THE LIENING TOWER OF PERLEY
Michael F. Perley
[email protected]
Sipler v. Trans Am Trucking, Inc. (2012 WL 3156807)
DISTRICT COURT DOES NOT IMPOSE REQUIREMENT FOR A SET-ASIDE AFTER SETTLEMENT NEGOTIATIONS HAVE CONCLUDED
On the eve of trial, a personal injury action brought by Jeffrey Sipler was settled for $225,000.  At the time of the settlement, Mr. Sipler was Medicare eligible; however, his private health insurance had taken over payment of medical bills from the first-party automobile insurance policy that had previously provided coverage.  After the settlement was negotiated, the defendants sought to have the court impose a Medicare Set-Aside, which the court declined to do.  The basis for the court’s decision does not absolve Mr. Sipler from any responsibility to Medicare; to the contrary, it imposes a responsibility on him to pay for all of his medical expenses in the future should there be no insurance to cover them.  More specifically, the court determined that there is no federally mandated requirement for a Medicare Set-Aside, which is correct.  In addition, the court held noting:

Medicare is currently a secondary payer to both Mr. Sipler’s health insurance plan and his settlement with the defendants – which is being funded by a liability insurance policy – for future medical expenses arising out of the accident.”  Therefore, Mr. Sipler may not seek payment from Medicare for such expenses to the extent they are provided for by his health insurance policy and/or the settlement.  2012 WL 315807 at 3.

Thus, it is clear that Mr. Sipler will bear the ultimate personal responsibility for his medical expenses and, if the court’s order is enforced, Medicare has been absolved of any responsibility until the entire settlement proceeds have been exhausted.  This may be a hard ruling for plaintiffs if it becomes the general approach of the courts to these issues.

The decision is silent on the nature of the health insurance being provided to Mr. Sipler.  If the health insurance is from a Medicare Advantage Organization (MAO), Mr. Sipler’s life could become more complicated.  I remind the reader of In re Avandia Marketing on which I wrote in our July 5, 2012 issue.  In that case, the Third Circuit Court of Appeals (the circuit in which New Jersey is located), held that an MAO has the same  private cause of action as the Medicare Trust Fund to seek reimbursement for payments made as a private health insurer in lieu of Medicare.  If Mr. Sipler’s health insurance is from an MAO, he may see the depletion of his settlement more quickly than he anticipates.

AUDREY’S ANGLES ON NO-FAULT
Audrey A. Seeley
aas@hurwitzfine.com
ARBITRATION
08/15/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Chiropractic Care Not Medically Necessary Is Not Equal to Massage Therapy Not Medically Necessary

The Applicant, medical provider, sought reimbursement for massage therapy rendered to the assignor allegedly arising out of injuries sustained from a February 19, 2009, motor vehicle accident.  The assignor was also receiving chiropractic care three times a week as a result of this accident.  On February 24, 2009, the assignor’s neurosurgeon prescribed a lumbar spine MRI, which revealed herniations at L4/5 and L5/S1.  Thereafter, the assignor was prescribed massage therapy which was ultimately denied.

The assignor also underwent an April 6, 2009, cervical spine MRI which revealed herniations of varying degrees at C2/3, C4/5, and C5/6.  In May 2009, the assignor underwent a thoracic spine MRI which revealed a T6/7 herniation.

On February 10, 2010, the assignor was prescribed another round of massage therapy.  The massage therapist’s SOAP notes documented neck and extremity pain and objective findings.

The insurer denied the massage therapy upon the independent chiropractic examination of Gregory Hnat, D.C.  The assignor advised that she felt no progress was attained with chiropractic care.  Upon examination, the assignor complained that her entire body hurt.  Her cervical spine range of motion was normal except right rotation.  Some orthopedic tests were positive in the cervical spine.  The lumbar spine demonstrated normal range of motion except with regard to flexion.  Mr. Hnat opined that the assignor reached an end-result in his specialty.

The assigned arbitrator found Mr. Hnat’s report unpersuasive.  Specifically, there was no discussion regarding the positive findings of Mr. Hnat’s examination, the positive MRI findings, or the massage therapy records.  The fact that the assignor claimed chiropractic treatment was not beneficial had no bearing on whether massage therapy was medically necessary.  Further, the assigned arbitrator determined that there was no discussion as to whether massage therapy was medically necessary.

08/14/12       Applicant v. Respondent
Arbitrator Thomas J. McCorry, Erie County
Durable Medical Equipment Not Medically Necessary Despite Goal of Decreasing Costly Chiropractic Visits

The Applicant sought reimbursement for an LSO brace, TENs unit, and cervical traction unit dispensed to the assignor for injuries allegedly arising out of an April 14, 2011, motor vehicle accident.  The Applicant argued that the assignor experienced relief with in-office trial use.  Thus, the treatment goal was to provide pain relief and return the patient to normal range of motion without the need for costly office visits.

The insurer denied the durable medical equipment upon the peer review of Kevin Portnoy, D.C.  Mr. Portnoy’s report opined that the equipment was not medically necessary as their use was at best controversial and there was a perceived lack of contemporaneous chiropractic documentation.

The assigned arbitrator upheld the insurer’s denial as it was unclear how much improvement was realized from the durable medical equipment versus office chiropractic care.  Also, while the Applicant’s treating chiropractor had an admirable goal of reducing office visits there was nothing in the submission to demonstrate that treatments were actually decreased due to the durable medical equipment.

08/13/12       Applicant v. Respondent
Arbitrator Thomas J. McCorry, Erie County
Durable Medical Equipment Prescribed at Initial Visit Not Medically Necessary

The Applicant sought reimbursement for durable medical equipment dispensed to the assignor for injuries allegedly arising out of a January 21, 2011, motor vehicle accident.  The assignor’s treating chiropractor prescribed the durable medical equipment at the initial visit and also recommended chiropractic adjustments.

The insurer denied the durable medical equipment based upon Robert Sohn’s peer review report.  Mr. Sohn opined that equipment was not medically necessary as the equipment used at home would initially be used in the office to properly supervise the patient.  Further, at least one course of treatment using the equipment in-office should have been performed before determining the need for it at home.

The assigned arbitrator upheld the insurer’s denial determining that the timing of the prescription of the equipment on the initial visit was perhaps premature as a course of in-office use should have been first attempted.

08/13/12       Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Partially Boilerplate Reports by Both Sides Leads to Split On Medical Necessity

The Applicant sought reimbursement for an LSO brace and cervical traction unit prescribed to the assignor just less than one month post-accident.  The assignor treated with a chiropractor after the May 6, 2011, motor vehicle accident and was diagnosed with lumbar and thoracic sprain/strain as well as cervical radiculopathy.  A May 19, 2011, MRI of the lumbar and cervical spine revealed an L4/5 herniation and C5/6 disc bulge.  On May 20, 2011, the assignor was prescribed an LSO brace and cervical traction unit to stabilize and assist with healing.

The insurer denied the equipment upon the peer review report of John Gaiser, D.C.  Mr. Gaiser opined that the traction unit should have first been used in-office to ascertain if it was successful in treatment.  Also, such a unit is usually reserved for patients who have failed and been discharged from a formal treatment program.  Turning to the LSO brace, Mr. Gaiser opined that the medical literature found this device controversial at best and contradicted chiropractic care.

The Applicant submitted a rebuttal letter from the prescribing chiropractor.  He advised that the equipment prescribed was used in-office with benefit and prescribed to reduce physician dependency.  Mr. Gaiser also submitted a rebuttal letter adhering to his original opinion.

The assigned arbitrator indicated that both chiropractor’s letters contained boilerplate citations to medical authority “which may not have been authored by the respective treating chiropractor or the examining chiropractor.”  With regard to the treating chiropractor’s letter, the assigned arbitrator noted he decided another case that day with the same exact citations and quotes.  Also, the letter incorrectly references different patients.  The assigned arbitrator noted that this has a bearing on credibility of the document.

Likewise, the peer review report was also determined by the assigned arbitrator to have credibility issues.  This is because that report cited to the same 12 year old article also relied upon by another peer reviewer in a different case heard the same day by the assigned arbitrator.

The assigned arbitrator found the peer review persuasive as to the cervical traction unit but not persuasive as to the LSO brace.  As to the LSO brace the assigned arbitrator noted that the peer review did not discuss the positive MRI findings.

08/9/12         Applicant v. Respondent
Arbitrator Kent L. Benziger, Erie County
Spinal Surgery Denial Upon Peer Review Not Persuasive

The Applicant, Dr. Cappuccino, sought reimbursement for a lumbar surgery performed upon the assigned allegedly arising out of injuries sustained in a September 16, 2010, motor vehicle accident.  Dr. Cappuccino’s records revealed that the assignor had a severe significant segment breakdown with a large herniation at C3/4 and C4/5 above a prior fusion.  Also, a lumbar spine MRI revealed an L5/S1 herniation below an old fusion.  While the assignor had prior surgeries he had not been seen for four to five years.

The insurer denied the surgery upon a peer review by Dr. Anthony Leone.  Dr. Leone opined that the MRIs revealed degenerative conditions related to adjacent segment wear from prior fusions.  He indicated that the accident may have aggravated the abnormalities but the MRIs revealed something that occurred over a long period of time after the lumbar spine fusion was performed.

The assigned arbitrator did not find the peer review persuasive.  There was no discussion of the new L5/S1 herniation and the opinion that the injury was not casually related to the accident yet may be aggravated by the accident was not persuasive.

LITIGATION

08/6/12         Jamaica Dedicated Med. Care, PC a/a/o Alexander Montgomery v. State Farm Mut. Auto. Ins. Co.
Appellate Term, Second Department
Insurer Prevails on Failure to Appear for Scheduled EUO

The insurer established failure to appear for scheduled EUOs through submitted affidavits that the EUO letters were sent and the denial of claim forms were timely mailed.

08/6/12         Perfect Point Acupuncture, PC a/a/o Jocelyne Louis v. Auto One Ins. Co.
Appellate Term, Second Department
Insurer’s Evidence Failed to Establish IME Scheduling Letters Mailed

The insurer’s cross-motion was properly denied as it failed to establish that the letters scheduling IMEs were mailed to plaintiff’s assignor.  Thus, the insurer did not demonstrate that a condition under the policy was violated for failure to appear for scheduled IMEs.

08/6/12         Metropolitan Med. Supplies, LLC a/a/o Tenisha Addison v. GEICO Ins. Co.
Appellate Term, Second Department
Substitute Peer Doctor Should Have Been Permitted to Testify at Bench Trial

On appeal from a bench trial, the court did error with regard to plaintiff’s second cause of action in precluding the insurer’s expert testimony on the ground that the expert did not prepare the peer review report.  The expert witness should have been permitted to testify as to his opinion of lack of medical necessity which would be limited to the basis for the denial as set forth in the peer review report.  Accordingly, a new trial was required on the second cause of action.

08/6/12         Infinity Health Products, Ltd. a/a/o Alexander Fitzmichael Jr. v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department
Insurer Demonstrated Failure to Appear for IME with Affidavits from Doctor and IME Company

The insurer was entitled to summary judgment on the ground that the assignor violated a condition precedent to coverage under the policy in failing to appear for scheduled IMEs.  The submission of an affidavit from the IME scheduling company and an affidavit from the IME physician on failure to appear were sufficient to establish violation of the policy condition.

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]
Property

08/08/12       Nationwide Mutual Fire Ins. v Morgan Fuel & Heating Co., Inc.
Appellate Division, Second Department
Failure to Identify What Damages Were Attributable to What Accident Is Fatal to Plaintiff’s Subrogation Claim for Paid Property Damage
Defendant delivered fuel oil to Nationwide’s insured on March 13, 2006.  Three weeks later, Nationwide’s insured discovered that he was, again, out of fuel oil.  As a result, a call was placed to defendant Morgan.  Morgan reasoned that the delivery must have been made to the wrong house, and on April 7, 2006, delivered another shipment of fuel oil to the insured property. 

Unfortunately, it was later revealed that Nationwide’s insured’s fuel oil tank was leaking.  Thus, both the delivery from March 13, 2006 and April 7, 2006 had leaked into the surrounding ground.  Nationwide paid nearly $175,000 in remediation costs to remove oil and contaminated soil.  Thereafter, Nationwide commenced the instant action which sought contribution from defendant. 

Nationwide’s theory was that the second delivery caused additional damage to the property, and that defendant should have known that it had previously delivered more than enough fuel oil to the premises.  Thus, all of the fuel oil lost from the second shipment was caused due to defendant’s negligence.

Defendant moved for summary judgment on the basis that Nationwide could not determine how, or to what extent, the second shipment of oil caused new or additional damage to the premises.  In support of its argument, defendant presented expert testimony which opined that the fuel oil from the second shipment would have followed the same path as the first shipment.  Accordingly, the expert opined that there was no evidence that the area had sustained any more damage as a result of the second shipment. 

In opposition, Nationwide presented an expert who opined that the oil from the second shipment would have simply “pushed” the oil from the first shipment farther from the leak source.  Thus, under Nationwide’s position, the leak would have grown in circumference due to the second shipment.

In ruling for the defendant, the Court noted that defendant had established a leak prior to April 7, 2006 (the second delivery).  Moreover, the Court noted that Nationwide was unable to allocate how much of the costs for the cleanup could be attributed to oil from the second delivery.  As such, Nationwide failed to present a triable issue of fact and defendant’s motion was granted in its entirety.

Potpourri

08/08/12       Annicaro v Corporate Suites, Inc.
Appellate Division, Second Department
No Common Law Liability Where Plaintiff’s Injuries Were Caused by the Same Debris that He Was Required to Clear
Defendant Corporate hired Millennium to perform a renovation work at its office space in New York.  Plaintiff, who was employed by Millennium, sustained injury when he tripped on debris that was left on a staircase.  Plaintiff’s job, at the time of the incident, was to clear the staircase of the debris upon which actually precipitated his fall. 

Plaintiff commenced the instant action sounding in Labor Law §§ 200 and 241(6), respectively.  In affirming the dismissal of plaintiff’s Labor Law § 241(6) claim, the Court noted that the Common Law duty to provide a safe place to work did not extend to hazards that were inherent in the type of work being performed.  Accordingly, plaintiff had no basis to proceed in the instant claim.

In addition, the Court also dismissed plaintiff’s Labor Law § 241(6) claims were, as here, he was unable to assert any alleged violations which actually applied to the facts and circumstances of the instant case.

08/08/12       Muir v Coleman
Appellate Division, Second Department
Law Office Failure Can, in Rare Instances, Provide a Reasonable Excuse for a Default
Defendant’s former counsel failed to comply with multiple court orders.  As a result, and presumably after a series of warnings, defendant’s answer was stricken and default judgment entered.  Defendant’s new counsel presented the instant motion practice to vacate that default. 

In a rare break from the hardline stance adopted by the Second Department, the Court noted that law office failure, in certain circumstances, could provide a basis for a reasonable excuse.  This, coupled with the fact that defendant’s new counsel presented evidence of a potentially meritorious defense, persuaded the Court to vacate the default order. 

Peiper’s Point – I am willing to bet this was a fairly egregious fact pattern.  I would not rely upon the court’s benevolence in every default situation moving forward.

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

S5533/A8455
Governor Cuomo Vetoes Bill Which Sought to Allow Service Upon the Secretary of State to Occur at any of the Department of State Offices Rather Than Only the Albany Office
The Senate and the Assembly both passed bills that would allow service of a summons and complaint that previously could only be served upon the Secretary of State at the Department of State Office in Albany to be served at one of the Secretary of State’s regularly established offices.  Per the Sponsor’s Memorandum, three New York City agencies, Department of Transportation (NYCDOT), Department of Buildings (DOB), and Fire Department (FDNY) spend approximately $188,000 annually on service of summons and complaints upon the Secretary of State in Albany.  The memorandum alleges that allowing the service to be effectuated at any of the regular offices will allow these agencies and others to save money and resources used to effectuate service.

Governor Cuomo vetoed the legislation because “the staffing, leasing and equipment costs of complying with the provisions of this bill at each of the Department of State's offices, many of which do not have full-time staff, would be substantial, and there is no funding for this initiative.”

 

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

08/03/12       ProLink Holdings Corp. v. Federal Insurance Company. 
Seventh Circuit Court of Appeals –Illinois law applied
Allegations of Disparagement of Property Not Covered under Policy
In 2009, GPS Industries, Inc. and GPS IT, LLC [collectively “GPS”], filed a lawsuit against ProLink Holdings Corporation [“ProLink”], asserting claims of patent infringement, slander of title, and unfair competition.  ProLink’s insurer, Federal Insurance Company [“Federal”], refused to defend ProLink because the allegations did not trigger coverage under the policy, or in the alternative, were subject to various policy exclusions.  GPS and ProLink eventually settled and ProLink then sought a declaration that Federal had a duty to defend.

The district court granted Federal’s motion for judgment on the pleadings.  For the following reasons the United States Court of Appeals for the Seventh Circuit [“Court”] affirmed.

ProLink and GPS were business competitors, each manufacturing and selling GPS-based golf course distance measurement and course management products.  GPS owned U.S. Parent No. 5,438,518 [“518 patent”] for a player positioning and distance finding system.  On July 16, 2008, GPS sued ProLink, alleging that ProLink infringed and induced the infringement of the 518 patent by “making, using, leasing, offering to sell, and/or selling devices incorporating the inventions patented in the 518 patent.  In addition, GPS asserted claims of slander of title and unfair competition against ProLink.  GPS alleged that on June 30, 2006, ProLink falsely represented that it owned an exclusive license in perpetuity under the 518 patent as part of an intellectual property security agreement with Comerica Bank.  This agreement was recorded and allegedly encumbered GPS’s title to the 518 patent.   On August 17, 2007, ProLink entered into a second intellectual property security agreement, this time representing that it owned outright the 518 patent.  Again, this agreement was recorded and allegedly encumbered GPS’s title.

The GPS complaint alleges that ProLink knew that its representations were false and that it does not own the 518 patent or any associated rights.  In addition, GPS alleged that the ProLink defendants have continued to make false claims of license rights and/or ownership interests in the 518 patent to investors and to others within the golf industry, and have granted security interests in the 519 patent to others.  GPS argued that ProLink’s actions slandered GPS’s title to the 518 patent and constituted unfair competition.

Federal denied coverage to ProLink stating that GPS’s allegations did not satisfy the Policy’s definition of “personal injury” and, even they did, the Policy’s Intellectual Property Laws or Rights Exclusion or Expected or Intended Injury Exclusion would apply.

The district court chose to enter judgment in favor of Federal based on the First Publication Exclusion, noting that ProLink did not timely inform the court that the same Policy was in effect prior to 2007.  The Court noted, however, that given that the 2006-2007 policy was referenced in the record before the district court, it declined to rely upon the First Publication Exclusion in reaching its decision, but affirmed the district court’s decision on other grounds.

Federal argued that that GPS’ allegations do not satisfy the definition of “personal injury” because the only thing alleged is disparagement of property.   “Personal injury” in the Federal policy was defined in part as “injury, other than bodily injury, property damage or advertising injury, caused by an offense of: . . .electronic, oral, written or other publication of material that: (1) libels or slanders a person or organization (which does not include disparagement of goods, products, property or services).  ProLink, however, argued that it is reasonable to infer from the underlying complaint that ProLink implicitly defamed and disparaged GPS, not just its patent.  This implicit defamation is therefore covered, or at least potentially covered, under the policy. 

The Court agreed with Federal because the GPS complaint spoke only to disparagement of property, rather than disparagement of GPS as an organization.  ProLink’s representations concerned only its own rights to the 518 patent and never identified GPS or accused GPS or any wrongdoing.   Accordingly, the Court held that Federal did not have a duty to defend ProLink in the GPS litigation.

MARC’S REMARKS

Marc A. Schulz
[email protected]

07/31/12       Magnione v Jacobs
Supreme Court, Queens County
Back Surgery After Failing to Appear for IME Constituted Spoliation of Evidence
Ms. Magnione was a passenger in a taxi which collided with a car, allegedly sustaining “serious” injuries.  Ms. Magnione had been previously involved in other accidents and personal injury lawsuits yet in this action, she ignored numerous court orders requiring her appearance at IMEs.  Instead of attending the IMEs, Ms. Magnione had spinal surgery.  Defense counsel brought a motion to dismiss, arguing Ms. Magnione’s surgery and not going to IMEs prior to surgery, despite three court orders, constituted intentional spoliation of evidence warranting the most stringent sanction of dismissal. 

As this issue presents a case of first impression in New York, the court engaged in a lengthy review of our-of-state court decisions, ultimately relying on Clark v. E.I. DuPont, 2001 WL 1482831 (Del. Super. 2001) (Plaintiff filed action in 1997 and then, in 2001, only eight days before trial which had been scheduled for over a year, underwent elective hip replacement surgery).  The Clark court found the surgery prevented defendants from conducting any IMEs concerning the need for surgery and/or whether it was related to the alleged incident, and dismissed plaintiff’s complaint because defendant were irreparably injured and left without a remedy.

In this case, the court held Ms. Magnione’s spinal surgery was knowingly scheduled by plaintiff and her counsel to frustrate the court-ordered IMEs, and that the aforementioned operation constituted spoliation of evidence.  The court stated “a court should consider whether the damage and prejudice to a victim of spoliation are irreparable or may be remedied by the imposition of lesser spoliation sanctions, short of outright dismissal of a pleading.”  The court decided the only effective spoliation sanction in this case is dismissal of Ms. Magnione’s complaint. 

08/03/12       Fayolle v Richard Rothbard, Inc.
Supreme Court, New York County
Post-Concussion Syndrome Constitutes Significant Limitation of Use Survives Summary Judgment as Expert Found Anxiety, Depression, Anger, and Severe Personality Changes Caused By Repeat Trauma
Plaintiff was involved in an auto accident in October 2008 (“auto accident”).  Plaintiff was involved in an earlier accident in March 2008, where he fell on a sidewalk and allegedly sustained traumatic injuries to his face, along with brain damage (“trip & fall”).  In this case, Plaintiff claims the concussion and other injuries in the auto accident exacerbated his injuries sustained in the trip & fall and thus, he has sustained an actionable “serious” injury.

Defendants argued plaintiff has no competent medical evidence supporting his serious injury claim, relying on an expert report opining that the “minor fender bender” was not the cause of any of plaintiff’s symptoms, but rather the trip & fall incident in which plaintiff injured his head and face.  Plaintiff provided the report of a medical doctor specializing in sports medicine who opined plaintiff sustained a concussion in the auto accident, suffers from post-concussion syndrome, and his brain injuries affected multiple physiological systems, including cognition, cerebral auto-regulation, autonomic function, hypothalamic function and limbic function.  Plaintiff’s treating neuro-psychiatrist’s report stated his headache increased substantially so he had to resume high dose narcotic medications, after the auto accident he became anorexic, had nausea vomiting, developed a tremor in his left hand, lost 20 pounds in a month, and experienced significant personality changes again.

The court determined plaintiff submitted sufficient evidence to raise an issue of fact regarding whether plaintiff suffered a significant limitation or use of a body function or system.  The court further held plaintiff raised an issue of fact as to whether the auto accident was a substantial factor in exacerbating the injuries suffered in the trip & fall to the extent of a significant limitation of a body function or organ because plaintiff’s expert found he suffered symptoms of anxiety, depression, anger, and severe personality changes arising from the repeat trauma of the car accident.

08/03/12       Tower Inc. Co. of N.Y. v PMI Contrs., Inc.
Supreme Court, New York County
Reliance on Potential Coverage Based on Certification of Insurance Insufficient to Establish Privity
The underlying declaratory action was brought by Tower based on an action brought by Aradillas for negligence and labor law violations, allegedly sustaining injuries while working for Castilo and PMI Contractors, performing floor renovations on property owned by Alain Realty.  Tower alleges in the underlying action Alain was not named as an additional insured under its policy and it has no duty to defend or indemnify.

Alain brought third-party action against Professional Brokerage Services – PMI Contractor’s Insurance broker – and its own broker, alleging breach of oral contract, negligent misrepresentation, and negligence.  Professional seeks summary judgment, claiming it is not liable to Alain for breach of contract because the certificate of insurance has a disclaimer and there was no obligation to obtain liability insurance coverage for Alain.  Alain’s agent admitted he did not read the certification of insurance in its entirety, but Alain did make two payments of premiums on behalf of PMI Contractors and Castillo.  Alain claims the payments are proof of an oral agreement and that Professional made false misrepresentations which led Alain to reasonably believe it possessed the appropriate coverage.

The court held “an insurance broker cannot be found liable for breach of contract to an additional named insured because privity of contract only runs from a broker it its customer.”  The court further held “an insurance broker cannot be found liable for fraud or negligence based on the unreasonable reliance on information contained in a certificate of insurance that has a disclaimer.”  As an insured is presumed to have read, known, understood, and assented to the terms of the insurance policy after it has been retained, a negligence or breach of contract claim in this case cannot be sustained against the brokers, and therefore, the court dismissed Alain’s third-party complaint. 

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

BAD FAITH MEETS PROCEDURAL JURISDICTION

A recent case in Ohio dealt with a connection between bad faith claims and insureds’ attempts to inconvenience insurance companies and file bad faith claims in the most favorable venues. Scott Eliott Smith LPA v. Travelers Casualty Insurance Co. of America, 2012 WL 1758398 (S.D. Ohio 5/16/12). 

A law firm was involved in a commercial lease dispute and sought coverage from Travelers for counterclaims asserted against it under its CGL policy.  Travelers initially provided a defense under a reservation of rights, but later denied coverage and withdrew its defense.  The law firm sued Travelers for bad faith in the Ohio state courts.  Travelers removed the suit to federal court based on diversity jurisdiction since the law firm was located in Columbus, Ohio while Travelers was not “located” in Ohio.

The law firm apparently wanted to maintain the case in the Ohio state courts.  Therefore, the law firm sought to amend the complaint to add as a defendant the Travelers claim adjuster who worked on the claim who was an Ohio resident.  The law firm essentially claimed that the adjuster was a necessary party, and since he was an Ohio resident there was no pure diversity of citizenship to maintain the case in federal court.  The law firm cited cases dealing with legal malpractice claims which held that joinder of the attorneys committing malpractice might be required since a finding of negligence is required against those individuals.  The law firm sought remand of the case to state court since joinder of the adjuster to the case defeated complete diversity of citizenship jurisdiction in federal court.

The U.S. Magistrate Judge denied the motion for leave to amend and the application for remand.  Procedurally, the Judge pointed out that joinder of the adjuster was clearly a device to defeat diversity jurisdiction.  The court also rejected reliance on the legal malpractice line of cases.  In a legal malpractice claim, the attorney practices law, not the law firm, but with respect to a bad faith claim it is the insurance company, not necessarily the adjuster, that owes the duty of good faith.  Therefore, the adjuster was not a necessary party, and amendment of the claim to add the adjuster as a defendant really added nothing to the lawsuit.  It was simply a ploy to defeat diversity jurisdiction in federal court.

This case demonstrates the importance of venue in bringing and defending bad faith claims not only from state to state, but even within the state and federal courts in a given jurisdiction.  Sometimes, perceptions and regard for insurance companies, and other corporate and business entities, can be markedly different even within local federal and state courts.

 

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

08/09/12       State of California v. Continental Insurance Company
California Supreme Court
“All Sums With Stacking” Allocation Rule Adopted in California
California adopted the “all sums with stacking” allocation rule for continuous and progressive property damage liability stretching across multiple policy periods. In the latest installment of the long-running Stringfellow Acid Pits saga, the California Supreme Court held the policyholder could recover up to policy limits on all excess liability policies providing coverage for pollution property damage without regard to the amount of property damage occurring in any one policy period, and that stacking of the policies was appropriate.
Submitted by: Andrew B. Downs, Bullivant Houser Bailey PC

 

REPORTED DECISIONS

Consolidated Bus Transit, Inc. v. Treiber Group, LLC


Silverman Sclar Shin & Byrne, PLLC, New York, N.Y. (Mikhail Ratner and Vincent Chirico of counsel), for appellants.
Keidel, Weldon & Cunningham, LLP, White Plains, N.Y. (Howard S. Kronberg and Zachary A. Mengel of counsel), for respondents.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, fraud, and fraudulent concealment, the plaintiffs appeal from (1) an order of the Supreme Court, Kings County (Schmidt, J.), dated April 7, 2011, which granted the defendants' motion for summary judgment dismissing the complaint, and (2) a judgment of the same court entered May 13, 2011, which, upon the order, is in favor of the defendants and against them dismissing the complaint. The notice of appeal from the order is deemed also to be a notice of appeal from the judgment (see CPLR 5501[c]).

ORDERED that the appeal from the order is dismissed; and it is further;

ORDERED that the judgment is affirmed; and it is further,

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

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

The Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the cause of action alleging breach of fiduciary duty. The defendants demonstrated their prima facie entitlement to judgment as a matter of law by submitting evidence establishing that they did not have a special relationship with the plaintiffs giving rise to a fiduciary duty (see Murphy v Kuhn, 90 NY2d 266, 270; Pike v New York Life Ins. Co., 72 AD3d 1043; People v Liberty Mut. Ins. Co., 52 AD3d 378, 380; Sutton Park Dev. Corp. Trading Co. v Guerin & Guerin Agency, 297 AD2d 430, 432). In opposition, the plaintiffs failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Zuckerman v City of New York, 49 NY2d 557, 562).

The Supreme Court also properly granted that branch of the defendants' motion which was for summary judgment dismissing the causes of action alleging fraud and fraudulent concealment. "The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages" (Introna v Huntington Learning Ctrs., Inc., 78 AD3d 896, 898; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; High Tides, LLC v DeMichele, 88 AD3d 954, 957). " [R]epresentation of opinion or a prediction of something which is hoped or expected to occur in the future will not sustain an action for fraud'" (Platus Corp. Pension Plan v Nazareth, 271 AD2d 422, 423 [some internal quotation marks omitted], quoting Landes v Sullivan, 235 AD2d 657, 659 [internal quotation marks omitted]). A cause of action to recover damages for fraudulent concealment requires, in addition to scienter, reliance, and damages, a showing that there was a fiduciary or confidential relationship between the parties which would impose a duty upon the defendant to disclose material information and that the defendant failed to do so (see High Tides, LLC v DeMichele, 88 AD3d at 957; Manti's Transp., Inc. v C.T. Lines, Inc., 68 AD3d 937; Barrett v Freifeld, 64 AD3d 736, 738).

Here, the defendants demonstrated their prima facie entitlement to judgment as a matter of law dismissing the fraud cause of action by submitting evidence establishing that their statements regarding the financial stability of a trust constituted opinion. In opposition to the defendants' prima facie showing, the plaintiffs failed to raise a triable issue of fact. The defendants also demonstrated their prima facie entitlement to judgment as a matter of law dismissing the fraudulent concealment cause of action by demonstrating that there was no fiduciary or confidential relationship between the parties that would impose a duty upon the defendants to disclose material information. In opposition to the defendants' prima facie showing, the plaintiffs failed to raise a triable issue of fact.

The plaintiffs' remaining contentions are without merit.

Hasbani v. Nationwide Mutual Insurance Company, appellant.


Milber Makris Plousadis & Seiden, LLP, Woodbury, N.Y. (Lorin A. Donnelly of counsel), for appellant.
Phillips, Krantz & Associates, LLP, New York, N.Y. (Heath T. Buzin of counsel), for respondents.

DECISION & ORDER
In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiffs in an underlying action entitled Grimes v Schmidt, pending in the Supreme Court, Kings County, under Index No. 12670/10, the defendant appeals from an order of the Supreme Court, Kings County (Schmidt, J.), dated June 14, 2011, which granted the plaintiffs' motion for summary judgment and denied its cross motion for summary judgment.

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

In 2008 the defendant, Nationwide Mutual Insurance Company (hereinafter Nationwide), issued a personal umbrella policy (hereinafter the Policy) which provided "excess liability insurance" to the plaintiff Victor Hasbani. The Policy provided that it would pay damages in excess of the "retained limit," which it defined as "the total amount of the limit of liability of the Required Underlying Insurance." The Policy's declaration page listed several "Required Underlying Insurance Coverages," including an automobile liability policy issued by a different insurer, GEICO, under policy number 40819642258. [*2]

While the Policy was in force the plaintiff Sylvia Safina-Hamadani was involved in an automobile accident while operating a vehicle owned by Hasbani, and a personal injury action was commenced against Hasbani and Safina-Hamadani (hereinafter together the plaintiffs). The plaintiffs filed a claim with Nationwide for coverage under the Policy. After an investigation, Nationwide denied coverage because the vehicle Safina-Hamadani was driving at the time of the accident was not covered by GEICO policy number 40819642258, but rather was covered under a different GEICO policy, number 4124247364. Nationwide took the position that the Policy only covered vehicles covered under GEICO policy number 40819642258. The plaintiffs then commenced this action for a judgment declaring that Nationwide was required to defend and indemnify them in the underlying personal injury action.

The plaintiffs moved for summary judgment and Nationwide cross-moved for summary judgment. The Supreme Court granted the plaintiffs' motion for summary judgment and denied Nationwide's cross motion. Nationwide appeals and we reverse.

The Supreme Court erred in denying Nationwide's cross motion for summary judgment. Nationwide met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the plaintiffs are not entitled to defense and indemnification because GEICO policy number 4124247364 was not listed as one of the "Required Underlying Insurance Coverages" in the Policy, so vehicles covered under that GEICO policy were not covered under the Policy (see York Restoration Corp. v Solty's Constr., Inc., 79 AD3d 861, 863; see also Government Empls. Ins. Co. v Kligler, 42 NY2d 863, 864-865). In opposition, the plaintiffs failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562).

Contrary to the plaintiffs' contentions, the provisions of the umbrella policy were clear and unambiguous, and did not apply to any and all automobile accidents and liabilities, including those outside of the "Required Underlying Insurance Coverages" named in the Policy (see United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232; Labate v Liberty Mut. Ins. Co., 45 AD3d 811, 812). Moreover, a disclaimer pursuant to Insurance Law § 3420(d) is unnecessary when a claim does not fall within the coverage terms of an insurance policy (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188). An insurer is not required to deny coverage where none exists (see Hargob Realty Assoc., Inc. v Fireman's Fund Ins. Co., 73 AD3d 856, 858). Since the Policy did not provide coverage to the plaintiffs with regard to the vehicle involved in the accident, requiring payment of a claim upon a failure to timely disclaim would create coverage where it never existed (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d at 188).

For the same reasons, the plaintiffs' motion for summary judgment should have been denied.

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

In the Matter of Metropolitan Property & Casualty v. Singh


Naimark & Tannenbaum, Jamaica, N.Y. (Michael Naimark of counsel), for appellant.
Congdon, Flaherty, O'Callaghan, Reid, Donlon, Travis & Fishlinger, Uniondale, N.Y. (Laura A. Endrizzi of counsel), for petitioner-respondent.
Jones Jones, LLC, New York, N.Y. (Jacqueline R. Mancino of counsel), for proposed additional respondents.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Sarah Singh appeals from an order of the Supreme Court, Queens County (Rios, J.), entered June 30, 2011, which, without a hearing, granted the petition.

ORDERED that the order is affirmed, with costs payable by the appellant to the petitioner.

In a proceeding to permanently stay arbitration of a claim for uninsured motorist benefits, the claimant's insurer has the initial burden of proving that the alleged offending vehicle was insured at the time of the accident, and thereafter the burden is on the party opposing the stay to rebut that prima facie showing (see Matter of American Intl. Ins. Co. v Giovanielli, 72 AD3d 948, 949; Matter of Lumbermens Mut. Cas. Co. v Quintero, 305 AD2d 684, 685). Here, the petitioner, Metropolitan Property & Casualty Insurance Company (hereinafter Metropolitan), made a prima facie showing that the alleged offending vehicle was a bus owned by a self-insurer, the New York City Transit Authority (hereinafter the NYCTA), by submitting, inter alia, the police accident report and portions of deposition testimony from a personal injury action commenced by the claimant [*2]against the NYCTA and related defendants (see Matter of American Intl. Ins. Co. v Giovanielli, 72 AD3d at 949; Matter of Mercury Ins. Group v Ocana, 46 AD3d 561, 562). In opposition, the claimant, Sarah Singh, did not rebut Metropolitan's prima facie showing that the offending vehicle was self-insured and, thus, the Supreme Court properly granted Metropolitan's petition to permanently stay the uninsured motorist arbitration (see Matter of Eagle Ins. Co. v Rodriguez, 15 AD3d 399, 400; Matter of Lumbermens Mut. Cas. Co. v Quintero, 305 AD2d at 685).

Contrary to Singh's contention, the Supreme Court properly declined to make a finding of fact or determination regarding the involvement of the alleged offending vehicle in the accident. That issue was not raised in the instant proceeding to permanently stay the uninsured motorist arbitration on the sole ground that the offending vehicle was self-insured, and any issues concerning the involvement of the alleged offending vehicle in the accident should be addressed in the personal injury action (see Matter of Insurance Co. of N. Am. v Castillo, 158 AD2d 691, 692-693).

Annicaro v Corporate Suites, Inc.


Scott Baron & Associates, P.C., Howard Beach, N.Y. (Andrea R. Palmer of counsel), for appellant.
Baxter Smith & Shapiro, P.C., Hicksville, N.Y. (Margot L. Ludlam of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by his brief, from so much of an order of the Supreme Court, Queens County (Taylor, J.), dated June 15, 2011, as denied those branches of his motion which were for summary judgment on the issue of liability on the causes of action alleging common-law negligence and violations of Labor Law §§ 200 and 241(6) insofar as asserted against the defendants RFR Realty, LLC, Corporate Suites 757, LLC, and 757 3rd Avenue Associates, LLC, and granted those branches of the cross motion of the defendants RFR Realty, LLC, Corporate Suites 757, LLC, and 757 3rd Avenue Associates, LLC, which were for summary judgment dismissing the causes of action alleging common-law negligence and violations of Labor Law §§ 200 and 241(6) insofar as asserted against them.
ORDERED that the order is affirmed insofar as appealed from, with costs.

The defendant 757 3rd Avenue Associates, LLC (hereinafter 757 3rd Avenue), owned a commercial building in Manhattan. The defendant RFR Realty, LLC (hereinafter RFR Realty), managed the building. The defendant Corporate Suites 757, LLC (hereinafter Corporate Suites), leased the 20th and 21st floors of the building.

Corporate Suites engaged certain contractors, including Millenium Contracting Services Corp. (hereinafter Millenium), for a construction project to renovate the demised premises. A Corporate Suites employee supervised Millenium's employees.

The plaintiff was a Millenium employee. His job was to clean up the debris generated by the construction project, thereby making the site safer for the workers. On November 25, 2008, at 11:40 A.M., the plaintiff, who had been directed to remove debris from an unfinished interior staircase, began removing the debris. Starting with the top tread, he used a broom to sweep debris on each tread down to the bottom of the staircase. When he finished cleaning a tread, he would step backwards, onto a lower tread.

When the plaintiff stepped backwards off of one of the treads, he stepped onto a long, thin, threaded metal rod. The plaintiff, who had seen other threaded rods lying about the construction site on prior occasions, described them as "garbage" that he would pick up and discard. Hence, he indicated that if had seen the threaded rod that he stepped onto, he would have picked it up and discarded it. The plaintiff's foot rolled off of the threaded rod. As a result, the plaintiff lost his balance, and fell down the staircase.
The plaintiff allegedly sustained certain injuries as a result of the accident. He commenced this personal injury action, alleging violations of, inter alia, Labor Law §§ 200 and 241(6), as well as common-law negligence.

Owners and general contractors, and their agents, have a common-law duty to provide employees with a safe place to work (see Ramos v Patchogue-Medford School Dist., 73 AD3d 1010, 1011). Labor Law § 200 merely codified that duty (see Russin v Louis N. Picciano & Son, 54 NY2d 311, 316-317).

The common-law duty to provide employees with a safe place to work does not extend to hazards that are part of, or inherent in, the very work the employee is to perform (see Hansen v Trustees of M.E. Church of Glen Cove, 51 AD3d 725, 726). Here, RFR Realty, Corporate Suites, and 757 3rd Avenue (hereinafter collectively the RFR defendants) established, prima facie, that the plaintiff's job responsibilities required him to keep a particular area free of debris, and that his alleged injuries were caused by debris in that area (see Imtanios v Goldman Sachs, 44 AD3d 383, 385-386; Jackson v Board of Educ. of City of N.Y., 30 AD3d 57, 63). Since, in opposition, the plaintiff failed to raise a triable issue of fact, the Supreme Court properly granted those branches of the RFR defendants' cross motion which were for summary judgment dismissing the causes of action alleging common-law negligence and a violation of Labor Law § 200 insofar as asserted against them. For the same reasons, the Supreme Court also properly denied that branch of the plaintiff's motion which was for summary judgment on the issue of liability on those causes of action.

Labor Law § 241(6) imposes upon owners and general contractors, and their agents, a nondelegable duty to provide reasonable and adequate protection and safety for workers, and to comply with the specific safety rules and regulations promulgated by the Commissioner of the Department of Labor (see Comes v New York State Elec. & Gas Corp., 82 NY2d 876, 878; Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494, 501-502; Russin v Louis N. Picciano & Son, 54 NY2d at 317-318). To prevail on a cause of action alleging a violation of Labor Law § 241(6), a plaintiff must establish the violation of a specific and concrete provision of the Industrial Code, and that such violation was a proximate cause of his or her injuries (see Rakowicz v Fashion Inst. of Tech., 56 AD3d 747).

The plaintiff alleged that certain regulations were violated, and that such violations were proximate causes of his alleged injuries. However, the RFR defendants established, prima facie, that some of those regulations were inapplicable or were complied with (see Paladino v Society of N.Y. Hosp., 307 AD2d 343, 345). The RFR defendants also established, prima facie, that any violations of the remaining regulations were not proximate causes of the plaintiff's alleged injuries (see Briglio v J.D.K. Group, 238 AD2d 297, 298). Since, in opposition, the plaintiff failed to raise a triable issue of fact, the Supreme Court properly granted that branch of the RFR defendants' cross motion which was for summary judgment dismissing the cause of action alleging a violation of Labor Law § 241(6) insofar as asserted against them. For the same reasons, the Supreme Court also properly denied that branch of the plaintiff's motion which was for summary judgment on the issue of liability on that cause of action.
SKELOS, J.P., BALKIN, LEVENTHAL and ROMAN, JJ., concur.

Muir v Coleman


Brian M. Levy, New York, N.Y., for appellant.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from an order of the Supreme Court, Queens County (Kitzes, J.), dated November 18, 2011, which granted the defendant's motion pursuant to CPLR 5015 to vacate his default in failing to comply with certain court orders.

ORDERED that the order is affirmed, without costs or disbursements.
To vacate his default, the defendant was required to demonstrate a reasonable excuse for the default and a potentially meritorious defense (see Infante v Breslin Realty Dev. Corp., 95 AD3d 1075; Swensen v MV Transp., Inc., 89 AD3d 924, 925; L & L Auto Distribs. & Suppliers Inc. v Auto Collection, Inc., 85 AD3d 734). A court may, in its discretion, accept a claim of law office failure as satisfying the reasonable excuse requirement (see CPLR 2005; Goldstein Meadows Redevelopment Co Owners Corp. I, 46 AD3d 509, 511). Here, the defendant demonstrated that his default in complying with certain court orders was due to law office failure. Contrary to the plaintiff's contention, the defendant's conduct in relying on the representations of his former counsel did not constitute a willful default or neglect under the circumstances of this case (see Gironda v Katzen, 19 AD3d 644, 645; Belesi v Gifford, 269 AD2d 552; cf. Bazoyah v Herschitz, 79 AD3d 1081, 1082). Further, the defendant demonstrated a potentially meritorious defense (see Karamuco v Cohen, 90 AD3d 998; cf. Swensen v MV Transp., Inc., 89 AD3d at 925).

The plaintiff's remaining contention is without merit.

MASTRO, A.P.J., SKELOS, FLORIO and HALL, JJ., concur.


Nationwide Mutual Fire Ins. v Morgan Fuel & Heating Co., Inc.


Wichler & Gobetz, P.C., Suffern, N.Y. (Kenneth C. Gobetz of counsel), for defendant third-party plaintiff-appellant.
Sheps Law Group, P.C., Melville, N.Y. (Robert C. Sheps of counsel), for plaintiff-respondent.

DECISION & ORDER
In a subrogation action to recover benefits paid to the plaintiff's insured, the defendant third-party plaintiff appeals (1) from so much of an order of the Supreme Court, Dutchess County (Sproat, J.), dated October 22, 2010, as denied those branches of its motion which were for the imposition of sanctions against the plaintiff and the third-party defendant based on spoliation of evidence, and (2) from an order of the same court dated June 6, 2011, which denied its motion for summary judgment dismissing the complaint and on its third-party cause of action for contractual indemnification.

ORDERED that the appeals from so much of the order dated October 22, 2010, as denied those branches of the defendant third-party plaintiff's motion which were for the imposition of sanctions against the plaintiff and the third-party defendant based on spoliation of evidence, and so much of the order dated June 6, 2011, as denied that branch of the defendant third-party plaintiff's motion which was for summary judgment on its third-party cause of action for contractual indemnification, are dismissed as academic in light of our determination of the appeal from so much of the order dated June 6, 2011, as denied that branch of the defendant third-party plaintiff's motion which was for summary judgment dismissing the complaint; and it is further,

ORDERED that the order dated June 6, 2011, is reversed insofar as reviewed, on the law, and that branch of the defendant third-party plaintiff's motion which was for summary judgement dismissing the complaint is granted; and it is further,

ORDERED that one bill of costs is awarded to the defendant third-party plaintiff.

On March 13, 2006, the defendant third-party plaintiff, Morgan Fuel & Heating Co., Inc., doing business as Bottini Fuel (hereinafter Morgan Fuel), made a fuel oil delivery to residential customer James Iaquinto. About three weeks later, on April 6, 2006, Iaquinto called Morgan Fuel to complain that he had no heat and hot water in his home. Mistakenly believing that the March 13th delivery had been made to the wrong property and that Iaquinto had run out of oil as a result of the supposed misdelivery, on April 7, 2006, Morgan Fuel added approximately 484 gallons of fuel oil to the underground oil tank in his backyard. Several days later, Morgan Fuel realized that Iaquinto's fuel tank was leaking, and pumped out the oil remaining in the tank. The plaintiff, Nationwide Mutual Fire Insurance Company, as subrogee of James Iaquinto (hereinafter Nationwide), which had issued a homeowner's insurance policy to Iaquinto, paid $173,504 to a company specializing in environmental cleanup to remediate the damage to Iaquinto's property by removing contaminated soil. It is undisputed that Iaquinto's fuel tank was leaking prior to Morgan Fuel's April 7, 2006, delivery, and that the $173,504 paid by Nationwide encompassed the cost of cleaning up the oil that leaked from the tank both before and after April 7, 2006.

In an effort to recoup the entire cost of the cleanup, Nationwide, as subrogee, commenced this action against Morgan Fuel, primarily on the theory that the fuel company had negligently deposited fuel oil into an already leaking tank on April 7, 2006. After discovery had been conducted, Morgan Fuel moved, inter alia, for summary judgment dismissing the complaint on the ground that Nationwide would be unable to prove damages because there was no way to differentiate the costs associated with the clean-up of the oil discharged from the leaking tank prior to the delivery on April 7, 2006, from the costs associated with the clean-up of the additional oil discharged after that date. In support of its position, Morgan Fuel relied upon an expert's opinion that oil discharged after April 7, 2006, would travel in the same path as the oil discharged earlier, and that in the absence of soil samples from the Iaquinto property, which Nationwide had failed to retain, it was impossible to determine whether oil attributable to the delivery on April 7, 2006, was located in areas other than those already contaminated by prior discharges of oil. In opposition to the motion, Nationwide submitted the affidavit of an expert who concluded that, while oil discharged at a later point in time would travel the path of least resistance, it would push the existing oil deeper into the earth and expand the ring of oil, thus requiring additional remediation costs.

In an order dated June 6, 2011, the Supreme Court, inter alia, denied that branch of Morgan Fuel's motion which was for summary judgment dismissing the complaint. Morgan Fuel appeals, and we reverse the order dated June 6, 2011, insofar as reviewed.

Here, Morgan Fuel made a prima facie showing of its entitlement to judgment as a matter of law by submitting evidentiary proof that the subject oil tank was leaking prior to its allegedly negligent delivery of additional fuel oil on April 7, 2006, and that the costs associated with cleaning up the oil discharged before April 7, 2006, could not be separated from the costs associated with the clean-up of oil discharged after that date. In opposition, Nationwide failed to raise a triable issue of fact. Although Nationwide's expert concluded that the discharge of additional fuel oil after the delivery on April 7, 2006, pushed the previously discharged oil deeper into the ground and expanded the ring of contamination, he offered no methodology by which the costs associated with the clean-up of oil discharged after April 7, 2006, could be allocated. Under these circumstances, the affidavit of Nationwide's expert does not provide a nonspeculative basis upon which a determination can be made as to whether, and to what extent, Morgan Fuel's alleged negligence in adding additional fuel oil to the tank on April 7, 2006, contributed to the costs of remediation. Thus, the affidavit of Nationwide's expert was insufficient to defeat summary judgment (see Romano v Stanley, 90 NY2d 444, 451-452; State of New York v Slezak Petroleum Prods., Inc., 96 AD3d 1200; Tifft v Bigelow's Oil Serv., Inc., 70 AD3d 1248, 1249; Hilltop Nyack Corp. v TRMI Holdings, 272 AD2d 521, 523; Prato v Vigliotta, 253 AD2d 749, 750; cf. Fuchs & Bergh, Inc. v Lance Enters., Inc., 48 AD3d 626, 627). Accordingly, the Supreme Court should have granted that branch of Morgan Fuel's motion which was for summary judgment dismissing the complaint.

In light of our determination that Morgan Fuel is entitled to summary judgment dismissing the complaint, its appeal from so much of the order dated June 6, 2011, as denied that branch of its motion which additionally sought summary judgment on its third-party cause of action for contractual indemnification against Iaquinto, and its appeal from so much of an order dated October 22, 2010, as denied those branches of its motion which were for the imposition of sanctions against the plaintiff and the third-party defendant based on spoliation of evidence, have been rendered academic (see Spence v Island Estates at Mt. Sinai II, LLC, 79 AD3d 936, 939; Abbattista v King's Grant Master Assn., Inc., 39 AD3d 439, 442; Cardozo v Mayflower Ctr., Inc., 16 AD3d 536, 538).

SKELOS, J.P., FLORIO, ENG and ROMAN, JJ., concur.

Government Employees Insurance Company v. Phillip


Gail S. Lauzon (Montfort, Healy, McGuire & Salley, Garden City,
N.Y. [Donald S. Neumann, Jr.], of counsel), for appellant.
Robert P. Tusa (Sweetbaum & Sweetbaum, Lake Success,
N.Y. [Marshall D. Sweetbaum], of
counsel), for respondent-respondent.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Kurtz, R.), dated April 27, 2011, as, after a hearing, denied the petition and directed the parties to proceed to arbitration.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the petition is granted, and the arbitration is permanently stayed.

On April 13, 2009, a vehicle insured by Government Employees Insurance Company (hereinafter GEICO), was involved in a collision with a vehicle owned by Altagrace Gaspard, and allegedly insured at that time by Allstate Indemnity Company (hereinafter Allstate). As a result of the accident, Joan Phillip, a passenger in the GEICO vehicle, allegedly sustained personal injuries. Allstate claimed that it had cancelled Gaspard's policy of insurance in April 2005, and GEICO commenced this proceeding to permanently stay arbitration of Phillip's claim for uninsured motorist benefits under the GEICO policy. After a framed-issue hearing on whether Allstate had properly terminated coverage prior to the accident date, the Supreme Court denied the petition, and directed the parties to proceed to arbitration. GEICO appeals and we reverse.

Allstate concedes that GEICO made a prima facie showing at the hearing that Allstate had issued a policy of insurance that was in existence at the time of the accident. As a result, the burden then shifted to Allstate to establish that it had validly cancelled the subject policy prior to the accident date (see Matter of Mercury Ins. Group v Ocana, 46 AD3d 561). Vehicle and Traffic Law § 313 governs the procedures which an insurance carrier must follow in order to properly cancel an automobile insurance policy. Vehicle and Traffic Law § 313(2)(a) requires an insurance carrier to file with the Commissioner of Motor Vehicles a notice of cancellation within 30 days after the cancellation of an automobile insurance policy. Failure to strictly comply with this provision results in the termination of coverage being invalid as to third parties (see Matter of Progressive Northeastern Ins. Co. v Barnes, 30 AD3d 523; Matter of Progressive N. Ins. Co. v White, 23 AD3d 477). The evidence adduced at the hearing did not demonstrate that Allstate complied with this provision when it terminated Gaspard's policy. Thus, the termination of coverage by Allstate was not effective with respect to the claim made by Phillip arising out of the April 13, 2009, accident (see Matter of Chubb Group of Ins. Co. v Williams, 14 AD3d 561).

Accordingly, the petition to permanently stay arbitration pursuant to the uninsured motorist provisions of the GEICO policy should have been granted.