Coverage Pointers - Volume XVII, No. 14

Volume XVII, No. 14 (No. 444)

Friday, January 1, 2016

 

A Biweekly Electronic Newsletter

 

Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

Phone: 716-849-8900

Fax: 716-855-0874

                                           

Long Island Office:

535 Broad Hollow

Melville, New York 11747

Phone: 631-465-0700

Fax: 631-465-0313

 

www.hurwitzfine.com

© Hurwitz & Fine, P. C. 2016
All rights reserved
 

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

 

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

 

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

 

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

 

 Dear Coverage Pointers Subscribers:

 

Do you have a situation?  We love situations. 

 

Greetings from Scottsdale, AZ and best wishes for a Happy New Year.

 

From the Hurwitz & Fine, PC lawyers and professional staff, we wish you the warmest wishes for the year 2016.  We hope for peace and prosperity and good health for all of you.

 

Courts are quiet this time of year.  Interesting case from the Fourth Department in my column on additional insured status and another good read on Assault and Battery coverage.

 

Thanks for your continued support.

 

 

ACCEC SYMPOSIUM

 

The American College of Coverage and Extra Contractual Counsel is holding its 2016 Insurance Law Symposium: The New Face of Insurance Litigation on Friday, January 22 at Boston College Law School in Newton, MA. 

 

Click here to download the brochure and registration form. 

 

  • $250 – before January 1
  • $275 – January 1 and after
  • $125 – Boston College Alumni before January 1
  • $150 – Boston College Alumni January 1 and after
  • Free for BCLS students and Faculty. Registration required.

 

I am proud to be a founding director of the ACCEC.  ACCEC brings together preeminent lawyers representing the interests of both insurers and policyholders to improve the quality of the practice of insurance law and to increase civility and professionalism in our field. Our mission includes educating all sectors involved in insurance disputes — including the judiciary, legal and insurance professionals, and businesses — on critical topics such as best practices in policy formation and claims handling, developing trends in insurance law, and bad faith.

 

The registration deadline is Friday, January 15. Space is limited and available on a first-come, first-served basis. 

 

Attendees can receive the Boston College corporate rate of $125/night at the Crowne Plaza Boston-Newton. Reservations can be made by calling the hotel directly at 1-617-969-3010.

 

HEWITT’S HIGHLIGHTS:

 

Dear Subscribers:

 

It is that time again. A new year and a new column. As for the New Year, I hope 2016 is a great year for you all. A new year brings new hope and new optimism. In the serious injury threshold world, we have a few cases this week of note. In one interesting case, there was a multi-car accident. Normally, when a vehicle hits another vehicle in the rear, there is a presumption that the rear hitting vehicle is negligent.

 

However, in that case, because the second vehicle itself had been hit into the rear of the first vehicle after the middle car was rear-ended by a third, and pushing the second car into the first vehicle, the court held that it had satisfied its burden of showing a non-negligent explanation for why the second vehicle hit the first vehicle from behind. In a 90/180-day category case, the Appellate Division found defendants satisfied their burden with respect to the claim of a 90/180-day injury by relying on plaintiff's own admissions showing that he was not prevented from completing substantially all of the acts making up his usual and customary daily routine.

 

Hope you all make it until the ball drops.

 

Until next time,

 

Rob
Robert Hewitt

[email protected]

 

Common Core – A Century Ago:

 

The Daily Republican
(Monongahela, Pennsylvania)

Saturday, January 1, 1916

 

FEW FOUND TO BE PERFECT

 

According to Tests Made the Ideal

Husband Seems to be a Somewhat

Rare Animal

 

In a recent husband show, each competitor was required to do certain things and answer certain questions, says Pearson’s Weekly.

 

The ideal husband answered all the questions and did his tasks without fail.

 

Are you the husband every wife should have?  If so:

 

Can you give the day of the week you were married on and its full date?

Do you know when your mother-in law’s birthday is?

When you left for the office this morning what kind of dress was your wife wearing?

Can you say offhand what the market prices of eggs, butter, cheese, meat and bread are?

Do you know the cheapest shopping places in the neighborhood?

 

One of the tests the husbands had was as follows:  The wives stood behind a curtain and placed one hand above it.  Each husband was required to pick out his wife’s hand.  A good many failed! 

 

Do you make a point of always praising your wife when she has cooked anything more daintily than usual?

Do you tell her she’s the best wife in the world?

Have you ever acknowledged to her that you were wrong and she is right in any argument?

 

If you can answer these questions satisfactorily then you can put yourself down as the perfect husband – according to this interesting and instructive test, at any rate.

 

Wilewicz’ Wide World of Coverage:

 

Dear Readers,

 

This week, I have been out of the office for a few days and the courts have been in the year-end slow down, so I have no cases to report. The Wide World of Coverage will undoubtedly be back in two weeks with plenty of pressing precedent for your perusing pleasure.

 

Nevertheless, I did want to take the opportunity to wish all of our readers a very happy holiday season and a prosperous New Year. The last one was tumultuous and exciting, and I look forward to a new adventure around the bend. I am thankful that I made the transition to Hurwitz & Fine and appreciate all of the opportunities I have already been afforded as a result. Tonight I will raise a glass (or two) to my colleagues here for making me feel so welcome and immediately integrated into the team. Here’s to many more years to come!

 

Happy New Year!

 

Agnes

Agnes A. Wilewicz

[email protected]

 

Editor’s Note:          We love having you with us!

 

Snow in Arizona, Hundred Years Ago:

 

The Sun

New York, New York

1 Jan 1916

 

SIX FOOT SNOW IN ARIZONA

 

Great Storm Ties Up Train Service

at Prescott

 

Los Angeles, Dec. 31.—According to telegraphic advices received here to-night, the greatest snow storm in the history of western and central Arizona swept that section today and to-night is continuing unabated.

 

The snow, which has fallen continuously for more than forty-eight hours, has reached a depth of from three to six feet at Prescott.  Steam and electric train service there has been cancelled and may not resume for two weeks.

 

At Flagstaff the Majestic Opera House collapsed under the weight of the snow.  Many other roofs buckled.  The snow fall measured fifty-two inches on the level.  Weather forecasts predict a continuation of the storm for another twenty-four hours. 

 

Jen’s Gems:

 

It is hard to believe that another year is in the books.  In wrapping things up, I began to think about all that has happened this year and my hopes for the year to come.  This year brought a new addition to my family with the birth of my second daughter Charlotte (“Charlie”).  While the initial months with my first daughter seemed move slow motion, with this child, they have flown.  All of sudden days have turned into weeks and weeks into months.  Now, Charlie is almost nine months.  She is constantly on the move and standing on her feet in order to cautiously shift herself from one piece of furniture to the next.  She also has a grin that melts my heart every time.  We are very lucky, and next year I know we can expect even more from her.  Big sister Ella better watch out.

 

As I know Dan already reported, another year has passed without an appellate court upholding a finding of bad faith against an insurer in New York.  Our hope is that this continues into the New Year. 

 

I also wanted to highlight a decision out of Kings County that appears in my column this week, Azor v. Tower Ins. Co. of N.Y.  The decision is not very long, but I report on it because it includes a nice little discussion of common law waiver in New York.  Frequently we see policyholders made general allegations that the carrier took some action and, as a result, “waived” its right to rely on certain policy provisions or endorsement.  For example, we have seen policyholders argue waiver where the carrier paid a portion of the claim and denied another portion or failed to cite certain policy language in a disclaimer issued relative to a property damage claim.  In Azor, the policyholder argued that because Tower issued her a homeowner’s policy for her actual residence, it knew the other property she owned (and also insured via a homeowner’s policy), was not her residence.  The court in dismissing this argument cited to the Court of Appeals decision in Albert L. Schiff Assoc., Inc. v. Flack.  Although it is often overlooked, in that decision, the Court was clear that where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable.  In other words, a carrier cannot waive its right to rely on the grant of coverage or an exclusion.  The applicability to the latter is what is often underappreciated. 

 

Well, hope everyone has an enjoyable and safe New Year’s.

 

Until next year…

 

Jen

Jennifer A. Ehman

[email protected]

 

Psychiatric Defense First Used a Century Ago:

 

Sentenced to Hospital, Moron Brings

First Victor to Doctors

New York Tribune

January 1, 1916

 

Hospital treatment as a scientific substitute for jail sentences in dealing with criminals had one of its first important victories in New York yesterday. As a result of the change of procedure Sammy Margolin, charged with grand larceny, is undergoing medical treatment at Kings County Hospital instead of occupying a cell in a jail.

 

Margolin has been pronounced a moron. The police man, who arrested him for appropriating a laundry wagon at Nostrand Avenue and Pacific St., Brooklyn, Thursday evening, didn’t know that he was. It is likely that he didn’t know the difference between a moron and a breakfast food.

 

But a physician who chanced to see the prisoners as they were going before magistrate Maguire for a hearing notice that Margolin acted queerly.  He asked that the prisoner be transported to the city’s psychopatic laboratory at Headquarters with the result that Margolin was examined by Dr. Louis E. Bisch, director of the laboratory.

 

In answer to the first question put to him, Margolin glibly announced that he was eighteen years old.  Careful examination with the aid of the picture charts and other paraphernalia of the department revealed that he was the mentality of a boy of six years.  To send the child-minded man to jail for a crime would have been a greave miscarriage of justice, the physician said…

 

Peiper’s Pipings:

 

We close our 2015 with a rant.  Pardon our frustration, but we’re confused by the Second Department’s recent decision in Gikas.   As outlined below, the Court denied a contractor’s application for contractual indemnification solely because it had not established that it did not have authority supervise, direct or control the work which produced plaintiff’s injury.  Rather, the contractor instead argued that it subcontracted its work to a third-party, and it was not even on the jobsite at the time of the incident. 

 

We note the Court of Appeals’ statement in McCarthy v Turner Construction Corp which provided: “[i]f a party with contractual authority to direct and supervise the work at a job site never exercises that authority because it subcontracted its contractual duties to an entity that actually directed and supervised the work, a common-law indemnification claim will not lie against that party on the basis of its contractual authority alone”  

 

Stated another way, if a party does not actively supervise, direct or control the work it will not be deemed to be negligent.  Indeed, McCarthy stands for the proposition that one need to establish active negligence against the party against whom indemnity is sought.  This is because one cannot receive an award of common law indemnity against a “non-negligent” party. 

 

If establishing that one did not actively supervise, direct or control the injury producing work (despite the contractual right to do so) absolves a party from a common law indemnity claim, should it also not serve as a predicate for a contractual indemnity claim.  In other words, a lack of negligence (here, exercising no supervision, direction or control) is a shield from a common law indemnity claim.  Should it not logically follow that the same lack of negligence can be used as a sword to help establish a claim for contractual indemnity? 

 

Something to think about as you pour your final bottle of champagne into a glass of OJ this morning.  Cheers.   

 

See you in two weeks.  In the meantime, Happy New Year.

 

Steve

Steven E. Peiper

[email protected]

 

 

 

Transforming from Manufacturing Wagons to Making Cars:

Courier-Journal (Louisville, KY)

January 1, 1916

Contract for Assembling Automobiles Five Years

Objections to Wagon Company Deal Made by John J. Shelley are Overcome

 

A contract whereby the Kentucky Wagon Manufacturing Company will assemble automobiles for the Dixie Motor Car Company, a concern in the process of organization, for a period of five years, was approved by the stockholders at a special meeting yesterday afternoon at the plant.

 

Objections to the immediate approval of the contract on the part of John J, Shelley, stockholder and former secretary of the company, were voted down.

 

The Dixie Flyer was an automobile built in Louisville, Kentucky from 1916 until 1923. Dixie Flyers were marketed under the slogan of "The Logical Car."[1] They may be classified as Brass Era cars.

 

The origins of the company can be traced back to 1878, when the Kentucky Wagon Manufacturing Company was established. In 1912, the local Electric Vehicle Company was acquired, which marked the entrance of Kentucky Wagon into the automotive field. An electric car called the Kentucky Electric was planned, but did not come to pass.

 

Erroneously, some lists of old automobiles list the Kentucky Electric from the Kentucky Wagon company in this period. The sole electric automotive product of the company was the Urban Electric truck produced from 1912 to 1916. In 1914, the Hercules Motor Car Company contracted with Kentucky Wagon to build bodies for their cars. Hercules went out of business in 1915, with its assets acquired by Kentucky Wagon.

 

There appear to have been plans to continue the Hercules name, but the Hercules instead formed the nucleus of the new Dixie Flyer in 1916. All cars had four-cylinder engines.  The Firefly speedster of 1922 was the sportiest Dixie Flyer, unfortunately, it was their last new model as well.

 

The Kentucky Wagon plant is depicted here. It later became the site of a huge Ford Plant where the Model T was produced, then the Reynolds (Aluminum) Building which was part of the University of Louisville campus. In 2005, the U of L sold off the property for loft construction, and there are a beautiful condominium building known as Reynolds Lofts occupy the site.

 

This Week’s Highlights from the Attached Edition:

 

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

 

  • Question of Fact as to Whether a Slip and Fall on the Snow and Ice was Caused in Whole or In Part by Snow Plow Contractors Acts or Omissions
  • Fourth Department Broadly Interprets AI Coverage
  • Affidavit of Insurance Investigator Including Insureds Admission of Non-Residence Together with Insured’s Default Sufficient for Summary Judgment
  • Assault and Battery Exclusion in Bar’s Policy Eliminates Coverage for Assault by Patron


HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW

Robert E.B. Hewitt III

[email protected]

 

  • Plaintiff Raised an Issue of Fact as to Whether Their Cervical Spine Injuries Constituted a Serious Injury
  • Defendant Made a Prima Facie Case by Submitting Medical Evidence that the Injuries to Plaintiff’s Cervical and Lumbar Regions of the Spine Did Not Constitute Serious Injuries
  • Plaintiff Raised Issue of Fact by Submitting Evidence of Range of Motion Limitations and Positive Results on Straight Leg Tests
  • Documented Aggravation of an Existing Asymptomatic Injury Can Constitute a Serious Injury
  • Plaintiff Raised Triable Issue of Fact as To Whether He Suffered a Serious Injury through Submission of Medical Evidence
  • Defendant Provided a Non-negligent Explanation for Hitting Vehicle in the Rear When Evidence Showed Defendant’s Vehicle Was Hit by a Third-Vehicle From behind Which Pushed Defendant’s Vehicle into First Vehicle

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

  • Thousands Confused:  Question of Fact on Contractor’s Negligence Where it May Have had the Right to Control or Direct the Injury Producing Work, but Did Not Do So 
  • Builder’s Risk Policy Does Not Provide Coverage for Tower Crane because it was an Integral Part of the Construction Project.

 

FITZ’S BITS

Elizabeth A. Fitzpatrick

[email protected]

 

  • Happy New Year.

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

  • Happy New Year.

 

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

  • Court Upholds Disclaimer Based on Insured’s Failure to Reside at the Premises; Irrelevant that Insurer also issued a Homeowner’s Policy for Plaintiff’s Actual Residence

 

Bad Faith

 

  • No Obligation to Settle Claim under Kansas Law where there is a Good Faith Question as to whether there is Coverage under the Policy 

 

 

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

 

  • Insurer Defeats Punitive Damages in Bad Faith Case

 

To our clients, all who are friends, and our readers, all of who we consider our friends, as well, we say THANK YOU for a great year, for interesting work, for great conversation, for good humor and for our delight in considering you all a part of our family.

 

Happy New Year.

 

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

Twitter:           @kohane

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

Jennifer A. Ehman

Agnieszka A. Wilewicz

Diane F. Bosse

Joel R. Appelbaum

 

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

 

Elizabeth A. Fitzpatrick
 

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

 

Jennifer A. Ehman

 

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 

 Elizabeth A. Fitzpatrick

Diane F. Bosse

 

Topical Index

Kohane’s Coverage Corner

Hewitt’s Highlights on Serious Injury
Peiper on Property and Potpourri

Fitz’ Bits

Wilewicz’s Wide World of Coverage

Keeping the Faith with Jen’s Gems
Earl’s Pearls

 

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

 

12/31/15       Zraj Olean, LLC v. Erie Insurance Company

Appellate Division, Fourth Department
Question of Fact as to Whether a Slip and Fall on the Snow and Ice was Caused in Whole or In Part by Snow Plow Contractors Acts or Omissions
There was a slip and fall on ice in a roadway at the Olean Center Mall injuring Johnson.  He sued the mall owner, Zraj, and the property manager, under a snow plow agreement, Southern agreed to perform snow removal at the mall.  

 

Zamias sued Erie Insurance (Erie) seeking a declaration that Zamias was entitled to a defense and indemnification with respect to the underlying action as an additional insured under the commercial general liability policy issued by Erie to Southern Summit.

 

There were also claims under the indemnity and hold harmless agreement between the property owner and the snow plow contractor.

 

First, the court determined that the contractual indemnity claim can be pursued.  While negligent owners cannot pass through their negligence to contractors under construction agreement because of the provisions of General Obligations Law § 5-322.1(1), this is not a construction contract. Therefore, the indemnification clause is enforceable even to pass though the owner may be negligent and the snow plow contractor may not be negligent.

 

Zamias was also entitled to a defense as an additional insured under Erie's policy even though the complaint only alleged the owner’s negligence.

 

Now, as to AI coverage,  coverage for an additional insured is provided for injuries caused in whole or in part by the "acts or omissions" of SouthernNeither Erie nor Southern offered sufficient proof to demonstrate that the accident was either NOT caused in whole or in part or WAS caused in whole or in part by Southern’ s conduct.  Therefore, the court did not decide whether Erie was responsible to indemnify under the policy.

 

 

12/31/15       Engasser Construction Corp v. Dryden Mutual Insurance Co.

Appellate Division, Fourth Department

Fourth Department Broadly Interprets AI Coverage

Plaintiff hired a contractor to install ice blocks on the roof of its commercial building, and an employee of the contractor fell from the roof while installing the ice blocks. The employee commenced an action against Engasser, alleging common-law negligence Labor Law violations.

 

The contractor was insured under a general liability policy issued by Dryden and an endorsement to that policy named Engasser as an additional insured. The additional insured endorsement states that the insured provision of the general liability coverage "is amended to include as an insured the [plaintiff] BUT only with respect to . . . its liability for activities of the named insured or activities performed by [the plaintiff] on behalf of the named insured."

 

Pursuant to that endorsement, plaintiff sought a defense and indemnification in the underlying action, and Dryden disclaimed coverage

 

Engasser reasonably expected coverage under the endorsement, inasmuch as it was subject to liability for the activities of the named insured, i.e., the injured worker's employer, under the Labor Law. Thus, pursuant to the additional insured endorsement, Engasser was entitled to coverage "with respect to . . . its liability for activities of the named insured," and the court properly declared that Engasser entitled to a defense and indemnification under the policy

 

 

12/29/15       Tower Insurance Company v. Hossain

Appellate Division, First Department

Affidavit of Insurance Investigator Including Insureds Admission of Non-Residence Together with Insured’s Default Sufficient for Summary Judgment
The insurer had no obligation to defend or indemnify defendant Hossain in the underlying personal injury action by showing, pursuant to an exclusion in his homeowners policy, that Hossain did not reside at the premises when the accident happened. As the court recognized, the affidavit by plaintiff's insurance investigator stating that Hossain admitted that he had not resided at the premises since November 2008, nearly a year and a half before the accident occurred, is admissible for the purpose of showing his non-residence when the accident occurred, and, by defaulting in this action, Hossain is deemed to have admitted the allegation in the complaint that he did not reside at the premises at the relevant time.

 

12/23/15       Amato v. National Specialty Insurance Company
Appellate Division, Second Department

Assault and Battery Exclusion in Bar’s Policy Eliminates Coverage for Assault by Patron

Amato claims that on December 21, 2007, she sustained injuries as a result of an altercation with an intoxicated patron at an establishment owned by the Bistro Restaurant in Richmond County. She sued the patron and Hylan Bistro (“Bistro”) alleging, that Bistro was liable for her injuries for having unlawfully and knowingly sold or provided alcohol to a visibly intoxicated patron, who was known by Hylan Bistro to become intoxicated and violent, and that such intoxication contributed to the patron suddenly assaulting, battering, striking, and/or otherwise injuring the plaintiff.

 

National Specialty Insurance Company (“National”) provided coverage to Bistro and they were advised of the incident on January 21, 2009, by Hylan Bistro.  This was over a year after the fracas.  Five days later, National disclaimed coverage based on an assault and battery exclusion endorsement.

 

The plaintiff commenced this action seeking a declaration, inter alia, that the policy issued by Bistro provided coverage for her claims against Bistro in the personal injury action and that the insurance defendants were obligated to defend and indemnify Bistro in that action. National moved for summary judgment declaring that they were not obligated to defend and indemnify Bistro in the underlying action, and the plaintiff cross-moved for summary judgment.

 

The motion should have been made on the basis of lack of standing to bring the lawsuit.  The injured party does not have standing to do so unless it has a judgment against Bistro (Hanover v. Lang).

 

In any event, the lower court ruled in National’s favor, based on the assault and battery exclusion and the plaintiff appealed.

 

In support of their motion, the insurance defendants demonstrated their prima facie entitlement to judgment as a matter of law by establishing that the claims asserted by the plaintiff against Hylan Bistro in the personal injury action fall within the terms of the assault and battery exclusion endorsement. Each of the claims asserted by the plaintiff in the personal injury action arises out of the assault and/or battery, and thus, falls within the subject policy's exclusion endorsement. In opposition, the injured plaintiff failed to raise a triable issue of fact as to the applicability of the exclusion endorsement.

 

Editor’s Note: While we don’t see the language of the “assault and battery” exclusion in the body of the decision, this holding is in line with Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 353 [1996]).


HEWITT’s HIGHLIGHTS ON SERIOUS INJURY UNDER NO-FAULT LAW

Robert E.B. Hewitt III

[email protected]

 

12/30/15                  Wasserman v. City of New York

Appellate Division, Second Department

Plaintiff Raised an Issue of Fact as To Whether his Cervical Spine Injuries Constituted a Serious Injury

Plaintiff appealed from an order of the trial court that granted defendant’s cross-motion for summary judgment on the basis that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The Appellate Division, in a decision devoid of detail, reversed that order, and remanded the case to the trial court to determine plaintiff’s motion for summary judgment on the issue of liability on the merits. The Appellate Division found that in support of their cross motion for summary judgment dismissing the complaint, the defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of  the Insurance Law as they  submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical region of the plaintiff's spine did not constitute serious injuries under the permanent consequential limitation of use or significant limitation of use categories. However, in opposition to the cross motion, and in support of his motion for summary judgment on the issue of liability, the Appellate Division found that plaintiff submitted evidence raising triable issues of fact as to whether he sustained serious injuries to the cervical region of his spine. 

 

12/30/15                  Olivencia v. Depompeis

Appellate Division, Second Department

Defendant Made a Prima Facie Case by Submitting Medical Evidence That the Injuries to Plaintiff’s Cervical and Lumbar Regions of the Spine Did Not Constitute Serious Injuries

The Appellate Division \vacated its prior decision upon motion for clarification and substituted a new decision. Defendants had appealed an Order of the trial court denying their motion for summary judgment seeking dismissal of the causes of action alleging that the plaintiff sustained serious injuries under the permanent consequential limitation of use, significant limitation of use, and permanent loss of use of a body organ, member, function, or system categories of Insurance Law § 5102(d) as a result of the subject accident.

 

The Appellate Division reversed the trial court. It found that the defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury under the permanent consequential limitation of use, significant limitation of use, or permanent loss of use of a body organ, member, function, or system categories of Insurance Law § 5102(d) as a result of the subject accident. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injuries to the cervical and lumbar regions of the plaintiff's spine were not caused by the accident and the plaintiff failed to raise a triable issue of fact in opposition.

 

12/29/15                  Balducci v. Carrasco

Appellate Division, First Department

Plaintiff Raised Issue of Fact by Submitting Evidence of Range of Motion Limitations and Positive Results on Straight Leg Tests

The Appellate Division modified the lower court’s grant of defendants' motion for summary judgment dismissing the claims of serious injury to the lumbar spine and a 90/180-day injury under Insurance Law § 5102(d), to deny the motion as to the claims of "permanent consequential" and "significant" limitations in the use of the lumbar spine, and otherwise affirmed the decision. The Appellate Division decided that whether or not defendants met their prima facie burden as to the lumbar spine injury, in opposition, plaintiff raised a triable issue of fact. Among other things, he submitted an affirmed report by a physician who, upon examination not long after the accident and recently, found limitations in range of motion and positive results on straight leg raising tests. In sum, plaintiff's evidence was found sufficient to raise a triable issue of fact with respect to his lumbar spine injury.

 

As to the 90/180-day category, the Appellate Division found defendants satisfied their burden with respect to the claim of a 90/180-day injury by relying on plaintiff's own admissions showing that he was not prevented from completing substantially all of the acts making up his usual and customary daily. Plaintiff admitted that he only missed about two weeks of work and was in bed for approximately 10 non-consecutive days. In opposition, plaintiff failed to present medical evidence sufficient to raise an issue of fact as to this claimed injury.

 

12/23/15                  Armella v. Olson

Appellate Division, Fourth Department

Documented Aggravation of an Existing Asymptomatic Injury Can Constitute a Serious Injury

The Appellate Division modified the order of the trial court which had dismissed all of plaintiff’s complaint by denying the motion in part and reinstating the complaint, as amplified by the bill of particulars, with respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury within the meaning of Insurance Law § 5102 (d). Plaintiff commenced the action seeking damages for injuries he sustained when his vehicle was struck from behind by a third party's vehicle that had been struck by defendant's vehicle. Defendant moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d). Plaintiff opposed the motion only with respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury alleged in the complaint, as amplified by the bill of particulars, and therefore was deemed to have abandoned his claims with respect to the other categories of serious injury.

 

The Appellate Division agreed with plaintiff that the trial court erred in granting the motion with respect to the permanent consequential limitation of use and significant limitation of use categories of serious injury, and therefore modified the order. The Appellate Division held that even assuming, arguendo, that defendant met his initial burden; plaintiff raised triable issues of fact with respect to those two categories. Plaintiff submitted the affidavit of his treating physician, who reviewed plaintiff's cervical MRI and opined that plaintiff sustained a cervical whiplash superimposed on a degenerative cervical spine and at least two levels of cervical herniations. His physical examination of plaintiff revealed muscle spasms, which constituted objective evidence of injury and plaintiff's range of motion was limited to a moderate or marked degree. He opined that, given plaintiff's absence of any prior neck pain, stiffness, or radiculopathy prior to the accident, the accident was a substantial factor in causing previously asymptomatic degenerative conditions in plaintiff's spine to become symptomatic, and in causing plaintiff's neck pain, stiffness, spasms, and restricted range of motion. The Appellate Division held that it was well settled that the aggravation of an asymptomatic condition can constitute a serious injury.

 

12/23/15                  Emmanuel v. New York City Transit Authority

Appellate Division, Second Department

Plaintiff Raised Triable Issue of Fact as To Whether He Suffered a Serious Injury through Submission of Medical Evidence

The Appellate Division found 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. The defendants submitted competent medical evidence establishing, prima facie, that the alleged injury to the lumbar region of the plaintiff's spine did not constitute a serious injury under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, however, the Appellate Division found plaintiff raised a triable issue of fact as to whether he sustained a serious injury to the lumbar region of his spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d). No details are given.

 

12/17/15                  Tejada v. Aifa

Appellate Division, First Department

Defendant Provided a Non-negligent Explanation for Hitting Vehicle in the Rear When Evidence Showed Defendant’s Vehicle Was Hit by a Third-Vehicle From behind Which Pushed Defendant’s Vehicle into First Vehicle

The Appellate Division reversed the lower court’s denial of summary judgment. Plaintiff alleged that she suffered serious injuries when she was a passenger in a livery cab driven by defendant Aifa that was the front-most vehicle in a rear-end accident involving four vehicles. Defendant Lake, who was driving the third car in the accident, testified that Aifa's cab stopped suddenly to pick up a passenger, that the second cab then braked, and that she braked and came to a stop about a foot behind the second cab. Lake's cab was then hit in the rear by the truck behind her, which was driven by defendant Dickerson, causing her vehicle to travel forward and strike the second cab. Dickerson testified that the accident occurred because cabs in front of him stopped suddenly to pick up passengers, that he was just a half-car length behind Lake's cab when he first saw it, and that he hit the rear of Lake's cab after it had stopped.

 

Lake provided a "non-negligent explanation for the collision" between her car and the cab stopped in front of her; thereby rebutting the presumption that she was negligent she submitted the testimony that she had come to a full stop before being hit by Dickerson's truck, which caused her car to move forward into the cab stopped in front of her. Dickerson's testimony that Lake stopped short is insufficient by itself to raise an issue of fact as to her negligence; he provided no explanation as to why he did not maintain a safe distance between his vehicle and Lake's vehicle in front of him. Thus, Lake and defendant Dito, the owner of the cab Lake was driving, demonstrated their lack of fault in connection with both the impact with the second vehicle and the rear impact by Dickerson's vehicle, and are entitled to summary dismissal of the complaint and cross claims against them.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

12/23/15       Gikas v 42-51 Hunter St., LLC

Appellate Division, Second Department

Thousands Confused:  Question of Fact on Contractor’s Negligence Where it May Have had the Right to Control or Direct the Injury Producing Work, but Did Not Do So 

Plaintiff commenced the instant lawsuit after being struck by a falling object at a jobsite owned by Hunter Street.  In subsequent third-party lawsuits, the plaintiff’s employer, Danica, was sued for common law and/or contractual indemnification. 

 

In its motion for summary judgment, Danica argued that it was protected against a common law indemnity claim by operation of Workers’ Compensation Law § 11 and the fact that Mr. Gikas did not sustain a grave injury.  Moreover, because the contract under which Danica was performing services did not include a contractual indemnity clause, or an insurance procurement provision, it bore no contractual liability for Mr. Gikas’ alleged injuries.  The Appellate Division, not surprisingly agreed, and all claims against Danica were summarily dismissed.

 

At the same time, the scaffolding contractor, Colgate, also moved for summary judgment seeking a contractual indemnity award against the general contractor, Roe.  Colgate argued that it was not on the jobsite at the time of the incident, and that it had subcontracted its job duties at the project to another entity, Consolidated.  Because Colgate was not even at the jobsite, it averred that it was entitled to judgment. 

 

The Appellate Division declined Colgate’s motion on the basis that question of fact existed as to whether Colgate had some share of negligence.  Essentially, the Court advised that because Colgate did not establish it “lacked authority…to supervise or control” the work giving rise to the injury, there a possibility of some percentage of negligence being assigned to it.   As a party cannot be indemnified for their own negligence, it follows that Colgate did not meet its burden.

 

12/22/15       Lend Lease Constr. LMB, Inc. v Zurich Am. Ins. Co.

Appellate Division, First Department

Builder’s Risk Policy Does Not Provide Coverage for Tower Crane because it was an Integral Part of the Construction Project.

In yet another Hurricane Sandy case, Lend Lease and Extell (as owner) were in the process of erecting a 74 story mixed use building in Manhattan.  In order to complete the upper floors, Lend Lease contracted with Pinnacle II.  Pinnacle II, in turn, rented a large tower crane from its sister company, Pinnacle III.  The crane was affixed to a concrete pad on the 20th floor of the structure.  Importantly, the concrete pad, but not the crane itself, was incorporated into the building’s construction schematic. 

 

As a result of a high winds which accompanied Sandy, the crane sustained significant damage.  Lend Lease and Extell sought coverage under their builder’s risk policy from Zurich.  Zurich denied the request on the basis that the policy did not provide coverage for the crane.  Specifically, the builder’s risk policy in question only provided coverage for “Property Under Construction” and “Temporary Works.”   “Temporary Works” was defined by the policy as “scaffolding…formworks…shoring, fences and temporary buildings or structures…all incidental to the project.” 

 

While it was clear the crane was not “Property Under Construction,” the Court spent considerable time determining whether or not it qualified as “Temporary Works.”  In ruling that the crane did not qualify as “Temporary Works,” the Appellate Division noted that the item was not incidental (as required by the policy), but, in fact, was integral to the construction of the upper floors of the building.   The majority further supported its decision by referencing the rarely employed judicial construction tool of ejusdem generis.  Ejusdem generis is explained as “the meaning of a word in a series of words is determined ‘by the company it keeps’.”  “Temporary Works” includes work trailers and temporary offices, among other things.   While a project can continue without a temporary job office, in the court’s eyes the project at hand could not have been accomplished without the crane.  As such, it was deemed integral to the building process, and thus not incidental “Temporary Work.”

 

Further, even if the crane qualified as “Temporary Work” the Court ruled that the policy excluded all coverage for loss to a contractor’s “tools, machinery, plant and equipment…not destined to become a permanent part of the INSURED PROJECT unless specifically endorsed to the Policy.”  In so holding, the Court had no problem describing the crane as “equipment.”  The Court also resolved issues about permanency when it explained that although the pad upon which the crane rested would remain a part of the building, the crane itself would be disassembled and moved to a different job at the completion of the instant project.  As such, the Court ruled that the crane was not a permanent part of the project.  Finally, the Court brushed aside plaintiff’s claims that the coverage was illusory as it would never provide coverage for any loss to contractor’s equipment. In doing so, the Appellate Division noted that a provision is not illusory if it provides coverage “for some acts.”  Because the policy rendered some coverage benefits to the assured and the exclusion did not negate all possibilities of coverage for Temporary Works, it was enforceable. 

 

In a spirited dissent, Justice Mazzarelli argued that the crane was a “temporary structure” within the meaning of the policy. As such, it qualified for coverage under the policy’s grant for “Temporary Works.”  Justice Mazzarelli also ruled that the exclusion for contractor’s equipment was too broad, and thus unenforceable. 

 

 

FITZ’S BITS

Elizabeth A. Fitzpatrick

[email protected]

 

Happy New Year.

 

WILEWICZ’S WIDE WORLD OF COVERAGE

Agnes A. Wilewicz

[email protected]

 

Happy New Year.

 

 

KEEPING THE FAITH WITH JEN’S GEMS

Jennifer A. Ehman

[email protected]

 

12/17/15       Azor v. Tower Ins. Co. of N.Y.

Supreme Court, Kings County

Court Upholds Disclaimer Based on Insured’s Failure to Reside at the Premises; Irrelevant that Insurer also issued a Homeowner’s Policy for Plaintiff’s Actual Residence

Tower issued a homeowner’s policy to plaintiff for a residential property in South Ozone Park, New York.  The house subsequently sustained fire damage.  Tower denied coverage citing the definition of “residence premise” and submitting that plaintiff during her EUO conceded that she never resided at the premises.

 

What is interesting about this decision is the court’s handling of plaintiff’s argument that Tower either waived or was estopped from denying coverage because it issued a similar homeowner’s policy to plaintiff for her residence in Brooklyn. 

 

The court addressed plaintiff’s position that Tower either waived or was estoppel from denying coverage.  First, citing Albert L. Schiff Assoc., Inc. v. Flack, the court held that where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable. 

 

Second, with regard to estoppel, although coverage can be created by estoppel, the insured must demonstrate:  1) lack of knowledge of the true facts; 2) reliance on the insurer’s conduct, and 3) prejudicial change in the insured’s position.  Here, plaintiff did not show, or even allege, that Tower took any affirmative act upon which she relied to her detriment other than to issue her a policy of insurance which she requested.  The court was clear that plaintiff’s contention that Tower, by issuing her a separate homeowner’s policy, knew that she had another home.  In the court’s view this was irrelevant to the “residence premises” defense as a person may have more than one residence for purpose of insurance coverage.  

 

Bad Faith

 

12/23/15       Becker v. Bar Plan Mutual Ins. Co.

Court of Appeals of Kansas

No Obligation to Settle Claim under Kansas Law where there is a Good Faith Question as to whether there is Coverage under the Policy 

Sheila Seck and her law firm represented plaintiff in connection with loans made to a third-party.  After the loans were made, plaintiff learned that the collateral used to secure those loans was already encumbered.  Apparently, Seck and her law firm failed to conduct a UCC search or advise plaintiff to perform a UCC search. 

 

The loans were made in March 2010.  In December 2011, plaintiff discovered the UCC filing relative to the earlier loan.  During this time, plaintiff’s relationship with the third-party also began to crumble.  Via e-mail sent in February 2012, plaintiff advised Seck that he was terminating her services, that errors had occurred, and that he “would appreciate [her] inquiry with [her] insurance carrier, as [he] had not yet qualified what [he] expected to be very large damages.” 

 

Seck did not place defendant, her malpractice insurer, on notice of this loss under November 2012.  Upon receipt of notice, defendant assigned counsel to the claim file and requested a complete copy of Seck’s legal file.  Defendant received that complete copy on February 11, 2013.  On February 22, 2013, plaintiff made a settlement offer for the aggregate limit of the policy minus reasonable defense costs and other costs incurred by the insurer.  Defendant did not make a counter offer. 

 

In March, defendant sent a reservation of rights letter and in April, a coverage denial was sent stating that Seck was aware of plaintiff’s claim prior to the commencement of the policy period on the claims made policy it issued.  Plaintiff, following the denial, made a second settlement offer which likewise received no response. 

 

Thereafter, plaintiff and Seck entered into a consent judgment, and plaintiff brought this lawsuit seeking to challenge the denial and alleging bad faith. 

 

As discussed at length in this decision, the court agreed with defendant that the prior knowledge condition contained in defendant’s policy barred coverage, and that summary judgment was properly granted in defendant’s favor. 

 

With regard to the bad faith claim, plaintiff submitted that defendant breached its contractual obligation to enter settlement negotiations on Seck’s behalf.  He maintained that because defendant breached its implied good-faith settlement obligation to Seck, he was entitled to recover an excess judgment.   

 

The court held that, with regard to the second settlement offer, at that point defendant had already denied coverage and therefore, there was no reason for defendant to enter into settlement negotiations at that point.  And, with regard to the initial offer, the court reiterated precedent in Kansas which held that “[a]n insurance company should not be required to settle a claim when there is a good faith question as to whether there is coverage under its insurance policy.  If there is not coverage, there is no fiduciary relationship between the tortfeasor and the insurance company.”  Accordingly, as the court previously found that Seck was not entitled to coverage under the policy, defendant should not have been required to settle the claim because there was a good-faith question as to whether Seck was entitled coverage under its policy.  In turn, the bad faith claim failed.

 

 

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

 

06/12/15       Wolfe v. Allstate Property & Casualty Insurance Co.
Third Circuit

Insurer Defeats Punitive Damages in Bad Faith Case

 

Basing its decision on Pennsylvania Law, the Third Circuit held that an insured who incurred a punitive damages award could not get indemnification from his insurance company in a later bad faith action. 

 

Wolfe was involved in a car accident with Allstate insured Zierle in 2007.  Zierle was intoxicated at the time.  The Allstate policy provided Zierle with up to $50,000 in coverage, but excluded coverage for punitive damages.  A jury ultimately awarded Wolfe $15,000 in compensatory damages and $50,000 in punitive damages.  Allstate paid the compensatory damages, but not the punitive damages.  As these things go, Zierle assigned his rights against Allstate to Wolfe in exchange for the plaintiff agreeing not to enforce the punitive damages award against him personally. 

 

When Wolfe then sued Allstate, the insurance company made a motion in limine to preclude any reference to the punitive damages award in the underlying case.  The District Court denied that motion on a theory that, if Allstate had failed to reasonably negotiate a settlement of the plaintiff’s claim, the $50,000 punitive damages award could be viewed as damages flowing from that breach.  A jury ultimately found that Allstate breached its contract and violated Pennsylvania’s bad faith statute, but awarded no compensatory damages and $50,000 in punitive damages. 

 

The Third Circuit reversed on appeal by Allstate.  The first point of argument was the District Court’s denial of the motion in limine.  Basing its ruling on Pennsylvania law, the Court held that in an action by an insured against the insurer for bad faith, the insured may not collect as compensatory damages any punitive damages awarded in an underlying lawsuit.  Therefore, the underlying punitive damages award was not relevant to the lawsuit and should have been excluded from evidence and argument.  This was seen as a “logical extension” of state policy providing for non-insurance for punitive damages. 

 

Then in an ironic twist, the Court held that elimination of the punitive award from consideration did not necessarily preclude the bad faith claim.  Pennsylvania’s bad faith statute apparently does not provide for the recovery of compensatory damages, and only authorizes recovery of punitive damages, interest, and costs for an insurer’s alleged bad faith, and the case was remanded to the District Court for a new trial.  The irony of this case and result is that the District Court, and perhaps the Appellate Court, may eventually have a new punitive damages award to review and assess. 

 

The Federal District Courts in such cases are bound to review and apply state law to the best of their ability, and bad faith claims must be assessed state by state based on court decisions, insurance regulations, or in this case a statute that may apply.  It is odd that the Pennsylvania statute does not allow for “compensatory” damages but only punitive damages, which would seem to invite difficult and protracted litigation.  Since Allstate paid the compensatory damages in the earlier case, and punitive damages are not a consideration, it is difficult to conceive how there would be any basis to assert punitive damages as part of the bad faith claim.  Without an allowance for any compensatory damages, the state statute would make any further recovery problematic since there seems to be little or no basis for a further punitive damages award. 

 

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