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Coverage Pointers - Volume XIV, No. 9

Dear Coverage Pointers Subscribers:

Greetings from the DRI Annual Meeting in New Orleans.  It’s a big day in Coverage Pointers history.

We bring you the Big Easy in newsletter delivery:

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First Party Decisions:
See Steve Peiper’s offerings below, which include two (count’em, two) Court of Appeals (New York’s highest court) decisions in the first party arena decided in the last couple of days.
Ask Tim:

Many of you know that we founded and moderate the New York Insurance Law group on LinkedIn.  If you haven’t been there lately, you have missed the three-part posting blog on NY Changes to the Personal Auto Policy by Tim Dodge, Director of Research & Media Relations at Independent Insurance Agents & Brokers of New York, Inc., (IIABNY).  Tim is known far and wide for his coverage blog, Ask Tim.  His insightful analysis and thoughtful discussions are a must read for NY insurance practitioners.  Click here for access.

Albany Office:

Every so often we remind folks that we do have an office in Albany, staffed by the ever-delightful and clever Cassandra (Cassie) Kazukenus.  You can reach her through our main switchboard, 716-849-8900.
Are Campaigns Nasty Today?  One Hundred Years Ago It Was the Same:

The New York Times

COLONEL STARTS LIBEL SUITS AGAINST EDITOR
Criminal and Civil Actions Grow Out of Charge That He Gets Drunk

MICHIGAN MAN DEFENDANT
First Chance Roosevelt Has Had to Reach a Person of Responsibility in Reports of His Intemperance

In a statement made public yesterday at the Progressive national headquarters it was announced that criminal and civil actions for libel had been brought by Theodore Roosevelt in the state court at Marquette, Mich., against George A. Newett, editor and publisher of “The Iron Ore,” a weekly newspaper published at Ishpeming, Mich.  The civil action demands nominal damages of $5,000.

The action was taken, the statement declared, because of the publication by Mr. Newett in “the Iron Ore” of Saturday, October 12, of an article headed “The Roosevelt Way,” which included, among other alleged slanders, the following paragraph:

Roosevelt lies and curses in a most disgusting way; he gets drunk, too, and that not infrequently, and all his intimates know about it. All who oppose him are wreckers of the country, liars, knaves, and undesirables. He alone is pure and entitled to a halo. Rats. For so great a fighter, self-styled, he is the poorest loser we ever knew!

It has been well known to Colonel Roosevelt and his friends for a long time, the statement said, that his opponents were conducting an insidious campaign of slander against him, and seeking by innuendo and covert suggestion to create the impression throughout the country that he was a heavy drinker and that he was frequently intoxicated.  No respectable person of responsibility, so far as he is known to Colonel Roosevelt and his friends, had dared to make this charge in an open and responsible way until Mr. Newett made it in his newspaper.

The letter written by Colonel Roosevelt some weeks ago in which he spoke about his habit regarding all beverages, and said that he drank about as much as Dr. Lyman Abbott, the statement declared, was the result of reports brought to him by friends that slanderous stories of such a nature were being circulated as widely as his opponents could procure.  It appeared, however, that opponents of Mr. Roosevelt continued to spread this falsehood concerning his personal habits, the statement said, and the colonel’s friends had been watching to secure evidence of the utterance of this libel by any responsible person.  The publication of the article in the Ishpeming “Iron Ore” was the first case that had come to the notice of Mr. Roosevelt or his friends. 

On May 26, 1913, a trial started in Marquette, Michigan.

When Roosevelt arrived in Marquette for the trial, he was buoyed by the support he received at the train station. He also had the pleasure of watching Newett’s defense go up in smoke quickly once the trial began. Roosevelt had an impressive array of men come and vouch that he was not a drunkard. The witnesses included Gifford Pinchot, Robert Bacon, Jacob Riis, and TR's cousin Emlen Roosevelt. Newett’s star witness, a journalist who had sworn he’d seen Roosevelt drunk, was forced to flee the country because of grand larceny charges before the start of the trial.

In the end, Newett read a statement of retraction in court and Roosevelt waived damages. The trial had been more about restoring Roosevelt’s good name, damaged by the 1912 presidential campaign, to its former national hero glory.

In a letter to his son Kermit following the end of the trial, Roosevelt noted he was very satisfied with the outcome but wished he could have avoided the expense of it.

Audrey’s Angle

This edition is being brought to you from the DRI Annual Meeting in New Orleans.  DRI has yet again brought to the defense industry a timely, high quality program.  I listened to Ambassador Karen Hughes and Dee Dee Myers engage in a point counterpoint this morning regarding their parties' prospective candidate.  It was inspiring to see two powerful women come together to discuss their own personal views on the economy and healthcare while debating each other with class whether their parties' candidate has the better policy.  Dee Dee Myers though was able to find common ground at the end of the presentation by stating that she believes these issues could be solved by placing the women leaders in one room to make the decision. 

Thereafter, I listened to Roy Blount, Jr., NPR radio's voice for Wait Wait, Don't Tell Me discuss the humorous differences between the north and the south.  He discussed pig and possum tossing to grits to who is his favorite Southern politician.  Finally, the afternoon was rounded out with insurance coverage issues.  The Insurance Law Committee put together two great presentations.  The first was a panel discussion on independent counsel and the insurer's and insured's rights when the choice of independent counsel is triggered.  The second was a discussion with Curtis Wilkie, author of the Fall of the House of Zeus documenting the rise and downfall of Dickie Scruggs.

There is a must read Appellate Division decision this edition regarding the insurer's extremely narrow exception to the preclusion rule.  This decision continues to demonstrate how the insurer's rights are becoming virtually nonexistent to rely upon coverage defenses when an untimely denial has been issued.  If you would like a complete copy of the decision please email me at [email protected].

Audrey Seeley

Suozzi’s Municipal Law Pointer:
Paul Suozzi ([email protected]) leads our municipal law defense team.  From time to time, he reports on significant cases from our appellate courts.  He reports below on an October 18, 2012 Court of Appeals decision:

COURT OF APPEALS REBUFFS ATTEMPT TO EXPAND SCHOOL’S DUTY TO SUPERVISE

In  Jayvaun Stephenson v. City of New York, et al.  2012 NY Slip Op 06992, a unanimous Court of Appeals refused to hold a school responsible for an off-school premises assault by one student against another.  The assault occurred two blocks from the boys’ school before school hours.  The boys had been involved in an altercation in school just two days before, which resulted in in-school suspensions for both boys.  The assistant principal made sure the boys were dismissed at different times so that further altercations would not occur.  The plaintiff claimed the assailant threatened him on school premises the day before the assault.  During discovery the trial court sanctioned the school for failure to produce records and held that defendants were deemed to have notice of the incident. 

Defendants moved for summary judgment, arguing that it owed no duty to plaintiff since the assault occurred before school and off school property.  The motion was denied.  The Appellate Division reversed and dismissed the complaint, but two Justices dissented, which allowed the case to proceed to the Court of Appeals.

The memorandum decision notes that a school’s common law duty to supervise students “stems from the fact of its physical custody of them” (Pratt v. Robinson, 39 NY2d 554, 560[1976]) and that a school must “exercise such care of them as a parent of ordinary prudence would observe in comparable circumstances” (Mirand v City of New York, 84 NY2d44, 49).  It explained the simple fact that in assuming physical custody and control of students, a school takes the place of parents and guardians (citing Mirand, supra).  It further explained that schools are not insurers of students’ safety and “cannot reasonably be expected to continuously supervise and control all movements and activities of students; therefore, schools are not to be held liable ‘for every thoughtless or careless act by which one pupil may injure another.’” (id., quoting Lawes v Board of Education, 16 NY2f 302,306[1965]).

The Court distinguished cases such as Bell v Board of Educ. of City of N.Y. (90 NY2d 944 [1997]) and Ernest v. Red Cr. Cent. School Dist. (93 NY2d 664 [1999]) where liability extended to off-premises injuries because they occurred either during school hours or shortly thereafter upon the student’s departure from school. 

The Court also found that the school cannot be held liable for a failure to notify the plaintiff’s mother of impending danger, stating that there is no statutory duty to inform parents about generalized threats made at school and the circumstances don’t give rise to a common law duty to notify parents of threatened harm from a third-party.  The court cites Kimberly S.M. by Mariann D. M. v Bradford Cent. School, 226 AD2d 85 (4th Dept 1996), a case which involves the statutory duty to report sexual abuse.

A question left unanswered is whether a more specificthreat would give rise to a common law duty to notify a parent, even if the threat may be carried out off school premises. 

One Hundred Years Ago:  Medical Breakthrough:

THE NEW YORK TIMES
October 26, 1912
ORGANS SEPARATED FROM BODY
MADE TO KEEP WORKING

Dr. Alexis Carrel Tells of
Living Stomach, Heart and Kidneys

KEPT IN HIS LABORATORY
Surgeons Are Amazed as Doctor
Connected With the Rockefeller Institute
Describes Experiments – Will Add Much to Science.

New York, October 26. – Having kept alive for 104 days a heart removed from its organism, Dr. Alexis Carrel has now added to the wonders of his surgery the transfer of a heart, stomach and kidneys from their casement of flesh to the vessels in his laboratory, where they are now living and performing their normal functions. 

This experiment is in progress in the Rockefeller Institute.  None of the organs, of course, is that of a human being.

Dr. Carrel told the story to an audience of physicians and surgeons, who sat amazed under the narrative.  As he finished, Prof. August Gaertner of the University of Jena, himself a guest at the meeting, said that he considered himself most fortunate, on the eve of sailing for home, in having heard of this extraordinary achievement from Dr. Carrel’s own lips.  He believed it heralded the foundation of a new science, destined to solve some of the mysteries of life and death.
Editor’s Note: Dr. Carrel was awarded the Nobel Prize in Physiology or Medicine in 1912.

Peiper’s Postulates:

Red Alert, Red Alert...If you never read our first party offerings, we'd encourage you to give us a try this week!

Just today, the Court of Appeals has handed down two major decisions which are sure to have an impact on the industry's management of risks associated with dwelling coverage. The first case, Bentoria Holdings, Inc. v Travelers, involves the Court's review of the often litigated earth movement exclusion.  Faithful first party aficionados will recall that the high court previously held that the exclusion was ambiguous and inapplicable where the earth movement (and subsequent damage) was occasioned due to neighboring excavation.  That had been the rule since 2009.  Not so fast, sayeth Travelers, who relying upon specifically tailored language in its own policy was able to breathe life into an area that was gutted by the Court's earlier decisions.

The second issue discussed by the high court, in Dean v. Tower Ins. Co of NY, is the residence premises requirement for dwelling coverage.  Again, as those of us who follow the cases know, the industry had been on a roll in convincing court after court that the insured premises must be used as a residence premises of the named insured for dwelling coverage to trigger under a typical homeowners' policy.  The policyholder bar had been complaining for some time that the standards set by the Appellate Divisions created an onerous burden on a homeowner who was completing work at a newly purchased home before taking up residency in earnest.  Prior to October 25, 2012, if you were not a resident (ie., lived at the premises) there was no coverage.  By the way, if you didn't know that...you really ought to read this column closer! 

Not no more, we are sad to report.  In a startling decision, the Court of Appeals has held that the inquiry on residence premises is not one of actual residence (as pointed out by Judge Jones' well-reasoned dissent), but rather one of occupancy.  In essence, the Court of Appeals has established that a jury is likely necessary to determine whether the insured's actions are sufficient to establish occupancy which, in the majority's opinion, roughly equates to residency. While an abandoned dwelling is still likely outside the scope of Coverage "A", we note that the denial to the transient homeowner just got a lot harder to prove.   

The good news to take from this decision (if there is any) is that the Court's decision that issues related to occupancy are questions of fact necessarily implies that an insured is likely precluded from summary judgment on these issues as well.  Having been dealt a major blow to the management of risk related to unoccupied dwellings, we would suggest that the onus will now fall Underwriting's inspectors to ferret out undesirable premises before the loss ensues.

Although the Court of Appeals takes most of the spotlight this week, we would also note a very interesting case from the Second Department detailing the scope of coverage obligations that are owed to insureds under a title insurance policy.  In short, a policy is not compelled to provide a defense to its insured where a challenge to the validity of title is brought up in response to the insured's own affirmative action. 

Enjoy what we've got this week, and we'll see you in two more. In the meantime, have a Happy Halloween!

P.S. - Got something to say about either of these decisions by the Court of Appeals?  If so, please join us on the NY Insurance page on LinkedIn.  We'd love to hear your thoughts. 

Steve Peiper
[email protected]

 

In This Week’s Issue:

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

  • Insurer Not Required to Represent Insured With Respect to Litigation It Commenced
  • An Insurer That Appoints the Superintendent as Agent for the Purposes of Receiving Process Consents to Be Sued Within New York State
  • Four Month Delay in Disclaiming on Basis of Lack of Cooperation Waives Defense
  • Was Notice Given to Insured’s Agent, or Not?
  • General Business Law Section 349 Action (“Unfair Trade Practices Claim”) Can Be Brought by a Business Entity That Claims It Was Hurt by Alleged “Misleading Practices” of Another

 

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

[email protected]

  • Conflicting Expert Opinions as to Existence of Cervical Fracture Precludes Summary Judgment
  • Defendants’ Persuasive Evidence of Preexisting Conditions Requires Plaintiff to Present Evidence Addressing Claimed Lack of Causation
  • Failure to Adequately Address Claims in Bill of Particulars Spells Defeat
  • Plaintiffs Raised Triable Issue of Fact Warranting Reversal
  • Defendants Prove That Injuries Not Causally Related to Accident
  • Defendants Fail to Meet Prima Facie Burden as to 90/180-Day Claim
  • Conclusory Opinion That Injury Is Resolved Is Insufficient
  • Exhaustion of Benefits Is Sufficient to Explain Gap in Treatment
  • Plaintiff Successfully Rebuts Defendants Prima Facie Showing
  • Defendants Fail to Meet Burden With Respect to 90/180-Day Claim
  • Again, Defendants Fail to Meet Burden With Respect to 90/180-Day Claim
  • Defendants’ Expert Failed to Substantiate Opinion that Limitations Were Self-Imposed
  • Evidence of Fracture Opens Door for Non-Threshold Injuries
  • Unexplained Significant Limitations Result in Reversal
  • Defendants’ Experts Not Required to Specifically Address Positive Diagnostic Findings to Meet Prima Facie Burden

 

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

LITIGATION

  • Preclusion Rule Applies to Failure to Assert Independent Contractor Rule
  • Insurer Established Lack of Medical Necessity Based upon Peer Review\
  • Insurer Prevails on Failure to Appear for Scheduled IMEs

 

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • High Court Clarifies Its Position on “Earth Movement” Exclusion
  • Residence Premises Requirement Turns on Definition of Occupy, Not, as Urged by Judge Jones, on the Definition of Residence
  • Title Policy Does Not Cover Attorneys’ Fees Incurred in Eviction Proceedings
  • Plaintiff’s Admission That He Could Perform Job Duties Is Fatal to Total Disability Claim

 

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

  • UPDATE RE: A10784 SUM BILL PROVIDING AUTOMATIC SUM COVERAGE; A10784 Has Been Sent to Governor Cuomo for His Signature and Awaits Signature or Veto
  • The Department Has Drafted Proposed Changes to the Regulations Pertaining to the Issuance of Releases and Has Recently Met With Industry Representatives Regarding Industry Concerns

 

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

  • Policy Language Controls – Insurer Has Duty to Defend or Indemnify

 

KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
[email protected] 

  • Underlying Plaintiff Attempts to Establish Standing to Prosecute Bad Faith Claim under Oklahoma Law
  • Under Kentucky Law, Evidence of an Evil Motive Is Necessary to Establish Bad Faith Claim for Refusal to Settle Within the Policy Limits

 

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

  • Valid Waiver of Subrogation Language Contained Within Policy and Lease Is Enforceable if Neither Clause Restricted Each Other’s Coverage 
  • Where Expert Report Found Limitations But Failed to Explain Why Objective Findings Were Normal, Defendants Denied Summary Judgment
  • Expert’s Use of Variable Ranges of Motion in Report, Without Explaining the Circumstances Under Which They Occur, Fatal to Defendants Summary Judgment Motion
  • Plaintiff’s Expert Report of Neurologist Who Explained Gap in Treatment Sufficiently Raised Issues of Fact to Defeat Defendant’s Summary Judgment Motion 

 

EARL’S PEARLS
Earl K. Cantwell

[email protected]

  • Limitation of Liability Clause Trumps State Anti-Indemnification Statute

           

That’s it for today.  Install our app!  Enjoy the technological advances that allows us to spoon feed delicious coverage tidbits

Remember:  if  you have a situation?  We love situations.

Dan

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

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”
Audrey’s Angles on No Fault
Peiper on Property and Potpourri

Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Marc’s Remarks
Earl’s Pearls
Across Borders

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

10/24/12       Sands Point Partners Private Client Group v. Fidelity Natl. Tit. Ins. Co.
Appellate Division, Second Department
Insurer Not Required to Represent Insured With Respect to Litigation It Commenced
Sands Point Partners Private Client Group (“Sands Point”) purchased a parcel of land.  It then commenced an action seeking to evict Kevin Evans, a person in possession of the property.  Evans defaulted on the eviction action, but eventually moved to vacate the default.  The Civil Court of the City of New York denied this motion.  Evans filed a notice of appeal. 

In addition, Evans separately moved for a stay of eviction pending determination of the appeal.  In support of this stay, Evans for the first time asserted that he was an heir of a prior owner of the property and that Sands Point did not have valid title to the property.  Upon receipt of papers containing this assertion, Sands Point placed Fidelity, its title insurer, on notice and demanded that it be represented with respect to this claim.  As Fidelity did not provide a final determination as to coverage before the motion was returnable, Sands Point represented itself.  Thereafter, Fidelity declined to represent it. Sands Point then brought this action, and Fidelity immediately moved to dismiss based on documentary evidence. 
The Second Department affirmed the trial court’s grant of Fidelity’s motion.  According to the Court, the policy required Fidelity to defend its insured with respect to “causes of action” alleging matters insured by the policy.  It did not require Fidelity to represent its insured with respect to litigation commenced by its insured against another party in which no cause of action was asserted against its insured. 
10/25/12       Matter of Fiduciary Ins. Co. of Am. v. Jackson
Appellate Division, First Department
Presumption of Permission Rebutted by Testimonial Evidence
Proof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner’s permission, express or implied.  In this case, the Court affirmed a finding that the vehicle was not being used with the owner’s permission.  Specifically, the Court agreed that the owner had rebutted the presumption through testimony that he left the keys on the table in his mother’s home with express instructions that his mechanic or his cousin would pick it up for repairs.  Further, in the Court’s opinion, there was no constructive consent as there was no consensual link between the negligent operator and the owner or the owner’s mother. 

10/23/12       Weinstein v. Kmart Corporation
Appellate Division, Second Department
An Insurer That Appoints the Superintendent as Agent for the Purposes of Receiving Process Consents to Be Sued Within New York State
Sequoia Insurance Company (Sequoia) is subject to personal jurisdiction in New York.  Sequoia had sought dismissal of the lawsuit against it.  It submitted the affidavit of one of its vice presidents, who acknowledged that the company became licensed to conduct insurance business in New York prior to the commencement of the third-party action.  Sequoia additionally admitted that, as required by Insurance Law § 1212, it appointed the New York Superintendent of Insurance as its agent for service of process.

Sequoia's authorization to do business in New York, and its statutorily required appointment of the Superintendent of Insurance as its agent for service of process "in any proceeding against it on a contract delivered or issued for delivery, or on a cause of action arising, in this state" is an inherent consent to jurisdiction in New York.  Thus, a declaratory judgment action against a company who has appointed the Superintendent is within the jurisdiction of the court.

10/18/12       Country-Wide Ins. Co. v. Preferred Trucking Services Corp
Appellate Division, First Department
Four Month Delay in Disclaiming on Basis of Lack of Cooperation Waives Defense
The First Department held that the insurer’s disclaimer of coverage was untimely, since it came approximately four months after it learned of the ground for the disclaimer.  The carrier argues that the disclaimer was timely excuse it had no basis for disclaiming coverage until it became apparent that the operator of the subject truck would not cooperate with the defense of the underlying personal injury action.  However, the insurer’s diligent conduct prior to the disclaimer, in attempting to secure the cooperation of both Preferred's owner and the operator of the truck, shows that insurer believed that both had knowledge or information pertaining to the accident and the underlying litigation.
Editor’s Note:  Jen Ehman reported on the lower court decision, with an extensive review of the facts, in our August 19, 2011 edition.

10/17/12       Prince Seating Corp. v. QBE Insurance Co.
Appellate Division, Second Department
Was Notice Given to Insured’s Agent, or Not?
Prince Seating purchased a CGL policy from QBE.  A personal injury action was commenced against the Prince in Virginia, and defense and indemnification was sought from QBE.  Timely notice of the underlying claim to its broker, the defendant Century Coverage Corp. (hereinafter Century) under an agreement between Prince and Century, which provided that Century, acting as "middleman," would convey such claims to QBE.

QBE claims that Century failed to timely convey notice of the underlying claim to QBE.  But Century claimed that Prince did not provide IT with timely notice of the underlying claim by Prince.

Century demonstrated that it first received notice of the underlying claim from a claims adjustor in the underlying action on February 19, 2002, more than six months after the plaintiff first received notice of the claim against it.  Timely notice of an accident by an insured to a broker is not effective and does not constitute notice to the insurance company, as a broker is considered to be an agent only insured".  There may have been some ambiguity in the policy as to whom notice should be given.

10/17/12       North State Autobahn, Inc. v. Progressive Ins.
Appellate Division, Second Department
General Business Law Section 349 Action (“Unfair Trade Practices Claim”) Can Be Brought by a Business Entity That Claims It Was Hurt by Alleged “Misleading Practices” of Another
Progressive Insurance defendants initiated, internally promoted, and advertised a direct repair program (hereinafter the DRP) by which they contracted with numerous vehicle repair shops regarding rates and terms of repairs for claimants.  The plaintiffs operated a vehicle repair shop that was not a member of the DRP.

This action against the Progressive asserted in the complaint alleged that the Progressive defendants had violated General Business Law § 349.  Specifically, the complaint alleged that the Progressive defendants engaged in practices which deceived claimants who sought to have their vehicles repaired at the plaintiffs' and other repair shops that did not participate in the DRP by making misrepresentations as to their workmanship, price, timeliness of service, and character.  The plaintiffs also alleged that the Progressive defendants issued damage repair appraisals well below fair-market value at about one-half the estimate of the plaintiffs' estimate, and that the Progressive defendants represented to claimants that the plaintiffs would make only partial payments for repairs which would necessarily require claimants who had their vehicles repaired by the plaintiffs or other independent shops to incur out-of-pocket expenses.

The court finds that a business entity has stated a valid cause of action for violation of General Business Law § 349(h) where it alleges that another business entity deceived and misled prospective customers, causing it to sustain direct economic loss in the form of more than $5 million in lost business sales.

 

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

[email protected]

10/25/12       Bailey v. Islam
Appellate Division, First Department
Conflicting Expert Opinions as to Existence of Cervical Fracture Precludes Summary Judgment
Defendants’ radiologist found no evidence of post-traumatic injury while plaintiff’s radiologist found subchondral fractures at C3 and C4, precluding an award of summary judgment with respect to the fracture category of serious injury.  However, defendants met their prima facie burden with respect to claimed injuries to the right shoulder through the reports of an orthopedist and a neurologist finding full range-of-motion, resolved strains, and no orthopedic or neurological disability.  In addition, plaintiff’s deposition testimony defeated his 90/180-day claim because, although he was out of work for more than 90 days, that is not determinative where plaintiff was not otherwise prevented from performing his usual pre-accident activities.  Nevertheless, if the fracture injury is sustained, plaintiff will be entitled to damages for all his causally related injuries.

10/25/12       Cole v. Roberts-Bonville
Appellate Division, Third Department
Defendants’ Persuasive Evidence of Preexisting Conditions Requires Plaintiff to Present Evidence Addressing Claimed Lack of Causation
Plaintiff claimed injuries to his right shoulder and knee, left leg, and cervical and lumbar spine under the permanent loss of use, permanent consequential and/or significant limitation of use, and 90/180-day categories.  Defendants alleged that his injuries were the result of a history of degenerative arthritis and disc disease predating the accident.

In support, defendants submitted plaintiff’s medical records and the IME of their examining orthopedist.  The medical records showed a history of lower back problems, osteoarthritis to the right hip, degenerative joint disease in the right shoulder, and spondylosis and degenerative disease to the cervical spine, minimal foraminal narrowing at C5-6 and C6-7 and a disc bulge at C7-T1.  The orthopedic expert also noted that plaintiff did not complain of hip problems in the emergency room or for the following two years.  He concluded that any hip pain was due to age related degenerative arthritis and that similarly, the neck and shoulder problems were preexisting and age related and only mildly aggravated by the accident.  Furthermore, at the time of the accident plaintiff was on disability retirement and none of his medical records during the 180 days following the accident referenced limitations on his daily activities.

In opposition, plaintiff failed to raise a triable issue of fact as none of his medical records or reports indicated he sustained a serious injury of a total and permanent nature, nor did the records or reports support his claims under the permanent consequential and/or significant limitation of use categories as none addressed the fact that plaintiff’s medical records showed that his arthritis and current limitations predated the accident.  The report of the surgeon who performed hip surgery failed to distinguish the current conditions from those that predated the accident or explain the more than two-year delay between the accident and the onset of complaints.  Therefore, the surgeon’s opinion that the hip problem was related to the accident was speculative.  In addition, another physician’s report was deficient because he did not examine medical records from before the accident and his conclusions were based on plaintiff’s misrepresentations that he had no prior history of accidents or injuries.  Furthermore, plaintiff did not submit any evidence showing that his daily activities were in any way curtailed after the accident.  As such, the trial court correctly awarded summary judgment dismissing the complaint.

10/24/12       Addison v. Joseph-Walters
                    Robinson v. Lawrence
Appellate Division, Second Department
Failure to Adequately Address Claims in Bill of Particulars Spells Defeat
In Addision, defendant failed to adequately address plaintiff’s 90/180-day claim set forth in his bill of particulars.  In Robinson, defendants failed to adequately address injuries to the right knee, also set forth in plaintiff’s bill of particulars.  As a result, the trial courts’ decisions denying defendants’ motions for summary judgment are affirmed with considering the sufficiency of plaintiffs’ opposition papers.

10/24/12       Derespino v. Valenti
                    Patterson v. Flechier
Appellate Division, Second Department
Plaintiffs Raised Triable Issue of Fact Warranting Reversal
In both Derespino and Patterson, plaintiffs submitted competent medical evidence raising issues of fact with regard to their claims under the permanent consequential and/or significant limitation of use categories.  As such, defendants’ motions for summary judgment should not have been granted and the trial courts’ decisions are reversed.

10/24/12       Scott v. Martinez
Appellate Division, Second Department
Defendants Prove That Injuries Not Causally Related to Accident
Defendants submitted competent medical evidence to establish that plaintiff’s alleged injuries to the lumbosacral region of the spine were not serious and, in any event, neither those injuries, nor the injuries to the thoracic region, were causally related to the accident.  As plaintiff failed to raise a triable issue of fact, the trial court correctly granted defendants’ motion dismissing the complaint.

10/23/12       Steinbergin v. Ali
Appellate Division, First Department
Defendants Fail to Meet Prima Facie Burden as to 90/180-Day Claim
Defendants met their prima facie burden with respect to plaintiff’s claim of permanent right shoulder injury by submitting the report of their orthopedist who found full range of motion in every plane except one in which he found a minor diminution which was not significant enough to constitute a serious injury.  Plaintiff failed to raise an issue of fact.  During two follow-up visits to the arthroscopic surgery, plaintiff’s orthopedic surgeon found excellent range-of-motion and plaintiff did not submit any other recent limitations.  As such, plaintiff conceded that he did not sustain a permanent consequential or significant limitation of use with respect to the right shoulder.

However, with respect to plaintiff’s claim under the 90/180-day category, defendants’ failed to meet their burden as their expert did not examine plaintiff until four years after the accident and therefore could not speak to his condition during the relevant period.  On the other hand, plaintiff’s surgeon examined him numerous times during the relevant period and found him to be disabled.  In addition, plaintiff testified that he did not return to work for two years following the accident and that he was confined to bed for three months and home for about a year and a half.  

10/18/12       Jeffers v. Style Transit Inc.
Appellate Division, First Department
Conclusory Opinion That Injury Is Resolved Is Insufficient
On appeal, the trial court is reversed as defendants failed to make a prima facie showing of entitlement to summary judgment.  Plaintiff claimed injury to her right knee and an MRI taken three weeks after the accident revealed a linear tear of the posterior horn of the medial meniscus as well as another small tear of the free edge of the body of the medial meniscus.  Defendants’ expert did not, however, address these positive findings and, in fact, appeared to not have reviewed any medical records and did not provide any medical evidence that the injuries were not caused by the accident.  Instead, he gave only a conclusory opinion that plaintiff had a resolved knee sprain, even though he observed signs of injury during the examination.  In addition, Defendants failed to submit any evidence as to causation and also to refute plaintiff’s 90/180-day claim because they submitted no evidence to disprove that she was unable to work as a maternity ward nurse for 11 months due to a medically determined injury.

Although not required to submit any opposition to defendants’ moving papers because they did not meet their burden, plaintiff nevertheless submitted sufficient medical evidence to raise a triable issue of fact.

10/18/12       Pindo v. Lenis
Appellate Division, First Department
Exhaustion of Benefits Is Sufficient to Explain Gap in Treatment
Plaintiff claimed injuries to his cervical and lumbar spine under the significant limitation of use category, submitting reports from his treating physician showing range-of-motion limitations in multiple planes days after the accident and during subsequent examinations.  Plaintiff also explained the gap in treatment by submitting an affidavit stating that he attended extensive physical and rehabilitative therapy until his no-fault benefits were exhausted, at which point he could no longer afford to continue treating.  As plaintiff raised a triable issue of fact and additionally explained the gap in treatment, the trial court correctly denied defendant’s motion.

10/17/12       Burgos v. Castro
Appellate Division, Second Department
Plaintiff Successfully Rebuts Defendants Prima Facie Showing
In a reversal without details, the appellate court determined that plaintiff raised a triable issue of fact with respect to the injury to his cervical spine such that defendants’ motion should have been denied.

10/17/12       Hussain v. Tejada
Appellate Division, Second Department
Defendants Fail to Meet Burden With Respect to 90/180-Day Claim
The Appellate Court affirms the trial court and denies defendants’ motion but because defendants did not adequately address plaintiff’s 90/180-day claim set forth in his bill of particulars.  As such, defendants’ motion should have been denied without need to consider plaintiff’s opposing papers.

10/17/12       Marquez v. Brower
Appellate Division, Second Department
Again, Defendants Fail to Meet Burden With Respect to 90/180-Day Claim
In this case, the Appellate Court reversed the trial court finding that defendants failed to adequately address plaintiff’s 90/180-day claim set forth in his bill of particulars and, therefore, defendants did not sustain their burden requiring denial of their motion without consideration of the opposing papers.

10/17/12       Uvaydov v. Peart
Appellate Division, Second Department
Defendants’ Expert Failed to Substantiate Opinion that Limitations Were Self-Imposed
Plaintiff alleged injuries to his cervical and lumbosacral spine and right shoulder.  Defendant’s orthopedic surgeon performed range-of-motion testing and found significant limitations but concluded that they were self-imposed.  He did not, however, explain or substantiate, with objective medical evidence, the basis for his conclusion.  Defendants therefore failed to meet their burden and their motion should have been denied.

10/16/12       Rebollo v. Nicolas Cab Corp.
Appellate Division, First Department
Evidence of Fracture Opens Door for Non-Threshold Injuries
Plaintiff alleged injuries to his cervical and lumbar spine, right knee and right ankle.  Defendants met their prima facie burden with respect to claims under the permanent consequential and/or significant limitation of use categories but plaintiff raised a triable issue of fact by presenting evidence of a fracture to the right ankle.  As such, on appeal the trial court’s decision was modified.  In addition, the court noted that if the jury were to determine that plaintiff met threshold for the ankle injury, then it could award damages for all of plaintiff’s injuries, even those not meeting threshold.

10/16/12       Santos v. New York City Transit Authority
Appellate Division, First Department
Unexplained Significant Limitations Result in Reversal
On appeal, defendants’ motion is denied as their orthopedist failed to explain the significant limitations in plaintiff’s cervical and lumbar spine which findings conflicted with their findings of absence of serious injury.  In addition, defendants did not submit evidence showing the absence of spinal injuries or abnormalities or an expert opinion that the injuries were not caused by the accident.  As such, the motion should have been denied regardless of the opposing paper’s sufficiency.

10/16/12       Robinson v. Joseph
Appellate Division, First Department
Defendants’ Experts Not Required to Specifically Address Positive Diagnostic Findings to Meet Prima Facie Burden
Defendants meet their prima facie burden showing that plaintiff did not sustain a serious injury to her cervical and lumbar spine by submitting affirmations of a physiatrist and a neurologist, both of whom found full range-of-motion and compared the findings to normal.  Furthermore, it was not necessary for them to specifically address the positive diagnostic findings in plaintiff’s records to meet their prima facie burden. 

However, plaintiff raise a triable issue of fact by submitting the affirmation of a radiologist who reviewed MRIs and found disc herniations at multiple levels in her cervical spine, and also reported that plaintiff’s EMG testing revealed cervical and lumbar radiculopathy.  Plaintiff also submitted reports from three physicians, all of whom found range-of-motion limitations in the cervical and lumbar spine.  In addition, plaintiff’s expert in physical medicine and rehabilitation stated that the herniations and radiculopathies were causally related to the accident.

Defendants also failed to meet their burden with respect to plaintiff’s 90/180-day claim because they relied solely on their experts’ reports, none of whom examined plaintiff during the relevant period or addressed her condition during the 180-day period.  The trial court therefore correctly denied defendants’ motion.

 

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

LITIGATION

10/17/12       AM Med. Servs., PC a/a/o Sergo Chadaevi v. Progressive Cas. Ins. Co.
Appellate Division, Second Department
Preclusion Rule Applies to Failure to Assert Independent Contractor Rule

The core issue in this case was whether an insurer is precluded from asserting the independent contractor defense when it has not issued a timely denial.  The Appellate Division held that the insurer is precluded from asserting this defense if not timely raised in its denial. 

The plaintiff, AM Medical Services PC (“AM Medical”) allegedly treated Mr. Chadaevi for injuries arising from a June 24, 2002, motor vehicle accident.  Mr. Chadaevi assigned his rights to recover first party benefits to AM Medical.  On July 30, 2002, AM Medical submitted two claims for medical services to the defendant, Progressive Casualty Insurance Company (“Progressive”).  The claim forms listed AM Medical as the provider name and address but listed under the treating provider’s name two medical professionals that were noted as independent contractors.  There was no dispute that Progressive did not issue a written denial stating that the ground for the denial was that the independent contractors were the treating providers and it did not request any verification.

AM Medical commenced this action against Progressive for payment of the bills in full together with statutory interest and attorney’s fees.  Progressive interposed an answer raising failure to state a cause of action and generally failure to comply with the no-fault regulations.  There was no assertion of that the treating providers were independent contractors.

Progressive moved for summary judgment on the ground that AM Medical lack standing to recover for the medical services rendered by independent contractors.  AM Medical in opposition to Progressive’s motion argued that Progressive was precluded from relying upon the independent contractor defense as it failed to timely raise it.  AM Medical relied primarily upon the Court of Appeals’ decision in Hospital for Joint Diseases v. Travelers Prop. Cas. Ins. Co.  The civil court granted Progressive’s motion which was affirmed by the Appellate Term. 

The Appellate Term in affirming the civil court’s decision relied upon Matter of Health & Endurance Med., PC v. Deerbrook Ins. Co. The Appellate Term held that the insurer is not obligated to issue a timely denial to rely upon the independent contractor defense.  The Appellate Division reversed.
Initially, the Court determined that it was an issue of first impression as to the interpretation and application of 11 NYCRR §65-3.11(a), commonly referred to as the independent contractor rule, applies in the situation where the medical provider submits a bill indicating the services were rendered by an independent contractor.  The Court held the no-fault regulation does not permit direct payment to a medical provider who submits a bill identifying the treating provider as an independent contractor. 

Next, the Court proceeded to discuss the scope of the preclusion rule under no-fault.  The Court recognized the 30 day rule for an insurer to pay or deny a claim.  The effect of an insurer not complying with that rule is substantial loss of rights under the policy.  Generally, under Presbyterian Hosp. the insurer is precluded from asserting a defense against payment of a claim.  The Court of Appeals in Central Gen. Hosp., recognized a very narrow exception to the preclusion rule for a situation where the insurer asserts a defense of lack of coverage.  The high court in subsequent decisions has held that defenses such as lack of a valid assignment of benefits, which is akin to lack of standing, as well as the billed for services were never rendered in the first instance, are subject to the preclusion rule.

Here, the parties do not dispute that an assignment of benefits existed but Progressive argued that the assignment was invalid to confer standing upon AM Medical since AM Medical was not the treating provider.  Thus, the argument was essentially a lack of standing argument which, under Hospital for Joint Diseases, must be timely asserted in a denial or otherwise precluded.  Since Progressive did not timely assert the independent contractor defense it was precluded from asserting it in litigation.

The Court went on to indicate that this ruling is consistent with the no-fault law’s objectives to provide a “tightly timed process of claim, disputation and payment” as well as “prompt uncontested, first-party insurance benefits.”  In this case, the Court stated that the reason for denying the claim should have been apparent from the bill’s face.  Further, the Court continued on to opine that had the insurer issued a prompt denial litigation could have been avoided.  This is because the medical provider could have resubmitted its bills where there was an alleged mistake, even if in violation of the 45 day rule since it can be excused with reasonable written justification.

[Here is the Angle:  While there must be compliance with the no-fault law’s objectives, there must also be a balance to the system to avoid not only fraud but those claims that were never meant to be covered by no-fault.  The extreme, near non-existence of the exception to the preclusion rule continues to place the insurer in a gotcha situation forcing it to pay a claim which was never covered by no-fault in the first instance.  Incidentally, this decision mentions that this litigation could have been avoided if the insurer issued a timely denial which would permit the provider to resubmit its bill.  However, the plaintiff here cannot, in this situation, legitimately resubmit the bill when the services of an independent contractor were never meant to be covered by no-fault unless the plaintiff falsifies the bill, which we are not suggesting that this plaintiff would do.  Unfortunately, it appears that the balance between the insurer’s rights and the eligible injured person/medical provider’s rights may only be struck through legislative action.] 

10/11/12       Ayoob Khodadadi, MD, MRI, PC a/a/o David Pierre v. Clarendon Nat. Ins. Co.
Appellate Term, Second Department
Insurer Established Lack of Medical Necessity Based upon Peer Review

The insurer’s cross-motion for summary judgment on lack of medical necessity based upon a peer review should have been granted.  The insurer established timely issuance of a denial based upon lack of medical necessity due to a peer review.  Also, the affirmed peer review set forth sufficient factual basis and medical rationale for the opinion of lack of medical necessity.  The plaintiff failed to submit any medical evidence to raise a triable issue of fact precluding summary judgment in favor of the insurer.

10/16/12       Delta Diag. Rad., PC a/a/o Alexander Fitzmichael v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department

10/16/12       New Way Acupuncture, PC a/a/o Doreen Polanco v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department

10/16/12       Infinity Health Products, Ltd. a/a/o Damian Thomas v. New York Cent. Mut. Fire Ins. Co.
Appellate Term, Second Department

10/05/12       Rainbow Med. Care, PC a/a/o Terence Johnson v. Kemper Ins. Co.
Appellate Term, Second Department
Insurer Prevails on Failure to Appear for Scheduled IMEs

In all four decisions the insurer’s summary judgment motion should have or was properly granted on breach of a policy condition to appear for duly scheduled independent medical examinations (“IME”).  The insurer presented affidavits from the IME scheduling company as to generation and mailing of an IME notice as well as an affidavit or affirmation from the physician to perform the IME as to non-appearance.

PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]
10/25/12       Bentoria Holdings, Inc. v. Travelers Indem. Co.
Court of Appeals
High Court Clarifies Its Position on “Earth Movement” Exclusion
For those of you who have been following this column for the past few years, you will recall that in 2009, the Court of Appeals ruled that the Earth Movement Exclusion was ambiguous when applied to damage caused by excavation activities.  At that time, we noted:

4/30/09         Pioneer Tower Owners Association v State Farm Fire & Cas. Co.
Court of Appeals
High Court EXTREMELY Limits the Earth Movement and Settling/Cracking Exclusions
In our May 16, 2008 version of Coverage Pointers, your author noted the following decision.  Unlike then, we now know what State Farm’s decision was based upon.  Not unlike then, we are still perplexed at how State Farm’s denial was overturned.
5/06/08         Pioneer Tower Owners Assoc. v State Farm Fire & Cas. Co.
Appellate Division, Second Department
Exclusion Relied Upon by Carrier Inapplicable = Coverage for Insured
Carrier had erroneously relied upon an exclusion in the policy (don’t blame me, the Second Department didn’t tell us which one), which resulted in plaintiff’s commencement of the current declaratory judgment action to recover for damages to insured property. In finding coverage for the insured, the Second Department stated without explanation that the exclusion relied upon by carrier did not apply to plaintiff’s claim.
In this case, plaintiff sought recovery for cracks and separations in the foundation of its building. The damage occurred as a result of improper underpinning that had been erected to protect plaintiff’s structure while excavation was ongoing on the adjacent parcel of land. Because the underpinning was not sufficient, the earth beneath plaintiff’s structure “slid away” and caused instability.
State Farm denied the claim for coverage on the basis that the exclusion for property damage arising from “earth movement” applied. That exclusion, as most of you know, bars coverage for the “sinking, rising shifting, expanding or contracting of earth.” In addition, State Farm also denied coverage pursuant to the exclusion which removes coverage for damage arising from “settling, cracking, shrinking, bulging or expansion.”
To get around the clear exclusion, plaintiff argued that the breadth of the language was ambiguous, and as such should be construed against the drafter of the policy, to wit, State Farm. Plaintiff argued, principally, that the earth movement exclusion should only be read to apply to losses caused by natural forces (i.e., earthquakes, landslides, erosion, etc.). As such, the exclusion should not be read to apply to earth movement caused by excavation or other man-made activities. In support of this, the Court noted plaintiff’s argument that the policy only references natural causes of earth movement and not excavation which (in the Court’s eyes) is a “more obvious and common way of moving earth).
Further, plaintiff argued that the “settling/cracking” exclusion referenced above could not be read to apply where the settling or cracking was the “immediate and obvious result of some other event.” We are not sure how one could have cracking without “some other event,” but the Court did not see that as an issue. The Court was also not persuaded that this particular exclusion also has several enumerated exceptions built in for property damage caused by specific perils.
As a result, the Court ruled that (a) the earth movement exclusion did not apply to intentional acts of displacing earth and (b) the settling or cracking exclusion does not apply to damage which is the result of some other causative event. Although not specifically endorsed, the implication of this ruling is that the earth movement exclusion (as presently constructed) is only applicable to natural causes of loss. Likewise, the “cracking” exclusion as found in most property policies may now only apply where there is a natural settling of the premises. Indeed, your author cannot imagine an incident where there would be cracking that was not the result of some other event.
In its holding from October 25th, the Court of Appeals addressed different language.  Specifically, the policy issued by Travelers’ specifically provided that the “Earth Movement” exclusion would apply to “[a]ll whether naturally occurring or due to man-made or other artificial causes.”  The result of this language, per Judge Smith’s opinion, removed any ambiguity as to the exclusions applicability.  Accordingly, Travelers’ denial of foundation damage caused by neighboring excavation was upheld.

10/25/12       Dean v. Tower Ins. Co. of NY
Court of Appeals
Residence Premises Requirement Turns on Definition of Occupy, Not, as Urged by Judge Jones, on the Definition of Residence
Plaintiff purchased a home, and shortly after closing discovered extensive termite damage.  Instead of moving in immediately, plaintiff began an extensive project to remedy the termite damage.  At the time, he and his family continued to live at their previous residence.  Prior to moving into the home, the premises was totally destroyed by fire.  Because the house was unoccupied as a residence, Tower disclaimed coverage on the basis that the home was not a “residence premises” and, thus, there was no dwelling coverage under the policy.

Plaintiff challenged the position by arguing that he had worked at the home approximately five days per week since the closing was finalized.  In addition, his efforts often kept him at the premises until very late at night.   Plaintiff also noted that he would eat at the premises virtually every time he was there, had constructed a table to take meals on, and slept at the home on several occasions. 

On balance, the Court of Appeals noted that plaintiff’s almost daily presence, along with the fact plaintiff’s family intended to move in at some point, created a question of fact as to whether the home qualified as a “residence premises”. 

In dissent, Judge Jones noted that the majority’s opinion was focused on whether the location was “occupied.”  The question, in Judge Jones’ opinion, was not whether the dwelling was occupied, but whether it was used as a residence at the time of the loss.  As Judge Jones’ noted, “put simply, [plaintiff] failed to physically move into the subject premises.  Until that happened, the dissent reasoned that the location could not qualify as a residence. 

10/24/12       Sands Pt. Partners Priv. Client Grp. v. Fidelity Nat. Tit. Ins. Co.
Appellate Division, Second Department
Title Policy Does Not Cover Attorneys’ Fees Incurred in Eviction Proceedings
Plaintiff commenced an action in New York City housing court to evict a party that they maintained did not have permission to remain in the premises in question.  In opposition to the eviction proceedings, the party in possession argued that he held title to the property through a conveyance of the previous owner.  Accordingly, it was argued that plaintiff did not possess valid title to the property. 

Upon receipt of this argument, plaintiff tendered the matter to its title insurer, Fidelity.  Plaintiff argued that because a question related to the validity of the title was raised, plaintiff was entitled to coverage under the Fidelity policy.  This was the case even though the party opposing plaintiff’s eviction action had not actually commenced an affirmative challenge to the title. 

When Fidelity denied the coverage request, plaintiff commenced the instant action.  Fidelity immediately moved to dismiss on the basis that the policy, along with the underlying pleadings, conclusively established that plaintiff faced no claims challenging the validity of title.  This was not a situation where plaintiff was in a defensive posture, but rather was a scenario that was created solely out of plaintiff’s own actions to pursue eviction proceedings. 

The Second Department agreed by holding that the title policy was not required to provide coverage where, as here, the only reference to title issues was contained in an affirmative defense to a lawsuit the insured, itself, had commenced.

10/16/12       Nicoletta v. Berkshire Life Ins. Co.
Appellate Division, First Department
Plaintiff’s Admission That He Could Perform Job Duties Is Fatal to Total Disability Claim
Plaintiff commenced this action after his claim for disability insurance was denied by Berkshire.  Apparently, at the time of the alleged disability, plaintiff was self-employed as an airline maintenance consultant.  Apparently during Berkshire’s investigation, plaintiff also admitted that he was able to perform his duties as a consultant notwithstanding his ailment.

Accordingly, the Court noted that where, as here, an insured is able to perform their job duties they are not, per the definition in the policy, totally disabled.  In so holding, the Court rejected plaintiff’s argument that Berkshire had waived the right deny on the “total disability” ground.  As aptly noted by the Appellate Division, common law waiver is inapplicable where, as here, the “issue is existence or non-existence of coverage.” Moreover, the Court noted that if plaintiff was “unemployed” at the time of his disability, he would likewise not qualify for benefits under the Berkshire policy. 

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

UPDATE RE: A10784 SUM BILL PROVIDING AUTOMATIC SUM COVERAGE
A10784 Has Been Sent to Governor Cuomo for His Signature and Awaits Signature or Veto
As mentioned in the last edition of Coverage Pointers, the New York State Assembly and Senate passed legislation over the summer which would make SUM coverage automatic.  On October 17, 2012, the bill was sent to Governor Cuomo for signing.  At this time, the bill has not been signed, and there are numerous groups lobbying both for and against the bill with the Governor’s office.  There is only a short time (until October 29, 2012) left for the Governor to either veto the bill or it becomes the law in New York. 

REMINDER: DFS Proposed Changes to 11 NYCRR 216.6(g) (Unfair Claims Settlement Practices)
The Department Has Drafted Proposed Changes to the Regulations Pertaining to the Issuance of Releases and Has Recently Met With Industry Representatives Regarding Industry Concerns
The Department of Financial Services has drafted proposed changes to the Unfair Claims Settlement Practices section 216.6(g) which pertains to the issuance of releases and creates concerns for industry members.  Please note the restrictions on confidentiality agreements, the requirement that the release is for “known” damages, and the need to apportion liability.

Below is a brief recap of some of the proposed changes:

Subdivision 2 of this section would include additional restrictions to the release.  Previously, this provision only disallowed releases that are broader than the scope of settlement.  In the proposed regulation, insurers may not execute a release that:

(b)  unreasonably restricts the ability of the releaser to:
(1) discuss the terms and conditions of the settlement provided, however that the insurer shall not in any case prohibit the releaser from discussing the terms and conditions of the settlement with:
(i) the releasor’s attorney, accountant, or financial advisor or planner;
(ii) any of the releasor’s family members;
(iii) any court of law; or
(iv) any local, state or federal agency and
(2) make statements about the insurer, provided, however, that nothing herein shall prevent an insurer from requiring the execution of a release that prohibits the releaser from making false statements about the insurer.

In other words, this proposed change would limit the extent an insurer may require the insured to keep the settlement confidential. 

In addition to the above proposed changes, the proposed regulation adds additional regulations with regard to releases issue as part of a settlement under a fire, miscellaneous property, water, burglary or theft, glass, boiler and machinery, elevator, animal, collision, personal injury liability, property damage liability, fidelity and surety, motor vehicle and aircraft property damage and marine and inland marine insurance policies.  Under the proposed regulations, an insurer may not require a release for any claim under any of the above enumerated policies unless the release sets forth:

  • Where the claim arises under a liability policy – whether the claim is for property damage or bodily injury
  • Nature of the occurrence from which claim arises
  • Date and location of occurrence
  • Total amount of actual damages (except where claim is under a liability policy)
  • Claims under a motor vehicle liability policy must include the dollar or percentage reduction in damages as a result of an agreement because of comparative negligence

 

Additionally, the insurer must use separate releases for property damage and bodily injury claims if the claim involves both types of claims under a liability policy.  Furthermore a bodily injury release must state in bolded capital letters that the release is only for bodily injury claims and, similarly, the property damage release must state in bolded capital letters that the release is only for property damage claims.

Furthermore, if an insurer requires a release for motor vehicle property damage claims, the insurer must use the newly prescribed model “Release of Motor Vehicle Property Damage Liability Claim Only” form found in section 216.12 of this section.  (If you would like a copy of the form, please let me know, and I will be happy to provide you a copy.)  We note that the form release states “For and in consideration of the sum of $______, which represents the total known property damages asserted…”

For some of the above proposed provisions, there is an exemption where the claimant is a large commercial claimant as long as the claimant agrees, in writing, that the insurer is not subject to the relevant provisions.

 

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

10/16/12       Nautilus Ins. Co. v. Barfield Realty Corp. 
United States District Court – Southern District New York
Policy Language Controls – Insurer Has Duty to Defend or Indemnify
This case arises out of underlying personal injury claims filed by Joseph Castelli against Barfield Realty Corp. [“Barfield”] for injuries sustained while an employee of JFD Contracting Company, Inc. [“JFD”].  Castelli was allegedly injured while working for JFD to repair the premises owned by Barfield located at 1793 Sedgwick Avenue, Bronx, New York.

Nautilus issued a commercial general liability policy to Barfield.  The policy explicitly excludes “bodily injury” to:  (1) An ‘employee’ of the insured arising out of and in the course of:  (a) Employment by the insured; or (b) Performing duties related to the conduct of the insured’s business.  The exclusion applied whether the insured may be liable as an employer or in any other capacity. 

Second, the policy contains an endorsement clarifying the meaning of the word “employee” as used throughout the policy.  An “employee” of the insured includes:  “[A]ny person or persons who provide services directly or indirectly to any insured, regardless of where the services are performed or where the ‘bodily injury’ occurs including, but not limited to, a ‘leased worker,’ a ‘temporary worker,’ a ‘volunteer worker,’ a statutory employee, a casual worker, a seasonal worker, a contractor, a subcontractor, an independent contractor, and any person or persons hired by, loaned to, employed by, or contracted by any insured or any insured’s contractor, subcontractor or independent contractor.”

Third, the policy contains an endorsement, “Exclusion – Contractors and Subcontractors” which modifies Section I of the policy, providing that coverage “does not apply to ‘bodily injury,’ ‘property damage,’ ‘personal and advertising injury’ or medical payments arising out of work performed by any contractor or subcontractor whether hired by or on behalf of any insured, or any acts or omissions in connection with the general supervision of such work.

Finally, the Nautilus policy also contains a section concerning liability for medical payments associated with accidents on the insured’s premises.  Within this section is an exclusion for inter alia, “any insured”; “a person hired to do work for or on behalf of any insured or a tenant of any insured”; and any person “[e]xcluded under Coverage A.

Based on the policy terms, Nautilus issued a coverage position letter disclaiming its duty to both defend and indemnify.  Nautilus, however, provided its insured with a courtesy defense under a reservation of rights.  Barfield contends that it is entitled to coverage because the policy is ambiguous in its definition of “employee”, arguing that the ambiguity led to a misunderstanding between its president and Nautilus.

Barfield and Castelli made several arguments in support of their position that Barfield was entitled to a defense and indemnification.  First, they contend there was no meeting of minds as to the original contract because the president of Barfield “believed that the insurance policy covered the loss because nowhere in the policy did it identify the types of loss that would be excluded.  Second, they argued that the policy exclusions are ambiguous, as they fail to contemplate exigent circumstances, such as the fire giving rise to the repairs that necessitated the contract with JFG.  Third, they argue that Barfield did not supervise the work performed by JFD.  Finally, they dispute many of the allegations in the underlying action. 

The court found these arguments to be without merit.  The court noted that:  (1) Barfield admitted to contracting with JFD; (2) Barfiled admitted to hiring JFD to perform necessary repairs at the subject property; (3) Barfield’s counsel admitted in his affirmation that Castelli was an employee of JFD.  The court determined that because contractors and subcontractors are explicitly included in the unambiguous definition of the term ‘employee’, Castelli was an employee of Barfield and coverage was excluded.  The court determined that even if Castelli were not considered an employee for purposes of the employee exclusion, an endorsement unambiguously excluded contractors and subcontractors in their own right.  Consequently, whether Castelli was considered Barfield’s employee, or merely an employee of the contractor hired by Barfield, his injuries fall within the plain language of the policy exclusion.

Another issue addressed by the court was the interplay between the exclusionary language in the policy and the ‘separation of insureds’ clause.  After analyzing cases on the issue and finding some disagreement in the case law, the court sided with those courts which opined that the a separation of insureds clause need not in fact preclude the applicability of unambiguous exclusionary language referring to “any insured”.  The court found convincing the argument that where exclusionary endorsements refer to “the insured”, rather than “any insured”, the separation of insureds language does control, and the clauses may be read in harmony.  However, where, as here, the language of the exclusion refers to “any insured” it should be read to supersede the separation of insureds language in order to both effectuate the plain meaning, and to avoid rendering the clause a nullity.

The district court granted Nautilus’ motion for summary judgment, declaring that the plain language of the Policy relieves Nautilus of any duty to defend, indemnify or pay medical expenses.

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman
[email protected] 

10/17/12       Colony Ins. Co. v. Burke
United States Court of Appeals, Tenth Circuit
Underlying Plaintiff Attempts to Establish Standing to Prosecute Bad Faith Claim under Oklahoma Law
This decision deals with the sad case of a little girl that died in foster care due to extreme neglect.  The Plaintiff, Colony, issued an insurance policy that covered foster parents who were licensed and/or certified by the Oklahoma Department of Human Services.  The policy had a $300,000 limit.  Colony denied coverage for this particular incident citing a limitation in the policy for injuries arising out of physical or sexual abuse.  Notably, the foster parent was being defended under another insurance policy. 

Ultimately, a wrongful death action was brought against the foster parent by the girl’s estate.  Colony and the other insurer were given the opportunity to settle the case for the combined limits of both policies, $600,000.  Colony did not accept the offer and the matter proceeded to trial where a jury returned a $20 million dollar verdict against the foster parent. 

Colony then commenced a declaratory judgment action against the estate and the foster parent seeking a declaration that it had no duty to defend or indemnify the foster parent for the estate’s judgment against her.  The foster parent answered and asserted a counter claim alleging bad faith resulting from Colony’s failure to settle within the policy limit.   

Apparently, while all of this was going on, the estate and the foster parent entered into a side agreement.  The foster parent agreed to pursue her pending counterclaims for breach of contract and bad faith against Colony and to dismiss her state-court appeal of the underlying wrongful-death judgment, in exchange for which the estate promised to limit its execution on the underlying judgment against the foster parent to 75% of any amount the foster parent ultimately recovered from Colony.  In other words, in order to encourage the foster parent to pursue a recovery from Colony, the estate agreed to split any such recovery 75/25 with the foster parent, and the estate would not further execute on its judgment.  

It then happened that during a private mediation among the parties, Colony and the foster parent reached a settlement, in which Colony agreed to dismiss its claims against the foster parent and to pay her $4 million.  In turn, the foster parent agreed to dismiss her counterclaims against Colony and to release Colony from any and all claims under the policy.  Notably, the $4 million was subject to the prior agreement with the estate, in which the estate received 75 percent.  

Accordingly, the main issue in this decision is whether, following the settlement between the foster parent and Colony, the estate had standing to continue to maintain the breach of contract and bad faith claims against Colony in order to recover on the rest of the judgment.

The Court individually considered the different arguments made by the estate in its attempt to establish standing.  First, the court noted that irrespective of whether a foster child is an insured under the policy does not create standing.  Because the policy is a liability policy, even if a foster child is an “insured” under the policy, the foster child is contractually covered, and thus a “first party,” only with respect to claims by others against the foster child, not claims brought by the foster child against another insured.

Further, the estate did not qualify as a third-party beneficiary to the insurance contract.  Although it is not necessary that a third party be specifically named as a beneficiary in order to have standing, the contract must be made expressly for the third-party’s benefit, which means in an express manner (i.e. direct or unmistakable terms).  In the Court’s opinion, the Colony policy did not, in direct or unmistakable terms, indicate that a foster child was a third-party beneficiary, or that the primary purpose of the policy was to provide for recovery by foster children.     

Lastly, the Court found no sufficient statutory relationship to confer standing. 

Take Away:  Presumably, this situation only occurred because Oklahoma does not permit insureds to assign their bad faith claims against their own insurers.  This situation would likely not occur in New York because here the foster parent could have directly assigned her bad faith claim against Colony to the estate.  Although New York General Obligations Law 13-101 does prohibit the assignment of claims for personal injuries, courts have held that bad faith claims are not personal injury claims.  Rather, such an action is a contract action that arises out of the insurance contract.  Essentially, a so-called bad faith action under a policy of insurance is for breach of the express covenant to defend and breach of an insurer's obligation to make, in good faith, a reasonable settlement of a claim within the policy limits.

As a side note, as I was reading this decision, I was deeply troubled by the possibility that the foster parent, who caused the child’s death, could have received any portion of the settlement paid by Colony.  Hopefully, this is not what actually occurred.  

10/09/12       National Surety Corp. v. Hartford Casualty Ins. Co.
United States Court of Appeals, Sixth Circuit
Under Kentucky Law, Evidence of an Evil Motive Is Necessary to Establish Bad Faith Claim for Refusal to Settle Within the Policy Limits
In this case, a weed trimmer head manufactured by the insured shattered, severely lacerating the underlying plaintiff’s leg.  Defendant issued a primary liability policy with $1 million of coverage.  Plaintiff provided the insured with excess liability coverage over the policy issued by defendant. 

During settlement negotiations, the underlying plaintiff indicated that he would settle this claim for $1 million.  Defendant refused.  At trial, the jury awarded over $5 million dollars to the injured party.  Plaintiff then commenced this action seeking reimbursement of amounts paid in excess of the primary policy claiming that defendant breached its primary duty to avoid excess judgments against an insured.  Notably, there was a prior decision by this court which held that, pursuant to plaintiff’s subrogation rights, it had standing to press the bad faith claims on behalf of the insured.   

In Kentucky, bad faith “is not simply bad judgment.  It is not merely negligence.  It imports a dishonest purpose of some moral obliquity.  It implies conscious doing of wrong…It partakes of the nature of fraud.” 

Plaintiff alleged in this action that defendant failed to consider information in its own files, failed to conduct a diligent investigation into the underlying plaintiff’s claim, failed to properly respond to the $1 million dollar demand, failed to timely notify the insured that a verdict may exceed its primary policy, relied too heavily on defense counsel, failed to account for the possibility of a punitive damage award, and made only “low ball” offers during settlement talks. 

In considering whether defendant’s actions constituted bad faith, the court held that there was no evidence that defendant’s action were the result of evil motive or an indifference to the insured.  Specifically, according to the court, each argument made by plaintiff suggested that Defendant should have handled the insured’s claim differently but not that defendant acted with a consciousness of wrongdoing or reckless disregard toward its insured.   

Take Away:  With this standard, it would be extremely difficult to prevail on a bad faith claim in Kentucky.  You can only imagine what type of evidence you would need to prove an evil motive. 

In comparison, in New York, as stated by the Court of Appeals in Pavia v. State Farm Mut. Auto. Ins. Co., “[i]n order to establish a prima facie case of bad faith, the plaintiff must establish that the insurer’s conduct constituted a ‘gross disregard’ of the insured’s interests--that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer.” 

I would take the position that while it is extremely difficult to establish bad faith in New York, it may be harder in Kentucky. 

 

MARC’S REMARKS

Marc A. Schulz
[email protected]

10/11/12       U.S. Underwriters Ins. v. New Realty Corp.
Supreme Court, New York County
Valid Waiver of Subrogation Language Contained Within Policy and Lease Is Enforceable if Neither Clause Restricted Each Other’s Coverage 
This is a subrogation action by U.S. Underwriters, the insurer of a tenant, Tibet Carpet, which suffered water damage to its rugs stored in a basement.  The source of the leak allegedly was a feeder pipe between the water main and fire suppression system.  Pursuant to a lease, Tibet was a tenant and New Realty was the landlord. 

New Realty moved for summary judgment dismissing the complaint arguing that U.S. Underwriters’ action is barred by a valid waiver of subrogation provision in the lease agreement.  U.S. Underwriters argued that the submitted insurance policy is uncertified and does not contain a waiver of subrogation.

“While parties to an agreement may waive their insurer’s right of subrogation, a waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears.”  Here, the lease between Tibet and New Realty provides in relevant part: “…to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of recovery against the other or anyone claiming through or under each of them by way of subrogation or otherwise…”  The commercial property condition section of the policy issued by U.S. Underwriters to Tibet provides in relevant part: “…you may waive your rights against another party in writing: 1. Prior to a loss of your Covered Property … This will not restrict your insurance…”

According to the court, the lease agreement between New Realty and Tibet contained the foregoing waiver of subrogation clause, conditioned solely upon there being in each of New Realty’s and Tibet’s insurance policies a clause permitting a waiver of subrogation, and it is undisputed that each policy contains such a clause.  The court noted that both policies here contain a clause that waiver of subrogation “will not restrict” each party’s insurance, which means the insurance will not be invalidated by waiver of subrogation.  Therefore, the court held the waiver of subrogation clause in the present lease bars this action, and granted New Realty’s motion.

10/15/12       Pinnock v. All County Ready Mix Corp.
Supreme Court, Queens County
Where Expert Report Found Limitations But Failed to Explain Why Objective Findings Were Normal, Defendants Denied Summary Judgment
Plaintiffs Pinnock and Fuller were the respective driver and passenger in a vehicle involved in a collision with cement truck driven by Cephas and owned by All County Ready Mix (collectively, Defendants).  As a result, Pinnock and Fuller allegedly sustained serious injuries.  Defendants moved for summary judgment.

In support of their motion, defendants submitted expert medical reports of, among others, an orthopedist who examined both plaintiffs.  The orthopedist found no significant limitations of range of motion regarding Pinnock’s cervical spine, thoracic spine, right shoulder, left shoulder, right wrist/hand, right hip, right knee, left knee, right ankle/foot and left ankle/foot.  However, he did find a 20% limitation of Pinnock’s lumbar spine.  The orthopedist’s report stated that although there were decreased ranges of motion of lower back, right shoulder and right knee, all objective findings were normal. 

With respect to Fuller, the orthopedist found no limitations of range of motion of her cervical spine, thoracic spine, left shoulder, right elbow, right hip and right knee.  However, the orthopedist noted that Fuller displayed limitations of range of motion of the lumbar spine.  In this regard, the report stated “although there was decreased range of in the lower back, objective clinical examination findings were normal including straight leg raise.” 

According to the court, defendants’ orthopedist reports for Pinnock and Fuller clearly stated that he found significant limitation in the range of motion for plaintiffs.  The court noted that the orthopedist failed to explain the basis for his conclusions that all objective clinical findings with respect to Pinnock and Fuller were normal.  Therefore, the court held defendants failed to make a prima facie showing of entitled to judgment as a matter of law that plaintiffs did not sustain serious injuries. 

The court also determined the medical reports submitted by plaintiffs’ treating orthopedist attesting to the fact that each had significant limitations in range of motion of the lumbar spine and cervical both contemporaneous to the accident and in a recent examination, and concluding that plaintiffs’ limitations were significant and permanent and were casually related to the accident were sufficient to raise a triable issue of fact.  Consequently, defendants’ motion was denied.

10/15/12       Ramirez v. Castaneda-Valle
Supreme Court, Suffolk County
Expert’s Use of Variable Ranges of Motion in Report, Without Explaining the Circumstances Under Which They Occur, Fatal to Defendants Summary Judgment Motion
As a result of a motor vehicle accident, Plaintiff allegedly sustained a serious injury to his left shoulder or cervical spine.  Defendants moved for summary judgment and submitted medical reports in support of their motion.  According to the court, defendants’ orthopedist medical report was deficient because the normal range of motion measurements contained therein consisted of variable ranges of motion, thereby leaving the court to speculate as to the normal values and under what circumstances those variable ranges occur.  The court also noted the measurements ascribed to plaintiff’s left shoulder and cervical region were on the low end of the so-called “normal” ranges.  In addition, the radiologists stated in her report that “the possibility of small tear cannot be completely excluded and that an MRI arthrography is necessary for further evaluation.”  The Court held Defendants proof objectively failed in demonstrating that plaintiff did not suffer a serious injury.  

10/15/12       Knibbs v Frazier
Supreme Court, Queens County
Plaintiff’s Expert Report of Neurologist Who Explained Gap in Treatment Sufficiently Raised Issues of Fact to Defeat Defendant’s Summary Judgment Motion 
Defendant’s car, while attempting a left turn, collided with plaintiff’s, who was allegedly injured as a result of the impact.  Plaintiff brought suit alleging she sustained serious injuries.  Defendant moved for summary judgment.

In support of their motion, Defendant submitted expert reports from an orthopedist and radiologist.  The orthopedist found no limitations of range of motion and stated plaintiff has no objective evidence of any disability as all her sprains/strains resolved.  After reviewing an MRI, the radiologist observed disc bulges and stated they were not post-traumatic but rather degenerative.  The radiologist also observed meniscal degeneration with no meniscal tear or fracture.  The radiologist further stated the findings were not casually related and there are no abnormalities casually related to the accident.  The court held defendants proof was sufficient to meet their prima facie burden.

In opposition, plaintiff submitted expert reports of her treating neurologist and a radiologist.  The neurologist examined plaintiff three days after the accident and found significant limitations of range of motion of her cervical and lumbar spine.  A recent exam by plaintiff’s neurologist indicated limitations of range of motion in her cervical and lumbar spine, hips and knees.  The neurologist stated plaintiff’s injuries are chronic, permanent and disabling in nature.  Interestingly, plaintiff stopped treating with the neurologist almost two years post-accident because plaintiff was informed that additional care and treatment would be palliative in nature.  Six months later, plaintiff’s symptoms worsened and she returned to treatment.  The radiologist, after reviewing an MRI, observed tears of the posterior horn of the lateral and medial menisci. 

As the court determined defendants met their burden in demonstrating that plaintiff did not sustain serious injuries, the burden now shifted to plaintiffs to raise a triable issue of fact.  The court held plaintiff sufficiently raised triable issues of fact by submitting medical reports attesting to the fact that plaintiff had substantiated injuries contemporaneous to the accident and had significant limitations in range of motion at a recent exam, and concluded said limitations were significant and permanent and resulted from trauma casually related to the accident.  The court noted that the neurologist adequately explained the gap in plaintiffs’ treatment by stating that she reached the point of maximum medical improvement and any further treatment would be palliative.  Therefore, the court denied defendant’s motion.     

EARL’S PEARLS
Earl K. Cantwell

[email protected]

Limitation of Liability Clause Trumps State Anti-Indemnification Statute

Thrash Commercial Contractors hired Terracon Consultants to lab test fill material to ensure that it met contract specifications.  The allegation was that Terracon did not test the soil properly, and the fill that was placed did not meet required soil density.  Thrash filed a breach of contract action against Terracon seeking some $300,000 in damages to recover expenses allegedly incurred due to the soil density issue.  Terracon replied that a subcontract limitation of liability provision capped Thrash’s potential recovery at $50,000.  Thrash contended the clause was unenforceable under Mississippi law (Thrash Commercial Contractors, Inc. v Terracon Consultants, Inc., (2012 U.S. Dist. Lexis 87338 [SD Miss. June 25, 2012])).  The Court ultimately ruled that the limitation of liability clause could indeed stand to Terracon’s benefit. 

Thrash argued that the limitation of liability clause conflicted with other contract provisions, including indemnity and hold harmless provisions.  However, the clause stated that it applied regardless of the theory, including indemnity.  In addition, the indemnity clause was not inconsistent because the indemnity clause applied to third-party claims, whereas the limitation of liability clause applied to direct actions between contractor and subcontractor.

Thrash’s next argument was that the $50,000 limit was unenforceable because it was disproportionate to the harm allegedly caused of $300,000.  However, the proper comparison was to compare the limitation of liability clause to the party’s expected compensation, and the $50,000 liability limitation was considerably more than Terracon’s soil testing fee which was apparently only $15,000.

Finally, Thrash claimed that the limitation of liability clause violated a Mississippi statute regarding construction contracts which voids agreements to indemnify or hold harmless a person for acts or damages caused by that person’s own negligence, a common anti-indemnity provision in statewide construction statutes.  Courts, however, distinguish between an indemnity/hold harmless clause and a limitation of liability clause, and the Court held that the anti-indemnity statute did not apply.

The District Court ruled that the limitation of liability clause was enforceable and would limit Thrash’s recovery against Terracon for breach of contract.

This case stands for the proposition that courts are more inclined to enforce limitation of liability clauses in mutually negotiated contracts.  The case also notes the difference between limitation of liability clauses and indemnity which may avoid the impact of common anti-indemnity legislation governing public and/or private construction contracts.

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

10/19/12       Ace America Ins. Co. v. Freeport Welding & Fabricating, Inc.
Fifth Circuit Court of Appeals
ACE Had No Duty to Defend Freeport
Energy Solutions, L.L.C. (“Brand Energy”) was named a defendant in a personal injury suit in Texas state court. ACE American Insurance Company (“ACE”) insures Brand Energy. Freeport sought defense and indemnity from ACE in the state court proceedings as an additional insured under Brand Energy’s insurance policy with ACE. In this case the purchase order for the work involved in the litigation predated the purchase agreement which would contain the language which would have included Freeport as an additional insured. The Court rejected the arguments of relationship back.
Submitted by: Kay Gaffney, Barnes Alford

10/18/12       Great Am. E & S Ins. Co. v. Quintairos, Prieto, Wood & Boyer
Supreme Court of Mississippi
Excess Carrier Can Sue Lawyer Under Doctrine of Equitable Subrogation
The Mississippi Supreme Court allowed an excess carrier to pursue an equitable subrogation claim against a law firm (despite there being no direct attorney-client relationship) that defended a nursing home in an underlying case, but failed to timely disclose an expert defense witness; thus allegedly causing the value of the case to greatly increase and trigger payment under the excess policy.
Submitted by: Kile T. Turner, Norman, Wood, Kendrick & Turner

 

REPORTED DECISIONS

Sands Point Partners Private Client Group v. Fidelity National Title Insurance Company, respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for breach of a title insurance policy, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Solomon, J.), dated July 18, 2011, as granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(1) to dismiss the complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
After purchasing the premises at issue in 2009, the plaintiff commenced an action in the Civil Court of the City of New York, Housing Part, seeking to evict Kevin Evans, a person in possession of the property (hereinafter the eviction action). Evans defaulted in the eviction action, but eventually moved to vacate his default. The Civil Court denied his motion in February 2010, and Evans filed a notice of appeal. Evans also moved in the Appellate Term, 2nd, 11th, and 13th Judicial Districts, by order to show cause, for a stay of eviction pending determination of the appeal. In an affidavit submitted in support of the motion, Evans asserted, for the first time, that he was an heir of a prior owner of the property and that the plaintiff's grantor did not have a valid title to the property. The plaintiff notified its title insurer, Fidelity National Title Insurance Company (hereinafter Fidelity), of Evans' assertions and demanded that Fidelity represent it with respect to Evans' newly raised assertions. Fidelity notified the plaintiff that it would need time to investigate the claim, stated that it was not likely to complete its investigation before the return date of Evans' motion, and advised the plaintiff to do "whatever is necessary to protect against default until [it had] completed coverage review." The plaintiff's attorneys in the eviction action filed opposition to Evans' motion for a stay pending determination of the appeal. Within the next few weeks, the Appellate Term denied Evans' motion for a stay pending appeal, Fidelity denied the plaintiff's demand for representation, and the Appellate Term dismissed Evans' appeal for failure to perfect.
The plaintiff then commenced this action against Fidelity alleging, among other things, that Fidelity breached a provision of the policy requiring it to provide a defense against claims covered by the policy. Fidelity made a pre-answer motion, inter alia, pursuant to CPLR 3211(a)(1) to dismiss the complaint. In support of its motion, Fidelity submitted, among other documents, the policy and the papers submitted to the Appellate Term in support of and in opposition to Evans's motion for a stay pending appeal. The Supreme Court granted Fidelity's motion, and the plaintiff appeals.
CPLR 3211(a) provides that a defendant may move for judgment dismissing a cause of action on the ground that " a defense is founded upon documentary evidence" (CPLR 3211[a][1]). A CPLR 3211(a)(1) motion may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; see Leon v Martinez, 84 NY2d 83, 88; Cervini v Zanoni, 95 AD3d 919, 920-921; Fontanetta v John Doe 1, 73 AD3d 78, 83-84). Materials that clearly qualify as "documentary evidence" include "documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable'" (Fontanetta v John Doe 1, 73 AD3d at 84-85, quoting 2 N.Y. Prac. Com. Litig. in New York State Courts § 7:60, 3d ed).
Here, the policy required Fidelity to defend its insured with respect to "causes of action" alleging matters insured by the policy. It did not require Fidelity to represent its insured with respect to litigation commenced by its insured against another party in which no cause of action was asserted against its insured (see Cohn v Commonwealth Land Tit. Ins. Co., 254 AD2d 241, 241-242; Eliopoulos v Nation's Tit. Ins. of N.Y., Inc., 912 F Supp 28, 31-32). Inasmuch as the documentary evidence submitted by Fidelity in support of its motion conclusively established that no cause of action alleging matters insured by the policy had been asserted against the plaintiff, Fidelity did not breach the policy and the Supreme Court properly granted that branch of Fidelity's motion which was pursuant to CPLR 3211(a)(1) to dismiss the complaint.
In light of our determination, it is not necessary to address the plaintiff's remaining contention.
DILLON, J.P., BALKIN, AUSTIN and COHEN, JJ., concur.
In re Fiduciary Insurance Company of America v. Jackson

Order, Supreme Court, New York County (Martin Schoenfeld, J.), entered May 10, 2012, which, after a framed-issue hearing, permanently vacated a stay of arbitration and directed the matter to proceed to arbitration, unanimously affirmed, without costs.
"[P]roof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner's permission, express or implied" (Leotta v Plessinger, 8 NY2d 449, 461 [1960]; see Bernard v Mumuni, 22 AD3d 186, 187 [1st Dept 2005], affd 6 NY3d 881 [2006]). This presumption was rebutted by substantial evidence that the subject vehicle was not being operated with the owner's consent. The owner testified that he left the keys on a table in his mother's home with instructions that his mechanic or his cousin would pick it up for repairs. Furthermore, a finding of constructive consent requires a consensual link between the negligent operator and one whose possession of the car was authorized (see Murdza v Zimmerman, 99 NY2d 375, 381 [2003]). Here, there was no evidence showing a consensual link between the owner and his mother on the one hand, and the driver on the other. There is no basis to disturb the court's finding that the owner's testimony that he did not give the driver permission to use his car was credible (see Leotta, 8 NY2d at 461; Matter of Eagle Ins. Co. v Lucia, 33 AD3d 552, 554-555 [1st Dept 2006]).

North State Autobahn, Inc. v. Progressive Ins.

APPEAL by the defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, Progressive Specialty Insurance Company, and Nicholas Stanton, in an action, inter alia, to recover damages for violation of General Business Law § 349, tortious interference with prospective business advantage, and injurious falsehood, as limited by their brief, from so much of an order of the Supreme Court (Gerald E. Loehr, J.), entered June 24, 2011, in Westchester County, as denied those branches of the motion of the defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, and Progressive Specialty Insurance Company which were for summary judgment dismissing the first cause of action, which was to recover damages for violation of General Business Law § 349, and for summary judgment dismissing so much of the sixth cause of action, which was to recover damages for injurious falsehood, as was based on allegations other than "category 1," insofar as asserted against them, and denied that branch of the motion of the defendant Nicholas Stanton which was for summary judgment dismissing the fifth cause of action, which was to recover damages for tortious interference with prospective business advantage, insofar as asserted against him.

Nelson Levine de Luca & Horst, LLC, New York, N.Y. (Michael R. Nelson, Kymberly Kochis, and Francis X. Nolan IV of counsel), for appellants.
Richard Paul Stone, New York, N.Y. (Anderson, Kill & Olick, P.C. [Finley T. Harckham and Dennis J. Artese of counsel], and Anthony J. Mamo, Jr., PLLC, of
counsel), for respondents (one brief filed).

OPINION & ORDER

MILLER, J.  This case presents us with the question of whether a business entity has stated a valid cause of action for violation of General Business Law § 349(h) where it alleges that another business entity deceived and misled prospective customers, causing it to sustain direct economic loss in the form of more than $5 million in lost business sales. We conclude that it does.

  • Factual And Procedural Background

 

The defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, and Progressive Specialty Insurance Company (hereinafter collectively the Progressive defendants) are involved in underwriting automobile insurance policies in the State of New York. in approximately 2000, the Progressive defendants initiated, internally promoted, and advertised a direct repair program (hereinafter the DRP) by which they contracted with numerous vehicle repair shops regarding rates and terms of repairs for claimants. The plaintiffs, North State Autobahn, Inc., and North State Autobahn, Inc., doing business as North State Custom, operated a vehicle repair shop that was not a member of the DRP.

In 2007, the plaintiffs commenced this action against the Progressive defendants and a number of Progressive employees, including the defendant Nicholas Stanton. The first cause of action asserted in the complaint alleged that the Progressive defendants had violated General Business Law § 349. Specifically, the complaint alleged that the Progressive defendants engaged in practices which deceived claimants who sought to have their vehicles repaired at the plaintiffs' and other repair shops that did not participate in the DRP by making misrepresentations as to their workmanship, price, timeliness of service, and character. The plaintiffs also alleged that the Progressive defendants issued damage repair appraisals well below fair-market value at about one-half the estimate of the plaintiffs' estimate, and that the Progressive defendants represented to claimants that the plaintiffs would make only partial payments for repairs which would necessarily require claimants who had their vehicles repaired by the plaintiffs or other independent shops to incur out-of-pocket expenses.

The plaintiffs further alleged that the Progressive defendants engaged in such deceptive practices in order to mislead customers of the plaintiffs and other independent shops to believe that they must have their vehicles repaired at repair shops that were members of the DRP. The Progressive defendants allegedly failed to inform these claimants that the repair shops that participated in the DRP used inferior aftermarket parts, or were not registered or qualified to work on specific vehicle models. As a result of the Progressive defendants' actions, the plaintiffs alleged that they sustained direct economic loss in the form of more than $5 million in lost business sales, and that the public at large sustained other damages.

The fifth and sixth causes of action in the complaint were asserted against both the Progressive defendants and Stanton. The fifth cause of action alleged tortious interference with prospective business advantage. The sixth cause of action alleged injurious falsehood. With respect to the cause of action alleging injurious falsehood, the plaintiffs alleged, inter alia, that the Progressive defendants made numerous derogatory statements about the plaintiffs to their insureds. The Progressive defendants moved for summary judgment dismissing the complaint insofar as asserted against them, and Stanton separately moved for summary judgment dismissing the complaint insofar as asserted against him. The Supreme Court, inter alia, denied that branch of the Progressive defendants' motion which was for summary judgment dismissing the cause of action alleging violation of General Business Law § 349. The court also denied that branch of Stanton's motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him.

With respect to that branch of the Progressive defendants' motion which was for summary judgment dismissing the cause of action alleging injurious falsehood, the Supreme Court classified the allegedly derogatory statements into three general categories: (1) statements indicating that the plaintiffs were a difficult shop and were difficult to deal with, (2) statements indicating that the plaintiffs overcharged their customers and did not do good work, and (3) statements to the effect that the plaintiffs were a "bunch of crooks." The court concluded that the statements identified under "category 1" were statements of opinion which were not actionable. However, the court concluded that the plaintiffs had submitted sufficient evidence to raise a triable issue of fact with respect to so much of the cause of action alleging injurious falsehood as was based on the statements identified as "category 2" and "category 3." Accordingly, the court denied that branch of the Progressive defendants' motion which was for summary judgment dismissing so much of the cause of action alleging injurious falsehood as was based on allegations other than "category 1" insofar as asserted against them. The court granted that branch of Stanton's motion which was to dismiss that cause of action insofar as asserted against him. The Progressive defendants and Stanton jointly appeal from stated portions of the order.

As an initial matter, the Progressive defendants are not aggrieved by so much of the order appealed from as denied that branch of Stanton's motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144). Accordingly, the appeal by the Progressive defendants from that portion of the order must be dismissed.

Similarly, Stanton is not aggrieved by so much of the order as denied those branches of the Progressive defendants' motion which were for summary judgment dismissing the cause of action alleging violation of General Business Law § 349 and so much of the cause of action alleging injurious falsehood as was based on allegations other than "category 1" insofar as asserted against them (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144). Accordingly, the appeal by Stanton from those portions of the order must be dismissed as well.

Turning to the merits, we conclude that the Supreme Court properly denied those branches of the Progressive defendants' motion which were for summary judgment dismissing the causes of action alleging violation of General Business Law § 349 and so much of the cause of action alleging injurious falsehood as was based on allegations other than "category 1" insofar as asserted against them. However, we conclude that the court should have granted that branch of Stanton's motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him. Accordingly, we modify.

II. General Business Law § 349

General Business Law § 349 declares unlawful all "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state" (General Business Law § 349[a]). "Section 349 governs consumer-oriented conduct and, on its face, applies to virtually all economic activity" (Small v Lorillard Tobacco Co., 94 NY2d 43, 55; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 324; Karlin v IVF Am., 93 NY2d 282, 290-291).

To successfully assert a claim under General Business Law § 349(h), "a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice" (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d 616, 621; see Koch v Acker, Merrall & Condit Co., 18 NY3d 940, 941; Stutman v Chemical Bank, 95 NY2d 24, 29). In this case, the Progressive defendants contend that the conduct at issue was not consumer-oriented and that the plaintiffs failed to adequately allege that they suffered an injury as a result of the Progressive defendants' allegedly deceptive conduct.

  • Consumer-Oriented Conduct

 

"[P]arties claiming the benefit of [General Business Law § 349(h)] must, at the threshold, charge conduct that is consumer oriented" (New York Univ. v Continental Ins. Co., 87 NY2d 308, 320; see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 334; Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25; see also Genesco Entertainment, Div. of Lymutt Indus., Inc. v Koch, 593 F Supp 743, 752 [SD NY]). "Private contract disputes, unique to the parties . . . [do] not fall within the ambit of the statute" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25; see New York Univ. v Continental Ins. Co., 87 NY2d at 320). The " single shot transaction'" (Genesco Entertainment, Div. of Lymutt Indus., Inc. v Koch, 593 F Supp at 752 [SD NY]), which is "tailored to meet the purchaser's wishes and requirements" (New York Univ. v Continental Ins. Co., 87 NY2d at 321), does not, without more, constitute consumer-oriented conduct for the purposes of this statute (see Biancone v Bossi, 24 AD3d 582, 583; Lynch v McQueen, 309 AD2d 790, 792; Teller v Bill Hayes, Ltd., 213 AD2d 141, 145; United Knitwear Co. v North Sea Ins. Co., 203 AD2d 358, 359).

On the other hand, conduct has been held to be sufficiently consumer-oriented to satisfy the statute where it involved "an extensive marketing scheme" (Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d at 344), where it involved the "multi-media dissemination of information to the public" (Karlin v IVF Am., 93 NY2d at 293), and where it constituted a standard or routine practice that was "consumer-oriented in the sense that [it] potentially affect[ed] similarly situated consumers" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 27; see Wilner v Allstate Ins. Co., 71 AD3d 155, 164; Elacqua v Physicians' Reciprocal Insurers, 52 AD3d 886, 888). Simply put, "[the] defendant's acts or practices must have a broad impact on consumers at large" (New York Univ. v Continental Ins. Co., 87 NY2d at 320; see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25; Canario v Gunn, 300 AD2d 332, 333; see also Genesco Entertainment, Div. of Lymutt Indus., Inc. v Koch, 593 F Supp at 752 [SD NY]).Here, the Progressive defendants argue that they are entitled to summary judgment on the ground that the complaint fails to state a cause of action for violation of General Business Law § 349 (see Biancone v Bossi, 24 AD3d at 583). Specifically, they contend that the plaintiffs failed to base their cause of action on conduct that affects consumers in general.

Contrary to the Progressive defendants' contention, the complaint is not based upon a private contract dispute or a single shot transaction between them and plaintiffs (cf. New York Univ. v Continental Ins. Co., 87 NY2d at 320; Biancone v Bossi, 24 AD3d at 583; Lynch v McQueen, 309 AD2d at 792; Korn v First UNUM Life Ins. Co., 277 AD2d 355, 356). Rather, the complaint alleges that the Progressive defendants engaged in deceptive conduct which misled customers of the plaintiffs and other independent shops into believing that they must have their vehicles repaired at repair shops that were members of the DRP. The complaint further alleges that this conduct was part of an institutionalized program and that it constituted a standard practice that was routinely applied to all claimants who sought to have their vehicles repaired by the plaintiffs or by any other independent repair shop. Accordingly, the complaint adequately alleges conduct that is consumer-oriented inasmuch as it alleges conduct that has a "broad[ ] impact on consumers at large" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25; see Wilner v Allstate Ins. Co., 71 AD3d at 164; Elacqua v Physicians' Reciprocal Insurers, 52 AD3d at 888).

The Progressive defendants further contend that in order to show that the alleged conduct has a broad impact on consumers, the plaintiffs must identify individual consumers who were specifically harmed when they were misled into having repairs done at the DRP shops. The Supreme Court rejected this contention, and so do we.

On its face, General Business Law § 349(a) declares deceptive conduct unlawful without reference to whether it has actually caused specific pecuniary harm to consumers in general. The statute declares unlawful "[d]eceptive acts or practices in the conduct of any business" (General Business Law § 349[a]). The requirement that the consumer-oriented conduct be materially misleading limits the availability of section 349(a) to cases where the deception pertains to an issue that may bear on a consumer's decision to participate in a particular transaction. As such, the statute is limited in its application to those acts or practices which undermine a consumer's ability to evaluate his or her market options and to make a free and intelligent choice. In this sense, the deception itself is the harm that the statute seeks to remedy: "[c]onsumers have the right to an honest market place" (Mem of Governor Rockefeller, 1970 NY Legis Ann, at 472; see Richard A. Givens, Practice Commentaries, McKinney's Cons Laws of NY, Book 19, General Business Law § 349, at 569 [1988 ed] ["The Legislature determined . . . that consumer deceptions of this sort inherently hurt the public—including both consumers themselves and legitimate business"]).

To require a showing of specific quantifiable harm to the public at large goes beyond the Court of Appeals' statement that a plaintiff need only show an "impact" on consumers (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25). Such a requirement would be inconsistent with past cases which hold that the threshold requirement of consumer-oriented conduct may be satisfied where the allegedly deceptive acts are standardized such that "they potentially affect similarly situated consumers" (id. at 27 [emphasis added]; see Wilner v Allstate Ins. Co., 71 AD3d at 164; Elacqua v Physicians' Reciprocal Insurers, 52 AD3d at 888; cf. Restatement [Third] of Unfair Competition, § 2).

Furthermore, a requirement that a plaintiff must show specific quantifiable harm to the public at large would be inconsistent with the principle that "conduct need not be repetitive or recurring" in order to come within the purview of the statute (New York Univ. v Continental Ins. Co., 87 NY2d at 320; see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25). Indeed, "the legislative history makes plain that this law was intended to afford a practical means of halting consumer frauds at their incipiency without the necessity to wait for the development of persistent frauds'" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25, quoting Mem of Governor Rockefeller, 1970 NY Legis Ann, at 472-473; see Mem of the Dept of Law to the Governor, Bill Jacket, L 1970, ch 43). Indeed, the availability of injunctive relief permits the Attorney General to bring an action upon his or her belief that "any person, firm, corporation or association . . . is about to engage in any of the acts or practices stated to be unlawful" (General Business Law § 349[b]; cf. Richard C. Givens, Practice Commentaries, McKinney's Cons Laws of NY, Book 19, General Business Law § 349, at 565 [1988 ed] ["There is no requirement that the plaintiff show specific dollar injury, or to obtain injunctive relief that there even be pecuniary injury at all"]).

In light of the plain language of General Business Law § 349(a), we conclude that the plaintiffs were not required to identify specific consumers who suffered pecuniary harm as a result of the allegedly deceptive conduct in order to show that the alleged conduct has a broad impact on consumers. Accordingly, we conclude that the Progressive defendants failed to establish, prima facie, their entitlement to judgment as a matter of law on the ground that the plaintiffs failed to adequately allege consumer-oriented conduct.

  1. Direct Injury

 

As indicated, the Progressive defendants also contend that the plaintiffs failed to adequately allege that they suffered injury as a result of the allegedly deceptive acts or practice. The Progressive defendants argue that the plaintiffs did not adequately allege that they suffered a direct injury, and that they therefore do not have standing under General Business Law § 349(h).

When General Business Law § 349 was enacted in 1970, only the Attorney General was empowered to enforce it (see General Business Law § 349[b]; L 1970, ch 43, § 2). "It soon became clear, however, that the broad scope of section 349, combined with the limited resources of the Attorney General, [made] it virtually impossible for the Attorney General to provide more than minimal enforcement'" (Karlin v IVF Am., 93 NY2d at 291, quoting Mem of Assemblyman Strelzin, L 1980, ch 346, § 1, 1980 NY Legis Ann, at 146).

 

In 1980 the statute was amended to provide a private right of action: "any person who has been injured by reason of any violation of this section may bring an action in his [or her] own name" (General Business Law § 349[h]; L 1980, ch 346, § 1). "Among the remedies available to private plaintiffs are compensatory damages, limited punitive damages and attorneys' fees" (Karlin v IVF Am., 93 NY2d at 291; see General Business Law § 349[h]). The statute also makes injunctive relief available to private plaintiffs (see General Business Law § 349[h]).

The Court of Appeals has recognized that "section 349 is a broad, remedial statute and that the provision creating a private right of action employs expansive language" (Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200, 207). The Court has never explicitly held that section 349(h) only confers standing on individual members of the consuming public. To the contrary, the Court has indicated that "limit[ing] the scope of section 349 to only consumers" would be "in contravention of the statute's plain language permitting recovery by any person injured by reason of' any violation" (Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 207).

Accordingly, when analyzing the issue of whether a plaintiff has standing to commence a private action pursuant to subsection 349(h), the Court of Appeals has confined its analysis to determining the nature of the alleged injury and whether it is sufficiently connected to the asserted unlawful conduct (see City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 622-624; Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 206-208). In this regard, the Court has stated that plaintiffs "must . . . plead that they have suffered actual injury caused by a materially misleading or deceptive act or practice" (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 623).

Recognizing that the 1980 amendments only permit recovery by one injured "by reason of" a deceptive business practice (General Business Law § 349[h]), the Court has refused to "presume an intent to include recovery for derivative injuries within the scope of the statute in the absence of a clear indication of such intent from the Legislature" (Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 207). The Court has made it clear that "allegations of indirect or derivative injuries will not suffice" (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 623).

In Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc. (3 NY3d at 203), the plaintiff was one of several health care plans that commenced an action against tobacco companies alleging that they engaged in deceptive practices which misled the public regarding the harmful effects of smoking. The plaintiff sought to recover from the tobacco companies the costs of services that it had provided to plan subscribers as a result of those subscribers being harmed by the effects of smoking (id.). The Court concluded that the plaintiff health plan had "no standing to bring [the] action under General Business Law § 349 because its claims [were] too remote" (id. at 208).

Four years later, in City of New York v Smokes-Spirits.Com, Inc. (12 NY3d 616), the plaintiff City of New York sued out-of-state entities and persons engaged in the business of selling cigarettes over the Internet. The City alleged that the defendants' Web sites allegedly misrepresented that their Internet cigarette sales were tax free, and that their customers did not have to pay cigarette taxes (id. at 620). The City argued that it was injured by the defendants' deceptive acts "in an undetermined amount of unpaid cigarette taxes" (id.). The Court of Appeals concluded that the City lacked standing to assert an action premised on violation of section 349 since the City's claimed injury was "just as indirect as the insurer's was in Blue Cross" (id. at 622).

In both Smokes-Spirits and Blue Cross, the Court reached its conclusion based on the finding that the injuries alleged by each of the plaintiffs were "entirely derivative of injuries . . . suffered by misled consumers" (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 622; see Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 207). Stated more generally, the Court concluded that a plaintiff lacks standing to bring an action pursuant to General Business Law § 349(h) when the claimed loss "arises solely as a result of injuries sustained by another party" (Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 207). Here, the plaintiffs alleged that they were directly injured by the Progressive defendants' deceptive practices in that customers were misled into taking their vehicles from the plaintiffs to competing repair shops that participated in the DRP. The allegedly deceptive conduct was specifically targeted at the plaintiffs and other independent shops in an effort to wrest away customers through false and misleading statements. The plaintiffs' alleged injury did not require a subsequent consumer transaction; rather, it was sustained when customers were unfairly induced into taking their vehicles from the plaintiffs' shop to a DRP shop regardless of whether the customers ultimately ever suffered pecuniary injury as a result of the Progressive defendants' deception. The plaintiffs adequately alleged that as a result of this misleading conduct, they suffered direct business loss of customers resulting in damages of over $5 million (see M.V.B. Collision, Inc. v Allstate Ins. Co., 728 F Supp 2d 205, 217-218 [ED NY]; cf. City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 622; Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d at 207).

Affording a business standing to challenge deceptive conduct practiced in favor of a competing business is consistent with the legislative history of the 1980 amendments, which, as the Court of Appeals has repeatedly recognized, "support[s] the position that business competitors have standing under the statute" (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 624 n 3; see Mem of Atty Gen, Bill Jacket, L 1980, ch 346 ["It is also noted that a business itself will be able to use the private right of action against another business engaged in deceptive practices and thereby obtain increased legal protection"]; Special Comm on Consumer Affairs of Assn of Bar of City of NY, "Private Right of Action" Proposals, Bill Jacket, L 1980, ch 346 ["permitting suits by either consumers or competitors . . . would help to police the marketplace against misrepresentations which constitute deception against the consumer and unfair competition with firms not engaging in such practices"]; Mem of Comm of Dept of Transp, Bill Jacket, L 1980, ch 346 [in a statement in support of the bill: "the businesses affected are in a position to protect their own interests," thus "free[ing]" the Attorney General to protect "persons who are unable, by reason of financial or other circumstances to protect themselves"]; see also Richard A. Givens, Practice Commentaries, McKinney's Cons Laws of NY, Book 19, General Business Law § 349, at 565 [1988 ed] ["In addition to consumers, . . . competitors . . . are given the right to sue . . . as an additional enforcement measure"]; cf. Restatement [Third] of Unfair Competition §§ 1[a][1]; 2 [permitting private action by competitors for deceptive marketing to prospective purchasers]).

The Progressive defendants nevertheless contend that to the extent that a business entity may have standing under section 349(h), such standing should be limited to situations where the entity is acting as a consumer of goods or services (accord Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20). There is some federal court dicta indicating that the statute "was not intended to be a sword to be wielded in business-versus-business disputes . . . where the party asserting the claim is not acting in a consumer role'" (S.Q.K.F.C., Inc. v Bell Atl. TriCon Leasing Corp., 84 F3d 629, 636 [2d Cir], quoting Richard E. Givens, Supp Practice Commentaries, McKinney Cons Laws of N.Y., Book 19, Overall Scope of General Business Law §§ 349-350, 1996 Pocket Part at 166, 167). This statement was made by the United States Court of Appeals for the Second Circuit in the context of its analysis as to whether the complaint adequately alleged consumer-oriented conduct—a distinctly separate element (see S.Q.K.F.C., Inc. v Bell Atl. TriCon Leasing Corp., 84 F3d at 636; cf. City of New York v Smokes-Spirits.Com, Inc., 12 NY3d at 623-624). In any event, the Second Circuit ultimately left that issue open and decided the appeal on alternative grounds (see S.Q.K.F.C., Inc. v Bell Atl. TriCon Leasing Corp., 84 F3d at 636). Moreover, in a subsequent version of the Practice Commentaries cited by the Second Circuit, it is clear that the statement quoted is referring to specific types of business-versus-business disputes, not at issue in this case, such as those "over intellectual property rights" including "trademark or trade dress infringement" (Richard E. Givens, Supp Practice Commentaries, McKinney's Cons Laws of NY, Book 19, Overall Scope of General Business Law §§ 349-350, 2004 Pocket Part at 319, 322). The author, a former Regional Director of the Federal Trade Commission, went on to state that "business standing under §§ 349-350 can be recognized where a business is truly acting in the role of consumer . . . or where deceptions harming consumers incidentally sideswipe rivals who are better funded and thus in a position to sue as private attorneys general to vindicate the consumer interest" (Richard E. Givens, Supp Practice Commentaries, McKinney's Cons Laws of NY, Book 19, Overall Scope of General Business Law §§ 349-350, 2004 Pocket Part of 319, 322 [emphasis added]).

Indeed, by conferring on an injured business competitor standing to challenge deceptive conduct practiced on the consumers in its market, the integrity of the market may be maintained by an entity which may have more funds, broader information, and more at stake in the market than any single individual consumer. Such private enforcement of this consumer-protection statute is consistent with the purpose of the 1980 amendments inasmuch as it tends to ease the burden placed on the Attorney General by providing for alternative means of enforcing the substantive measures of consumer protection. So long as the allegedly deceptive conduct is sufficiently consumer-oriented, a business competitor protecting its own interest will ultimately serve to protect the interests of the consuming public.

Turning once more to the plain language of the statute, we note that the right to bring a private action was not limited to those acting in a consumer role, but rather, it was provided to "any person who has been injured by reason of any violation of this section" (General Business Law § 349[h]). The complaint here alleged that the unlawful conduct diverted customers to competing businesses resulting in over $5 million in lost business. Inasmuch as we conclude that the plaintiffs have sufficiently alleged that they were directly injured by reason of conduct rendered unlawful by section 349(a), we find no reason to judicially graft an additional requirement onto the statute so as to deprive them of standing based solely on their role in the consumer transaction. Accordingly, we hold that the allegation that the Progressive defendants' deceptive practices diverted the plaintiffs' customers to competing businesses resulting in over $5 million in lost business sales constituted an allegation of a direct injury sufficient to confer standing upon the plaintiffs under General Business Law § 349(h).

In sum, the Progressive defendants failed to establish, prima facie, their entitlement to judgment as a matter of law on the ground that the plaintiffs lacked standing by failing to adequately allege that they suffered a direct injury as a result of the allegedly deceptive act or practice. Accordingly, the Supreme Court properly denied that branch of the Progressive defendants' motion which was for summary judgment dismissing the first cause of action.

  1. Injurious Falsehood And Tortious Interference With Prospective Business Advantage

 

The Progressive defendants also contend that the Supreme Court erred in denying that branch of their motion which was for summary judgment dismissing so much of the sixth cause of action, which was to recover damages for injurious falsehood, as was based on allegations other than "category 1," insofar as asserted against them. To establish a claim for injurious falsehood, a plaintiff must demonstrate that a defendant maliciously made false statements with the intent to harm the plaintiff, or recklessly and without regard to their consequences, and that a reasonably prudent person would have or should have anticipated that damage to the plaintiff would result (see Gilliam v Richard M. Greenspan, P.C., 17 AD3d 634, 635).

The Progressive defendants established, prima facie, their entitlement to judgment as a matter of law dismissing the sixth cause of action in its entirety. However, in opposition, the plaintiffs raised triable issues of fact as to whether numerous false statements the Progressive defendants purportedly uttered to its claimants—communicating that the plaintiffs overcharged, did not do good work, and were a "bunch of crooks"—were made maliciously with the intent to harm the plaintiffs, or made recklessly and without regard to their consequences (see Liberman v Gelstein, 80 NY2d 429, 437; Gilliam v Richard M. Greenspan, P.C., 17 AD3d at 635). Accordingly, the Supreme Court properly denied that branch of the Progressive defendants' motion which was for summary judgment dismissing so much of the sixth cause of action as was based on allegations other than "category 1" insofar as asserted against them.

Finally, Stanton contends that the Supreme Court erred in denying that branch of his motion which was for summary judgment dismissing the fifth cause of action, which was to recover damages for tortious interference with prospective business advantage, insofar as asserted against him. To establish a claim for tortious interference with prospective business advantage, a plaintiff must demonstrate that, "(a) the plaintiff had business relations with a third party; (b) the defendant interfered with those business relations; (c) the defendant acted with the sole purpose of harming the plaintiff or by using unlawful means; and (d) there was resulting injury to the business relationship" (Thome v Alexander & Louisa Calder Found., 70 AD3d 88, 108, citing Carvel Corp. v Noonan, 3 NY3d 182, 189-190).

Here, Stanton established his prima facie entitlement to judgment as a matter of law by establishing that the plaintiffs did not sustain injury to their business relationship with a customer as a result of Stanton's handling of a particular claim (see Carvel Corp. v Noonan, 3 NY3d at 189-190; Thome v Alexander & Louisa Calder Found., 70 AD3d at 108). In opposition, the plaintiffs failed to raise a triable issue of fact. Accordingly, the Supreme Court should have granted that branch of Stanton's motion which was for summary judgment dismissing the fifth cause of action insofar as asserted against him (see Zuckerman v City of New York, 49 NY2d 557, 562).

Accordingly, the appeal by Stanton from so much of the order as denied those branches of the motion of the Progressive defendants which were for summary judgment dismissing the first cause of action, and for summary judgment dismissing so much of the sixth cause of action as was based on allegations other than "category 1," insofar as asserted against them is dismissed, as he is not aggrieved by those portions of the order. The appeal by the Progressive defendants from so much of the order as denied that branch of Stanton's motion which was for summary judgment dismissing the fifth cause of action insofar as asserted against him is dismissed, as the Progressive defendants are not aggrieved by that portion of the order. The order is modified, on the law, by deleting the provision thereof denying that branch of Stanton's motion which was for summary judgment dismissing the fifth cause of action insofar as asserted against him, and substituting therefor a provision granting that branch of the motion, and, as so modified, the order is affirmed insofar as reviewed.

ANGIOLILLO, J.P., BELEN and LOTT, JJ., concur.

ORDERED that the appeal by the defendant Nicholas Stanton from so much of the order as denied those branches of the motion of the defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, and Progressive Specialty Insurance Company which were for summary judgment dismissing the first cause of action, which was to recover damages for violation of General Business Law § 349, and for summary judgment dismissing so much of the sixth cause of action, which was to recover damages for injurious falsehood, as was based on allegations other than "category 1," insofar as asserted against them is dismissed, as he is not aggrieved by those portions of the order (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144); and it is further,

ORDERED that the appeal by the defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, and Progressive Specialty Insurance Company from so much of the order as denied that branch of the motion of the defendant Nicholas Stanton which was for summary judgment dismissing the fifth cause of action, which was to recover damages for tortious interference with prospective business advantage, insofar as asserted against him, is dismissed, as those defendants are not aggrieved by that portion of the order (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144); and it is further,

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the motion of the defendant Nicholas Stanton which was for summary judgment dismissing the fifth cause of action, which was to recover damages for tortious interference with prospective business advantage, insofar as asserted against him, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as reviewed; and it is further,

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

Prince Seating Corp. v. QBE Insurance Company


Abrams, Gorelick, Friedman & Jacobson, P.C., New York, N.Y. (Michael E. Gorelick and Alexandra Rigney of counsel), for appellant QBE Insurance Company.
The Sullivan Law Group, LLP, New York, N.Y. (Robert M. Sullivan and Dana B. Hoffman of counsel), for appellant Century Coverage Corp.
Seidemann & Mermelstein, Brooklyn, N.Y. (David J. Seidemann of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the defendant QBE Insurance Company is obligated to defend and indemnify Prince Seating Corp. in an action entitled Rabideau v Prince Seating Corp., pending in the Circuit Court of Fairfax County, in the Commonwealth of Virginia, under At Law No. 213800, and to recover damages for breach of contract, the defendant QBE Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Schmidt, J.), entered August 26, 2011, as denied its motion for summary judgment, in effect, declaring that it was not so obligated, and the defendant Century Coverage Corp. separately appeals, as limited by its notice of appeal and brief, from so much of the same order as denied its separate motion for summary judgment dismissing the amended complaint insofar as asserted against it.

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

The plaintiff, Prince Seating Corp., secured a policy of liability insurance from the defendant QBE Insurance Company (hereinafter QBE). A personal injury action was commenced against the plaintiff in Virginia, and the plaintiff sought defense and indemnification from QBE in connection with that action. The plaintiff allegedly provided timely notice of the underlying claim to its broker, the defendant Century Coverage Corp. (hereinafter Century) pursuant to an agreement between the plaintiff and Century, which provided that Century, acting as "middleman," would convey such claims to QBE.

Where, as here, a policy of liability insurance requires that notice of an occurrence be given as soon as practicable, such notice must be afforded to the carrier "within a reasonable period of time" (Bauerschmidt & Sons, Inc. v Nova Cas. Co., 69 AD3d 668, 669). The plaintiff contends that Century failed to timely convey notice of the underlying claim to QBE. However, as Century correctly contends, it cannot be held liable for failing to provide timely notice of the claim to QBE if it did not receive timely notice of the underlying claim from the plaintiff.

Century made a prima facie showing of its entitlement to judgment as a matter of law by submitting a written telephone message and the deposition testimony of its claims supervisor, which demonstrated that it first received notice of the underlying claim from a claims adjustor in the underlying action on February 19, 2002, more than six months after the plaintiff first received notice of the claim against it (see id.). In opposition, however, the plaintiff raised a triable issue of fact as to whether it provided Century with timely notice of the claim via facsimile transmission, mail, and telephone communication (see 233 E. 17th St., LLC v L.G.B. Dev., Inc., 78 AD3d 930; Tully Constr. Co., Inc. v Marsh USA, Inc., 65 AD3d 627, 629; Huertero v Blue Ridge Ins. Co., 13 AD3d 486).

Even if the plaintiff timely provided notice to Century, "absent some evidence of an agency relationship [between a broker and an insurer], even timely notice of an accident by an insured to a broker is not effective and does not constitute notice to the insurance company, as a broker is considered to be an agent only of the insured" (Prince Seating Corp. v QBE Ins. Co., 73 AD3d 884, 885). Nonetheless, as this Court determined on a prior related appeal, since the language of the policy issued by QBE to the plaintiff was ambiguous with respect to whom should be notified, "there is an issue of fact as to whether the contract should be interpreted to allow notice to [the] broker" (id. at 885 [internal quotation marks omitted]; see Jeffrey v Allcity Ins. Co., 26 AD3d 355, 356). Despite QBE's contentions to the contrary, this triable issue of fact has not been eliminated by any of the deposition testimony, which was taken after the date of this Court's prior decision and order.

Accordingly, the Supreme Court correctly denied the separate motions for summary judgment.

Country-Wide Insurance Company v. Preferred Trucking Services Corp


Thomas Torto, New York, for appellant.
Alexander J. Wulwick, New York, for respondents.

Order, Supreme Court, New York County (Marcy S. Friedman, J.), entered on or about August 10, 2011, which, insofar as appealed from, granted the motion of defendants Filippo and Sherri Gallina for summary judgment to the extent of declaring that plaintiff's disclaimer of coverage for its insured defendant Preferred Trucking Services Corp. (Preferred) was untimely, and that plaintiff was obligated to indemnify Preferred up to the policy limit of $500,000, and denied plaintiff's cross motion for summary judgment declaring that it was not obligated to defend and indemnify Preferred in the underlying personal injury action, unanimously affirmed, without costs.

 

Plaintiff's disclaimer of coverage was untimely, since it came approximately four months after it learned of the ground for the disclaimer (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69 [2003]; Consolidated Edison Co. of N.Y. v Hartford Ins. Co., 203 AD2d 83, 84-85 [1st Dept 1994]). Plaintiff's argument that the disclaimer was timely because it had no basis for disclaiming coverage until it became apparent that the operator of the subject truck would not cooperate with the defense of the underlying personal injury action, is unavailing. Plaintiff's diligent conduct prior to the disclaimer, in attempting to secure the cooperation of both Preferred's owner and the operator of the truck, shows that plaintiff believed both had knowledge or information pertaining to the accident and the underlying litigation, and belies plaintiff's representation that its sole concern was with the testimony of the operator of the truck.

Rebollo v. Nicholas Cab Corp.


Law Offices of Michael S. Lamonsoff, PLLC, New York (Craig W. Phemister of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., Brooklyn (Stacy R. Seldin of counsel), for respondents.

Order, Supreme Court, New York County (George J. Silver, J.), entered July 6, 2011, which, to the extent appealed from as limited by the briefs, granted defendants-respondents' motion for summary judgment dismissing plaintiff's serious injury claims regarding his right knee, right ankle, and cervical and lumbar spine injuries, unanimously modified, on the law, to deny the motion with respect to plaintiff's claimed right ankle fracture, and otherwise affirmed, without costs.

Defendants made a prima facie showing of entitlement to summary judgment as to plaintiff's claims of "permanent consequential limitation of use" and "significant limitation of use" of his right knee, right ankle, and cervical and lumbar spine (Insurance Law § 5102[d]).

Plaintiff raised an issue of fact with respect to his right ankle injuries by presenting evidence of a fracture (see id.). Plaintiff also raised a triable issue of fact as to his right shoulder injuries which are not at issue on this appeal.

Should the jury determine that plaintiff has met the threshold for serious injury on his shoulder and/or ankle, it may award damages for all of plaintiff's injuries causally related to the accident, even those not meeting the serious injury threshold (see Linton v Nawaz, 14 NY3d 821 [2010]; Rubin v SMS Taxi Corp., 71 AD3d 548 [1st Dept 2010]).

Santos v. New York City Transit Authority


Sim & Records, LLP, Bayside (Sang J. Sim of counsel), for appellants.
Wallace D. Gossett, Brooklyn (Jane Shufer of counsel), for respondents.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered December 21, 2011, which granted defendants' motion for summary judgment dismissing the complaint alleging serious injuries under Insurance Law § 5102(d), unanimously reversed, on the law, without costs, and the motion denied.

Defendants failed to make a prima facie showing of their entitlement to judgment as a matter of law. Their orthopedist's unexplained findings of significant limitations in the cervical and lumbar spine (see Yamamoto v Carled Cab Corp., 66 AD3d 603 [1st Dept 2009]) conflict with their findings of an absence of serious injury to the spine (Feaster v Boulabat, 77 AD3d 440, 440-441 [1st Dept 2010]). Defendants also failed to submit objective evidence of the absence of any spinal injuries or abnormalities. Nor did they submit any expert opinion that plaintiff's alleged injuries were not caused by the accident. Because defendants failed to meet their burden, their motion must be denied, regardless of the sufficiency of the opposing papers (see Escotto v Vallejo, 95 AD3d 667, 668 [1st Dept 2012]).

Robinson v. Joseph


Law Offices of William B. Baier, Bohemia (William B. Baier of counsel), for appellants.
Paris & Chaikin PLLC, New York (Ian M. Chaikin of counsel), for respondent.

Order, Supreme Court, Bronx County (Barry Salman, J.), entered on or about July 1, 2011, which denied defendants Adama Mbaye and Krukman, LLC's motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102 (d), unanimously affirmed, without costs.

Defendants met their prima facie burden of showing that plaintiff did not sustain a serious injury to her cervical spine and lumbar spine by submitting the affirmations of a physiatrist and neurologist, both of whom found that plaintiff's cervical spine and lumbar spine demonstrated full ranges of motion in
every plane, comparing plaintiff's values to normal (see Perl v Meher, 18 NY3d 208 [2011]; Vega v MTA Bus Co., 96 AD3d 506, 507 [1st Dept 2012]; Spencer v Golden Eagle, Inc., 82 AD3d 589, 590-591 [1st Dept 2011]). Contrary to plaintiff's contention, it was unnecessary, for defendants to meet their prima facie burden, for their experts to specifically address the positive diagnostic findings within plaintiff's medical records (see Clemmer v Drah Cab Corp., 74 AD3d 660, 660-661 [1st Dept 2010]; Shumway v Bungeroth, 58 AD3d 431 [1st Dept 2009]; Onishi v N & B Taxi, Inc., 51 AD3d 594, 595 [1st Dept 2008]).

Nevertheless, plaintiff raised an issue of fact in opposition as to both her cervical and lumbar spines. She submitted the affirmation of a radiologist explaining that the MRIs of her cervical spine revealed, among other things, disc herniations at multiple levels, and affirmed results of EMG tests which revealed lumbar and cervical radiculopathy. Further, plaintiff submitted the affirmed reports of three treating physicians, all of whom found that plaintiff's cervical and lumbar spine suffered diminished ranges of motion (see Lavali v Lavali, 89 AD3d 574 [1st Dept 2011]; Colon v Bernabe, 65 AD3d 969, 970 [1st Dept 2009]). Moreover, plaintiff's physical medicine and rehabilitation expert stated in his affirmation that the disc herniations and radiculopathies were causally connected to the accident (see e.g. Fuentes v Sanchez, 91 AD3d 418 [2012].

Defendants failed to meet their initial burden as to plaintiff's 90/180-day claim, since they relied only on the reports of their medical experts who did not examine plaintiff during the relevant statutory period and did not address plaintiff's condition during the relevant period (see Quinones v Ksieniewicz, 80 AD3d 506, 506-507 [1st Dept 2011]). Viewing the evidence in a light most favorable to plaintiff, as we must at this procedural posture, Supreme Court properly denied defendants' motion as to the 90/180-day claim (see Cruz v Rivera, 94 AD3d 576 [1st Dept 2012]; Morris v Cisse, 58 AD3d 455, 456 [1st Dept 2009]; Alexandre v Dweck, 44 AD3d 597 [2nd Dept 2007]).

Burgos v. Castro


Mallilo & Grossman, Flushing, N.Y. (Elliot L. Lewis of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Stacy R. Seldin of counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Pineda-Kirwan, J.), entered April 5, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957).

In opposition, however, the plaintiff raised a triable issue of fact as to whether he sustained a serious injury to the cervical region of his spine within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Perl v Meher, 18 NY3d 208, 215-218). Accordingly, the defendants' motion for summary judgment dismissing the complaint should have been denied.

Hussain v. Tejada


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Stacy R. Seldin of counsel), for appellants.
Michael A. Cervini, Jackson Heights, N.Y. (Robin Mary Heaney of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Solomon, J.), dated November 4, 2010, which denied their 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) as a result of the subject accident.

ORDERED that the order is affirmed, 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 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 papers submitted by the defendants failed to adequately address the plaintiff's claim, set forth in the bill of particulars, that he sustained a medically determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Takaroff v A.M. USA, Inc., 63 AD3d 1142, 1143).

Since the defendants did not sustain 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 (id. at 1144).

Accordingly, the Supreme Court properly denied the defendants' motion for summary judgment dismissing the complaint.

Marquez v. Brower

The Goodman Law Firm, Melville, N.Y. (Peter J. Goodman of counsel), for appellant.
Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, and Melissa M. Murphy 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, Nassau County (Brandveen, J.), dated December 15, 2009, as granted that branch of the motion of the defendants Peter J. Brower, the Town of Hempstead, and the Town of Hempstead Sanitation Department which was for summary judgment dismissing the complaint insofar as asserted against them on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the motion of the defendants Peter J. Brower, the Town of Hempstead, and the Town of Hempstead Sanitation Department which was for summary judgment dismissing the complaint insofar as asserted against them is denied.

The defendants Peter J. Brower, the Town of Hempstead, and the Town of Hempstead Sanitation Department (hereinafter collectively the Town 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 papers submitted by the Town defendants failed to adequately address the plaintiff's claim, set forth in the bill of particulars, that the plaintiff sustained a medically determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident (see Mugno v Juran, 81 AD3d 908).

Since the Town defendants did not sustain 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 (id. at 909).

Accordingly, the Supreme Court should have denied the Town defendants' motion for summary judgment dismissing the complaint insofar as asserted against them.

Uvaydov v. Peart


Elliot Ifraimoff & Associates, P.C., Forest Hills, N.Y. (Dmitriy Shulman of counsel), for appellant.
Brand Glick & Brand P.C., Garden City, N.Y. (Peter M. Khrinenko of counsel), for respondents.

DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Strauss, J.), dated May 16, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). Although the defendants asserted that the alleged injuries to the cervical and lumbosacral regions of the plaintiff's spine, and to the plaintiff's right shoulder, did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d at 352; Gaddy v Eyler, 79 NY2d at 955-956), the defendants' examining orthopedic surgeon recounted, in an affirmed report submitted in support of the defendants' motion for summary judgment, that range-of-motion testing performed during the examination revealed significant limitations in those areas (see Alexander v Gordon, 95 AD3d 1245, 1246). Although the defendants' examining orthopedic surgeon concluded that the range-of-motion limitations were self-imposed, he failed to explain or substantiate, with objective medical evidence, the basis for that conclusion (see Iannello v Vazquez, 78 AD3d 1121).

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) as a result of the subject accident, 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).
Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

Jeffers v. Style Transit Inc.


Weiss & Rosenbloom, P.C., New York (Andrea K. Tessler of counsel), for appellant.
Jason Levine, New York, for respondents.
Order, Supreme Court, Bronx County (Diane A. Lebedeff, J.), entered on or about March 8, 2011, which granted defendants-respondents' motion for summary judgment dismissing the complaint on the threshold issue of serious injury within the meaning of Insurance Law § 5102(d), unanimously reversed, on the law, with costs, and the motion denied.

Defendants failed to make a prima facie showing that plaintiff did not sustain a serious injury to her right knee. An MRI of the knee taken less than three weeks after the accident showed that plaintiff had sustained "a linear tear of the posterior horn of the medial meniscus with a second small tear ofthe free edge of the body of the medial meniscus." Defendants' expert, Dr. Katzman, failed to address the positive findings on the MRI, and indeed, does not appear to have reviewed any of the relevant medical records, including contemporaneous reports of diminished ranges of motion. Dr. Katzman failed to proffer any medical evidence that plaintiff's knee injuries were not caused by the accident, merely opining, in conclusory fashion, that she had a resolved knee sprain, in spite of the fact that Dr. Katzman himself observed signs of injury such as an antalgic gait. This was insufficient to meet defendants' burden (see Patterson v Rivera, 49 AD3d 337 [1st Dept 2008]; Nix v Yang Gao Xiang, 19 AD3d 227 [1st Dept 2005]).

Plaintiff's submissions, in any event, raise a triable issue of fact. Plaintiff submitted a certified copy of the Lenox Hill emergency department record; affirmed medical records of Dr. Robert Kutnick, plaintiff's primary care physician, detailing plaintiffs' complaints and post-accident treatment; an affirmation and MRI report of radiologist Dr. Jacob Lichy, interpreting plaintiff's right knee MRI studies; and the affirmed report of her treating orthopedist, Dr. Mark McMahon, who first examined plaintiff on August 1, 2007, approximately one week after the accident. Dr. McMahon found progressing reductions in range of motion and consistent positive McMurray tests, among other things, and recommended knee surgery, which plaintiff could not undergo due to a health condition unrelated to the accident. Evaluations that Dr. McMahon conducted three years after the July 2007 accident revealed a 30% loss in range of motion, as measured by objective testing (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351 [2002]; Delgado v Papert Tr., Inc., 93 AD3d 457, 458 [1st Dept 2012]; Mitchell v Calle, 90 AD3d 584, 584 [1st Dept 2011]). Dr. McMahon also noted that plaintiff experienced buckling and occasional clicking of the knee, and that she had difficulty ascending and descending stairs, bending, and sitting for extended periods of time (see Fuentes v Sanchez, 91 AD3d 418, 419 [1st Dept 2012]). Further, he maintained that arthroscopic surgery would have been the best method to resolve the condition.

Defendants did not submit any evidence as to causation. In any event, Dr. McMahon's opinion that plaintiff's injuries were caused by the accident is sufficiently supported by plaintiff's claim that she was previously asymptomatic and a lack of records showing otherwise (see Perl v Meher, 18 NY3d 208, 218-219 [2011]; Yuen v Arka Memory Cab Corp., 80 AD3d 481, 482 [1st Dept 2011]).

Finally, defendants failed to meet their burden of establishing, prima facie, the absence of a 90/180-day injury. While plaintiff testified that she was confined to home for only two months, she also testified that she missed 11 months of work as a maternity ward nurse due to pain in her right knee. Dr. Katzman's examination postdated the requisite 180-day period, and defendants submitted no evidence disproving that plaintiff was unable to work for 11 months due to a medically determined injury (see Quinones v Ksieniewicz, 80 AD3d 506, 506-507 [1st Dept 2011]).

Pindo v. Lenis


Martin, Fallon & Mullé, Huntington (Stephen P. Burke of counsel), for appellant.
Rosenblatt, Frasciello & Knipping-Diaz, LLC, New York (Giulio S. Frasciello of counsel), for respondent.

Order, Supreme Court, New York County (George J. Silver, J.), entered January 12, 2012, which, insofar as appealed from, denied defendant Elicias Lenis's motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.

In response to defendant's prima facie showing that plaintiff did not sustain a serious injury, plaintiff proffered sufficient evidence to raise an issue of fact as to whether the alleged injuries to his cervical and lumbar spines were "significant" within the meaning of Insurance Law § 5102(d). Days after the accident, plaintiff's treating physician found that his cervical and lumbar spine suffered limitations in range of motion in multiple planes, and that physician continued to find diminished ranges of motion at subsequent examinations. Such injuries, if proven, are significant enough to provide a basis for finding a serious injury under Insurance Law § 5102(d) (see Garner v Tong, 27 AD3d 401 [1st Dept 2006]; Howard v King, 307 AD2d 278 [2d Dept 2003]; see also Vega v MTA Bus Co., 96 AD3d 506 [1st Dept 2012]; Rosa-Diaz v Maria Auto Corp., 79 AD3d 463 [1st Dept 2010]).

As for defendant's gap in treatment argument, plaintiff submitted an affidavit explaining that he attended extensive physical and rehabilitative therapy, until his insurer advised him that his no fault benefits had expired, and that he could no longer afford treatment. This Court has repeatedly found such an explanation adequate to raise an issue of fact (see e.g. Serbia v Mudge, 95 AD3d 786 [1st Dept 2012]; Browne v Covington, 82 AD3d 406 [1st Dept 2011]).

Steinbergin v. Ali


Baker, McEvoy, Morrissey & Moskovits, P.C., New York (Stacy R. Seldin of counsel), for appellants.
Joelson & Rochkind, New York (Geofrey Liu of counsel), for respondent.
Order, Supreme Court, New York County (George J. Silver, J.), entered November 25, 2011, which denied defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d), unanimously modified, on the law, the motion granted to the extent of dismissing plaintiff's "permanent consequential limitation" and "significant limitation" claims, and otherwise affirmed, without costs.

Defendants met their prima facie burden of demonstrating that plaintiff did not suffer a permanent right shoulder injury by submitting the affirmation of an orthopedist who found that it demonstrated a full range of motion in every plane except for one, comparing plaintiff's values to normal (see Vega v MTA Bus Co., 96 AD3d 506, 507 [1st Dept 2012]; Spencer v Golden Eagle, Inc., 82 AD3d 589, 590-591 [1st Dept 2011]). The minor diminution in a single plane was not significant enough to constitute a serious injury (see Canelo v Genolg Tr., Inc., 82 AD3d 584 [1st Dept 2011]; Sone v Qamar, 68 AD3d 566 [1st Dept 2009]).

Plaintiff failed to raise an issue of fact in opposition. His orthopedic surgeon found, at two follow-up visits, that plaintiff's right shoulder had "excellent range of motion" after he conducted arthroscopic surgery upon it, and no other evidence of recent limitation was offered (see Oberly v Bangs Ambulance, 96 NY2d 295, 299 [2001]; Dufel v Green, 84 NY2d 795, 798 [1995]). In any event, plaintiff concedes that he did not sustain a serious injury under the "permanent consequential" and "significant limitation" categories of Insurance Law § 5102(d).

However, defendants failed to meet their prima facie burden as to plaintiff's 90/180-day claim. Their expert did not examine plaintiff until almost four years after the accident, and, therefore, could not speak to plaintiff's condition during the relevant period (see Quinones v Ksieniewicz, 80 AD3d 506, 506-507 [1st Dept 2011]). In any event, plaintiff submitted the affirmation of his orthopedic surgeon, who treated him on multiple occasions during the relevant period, and found that he was disabled. Viewing the evidence in a light most favorable to plaintiff, as we must at this procedural posture (see Cruz v Rivera, 94 AD3d 576 [1st Dept 2012]), and considering it in conjunction with plaintiff's testimony that he did not return to work for about two years after the accident, was confined to bed for about three months, and was confined to home for about a year and a half, plaintiff raised an issue of fact in opposition (see Gaddy v Eyler, 79 NY2d 955, 958 [1992]; Alexandre v Dweck, 44 AD3d 597 [2d Dept 2007]).

Weinstein v. Kmart Corporation

Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, and Merril S. Biscone of counsel), for third-party defendant-appellant.
Simmons Jannace, LLP, Syosset, N.Y. (J. Daniel Velez of counsel), for defendant third-party plaintiff-respondent.

DECISION & ORDER
In an action to recover damages for personal injuries, the third-party defendant Sequoia Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Tanenbaum, J.), dated May 12, 2011, as denied that branch of its motion which was pursuant to CPLR 3211(a)(8) to dismiss the third-party complaint insofar as asserted against it on the ground of lack of personal jurisdiction.

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

The Supreme Court properly concluded that the third-party defendant Sequoia Insurance Company (hereinafter Sequoia) is subject to personal jurisdiction in New York. In support of its motion, inter alia, to dismiss the third-party complaint insofar as asserted against it pursuant to CPLR 3211(a)(8), Sequoia submitted the affidavit of one of its vice presidents, who acknowledged that the company became licensed to conduct insurance business in New York prior to the commencement of the third-party action. Sequoia additionally admitted that, as required by Insurance Law § 1212, it appointed the New York Superintendent of Insurance as its agent for service of process.

Sequoia's authorization to do business in New York, and its statutorily required appointment of the Superintendent of Insurance as its agent for service of process "in any proceeding against it on a contract delivered or issued for delivery, or on a cause of action arising, in this state" (Insurance Law § 1212[a]), constituted a consent to jurisdiction for claims within the scope of that appointment (see Pennsylvania Fire Ins. Co. of Philadelphia v Gold Issue Mining & Milling Co., 243 US 93, 95; STX Panocean [UK] Co., Ltd v Glory Wealth Shipping Pte Ltd., 560 F3d 127, 131; The Rockefeller Univ. v Ligand Pharmaceuticals, 581 F Supp 2d 461, 466-467; Amalgamet, Inc. v Ledoux & Co., 645 F Supp 248, 249; Augsbury Corp. v Petrokey Corp., 97 AD2d 173, 175; Comprehensive Mental Assessment & Med. Care v Merchants & Businessmen's Mut. Ins. Co., 196 Misc 2d 134, 136-137; Le Vine v Isoserve, Inc., 70 Misc 2d 747, 749; Robfogel Mill-Andrews Corp. v Cupples Co., Mfrs., 67 Misc 2d 623, 624; see also Vincent Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C301:1, at 21-24). The defendant third-party plaintiff's cause of action for a judgment declaring that Sequoia is obligated to defend and indemnify it in the main action pending in New York falls within the scope of the Superintendent of Insurance's appointment under Insurance Law § 1212 and, thus, Sequoia effectively consented to the exercise of personal jurisdiction over it (cf. Muollo v Crestwood Vil., 155 AD2d 420, 421). Accordingly, the Supreme Court properly denied that branch of Sequoia's motion which was pursuant to CPLR 3211(a)(8) to dismiss the third-party complaint insofar as asserted against it on the ground of lack of personal jurisdiction.

Addison v. Joseph-Walters


Martin, Fallon & Mullé, Huntington, N.Y. (Richard C. Mullé of counsel), for appellant.
Myers, Singer & Galiardo, LLP, New York, N.Y. (Christopher D. Galiardo of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Kings County (Schmidt, J.), dated October 27, 2011, which denied her 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) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

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

Since the defendant failed to meet her 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 (id. at 1020).

Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint.

Derespino v. Valenti


Wellerstein & Associates, P.C., Maspeth, N.Y. (Hedva Wellerstein of counsel), for appellant.
Richard T. Lau & Associates, Jericho, N.Y. (Linda Meisler 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, Kings County (Vaughan, J.), dated November 2, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.
ORDERED that the order is reversed, on the law, with costs, and the defendants' motion for summary judgment dismissing the complaint is denied.

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

However, in opposition, the plaintiff submitted competent medical evidence raising a triable issue of fact as to whether the alleged injuries to the lumbosacral region of her spine, and to her right shoulder, constituted serious injuries under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Perl v Meher, 18 NY3d 208, 215-218). Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

Patterson v. Flechier


Gary P. Kauget, P.C., Brooklyn, N.Y. (Karen M. Emma of counsel), for appellant.
Richard T. Lau, Jericho, N.Y. (Gene W. Wiggins 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, Kings County (Martin, J.), dated September 29, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

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

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbosacral regions of the plaintiff's spine did not constitute serious injuries within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795). The defendants also submitted certain evidence establishing, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d) (cf. Mensah v Badu, 68 AD3d 945, 946).

However, in opposition, the plaintiff submitted competent medical evidence raising a triable issue of fact as to whether the alleged injuries to the cervical and lumbosacral regions of her spine constituted serious injuries under the permanent consequential limitation of use and/or significant limitation of use categories of Insurance Law § 5102(d) (see Perl v Meher, 18 NY3d 208, 215-218). Accordingly, the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint.

Robinson v. Lawrence


DeSena & Sweeney, LLP, Hauppauge, N.Y. (Shawn P. O'Shaughnessy of counsel), for appellants.
Falk & Klebanoff, P.C., West Hempstead, N.Y. (Victor A. Carr and Jeffrey P. Falk of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Queens County (Taylor, J.), entered March 19, 2012, which denied their 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) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants failed to adequately address the plaintiff's claim, set forth in her bill of particulars, that as a result of the subject accident, she sustained certain injuries to her right knee (see Rahman v Sarpaz, 62 AD3d 979, 980; Joseph v Hampton, 48 AD3d 638, 638-639).

Accordingly, the Supreme Court properly denied the defendants' motion for summary judgment dismissing the complaint, regardless of the sufficiency of the plaintiff's opposition papers (see Rahman v Sarpaz, 62 AD3d at 980; Joseph v Hampton, 48 AD3d at 639).

Scott v. Martinez

Ross and Hill, Brooklyn, N.Y. (James F. Ross of counsel), for appellant.
Richard T. Lau, Jericho, N.Y. (Gene W. Wiggins 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, Kings County (Schmidt, J.), dated October 5, 2011, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

ORDERED that the order is affirmed, with costs.

The defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the lumbosacral region of the plaintiff's spine did not constitute a serious injury within the meaning of Insurance Law § 5102(d) (see Rodriguez v Huerfano, 46 AD3d 794, 795) and, in any event, were not caused by the subject accident (see Jilani v Palmer, 83 AD3d 786, 787). The defendants also submitted competent medical evidence establishing, prima facie, that the alleged injuries to the thoracic region of the plaintiff's spine were not caused by the subject accident (id. at 787).
In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint.

Bailey v. Islam


Kagan & Gertel, Brooklyn (Irving Gertel of counsel), for appellants.
Cheven, Keely & Hatzis, New York (William B. Stock of counsel), for respondents.
Order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered on or about April 4, 2012, which granted defendants' motion for summary judgment dismissing the complaint for failure to satisfy the serious injury threshold of Insurance Law § 5102(d), unanimously modified, on the law, to the extent of denying the motion with respect to plaintiffs' claim of serious injury under the "fracture" category of Insurance Law § 5102(d), and otherwise affirmed, without costs.

The conflicting expert opinions as to the existence of a fracture in the injured plaintiff's cervical spine precludes summary dismissal. While defendants established absence of a fracture by submitting the affirmed report of their radiologist, who found no evidence of post-traumatic changes, plaintiff raised a triable issue of fact by submitting the affirmation of his radiologist averring that he found subchondral fractures at the C3 and C4 levels of the cervical spine upon review of the MRI film (see Spagnoli-Scheman v Bellew, 91 AD3d 414 [1st Dept 2012]; Torain v Bah, 78 AD3d 588, 588-589 [1st Dept 2010]).

Defendants met their prima facie burden of establishing their entitlement to judgment as a matter of law with respect to plaintiff's claim of serious injury to his right shoulder, by submitting the reports of their orthopedist and neurologist finding full range of motion, resolved strains, and absence of orthopedic and neurological disability (see Diakite v Soderstrom, 89 AD3d 607 [1st Dept 2011]; Thompson v Abbasi, 15 AD3d 95, 96 [1st Dept 2005]). Plaintiff did not submit any evidence of limitations, contemporaneous or recent, so as to defeat summary judgment as to this claim (see Winters v Cruz, 90 AD3d 412 [1st Dept 2011]).

Defendants also met their burden with respect to plaintiffs' 90/180-day claim by submitting plaintiff's deposition testimony showing that, although the injuries prevented him from returning to work, they did not otherwise affect his usual pre-accident activities. That plaintiff missed more than 90 days of work is not determinative of a 90/180—day injury (see Uddin v Cooper, 32 AD3d 270, 271 [1st Dept 2006], lv denied 8 NY3d 808 [2007]), and plaintiff has offered no evidence showing that he was restricted from performing substantially all of the material acts that constituted his usual and customary daily activities for 90 days during the 180 days following the accident (see Fernandez v Niamou, 65 AD3d 935 [1st Dept 2009]).

We note, however, that if the trier of fact determines that a fracture injury was sustained, it may award damages for all injuries causally related to the accident (see Linton v Nawaz, 14 NY3d 821 [2010]; Rubin v SMS Taxi Corp., 71 AD3d 548, 549-550 [1st Dept 2010]).

Cole v. Roberts-Bonville


Calendar Date: September 10, 2012
Before: Peters, P.J., Lahtinen, Kavanagh, Stein and Egan Jr., JJ.

Finkelstein & Partners, LLP, Newburgh (Kara L. Campbell of counsel), for appellants.
Goldberg Segalla, LLP, Albany (Mark P. Donohue of counsel), for respondents.

MEMORANDUM AND ORDER
Stein, J.

Appeal from an order of the Supreme Court (Hummel, J.), entered May 25, 2011 in Rensselaer County, which granted defendants' motion for summary judgment dismissing the complaint.

Plaintiff Thomas Cole and his wife, derivatively, commenced this action to recover damages for injuries allegedly sustained when Cole's car was struck by a car being operated by defendant Amy Roberts-Bonville in October 2004. Cole alleges that he suffered a serious injury as defined by Insurance Law § 5102 (d) in that he sustained a permanent loss of use, a permanent consequential limitation of use and a significant limitation of the use of his right shoulder, left leg, right knee, cervical spine and lumbar spine. Cole also claims that he was prohibited from performing substantially all of his customary daily activities for at least 90 out of the 180 days immediately following the accident. Defendants moved for summary judgment dismissing the complaint after the completion of discovery, arguing, among other things, that Cole's injuries are the result of a history of degenerative arthritis and degenerative disc disease which predate the accident. Plaintiffs now appeal from Supreme Court's order granting defendants' motion and dismissing the complaint.

We affirm. As the proponents of the motion for summary judgment, defendants bore the initial burden of establishing that Cole did not suffer a serious injury as a result of the accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 352 [2002]; Peterson v Cellery, 93 AD3d 911, 911 [2012]). To that end, defendants submitted, among other things, Cole's medical records, the affidavit of Louis Benton — a licensed orthopedist — and the deposition testimony of Cole and his wife. Cole's medical records contain a diagnosis of "osteoarthritis to his right hip over the past number of years," degenerative joint disease in his right shoulder and spondylosis and degenerative disease to his cervical spine. The records also reflect a history of lower back problems and "minimal foraminal narrowing at C5-6 and C6-7 [and] disk bulging at C7-T1."[FN1]

Based upon his independent medical examination of Cole and review of Cole's medical records, Benton concluded that Cole had preexisting problems regarding his lumbar spine and his right knee and normal range of motion of his spine, right shoulder and right hip. Noting the absence of any complaint with regard to his hip when treated at the emergency room following the accident or at any time within two years thereof, Benton concluded that Cole's hip pain was secondary to age related degenerative arthritis and was not causally related to the accident. Benton further noted the lack of any indication of a fracture of Cole's cervical spine or right shoulder and similarly concluded that his neck and shoulder problems were the result of preexisting age related degenerative arthritis and degenerative disc disease, which were only mildly aggravated by the accident.

With respect to Cole's claim of serious injury under the 90/180-day category, defendants point to the testimony of Cole — who was retired at the time of the accident — and his wife that, after the accident, he continued to perform substantially all of his usual daily activities, albeit with some pain, during the relevant time period. Moreover, none of Cole's medical records from within the initial 180-day period following the accident referenced any limitations on his usual daily activities (see Insurance Law § 5102 [d]; Crawford-Reese v Woodard, 95 AD3d 1418, 1420 [2012]; Henry v Sorge, 90 AD3d 1355, 1357 [2011]).

The foregoing was sufficient to demonstrate defendants' entitlement to judgment dismissing the complaint and, accordingly, shifted the burden to plaintiffs to raise a triable issue of fact (see Peterson v Cellery, 93 AD3d at 913; Howard v Espinosa, 70 AD3d 1091, 1092-1093 [2010]). Thus, plaintiffs were required to offer appropriate evidence demonstrating a serious injury and, given defendants' "'persuasive evidence that [Cole's] alleged pain and injuries were related to a preexisting condition, plaintiff[s] had the [additional] burden to come forward with 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]; see Coston v McGray, 49 AD3d 934, 935 [2008]). We agree with Supreme Court's determination that plaintiffs failed to do so here.

In opposition to defendants' motion, plaintiffs submitted certain medical records, together with the reports of several of Cole's treating physicians. Initially, we note that none of the medical records or reports contain any indication that Cole has suffered a serious injury under the category of a total, permanent loss of use of any body organ, member, function or system (see Oberly v Bangs Ambulance, 96 NY2d 295, 297 [2001]). In order to raise a question of fact regarding the existence of a serious injury under the categories of a permanent consequential or significant limitation of use, plaintiffs were required to "present medical evidence that contain[s] objective, quantitative evidence with respect to diminished range of motion or a qualitative assessment comparing [Cole's] present limitations to the normal function, purpose and use of the affected body organ, member, function or system" (Boone v Milano, 96 AD3d 1195, 1197 [2012] [internal quotation marks and citations omitted]; see Toure v Avis Rent A Car Sys., 98 NY2d at 353; Peterson v Cellery, 93 AD3d at 913). In this case, even assuming that plaintiffs were entitled to rely on the unsworn, unverified narrative reports of Cole's physicians, neither such reports nor the medical records are sufficient to warrant denial of defendants' motion for summary judgment.
Specifically, none of the physician's reports addressed the fact that Cole's medical records reflect that his arthritis and current limitations predated the accident. Moreover, the conclusory opinions contained in the report of physician Charles Buttaci with regard to Cole's alleged limited range of motion of his cervical spine were unsupported by any examinations, tests or medical records. Similarly, the report of Frederick Fletcher, who ultimately performed hip surgery on Cole, fails to distinguish Cole's current limitations from his preaccident condition or to explain the more than two-year delay between the accident and the onset of complaints regarding Cole's hip, and his conclusion that Cole's hip problem was related to the accident is purely speculative (see Gaddy v Eyler, 79 NY2d 955, 958 [1992]; Anderson v Capital Dist. Transp. Auth., 74 AD3d 1616, 1617 [2010], lv denied 15 NY3d 709 [2010]). The report of physician Joseph Elfenbein is equally deficient, as he did not examine any of Cole's medical records from before the accident and his conclusions were based on Cole's misrepresentation that he had no prior history of accidents or injuries.

With respect to the claim under the 90/180-day category, plaintiffs failed to submit any evidence whatsoever of any curtailment of Cole's activities following the accident (see Crawford-Reese v Woodard, 95 AD3d at 1420; Mahar v Bartnick, 91 AD3d 1163, 1165-1166 [2012]). Thus, even viewing the evidence in the light most favorable to plaintiffs, they failed to raise a triable issue of fact concerning whether Cole sustained a causally related serious injury within the meaning of Insurance Law § 5102 (d), and Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint.

Footnotes

Footnote 1: Although plaintiffs' bill of particulars asserts injuries to his left leg, lumbar spine and right knee, his medical records do not refer to any treatment with respect to those body parts after the accident, and he was admittedly on disability retirement at the time of the accident due to the preexisting injuries to his knee and lower back.

Dean v Tower Insurance Company of New York


Max W. Gershweir, for appellant.
Robert D. Meade, for respondents.

CIPARICK, J.:
This appeal requires us to determine whether the term "residence premises" in an insurance contract is ambiguous where an insured purchased a homeowners' policy in advance of a closing but was unable to move in due to the need for major repairs. We conclude that under the circumstances of this case the term is ambiguous, precluding summary judgment.
Plaintiffs Douglas and Joanna Dean entered into a contract to purchase a home in Irvington in February 2005. The closing was scheduled to take place on March 31, 2005. Plaintiffs acquired a homeowners' insurance policy from defendant Tower Insurance Company of New York (Tower) effective as of the closing date. The closing was delayed until May 20, 2005. After the closing, plaintiffs discovered extensive termite damage to the house. Douglas Dean, with the help of family and friends, began the process of repairing the damage. Work on the house progressed over the course of the year following the closing, and the policy was renewed in March 2006. The renovations were substantially completed when, on May 15, 2006, a fire completely destroyed the house.

The morning after the fire, plaintiffs gave notice to Tower. On June 22, 2006, Tower disclaimed coverage on the grounds that: "Our investigation revealed the dwelling was unoccupied at the time of the loss. Accordingly, this dwelling does not qualify as a 'residence premises' [sic] there is no coverage for this claim under your policy." Secondarily, Tower disclaimed coverage on the ground that plaintiffs engaged in fraud by misrepresenting their intent to live in the premises on the application submitted in advance of acquiring the policy.
The Tower policy provides as follows: "We cover: 1. The Dwelling on the 'residence premises' shown in the Declarations, including structures attached to the dwelling." In the definitions section, "residence premises" is defined as: "The one family dwelling . . . where you reside." The term reside is not defined in the policy.

Plaintiffs commenced this action for breach of the insurance contract. Following discovery, both parties moved for summary judgment. Supreme Court granted Tower's motion, denied plaintiffs' motion and dismissed the complaint. The court held that the term "reside" is clear and unambiguous, and that plaintiffs never established residency at the premises and "[a]t best . . . established ownership of the house and presence in it to perform renovations, and a stated intent of living there." The Appellate Division modified the order of Supreme Court, finding that Tower failed to satisfy its prima facie burden on a motion for summary judgment (see Dean v Tower Ins. Co. of N.Y., 84 AD3d 499 [1st Dept 2011]). It concluded that the "residence premises" requirement in the policy failed to define what qualifies "as 'resides' for the purpose of attaching coverage" and that the "policy [was] ambiguous in the circumstances of this case" and otherwise denied summary judgment (id. at 499-500). The Appellate Division granted Tower leave to appeal to this Court on a certified question. We agree with the Appellate Division and now affirm.
"Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured" (Cragg v Allstate Indem. Corp., 17 NY3d 118, 122 [2011]). "[B]efore an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case and that they are subject to no other reasonable interpretation" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984] [internal citations omitted]). "[A]mbiguities in an insurance policy are to be construed against the insurer" (Breed v Insurance Co. of N. Am., 46 NY2d 351, 353 [1978]).

"The standard for determining residency for purposes of insurance coverage requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain" (Government Empls. Ins. Co. v Paolicelli, 303 AD2d 633, 633 [2d Dept 2003] [internal quotation marks omitted]; see also Matter of Aetna Cas. & Sur. Co. v Gutstein, 80 NY2d 773, 775 [1992]; Matter of Allstate Ins. Co. [Rapp], 7 AD3d 302, 303 [1st Dept 2004]). Plaintiff Douglas Dean claimed that between the date of the closing and the date of the fire he was generally at the property at least five days a week. He would go there after work between 4:00 and 5:00 p.m. and leave no earlier than 10 p.m. and would frequently stay late into the night or early morning. He also averred that he had built a table for eating purposes and would eat at the house everyday, sometimes with other workers, and that he slept there on several occasions. Therefore, there are issues of fact as to whether Douglas' daily presence in the house, coupled with his intent to eventually move in with his family, is sufficient to satisfy the insurance policy's requirements (cf. Vela v Tower Ins. Co. of N.Y., 83 AD3d 1050, 1051 [2d Dept 2011], lv granted 2011 NY Slip Op 85357[U] [2d Dept 2011], appeal withdrawn 18 NY3d 881 [2012]).

Further, because the term "reside" is not defined in the contract making the term "residence premises" ambiguous, it is arguable that the reasonable expectations of an average insured (see Cragg, 17 NY3d at 122) is that occupancy of the premises would satisfy the policy's requirements. Notably, the standard fire policy as provided in Insurance Law § 3404 (e) speaks in terms of occupancy, and Insurance Law § 3404 (f) (1) (A) states that a policy "with respect to the peril of fire" cannot contain provisions "less favorable to the insured than those contained in the standard fire policy." Additionally, Tower's letter disclaiming coverage also speaks in terms of occupancy [FN1]. Courts have held that "[a] householder need not necessarily have conventional, or, indeed, any furniture in a house to occupy it. His presence in it for sleeping and eating and working purposes can literally constitute occupancy. He can, if he will, sleep and eat on the floor or on improvised devices" (Page v Nationwide Mut. Fire Ins. Co., 15 AD2d 306, 307 (3d Dept 1962); see also Perrotta v Middlesex Mut. Ins. Co., 37 AD2d 783, 783 [2d Dept 1971]). Thus, there are issues of fact rendering summary judgment inappropriate in this matter.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

JONES, J. (dissenting):

The homeowners' policy at issue on this appeal provides coverage for a "residence premises" which is defined as the "family dwelling, other structures, and grounds," or "that part of any building[] where you reside." Thus, the proper inquiry is whether plaintiffs' resided at the subject premises — an outcome predicated on the simple application of the plain meaning of the term "reside" to the policy. The majority declines to do so, however, agreeing with the Appellate Division that the absence of an express definition of "reside," coupled with plaintiffs' tendered proof that they were engaged in daily renovations inside the premises, renders the phrase "residence premises" ambiguous and precludes Tower's entitlement to summary judgment. In my view, plaintiffs' activity falls short of demonstrating the physical permanence needed to establish that the subject property was their residence. Therefore, I respectfully dissent.

"The standard for determining residency for insurance coverage requires something more than temporary or physical presence and . . . at least some degree of permanence and intention to remain" (Matter of Allstate Ins. Co. (Rapp), 7 AD3d 302, 303 [1st Dept 2004] quoting Government Empls. Ins. Co. v Paolicelli, 303 AD2d 633, 633 [2d Dept 2003] [internal quotation marks omitted]). A resident is defined as "one who lives in the household with a certain degree of permanency and intention to remain" (id. quoting Canfield v Peerless Ins. Co., 262 AD2d 934, 934-935 [4th Dept 1999]).

Applying the plain definition of "reside" to the policy, it is evident that plaintiffs had not established the property as a "residence premises." Plaintiff Douglas Dean attested that leading up to the date of the fire, he would enter the property at least five days a week to perform renovation work, occasionally staying until late night or early morning. Although he ate meals and napped in the premises, significantly, he never stayed overnight and always returned to plaintiffs' residence of the previous seven years. Indeed, plaintiffs continued to reside in their previous home and put simply, failed to physically move into the subject premises. Thus, Douglas Dean's testimony demonstrates ownership, an intention to reside at the subject premises, and recurrent presence inside the property for the purpose of renovation, but not the necessary "degree of permanence" to establish a residence.

Inexplicably, the majority declines to apply the plain meaning of the term "reside" when we have previously accorded unambiguous terms within insurance policies their plain and ordinary meaning (see Government Empls. Ins. Co. v Kligler, 42 NY2d 863, 864 [1977] ["While it is true that policies of insurance are to be construed liberally in favor of the insured and strictly against the insurer, 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"]; New England Mutual Life Insurance Company v Doe, 93 NY2d 122, 130 [1999] [Court applied the plain meaning to the term "exist," noting that "[e]xist means exist."]; Vigilant Ins. Co. v Bear Stearns Cos., Inc., 10 NY3d 170, 177 [2008]; White v Continental Cas. Co., 9 NY3d 264, 267 [2007]). Instead, by finding an ambiguity with the term "residence premises," the majority argues that the case should turn on the issue of "occupancy" because "it is arguable that the reasonable expectations of an average insured is that occupancy of the premises would satisfy the policy's requirements (Majority op. at 5 [internal citation omitted]). The majority appears to take particular issue with Tower's disclaimer letter which stated: "Our investigation revealed the dwelling was unoccupied at the time of the loss.

Accordingly, this dwelling does not qualify as a 'residence premises' [sic] there is no coverage for this claim under your policy." It is evident, however, that Tower disclaimed coverage on the ground that "this dwelling does not qualify as a 'residence premises'" because it was not occupied in a manner that established the property as a residence. The terms "reside" and "occupy" should not be conflated to circumvent the governing terms of the policy, notwithstanding the reference to "occupancy" in the disclaimer letter and Insurance Law § 3404 (e)[FN2]. The issue is plainly whether the property was a "residence premises" and Tower amply demonstrated its entitlement to judgment as a matter of law (see Vela v Tower Ins. Co. of N.Y., 83 AD3d 1050 [2d Dept 2011]; Marshall v Tower Ins. Co. of N.Y., 44 AD3d 1014 [2d Dept 2007]; Commisso v Tower Ins. Co. of N.Y., 30 Misc 3d 1224(A) [Sup Ct NY County 2011]). Because plaintiffs' evidence failed to raise a triable issue of fact, I would reverse the order of the Appellate Division.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs, and certified question answered in the affirmative. Opinion by Judge Ciparick. Chief Judge Lippman and Judges Graffeo and Pigott concur. Judge Jones dissents and votes to reverse in an opinion in which Judges Read and Smith concur.
Decided October 25, 2012
Footnotes

Footnote 1: While not determinative, the disclaimer letter is indicative that the reasonable expectation of an average insured, under these facts, is that occupancy is sufficient to establish coverage.

Footnote 2: It is arguable whether plaintiffs even established occupancy (see Page v Nationwide Mut. Fire Ins. Co., 15 AD2d 306, 307 [3d Dept 1962]["Of course, the mere renovation of a house with no one staying there during the process does not make out occupancy"]).

Nicoletta v Berkshire Life Insurance Company


Law Offices of Christopher P. Foley, LLC, Katonah (Christopher P. Foley of counsel), for appellant.
Wilson Elser Moskowitz Edelman & Dicker LLP, White Plains (Robert A. Spolzino of counsel), for respondents.

Order, Supreme Court, New York County (Carol R. Edmead, J.), entered June 15, 2011, which, in this breach of contract action to recover disability income benefits under an insurance policy issued by defendant Guardian Life Insurance Company of America to plaintiff, granted defendants' motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Under the subject policy, "total disability" is defined to mean that, due to sickness or injury, an insured cannot perform the major duties of his or her occupation. "Occupation," in turn, is defined as "the regular occupation (or occupations, if more than one) in which [the insured is] engaged at the time [the insured] become[s] disabled."

The evidence in the record, including plaintiff's testimony, establishes that, at the time plaintiff purportedly became disabled, he held himself out as a self-employed airline maintenance consultant. Plaintiff admitted that he was able to perform the duties of a consultant, and the fact that he earned no income from such activity does not alter the conclusion that this was his occupation at the time he allegedly became disabled (see Erreca v Western States Life Ins. Co., 19 Cal 2d 388, 397, 121 P2d 689, 695 [1942]). Contrary to plaintiff's contention, defendants did not waive their right to assert that plaintiff was a consultant at that time. Indeed, where, as here, "the issue is the existence or nonexistence of coverage . . . the doctrine of waiver is simply inapplicable" (Albert J. Schiff Assoc. v Flack, 51 NY2d 692, 698 [1980]). Further, even if, as plaintiff asserts, he was unemployed at that time, he was not entitled to disability benefits under the terms of the policy (see Scherer v Equitable Life Assur. Soc. of U.S., 2006 WL 1520212, *4, 2006 US Dist LEXIS 35609, *13 [SD NY, May 31, 2006, No. 01-Civ-10193(CSH)], affd 262 Fed Appx 324 [2d Cir 2008]).

Equally unavailing is plaintiff's argument that he is totally disabled because he cannot perform certain inspection and mechanical duties he claimed to have performed when he was employed at AOG Sheet Metal. These duties contrast significantly with the job duties listed in plaintiff's application for disability income insurance, in which he stated that he was president of the company and that his job duties were 50% technical management and planning and 50% customer relations and personnel planning. In any event, even considering plaintiff's claimed job duties at AOG, the argument fails, as plaintiff admitted that he can still perform business management duties.

Sands Point v. Fidelity National Title Insurance Company

Abraham Hoschander, Brooklyn, N.Y. (David Fleischmann of counsel), for appellant.
Fidelity National Law Group, New York, N.Y. (Liezl Irene Pangilinan of counsel), for respondent.

DECISION & ORDER
In an action, inter alia, to recover damages for breach of a title insurance policy, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Solomon, J.), dated July 18, 2011, as granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(1) to dismiss the complaint.

ORDERED that the order is affirmed insofar as appealed from, with costs.
After purchasing the premises at issue in 2009, the plaintiff commenced an action in the Civil Court of the City of New York, Housing Part, seeking to evict Kevin Evans, a person in possession of the property (hereinafter the eviction action). Evans defaulted in the eviction action, but eventually moved to vacate his default. The Civil Court denied his motion in February 2010, and Evans filed a notice of appeal. Evans also moved in the Appellate Term, 2nd, 11th, and 13th Judicial Districts, by order to show cause, for a stay of eviction pending determination of the appeal. In an affidavit submitted in support of the motion, Evans asserted, for the first time, that he was an heir of a prior owner of the property and that the plaintiff's grantor did not have a valid title to the property. The plaintiff notified its title insurer, Fidelity National Title Insurance Company (hereinafter Fidelity), of Evans' assertions and demanded that Fidelity represent it with respect to Evans' newly raised assertions. Fidelity notified the plaintiff that it would need time to investigate the claim, stated that it was not likely to complete its investigation before the return date of Evans' motion, and advised the plaintiff to do "whatever is necessary to protect against default until [it had] completed coverage review." The plaintiff's attorneys in the eviction action filed opposition to Evans' motion for a stay pending determination of the appeal. Within the next few weeks, the Appellate Term denied Evans' motion for a stay pending appeal, Fidelity denied the plaintiff's demand for representation, and the Appellate Term dismissed Evans' appeal for failure to perfect.

The plaintiff then commenced this action against Fidelity alleging, among other things, that Fidelity breached a provision of the policy requiring it to provide a defense against claims covered by the policy. Fidelity made a pre-answer motion, inter alia, pursuant to CPLR 3211(a)(1) to dismiss the complaint. In support of its motion, Fidelity submitted, among other documents, the policy and the papers submitted to the Appellate Term in support of and in opposition to Evans's motion for a stay pending appeal. The Supreme Court granted Fidelity's motion, and the plaintiff appeals.

CPLR 3211(a) provides that a defendant may move for judgment dismissing a cause of action on the ground that " a defense is founded upon documentary evidence" (CPLR 3211[a][1]). A CPLR 3211(a)(1) motion may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; see Leon v Martinez, 84 NY2d 83, 88; Cervini v Zanoni, 95 AD3d 919, 920-921; Fontanetta v John Doe 1, 73 AD3d 78, 83-84). Materials that clearly qualify as "documentary evidence" include "documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable'" (Fontanetta v John Doe 1, 73 AD3d at 84-85, quoting 2 N.Y. Prac. Com. Litig. in New York State Courts § 7:60, 3d ed).

Here, the policy required Fidelity to defend its insured with respect to "causes of action" alleging matters insured by the policy. It did not require Fidelity to represent its insured with respect to litigation commenced by its insured against another party in which no cause of action was asserted against its insured (see Cohn v Commonwealth Land Tit. Ins. Co., 254 AD2d 241, 241-242; Eliopoulos v Nation's Tit. Ins. of N.Y., Inc., 912 F Supp 28, 31-32). Inasmuch as the documentary evidence submitted by Fidelity in support of its motion conclusively established that no cause of action alleging matters insured by the policy had been asserted against the plaintiff, Fidelity did not breach the policy and the Supreme Court properly granted that branch of Fidelity's motion which was pursuant to CPLR 3211(a)(1) to dismiss the complaint.

In light of our determination, it is not necessary to address the plaintiff's remaining contention.
DILLON, J.P., BALKIN, AUSTIN and COHEN, JJ., concur.

Bentoria Holdings, Inc. v Travelers Indemnity Company


Stephen M. Lazare, for appellant.
John V. Decolator, for respondent.
American Insurance Association et al., amici curiae.

SMITH, J.:
In Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co. (12 NY3d 302 [2009]), we held that an "earth movement" exclusion in an insurance policy did not unambiguously apply to excavation. We now confront a policy in which a similar exclusion is expressly made applicable to "man made" movement of earth. We hold that this added language eliminates the ambiguity, and that loss caused by excavation is excluded from the policy.

Travelers Indemnity Company issued to plaintiff an insurance policy covering "direct physical loss of or damage to" a building in Brooklyn. Under the heading "EXCLUSIONS," the policy said:

"1.We will not pay for loss or damage caused directly or indirectly by any of the following. . . .
****
"b.Earth Movement
****
"(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface "All whether naturally occurring or due to man made or other artificial causes."

The building suffered cracks as a result of an excavation being conducted on the lot next door to it. Plaintiff submitted a claim, which Travelers rejected, relying on the earth movement exclusion. Plaintiff sued for breach of the policy. Supreme Court denied Travelers' motion for summary judgment; the Appellate Division affirmed (Bentoria Holdings, Inc. v Travelers Indem. Co., 84 AD3d 1135 [2d Dept 2011]), but granted leave to appeal to this Court. We now reverse.

Pioneer was in most respects virtually identical to this case. The defendant there insured a building against "accidental direct physical loss" (12 NY3d at 305); the building suffered cracks and other damage as a result of an excavation on an adjoining lot. The defendant refused to pay, relying on an earth movement exclusion very similar to the one quoted above, with the distinction that the last words of the earth movement exclusion here — "All whether naturally occurring or due to man made or other artificial causes" — were absent in Pioneer.

The plaintiff in Pioneer argued that the policy did not clearly exclude "an excavation — the intentional removal of earth by humans" (id. at 308). We found that argument to be "reasonable" (id.), and therefore held that the earth movement exclusion "did not unambiguously remove" excavation damage from the coverage of the policy (id. at 305). But the same argument is not available to plaintiff here. By expressly excluding earth movement "due to man made or artificial causes," the policy contradicts the idea that "the intentional removal of earth by humans" is not an excluded event. This policy cannot reasonably be read to cover the damage on which plaintiff's claim is based.

Accordingly, the order of the Appellate Division should be reversed, with costs, the motion of Travelers Indemnity Company for summary judgment dismissing the complaint as against it granted, and the certified question answered in the negative.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, the motion of Travelers Indemnity Company for summary judgment dismissing the complaint as against it granted, and certified question answered in the negative.  Opinion by Judge Smith. Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Pigott and Jones concur.

 

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