Dear Coverage Pointers Subscribers:
Do you have a situation? We love situations.
We wish you all the healthiest and happiest of New Years. We hope that 2015 is all you want and need it to be. For those of you struggling with challenges, whether they are personal, familial or professional, we send special blessings to you and all of yours.
New Year’s finds me in Scottsdale, Arizona, where we are looking for a couple of weeks of quieter times. If you need to reach me, my cell is always available at 716-445-2258.
We are gearing up for another busy year. It’s important to take a breath before we do so and warmer weather in Arizona should help. Of course, it was a stirring 29 degrees this morning.
Training and Empowerment:
As you consider your company’s plans for 2015, do remember that we provide personalized training for insurers, locally, regionally or nationally. Our goal is to empower claims professionals to take on both the routine and the complex matters that come before them. Our training modules are designed for that purpose, to promote and enable self-reliance. Here are our most popular topics but we can craft something special for you if required:
- When to Hold Them, When to Fold Them – When to Defend, When to Walk Away
- Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
- Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
- NY Disclaimer Letters - Nuts & Bolts: How to Create and Write and Send a Disclaimer Letter, and How Not To. (The Reservation of Rights Letter Myth)
- Uninsured and Underinsured Claims Handling
- Preventing Bad Faith Claims - First Party Cases
- Preventing Bad Faith Claims - Liability Cases
- The Cooperation Clause - How to Handle
- No-Fault Arbitrations and Appeals: Mock Arbitrations
- The Serious Injury Threshold
- Preserving the Record, Taking an Appeal
- No Fault Regs - Knowledge is Power
- An Auto Liability Policy Primer
- A CGL Policy Primer
- A Homeowners Liability Policy Primer
- EUO's Under First Party Policies
- How to Resolve Coverage Disputes: DJ Actions, Insurance Law Section 3420 Direct Actions (Choice, Strategy and Timing)
- Insured-Selected Counsel: When is it Necessary and How to Avoid it?
- Mediation and the Role of the Mediator
- ADR and How to Get to "Yes"
- The Internet as a Tool for the Claims Representative
- Tackling Tenders
Peiper’s Playground:
The first issue of 2015 brings with it an interesting first party decision, and contractual indemnification decision that is a head scratcher. In line with some of the more recent decisions we’ve seen from the Appellate Divisions, a carrier would be well advised to ensure that any communication it is required to provide to its insured is, in fact, actually sent to that insured. That is to say that any communication should be sent directly to the insured. As we’ve seen, notices provided to the broker may not satisfy the carrier’s obligation. The failure to ensure notice is received by the insured could, as we see below in the Valentine decision, have disastrous consequences.
We also invite you to review the Second Department’s decision in Beharovic. I am reluctant to sound critical of a Court that, to this commentator at least, is almost always spot on. That said, frankly, I don’t under their decision in this case. If a party faces a direct negligence claim, and said party is not entitled to be indemnified for its own negligence, how then can it ever present a viable indemnity claim? Vicarious liability, I understand, but a plain garden variety premises liability case seems to preclude any viable indemnity claim – or at least it should.
Enough with my digression. It is a New Year, and with this I’ll bid adieu to the confusions of 2014. Surely, they’ll be plenty more to discuss in the coming months of 2015. Happy New Year to all, best wishes for safe and successful upcoming year.
Steve
Steven E. Peiper
[email protected]
Car 54, Where Are You? A Century Ago:
New York Tribune
January 2, 1915
Brooklyn Gangs Spread Terror
Footpads Beat and Rob at Will in Williamsburg – Captures are Made
Gangsters overran Williamsburg early yesterday attacking and robbing pedestrians. When the victims resisted, they were choked. In one instance, after robbing a man of his watch and chain and several dollars, the thieves attempted to wrench a ring from his finger and in doing so, dislocated it. The victim battled with the footpads until the arrival of a patrolman…
Editor’s Note: A footpad is an archaic term for a robber or thief specializing in pedestrian victims. The term was used widely from the 16th century until the 19th century, but gradually fell out of common use. A footpad was considered a low criminal, as opposed to the mounted highwayman who in certain cases might gain fame as well as notoriety.
Beth’s Bitz:
We send you the warmest wishes for the New Year.
“Til Then
Beth
Elizabeth A. Fitzpatrick
[email protected]
Public Access to Beaches – A Century Ago:
The Brooklyn Daily Eagle
Brooklyn, New York
2 Jan 1915
PUBLIC WINS FIGHT
FOR FREE BEACHES
AT CONEY ISLAND
Appellate Division Affirms Justice Benedict
in Suit Against Tilyou and Others
ALL OBSTRUCTIONS MUST GO.
Land Commissioners Exceeded Authority
in Making Grants, Declares Higher Court
The right of the public to free access to the beach and shore front at Coney Island, as defined by Justice Benedict in the Supreme Court in November, 1913, had just been affirmed by the Appellate Division. In a decision which is unanimous, and written by Justice Harrington Putnam, it is held that the suit brought by Deputy Attorney General William A. McQuaid for the people of the State was entirely proper. Further, the inaction of the State officials for so many years did not take away the rights which the people had before the State Land Commissioners made the mistake of turning over to private parties, privileges over which they had no control.
The decision of Justice Benedict, which is sustained, gave to the public the right to use the beach at Coney Island. It held that neither the Steeplechase Company, George C. Tilyou, Mrs. Emilie Huber, Mr. Hogg, nor any other owner of property had the right to fence in certain sections of the beach and make people pay an admission free if they desired to linger in that particular spot.
Hewitt’s Hints on Serious Injury:
Dear Subscribers:
The Appellate Courts have issued a number of serious injury threshold decisions as the year comes to an end. In the decisions I highlight this issue, the Courts remind defendants that they must specifically address all serious injuries alleged in the Bill of Particulars by plaintiff if they want to be successful on summary judgment. A defendant ignores injury claims at the risk of a denial of the motion. We also find two different results for plaintiffs when dealing with past injuries.
In the one case, plaintiff successfully prevented summary judgment when its expert specifically deal with medical records of prior injuries by opining that the prior injuries were different from the current injuries, even if in the same general area. In another case, defendants were successful on summary judgment. Although plaintiff’s expert opined that the plaintiff had not suffered prior injuries he ignored and did not explain medical records detailing those injuries which defendants’ expert said existed before the accident.
Remember that a new year presents endless possibilities and opportunities. Make the most of them.
Wishing all subscribers a happy 2015,
Rob
Robert Hewitt
[email protected]
Welcoming the New Gov – A Century Ago:
Times Herald
Olean, New York
2 Jan 1915
WHITMAN TAKES OATH OF OFFICE
Forty-Fourth Governor of New York
State Inaugurated
INAUGURAL ADDRESS CHEERED
GOVERNOR WHITMAN’S INAUGURATION WAS ATTENDED BY BRILLIANT MILITARY PAGEANT AND SOLEMN CEREMONIES IN
ASSEMBLY CHAMBER – EX-GOVERNOR GLYNN APPLAUDED BY
THOUSANDS OF PEOPLE
Albany, Jan. 2. – Charles Seymour Whitman, formally was inaugurated the 44th governor of New York state at noon yesterday, a military pageant and solemn ceremonies in the Assembly chamber marking his accession to the governor’s chair.
Two thousand persons taxed the capacity of the Assembly chamber to see Governor Whitman take the constitutional oath of office administered by Chief Judge Willard Bartlett of the court of appeals and it is estimated that fully 5,000 persons afterward filed through the executive chamber to shake hands with the new governor.
Editor’s Note: Governor Whitman, a Republican, served two two-year terms until being defeated by Tammany Hall candidate Alfred E. Smith. Whitman’s grandson, John R. Whitman, married Christine Todd, who went on to be a Republican Governor of New Jersey.
Jen’s Gems:
Happy New Year! Hope everyone had an enjoyable and safe evening. Personally, my New Year’s Eve was spent at home watching Monsters, Inc. with my daughter and eating appetizers. A wonderful way to spend the evening (although five years ago I am sure I would have deeply disagreed with that comment as I braved the cold in a bedazzled dress and heels).
In terms of my column this week, I would direct your attention to Winkle v. Certain Underwriters of Lloyds London, a decision out of New York County. I mention this decision because it highlights a practice point we routinely recommend in New York. The decision involves an insurer’s motion to dismiss certain causes of action alleged against it for breach of fiduciary duty, bad faith and for attorneys’ fees, costs and expenses. As illustrated by this decision, we always recommend, if possible, trying to get rid of bad faith and extra contractual claims early on in litigation. Sometimes this can be done with a simple phone prior to answering, but other times you need to make the motion to dismiss based on the allegations in the complaint. Getting rid of these claims early prevents discovery issues down the road. Again, certain documents may be available in a bad faith action that otherwise would be protected such as best practices, employees’ personnel files and information on similar claims. If these causes of action are dismissed early on, you avoid a fight down the road and potentially the disclosure of documents you would prefer to keep private.
Wishing everyone a prosperous New Year. Until next issue…
Jen
Jennifer A. Ehman
[email protected]
Immigration Reform? A New Issue? Nah:
New York Tribune
New York, New York
2 Jan 1915
IMMIGRATION VOTE NEAR
Administration Men Hope for
Delay in Conference.
[From The Tribune Bureau]
Washington, Jan. 1.—The fight over the immigration bill will probably come to an end in the Senate to-morrow, when a vote will be taken. The measure will be sent to conference and, it is expected, will be ready for submission before the close of the present Congress.
The vote on the amendment to strike out the literacy test practically disposed of the controversy. With the exception of minor amendments it is expected the bill will be approved by the Senate in its present form.
The way of immigration legislation, however, is not entirely cleared of obstacles. Some of the administration leaders, sympathizing with the predicament in which the President will be placed if he is confronted with the necessity either of vetoing or approving the bill, hope to delay action by the conference committee. In this, it is predicted by the friends of the measure, they will not succeed, and the President must take a definite stand on the immigration question.
I Wouldn’t Have Wanted Her to Marry My Son:
Daily Capital Journal
January 2, 1915
Salem, Oregon
Gabrielle Shot Him Because He Was Mean
Los Angeles: Miss Gabrielle Darley is held today by the police pending the filing of a charge against her as the result of the fatal shooting of Leonard Topp. Miss Darley killed Topp late last night in a retain liquor store, giving as her reason “he was too mean to me”.
While Topp stood before a counter in a liquor store, the girl entered drew a pistol from her muff and shot him through the breast. As he fell Topp grappled with her and bore her to the floor, where he choked her until his strength failed.
Miss Darley was revived at the receiving hospital. She refused to discuss the affair in detail.
Editor’s Note: In a 2013 article in Arizona Oddities, Sam Lowe discussed the lovely Miss Darley:
Getting involved with Gabrielle Darley was similar to receiving a death sentence because five important men in her life died, and all under suspicious circumstances. Gabrielle ran a brothel in Prescott and did so well that she became one of the town’s leading (and notorious) citizens. Then she married Ernest Presti, who gambled away much of her money. He was shot and killed over a $20 gambling debt. Rumors around town hinted that Gabrielle may have ordered the shooting, but she was never charged.
Next, she took up with Leonard Topp, but he ran off with one of her working girls and worse yet, a big chunk of her money. She traced him to Los Angeles, went there, and shot and killed him. She was charged and tried, but a jury refused to convict her. One reporter covering the trial noted that with men like Topp, “homicide is not only justifiable, but obligatory.”
She returned to Prescott, went back to work and married Bernard Melvin. But her new husband also had sticky fingers. He stole some of Gabrielle’s money and fled to Los Angeles. She followed him, had him arrested, and testified against him. Melvin was sentenced to prison time and after his release, he returned to Prescott where he was so badly beaten during a robbery that he died of his injuries.
But Gabrielle wasn’t done marching down the aisle. The results, however, were similar. Her next husband, Everett Fretz, went insane and died in an asylum.
The symptoms resembled poison, but again, Gabrielle was never charged.
Husband Number Four (and victim Number Five) was George Wiley. And history, in a sense, repeated itself. Wiley got into a dispute with one of his wife’s employees and during the ensuing argument, she fell and hit her head on a water cooler. She died two weeks later and Wiley was charged with murder. But he never went to trial because one night he drank a glass of milk filled with rat poison. There were rumors, but no charges.
She was the focus of a controversial silent film, the Red Kimono, released in 1925.
Highlights of This Week’s Edition, Attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
- Twenty Days for Insurer to Bring Application to Stay Uninsured Motorists Arbitration
- If Murder Isn’t an Accident, Why is a Staged Accident?
- Mandatory Arbitration for Uninsured or Underinsured Motorist Claim of $25,000
- Insurer Established Right to Additional Premiums with Post-Policy Period Audit
HEWITT’S HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III
[email protected]
- Plaintiff’s Failure to Raise an Issue As to the Permanency of His Knee Injuries Does Not Preclude Plaintiff’s Recovery under Significant Limitation of Use
- Defendants Failed to Adequately Address Claims of a Serious Injury under the 90/180 Category and Thus Failed To Get the Case Dismissed
- Defendants Must Address All Injuries Set Forth in Bill of Particulars to Win Summary judgment
- Defendants Failed to Address Claim of Permanent Injury to Left Shoulder Resulting In Denial of Summary Judgment
- When Defendants’ Expert Establishes That Injuries Were Preexisting Plaintiff’s Expert’s Failure to Address Prior Medical Records Regarding Those Injuries Will Lead to the Expert’s Opinion That They Were Not Preexisting to Be Disregarded
MARGO’S MUSINGS ON NO FAULT
Margo M. Lagueras
[email protected]
Arbitration:
- Arbitrator Finds Insurer Had Obligation to Forward Verification Forms
- Denial Not Upheld Where EIP’s Intoxication Was Not Proximate Cause of Accident
- Improper Licensing Defense Not Time Barred
- Left Knee Arthroscopy Not Causally Related Where Trauma Was to Right Knee
Litigation:
- Affidavit Not Professing Personal Knowledge of Office Practices and Procedures Is Insufficient
PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
Property:
- Failure to Notify its Insureds of a Policy Change Results in Violation of Insurance Law § 3425(d)….and Possibly General Business Law § 349.
Potpourri:
- Failure to Establish Connection between Address and Financial Structure Precludes Third-Party Defendant’s Claims of Section 11 Protections as Alter-Ego of Plaintiff’s Employer.
- Thousands Confused. Question of Fact on Defendant’s Tort Liability to Injured Party Does Not Preclude Same Defendant’s Claims for Contractual Indemnity.
FITZ’ BITS
Elizabeth A. Fitzpatrick
[email protected]
- Happy New Year.
AUDREY’S ALL THINGS PERSONAL
Audrey A. Seeley
[email protected]
- Happy New Year.
CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]
- DFS Provides Responses to Industry Comments to DFS’ Proposed Changes to Regulation 79 (mandatory underwriting inspections of automobiles)
KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
[email protected]
- Where Appraisal Provision Uses the Term “May,” Compliance is Not a Condition Precedent to Bringing Suit
- Carrier Had No Obligation to Disclaim Coverage until Property Manager Tendered Claim
Bad Faith:
- Court Dismisses Causes of Action for Breach of Fiduciary Duty, Bad Faith and for Attorney’s Fees, Costs and Expenses
EARL’S PEARLS
Earl K. Cantwell
[email protected]
- No Insurance Coverage for Trade Secret Claim
We wish you the best for 2015 and keep those cards and letters coming in.
Dan
Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202
Office: 716.849.8942
Mobile: 716.445.2258
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
Jennifer A. Ehman
[email protected]
INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]
Michael F. Perley
Elizabeth A. Fitzpatrick
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman
Taylor F. Gabryel
Diane F. Bosse
Joel R. Appelbaum
FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Elizabeth A. Fitzpatrick
Cassandra Kazukenus
NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman
Taylor F. Gabryel
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Elizabeth A. Fitzpatrick
Diane F. Bosse
Index to Special Columns
Kohane’s Coverage Corner
Hewitt’s Highlights on Serious Injury
Margo’s Musings on No Fault
Peiper on Property and Potpourri
Fitz’ Bits
Audrey’s All Things Personal
Cassie’s Capital Connection
Keeping the Faith with Jen’s Gems
Earl’s Pearls
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
12/24/14 Allstate Insurance Company v. Fullone
Appellate Division, Second Department
Twenty Days for Insurer to Bring Application to Stay Uninsured Motorists Arbitration
A claim was made for uninsured motorists benefits and the insurer moved to permanently stay arbitration for reasons unclear in the decision. The insured claimed that the application was made too late. Under Article 75 of the CPLR, if the insurer believes that there is a legal (rather than factual) reason to defeat a claim for UM benefits, it must make an application to stay arbitration, in court, within 20 days of receipt of the demand.
The insured claimed that the insurer’s application was too late but the court disagreed,
12/24/14 Nationwide General Insurance Company v. Pontoon
Appellate Division, Second Department
If Murder Isn’t an Accident, Why is a Staged Accident?
Pontoon alleged that he was injured while riding as a passenger in a vehicle operated by Nelson, when the vehicle in which he was traveling sideswiped a vehicle owned and operated by Robinson.
Robinson's vehicle was insured by GEICO but when he sought coverage from GEICO, it denied coverage on the ground that the accident was staged and intentional. Pontoon then sought arbitration under the uninsured motorist provision of Nelson's policy, which was issued by Nationwide. Nationwide moved to stay arbitration on the ground that GEICO was required to provide coverage for Pontoon's injuries, and thus Robinson was not "uninsured."
As a framed issue hearing, the referee directed GEICO to provide coverage under the policy, "as no proof was submitted that Pontoon was an active participant in the alleged staged accident."
The court found that if GEICO can prove that the collision was staged by Robinson, its insured, it would not be obligated to provide coverage under the policy regardless of whether Pontoon was an innocent third party and send the matter back for the completion of the framed issue hearing.
Editor’s Note: While you editor agrees with this decision, it runs counter to other cases suggesting that one looks at what is an accident from the standpoint of the person making the claim.
In two previous cases, the March 2011 decision in State Farm v. Langan reviewed here and the more recent October 14, 2011 decision in Utica Mutual v. Burrows discussed here, the courts found that murder was accidental from the insured’s perspective if the insured did not commit it. If murder can be considered accidental from the insured’s perspective, why not a staged incident? Again, I have no problem with the decision, just the inconsistency.
12/24/15 Serrano v. Progressive Insurance Companies
Appellate Division, Second Department
Mandatory Arbitration for Uninsured or Underinsured Motorist Claim of $25,000
The plaintiffs commenced this action to recover damages for breach of an insurance contract, alleging that they had submitted a valid claim for uninsured motorist benefits to the Progressive and Progressive refused to pay the claim. Pursuant to the terms of the subject insurance policy, arbitration of a dispute with respect to the amount owing under either the uninsured motorist coverage provision or the supplementary uninsured/underinsured motorist coverage provision was mandatory and thus the action should have been dismissed.
Editor’s Note: We trust that the amount of the claim was $25,000. Otherwise, the insured has the option of arbitration or suit, under Condition 12 of the Mandatory SUM Endorsement:
12. Arbitration: If any insured making claim under this SUM coverage and we do not agree that such insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, or do not agree as to the amount of payment that may be owing under this SUM coverage, then, at the option and upon written demand of such insured, the matter or matters upon which such insured and we do not agree shall be settled by arbitration, administered by the American Arbitration Association, pursuant to procedures prescribed or approved by the Superintendent of Insurance for this purpose. If, however, the maximum amount of SUM coverage provided by this endorsement equals the amount of coverage required to be provided by section 3420(f)(1) of the New York Insurance Law and Article 6 or 8 of the New York Vehicle and Traffic Law, then such disagreement shall be settled by such arbitration procedures upon written demand of either the insured or us…
12/24/14 Burlington Insurance Co. v. Casur Corporation
Appellate Division, Second Department
Insurer Established Right to Additional Premiums with Post-Policy Period Audit
This involved a claim for a post-policy audit to determine premiums due. The insurer established its prima facie entitlement to judgment by submitting the subject insurance policy, the audit statement, and the affidavit of the plaintiff's accounts receivable and collections manager. These submissions demonstrated that, pursuant to an audit and revised audit, which were conducted after expiration of the policy in accordance with the terms of the policy, the defendant owed an additional $134,550 in premiums.
The insured demonstrated nothing that would require additional discovery and was unable, therefore, to defeat the insurer’s summary judgment motion.
HEWITT’S HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW
Robert E.B. Hewitt III
[email protected]
12/30/14 Holmes v. Brini Transit, Inc.
Appellate Division, First Department
Plaintiff’s Failure to Raise an Issue As to the Permanency of His Knee Injuries Does Not Preclude Plaintiff’s Recovery under Significant Limitation of Use
In this car accident case, plaintiff alleged injuries and arthroscopic surgery on both knees as a result of the accident. Defendants established prima facie that plaintiff did not sustain a significant or permanent injury to his knees by submitting their orthopedist’s report finding normal range of motion and absence of residuals upon examination the year following the surgeries. The Defendant’s orthopedist also opined that the tears found in both knees during surgery were pre-existing degenerative conditions. Defendants also demonstrated lack of causation through evidence that plaintiff had previous surgery to his right knee following a prior accident, a radiologist’s opinion that a tear in the left knee was preexisting, and the affidavit of a biomechanical engineer opining that plaintiff could not have sustained such injuries in the subject accident which involved minor damage to the vehicles.
In opposition, plaintiff was able to raise triable issues of fact as to whether he sustained a significant limitation in both knees as a result of the accident by submitting the affirmation of his orthopedic surgeon, who measured limitations in range of motion during the six months following the 2009 accident, and opined that the trauma caused damage to both knees that required surgery. He addressed the prior knee surgery by opining the accident caused additional damage to the internal aspect of the knee and his description of the left knee injuries sustained in the accident differs from that identified in the prior records, thus raising an issue of fact as to causation.
Plaintiff’s orthopedist also found limitations during a July 2013 examination four years after the accident, but plaintiff failed to adequately address his complete cessation of treatment after the December 2009 surgery, which interrupts the chain of causation and renders the finding of permanency speculative. Plaintiff testified that he stopped treatment because his no fault benefits ended but failed to explain why he could not continue his treatment through his other health insurance. However, his failure to raise an issue as to the permanency of his knee injuries following surgery to correct the damage allegedly caused by the 2009 accident does not preclude recovery under the significant limitation of use category. Thus summary judgment was precluded.
Defendants were entitled to dismissal of the 90/180-day injury claim, as plaintiff’s testimony and bill of particulars show that he was not disabled for the minimum statutory period necessary to support such a claim.
12/24/14 Carter v. Adams
Appellate Division, Second Department
Defendants FailedTo Adequately Address Claims of a Serious Injury under the 90/180 Category and Thus Failed To Get the Case Dismissed
The Appellate Division reversed a grant of summary judgment and found that Defendant failed to meet his prima facie burden of showing that plaintiff Bryan did not sustain a serious injury within the meaning of Insurance Law §5102. Defendants papers failed to adequately address plaintiff’s claims set forth in the bill of particulars that he sustained an injury under the 90/180 day category of Insurance Law §5102(d). With respect to plaintiff Carter, the defendant did sustain its prima facie burden of showing that the alleged injuries to the cervical and lumbar regions of the spine did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories. However, plaintiff Carter was able to raise an issue of fact as to whether she sustained serious injuries to the cervical and lumbar regions of her spine.
12/24/14 Rodriguez v. Yatiz
Appellate Division, Second Department
Defendants Must Address All Injuries Set Forth in Bill of Particulars to Win Summary judgment
The Appellate Court reversed the lower court’s grant of summary judgment. Defendants failed to meet their prima facie burden of showing that plaintiff did not sustain a serious injury because they failed to adequately address the claims in the bill of particulars that he sustained a serious injury under the 90/180 day category of the insurance law. Therefore it was unnecessary to determine whether plaintiff raised an issue of fact.
12/23/14 Luna v. Romanowski
Appellate Division, Second Department
Defendants Failed to Address Claim of Permanent Injury to Left Shoulder Resulting In Denial of Summary Judgment
The Appellate Court reversed the lower court’s grant of summary judgment. Defendants failed to meet their prima facie burden of showing that plaintiff did not sustain a serious injury because they failed to adequately address the claims in the bill of particulars that he sustained a serious injury to the left shoulder under the permanent consequential limitation of use and significant limitation of use categories and that he sustained a serious injury under the 90/180 day category of the insurance law. Therefore it was unnecessary to determine whether plaintiff raised an issue of fact.
12/23/14 Jones v. MTA Bus Company
Appellate Division, First Department
When Defendants’ Expert Establishes That Injuries Were Preexisting Plaintiff’s Expert’s Failure to Address Prior Medical Records Regarding Those Injuries Will Lead to the Expert’s Opinion That They Were Not Preexisting to Be Disregarded
Appellate Court reverses the lower Court’s denial of summary judgment. Plaintiff alleged that as a result of being struck by closing doors as she exited a bus, she suffered post-traumatic psychosis and brain injuries as well as various injuries to her left eye, neck, right shoulder, knee, and elbow. Defendants demonstrated prima facie that plaintiff’s claimed psychological and brain conditions preexisted the subject accident by submitting plaintiff’s medical records. They also submitted the report of a neuropsychologist who, after conducting a battery of tests and reviewing records, opined that her well documented symptoms existed prior to the incident and there was no basis for finding that she sustained any brain injury or psychological injury as a result of the incident, or that any preexisting condition was exacerbated by the incident.
As for plaintiff’s other claimed injuries, defendants met their burden by relying on plaintiff’s testimony that her eye stopped hurting within weeks of the accident, and her post-accident hospital and medical records showing that she made no complaints until about five months after the accident which was too remote in tie to establish a causal relationship.
In opposition, plaintiff failed to raise a triable issue of fact as to any of her claims. Her primary care physician stated she did not suffer from any psychological and brain conditions prior to the accident, but he did not address the poor medical records. Moreover he did not opine those conditions were causally related to the accident, Plaintiff submitted no objective evidence supporting her other injuries and no medical opinion that they were causally related to the accident or permanent.
As Plaintiff failed to meet the serious injury threshold, the Court did not consider whether defendants met their burden on alternate theories of lack of liability.
Margo M. Lagueras
[email protected]
Arbitration:
12/16/14 Erie County Medical Center v Farmington Casualty Co.
Erie County, Arbitrator Michelle Murphy-Louden
Arbitrator Finds Insurer Had Obligation to Forward Verification Forms
The issue was whether Applicant’s claim was premature due to outstanding verification. Applicant had submitted a UB-04 together with an incomplete NF-4 (Verification of Hospital Treatment). Respondent then twice requested verification. Citing awards by other arbitrators, the Arbitrator held that, upon receipt of Applicant’s claims, and as part of its request for verification, Respondent had a duty to forward Applicant an NF-5 for completion and not simply delay the claim asserting that verification was incomplete.
12/16/14 Applicant v Geico Insurance Co.
Erie County, Arbitrator Gillian Brown
Denial Not Upheld Where EIP’s Intoxication Was Not Proximate Cause of Accident
Applicant alleged that the one-car accident was due to black ice. Respondent denied Applicant’s lost wage claim based on his alleged intoxication. In support of its defense, Respondent submitted hospital records showing “alcohol serum” of 143 mg/dl and notes from the emergency room physician noting alcohol consumption. However, there was nothing in the submissions indicating that Applicant was given a traffic ticket for DWI or any other related offense, or that he was interviewed by law enforcement at the hospital, or even at what time the blood sample was taken. The Arbitrator reiterated that, in order to disclaim on the grounds of intoxication, the insurer must show not only that the insured was intoxicated, but also that such intoxication was a proximate cause of the accident. Here, Respondent both failed to submit evidence of the EIP’s actual intoxication, and that the use of alcohol was the proximate cause of the accident. Therefore, the denial of benefits was improper.
12/12/14 WJW Med Products, Inc. v Geico Insurance Co.
Erie County, Arbitrator Mona Bargnesi
Improper Licensing Defense Not Time Barred
Applicant sought reimbursement for a Motion X lumbar support brace provided to an EIP resident within New York City. Respondent argued that Applicant was not licensed to operate within the five boroughs of NYC as required by the NYC Department of Consumer Affairs and therefore was not entitled to reimbursement. In opposition, Applicant argued that Respondent’s defense should be precluded because it was not timely raised in the denial. Citing numerous other decisions, including Malella (4 NY3d 313 [2005]), the Arbitrator determined that Respondent was not precluded from raising the defense that Applicant is not properly licensed to dispense its products within the five boroughs of NYC, and that the claim should be dismissed with prejudice because the licensure cannot be conferred retroactively.
12/12/14 Northtowns Orthopedics v Geico Insurance Co.
Erie County, Arbitrator Mona Bargnesi
Left Knee Arthroscopy Not Causally Related Where Trauma Was to Right Knee
The 63 year-old EIP sustained a right knee fracture in the motor vehicle accident which required open reduction internal fixation surgery in October 2012. In April 2013, the EIP sought treatment for new complaints of left knee pain. According to the EIP, the new left knee pain was associated with compensating for her right knee. Ultimately, left knee arthroscopic surgery was performed in May 2013 and denied based on a peer review as not medically necessary. The Arbitrator noted that while the EIP complained of pain, there was no reported injury to the left knee. In fact, the only mention of causal relationship was the EIP’s own statement which, as a layperson, was not sufficient. The Arbitrator determined that the treating surgeon’s letter was insufficient to rebut the persuasive peer review, in particular because there were no contemporaneous medical documents to support the theory that the left knee injury was due to the non-weight-bearing right knee. In denying the claim, the Arbitrator also noted the treating surgeon’s mention of arthritis which, given the EIP’s age, could also have been a factor.
Litigation:
12/15/14 Medcare Supply, Inc. v Farmers New Century Ins. Co.
Appellate Term, First Department
Affidavit Not Professing Personal Knowledge of Office Practices and Procedures Is Insufficient
On appeal, the trial court was reversed and the complaint reinstated because the affidavit submitted by defendant to establish the non-receipt of plaintiff’s claim was insufficient. Not only was the affidavit by a claims representative in the Hicksville, New York office of the non-party that “administers claims” on defendant’s behalf, that affidavit did not profess any personal knowledge of defendant’s practices and procedures in its Oklahoma City office which is the designated mailing address for claims. Plaintiff, on the other hand, produced a stamped mailing certificate supporting its assertion that it timely mailed the claim to the designated Oklahoma City address. Therefore, granting summary judgment to defendant was improper.
PEIPER ON PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
Property:
12/24/14 Valentine v. Quincy Mut. Fire Ins. Co.
Appellate Division, Second Department
Failure to Notify its Insureds of a Policy Change Results in Violation of Insurance Law § 3425(d)….and Possibly General Business Law § 349.
In this strange case, Quincy issued a series of homeowners’ policies to plaintiff. In 2009, Quincy petitioned DFS, and subsequently received approval, to amend its policy forms to limit its exposure for replacement cost coverage to only 25% more than the policy limit. The previous policy form had apparently provided full replacement cost coverage for both real and personal property. Quincy then mailed notices of the coverage change to plaintiff’s broker, Sheridan. Sheridan, in turn, appears to have never passed along the policy change to plaintiff.
When a fire occurred at plaintiff’s residence in October of 2010, plaintiffs submitted a claim for full replacement cost. Quincy responded by relying upon the endorsement which limited exposure to no more than 25% over the stated policy limit. Plaintiff, thereafter, responded by filing the instant lawsuit which asserted claims for breach of contract, as well as violations of GBL § 349 and Insurance Law § 3425(d), respectively. In addition, plaintiff also sued his broker, Sheridan, for negligence. Finally, Quincy asserted a cross-claim against Sheridan.
On appeal, the Appellate Division ruled that Quincy had an obligation pursuant to Insurance § 3425 to provide notice directly to Valentine. Its failure to do so was a prima facie violation of the statute, and as such Quincy lost the opportunity to rely upon the endorsement which limited its replacement cost exposure. In addition, the Court also noted that Quincy failed to meet its burden in moving to dismiss the GBL § 349 claims. The Court noted that Quincy had applied the limiting endorsement to all its policies, and that it had failed to provide proper notice to each of its insureds holding a homeowners’ policy. The Court went on to note that plaintiffs, who unknowingly became subject to the endorsement, were harmed by the oversight. Under such circumstances, Quincy failed to meet its burden as the moving party.
Finally, the Court reversed the trial court’s decision to deny Sheridan’s motion to dismiss Quincy’s cross-claims for common law indemnification. Sheridan argued that Quincy’s failure to comply with Insurance Law 3425(d) established that it was the carrier’s duty to provide notice to its insureds. As such, there was no basis to conclude that Sheridan, as the broker, owed a duty to Quincy to provide the notice. Absent a specific duty, it followed that there was no basis for Quincy’s common law indemnity claims. The Court agreed, and ruled that Sheridan’s motion for summary judgment against Quincy should have been granted.
Potpourri:
12/31/14 Henderson v Gyrodyne Co. of America, Inc.
Appellate Division, Second Department
Failure to Establish Connection Between Address and Financial Structure Precludes Third-Party Defendant’s Claims of Section 11 Protections as Alter-Ego of Plaintiff’s Employer.
Third-party defendant, Towne Bus Corp., moved to dismiss Gyrodyne’s claims for common law and/or contractual indemnification. With respect to the common law indemnity claims, Towne argued that Gyrodyne’s claim should be dismissed due to the exclusivity protections of Workers’ Compensation Law § 11.
Essentially, Towne argued that although it was not plaintiff’s employer, it was the alter-ego of the plaintiff’ employer. As such, the protections of Section 11 should extend to it. In denying Towne’s motion, the Appellate Division noted that Towne failed to establish a connection between the financial systems of the plaintiff’s employer and itself, nor had it established the business locations of the two entities were identical.
Moreover, in addition to the Section 11 defense, Towne also argued that it did not have any negligence relative to the incident involving plaintiff. In rejecting that assertion, the Court noted that Towne failed to establish that it did not have actual, or constructive, notice of the allegedly defective condition. The question of notice also resulted in plaintiff’s motion be denied.
In addition, Towne’s motion to dismiss the contractual indemnification claim of Gyrodyne was also denied. In the current instance, Towne leased the premises owned by Gyrodyne pursuant to a specified lease term. While that lease contained a contractual indemnification provision, the lease expired one month prior to the incident giving rise to the current claim. Notably, however, Towne continued to remain at the premises even after the lease expired as a “holdover” tenant. Under such circumstances, the Court found a question of fact as to whether Towne’s holdover status automatically extended the terms and conditions of the lease agreement; including the indemnity provision contained therein.
12/24/14 Beharovic 18 E. 41st Partners, Inc.
Appellate Division, Second Department
Thousands Confused. Question of Fact on Defendant’s Tort Liability to Injured Party Does Not Preclude Same Defendant’s Claims for Contractual Indemnity.
Third-party defendant PBMC entered into a contract with defendant, Partners, to provide cleaning services a building Partners’ owned. Plaintiff, who was employed by PBMC, was injured when she fell at Partners’ building while engaged in the process of cleaning. Plaintiff commenced the instant claim asserting a premises liability claim against Partners. Partners, in turn, asserted a claim for contractual indemnity claim against PBMC.
Partners eventually moved for summary judgment dismissing the plaintiff’s negligence claim on the basis that plaintiff could not identify what caused her injury, and that even if a defect was identified Partners had no actual or constructive notice of it prior to the loss. In denying the motion, the Court noted that plaintiff claimed that she had fallen on shaky stairs and a loose carpet. This was a condition that she had allegedly complained of at least two years prior to the loss at issue. While Partners produced evidence which contradicted plaintiff’s claims, the Court noted that the competing positions presented a classic question of fact and therefore denied Partners’ motion.
Partners also moved for contractual indemnification against PBMC. In moving, Partners noted that the indemnity clause at issue required PBMC to provide indemnification even where the loss was not occasioned out of PBMC’s negligence. Further, the Court noted that the clause at issue provided that PBMC would not indemnity Partners for Partners’ own negligence. Thus, the Court ruled that the clause at issue was not in violation of GOL § 5-322.1. It followed that Partners’ was entitled to contractual indemnification from PBMC for the loss involving plaintiff.
Peiper’s Point – Forgive us if we don’t quite understand this decision. By referencing GOL 5-322.1, we presume the court is suggesting that Partners is not entitled to be indemnified for its own negligence. While we are not sure GOL §5-322.1 should actually apply in this instance, we note that most courts have adopted the view that a service contract (such as this) would qualify for the protections of the statute.
If that is the case, it follows that Partners cannot be indemnified for its own negligence. In the case at hand, the only claim against Partners is its own negligence. Indeed, Partners’ moved to dismiss plaintiff’s cause of action on the basis that it lacked notice of the premises defect. That portion of the motion, as you will recall, was denied on a question of fact. If Partners only faced exposure due to its own negligence, we wonder aloud how then it could present a viable indemnity claim. There appears to be no argument of vicarious liability against Partners.
Moreover, note that the award provided by the Appellate Division was not conditioned upon a finding that Partners was free of negligence. Rather, the award, without equivocation, provided Partners with indemnity. How could that be where, as here, the potential negligence of Partners was, by this decision’s own holding, very much in question?
Elizabeth A. Fitzpatrick
[email protected]
Happy New Year.
Audrey A. Seeley
[email protected]
Happy New Year.
CASSIE’S CAPITAL CONNECTION
Cassandra A. Kazukenus
[email protected]
DFS Provides Responses to Industry Comments to DFS’ Proposed Changes to Regulation 79 (mandatory underwriting inspections of automobiles)
We previously reported on DFS’ proposed changes to the current regulation which mandates inspections of automobiles. DFS stated that it received comments from 11 interested parties which included property/casualty insurers, trade associations comprised of auto insurers, an insurance agency, trade associations comprised of insurance agents, a member of the New York State Assembly, and a motor vehicle inspection company. DFS summarized the comments to the proposed changes.
In general, insurers and agent trade associations do not support the establishment of mandatory underwriting inspection requirement due to the advancements in technology to combat auto insurance fraud and theft while, no surprisingly, the motor vehicle inspection company strongly supports the rule.
One insurer trade association recommended that the definition of “private passenger automobile” be amended to exclude private passenger vehicles primarily used for commercial purposes as fraud among these types of vehicles is uncommon. DFS was persuaded as there was no evidence that fraud is unlikely among these types of vehicles.
One insurer asserted that the mandatory inspection requirement for private passenger vehicles (11 NYCRR 67.2) provision could have an adverse impact on consumers due to the delay in obtaining coverage until a vehicle is inspected. The insurer asserted that such a delay could have “adverse consequences under the state’s financial responsibility laws for those making a legitimate request for insurance.” The insurer suggested additional waivers which would minimize the consequence of the delay in inspection. DFS again did not find the comments compelling enough to warrant additional waivers. Moreover, DFS does not understand how the financial responsibility laws would be impacted as the inspection requirements do not impact liability coverage under the policy.
Insurers and their trade associations have commented that requiring inspections for renewal is unnecessary and only increases costs and burdens on consumers without any deterrence of insurance fraud. Again, DFS did not find it compelling as no evidence that fraudulent activity only occurs during the initial policy year was provided.
An agent trade association expressed concerns with the requirements set forth in 11 NYCRR 67.3(b)(7),(8) and (1) that in order to waive the mandatory inspection requirement, a vehicle must be physically inspected by the previous insurer. This was especially a concern where the vehicle is new or has not been sold or transferred. DFS is considering the applicability of these waivers when the vehicle was originally new and the inspection was waived by the previous insurer under the regulations. However, this review will not delay the implementation of the regulation as proposed at this time.
In light of comments from numerous entities, the Department has agreed to expend the proposed 10-day inspection deferral period to 14 days.
KEEPING THE FAITH WITH JEN’S GEMS
Jennifer A. Ehman
[email protected]
12/19/14 Litwin v Tri-State Consumer Ins. Co.
Supreme Court, New York County
Where Appraisal Provision Uses the Term “May,” Compliance is Not a Condition Precedent to Bringing Suit
Plaintiff’s home suffered extensive fire damage. At the time of the loss, the home was insured by Tri-State. While Tri-State made payments toward the loss, Plaintiff claimed that she was still owned approximately $150,000.
Tri-State moved to dismiss the complaint based on plaintiff’s alleged failure to meet two conditions precedent to suit. First, Tri-State alleged that plaintiff breached the condition requiring she participate in a mandatory appraisal process prior to bringing suit. Second, Tri-State claimed that plaintiff failed to supply it with a detailed loss inventory as required by the policy.
Considering the motion to dismiss, the court rejected Tri-State’s argument that appraisal was required. Referencing the use of the word “may” in the appraisal provision, the court found that the appraisal process was not mandatory. If Tri-state wanted appraisal to be mandatory, it could change the word “may” into either “shall” or “must.”
Likewise, plaintiff also established that she provided Tri-State with an inventory of losses, as required by the policy. That Tri-State found the inventory inadequate or incorrect was irrelevant on a motion to dismiss.
12/17/14 200 W. End Ave. Condominium v Mt. Hawley Ins. Co.
Supreme Court, New York County
Carrier Had No Obligation to Disclaim Coverage until Property Manager Tendered Claim
While working as an electrician on a construction project, Bedson allegedly slipped and fell while descending a wet, slippery interior staircase. Bedson brought suit against the real estate developer for the project and construction manager. After a period of discovery, Bedson filed supplemental summons and amended complaint adding 200 West End Avenue Condominium (“West End Condo”), the owner of the common areas, and the property manager, Caran Properties, Inc.
This action arises out of a disagreement between insurance carriers for West End Condo and Caran. Apparently, Admiral and Mt Hawley each issued general liability policies that were in effect at the time of the incident. While Admiral was promptly notified about the underlying action and accepted the tender, Mt. Hawley was not notified until almost a year later when it received a fax transmission from the insurance broker identifying the insured as “200 West End Avenue Condominium,” the date of loss and the claimant. Annexed to the fax was also an ACORD form identifying the insured as “200 West End Ave Condominium c/o Caran Properties.” In response, Mt. Hawley denied coverage to “200 West End Avenue Condominium…c/o Caran Properties Inc.” based on late notice and because the incident appeared to be a construction accident which was not covered under the policy.
On this motion for summary judgment, Mt. Haley abandoned the second basis for its denial, and plaintiffs abandoned their claims related to West End Condo, arguing only that Caran was entitled to coverage as the property manager, and no denial was ever issued to it based on late notice. Electing not to decide whether the denial letter was sufficient as to Caran, the court instead determined that plaintiffs offered no evidence that Caran, as a separate entity from West End Condo, provided its own notice to Mt. Hawley, or a valid excuse for such failure. Thus, because Caran never placed Mt. Hawley on notice, its obligation to disclaim was never triggered.
NOTE: The question that remains unresolved based on this decision is whether the declaratory judgment complaint constitutes notice which would trigger an obligation to deny coverage. Of course, the response to this argument would be that the Answer served as a denial of coverage, but we do not know whether the Answer was served within 30 days and, if not, whether an excuse for any delay could be established.
Bad Faith
12/17/14 Winkle v Certain Underwriters at Lloyds London
Supreme Court, New York County
Court Dismisses Causes of Action for Breach of Fiduciary Duty, Bad Faith and for Attorney’s Fees, Costs and Expenses
Plaintiffs commenced this action against Lloyds seeking damages as a result of Hurricane Sandy. Plaintiffs’ complaint asserted five causes of action including breach of contract, breach of fiduciary duty, declaratory judgment, bad faith and for attorneys’ fees, costs and expenses.
Lloyds moved to dismiss the causes of action for breach of fiduciary duty, bad faith and for attorneys’ fees, costs and expenses. The court considered each cause of action separately. In support of the breach of fiduciary duty claim, plaintiffs submitted that Lloyds failed to properly investigate and analyze their claims, failed to provided plaintiffs with proper information regarding their claim, failed to advise plaintiffs regarding what personal property needed to be maintained or photographed to preserve their claim, and failed to provide timely and appropriate claims handling and insurance payments. In considering this cause of action, the court held that insurance companies do not owe a fiduciary duty to their insured absent a “special relationship.” Further, no special relationship of trust and confidence arises out of an insurance contract between the insured and the insurer; the relationship is legal rather than equitable. Here, plaintiffs made no showing that their relationship with Lloyds was unique or differed from that of a reasonable consumer. As such, the court dismissed this cause of action.
Next, the court considered the bad faith claim. Plaintiffs alleged that Lloyds maliciously and unreasonably withheld payment of claims for loss of personal property, and that such actions were done in bad faith with the intent to harm plaintiffs. New York law does not recognize an independent tort cause of action for an insurer’s alleged failure to perform its contractual obligations under an insurance policy. Moreover, the use of familiar tort language in a pleading does not change the cause of action to a tort claim in the absence of an underlying tort duty sufficient to support a claim for punitive damages. Thus, this cause of action was likewise dismissed.
Lastly, the court dismissed the claim for attorneys’ fees, costs and expenses noting that an insured may not recover the expenses incurred in bringing an affirmative action against an insurer to settle its rights under the policy.
EARL’S PEARLS
Earl K. Cantwell
[email protected]
09/30/14 Lemko Corp. v. Federal Insurance Co.
Northern District of Illinois
No Insurance Coverage for Trade Secret Claim
The modern computer era and an alleged ongoing scheme to steal trade secrets resulted in a recent ruling from a federal court that two insurance companies were not liable to defend against the claims under their policies. 2014 WL 4924403 (N.D. Illinois September 30, 2014). Motorola sued Lemko Corp. and former Motorola employees for misappropriation of trade secrets and several other claims. Motorola alleged that for several years its computers were accessed to obtain trade secrets and confidential information such as source codes. Lemko sought coverage under its general commercial liability and director and officer liability policies with separate insurance companies, but both companies denied any duty to defend. Lemko and Motorola eventually settled the principal claim, and Lemko then sued the insurance companies in federal court arguing they had owed a duty to defend against the claims.
Lemko argued that the polices covered “property damage” which included loss of use of tangible property that is not physically injured. Lemko claimed that Motorola alleged that the integrity of its computers was impaired and this constituted an allegation of loss of use of tangible property not physically damaged. The insurance companies argued that Motorola did not actually allege sufficient property damage, and one of the carriers argued that its policy specifically excluded liability for intellectual property claims. The federal court agreed with the insurance companies and granted summary judgment.
The court first ruled that the underlying complaint by Motorola did seek relief for loss of use of computer equipment. At their core, Motorola’s allegations were for theft and misappropriation of trade secrets and proprietary information. The court pointed out that the scheme apparently went on for several years without any “loss of use” or problems in the performance of Motorola’s computers. Therefore, the underlying complaint did not allege covered property damage (“loss of use of tangible property”).
The court also concluded that the underlying complaint did not allege a covered “occurrence” as defined in the policy. Motorola’s claims and losses were from an ongoing misappropriation of trade secrets and confidential information, which could not be considered an accidental or sudden “occurrence” caused by the insured.
Although this case involved interesting twists on computer theft and coverage for trade secret misappropriation, the decision was still based on fundamental coverage analysis: Does the complaint in the underlying action sufficiently allege facts pleading a covered loss? In this case, the court ruled the underlying allegations did not constitute a covered occurrence, and did not fall within the definition of property damage since there was no actual loss of use or destruction of tangible property. Motorola apparently did not allege that its computers were actually damaged or incurred any malfunction because of the unauthorized access and hacking.
