Coverage Pointers - Volume IX, No. 25

New Page 1

Dear Coverage Pointers Subscribers:

 

From the 13th Floor of the Liberty Building in Buffalo, our Friday the 13th issue of Coverage Pointers is attached.

 

You will find an issue LOADED with important case law and commentary attached.  For our 20 new subscribers this week, we welcome you to the Coverage Pointers family.  Each issue contains a cover letter which highlights some of the most important cases and developments in New York coverage law over the previous two weeks and the attached issue provides much more depth and analysis and the full appellate decision.  This week's issue reviews almost 40 NY appellate coverage decisions.  So you know, we review every New York appellate decision involving insurance coverage with the exception of most of those that involve only workers compensation. 

 

For our new subscribers, allow me introduce you to the Coverage Pointers team, in the order in which you will find the material:

 

  • Dan Kohane (that's me) writes this cover letter, serves as Editor and provides the summaries of all of the liability and casualty insurance opinions, including D&O, E&O, excess and umbrella, reinsurance, etc., along with any overall analysis, mischief, mistaken attempts at humor and comic relief.  I am to blame for anything you don't like; the remainder of the staff gets the credit for all that you enjoy;

 

  • Audrey Seeley (Audrey's Angles) provides the No Fault analysis, both regulatory and judicial;

  • Mark Starosielec (Mark's Mark) reviews all of the "Serious Injury" threshold decisions, and that's no small chore;

  • Steve Peiper (Peiper's Property and Potpourri) handles the first party claims (fire, property, life, health and disability) and other assorted, often non-insurance coverage decisions of general interest;

  • Earl Cantwell (Earl's Pearls) gives you specific insight on a worthy legal topic in virtually every issue;

  • The FDCC (Federation of Defense & Corporate Counsel) Hot Cases column www.thefederation.org  provides us with the non-New York cases (Across Borders) and the authors of each summary and firm affiliation is always included.

 

 

Red Alert, Red Alert:  

We suggest to you that a Third Department decision rendered this week poses one of the most significant threats to liability insurers we have seen lately.  The mid-level appellate court held that a failure to advise an insured of its right to select "conflict counsel" (aka Cumis Counsel) constitutes a Deceptive Trade Practice subjecting a carrier to treble damages and attorneys fees.  While an appeal to the Court of Appeals may be desired, under New York State rules, a request of review at this time cannot be entertained, as the order will not be final until a trial is completed on damages.  Here is the background.  You may remember this case as we reported it in 2005:

 

8/26/05          Elacqua v. Physicians Reciprocal Insurance
Appellate Division, Third Department
Court Equates Limitation with Exclusion.  Moreover, Court Requires Liability Carrier to Notify Insured of Conflict of Interest and Right of Insured to Select for Separate Counsel
This one's worth reading closely on three separate points, the final one worth reading two or three times.

Physicians Reciprocal Insurance (PRI) assigns the defense of a medical malpractice lawsuit to defense counsel.  It takes the position that the partnership in which the physicians who are sued are associated is provided with limited coverage, not as broad as that provided to the physicians, based on a Limitation of Liability clause in policy (not based on a policy exclusion).  Court holds that the clause is "kind of like" an exclusion so a failure to raise it in a timely method can lead to a waiver of that limitation, like it would an exclusion.  Editors Note: Court surely appears to be stretching the insurance law to reach THAT conclusion.

In any event, PRI alleges that it timely sent out notice of that limitation in a coverage letter sent by certified mail but could not find or produce the return receipts on the certified mail.  Court held that failure to produce the return receipts raises a question of fact as to whether these letters were sent.  Editors Note:  Who says you need to send out by certified mail, anyway?  Not the Insurance Law.

Finally, the Court held that there was a potential conflict between the interests of the insured and the insurer which gave rise to the insured's right to select counsel at the carrier's expense.  That's not an unusual finding.  However, the Court held, contrary to long established case law, that when such a potential conflict exists, the carrier must NOTIFY the insured of its right to select counsel, whose reasonable fees are to be paid by the carrier. 

 

If this decision because the law of the land, it is now the law in the Third Department, it will require a wholesale change in the way disclaimer and reservation of rights letters are crafted in the future. Courts have not required carriers to notify insured of this right, which exists when there is a potential of a conflict between the coverage interests of the insured and the carrier.

 

Watch this space for further developments!

 

FURTHER DEVELOPMENTS, AS PROMISED: 

The Third Department has now revisited Elacqua I and had issued Elacqua II. 

 

The court has held that a failure to notify an insured of its right to select conflict counsel (known around the globe as Cumis counsel) constitutes a Deceptive Trade Practice under General Business Law Section 349 subjecting the insurer - as a matter of law --- to damages. 

What are the damages available under that General Business Law Section?

 

General Business Law Section 349(h):

In addition to the right of action granted to the attorney general pursuant to this section, any person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars,  if  the  court  finds  the  defendant  willfully  or knowingly violated this section. The court may award reasonable attorney's fees to a prevailing plaintiff.

 

There is a more complete discussion of this case in the attached issue.  Please read it carefully and review our earlier article on the subject and proceed accordingly.  Call if you have any questions.  The earlier article is linked from this attached issue. 

 

Might Today be Friday the 13th?

Paraskevidekatriaphobics, of course, is the condition suffered by people afflicted with a morbid, irrational fear of Friday the 13th.  Why is Friday the 13th bound up with superstitious connotations?  Tradition suggests it was the day of the week when Eve tempted Adam and the day when Christ was crucified (and there were 13 people at the Last Supper).  Some suggest that Friday was selected as it was the only day named after a woman.  The others pay homage to either Scandinavian male gods (Wooden, Thor, and Tiu - God of War) or celestial bodies (Saturn, Sun, and Moon). Friday was named after the Norse Goddess Freya who represented fertility and sexual love.  Because Frey was the Goddess of the Sea, there are still the superstitious types who do not set sail for a long trip on a Friday.

 

The website www.infoplease.com relates that thirteen was also a sinister number in Norse mythology. Loki, one of the most evil of the Norse gods, went uninvited to a party for 12 at Valhalla, a banquet hall of the gods. As a result, he caused the death of Balder, the god of light, joy, and reconciliation. Loki tricked Balder's blind brother, Hod, into throwing a sprig of mistletoe at Balder's chest. Since mistletoe was the only thing on Earth fatal to Balder, the beloved god fell dead.

 

The number 13 also has been associated with death in other cultures. The ancient Egyptians, for example, believed life unfolded in 12 stages, and the 13th stage was death. Some historians propose that the origin of the "Black Friday" was the simultaneous arrest of hundreds of Knights Templars on October 13, 1307 (Friday), to be later tortured into "admitting" heresy.

 

Earls' Pearls

Earl Cantwell's ever-useful article discusses the important topic of "indemnification" and provides a very useful primer on the subject.

 

From the Land of No Fault

 

Audrey Seeley, Queen of the Porcupines and No Fault Guru Extraordinaire:

 

My Alaskan Malamutes are recovered from their brush with a porcupine but after reading the Court of Appeals decision in Fair Price, I may be in need of serious medical attention.  Nearly a year ago we reported on the Appellate Division Second Department's decision in Fair Price which raised an eyebrow regarding whether an insurer must timely deny a claim for medical equipment never received and whether the insurer could still mount a fraud defense after denying the claim two years after receipt.  The Court of Appeals rendered its decision on this case nearly a year later affirming the appellate court's decision.  Essentially, an insurer must timely deny a claim and ensure timely verification requests are sent to toll the 30 day time frame to issue the denial.  The effect of failing to do so is preclusion of just about of its defenses except for fraud and the claim not being within the grant of insurance coverage. 

 

However, after reviewing the Court's decision there do not seem to be many defenses available regarding the claim not being within the grant of insurance coverage.  The decision indicates that the since there was no issue of there being a motor vehicle accident and injuries sustained as a result of that accident there is insurance coverage afforded.  In other words, perhaps since there was no dispute over whether an accident occurred and injuries were sustained any claim falls within the grant of coverage?  The Court held that the issue of a service or device never being received or incurred by the eligible injured person is an exception to coverage requiring a timely denial of the claim.  Now in addition to my title Dan so kindly bestowed on me, I am a coverage lawyer.  Putting a coverage hat on, I fail to see how this is an exception to coverage.  There is no policy exclusion or policy condition in the endorsement that provides that a condition or exclusion to coverage is the eligible injured person's failure to incur the service or equipment takes the claim outside of coverage under the policy.  I do see with the insuring grant though that the service or equipment for it to fall within the scope of coverage under the policy must be incurred.  In other words, the eligible injured person must, among other things, incur the expense or the service to before their claim will fall within the scope of coverage under the policy.  

 

Alright, I think it is evident that I respectfully disagree with the analysis but the question remains what should an insurer do in light of this decision.  It seems that the insurer may want to consider always timely issuing a denial and, despite the Court's dicta, send out a flurry of verification requests on all claims to ensure that the denial is timely.

 

Audrey A. Seeley

[email protected]

 

Should You Wish To Take This Matter Up .

 

You all know the statement and many of you attach it to every letter you ever send to an insured or third party claimant.  Some of you don't attach it to any.  Others attach it without rhyme or reason:


"Should you wish to take this matter up with the New York State Insurance Department, you may file with the Department either on its website at www.ins.state.ny.us/complhow.htm or you may write to or visit the Consumer Services Bureau, New York State Insurance Department, at: 25 Beaver Street, New York, NY 10004; One Commerce Plaza, Albany, NY 12257; 200 Old Country Road, Suite 340, Mineola, NY 11501; or Walter J. Mahoney Office Building, 65 Court Street, Buffalo, NY 14202."

 

When MUST it be attached?  When an insurer is denying a personal property insurance claim or negotiating a motor vehicle physical damage claim.  It is part of Regulation 64, the Unfair Claims Settlement Practices Regulations (11 NYCRR § 216). 

 

11 NYCRR § 216.6 (h) Any notice rejecting any element of a claim involving personal property insurance shall contain the identity and the claims processing address of the insurer, the insured's policy number, the claim number, and the statement must be prominently set out

 

11 NYCRR § 216.7: contains the same requirement with respect to standards for prompt, fair and equitable settlement of motor vehicle physical damage claims

 

By its terms, it does not apply to bodily injury disclaimer letters and there is no regulatory requirement that the statement be included in every disclaimer letter!  It doesn't hurt to include it, but the statement is not required.

 

Mark's Mark

 

Comply with CPLR's Discovery Rules or Else! (Well, at least 'essentially' comply with them)

 

Today's Mark's Mark comes courtesy of the Second Department (Cruz v. Gustitos). It offers a lesson on compliance with the CPLR's Discovery Rules on Expert Disclosure. The rule states, inter alia:

 

"(d) Trial preparation.

1. Experts.     

(i) Upon request, each party shall identify each person whom the party expects to call as an expert witness at trial and shall disclose in reasonable detail the subject matter on which each expert is expected to testify, the substance of the facts and opinions on which each expert is expected to testify, the qualifications of each expert witness and a summary of the grounds for each expert's opinion. However, where a party for good cause shown retains an expert an insufficient period of time before the commencement of trial to give appropriate notice thereof, the party shall not thereupon be precluded from introducing the expert's testimony at the trial solely on grounds of noncompliance with this paragraph. In that instance, upon motion of any party, made before or at trial, or on its own initiative, the court may make whatever order may be just." 

 

CPLR 3101(d)(1)(i)

In Cruz, the Appellate Division held that the defendants did not intentionally fail to disclose expert witness information and that plaintiffs were not prejudiced as a result. So, the defendants were granted a new trial on damages. On appeal, the Appellate Division had held "preclusion for failure to comply with CPLR 3101(d) is improper unless there is evidence of intentional or willful failure to disclose and a showing of prejudice'" (Gayz v Kirby, 41 AD3d 782, quoting Johnson v Greenberg, 35 AD3d 380; see Shopsin v Siben & Siben, 289 AD2d 220, 221). Here, the medical reports which the defendants exchanged with the plaintiff essentially complied with the requirements of CPLR 3101(d)(1)(i) and there was no showing of a willful failure to disclose or of prejudice to the plaintiff.

The opinion does not state whether the defendants had an insufficient period of time to disclose their experts' reports. However, the practice tip to be gleaned from above is to exchange the expert reports promptly with opposing counsel to at the very least show "essential" compliance with CPLR 3101(d)(1)(i) and  possibly avoid the mess as described above.

 

Mark A. Starosielec, Esq.
[email protected]

 

OK, now that all the preliminaries are out of the way, here are today's appellate headlines (with the summaries to be found in the attached issue): 

 

·        Policy Properly Canceled for Non-Payment of Premium

·        Graves Amendment Ruled Constitutional, Yet Again

·         Failure to Place Correct Policy in Record Results in Failure to Establish Entitlement to Uninsured Motorists Coverage

·        Court Struggles through Allocation of Primary and Excess Coverage in Trucking Case

·        A Deductible Does Not Turn a Primary Policy into an Excess Policy

·        Whoa!  Failure to Advise Insured of Right to Select Own Counsel, When Right Exists, is a Deceptive Claim Practice

·        Sub-limit of Coverage Applying to One Kind of Claim Does Not Apply to Different Claims Arising from Same Occurrence

·        On Notice, What's Good for the Goose Ought to be Good for the Gander

·        Only One Bite at the Apple

·        To Occupy a Vehicle You Need Not Be In It, but You Need to be "Vehicle-Oriented"

·        For Hit-and-Run Uninsured Motorists Benefits, Policy or DMV Need to Notified within 24 Hours of Accident or as Soon as Reasonably Possible

·        Failure to Provide Promised Insurance Status Leads to Adverse Judgment

·        Declaratory Judgment Action Against Sister State Can be Litigated in New York

·        Injured Party, Without Judgment Against Insured, has No Standing to Challenge Disclaimer

·        Finding of No Physical Contact Affirmed in UM Case

·        Twenty Day Period to Move to Stay Uninsured Motorists Arbitration is Inapplicable if Parties Never Agreed to Arbitrate; if Claimant was Not an Insured, Parties Did Not Agree to Arbitrate

·        Claims Handling Manual Irrelevant and Not Discoverable

 

STAROSIELEC'S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT

Mark Starosielec
[email protected]

 

·        All You Need is One: AD's Modification of Order Keeps Just One SI Category in LS

·        Plaintiff's Failure to Address Pre-Existing Medical Condition Leads to SJ

·        No Reasonable Excuse for Plaintiff's Gap in Treatment Dooms SJ Survival Hopes

·        Plaintiff Survives SJ as Defendant Ignores Plaintiff's 90/180-day SI Claim

·        Reversed: Defendant Stubs Toe on Procedural Grounds as Lawsuit Continues

·        Affirmed: SJ Granted as Plaintiff's Doctor Relied on Unsworn Reports of Others

·        Plaintiffs Doctors' Unsworn Reports Fails to Create Triable Issue of Fact, SJ Granted

·        Repeat After Me: Mere Evidence of Plaintiff's Disc Bulges Is Not Enough to Survive SJ

·        Different Reasoning, Same Result as Order Denying D's MSJ is Affirmed

·        Reversed: Quantified ROM Limitations Is Enough to Create Triable Issue of Fact

·        Defendants' 'Essential' Compliance with CPLR 3101(d)(1) Paves Way for New Trial

·        D Fails to Make Prima Facie Showing as D's Dr. Notes P's Significant ROM Limitations

·        Swift Justice: AD Affirms Lower Court Order Granting SJ

 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Arbitration

 

·        Surgical Case Denied Based Upon Negative Findings From Two IMEs

·        If It Looks Like a Private Health Insurer and Seeks Payment for Bills Paid by Private Health Insurer There is No Standing

 

Litigation

 

·        Insurers BEWARE - State ALL BASIS for Denial in Your TIMELY NF-10

·        Master Arbitration Decision Upheld

·        Insurer's Cross-Motion Properly Granted for Plaintiff's Failure to Refute Evidence of Lack of Medical Necessity and Partial Payment of Claim

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

·        Terrorism Exclusion Restricted Scope of Coverage in Violation of Commercial Lease Agreement

·        Under 3420(d), Delivered and Issued in New York Means Delivered to a New Yorker

·        Even when Named as a Defendant after its Passage, Grave's Amendment does not Save Lessor from Vicarious Liability where the Action was Commenced Prior to the Legislation's Passage

 

EARL'S PEARLS

Earl K. Cantwell, II

[email protected]

 

Indemnification: Yours or Mine?

 

That about does it.  Call with any questions or, of course, to schedule training.  All the best.

 

Dan

New Page 3

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]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Audrey A. Seeley
Steven E. Peiper

Mark Starosielec

Fire, First-Party and Subrogation Team
Andrea Schillaci, Team Leader
[email protected]

Jody E. Briandi
Steven E. Peiper

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

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Dan D. Kohane
Scott M. Duquin

Index to Special Columns

 

Starosielec’s Serious Side of “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

6/12/08            Kaufmann v Leatherstocking Coop. Ins. Co.
Appellate Division, Third Department
Policy Properly Cancelled for Non-Payment of Premium
Kaufmann requested H&B Insurance Agency to provide him with a policy of homeowners coverage on an Otsego County property.  H&B did so through Leatherstocking and Kaufmann tendered a $94 down payment, with the remaining payments to be made monthly. He soon fell behind in payments and Leatherstocking sent Kaufmann a notice of cancellation on July 30, 2004, with the cancellation to be effective on August 16, 200d unless the carrier received the minimum payment of $66.80. Kaufmann made that payment but then was told, on September 9, that his policy would be cancelled effective September 26, unless he paid $87.40.  That payment wasn’t made and the policy was cancelled.  Of course, the place burn on October 6th with a $92,000 loss.

Plaintiff claimed that the final notice of cancellation was defective and did not operate to nullify the homeowners' insurance policy. Specifically, he argues that the notice did not properly set forth the amount due as required by the Insurance Law. However, his reference to a statute that applied to auto policies was not persuasive (let alone that the notice told him the amount due).

Leatherstocking clearly met its burden of proving that the final notice of cancellation was properly through the affidavit of an employee with personal knowledge.  The action against H&B was likewise dismissed for lack of proof of any arrangement where H&B was to pay premium,        

6/10/08            Hall v. Elrac, Inc., doing business as Enterprise Rent A Car

Appellate Division, First Department

Graves Amendment Ruled Constitutional, Yet Again

Yet another court, this time the First Department, rules that the Graves Amendment is constitutional, even for intra-state matters.  The Graves Amendment, our readers will recall, is the Congressional enactment eliminating vicarious liability imposed on rental and leasing car companies. This was yet another Constitutional challenge, based on the choices made by Congress to have it apply only to certain classes of vehicle owners.

 

6/10/08            In re Government Employees Insurance Company, v. Dumbar

Appellate Division, First Department
Failure to Place Correct Policy in Record Results in Failure to Establish Entitlement to Uninsured Motorists Coverage

Seems that the claimant lost his right to UM coverage because the wrong policy was presented to the court.

 

Dumbar was hurt as a passenger in a car owned and operated by Chambers.  GEICO insured the car and paid him the $25,000 liability limits for the negligence of the driver Chambers. There was another car involved in the accident, a hit-and-run driver.  Dumbar then sought to recover, again from GEICO, another $25,000, this time under the Uninsured Motorists Endorsement, reflecting the negligence of the other, unknown driver and demanded UM arbitration.

GEICO sought to stay arbitration on the ground that any recovery based on uninsured motorist benefits (to a limit of $25,000) is offset by the $25,000 respondent has already recovered for this same injury.  For reasons unknown, Dumbar put the wrong policy in the record, one GEICO issued to HIM that contained underinsured coverage (SUM) rather than the GEICO policy issued to Chambers.  

 

The court examined the SUM policy and, of course, applied the offset and stayed the arbitration.  Since the Chambers policy was not in the record, the court could rule on nothing else.

 

6/10/08            National Union Fire Ins. Co. etc. v. The Connecticut Indemnity Com.

Appellate Division, First Department
Court Struggles through Allocation of Primary and Excess Coverage in Trucking Case
Fight over primacy of coverage. Several insurance companies agreed to settle a case for $2.4 million and hash out coverage.  The accident occurred on May 3, 1999. Bailey, driving the insured tractor, collided with a disabled truck causing injury to Jon Honkala who had stopped to assist with the disabled truck. Associates owned the tractor that Bailey was driving. Associates insured the tractor with defendant Lumbermens. Associates had leased the tractor to Conway subleased the vehicle to Gibson who in turn, leased the vehicle and its driver Bailey, to Howard's Express, Inc. Each of these lessees/sublessees obtained insurance covering the tractor.

The Lumbermens policy stated that "[f]or any covered auto' you own, this Coverage Form provides primary insurance.” Lumbermen’s argued that a manuscript endorsement rendered the policy excess. However, the court disagreed, holding that the YOU here was the named insured, Associates and referred to a situation "[w]hen you have other insurance for an auto' covered by this policy." You, in insurance parlance, refers to the insured (here, Associates). Thus, as a co-primary insurer, Lumbermens must reimburse National Union $1 million of the settlement proceeds National Union funded because primary limits must be exhausted before excess coverage can apply.

As to the excess insurers, the court refused to consider the application of a policy issued by Legion since it was not available due to Legion’s liquidation. National Union and Federal provided umbrella coverage. The terms of these policies indicate that they are excess to the excess coverage that Connecticut Indemnity Co., (Connecticut) and US Fire provided.

With regard to Connecticut's coverage, the court held that Gibson and Sunrise’s notice to its carrier was not late, even though it came five-months after the accident.  Where notice to an excess carrier is in issue, the focus is on whether the insured reasonably should have known that the claim against it would likely exhaust its primary insurance coverage and trigger its excess coverage, and whether any delay between acquiring that knowledge and giving notice to the excess carrier was reasonable under the circumstances

The "bobtail" exclusion in Connecticut's policy was ruled void as against public policy.

6/10/08            233rd Street Partnership, L.P. v. Twin City Fire Insurance Company
Appellate Division, First Department

A Deductible Does Not Turn a Primary Policy into an Excess Policy
Another question of primacy of coverage.  Here, State National provided primary coverage to its insured, 233rd Street.  Twin City’s policy was found by the lower court to be excess but the Appellate Division disagreed.  Under the Twin City policy there was no primary coverage expected under any other policy, only the payment of a deductible.  That there is a deductible does not turn a primary policy into an excess policy.  Since both State National's and Twin City’s policies are primary, their other insurance clauses cancel each other out, and both insurers are rendered co-primary.

 

6/5/08              Elacqua v. Physician’s Reciprocal Insurers  (Elacqua II)

Appellate Division, Third Department

Whoa!  Failure to Advise Insured of Right to Select Own Counsel, When Right Exists, is a Deceptive Claim Practice
In Volume VII, No. 4 of Coverage Pointers we wrote extensively about the Third Department’s decision – on August 26, 2005 -- in Elacqua, holding that a carrier has an obligation to notify the insured of its right to choose Cumis counsel where a conflict may exist between the interests of the insurer and the insured. (Elacquq I). The New York cases that permitted the insured to select counsel are Prashker and Goldfarb.   We urge you to click here and review that article for background on Elacqua I, as well as the history of “conflict counsel” in New York.

 

We concluded that review with these comments:

 

And, equally as surprising, in the half-century since Prashker and the quarter-century since Goldfarb, with the exception of a few scattered lower court decisions, the courts have not, until yesterday, directed that insurers so notify insureds of the right to select counsel when a conflict exists.

Tucked away at the end of the Elacqua decision yesterday, the Appellate Division, Third Department, directed otherwise:

As previously observed, counsel for plaintiffs [the insureds] correctly discerned that there existed a conflict of interest in his representation of all three plaintiffs inasmuch as defendant took the position that some of the underlying malpractice claims were covered under the policy while others were not … In such case, plaintiffs were entitled “to defense by an attorney of [their] own choosing,” whose fees were to be paid by defendant (Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392, 401 [1981]). While Supreme Court correctly recognized such entitlement, it held that it was constrained by Sumo Container Sta. v Evans, Orr, Pacelli, Norton & Laffan (278 AD2d 169 [1st Dept 2000], supra) to conclude that defendant had no obligation to advise plaintiffs of this right.

We decline to follow that part of the Sumo decision.  If defendant was obligated to defend plaintiffs in the underlying action and, as the decision in Public Serv. Mut. Ins. Co. v Goldfarb (supra) makes clear, provide them independent counsel of their own choosing, it follows that defendant was required to advise them of that right. To hold otherwise would seriously erode the protection afforded.

Those are compelling words from the Third Department.  All kinds of questions need to be answered in the near future:

·       What is the penalty for a carrier that does not notify the insured of its right to select counsel when a potential conflict exists? 

·       Will other Departments follow suit with a similar instruction?

·       Will the Court of Appeals speak on the subject?

·       When will the Court of Appeals realize that skilled and ethical defense lawyers selected by insurers would never try to steer cases into non-covered areas because we are bound by the Canons of Ethics to properly represent our clients when selected to so do?

 

Well, no other Departments have yet to follow suit and the Court of Appeals has not spoken on the subject.  However, two years later, the same court has answered the first question:  what is the penalty for failing to notify the insured of its right to select counsel?

 

The Court held that a failure to notify the insured of its right to select counsel was – as a matter of law – a Deceptive Trade Practice under General Business Law § 349 even without a demonstration of actual damages:

Plaintiffs' primary contention is that Supreme Court erred in dismissing their General Business Law § 349 claim on the ground that they were unable to demonstrate actual harm as a result of not being represented by independent counsel. General Business Law § 349 prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state," and one injured by such conduct may bring an action to recover damages.  … A plaintiff must further demonstrate that such act or practice was "'deceptive or misleading in a material way and that plaintiff has been injured by reason thereof"

The deceptive practice alleged by plaintiffs is that defendant failed to inform them that they had a right to select independent counsel of their choosing at defendant's expense. Supreme Court properly found that the alleged offending practice of defendant was consumer-oriented inasmuch as its failure to inform plaintiffs of their right to select independent counsel was not an isolated incident, but a routine practice that affected many similarly situated insureds….

Here, the partial disclaimer letters sent by defendant to its insureds including plaintiffs failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protect their uninsured interests "at [their] own expense." Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I.   This practice was certainly "likely to mislead a reasonable consumer acting reasonably under the circumstances” and, therefore, constitutes a deceptive practice pursuant to General Business Law § 349….

This threat of divided loyalty and conflict of interest between the insurer and insured is the precise evil sought to be remedied by Goldfarb and our decision in Elacqua I, hence the requirement that independent counsel be provided at the expense of the insurer and that the insurer advise the insured of this right. Defendant's failure to inform plaintiffs of this right, together with plaintiffs' showing that undivided and uncompromised conflict-free representation was not provided to them, constitutes harm within the meaning of General Business Law § 349.

The Court remanded the matter to the trial court for a trial on damages.

Editor’s Note:  This is a “life altering” decision, unless reviewed and reversed by the Court of Appeals (and that cannot occur until after the trial on damages).  It is ONLY one Departmental decision and there is still a split among the Departments on whether or not a duty exists to advise.  However, carriers are placed on notice – particularly in the Third Department – that a failure to notify an insured of its right to counsel can result in a finding of a Deceptive Practice with damages awarded.

 

Without question, in the Third Department, it is critical to advise the insured of the right to select counsel when there a carrier advises of non-covered claims for which there may not be indemnity.  In the Sumo (pre-Elacqua I) decision, the First Department, feeling “constrained,” noted that there were no appellate decisions requiring a carrier to provide notice of the right to select counsel.  Surely, it is the safer course of conduct to advise the insured of a right to select counsel when that right exists.  However, nothing outside the Third Department compels that advice at this point. 

 

How risk-adverse do you wish to be?

 

6/5/08              The Trustees of Princeton University v. National Union Fire Insurance Co.

Appellate Division, First Department
Sublimit of Coverage Applying to One Kind of Claim Does Not Apply to Different Claims Arising from Same Occurrence

We can’t get a great deal of information about the facts of this case from the opinion but for those interested, the lower court’s decision, with detailed review of the claims, is available here.    The appellate court reject National Union's contention that the subject insurance policy's $5 million sublimit for claims that seek equitable relief applies also to claims arising from the same underlying occurrence that seek legal relief based on tort and contract law principle.  It also rejected a claim that the policy's "insured versus insured" exclusion applies to claims brought against the insured entities by individual insureds acting in their individual capacities.

As the policy obligated National Union to advance all defense costs as they are incurred, subject to a right of recoupment of payment for noncovered costs after the underlying litigation is completed, the court found it had no obligation at this juncture to rule on the allocation of defense expenses.

6/5/08              Young Israel Co-Op City v Guideone Mut. Ins. Co.
Appellate Division, First Department|
On Notice, What’s Good for the Goose Ought to be Good for the Gander
And here it was.  Unexcused 40-day delay in giving notice of an accident to the insurer where policy requires prompt notice is a breach and vitiates coverage.  Given that the insured was allegedly negligent in this rear-end collision and that the underlying claimant was taken away from the accident by ambulance, the insured failed to raise an issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of nonliability.  

6/5/08              State Farm Ins. Co. v. DeSarbo

Appellate Division, Third Department
Only One Bite at the Apple

The court had previously ruled that State Farm had not timely moved to stay an underinsured motorists arbitration and therefore could not raise certain coverage defenses.  State Farm then brought a declaratory judgment action on the same issues.  The court held since there was a valid arbitration agreement and the 20-day rule applied, State Farm could not circumvent it by commencing a declaratory judgment action seeking the same relief.

 

6/5/08              Faragon v. American Home Assurance Company

Appellate Division, Third Department
To Occupy a Vehicle You Need Not Be In It, but You Need to be “Vehicle-Oriented”

Faragon, a truck driver, was struck by a hit-and-run vehicle after unloading construction equipment from a tractor-trailer owned by his employer and insured by American.  He filed an uninsured motorist claim with American.  American denied coverage arguing that Faragon was not “occupying” the tractor-trailer and thus not eligible for benefits.  The pertinent SUM endorsement in American's policy provides coverage for an individual "occupying" a covered vehicle. The term "occupying" is further defined in American's policy consistent with the regulatory and statutory requirement to include "in, upon, entering into, or exiting from a motor vehicle." In New York "status of passenger is not lost even though an individual is not in physical contact with the vehicle, provided there has been no severance of connection with it, his or her departure is brief and he or he is still vehicle-oriented with the same vehicle..

Here, plaintiff was off-loading a 44,000 pound, 50-to-55 foot-long boom lift from a 70-foot tractor-trailer. The procedure involved many steps but at the time of the accident, he was involved in training the rentee of the equipment as to how it should be used.  Although the tractor-trailer reportedly remained running during the entire time, he was no longer vehicle-oriented.

6/3/08              Sitbon v. Unitrin Preferred Insurance Company
Appellate Division, Second Department
For Hit-and-Run Uninsured Motorists Benefits, Policy or DMV Need to Notified within 24 Hours of Accident or as Soon as Reasonably Possible
The plaintiff sought uninsured motorist benefits for physical sustained in a hit-and-run accident on the evening of December 3, 2004. Unitrin disclaimed coverage on the basis that the plaintiff failed to fulfill a condition precedent, applicable to hit-and-run accidents, that he, or someone on his behalf, provide notice of the accident, as relevant to this case, to the police or the Commissioner of Motor Vehicles (hereinafter the Commissioner), within 24 hours of the accident or as soon as reasonably possible. Unitrin demonstrated that notice was not given timely and the plaintiff offered nothing of substance in opposition demonstrating timely notification

Insurer wins.

6/3/08              Boxer v. Metropolitan Transportation Authority

Appellate Division, Second Department
Failure to Provide Promised Insurance Status Leads to Adverse Judgment
Boxer tripped on a sidewalk abutting property owned by the Long Island Rail Road (LIRR) and leased to MLC Management and subleased to Baker’s. The LIRR and MLC moved to dismiss the claim on the grounds of the trivial nature of the alleged sidewalk defect but the court found questions of fact existed on that question.

However, the court granted the motion against Baker’s in favor of the LIRR and MLC for Baker’s breach of its contractual promise to provide insurance required under the lease.

6/3/08              Lumbermens Mutual Casualty Co. v. The Commonwealth of Pennsylvania

Appellate Division, First Department

Declaratory Judgment Action Against Sister State Can be Litigated in New York

While states generally enjoy the privilege of facing lawsuits against them only in their home state and federal courts, the Legislature made explicit that public policy favors New York courts retaining actions against foreign states where a choice of New York law has been made and the foreign state agreed to submit to New York's jurisdiction. Here, the court was willing to enforce a choice-of law and New York forum selection clause in a policy and require the Commonwealth of Pennsylvania to resolve its coverage issues in New York courts.

 

5/27/08            Azad  v. Capparelli

Appellate Division, Second Department

Injured Party, Without Judgment Against Insured, has No Standing to Challenge Disclaimer
Under Insurance Law Section 3420(a), an injured party has no standing to commence a declaratory judgment action until after a judgment in the underlying tort action is obtained (against the putative insured), it is presented to the insured and the carrier and it remains unsatisfied for 30 days.  In this case, the plaintiff had no judgment and thus the action was dismissed.  See:  Lang v. Hanover Ins. Company, 3 NY3rd 350.

 

5/27/08            In the Matter of Government Employees Insurance Company v. Steinmetz

Appellate Division, Second Department

Finding of No Physical Contact Affirmed in UM Case

A demand for uninsured motorist arbitration was challenged by the insurer.  The carrier brought an application to stay arbitration – within 20 days as required by CPLR 7503 -- claiming that there was no physical contact between the vehicles, required in a claim of a hit-and-run accident.  A framed issue hearing before a judge led to a decision of a lack of physical contact.  Thus, the trial judge stayed the arbitration, finding that the applicant was not in a qualifying hit-and-run accident.  The appellate court refused to disturb the findings of the lower court.

 

5/27/08            In the Matter of Interboro Insurance Company v. Maragh

Appellate Division, Second Department

Twenty Day Period to Move to Stay Uninsured Motorists Arbitration is Inapplicable if Parties Never Agreed to Arbitrate; if Claimant was Not an Insured, Parties Did Not Agree to Arbitrate

Unlike the GEICO case, above, in this case the carrier did not bring its application to stay arbitration within 20 days.  Generally,  an insurer which fails to seek a stay of arbitration within 20 days after being served with a notice of intention or demand to arbitrate under CPLR 7503(c) is generally precluded from objecting to the arbitration thereafter. However, the 20-day rule does not apply IF the parties never agreed to arbitrate.

 

In this case, Interboro raised an issue over the insured status of the insured’s son, with respect to his residency. If the son was not a resident of the named insured’s household, he was not an insured and thus not entitled to benefits. If he was not entitled to benefits because of a lack of insured status, the 20-day time period would be inapplicable. The matter must be remitted to the Supreme Court, for a framed issue hearing on the issue of whether the son was a resident of the household..

 

5/27/08            State Farm Insurance Company v. Aracena-Almonte

Appellate Division, Second Department

Claims Handling Manual Irrelevant and Not Discoverable
In this action for a declaratory judgment, the plaintiff alleged that an automobile collision was intentional and not an accident. The insured  failed to establish the relevancy of the plaintiff's "Claims Procedure Guide" to the issues to be decided in this action. Since the defendant was not entitled to discovery of such document, the Supreme Court erred in granting that branch of his motion which was would have sanctioned the insurer unless it provided the insured with the manual.

 

 

STAROSIELEC’S SERIOUS (INJURY) SIDE OF NEW YORK NO FAULT

Mark Starosielec
[email protected]

 

6/6/08              Feggins v. Fagard

Appellate Division, Fourth Department

All You Need is One: AD’s Modification of Order Keeps Just One SI Category in LS

Plaintiff’s lawsuit remains alive but not well as most of his SI categories were bounced, save one: significant limitation of use. The rest - significant disfigurement, fracture, permanent loss of use of a body organ, member, function or system, and permanent consequential limitation of use of a body organ or member categories – were dismissed.

At the outset that, plaintiff abandoned his claims of serious injury with respect to three of the five categories, i.e., significant disfigurement, fracture, and permanent loss of use. The appellate division further concluded that the court erred in denying defendants' motion with respect to the permanent consequential limitation of use category. In opposition to the motion, plaintiff submitted sworn and unsworn reports of his treating neurosurgeon, uncertified medical records and an affirmed report of a chiropractor. It should be noted that plaintiff may rely on unsworn reports and uncertified medical records if they were submitted by defendants (see Kearse v New York City Tr. Auth., 16 AD3d 45, 47 n 1), or were referenced in the reports of physicians who examined plaintiff on their behalf, and submitted the reports of their experts (see Brown v Achy, 9 AD3d 30, 32). Nevertheless, none of plaintiff's submissions raises a triable issue of fact with respect to the permanent consequential limitation of use category.

Finally, the lower court properly denied the motion of defendants with respect to the significant limitation of use category inasmuch as they failed to meet their initial burden of establishing their entitlement to judgment as a matter of law. The report of the neurologist who examined plaintiff at their request indicated that, based on the CT report, plaintiff sustained a disc herniation at C6/C7 that was mildly compressing the thecal sac and narrowing the neural foramen. Another physician who examined plaintiff at defendants' request concluded that plaintiff suffered a cervical strain as a result of the accident. Thus, defendants' own submissions raise triable issues of fact whether plaintiff sustained a qualifying injury under the significant limitation of use category.

 

6/6/08              Lux v. Jakson

Appellate Division, Fourth Department

Plaintiff’s Failure to Address Pre-Existing Medical Condition Leads to SJ

The Appellate Division reversed a lower court order which had denied defendants' motion for summary judgment dismissing the complaint, after plaintiff ignored some of defendants’ doctor’s findings.  Here, defendants moved for summary judgment. The appellate division held the defendants met their initial burden by submitting, inter alia, an affirmed report of a physician who examined plaintiff on behalf of defendants and concluded that there was no objective evidence that plaintiff sustained a serious injury in her cervical spine but, rather, plaintiff suffered from a preexisting degenerative condition in her cervical spine and had previously injured her cervical spine. "[W]ith persuasive evidence that plaintiff's alleged pain and injuries were related to a preexisting condition, plaintiff had the burden to come forward with evidence addressing defendant[s'] claimed lack of causation" (Carrasco v Mendez, 4 NY3d 566, 580), and plaintiff failed to meet that burden. The affidavit of plaintiff's treating chiropractor is insufficient to raise a triable issue of fact.

 

6/6/08              McConnell v. Freeman

Appellate Division, Fourth Department

No Reasonable Excuse for Plaintiff’s Gap in Treatment Dooms SJ Survival Hopes

Claiming that the no-fault carrier would no longer pay for medical expenses was not a reasonable enough excuse for plaintiff to stop medical treatment. As such, the lower court order denying defendants’ summary judgment motion was unanimously reversed and the complaint was dismissed.

Defendants met their initial burden on the motion by submitting, inter alia, the affirmation of a physician who examined plaintiff and concluded that none of plaintiff's alleged injuries was related to the motor vehicle accident. The plaintiff failed to raise a triable issue of fact. They submitted, inter alia, the affirmation of a physician who treated plaintiff for her back condition but plaintiffs failed to provide a reasonable explanation for the gap in plaintiff's treatment (see Pommells v Perez, 4 NY3d 566, 572; McCarthy v Bellamy, 39 AD3d 1166, 1166-1167). The explanation of plaintiff for the gap in treatment, i.e., that she ended treatment because of her understanding that her no-fault carrier would no longer pay for her medical expenses, is belied by the record. Indeed, plaintiffs' supplemental bill of particulars indicates that plaintiff's medical bills have been paid by the no-fault carrier.

6/3/08              Ali v. Rivera

Appellate Division, Second Department

Plaintiff Survives SJ as Defendant Ignores Plaintiff’s 90/180-day SI Claim

Here, the defendants’ failure to address the plaintiff’s claims led to an unsuccessful appeal of a lower court order which had denied their motion for summary judgment dismissing the complaint. The appellate division held the defendants failed to meet their prima facie burden. In support of their motion, the defendants relied upon, inter alia, the affirmed medical report of their examining orthopedic surgeon. In that report, the surgeon noted significant range of motion limitations in the plaintiff's cervical spine, right shoulder, and lumbar spine.

 

However, the defendants' motion papers did not adequately address the plaintiff's claim that he sustained serious injury under the 90/180 day category. The plaintiff stated in his bill of particulars that he missed six months of work after the MVA. The defendants' examining orthopedic surgeon and neurologist conducted separate examinations of the plaintiff but failed to relate medical findings to this category of serious injury.

 

6/3/08              Barrera v. MTA Long Is. Bus

Appellate Division, Second Department

Reversed: Defendant Stubs Toe on Procedural Grounds as Lawsuit Continues

Here, plaintiff successfully appealed a lower court order which had granted defendants' motion for summary judgment. The plaintiff allegedly sustained injuries to his right knee, including a tear of the medial meniscus. The defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury. The defendants' expert orthopedist reported range-of-motion findings of the plaintiff's right knee, but failed to expressly compare that finding to what is considered normal range of motion. Yet, to meet its prima facie burden, the defendants could not rely on the evidence submitted for the first time in its reply papers (see Rengifo v City of New York, 7 AD3d 773). Under these circumstances, it is not necessary to consider the sufficiency of the plaintiff's papers which were submitted in opposition to the defendants’ motion, inter alia, for summary judgment.

 

6/3/08              Fiorella v. Arriaza

Appellate Division, Second Department

Affirmed: SJ Granted as Plaintiff’s Doctor Relied on Unsworn Reports of Others

Here, the Appellate Division agreed with the lower court which had granted the defendant's motion for summary judgment dismissing the complaint. The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury. In opposition, the plaintiff failed to raise a triable issue of fact. The affirmed medical report of the plaintiff's treating physician was without probative value in opposing the motion since he improperly relied on the unsworn reports of others in coming to his conclusions. Moreover, while the plaintiff's treating physician concluded that the plaintiff sustained significant limitation of use of his left shoulder, the physician failed to set forth what objective tests he performed to arrive at that conclusion. The physician further failed to relate any of the plaintiff's injuries he noted in his report to the subject accident.

 

6/3/08              Michel v. Blake

Appellate Division, Second Department

Plaintiffs Doctors’ Unsworn Reports Fails to Create Triable Issue of Fact, SJ Granted Here, defendants successfully appealed a lower court order which had denied its motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury. The defendants met her prima facie burden. In opposition, the plaintiff failed to raise a triable issue of fact. The submissions of Dr. Hausknecht and Dr. DeMarco were without any probative value since they were unaffirmed. Moreover, the affirmation of Dr. Lifschultz also was without any probative value since he clearly relied on the unsworn medical reports of other doctors in coming to his conclusions.  

 

6/3/08              Page v. Rain Hacking Corp.                                                                                       Appellate Division, First Department                                                                                              Repeat After Me: Mere Evidence of Plaintiff’s Disc Bulges Is Not Enough to Survive SJ     In a fact scenario seen all too often, the plaintiff failed to raise a triable issue of fact when plaintiff’s expert noticed disc bulges on the MRI reports but failed to compare his observations to the norm. As such, the lower court order granting the defendants' summary judgment motion was affirmed as plaintiff failed to satisfy their evidentiary burden to submit, in opposition to the motion, “objective medical proof of a serious injury causally related to the accident in order to survive summary dismissal.”

 

6/03/08            Sajid v. Murzin

Appellate Division, Second Department

Different Reasoning, Same Result as Order Denying D’s MSJ is Affirmed

While doing so on other grounds, the Appellate Division agreed with the lower court’s decision denying the defendants’ motion for summary judgment. The defendants failed to meet their prima facie burden. The defendants' experts failed to perform any range of motion testing with respect to the respondent's thoracic spine, despite the fact that she allegedly sustained a herniated disc and bulging discs as a result of the subject accident.

 

6/3/08              Tuico v Maher

Appellate Division, First Department

Reversed: Quantified ROM Limitations Is Enough to Create Triable Issue of Fact

Here, the plaintiff successfully appealed a lower court order which had granted defendants' motion for summary judgment dismissing the complaint. The Appellate Division held that while defendants made a sufficient prima facie showing, the expert affirmations in response designated a numeric percentage for each plaintiff's loss of range of motion, and comparing those limitations what is considered normal. Plaintiffs’ experts specifically quantified the range-of-motion limits and causally related them to the accident, sufficient to defeat summary dismissal.

 

5/27/08            Cruz v. Gustitos

Appellate Division, Second Department

Defendants’ ‘Essential’ Compliance with CPLR 3101(d)(1) Paves Way for New Trial

Holding that the defendants did not intentionally fail to disclose expert witness information and that plaintiffs were not prejudiced as a result, the Appellate Division reversed a lower court order and granted defendants a new trial on damages. Here, defendants had been precluded from having their medical experts testify at trial, pursuant to the lower court’s granting of the plaintiff's application pursuant to CPLR 3101(d). Subsequently, the jury awarded a verdict in favor of plaintiff  in the principal sum of $235,000.

At trial, the defendants had conceded their liability. Defendants’ two medical experts were Jerrold Gorski, an orthopedist, and Elizabeth Schultz, a radiologist. In her report, Dr. Schultz had concluded that the MRI film of the plaintiff's right knee appeared normal, and Dr. Gorski found "no orthopedic findings on examination to date." Yet, defendants’ experts were precluded from testifying. The jury found plaintiff had sustained a serious injury.

On appeal, the Appellate Division held “preclusion for failure to comply with CPLR 3101(d) is improper unless there is evidence of intentional or willful failure to disclose and a showing of prejudice'” (Gayz v Kirby, 41 AD3d 782, quoting Johnson v Greenberg, 35 AD3d 380; see Shopsin v Siben & Siben, 289 AD2d 220, 221). Here, the medical reports which the defendants exchanged with the plaintiff essentially complied with the requirements of CPLR 3101(d)(1)(i) and there was no showing of a willful failure to disclose or of prejudice to the plaintiff. As such, the defendants are entitled to a new trial on the issue of damages.

 

5/27/08            Dux v. Maddaloni
Appellate Division, Second Department

D Fails to Make Prima Facie Showing as D’s Dr. Notes P’s Significant ROM Limitations

In a reversal of fortune, the plaintiff successfully appealed a lower court order which had granted the defendant's motion for summary judgment dismissing the complaint.  The Appellate Division held that contrary to the lower court’s determination, the defendant failed to meet her prima facie burden. Defendant had relied upon the affirmed medical report of her examining orthopedic surgeon who evaluated the injured plaintiff almost two years after the accident. In that report, the surgeon noted significant limitations in the range of motion of the injured plaintiff's cervical spine, lumbar spine, and left shoulder.

 

5/27/08            McRae v. Alauddin

Appellate Division, Second Department

Swift Justice: AD Affirms Lower Court Order Granting SJ

Using their words judiciously, the Appellate Division affirmed a lower court order which granted the defendant's motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury. The Appellate Division held the defendant met his prima facie burden but the plaintiff failed to raise a triable issue of fact in opposition. 

 

 

 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

The reporting of No-Fault arbitration awards is not at the same level of reported case law, meaning there is no one source to turn to for comprehensive research of arbitration awards.  We encourage you to submit to us, in a PDF format, at [email protected], any recent no-fault arbitration awards, especially Master Arbitration awards, that address interesting no-fault issues.

 

Arbitration

 

6/9/08  In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

Surgical Case Denied Based Upon Negative Findings From Two IMEs.

The Applicant, eligible injured person (“Applicant”), was involved in an October 7, 2004, motor vehicle accident.  The Applicant treated for neck pain and was diagnosed with multiple strains.  On October 29, 2004, the Applicant began a course of chiropractic care with Steven Ess, D.C. which lasted for nearly three years.  The Applicant also underwent massage therapy for approximately two months.  On August 24, 2006, the Applicant consulted with Dr. Capicotto who recommended cervical discectomy and fusion due to a central cervical spine disc herniation.

 

The insurer noticed and the Applicant underwent independent medical examinations (“IME”)with Christopher Ferrante, D.C. and Dr. Barry Katzman, an orthopedist.  The insurer denied all chiropractic, massage therapy, and orthopedic care based upon those IMEs.

 

The arbitrator focused on Dr. Katzman’s IME report which stated that the Applicant had a negative physical examination and was diagnosed with resolved cervical, thoracic, and lumbar spine and right shoulder strain.  Dr. Katzman opined that surgery on the spine was not warranted.

 

The Applicant’s cervical spine MRI was reviewed and revealed that a C4/5 minimal ventral bulge and a C5/6 disc bulge to the right neural foramen.

 

Dr. Capicotto’s report indicated that the MRI revealed a C5/6 and C6/7 bulging consistent with a disc herniation.

 

The assigned arbitrator while disregarding the parties’ characterizations of the others medical witnesses did state:

 

I cannot image more widely divergent opinions than what were rendered by the physicians in this case.  That divergence is framed by a back drop of charges, from the Respondent’s Bar, ‘that the Buffalo area has the highest level of spinal surgeries in the State’ to a letter from Applicant’s Counsel indicated that ‘Dr. Katzman is under investigation,’ in an unrelated matter, with the Department of Health.

The assigned arbitrator found in favor of the insurer and noted that on balance the IME physician’s and chiropractor’s report was more persuasive.

 

6/6/08  In the Matter of the Arbitration Between Applicant and Respondent

Arbitrator Thomas J. McCorry (Erie County)

If It Looks Like a Private Health Insurer and Seeks Payment for Bills Paid by Private Health Insurer There is No Standing

The Applicant’s, eligible injured person (“Applicant”), claim was denied for lack of standing since the bills in dispute were paid by Blue Cross/Blue Shield.  Further, the assignment the private health insurer provided to Applicant to arbitrate on its behalf was not valid.  The private health insurer is not an eligible injured person under the no-fault law or a provider of health care services permitting it to file for arbitration against the insurer.  Accordingly, the assignment of the private health insurer’s claim to the Applicant does not permit a determination in the no-fault arbitration forum of whether the no-fault insurer must reimburse the private health insurer.

 

Litigation

 

6/5/08              Fair Price Med. Supply Corp. a/a/o Cesar Nivelo v.

Travelers Indem. Co. (Court of Appeals)

Insurers BEWARE – State ALL BASIS for Denial in Your TIMELY NF-10

Nearly a year ago we reported on this case in the Appellate Division Second Department.  Here was our analysis:

6/12/07            Fair Price Med. Supply Corp. a/a/o Cesar Nivelo v. Travelers Indemnity Co.2007 NYSlipOp 05220 (2d Dept.)
Insurer Must Timely Deny Claim for Medical Supplies Even if Defense is Based Upon Fraudulent Claim Through Failure to Provide Supply

On May 8, 2001, the eligible injured person (“EIP”) was allegedly injured in a motor vehicle accident.  The Plaintiff, medical supplier, purportedly issued to the EIP a TENs unit, infrared heat lamp, massager, heating pad, cervical pillow, and lumbosacral support.  The Plaintiff submitted a claim for no-fault benefits, as the assignor of the EIP, on September 18, 2001 and October 13, 2001 for the total amount of $1,638.98.  The insurer requested a letter of medical necessity which the Plaintiff provided on November 6, 2001.

The insurer never denied the claims until nearly two years later – August 15, 2003.  The basis for the denial was that based upon the EIP’s October 4, 2001, statement he denied ever receiving the medical supplies the Plaintiff sought payment for.

The issue before the Appellate Division was whether the insurer was precluded from arguing the defense that the claim fraudulently seeks reimbursement for medical supplies that were never delivered to the EIP.  The Court held that this defense was precluded as the insurer failed to pay or deny the claim within 30 days from receipt of proof of claim.

 The Court proceeded to provide an analysis of the Zappone, Presbyterian Hosp., and Chubb cases (citations omitted) which the Court reasoned ultimately permitted an insurer, who fails to timely deny a claim, to preserve the ability to argue fraud with respect to staged accidents.  Simply put, the insurer is not precluded from arguing that the claim was not “accident” never falling within what the insurance policy provided coverage.  This is opposed to the insurer relying upon a policy exclusion or breach of policy condition.  In that case, the insurer is essentially indicating that the claim initially fell within the scope of coverage provided by the policy but some fact or situation, i.e., intoxication or late notice took it outside of coverage.

Here, the Court concluded that the insurer was not arguing that this claim did not fall within the grant of insurance coverage.  The claim was really that the medical supply, which is covered under the insurance policy, was not provided not that medical supplies were never within the scope of insurance coverage under the policy. 

Yet, you may ask what about the fraud defense?  The Court addresses that argument by reasoning that in the defense of fraud by a staged accident it is a situation where there was never insurance coverage under the policy in the first instance.  The key inquiry is whether the defense is based upon whether the claim was within the grant of insurance coverage in the first instance.  In the situation of medical supplies, the insurance policy provides coverage for medical supplies, but the purported fraud arose later taking it out of insurance coverage.

What is the insurer to do then when it suspects that the medical supply was never provided to the EIP?  Request timely verification of the claim and timely issue the denial if the medical supply was never provided.

Fast forward nearly a year and the Court of Appeals issued a decision affirming the Appellate Divisions decision and insurers should take notice.

 

The Court of Appeals specifically reviewed the issue of whether the insurer’s argument that the eligible injured person’s admission of non receipt of durable medical equipment was a fundamental coverage issue not subject to preclusion under Chubb or whether it is a defense that must be timely asserted.  It is apparent in the decision that the Court is not happy with the fact that it took the insurer two years to issue a denial.  However, the insurer argued that a timely denial was not required as there was no coverage for the medical device in the first instance since the eligible injured person admitted that he never received it.  Furthermore, the insurer asserted a fraud defense which cannot be waived.

 

The Court held that the defense of billed for service never being rendered to the eligible injured person is akin to “a ‘normal’ exception from coverage (e.g., a policy exclusion).  The Court in distinguishing this case from Chubb, indicated that the Court made a narrow exception for denials of claims based upon lack of coverage.  Further the Court in Chubb explicitly held that where the insurer claims that the billing was for unnecessary procedures such as overbilling such a defense is subject to preclusion if not timely raised.  The Court reasoned that in this case there is no dispute that the eligible injured person was involved in a motor vehicle accident and sustained injuries requiring medical care.  Those facts in the first instance brought the claim within the scope of coverage under the policy.   

 

Here’s the Angle:  The important point we take from this decision is that any request for verification and any denial must be timely issued even if you believe that the defense is a fundamental coverage issue that cannot be waived.  What is a fundamental coverage issue that cannot be waived seems to be limited to a claim that the eligible injured person was not involved in a motor vehicle accident and accordingly never sustained any injury.  This limitation appears to be taken from Insurance Law §5103 and the implementing regulations. 

 

However, a careful review of the mandatory PIP endorsement to an auto policy provides that in order to be afforded insurance coverage there must be more than an EIP being involved in a motor vehicle accident with injuries.  As my mentor, Dan Kohane, Esq. would say “what’s in” on this policy.  In other words, what is within the scope of insurance coverage under the policy. 

 

In no-fault, the mandatory endorsement provides that the insurer will pay for basic economic loss sustained by an eligible injured person due to personal injuries caused by a motor vehicle accident.  A careful review indicates that five things must be present to by within the grant of coverage:

 

  1. There must be motor vehicle accident;
  2. The claimant must have personal injuries causally related to accident;
  3. The claim must be for basic economic loss;
  4. The claimant must be an eligible injured person; and
  5. The eligible injured person must have sustained basic economic loss.

 

A careful review of what basic economic loss is under Insurance Law §5102(a) regarding the definition of basic economic loss reveals that it consists of necessary expenses incurred, loss of earnings, and other necessary expenses incurred.  This definition is included within the mandatory PIP endorsement in the auto policy.

 

In this case, I would respectfully submit, but recognize that the Court of Appeals did not agree, that if the expense was never incurred by the eligible injured person or that person’s assignee because the treatment or the equipment was never rendered or issued then the claim does not fall within the grant of coverage under the policy.  Accordingly, under the Zappone case and the Chubb case a timely denial or disclaimer on a fundamental coverage ground in not required.

 

Overall, when in doubt on this issue ensure that a timely denial is issued and that verification is timely requested.

 

6/5/08              101 Acupuncture, P.C. a/a/o Edwin Baez v.  State Farm Mut. Auto. Ins. Co.

Appellate Term, Second Department

Master Arbitration Decision Upheld

The Court declined to vacate a Master Arbitrator’s decision which upheld a decision in favor of the insurer.  The Court reasoned that the decision had a rational basis and was not arbitrary and capricious.

 

6/5/08              Eden Med. P.C. v. Progressive Cas. Ins. Co.

Appellate Term, Second Department

Insurer’s Cross-Motion Properly Granted for Plaintiff’s Failure to Refute Evidence of Lack of Medical Necessity and Partial Payment of Claim

Defendant’s cross-motion was properly granted and the plaintiff’s properly dismissed.  The defendant established that it paid $182.18 toward the plaintiff’s $3,247.19 claim and timely denied the remainder due to lack of medical necessity based upon an affirmed peer review report.  The plaintiff failed to refute the defendant’s prima facie showing and the cross-motion was properly granted.

 

5/30/08            First Aid Occupational Therapy, PLLC v. State Farm Fire and Cas.  Cp

Appellate Term, Second Department

Plaintiff Failed to Submit Proper Affidavit to Establish Prima Facie Case

The plaintiff’s motion for summary judgment was denied as it failed to submit the proper employee affidavit to have its records admitted as business records.  The affidavit failed to set forth the plaintiff’s practices and procedures to lay a proper foundation for admission of documents as business records.

 

5/30/08            Westchester Med. Ctr. a/a/o Esther Beaton v. Progressive Cas. Ins. Co.

Second Department

Criminal Disposition Certificate not Dispositive on Intoxication Exclusion

The plaintiff’s motion and the defendant’s cross-motion for summary judgment were properly denied upon renewal to the Supreme Court.  The eligible injured person was involved in a February 4, 2006, one car accident.  On April 14, 2006, the plaintiff sought payment of the hospital bill.  On April 25, 2006, the defendant sent a verification request for information pertaining to the eligible injured person’s blood alcohol level at the time of the accident.  The defendant sent a second request for verification on May 26, 2006, seeking the same information.  On June 7, 2006, the defendant after receiving no response from the plaintiff received from the policy laboratory the blood alcohol test which revealed the eligible injured person was intoxicated at the time of the accident.

 

On June 14, 2006, the plaintiff commenced the instant lawsuit.  On June 15, 2006, the defendant issued a denial of the claim citing the intoxication exclusion.

 

The plaintiff’s summary judgment motion was properly denied as it failed to establish that the defendant did not issue a timely or proper request for verification.  The defendant’s cross-motion was properly denied as the submission of the eligible injured person’s certificate of disposition of the driving while intoxication charge was not evidence that the eligible injured person’s intoxication was the cause of the motor vehicle accident and subsequent injuries.

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

The Property

 

6/03/08            Tag 380, LLC, v ComMet 380, Inc.

Court of Appeals

Terrorism Exclusion Restricted Scope of Coverage in Violation of Commercial Lease Agreement

Plaintiff leased a large commercial building from defendant in Manhattan.  The lease agreement required that tenant procure and maintain insurance on the property which covered at least the minimum standards of coverage proscribed in the version of the Standard Fire Insurance Policy and Extended Coverage Endorsement which was effective in 1989 (the year the lease was executed).  In addition to coverage for fire losses, the 1989 version also required coverage for, among other things, riot, civil commotion, explosion and physical contact with aircraft or vehicles. 

 

However, after September 11, 2001, many carriers began excluding losses caused by, or resultant from, acts of terrorism.  Not surprisingly, when plaintiff sought renewal for the 2002 Policy Term, the carrier had included an exclusion for Losses related to Terrorism.  Because of the breadth of the terrorism exclusion, it did not satisfy the terms of the Standard Fire Policy as proscribed in the Insurance Law.  It follows that the procured policy likewise failed to satisfy the terms of the lease agreement.  The Court reasoned that the policy was not in compliance because the terrorism exclusion removed, among other things, all fires caused by terrorists.

 

In so holding, the Court of Appeals also noted that defendant was entitled to recovery of attorney’s fees because the plaintiff had breached the terms of the lease agreement, and the lease agreement provided that the non-breaching party was entitled to the recovery of fees incurred to prove the breach. 

 

Finally, the Court noted that because plaintiff failed to advise the defendant that it later obtained sufficient coverage (also a breach of the lease agreement), the defendant was also entitled to the costs of premiums it expended to ensure proper coverage was maintained for the building. 

 

The Potpourri

 

6/12/08            Preserver Insurance Company v Ryba

Court of Appeals

Under 3420(d), Delivered and Issued in New York Means Delivered to a New Yorker

Not so much property, not so much potpourri, but too good to pass up nonetheless.  In a rarity, the Court of Appeals weighs in on what the term “delivered and issued” as used in Insurance Law 3420(d) means.

 

The Facts:

 

The defendant was an employee for a New Jersey Corporation, East Coast Stucco, at a jobsite in Orangeburg, New York.  While on the jobsite, defendant sustained a grave injury.  Thereafter, he commenced a declaratory judgment action against the General Contractor at the jobsite, Almedia.  Because of defendant’s injury, Almedia commenced a third-party action against East Coast for common law indemnification, contractual indemnification, and a breach of contract for failing to procure insurance coverage. 

 

Upon receipt of the claim, plaintiff commenced the current declaratory judgment action seeking confirmation that it had no duty to defend the breach of contract claims, and also that it had no common law indemnification obligations because the employee’s injury was not “incidental” to East Coast’s New Jersey operations.  Finally, the carrier sought a declaration that coverage was limited under the policy to $100,000. 

 

In response, Almedia (and its carrier) counter claimed seeking a declaration that plaintiff’s denial was in violation of Insurance Law 3420(d).  Also, Almedia sought a declaration that the policy issued by plaintiff should have been unlimited pursuant to New York law.

 

Was 3420(d) Applicable?

 

As you all know, Insurance Law 3420(d) is not applicable to policies that are delivered or issued outside of New York State.  The Court of Appeals noted that “issued” is satisfied only when the policy in question covered risks in New York and that the company is located within the State.  Although the policy clearly contemplated losses in New York, the named insured was a New Jersey Corporation with a New Jersey principal place of business.  In light of this, the Court ruled that 3420(d) did not apply to plaintiff’s disclaimer.

 

What About the Limits?

 

As noted above, Almedia (and its carrier) sought a declaration that the policy’s limits should read to provide unlimited coverage as it would if it were issued in New York.  In short, the Court noted that the Policy in question was issued in New Jersey, with New Jersey forms, and did not contain any evidence that it was meant to conform to the laws of the State (here NY) where the injury occurred.

 

 Moreover, the Court noted that the plaintiff was unaware that its insured was even conducting operations in New York.  Thus, the Court implied that it would be unfair to impose increased liability limits upon a carrier from a foreign jurisdiction when the carrier was not given an opportunity to offset the increased risk with increased premiums.  In short, if New York law were to apply, the carrier had to have been notified that operations were ongoing which exposed the carrier to losses within the State of New York.

 

6/05/08            Jones v Bill  

Court of Appeals

Even when Named as a Defendant after its Passage, Grave’s Amendment does not Save Lessor from Vicarious Liability where the Action was Commenced Prior to the Legislation’s Passage

 

As many of you know, the United States Congress passed legislation which preempted enforcement of that portion of Section 388 of the Vehicle and Traffic Law which imputed vicarious liability upon the owners of leased vehicles.  The so called “Graves Amendment” was passed into law on August 10, 2005.

 

In the above matter, however, plaintiff commenced his lawsuit by filing a Summons and Complaint on August 8, 2005.  At that time, plaintiff alleged defendant was owner and operator of the vehicle at the time of the accident causing his injury.  When plaintiff learned that the owner was the lessor, DCFS Trust, he immediately amended his Complaint to add DCFS as a party defendant pursuant to Section 388 of the V&T Law.  The Amended Complaint was filed on or about November 1, 2005, and thus after the Graves Amendment came into effect.

 

In turn, DCFS argued that the Graves Amendment protected it from Section 388’s reach.  The Court of Appeals noted that the federal legislation was meant to take effect on August 10, 2005.  Thus, any action commenced before August 10, 2005 was immune from the new standard.  Because the Court agreed that the action was commenced on August 8, 2005, it made no difference when DCFS was added as a party defendant.  In turn, DCFS was properly added as a party defendant, and was potentially responsible as an owner of the vehicle under Section 388.

 

 

EARL’S PEARLS

Earl K. Cantwell, II

[email protected]

 

Indemnification: Yours or Mine?

 

            True indemnification is a doctrine that shifts the burden of liability from one party to another.  While “contribution” seeks to distribute loss among parties, indemnification seeks to transfer an entire loss from one party to another.  Generally, there are two possible sources of indemnification: common law or contract.

 

            Common law indemnification is implied by the courts as existing between parties or arising out of the nature of the relationship between them.  The rationale for the rule is that everyone should be “responsible” for the consequences of their own actions.  Principles of common law indemnification allow a party held vicariously liable or merely passively negligent to shift a loss to an actual wrong-doer.  Generally, in order to succeed on a common law indemnification claim, the party seeking indemnity must establish (a) its own freedom from actual negligence and (b) that the indemnitor was guilty of some negligence that contributed to or caused the accident.  Common law indemnification is (generally) only awarded to a party who is only vicariously or passively negligent.  Vicarious liability is liability imposed by the violation of a statute or only based upon a relationship such as agent-principal.  Passive negligence is usually a failure to do something, such as failing to discover a dangerous condition created by another.

 

            Common law indemnification may entitle the vicariously liable and/or passively negligent party to reimbursement for any judgment or settlement.  Common law indemnification may also encompass a right to recover attorneys’ fees, costs, and disbursements incurred in connection with defending the suit brought by an injured party.  However, it does not generally include recovery of attorneys’ fees incurred in prosecution of the indemnification claim. 

 

            Contractual indemnification is an obligation contractually assumed by one party to protect another against loss or damage from specific liabilities.  Indemnity agreements, for example, are regularly used to allocate risks between parties on construction contracts, landlord-tenant deals, sales of products, and other types of business arrangements.  Contract law governs indemnity provisions, but one-sided contracts have caused courts to closely scrutinize indemnification agreements.  When dealing with an indemnification contract, courts often employ more stringent standards of review, requiring that the nature and scope of the indemnity be absolutely clear and precise from the contractual language. 

 

State legislatures also entered the arena, such as General Obligations Law §5-322.1 in New York State, which prohibits a construction agreement from requiring indemnification for an injury caused by negligence on the part of the party seeking indemnification.  The purpose of the statute was to prevent a prevalent practice in the construction industry of requiring subcontractors and others to assume liability by contract for the negligence of others.  Many states now have statutes that limit indemnification agreements in a construction context.  These state laws can be placed in three general categories:

 

1)                  States without any anti- indemnification statute

2)                  Statutes barring indemnification for injury caused solely by the indemnitee’s negligence; and

3)                  Statutes barring indemnification for injury caused in whole or in part by the indemnitee’s negligence.

 

            With respect to actual indemnity provisions, there are two types. The first is a “Broad Form” indemnity pertaining to claims arising out of the work and operations of the indemnitor.  Courts usually say that the claim will arise out of the performance of the work if there is some nexus between the indemnitor’s work and the injury.  There are also “Narrow Form” indemnities, which only require indemnification for an accident or injury due to the negligence of the indemnitor. 

 

            A duty to defend is separate and distinct from a duty to indemnify.  In order for a duty to defend to arise under a contractual indemnity agreement, the contractual language must state that the indemnitor agrees to defend or assume the defense of the indemnitee.  Without such language, the indemnitor may not be obligated to provide a defense to the indemnitee.

 

            As a practical matter, parties should closely scrutinize and negotiate contractual indemnity provisions.  In addition, even in cases where there is no specific contractual indemnity, consider whether there is an argument for common law indemnity if the liability sought to be imposed is purely vicarious or based only on passive negligence.

 

ACROSS BORDERS

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org. Dan Kohane serves as the FDCC’s Immediate Past President and Board Chair and past Website Editor


 

6/10/08            National Athletic Sportswear, Inc. v. Westfield Ins. Co.

Seventh Circuit Court of Appeals
Insurer Did not Act in Bad Faith by Seeking More Than One Examination Under Oath Pursuant to Provision in Insurance Policy Permitting Examination of Insured in Connection with Claim
Plaintiff’s businessowner’s policy included, inter alia, a requirement that the insured submit to an Examination Under Oath (“EUO”) in connection with any claim made. Following burglary at plaintiff’s offices, plaintiff’s CEO testified at ECU and provided thousands of pages of documents in support of its claim. Plaintiff refused to submit to second EUO and relations broke down between the parties. Plaintiff sued insurer and alleged a breach of its good faith claim handling obligation; insurer counterclaimed, and alleged the plaintiff’s failure to submit to the second EUO breached the policy’s terms. The District Court granted the insurer’s motion under Indiana law, and the Seventh Circuit affirmed, holding that policy’s EUO provision was not unreasonable, and that the insurer did not act in bad faith in seeking a second EUO under the circumstances.

Submitted by: Elizabeth F. Lorell, Esq. (Schwartz Simon Edelstein Celso & Kessler LLC)

 

6/09/08            North Jersey Neurosurgical Assoc., P.A. v. Clarendon National Ins. Co.

New Jersey, Appellate Division
New Jersey No-Fault Law Applied to a New Jersey Resident Injured While a Passenger in a New York Registered and Insured Vehicle Involved in Accident in New York
A New Jersey resident injured in a New York motor vehicle accident while riding as a passenger in a car registered in and insured under a policy issued in New York was still entitled to receive the higher personal injury protection (PIP) benefits required by New Jersey law. The Appellate Division resolved the conflict of law question between New Jersey’s no-fault laws, under which PIP benefits are paid by the injured insured’s policy, and New York’s no fault law, under which PIP coverage is provided under host vehicle policy. The Court ultimately resolved the conflict-of-law issue in favor of New Jersey and determined New Jersey had the greater interest in protecting its injured resident because, inter alia, the injured man received at least some treatment for his injuries in New Jersey.

Submitted by: Elizabeth F. Lorell, Esq. (Schwartz Simon Edelstein Celso & Kessler LLC) 

 

REPORTED DECISIONS

 

Azad  v. Capparelli


Lester Schwab Katz & Dwyer, LLP, New York, N.Y. (Eric A.
Portuguese and Steven B. Prystowsky of counsel), for appellant.
John Walshe, New York, N.Y., for respondent.

DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendant Utica National Insurance Group appeals from an order of the Supreme Court, Kings County (Schack, J.), dated July 20, 2007, which denied its motion pursuant to CPLR 3211(a)(3) and (7) to dismiss the fifth and sixth causes of action.

ORDERED that the order is reversed, on the law, with costs, that branch of the motion which was to dismiss the fifth and sixth causes of action pursuant to CPLR 3211(a)(3) is granted, and the motion is otherwise denied as academic.

The plaintiff's right of action against the defendant Utica National Insurance Group (hereinafter Utica) is subject to the provisions of Insurance Law § 3420, as she was not a named insured under the commercial liability policy issued to the defendant Trayner Group, Ltd. (hereinafter Trayner) (see Selchick v Automobile Ins. Co. of Hartford, Conn., 32 AD3d 924, 924-925; Geissler v Liberty Mutual Ins. Co. 23 AD3d 432, 433). As the plaintiff did not obtain a judgment against Trayner that remained unsatisfied for 30 days, she lacked standing to maintain a direct action against its insurer, and the fifth and sixth causes of action, which were asserted against Utica, should have been dismissed (see Lang v Hanover Ins. Co., 3 NY3d 350, 352; NC Venture I, L.P. v Complete Analysis, Inc., 22 AD3d 544).

In the Matter of Government Employees Insurance Company v. Steinmetz


Subin Associates LLP, New York, N.Y. (Herbert S. Subin and
Brooke Lombardi of counsel), for appellant.
O'Connor, McGuinness, Conte, Doyle & Oleson, White Plains,
N.Y. (Montgomery L. Effinger of
counsel), for respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, Eliezer Steinmetz appeals from an order of the Supreme Court, Rockland County (Nelson, J.), dated July 30, 2007, which, after a hearing, granted the petition.

ORDERED that the order is affirmed, with costs.

"Where, as here, a case is tried without a jury, this Court's power to review the evidence is as broad as that of the trial court, taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses'" (Terry v State of New York, 39 AD3d 846, 846, quoting Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 494). We decline to disturb the Supreme Court's finding that there was no physical contact between the appellant's vehicle and an alleged hit-and-run vehicle (see Matter of Progressive Northeastern Ins. Co. v Sheikh, 40 AD3d 763, 764; Matter of Metropolitan Prop. and Cas. Co. v Sands, 5 AD3d 601, 602).

In the Matter of Interboro Insurance Company v. Maragh


Jerrold N. Cohen, Mineola, N.Y., for appellant.
Naimark & Tannenbaum, Jamaica, N.Y. (Michael Naimark of
counsel), for respondent.

DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Queens County (Rios, J.), entered August 13, 2007, which denied the petition and dismissed the proceeding.

ORDERED that the order is reversed, on the law, with costs, the petition is reinstated, and the matter is remitted to the Supreme Court, Queens County, for a hearing in accordance herewith and a new determination of the petition thereafter.

The petitioner, Interboro Insurance Company (hereinafter Interboro), commenced this proceeding, inter alia, to permanently stay arbitration of an uninsured motorist claim by the respondent, Patrick Maragh, on the ground that Maragh was not a covered person under its policy and therefore, no agreement to arbitrate existed.

On July 4, 2004, Maragh was involved in an accident when, while riding a motor scooter, he was struck by a motor vehicle owned and operated by nonparty Florida resident Donald M. Johnson. Johnson's vehicle, which was registered in the State of Florida, was insured under a policy of insurance issued by nonparty Ocean Harbor Casualty Insurance Company (hereinafter Ocean Harbor), a Florida-based insurer. Maragh received a letter dated November 16, 2004, from Ocean Harbor's managing general agent, advising him that Johnson's policy did not contain bodily injury coverage.

By letter dated April 1, 2005, Maragh made a demand on Interboro for arbitration of an uninsured motorist claim (hereinafter the 2005 demand) under a policy of insurance (hereinafter the subject policy) issued by Interboro to his mother, Deloreta Chouquette. It is undisputed that at the time the 2005 demand was sent, Interboro was in rehabilitation pursuant to an order of the Supreme Court, Nassau County, dated April 5, 2004.

On April 26, 2007, after emerging from rehabilitation, Interboro received another copy of the 2005 demand from Maragh. On May 11, 2007, the petitioner commenced this proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of Maragh's uninsured motorist claim. The Supreme Court denied the petition, concluding that the proceeding was untimely commenced pursuant to CPLR 7503(c). We disagree.

An insurer which fails to seek a stay of arbitration within 20 days after being served with a notice of intention or demand to arbitrate under CPLR 7503(c) is generally precluded from objecting to the arbitration thereafter (see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082, 1084; Matter of State Farm Ins. Co. v Williams,AD3d, 2008 NY Slip Op 03227 [2d Dept 2008]; Matter of Spychalski [Continental Ins. Cos.], 45 NY2d 847, 849; Matter of Standard Fire Ins. Co. v Mouchette, 47 AD3d 636; Matter of Travelers Prop. Cas. Corp. v Klepper, 275 AD2d 234). However, an otherwise untimely petition to stay arbitration may be entertained when, as here, its basis is that the parties never agreed to arbitrate (see Matter of Matarasso [Continental Cas. Co.], 56 NY2d 264).

In this case, Interboro raised a factual issue through sworn statements of Chouquette, its named insured, who denied that Maragh, her son, was a resident of her household at the time of the accident. In a sur-reply affidavit submitted in opposition, Maragh averred that he resided with his mother at that time. The provision of the subject policy for uninsured motorists coverage defines an "insured" as the named insured or any "family member," the latter being defined as "a person related to [a named insured] by blood . . . who is a resident of [the named insured's] household." Resolution of the factual issue as to whether Maragh was an insured under the subject policy is a condition precedent to arbitration (see Matter of Eagle Ins. Co. v Perez, 299 AD2d 544, 545; Matter of Aetna Cas. & Sur. Co. v Cartigiano, 178 AD2d 472). Further, if Maragh was not an insured under the subject policy, then no agreement to arbitrate existed between him and Interboro, and the 20-day time limit set forth in CPLR 7503(c) is inapplicable (see Matter of Eagle Ins. Co. v Perez, 299 AD2d at 545; Matter of State Farm Mut. Auto. Ins. Co. v Mandala, 284 AD2d 472, 473; Matter of Aetna Cas. & Sur. Co. v Cartigiano, 178 AD2d at 472). Accordingly, the matter must be remitted to the Supreme Court, Queens County, for a hearing on the issue of whether Maragh resided with Chouquette at the time of the accident and thus was covered by the subject policy, and thereafter, for a new determination of the petition to stay arbitration.

To the extent that the petitioner raises issues regarding that branch of the petition which was for pre-arbitration discovery, we note that such issues are not properly before us as that branch of the motion remains pending and undecided (see Katz v Katz, 68 AD2d 536, 542-543).

The petitioner's remaining contentions need not be reached in light of our determination.

State Farm Insurance Company v. Aracena-Almonte


Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F.
Korman, and Stuart M. Bodoff of counsel), for appellant.
Sanford L. Pirotin, P.C., Westbury, N.Y. (William S. Kanas of counsel), for respondent.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendants in an underlying action entitled Montero v Malik, pending in the Supreme Court, Nassau County, under Index No. 6634/05, the plaintiff appeals, as limited by its notice of appeal and brief, from so much of an order of the Supreme Court, Nassau County (Lally, J.), entered October 3, 2007, as granted that branch of the motion of the defendant Laneide Montero which was pursuant to CPLR 3126 to dismiss the complaint insofar as asserted against him unless the plaintiff provided him with a copy of its "Claims Procedure Guide."

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the motion of the defendant Laneide Montero which was to dismiss the complaint insofar as asserted against him unless the plaintiff provided him with a copy of its "Claims Procedure Guide" is denied.

In this action for a declaratory judgment, the plaintiff alleged that an automobile collision was intentional and not an accident. The defendant Laneide Montero (hereinafter the defendant) failed to establish the relevancy of the plaintiff's "Claims Procedure Guide" to the issues to be decided in this action. Since the defendant was not entitled to discovery of such document, the Supreme Court erred in granting that branch of his motion which was pursuant to CPLR 3126 to dismiss the complaint insofar as asserted against him unless the plaintiff provided him with the document (see Donskoi v Donskoi, 38 AD3d 708; cf. Gilman & Ciocia, Inc. v Walsh, 45 AD3d 531).

Feggins v. Fagard


Appeal from an order of the Supreme Court, Niagara County (Frank J. Caruso, J.), entered April 24, 2007 in a personal injury action. The order denied defendants' motion for summary judgment and granted plaintiff's cross motion for partial summary judgment on the issue of negligence.

BOUVIER PARTNERSHIP, LLP, BUFFALO (JOSHUA P. RUBIN OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
FALK & FALK, NIAGARA FALLS (RICHARD G. BERGER OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting the motion in part and dismissing the complaint, as amplified by the bill of particulars, with respect to the significant disfigurement, fracture, permanent loss of use of a body organ, member, function or system, and permanent consequential limitation of use of a body organ or member categories of serious injury within the meaning of Insurance Law § 5102 (d) and as modified the order is affirmed without costs.

Memorandum: Plaintiff commenced this action seeking damages for injuries he allegedly sustained when the vehicle he was driving was rear-ended by a vehicle driven by defendant Carey A. Fagard and owned by defendant David A. Bloom. The complaint, as amplified by the bill of particulars, alleges that plaintiff sustained a serious injury. Defendants moved for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of the five categories of Insurance Law § 5102 (d) specified in plaintiff's bill of particulars. We note at the outset that, in opposition to the motion, plaintiff abandoned his claims of serious injury with respect to three of the five categories, i.e., significant disfigurement, fracture, and permanent loss of use (see Oberly v Bangs Ambulance, 96 NY2d 295, 297), and we thus conclude that Supreme Court erred in denying defendants' motion with respect to those categories. We therefore modify the order accordingly.

We further conclude that the court erred in denying defendants' motion with respect to the permanent consequential limitation of use category, and we therefore further modify the order accordingly. Defendants established their entitlement to judgment as a matter of law with respect to that category by submitting two affirmed reports of physicians who examined plaintiff at their request. The first report, that of a neurologist, found no "evidence of permanent neurologic deficit secondary to the motor vehicle accident" and, in the second affirmed report, the physician stated that plaintiff would reach pre-accident neurological status (see Gaddy v Eyler, 79 NY2d 955, 956-957; Gonzalez v Green, 24 AD3d 939, 940; Chaney v Malone, 5 AD3d 1062). In opposition to the motion, plaintiff submitted sworn and unsworn reports of his treating neurosurgeon, uncertified medical records and an affirmed report of a chiropractor. We agree with defendants that the affirmed report of the chiropractor is not in admissible form inasmuch as it was not sworn to before a notary or other authorized official (see Shinn v Catanzaro, 1 AD3d 195, 197-198). We reject defendants' contention, however, that none of the unsworn reports and uncertified medical records may be considered because they are not in admissible form. Plaintiff may rely on unsworn reports and uncertified medical records if they were submitted by defendants (see Kearse v New York City Tr. Auth., 16 AD3d 45, 47 n 1), or were referenced in the reports of physicians who examined plaintiff on their behalf, and submitted the reports of their experts (see Brown v Achy, 9 AD3d 30, 32). Nevertheless, none of plaintiff's submissions raises a triable issue of fact with respect to the permanent consequential limitation of use category. Those submissions contain no findings with respect to the permanency of plaintiff's injuries and, indeed, the most recent report of plaintiff's treating neurosurgeon notes that plaintiff "was limited to a moderate degree by persistent cervical symptoms," but he failed to address the permanency of those symptoms (cf. Hoffmann v Stechenfinger, 4 AD3d 778, 779; Leahey v Fitzgerald, 1 AD3d 924, 926; Lutgen v Czapla, 1 AD3d 1036).

Finally, we conclude that the court properly denied the motion of defendants with respect to the significant limitation of use category inasmuch as they failed to meet their initial burden of establishing their entitlement to judgment as a matter of law (see generally Zuckerman v City of New York, 49 NY2d 557, 562). The report of the neurologist who examined plaintiff at their request indicated that, based on the CT report, plaintiff sustained a disc herniation at C6/C7 that was mildly compressing the thecal sac and narrowing the neural foramen. In addition, the neurologist noted "a decrease of cervical range of motion of a mild to moderate degree on the right and a moderate to severe decrease on turning to the left," and he characterized a report of plaintiff's treating physician as finding that plaintiff had a "rigid posture and limited range of motion, 50% in all directions." Another physician who examined plaintiff at defendants' request concluded that plaintiff suffered a cervical strain as a result of the accident. Thus, defendants' own submissions raise triable issues of fact whether plaintiff sustained a qualifying injury under the significant limitation of use category (see Strong v ADF Constr. Corp., 41 AD3d 1209, 1210; Matte v Hall, 20 AD3d 898, 899). In any event, we conclude that plaintiff raised a triable issue of fact in opposition by submitting the report of his treating physician. The physician stated therein that plaintiff "has limited range of motion with 50% in all directions of the cervical spine," and thus plaintiff submitted a quantitative assessment of his decreased range of motion sufficient to defeat the motion with respect to the significant limitation of use category (see generally Toure v Avis Rent A Car Sys., 98 NY2d 345, 352-353).

Lux. v. Jakson


Appeal from an order of the Supreme Court, Erie County (Frank A. Sedita, Jr., J.), entered October 26, 2007 in a personal injury action. The order denied defendants' motion for summary judgment dismissing the complaint.


BOUVIER PARTNERSHIP, LLP, BUFFALO (NORMAN E.S. GREENE OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
NOTARO, LAING & NAVARRO, P.C., BUFFALO (THOMAS J. NAVARRO, JR., OF COUNSEL), FOR PLAINTIFF-RESPONDENT.


It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs, the motion is granted and the complaint is dismissed.

Memorandum: Plaintiff commenced this action seeking damages for injuries she allegedly sustained when the motor vehicle that she was operating was struck by a vehicle operated by defendant Darlene M. Jakson. Defendants 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). Supreme Court erred in denying the motion. Defendants met their initial burden by submitting, inter alia, an affirmed report of a physician who examined plaintiff on behalf of defendants and concluded that there was no objective evidence that plaintiff sustained a serious injury in her cervical spine as a result of the accident but, rather, plaintiff suffered from a preexisting degenerative condition in her cervical spine and had previously injured her cervical spine. "[W]ith persuasive evidence that plaintiff's alleged pain and injuries were related to a preexisting condition, plaintiff had the burden to come forward with evidence addressing defendant[s'] claimed lack of causation" (Carrasco v Mendez, 4 NY3d 566, 580), and plaintiff failed to meet that burden. The affidavit of plaintiff's treating chiropractor submitted in opposition to the motion is insufficient to raise an issue of fact whether plaintiff's condition was caused by the accident inasmuch as the chiropractor did not address degenerative changes in plaintiff's cervical spine or the prior injury thereto (see Coston v McGray, 49 AD3d 934, 935-936; Smith v Cherubini, 44 AD3d 520; Agard v Bryant, 24 AD3d 182).

Michel v. Blake


Cheven, Keely & Hatzis, New York, N.Y. (William B. Stock of counsel), for appellant.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendant Beverly A. Francis appeals, as limited by her brief, from so much of an order of the Supreme Court, Kings County (Solomon, J.), dated April 18, 2007, as denied her motion for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs payable by the respondent to the appellant, the appellant's motion for summary judgment dismissing the complaint insofar as asserted against her is granted and, upon searching the record, summary judgment is awarded to the defendant Kenneth Blake dismissing the complaint insofar as asserted against him.

The appellant met her prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955; Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50). In opposition, the plaintiff failed to raise a triable issue of fact. The submissions of Dr. Allan Hausknecht and Dr. Charles DeMarco were without any probative value since they were unaffirmed (see Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; see also Grasso v Angerami, 79 NY2d 813; Pagano v Kingsbury, 182 AD2d 268). Moreover, the affirmation of Dr. David Lifschultz also was without any probative value since he clearly relied on the unsworn medical reports of other doctors in coming to his conclusions (see Malave v Basikov, 45 AD3d 539; Verette v Zia, 44 AD3d 747; Furrs v Griffith, 43 AD3d 389; see also Friedman v U-Haul Truck Rental, 216 AD2d 266, 267). The self-serving affidavit of the plaintiff was insufficient to raise a triable issue of fact (see Shvartsman v Vildman, 47 AD3d 700).

Accordingly, the Supreme Court should have granted the appellant's motion for summary judgment dismissing the complaint insofar as asserted against her.

Moreover, this Court has the authority to search the record and award summary judgment to a nonappealing party with respect to an issue that was the subject of the motion before the Supreme Court (cf. Dunham v Hilco Constr. Co., 89 NY2d 425, 429-430; Marrache v Akron Taxi Corp.,AD3d, 2008 NY Slip Op 03599 [2d Dept 2008]; Colon v Vargas, 27 AD3d 512, 514). Upon searching the record, we award summary judgment to the defendant Kenneth Blake dismissing the complaint insofar as asserted against him (see CPLR 3212[b]).
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Sajid v. Murzin



Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y. (Holly E. Peck of counsel),                                for appellants.
Sacco & Fillas, LLP, Whitestone, N.Y. (Bret L. Myerson of counsel), for respondent.


DECISION & ORDER

In an action, inter alia, to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Schneier, J.), dated August 10, 2007, which denied their motion for summary judgment dismissing the complaint insofar as asserted against them by the plaintiff Salma Sajid on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

While we affirm the order appealed from, we do so on grounds different from those relied upon by the Supreme Court. The defendants failed to meet their prima facie burden of showing that the plaintiff Salma Sajid (hereinafter the respondent) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The defendants' experts failed to perform any range of motion testing with respect to the respondent's thoracic spine, despite the fact that she allegedly sustained a herniated disc and bulging discs as a result of the subject accident (see O'Neal v Bronopolsky, 41 AD3d 452; Hughes v Cai, 31 AD3d 385; Loadholt v New York City Tr. Auth., 12 AD3d 352). Since the defendants failed to establish their prima facie entitlement to judgment as a matter of law in the first instance, it is unnecessary to determine whether the respondent's opposition papers were sufficient to raise a triable issue of fact (see O'Neal v Bronopolsky, 41 AD3d 452; Coscia v 938 Trading Corp., 283 AD2d 538).
SPOLZINO, J.P., RITTER, DILLON, BALKIN and LEVENTHAL, JJ., concur.

McConnell v. Freeman

Appeal from an order of the Supreme Court, Jefferson County (Hugh A. Gilbert, J.), entered January 31, 2007 in a personal injury action. The order, insofar as appealed from, denied defendants' motion for summary judgment.

FISCHER, BESSETTE, MULDOWNEY & HUNTER, LLP, MALONE (RICHARD F. HUNTER OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
WELDON & TRIMPER LAW FIRM, WATERTOWN (ROBERT M. WELDON, JR., OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

It is hereby ORDERED that the order insofar as appealed from is unanimously reversed on the law without costs, the motion is granted and the complaint is dismissed.

Memorandum: Elaine K. McConnell (plaintiff) commenced this action seeking damages for injuries she allegedly sustained when she was struck by a vehicle driven by defendant Christina M. Freeman while she was crossing a street in Watertown in August 1999. Supreme Court erred in denying defendants' motion for summary judgment dismissing the complaint on the ground that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102. Defendants met their initial burden on the motion by submitting, inter alia, the affirmation of a physician who examined plaintiff in April 2006 on behalf of defendants and concluded that none of plaintiff's alleged injuries was related to the motor vehicle accident. That examining physician concluded that plaintiff had a preexisting back condition and that the decrease in the range of motion in her lumbar spine was unrelated to the accident.

We conclude that plaintiffs failed to raise a triable issue of fact to defeat the motion. They submitted, inter alia, the affirmation of a physician who treated plaintiff for her back condition for the first time in February 2003 and, although the treating physician provided objective medical evidence that plaintiff was injured in the accident, plaintiffs failed to provide a reasonable explanation for the gap in plaintiff's treatment (see Pommells v Perez, 4 NY3d 566, 572; McCarthy v Bellamy, 39 AD3d 1166, 1166-1167). The explanation of plaintiff for the gap in treatment, i.e., that she ended treatment because of her understanding that her no-fault carrier would no longer pay for her medical expenses, is belied by the record. Indeed, plaintiffs' supplemental bill of particulars indicates that plaintiff's medical bills have been paid by the no-fault carrier.

We note in addition that the treating physician's affirmation does not adequately address the contradictory opinion of defendants' expert that plaintiff's injuries were preexisting and unrelated to the accident. Instead, the affirmation of plaintiff's treating physician fails to address the medical reports that form the basis of the opinion of defendants' expert, and the only objective test conducted by plaintiff's treating physician indicated that plaintiff could extend and/or flex her back only five degrees and that she had increased back and leg pain when she straightened her leg. The opinion of plaintiff's treating physician with respect to the percentage of loss of plaintiff's cervical and lumbar spine is speculative and conclusory, and plaintiff's treating physician also failed to provide a qualitative assessment of plaintiff's injuries (see generally Toure v Avis Rent A Car Sys., 98 NY2d 345, 350-351).

Ali v. Rivera


Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellants.
Berson & Budashewitz, LLP, New York, N.Y. (Jeffrey A. Berson of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Harkavy, J.), dated November 28, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of their motion, the defendants relied upon, inter alia, the affirmed medical report of their examining orthopedic surgeon. In that report, the surgeon noted significant range of motion limitations in the plaintiff's cervical spine, right shoulder, and lumbar spine based upon his examination of the plaintiff, which occurred 16 months after the subject accident (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555; Zamaniyan v Vrabeck, 41 AD3d 472; see also Brown v Motor Veh. Acc. Indem. Corp., 33 AD3d 832; Smith v Delcore, 29 AD3d 890).

Moreover, the defendants' motion papers did not adequately address the plaintiff's claim, clearly set forth in his bill of particulars, that he sustained a medically-determined injury or impairment of a nonpermanent nature which prevented him from performing substantially all of the material acts which constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident. The subject accident occurred on March 9, 2006. The plaintiff stated in his bill of particulars that he missed six months of work as a result of the subject accident. The defendants' examining orthopedic surgeon and neurologist conducted separate examinations of the plaintiff nearly 16 months after the subject accident. Those experts noted in their respective reports that the plaintiff missed six months from work as a result of the subject accident. Neither physician related his medical findings to this category of serious injury for the period of time immediately following the subject accident (see DeVille v Barry, 41 AD3d 763; Lopez v Geraldino, 35 AD3d 398; Nakanishi v Sadaqat, 35 AD3d 416; Faun Thai v Butt, 34 AD3d 447; Sayers v Hot, 23 AD3d 453).

Since the defendants failed to satisfy their prima facie burden, it is unnecessary to consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Jenkins v Miled Hacking Corp., 43 AD3d at 394; DeVille v Barry, 41 AD3d at 764; Coscia v 938 Trading Corp., 283 AD2d 538).
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

Barrera v. MTA Long Is. Bus



Bongiorno Law Firm, PLLC, Mineola, N.Y. (Aaron C. Gross of counsel), for appellant.
Sciretta & Venterina, LLP, Staten Island, N.Y. (Marilyn Venterina of counsel), for respondents.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Phelan, J.), dated April 3, 2007, as granted that branch of the defendants' motion which was for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the defendants' motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is denied, and the matter is remitted to the Supreme Court, Nassau County, to determine that branch of the defendants' motion which was to "preclud[e] the plaintiff from offering any evidence at trial concerning the parts of his body that were injured in a prior accident for which he failed to provide discovery."

On June 13, 2003, the plaintiff allegedly sustained injuries to his right knee, including, inter alia, a tear of the medial meniscus, when a bus owned by the defendant MTA Long Island Bus and operated by the defendant Dorrington A. Hunter struck the motor vehicle he was operating. The plaintiff underwent an arthroscopic procedure in September 2003, and again in December 2005, to treat his injuries.

The defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Tchjevskaia v Chase, 15 AD3d 389). The defendants' expert orthopedist reported range-of-motion findings only with regard to one operation of the plaintiff's right knee, and failed to expressly compare that finding to what is considered normal range of motion (cf. Caracci v Miller, 34 AD3d 515). The defendants' expert neurologist failed to report any range of motion findings with regard to the plaintiff's right knee. To meet its prima facie burden, the defendants could not rely on the evidence submitted for the first time in its reply papers (see Rengifo v City of New York, 7 AD3d 773). Under these circumstances, it is not necessary to consider the sufficiency of the plaintiff's papers which were submitted in opposition to the defendants motion, inter alia, for summary judgment (see Ayotte v Gervasio, 81 NY2d 1062).

Since the Supreme Court granted summary judgment to the defendants, it did not determine the remaining branch of the defendants' motion. In light of our determination denying summary judgment to the defendant, the matter must be remitted to the Supreme Court, Nassau County, for a determination of the undecided branch of the defendants' motion.
FISHER, J.P., RITTER, FLORIO and CARNI, JJ., concur.

Tuico v. Maher


Robert George Bombara, Howard Beach, for appellants.
Law Offices of John P. Humphreys, New York (Evy L. Kazansky of counsel),                                               for appellant-respondent.
Kay & Gray, Westbury (Lynn Golder of counsel), for Edward C. Maher, respondent.
Kelly, Rode & Kelly, LLP, Mineola (Susan M. Ulrich of counsel),                                                             for Jacqueline M. Bendick, respondent.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered September 5, 2006, which granted defendants' motion and cross motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, the motions denied, and the complaint reinstated.

Although defendants made a sufficient prima facie showing of entitlement to judgment on the question of "serious injury" (Insurance Law § 5102[d]), the expert affirmations in response designated a numeric percentage for each plaintiff's loss of range of motion, and an objective basis for comparing those limitations "to the normal function, purpose and use of the affected body organ, member, function or system" (Toure v Avis Rent A Car Sys., 98 NY2d 345, 350 [2002]). Plaintiffs' experts specifically quantified the range-of-motion limits (see Desulme v Stanya, 12 AD3d 557 [2004]) and causally related them to the accident, sufficient to defeat summary dismissal.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

Fiorillo v. Arriaza



Melvin B. Berfond, New York, N.Y., for appellant.
Richard T. Lau, Jericho, N.Y. (Linda Meisler of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (LaMarca, J.), entered March 19, 2007, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff failed to raise a triable issue of fact. The affirmed medical report of the plaintiff's treating physician was without probative value in opposing the motion since he improperly relied on the unsworn reports of others in coming to his conclusions (see Malave v Basikov, 45 AD3d 539, 540; Verette v Zia, 44 AD3d 747, 748; Furrs v Griffith, 43 AD3d 389, 390; see also Friedman v U-Haul Truck Rental, 216 AD2d 266, 267).

Moreover, while the plaintiff's treating physician concluded that the plaintiff sustained significant limitation of use of his left shoulder, the physician failed to set forth what objective tests he performed to arrive at that conclusion (see Murray v Hartford, 23 AD3d 629; Nozine v Sav-On Car Rentals, 15 AD3d 555, 556; Bailey v Ichtchenko, 11 AD3d 419, 420; Kauderer v Penta, 261 AD2d 365, 366). In fact, no range-of-motion testing of the left shoulder was apparent in his report. To the extent that he noted limitation in the plaintiff's cervical spine range of motion, he merely noted that testing showed "reduced" extension. With the exception of a single instance in which he noted that the plaintiff's cervical extension was limited to 50 degrees on August 18, 2004, he provided no quantified findings (see Duke v Saurelis, 41 AD3d 770; Desamour v New York City Tr. Auth., 8 AD3d 326), nor did he compare his findings to the normal range (see Malave v Basikov, 45 AD3d at 540).

In addition, the plaintiff's treating physician did not provide any qualitative assessment of the plaintiff's condition since he failed to compare the plaintiff's limitations in his cervical spine "to the normal function, purpose and use of" that affected region (Toure v Avis Rent A Car, 98 NY2d at 350). The physician further failed to relate any of the plaintiff's injuries he noted in his report to the subject accident (see Itskovich v Lichenstadter, 2 AD3d 406, 407; Bonner v Hill, 302 AD2d 544, 545). It appears that the finding of "significant limitation" by the plaintiff's treating physician was mere parroting of the statutory language, and thus insufficient to raise a triable issue of fact (see Picott v Lewis, 26 AD3d 319, 320; Mastoccioula v Sciarra, 11 AD3d 434, 435; Giannakis v Paschilidou, 212 AD2d 502, 503).
SPOLZINO, J.P., RITTER, DILLON, BALKIN and LEVENTHAL, JJ., concur.

Page v. Rain Hacking Corp.


Mallilo & Grossman, Flushing (Linda T. Ziatz of counsel), for appellants.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York
(Holly E. Peck of counsel), for respondents.

Order, Supreme Court, Bronx County (Patricia Anne Williams, J.), entered May 9, 2007, which granted the motion by defendants Rain Hacking Corp. and Ashraf for summary judgment dismissing the complaint of plaintiffs Jackson, Graham and Ruby Page, unanimously affirmed, without costs.

The moving defendants' prima facie showing of entitlement to summary judgment demonstrated that plaintiffs did not satisfy the serious injury threshold of Insurance Law § 5102(d). Plaintiffs failed to satisfy their evidentiary burden to submit, in opposition to the motion, "objective medical proof of a serious injury causally related to the accident in order to survive summary dismissal" (Pommells v Perez, 4 NY3d 566, 574 [2005]). Although the MRI reports were sufficient to establish the existence of disc bulges and herniations (Toure v Avis Rent A Car Sys., 98 NY2d 345 [2002]), plaintiffs' expert attributed present pain to an unquantified loss of range of motion, and did "not report his personal observations of plaintiff[s] while sitting and standing, or identify the tests, if any, he performed," or compare his observations to "the norm" (Burke v Torres, 8 AD3d 118, 119 [2004]; compare Garner v Tong, 27 AD3d 401 [2006]; see also Gonzalez v Vasquez, 301 AD2d 438 [2003]). With regard to plaintiff Jackson, the physicians failed to address the degenerative nature of his pre-existing condition (Mullings v Huntwork, 26 AD3d 214 [2006]; see also Montgomery v Pena, 19 AD3d 288 [2005]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

Cruz v. Gustitos


Michael E. Pressman, New York, N.Y. (Robert H. Fischler of counsel), for appellants.
Ami Morgenstern, Long Island City, N.Y. (Levin & Chetkof, LLP [Howard A. Chetkof],                             of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the defendants appeal from a judgment of the Supreme Court, Nassau County (Palmieri, J.), entered May 22, 2007, which, upon a jury verdict, and upon the granting of the plaintiff's application pursuant to CPLR 3101(d) to preclude their medical experts from testifying at trial, is in favor of the plaintiff and against them in the principal sum of $235,000.

ORDERED that the judgment is reversed, on the facts and in the exercise of discretion, with costs, the application is denied, and a new trial is granted on the issue of damages only.

This action arises from a motor vehicle accident which occurred on April 23, 2003, in Nassau County. The plaintiff alleged that the accident resulted in a patellofemoral injury to her right knee which qualified as a serious injury within the meaning of Insurance Law § 5102(d). The defendants conceded their liability and the matter proceeded to trial on the issue of damages. At the outset of the trial, the court granted the plaintiff's application to preclude the defense from calling two medical experts, Jerrold Gorski, an orthopedist, and Elizabeth Schultz, a radiologist, based upon the defendants' purported failure to comply with the requirements set forth in CPLR 3101(d). In her report, Dr. Schultz concluded that the magnetic resonance imaging film of the plaintiff's right knee appeared normal, and Dr. Gorski, while noting the existence of prior complaints of pain in the plaintiff's right knee, found "no orthopedic findings on examination to date." At trial, the plaintiff acknowledged that she had previously injured her right knee in an accident which occurred in 2001. The jury found, inter alia, that the plaintiff sustained an injury to her right knee which resulted in a "significant limitation of use of a body function or system" and a "permanent consequential limitation of use of a body organ or member."

"Preclusion for failure to comply with CPLR 3101(d) is improper unless there is evidence of intentional or willful failure to disclose and a showing of prejudice'" (Gayz v Kirby, 41 AD3d 782, quoting Johnson v Greenberg, 35 AD3d 380; see Shopsin v Siben & Siben, 289 AD2d 220, 221). Here, since the medical reports which the defendants exchanged with the plaintiff essentially complied with the requirements set forth in CPLR 3101(d)(1)(i), there was no showing of a willful failure to disclose or of prejudice to the plaintiff. Accordingly, the Supreme Court improvidently exercised its discretion in granting the plaintiff's application pursuant to CPLR 3101(d) to preclude, and the defendants are entitled to a new trial on the issue of damages.
SKELOS, J.P., SANTUCCI, BALKIN and CHAMBERS, JJ., concur.

Dux v. Maddaloni


Johnson Liebman, LLP, New York, N.Y. (Charles D. Liebman of counsel), for appellants.
Abamont & Associates, Uniondale, N.Y. (Congdon, Flaherty,
O'Callaghan, Reid, Donlon, Travis & Fishlinger [Gregory A. Cascino], of counsel),                              for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Suffolk County (Weber, J.), dated June 12, 2007, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff Stephen Dux did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

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

Contrary to the Supreme Court's determination, the defendant failed to meet her prima facie burden of showing that the plaintiff Stephen Dux (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In support of her motion, the defendant relied upon, inter alia, the affirmed medical report of her examining orthopedic surgeon who evaluated the injured plaintiff almost two years after the subject accident occurred. In that report, the surgeon noted significant limitations in the range of motion of the injured plaintiff's cervical spine, lumbar spine, and left shoulder (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Bentivegna v Stein, 42 AD3d 555; Zamaniyan v Vrabeck, 41 AD3d 472; see also Brown v Motor Veh. Acc. Indem. Corp., 33 AD3d 832; Smith v Delcore, 29 AD3d 890; Sano v Gorelick, 24 AD3d 747; Spuhler v Khan, 14 AD3d 693; Omar v Bello, 13 AD3d 430; Scotti v Boutureira, 8 AD3d 652).

Since the defendant failed to satisfy her prima facie burden, it is unnecessary to consider whether the plaintiffs' papers in opposition were sufficient to raise a triable issue of fact (see Jenkins v Miled Hacking Corp., 43 AD3d 393; Coscia v 938 Trading Corp., 283 AD2d 538).
RIVERA, J.P., LIFSON, MILLER, CARNI and ENG, JJ., concur.

McRae v. Alauddin


Alan M. Greenberg, P.C., New York, N.Y. (Jeremy A. Hellman of counsel), for appellant.
Cheven, Keely & Hatzis, New York, N.Y. (Mayu Miyashita of counsel), for respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Balter, J.), dated May 21, 2007, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendant met his prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957; Meyers v Bobower Yeshiva Bnei Zion, 20 AD3d 456; cf. Bozza v O'Neill, 43 AD3d 1094, 1096; DeFilippo v White, 101 AD2d 801, 802-803). In opposition, the plaintiff failed to raise a triable issue of fact.  FISHER, J.P., FLORIO, ANGIOLILLO, DICKERSON and BELEN, JJ., concur.

Lumbermens Mutual Casualty Company v. The Commonwealth of Pennsylvania


Donovan Hatem, LLP, New York (David M. Pollack of
counsel), for appellants.
Kaufman Dolowich Schneider Bianco & Voluck LLP,
Woodbury (Ivan J. Dolowich of counsel), for respondents.

Judgment, Supreme Court, New York County (Michael D. Stallman, J.), entered February 29, 2008, dismissing the action for lack of subject matter jurisdiction pursuant to an order, same court and Justice, entered January 31, 2008, which, in a declaratory judgment action involving insurance coverage for environmental pollution in Pennsylvania allegedly caused by highway construction in Pennsylvania, granted defendants Commonwealth of Pennsylvania and Pennsylvania Department of Transportation's (Penn DOT) motion to dismiss the action, and denied, as academic, plaintiffs insurers' cross motion for a preliminary injunction prohibiting defendants from litigating the issue of coverage in Pennsylvania, unanimously reversed, on the
law, without costs, the complaint reinstated and the matter remanded for consideration of the cross motion on the merits. Appeal from the above order unanimously dismissed, without costs, as subsumed in the appeal from the above judgment.

In enacting General Obligations Law § 5-1402 and CPLR 327(b), the Legislature made explicit that public policy favors New York courts retaining actions against foreign states where a choice of New York law has been made and the foreign state agreed to submit to New York's jurisdiction. The doctrine of comity does not, in the present declaratory context involving insurance coverage and New York forum-selection and choice-of-law clauses contained in the insurance policy, warrant recognition of defendants' sovereign immunity (cf. Korsinsky v Society Natl. Bank, 304 AD2d 793 [2003], citing Legal Capital, LLC v Medical Professional Liability Catastrophe Loss Fund, 561 Pa 336, 342, 750 A2d 299, 302 [Pa 2000]). We reject defendants' argument that Penn DOT lacked authority to waive its sovereign immunity by agreeing to submit to New York's jurisdiction. Penn DOT did not waive its sovereign immunity; rather, it agreed to litigate in a forum where it does not have sovereign immunity (see Nevada v Hall, 440 US 410, 416 [1979] [while "no sovereign may be sued in its own courts without its consent," there is "no support for a claim of immunity in another sovereign's courts"]). We have considered and rejected defendants' other arguments.

Boxer v. Metropolitan Transportation Authority

Jeffrey Samel & Partners, New York, N.Y. (David Samel of
counsel), for appellants.
Rosenberg, Minc, Falkoff & Wolff, LLP, New York, N.Y.
(Cheryl Stein of counsel), for
plaintiffs-respondents.
MacCartney, MacCartney, Kerrigan & MacCartney, Nyack,
N.Y. (William K. Kerrigan of counsel),
for defendant-respondent.


DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendants Metropolitan Transportation Authority, Long Island Rail Road, and MLC Management Corp. appeal from an order of the Supreme Court, Queens County (Kerrigan, J.), dated May 16, 2007, which, inter alia, denied their motion for summary judgment dismissing the complaint insofar as asserted against them and for summary judgment on their cross claims against the defendant Baker's Dozen Bagels Corp. for contractual indemnification and breach of the contract to procure insurance, and granted the cross motion of the defendant Baker's Dozen Bagel Corp. for summary judgment dismissing their cross claims for contractual indemnification and breach of the contract to procure insurance.

ORDERED that the order is modified, on the law, by deleting the provisions thereof denying that branch of the motion of the defendants Metropolitan Transportation Authority, Long Island Rail Road, and MLC Management Corp. which was for summary judgment on their fourth cross claim to recover damages for breach of the contract to procure insurance naming them as additional insureds and granting that branch of the cross motion of the defendant Baker's Dozen Bagel Corp. which was for summary judgment dismissing that cross claim, and substituting therefor provisions granting that branch of the motion and denying that branch of the cross motion; as so modified, the order is affirmed, without costs or disbursements.

The injured plaintiff (hereinafter the plaintiff) allegedly tripped on a crack in a public sidewalk abutting property owned by the defendant Long Island Rail Road (hereinafter the LIRR), leased to the defendant MLC Management Corp. (hereinafter MLC), and subleased to the defendant Baker's Dozen Bagel Corp. (hereinafter Baker's Dozen). The alleged defect in the sidewalk was estimated by the plaintiff to be one inch in height, and by the defendants to be between one-quarter and one-half inch in height. The defendants Metropolitan Transportation Authority, LIRR, and MLC (hereinafter collectively the MTA defendants) contend that the defect is trivial, and, therefore, was not actionable.

"[T]here is no minimal dimension test' or per se rule that a defect must be of a certain minimum height or depth in order to be actionable" (Trincere v County of Suffolk, 90 NY2d 976, 977). Rather, a court must look at the "width, depth, elevation, irregularity and appearance of the defect along with the time, place and circumstance of the injury" (Trincere v County of Suffolk, 90 AD2d at 978 [citations omitted]). Here, the MTA defendants failed to make a prima facie showing that the alleged sidewalk defect was too trivial to be actionable. The evidence submitted regarding the circumstances of the accident, including the deposition testimony, raises issues of fact as to whether the alleged defect was too trivial to be actionable (see Portanova v Kantlis, 39 AD3d 731, 732; Mishaan v Tobias, 32 AD3d 1000; Maxson v Brentwood Union Free School Dist., 31 AD3d 506; Adsmond v City of Poughkeepsie, 283 AD2d 598; Tesak v Marine Midland Bank, 254 AD2d 717). Accordingly, the Supreme Court correctly denied that branch of the MTA defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against them.

However, the Supreme Court erred in denying that branch of the MTA defendants' motion which was for summary judgment on their fourth cross claim to recover damages for breach of the contract to procure insurance naming them as additional insureds. The lease between the MTA defendants and Baker's Dozen Bagel Corp. clearly required the latter to procure liability insurance naming the MTA defendants as insureds. In opposition to the MTA defendants' prima facie showing of entitlement to judgment as a matter of law, Baker's Dozen failed to present any evidence to establish its compliance with its contractual obligation to obtain liability insurance naming the MTA defendants as an additional insureds (see Chae Hee Jung v Kum Gang, Inc., 22 AD3d 441, 443; Taylor v Gannett Co., 303 AD2d 397; see also Eagle v Chelsea Piers, L.P., 46 AD3d 367, 368). Thus, the MTA defendants were entitled to summary judgment on their cross claim for breach of contract (see Inchaustegui v 666 5th Ave. Ltd. Partnership, 96 NY2d 111, 114; Taylor v Gannett Co., 303 AD2d at 397; Taylor v Doral Inn, 293 AD2d 524; see also Eagle v Chelsea Piers, L.P., 46 AD3d at 368; Chae Hee Jung v Kum Gang, Inc., 22 AD3d at 443). For similar reasons, the Supreme Court should have denied that branch of the cross motion of Baker's Dozen which was for summary judgment dismissing the MTA defendants' fourth cross claim asserted against it (see Chae Hee Jung v Kum Gang, Inc., 22 AD3d at 443).

Faragon v. American Home Assurance Company


Calendar Date: April 30, 2008
Before: Peters, J.P., Rose, Lahtinen, Kane and Stein, JJ.


Wilson, Elser, Moskowitz, Edelman & Dicker,
L.L.P., Albany (F. Douglas Novotny of counsel), for appellant.
Edward P. Ryan, Albany, for Samuel Faragon,
respondent.
Law Office of Epstein & Donnelly, Latham (Jeffrey
T. Culkin of counsel), for Nationwide Mutual Insurance
Company, respondent.

MEMORANDUM AND ORDER


Lahtinen, J.

Appeal from an order and judgment of the Supreme Court (Hard, J.), entered August 8, 2007 in Albany County, which, among other things, denied a motion by defendant American Home Assurance Company motion for summary judgment dismissing the complaint against it and entered a declaration in favor of plaintiff.

Plaintiff, a truck driver, was struck by a hit-and-run driver while standing on the street in the City of Albany after unloading construction equipment from the tractor-trailer owned by his employer and insured by defendant American Home Assurance Company. He filed a supplementary uninsured/underinsured motorist (hereinafter SUM) claim with American and also with defendant Nationwide Mutual Insurance Company, which was his insurer. American denied the claim asserting that plaintiff was not covered by its policy because he was not "occupying" the vehicle at the time of the accident. Nationwide contended that plaintiff was covered by American and that its coverage was thus secondary. Plaintiff commenced this declaratory judgment action against American and Nationwide, and both insurers eventually moved for summary judgment. Supreme Court determined that plaintiff was "occupying" the vehicle and, accordingly, denied American's motion for summary judgment dismissing the complaint, declared that plaintiff was an insured under the SUM endorsement of American's policy and declared American's coverage to be primary to Nationwide. American appeals.

The pertinent SUM endorsement in American's policy provides coverage for an individual "occupying" a covered vehicle. The term "occupying" is further defined in American's policy consistent with the regulatory and statutory requirement (see 11 NYCRR 60-2.3 [f]; see also Insurance Law § 3420 [f] [3]) to include "in, upon, entering into, or exiting from a motor vehicle." Interpreting the term "occupying" has resulted in differing tests in various jurisdictions (see 24 Appleman on Insurance 2d § 148.1 [c]; Jacqueline G. Slifken, Annotation, Automobile Insurance: What Constitutes "Occupying" Under Owned-Vehicle Exclusion of Uninsured or Underinsured Motorist Coverage of Automobile Insurance Policy, 59 ALR5th 191). However, in New York "the term has long received a liberal interpretation and, thus, 'the status of passenger is not lost even though [an individual] is not in physical contact with [the vehicle], provided there has been no severance of connection with it, his [or her] departure is brief and he [or she] is still vehicle-oriented with the same vehicle'" (Matter of Travelers Ins. Co. [Youdas], 13 AD3d 1044, 1045 [2004] [internal citation omitted], quoting Matter of Rice v Allstate Ins. Co., 32 NY2d 6, 11 [1973]; see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 639 [1991]).

Here, plaintiff was off-loading a 44,000 pound, 50-to-55 foot-long boom lift from a 70-foot tractor-trailer. The procedure involved many steps, including setting out safety cones, unchaining the boom lift, folding out and inserting pins in the jib, inspecting the basket, lowering the trailer, backing the machine off the trailer, and securing and extending axle shifts. Plaintiff had completed these steps, which he testified at his deposition typically took 20 to 30 minutes. He further testified that, after removing and readying the boom lift, he next trains the person renting it on the proper operation of the equipment, a procedure he estimated to take 30 to 35 minutes. He recalled during his testimony that, in the current situation, he had been training the person who was going to operate the equipment for 10 to 15 minutes when the accident occurred. Although the tractor-trailer reportedly remained running during the entire time and plaintiff's affidavit sets forth a more condensed time frame than his deposition for his activities at the site, it is inescapable that he was no longer vehicle-oriented. His absence from the vehicle was not intended to be brief and, at the time of the accident, he was engaged in instructing the lessee about the operation of the delivered equipment. Under such circumstances, he was no longer "occupying" his employer's vehicle (see Matter of Martinez, 295 AD2d 277, 278 [2002]; Matter of State Farm Auto Ins. Co. v Antunovich, 160 AD2d 1009, 1010 [1990]; cf. Matter of Travelers Ins. Co. [Youdas], 13 AD3d at 1045-1046; Matter of Nassau Ins. Co. [Maylou], 103 AD2d 780, 780 [1984]; State-Wide Ins. Co. v Murdock, 31 AD2d 978, 978-979 [1969], affd 25 NY2d 674 [1969]).

Peters, J.P., Rose, Kane and Stein, JJ., concur.

ORDERED that the order and judgment is reversed, on the law, with costs to defendant American Home Assurance Company, motion of defendant Nationwide Mutual Insurance Company denied, motion of defendant American Home Assurance Company granted, summary judgment awarded to American, complaint dismissed against it, and it is declared that plaintiff is an insured under the supplementary uninsured/underinsured endorsement of Nationwide's policy.

Sitbon v. Unitrin Preferred Insurance Company


Votto & Cassata, LLP, Staten Island, N.Y. (Christopher J. Albee
of counsel), for appellant.
Alvin M. Bernstone, LLP, New York, N.Y. (Peter B. Croly of
counsel), for respondent.

DECISION & ORDER

In an action, in effect, to recover damages for breach of contract, the defendant appeals from an order of the Supreme Court, Kings County (Jacobson, J.), dated June 18, 2007, which denied its motion, in effect, for summary judgment dismissing the complaint.

ORDERED that the order is reversed, on the law, with costs, and the defendant's motion, in effect, for summary judgment dismissing the complaint is granted.

The plaintiff sought uninsured motorist benefits, under a policy of insurance issued by the defendant, for physical injuries he alleged were sustained in a hit-and-run accident on the evening of December 3, 2004. The defendant disclaimed coverage on the basis that the plaintiff failed to fulfill a condition precedent, applicable to hit-and-run accidents, that he, or someone on his behalf, provide notice of the accident, as relevant to this case, to the police or the Commissioner of Motor Vehicles (hereinafter the Commissioner), within 24 hours of the accident or as soon as reasonably possible. The plaintiff then commenced this action, in effect, to recover damages for breach of contract. The defendant moved, in effect, for summary judgment dismissing the complaint on the ground that the plaintiff failed to comply with the condition precedent of timely notifying either the police or the Commissioner.

The defendant made a prima facie showing of its entitlement to summary judgment dismissing the complaint by demonstrating, through the testimony of the plaintiff at the examination under oath and documentation, that timely notice was not provided to either the police or the Commissioner (see Alvarez v Prospect Hosp., 68 NY2d 320; Zuckerman v City of New York, 49 NY2d 557). The plaintiff failed to raise a triable issue of fact as to whether he, or anyone on his behalf, provided timely notice, or any notice, of the accident to the police or the Commissioner. The plaintiff did not oppose the motion for summary judgment with an affidavit or affirmation from the individual who prepared the original of the unsigned, partially completed, MV-104 form (Report of Motor Vehicle Accident) dated December 20, 2004, attesting to the filing of the report with the Commissioner and when it was filed. The plaintiff's sworn statements as to his knowledge of who prepared the report on his behalf are directly contradictory, with no explanation of the contradiction. Additionally, the Commissioner's form report of a motor vehicle accident specifically provides, in bold lettering, that an accident report is not considered complete and filed unless it is signed.

As the plaintiff failed to fulfill a condition precedent to coverage, the defendant was entitled to summary judgment dismissing the complaint (cf. Matter of AllCity Ins. Co. [Jimenez], 78 NY2d 1054; Matter of AIU Ins. Co. v Henry, 14 AD3d 506).

STATE FARM INSURANCE COMPANIES v. DeSARBO


Calendar Date: April 30, 2008
Before: Peters, J.P., Rose, Lahtinen, Kane and Stein, JJ.


The DeLorenzo Law Firm, L.L.P., Schenectady
(Thomas E. DeLorenzo of counsel), for appellant.
Pennock, Breedlove & Noll, L.L.P., Clifton Park
(Carrie McLoughlin of counsel), for respondent.

MEMORANDUM AND ORDER

Lahtinen, J.

Appeal from an order of the Supreme Court (Ferradino, J.), entered June 8, 2007 in Saratoga County, which granted plaintiff's motion for summary judgment.

The underlying facts in this dispute about underinsurance coverage are set forth in our earlier decision where we reversed a stay of arbitration that had been granted to plaintiff upon the ground that plaintiff's application for the stay had been untimely (Matter of State Farm Ins. Cos. [DeSarbo], 36 AD3d 1193 [2007]). While that appeal was pending, plaintiff commenced this declaratory judgment action contending that coverage was vitiated by defendant failing to cooperate and providing false information to plaintiff. Shortly after plaintiff moved for summary judgment in the declaratory judgment action, our decision reversing the granting of a stay was handed down. Supreme Court, noting that our decision did not address the issues raised in plaintiff's motion for summary judgment in the declaratory judgment action, granted plaintiff's motion. Defendant appeals.

Under CPLR article 75, "a court may involve itself in the arbitration process within the first 20 days . . . or following the conclusion of the arbitration proceeding," but "[t]here exists no authority for a court to become involved . . . between these periods" (Matter of Nationwide Mut. Ins. Co. [Miller], 95 AD2d 961, 961 [1983]; see Matter of Allstate Ins. Co. v Olsen, 222 AD2d 579, 580 [1995]). "[W]here the parties have entered into an agreement to arbitrate their disputes, and the party desiring arbitration has served a proper notice of intention to arbitrate, the party seeking to avoid arbitration on the ground that the agreement is invalid or has not been complied with, must, under the statute's clear language, seek a stay of arbitration within 20 days of service" (Matter of Matarasso [Continental Cas. Co.], 56 NY2d 264, 267 [1982]). While a limited exception to the 20-day time frame applies when a party asserts there never was an agreement to arbitrate (see id. at 267), challenges regarding, among other things, the scope of an agreement or compliance with the terms of an agreement are precluded if asserted outside the 20-day period (see Matter of Steck [State Farm Ins. Co.], 89 NY2d 1082, 1084 [1996]; Matter of Colonial Coop. Ins. Co. [Muehlbauer], 46 AD3d 1012, 1013 [2007]; Allstate Indem. Co. v Fernandez, 288 AD2d 42, 43 [2001]).

Here, a valid agreement to arbitrate underinsurance claims exists under the policy. The issue of defendant's compliance with terms of that agreement had to be raised by seeking a stay within 20 days of service of the intent to arbitrate. We have previously held that plaintiff failed to properly seek a stay within 20 days. Plaintiff cannot now circumvent the arbitration requirements by asserting in a declaratory judgment action an issue it failed to assert in a timely fashion when faced with a demand for arbitration.

The Trustees of Princeton University v. National Union Fire Insurance Co. of Pittsburgh


Cahill Gordon & Reindel LLP, New York (Edward P.
Krugman of counsel), for appellant.
Anderson Kill & Olick, P.C., New York (William G.
Passannante of counsel), for respondent.

Judgment, Supreme Court, New York County (Helen E. Freedman, J.), entered September 10, 2007, awarding plaintiff recovery from defendant National Union Fire Insurance Co. of Pittsburgh, Pa. in the amount of $9,607,021.93, and bringing up for review orders, same court and Justice, entered April 23, 2007 and August 20, 2007, to the extent they denied defendants' motion to dismiss the causes of action for breach of contract and declaratory judgment, granted plaintiff's cross motion for summary judgment on said causes of action, and directed entry of judgment accordingly, and order, same court and Justice, entered February 20, 2008, which
denied National Union's motion to vacate the judgment, unanimously affirmed, with costs.

We reject National Union's contention that the subject insurance policy's $5 million sublimit for claims that seek equitable relief applies also to claims arising from the same underlying occurrence that seek legal relief based on tort and contract law principles, as it relies on a strained construction of the terms of the policy (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984]; 242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co., 31 AD3d 100, 103 [2006]). Similarly, we reject the contention that the policy's "insured versus insured" exclusion applies to claims brought against the insured entities by individual insureds acting in their individual capacities.

As the policy obligates National Union to advance all defense costs as they are incurred, subject to a right of recoupment of payment for noncovered costs after the underlying litigation is completed, the court had no obligation at this juncture to rule on the allocation of defense expenses.

We have considered defendant's remaining arguments and find them unavailing.

Young Israel Co-Op City v. Guideone Mutual Insurance Company


Schnader Harrison Segal & Lewis LLP, New York (Carl J.
Schaerf of counsel), for appellant.
Alpert & Kaufman, LLP, New York (Gary Slobin of counsel),
for respondents.

Order, Supreme Court, Bronx County (Paul A. Victor, J.), entered on or about January 2, 2008, which granted plaintiffs' motion for a declaration that defendant must defend and indemnify them in an underlying personal injury action, and denied defendant's cross motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, the motion denied and the cross motion granted. The Clerk is directed to enter judgment accordingly.

The court improperly found that plaintiffs' 40-day delay in notifying defendant of the motor vehicle accident was reasonable as a matter of law (see Pandora Indus. v St. Paul Surplus Lines Ins. Co., 188 AD2d 277 [1992]). Under the insurance policy at issue, which required "prompt notice" of any accident or loss, plaintiffs' timely forwarding of the claim letter was not
adequate notice (see e.g. City of New York v Continental Cas. Co., 27 AD3d 28, 31 [2005]). Given that plaintiffs were allegedly negligent in this rear-end collision and that the underlying claimant was taken away from the accident by ambulance (cf. Kelly v Nationwide Mut. Ins. Co., 174 AD2d 481 [1991]), plaintiffs failed to raise an issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of nonliability (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 241 [2002]).

Elacqua v. Physician’s Reciprocal Insurers  

 

Calendar Date: March 26, 2008
Before: Peters, J.P., Spain, Rose, Lahtinen and Kavanagh, JJ.

Gleason, Dunn, Walsh & O'Shea, Albany (Thomas F.
Gleason of counsel), for appellants.
Bartlett, McDonough, Bastone & Monaghan, L.L.P.,
White Plains (Edward J. Guardaro of counsel), for respondent.

MEMORANDUM AND ORDER

Peters, J.P.

Appeal from a judgment of the Supreme Court (McNamara, J.), entered July 2, 2007 in Albany County, upon a decision of the court in favor of defendant.

The facts leading up to the instant dispute are set forth in this Court's decision upon the parties' prior appeal (21 AD3d 702 [2005], lv dismissed 6 NY3d 844 [2006]) (hereinafter Elacqua I). Upon that appeal, we held, among other things, that pursuant to Public Serv. Mut. Ins. Co. v Goldfarb (53 NY2d 392 [1981]), when the existence of both covered and uncovered claims gives rise to a conflict of interest between an insurer and its insured, the insured is entitled to independent counsel of his or her own choosing at the expense of the insurer and, moreover, the insurer has an affirmative obligation to advise the insured of such right (21 AD3d at 707).

Upon remittal, plaintiffs Mary S. Elacqua and William J. Hennessey (hereinafter collectively referred to as the physicians) and plaintiff OB/GYN Health Center Associates, LLP, the partnership in which the physicians were members (hereinafter the partnership), successfully sought leave to amend their complaint to add causes of action against defendant for, among other things, deceptive business practices pursuant to General Business Law § 349 in failing to inform them that they had a right to select independent counsel of their choosing at defendant's expense in the underlying malpractice action (hereinafter the Hytko action)[FN1]. Subsequently, defendant entered into a settlement with the plaintiffs in the Hytko action for $2.4 million in satisfaction of all claims against plaintiffs in this action [FN2]. Plaintiffs, however, continued this action on the basis of the amended claims, seeking to recover the counsel fees they had purportedly spent in compelling defendant to indemnify them for the verdict in the Hytko action. Following a bifurcated trial on the issue of liability, Supreme Court dismissed plaintiffs' complaint and entered a judgment thereon. Plaintiffs now appeal.

Plaintiffs' primary contention is that Supreme Court erred in dismissing their General Business Law § 349 claim on the ground that they were unable to demonstrate actual harm as a result of not being represented by independent counsel. General Business Law § 349 prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state," and one injured by such conduct may bring an action to recover damages (General Business Law § 349 [a], [h]). A claim brought under this statute must be predicated on an act or practice which is "consumer-oriented," that is, an act having the potential to affect the public at large, as distinguished from merely a private contractual dispute (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995]; see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 344 [1999]; Brooks v Key Trust Co. N.A., 26 AD3d 628, 630-631 [2006], lv dismissed 6 NY3d 891 [2006]). A plaintiff must further demonstrate that such act or practice was "'deceptive or misleading in a material way and that plaintiff has been injured by reason thereof" (Small v Lorillard Tobacco Co., 94 NY2d 43, 55 [1999], quoting Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25; accord Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d at 344; see Baron v Pfizer, Inc., 42 AD3d 627, 628 [2007]).

The deceptive practice alleged by plaintiffs is that defendant failed to inform them that they had a right to select independent counsel of their choosing at defendant's expense. Supreme Court properly found that the alleged offending practice of defendant was consumer-oriented inasmuch as its failure to inform plaintiffs of their right to select independent counsel was not an isolated incident, but a routine practice that affected many similarly situated insureds. Gregory Mignella, an attorney for defendant, acknowledged that defendant's practice is not to inform its insureds with whom it has conflicts that they have the right to select independent counsel at defendant's expense, and defendant's general counsel, James Tuffin, confirmed that practice.

We further find that this practice was deceptive within the meaning of General Business Law § 349. In Public Serv. Mut. Ins. Co. v Goldfarb (53 NY2d at 401), the Court of Appeals reaffirmed the proposition that where an insurer may face liability based upon some of the grounds for recovery asserted but not upon others, the insured defendant is entitled to be represented by an attorney of his or her own choosing at the expense of the insurer (see Prashker v United States Guar. Co., 1 NY2d 584, 593 [1956]). Moreover, as we recently held in Elacqua I, where such potential conflict exists between the insurer and the insured, the insurer has an affirmative obligation to inform the insured of his or her right to select independent counsel at the insurer's expense; "[t]o hold otherwise would seriously erode the protection afforded" (21 AD3d at 707).

Here, the partial disclaimer letters sent by defendant to its insureds including plaintiffs failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protect their uninsured interests "at [their] own expense." Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I [FN4]. This practice was certainly "likely to mislead a reasonable consumer acting reasonably under the circumstances" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 26; see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d at 344; Matter of People v Applied Card Sys., Inc., 27 AD3d 104, 107 [2005], lv dismissed 7 NY3d 741 [2006]) and, therefore, constitutes a deceptive practice pursuant to General Business Law § 349.

Lastly, plaintiffs were required to demonstrate "actual, although not necessarily pecuniary, harm" as a result of defendant's deceptive practice (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 26; see Small v Lorillard Tobacco Co., 94 NY2d at 55-56; Baron v Pfizer, Inc., 42 AD3d at 628). Plaintiffs' argument as to harm is grounded upon the deprivation of their right to independent counsel and the resulting lack of undivided, conflict-free loyalty of Mark Dunn, counsel retained for the partnership by defendant, and Jeffrey Feldman and Terrence O'Connor, the attorneys retained by defendant to represent Hennessey and Elacqua, respectively. "[A]n attorney stands in a fiduciary relationship to the client which relationship is imbued with ultimate trust and confidence that imposes a set of special and unique duties" (Beltrone v General Schuyler & Co., 252 AD2d 640, 641 [1998]; see Graubard Mollen Dennett & Horowitz v Moskovitz, 86 NY2d 112, 118 [1995]). Of paramount importance is the duty of counsel to "deal fairly, honestly and with undivided loyalty" to the client, which includes avoiding conflicts of interest and honoring the client's interests over that of the attorney's (Matter of Cooperman, 83 NY2d 465, 472 [1994]; see Beltrone v General Schuyler & Co., 252 AD2d at 641; Code of Professional Responsibility DR 1-107 [a] [22 NYCRR 1200.5-c (a)]). This obligation is particularly important in situations where, as here, the interests of an insured are at odds with that of an insurer, in which case tactical decisions must be made by counsel whose loyalty to the insured is unquestioned and whose dedication to the interests of the insured is paramount (see Feliberty v Damon, 72 NY2d 112, 120 [1988]; Nelson Elec. Contr. Corp. v Transcontinental Ins. Co., 231 AD2d 207, 209-210 [1997], lv denied 91 NY2d 802 [*4][1997]; Ladner v American Home Assur. Co., 201 AD2d 302, 304 [1994]).

This threat of divided loyalty and conflict of interest between the insurer and insured is the precise evil sought to be remedied by Goldfarb and our decision in Elacqua I, hence the requirement that independent counsel be provided at the expense of the insurer and that the insurer advise the insured of this right. Defendant's failure to inform plaintiffs of this right, together with plaintiffs' showing that undivided and uncompromised conflict-free representation was not provided to them, constitutes harm within the meaning of General Business Law § 349.

The circumstances surrounding the motion to dismiss made by Feldman and O'Connor manifested the conflict of interest presented where "the defense attorney's duty to the insured would require that he defeat liability on any ground and his duty to the insurer would require that he defeat liability only upon grounds which would render the insurer liable" (Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d at 401 n; see Prashker v United States Guar. Co., 1 NY2d at 593; 21 AD3d at 706-707). Here, Feldman and O'Connor successfully moved to dismiss the complaint in the Hytko action against the physicians, thereby disposing of all covered claims and leaving viable only the uncovered claim against the partnership for vicarious liability based upon the negligence of Jane Szary. The record reveals that the physicians were not fully informed of the ramifications of such motion. Moreover, although the motion to dismiss on behalf of the physicians, if granted, would leave the partnership exposed to uncovered claims, Dunn who represented the partnership fully joined in making it, despite the fact that he had legally sufficient grounds to oppose the motion (see Failla v Nationwide Ins. Co., 267 AD2d 860, 862-863 [1999]; Nelson Elec. Contr. Corp. v Transcontinental Ins. Co., 231 AD2d at 209-210; Ladner v American Home Assur. Co., 201 AD2d at 304). Under these circumstances, it simply cannot be said that plaintiffs' interests were adequately represented in the Hytko action. As Supreme Court remarked during the trial, the combined effect of the actions by counsel supplied by defendant was that "the end result was the [defendant's] interests were advanced and the insured doctors' interests were, to put it mildly, not enhanced." This result, engendered by the lack of independent representation with undivided loyalty uncompromised by conflicts of interest, constituted harm sufficient to sustain a claim under General Business Law § 349.

Plaintiffs' remaining contentions have been rendered academic by our decision.

Spain, Rose, Lahtinen and Kavanagh, JJ., concur.

ORDERED that the judgment is modified, on the law, without costs, by reversing so much thereof as dismissed plaintiffs' cause of action under General Business Law § 349; matter remitted to the Supreme Court for a trial on damages; and, as so modified, affirmed.

Footnotes


Footnote 1:Plaintiffs' complaint also sought damages for breach of contract based upon defendant's alleged failure to properly defend and indemnify plaintiffs in the Hytko action and seeking a determination that defendant was required to indemnify plaintiffs with respect to the underlying verdict.

Footnote 2:The Hytko action resulted in a jury verdict rendered against the partnership in the amount of $1,899,100 based upon vicarious liability through the negligence of Jane Szary, a nurse practitioner employed by the partnership. By the commencement of the instant action, the amount of the verdict in the Hytko action, with interest, amounted to more than $3 million.

Footnote 4:Indeed, defendant's partial disclaimers to its insureds, as late as August 2006, stated that the insured "may wish to consult an attorney, at its own expense regarding its uninsured interest."

 

Hall v. Elrac, Inc., doing business as Enterprise Rent A Car


Ogen & Associates, P.C., New York (Eitan Ogen of counsel),
for appellant.
DeSimone, Aviles, Shorter & Oxamendi, LLP, New York
(Michael J. Aviles of counsel), for Elrac, Inc., respondent.
Michael J. Garcia, New York (Matthew L. Schwartz of
counsel), for United States of America, respondent.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered January 24, 2007, which, in an action for personal injuries sustained by plaintiff while a passenger in a car owned by defendant-respondent car rental company, granted respondent's motion for summary judgment dismissing the complaint as against it to the extent of dismissing so much of the first cause of action as seeks to hold respondent vicariously liable for defendants driver's and lessee's negligence in the operation and maintenance of the car, and dismissing the second cause of action for negligent entrustment of the car in its entirety, unanimously affirmed, without costs.

Plaintiff's vicarious liability claims against respondent are barred by 49 USC § 30106, the "Graves Amendment." We reject plaintiff's argument that the Graves Amendment violates the Commerce Clause of the US Constitution (Graham v Dunkley, 50 AD3d 55 [2d Dept 2008], appeal dismissed __ NY3d __, 2008 NY Slip Op 70255 [April 29, 2008] [no substantial constitutional question involved], revg 13 Misc 3d 790 [2006]; see also Hernandez v Sanchez, 40 AD3d 446, 447 [1st Dept 2007]). We also reject plaintiff's argument that the Graves Amendment violates equal protection by favoring car rental companies over other vehicle owners, such as taxi owners, repair shop owners who provide loaner vehicles to customers, and car dealerships that allow test drives, who also allow others to operate their vehicles. The renting of vehicles has a clear substantial effect on interstate commerce (Graham, 50 AD3d at 61-62), unlike these other activities, and the same rational basis for regulating the renting of vehicles under the Commerce Clause even in purely intrastate instances - that elimination of vicarious liability will result in a reduction of insurance costs that will in turn result in a reduction of consumer prices and allow more lessors to remain in business (see id. at 61) - supports the classification for purposes of equal protection. We have considered and rejected plaintiff's other arguments.

National Union Fire Ins. Co. of Pittsburgh, PA  v. The Connecticut Indemnity Com.


Melito & Adolfsen, P.C., New York (John H. Somoza of
counsel), for Lumbermens Mutual Casualty Company, appellant.
Carroll, McNulty & Kull, L.L.C., New York (John P. De
Filippis of counsel), for United States Fire Insurance Company,
appellant.
Lester Schwab Katz & Dwyer, LLP, New York (Eric A.
Portuguese of counsel), for National Union Fire Insurance Company of
Pittsburgh, PA, Howard's Express, Inc. and Harold Bailey,
respondents.
Rivkin Radler LLP, Uniondale (Harris J. Zakarin of counsel),
for
The Connecticut Indemnity Company, respondent.

Order, Supreme Court, New York County (Michael D. Stallman, J.), entered April 27, 2007, which granted defendant Connecticut Indemnity's cross motion for summary judgment; denied cross motions for summary judgment by defendants Lumbermens and U.S. Fire; adjudged and declared that Lumbermens and U.S. Fire were primary insurers vis-À-vis the umbrella policy plaintiff National Union Fire issued, thereby obligating Lumbermens and U.S. Fire to defend and indemnify Howard Bailey in the underlying lawsuit; and adjudged and declared National Union entitled to reimbursement from Lumbermens and U.S. Fire, on a pro-rata basis, for the $1,454,640.15 it paid to settle said action, together with interest at the rate of 9% per annum from February 15, 2006, unanimously modified, on the law, the judgment in favor of Connecticut Indemnity vacated; National Union adjudged and declared entitled to reimbursement from Lumbermens in the amount of $1 million, together with prejudgment interest from February 15, 2006, and from U.S. Fire in an amount to be determined after further proceedings consistent herewith, together with prejudgment interest from February 15, 2006; and otherwise affirmed, without costs.

This is an action for a declaratory judgment regarding insurance coverage responsibility among several insurance companies for a $2.4 million dollar settlement in an underlying case. The underlying case involved an accident that occurred on May 3, 1999. That accident occurred when Howard Bailey, who was driving the insured tractor, collided with a disabled truck causing injury to Jon Honkala who had stopped to assist with the disabled truck. Associates Leasing, Inc. (Associates) owned the tractor that Bailey was driving. Associates insured the tractor with defendant Lumbermens. Associates had leased the tractor to Conway Beam Leasing, Inc., who subleased the vehicle to Lee E. Gibson Construction Co., d/b/a Sunrise Industries (Gibson/Sunrise). Gibson/Sunrise, in turn, leased the vehicle and its driver Bailey, to Howard's Express, Inc. Each of these lessees/sublessees obtained insurance covering the tractor. It is the apportionment among these various insurance policies that is at issue in this case. This appeal primarily involves what part of the underling settlement is the responsibility of Lumbermens and what part is the responsibility of United States Fire insurance Company (US Fire).

We reject Lumbermens' argument that Associates did not grant permission to Howard's Express to use the subject tractor, within the meaning of the insurance policy. In New York, proof of ownership of a motor vehicle creates a "very strong presumption" that the driver was using the vehicle with the owner's permission, express or implied, and this presumption continues "unless and until there is substantial evidence to the contrary" (Tabares v Colin Serv. Sys., 197 AD2d 571 [1993]; see Leotta v Plessinger , 8 NY2d 449, 461 [1960]). There is no such substantial evidence here.

The Lumbermens policy stated that "[f]or any covered auto' you own, this Coverage Form provides primary insurance." However, the motion court held that a manuscript endorsement in the Lumbermens policy rendered its coverage excess. We do not agree. By its plain terms, the manuscript endorsement refers to a situation "[w]hen you have other insurance for an auto' covered by this policy." You, in insurance parlance, refers to the insured (here, Associates) (see, e.g. Jeanes v Nationwide Ins. Co., 532 A2d 595, 599 [Del. Ch. 1987]).

Thus, as a co-primary insurer, Lumbermens must reimburse National Union $1 million of the settlement proceeds National Union funded because primary limits must be exhausted before excess coverage can apply.

We next address the allocation of the remaining $454,640.15 among the excess insurers. We cannot take the Legion policy into account in making this allocation because Legion is in liquidation and therefore its limits are not "available coverage" within the meaning of the policies' respective "other insurance" provisions (Matter of Midland Ins. Co., 269 AD2d 50, 67 [2000]).

National Union and Federal provided umbrella coverage. The terms of these policies indicate that they are excess to the excess coverage that Connecticut Indemnity Co., (Connecticut) and US Fire provided.

With regard to Connecticut's coverage, we disagree with the ruling that Gibson/Sunrise's notice was untimely as a matter of law. Under some circumstances, a five-month delay may be unreasonable, but here a question of fact exists as to whether the insured had a good-faith belief in nonliability. Where notice to an excess carrier such as Connecticut is in issue, the focus is on whether the insured reasonably should have known that the claim against it would likely exhaust its primary insurance coverage and trigger its excess coverage, and whether any delay between acquiring that knowledge and giving notice to the excess carrier was reasonable under the circumstances (see Morris Park Contr. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 763 [2006]).

The "bobtail" exclusion in Connecticut's policy is void as against public policy. We decline to enforce a "savings clause" in the policy, which provides coverage up to the minimum amounts the financial responsibility law requires, in the event the bobtail exclusion is held invalid (see Connecticut Indem. Co. v 21st Century Transport Co., 186 F Supp 2d 264 (EDNY 2002)). We agree with the reasoning of those courts which hold that permitting an insurer to limit its liability even in cases where its policy exclusion is held to be invalid would render the finding on the issue of validity essentially meaningless (see Connecticut Indem. Co. v 21st Century Transport Co., Inc. 186 F Supp 2d 264, 278 [ED NY 2002]; R.E. Turner, Inc. v Connecticut Indemn. Co., 925 F Supp 139, 149 [WD NY 1996]; Connecticut Indem. Co. v Carela, 2007 WL 2363123 (DNJ Aug 15, 2007] [applying New York law]; but see Connecticut Indem. Co. v Hines, 40 AD3d 903 [2d Dept 2007]). If the exclusion is void because it is against public policy, it can not be saved. Thus, the Connecticut policy must be read as affording liability up to its full limits.

Should the finder of fact ultimately determine that notice to Connecticut was timely, Connecticut and U.S. Fire, as excess carriers, should pro-rate the $454,640.15 remainder of the settlement in accordance with the limits of their respective policies.

The award of prejudgment interest was proper (CPLR 5001[a],[b]).

In re Government Employees Insurance Company, v. Dumbar


Monfort, Healy, McGuire & Salley, Garden City (Donald S.
Neumann, Jr. of counsel), for appellant.
Law Offices of Alvin M. Bernstone, LLP, New York (Peter B.
Croly of counsel), for respondent.

Order, Supreme Court, Bronx County (Lucy Billings, J.), entered on or about October 5, 2007, which denied the petition to stay arbitration of respondent's uninsured motorist (UM) benefits claim and dismissed the proceeding, unanimously reversed, on the law, without costs, and the petition granted.

Respondent, who was injured while a passenger in a motor vehicle, owned and operated by Chambers, involved in a hit-and-run accident, received a settlement payment of $25,000, based on the liability of the driver, insured by petitioner, for his own negligence. Respondent then sought to arbitrate a claim for a similar amount, which was the limit of the uninsured motorist coverage of the vehicle, based on the responsibility of the unidentified hit-and-run driver. Petitioner insurer sought to stay arbitration on the ground that any recovery based on uninsured motorist benefits (to a limit of $25,000) is offset by the $25,000 respondent has already recovered for this same injury. Respondent's demand for arbitration clearly refers to the policy issued to driver Chambers. However, the only policy included in the record, in this proceeding to stay arbitration, is a separate policy issued by petitioner to the injured respondent passenger himself, in which respondent purchased supplemental uninsured/underinsured (SUM) coverage, and the court appears to have denied the petition to stay arbitration on the ground that petitioner failed to make a sufficient showing that recovery under the Chambers policy precludes recovery under the SUM provision of the policy issued to respondent.

Since respondent received $25,000 in settlement of his claimed injuries, any potential UM claim under either the Chambers policy or a SUM claim under respondent's own policy was offset by the prior settlement payment (see Matter of Metropolitan Prop. & Cas. Co. v Barriga, 281 AD2d 200 [2001]). Sufficient evidence was presented to the court to make such determination, inasmuch as there was no dispute as to the existence and terms of the Chambers policy or the amount of payment of the settlement in the underlying action.

233rd Street Partnership, L.P., v. Twin City Fire Insurance Company


Max W. Gershweir, New York, for appellants.
Churbuck Calabria Jones & Materazo, P.C., Hicksville
(Nicholas P. Calabria of counsel), for respondent.

Order, Supreme Court, New York County (Marylin G. Diamond, J.), entered January 8, 2008, which, insofar as appealed from, upon granting defendant's motion to renew, declared that the coverage provided by plaintiff State National Insurance Company to plaintiff 233rd Street Partnership in the underlying personal injury action was primary to the coverage under the policy provided by defendant, and that defendant was not obligated to reimburse plaintiffs for their defense expenses, unanimously reversed, on the law, with costs, to declare that State National and defendant are co-primary insurers and must share in the defense of the underlying action, and expenses thereof.

The court erred in basing its determination that defendant's policy was excess solely on the wording of that policy. We find that since, among other things, there is no primary insurance underlying defendant's policy, and its coverage is subject only to the payment of a deductible, the policy is not a true excess policy, but rather is a primary policy that, under certain circumstances, purports to shift losses to other available insurance (see Bovis Lend Lease LMB, Inc. v Great Am. Ins. Co., __ AD3d __, 2008 NY Slip Op 3150, *9-10 [1st Dept 2008]; Cheektowaga Cent. School Dist. v Burlington Ins. Co., 32 AD3d 1265 [2006]). Since we find that both State National's and defendant's policies are primary, their other insurance clauses cancel each other out, and both insurers are rendered co-primary (see State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 373-374 [1985]; Lumbermens Mut. Cas. Co. v Allstate Ins. Co., 51 NY2d 651, 655 [1980]).

Kaufmann v. Leatherstocking Cooperative Ins. Co.



Calendar Date: April 22, 2008
Before: Cardona, P.J., Mercure, Rose, Malone Jr. and Kavanagh, JJ.


Konstanty Law Office, Oneonta (James E. Konstanty
of counsel), for appellant.
Sugarman Law Firm, L.L.P., Syracuse (Timothy J.
Perry of counsel), for Leatherstocking Cooperative Insurance
Company, Inc., respondent.
Maynard, O'Connor, Smith & Catalinotto, L.L.P.,
Albany (Michael T. Snyder of counsel), for Hughson &
Benson Associates Insurance and others, respondents.

MEMORANDUM AND ORDER

Malone Jr., J.

Appeal from an order of the Supreme Court (Dowd, J.), entered October 3, 2007 in Otsego County, which granted defendants' motions for summary judgment dismissing the complaint.

In June 2004, plaintiff requested that defendant Hughson & Benson Associates Insurance (hereinafter H & B) provide him with a homeowners' insurance policy on property he owned at 159 County Highway 56 in the Village of Schenevus, Otsego County. H & B secured a policy through defendant Leatherstocking Cooperative Insurance Company, effective June 25, 2004 through June 25, 2005. Plaintiff tendered a down payment of $94 at that time and elected to pay the remainder of the premium in monthly installments. He was billed directly by Leatherstocking on a monthly basis, but soon began to fall behind in payments. On July 30, 2004, Leatherstocking sent plaintiff a notice of cancellation advising him that the policy would be cancelled on August 16, 2004 unless it received the minimum payment of $66.80. Although plaintiff remitted this amount, his late payment altered the installment payment schedule resulting in a higher monthly payment for August. On September 9, 2004, after plaintiff failed to make this payment, Leatherstocking sent him another notice of cancellation informing him that his policy would be cancelled on September 26, 2004 if it did not receive the minimum payment of $87.40. Plaintiff never remitted this payment and the policy was cancelled as a result.

On October 6, 2004, plaintiff's property was destroyed by fire, resulting in a loss of $92,243. Leatherstocking disclaimed coverage on the basis that the policy had been cancelled for nonpayment. Plaintiff, in turn, commenced this action against Leatherstocking, H & B and H & B's principals alleging causes of action for breach of contract and negligence. Following joinder of issue and discovery, defendants moved for summary judgment dismissing the complaint. Supreme Court granted the motions, resulting in this appeal.

Initially, plaintiff asserts that the final notice of cancellation was defective and did not operate to nullify the homeowners' insurance policy. Specifically, he argues that the notice did not properly set forth the amount due as required by the Insurance Law. This argument is unpersuasive as the provision he relies upon, Insurance Law § 3425 (c) (1) (A), is applicable to automobile insurance policies. In any event, it is belied by the record as the notice clearly stated that the minimum payment of $87.40 was necessary to keep the policy in effect. While plaintiff further asserts that he was not in default on his installment payments, the affidavits and testimony of Leatherstocking's former president establish that the installment payment schedule was altered as a result of plaintiff's initial late payment, a circumstance fully disclosed on the billing statements he received, and that he failed to remit the necessary amount to keep the payments current thereafter.

Leatherstocking clearly met its burden of proving that the final notice of cancellation was properly mailed to plaintiff by submitting proof of the standard operating procedure for mailing such notices, as well as by submitting proof of the actual mailing of such notice to plaintiff through the affidavit of an employee with personal knowledge (see Thibeault v Travelers Ins. Co., 37 AD3d 1000, 1001 [2007]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]). Plaintiff's testimony that he never received the final notice is, without more, insufficient to rebut the presumption of receipt (see Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230 [2004]). Consequently, Supreme Court properly granted summary judgment dismissing plaintiff's contract claims.

Plaintiff further contends that he maintained a special services agreement with H & B and its principals and that they were negligent in failing to inform him when his payments were past due so that he could avoid cancellation of the policy. Generally, insurance agents are not liable for actions other than obtaining insurance coverage for their insureds, unless a special relationship has been established between the parties (see Curanovic v New York Cent. Mut. Fire Ins. Co., 307 AD2d 435, 438 [2003]). Here, H & B and its principals submitted affidavits and deposition testimony establishing that no special arrangement was made with plaintiff through which they agreed to notify him of past due payments and plaintiff was specifically informed that he would be directly billed by Leatherstocking. Significantly, plaintiff did not submit proof sufficient to raise a question of fact on this issue as plaintiff's deposition testimony indicates that his claim is based upon conversations that he had with one of H & B's principals regarding an unrelated commercial policy. Consequently, Supreme Court properly granted summary judgment dismissing plaintiff's negligence claim as well. We have considered plaintiff's remaining contentions and find them to be without merit.

TAG 380, LLC, v ComMet 380, Inc.


Bruce G. Paulsen, for appellant.
Warren A. Estis, for respondent.

CIPARICK, J.:

In this appeal, we are asked to determine whether a long-term ground tenant breached its lease by obtaining insurance coverage expressly excluding "terrorism" where the lease required that the tenant maintain insurance coverage against loss or damage by fire and other named perils included under the terms of the New York Standard Fire Insurance Policy and Extended Coverage Endorsement in effect in 1989. We conclude that the lease required tenant to procure insurance covering the named perils without excluding "terrorism" as an underlying cause of the named peril and that, by failing to do so, the tenant breached its lease.

I.

The dispute in this case arose in the aftermath of the September 11, 2001 terrorist attacks, just prior to the enactment of the Terrorism Risk Insurance Act of 2002 (15 USC § 6701)[FN1]. During this time, it became the practice of insurance companies that provided coverage for large commercial properties in New York City to raise their premiums for policies covering potential damage caused by terrorists, or to exclude from coverage altogether all damage from terrorist acts (see 1 Kalis, Reiter, Segerdahl, Policyholder's Guide to the Law of Insurance Coverage 2008 Supplement § 13.07[b], 28-3).
Defendant, ComMet 380 Inc., a corporate real estate investment trust, is the fee owner of a commercial building at 380 Madison Avenue, in New York City. Plaintiff, TAG 380 LLC., a limited liability company managed by real estate developer Sheldon H. Solow, is the tenant of that property under a master ground lease. Both parties are successors to a 25-year lease, which became effective on January 26, 1989 and is scheduled to expire on January 16, 2014.

Section 6.01 (a) of the lease requires tenant to "keep and maintain" insurance for the value of the building "against loss or damage by fire and against loss or damage by other risks included under the standard Extended Coverage Endorsement as presently adopted for use with the New York Standard Fire Insurance Policy, in an amount not less than the then full insurable value of the Building" (see Insurance Law § 3404).[FN2] The Extended Coverage Endorsement in effect in 1989 obligates the lessee to provide full insurance for certain other named perils, including windstorm, hail, smoke, riot, civil commotion, explosion and physical contact with the building by an aircraft or vehicle, and specifically excludes from coverage damage to the building caused by, among other things, various water disasters, riots and war-like actions by sovereign nations or their agents. Section 6.03 of the lease requires that lessee furnish the owner with proof in the form of a "certificate or a duplicate original of such policy" not less than 30 days prior to the expiration of its current insurance policy.

On June 30, 2002, TAG's insurance policy - which provided for a blanket coverage against all losses without excluding terrorism - expired. A month earlier, ComMet had written to TAG, reminding it of the impending expiration date. Before the expiration date, TAG obtained a one-year, all-risk policy that covered all causes of damage, as before, but it specifically exempted from coverage all losses incurred as a result of terrorism. The policy further contained an exclusions section, entitled the "War Risk and Terrorist Exclusion," which disclaimed any action caused even remotely "by terrorism." Indeed, the new policy explicitly stated "TERRORISM IS EXCLUDED."

On August 5, 2002, TAG advised ComMet that it had purchased terrorism insurance valued at $100 million. ComMet asserted that this coverage amount was inadequate, claiming that the insurable value of the building was approximately $400 million. The same day, ComMet sent a Notice of Default to TAG, asserting that it had not complied with the terms of the lease. That Notice, pursuant to section 11.01 of the lease, initiated a 10-business-day cure period, in which TAG could avoid default by obtaining the required insurance coverage. During this period, TAG did not provide any proof of even the alleged $100 million coverage as required by the terms of the lease.

At about the same time, unbeknownst to ComMet, Solow Management purchased an additional one-year, $300 million terrorism insurance coverage for its properties, including coverage for 380 Madison Avenue. Thereafter, TAG has maintained an all-risk policy covering damage caused by terrorism. It was not until February 19, 2003, after the commencement of this action, however, that TAG provided ComMet with evidence of its $100 million terrorist insurance coverage, and later, on May 23, 2003, when faced with a subpoena, TAG finally disclosed the other $300 million terrorist insurance policy.

In the interim, in August 2002, TAG commenced this action by moving for a declaratory judgment and a Yellowstone injunction (see First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630 [1968]). ComMet counterclaimed for breach of contract damages, a declaratory judgment and attorneys' fees.[FN3] On October 28, 2002, Supreme Court granted the Yellowstone injunction, which prohibited ComMet from terminating TAG's lease pending the outcome of this action and tolled the cure period in the Default Notice. Thereafter, ComMet moved for summary judgment on its counterclaims. Supreme Court granted ComMet summary judgment, holding that TAG breached its lease agreement, declaring that TAG "had a duty under Section 6.01 of the Lease. . . to obtain insurance which does not exclude coverage for terrorism[,]" and awarding damages and attorneys' fees.

The Appellate Division modified Supreme Court's decision insofar as appealed from by declaring that TAG had no duty under the lease to maintain terrorism insurance, and reversed the damages and award of attorneys' fees [FN4]. We granted ComMet leave to appeal, and now modify the Appellate Division order by reinstating the judgment of Supreme Court.

II.

When interpreting an insurance clause, we have repeatedly stated that it is for the court to determine the parties' rights and obligations under an insurance policy based on the specific language of the policy (see Newin Corp. v Hartford Acc. & Indem. Co., 62 NY2d 916, 919 [1984]; Hartford Acc. & Indem. Co. v Wesolowski, 33 NY2d 169, 172 [1973]). Similarly, it is a basic contract principle that "when parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004] quoting W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]; see also Reiss v Financial Performance Corp., 97 NY2d 195, 198 [2001]). "We have also emphasized this rule's special import in the context of real property transactions, where commercial certainty is a paramount concern, and where . . . the instrument was negotiated between sophisticated, counseled business people negotiating at arm's length'" (Vermont Teddy Bear Co, 1 NY3d at 475, quoting Matter of Wallace v 600 Partners Co., 86 NY2d 543,548 [1995]).

Commercial property insurance is generally offered in either an all-risk policy or a named-perils policy (see Parks Real Estate Purch. Group v St. Paul Fire & Mar. Ins. Co., 472 F3d 33, 41 [2d Cir 2006]). "Named-perils" covers only specifically enumerated risks, whereas an "all-risk" agreement generally covers all risks of physical loss, except for those perils specifically excluded. Those losses caused by fraud or, in some cases, by a fortuitous and unforseen event are likewise excluded (see 7 Couch On Insurance 3d § 101:7). TAG was required to obtain only a "named-perils" policy to provide coverage for fire and the specifically named-perils in the standard Fire Insurance Policy and Endorsement. It is undisputed that the lease here is silent as to whether it includes or excludes acts of terrorism.[FN5]

Under Section 6.01 (a) of the lease, TAG was required to maintain insurance for the building against fire and loss or damage by other risks under the Standard Fire Insurance Policy and Endorsement, covering windstorm, hail, smoke, riot, civil commotion, explosion and physical contact with the building by an aircraft or vehicle, irrespective of whether the mechanism of loss was the result of a terrorist act. The standard Fire Insurance Policy, as set forth in Insurance Law § 3404 (e), provides that the insuring party must protect against all direct loss by fire and lightning, and provides for other minimum requirements for standard fire insurance policies (see Lane v Security Mut. Ins. Co., 96 NY2d 1 [2001]). Thus, fire insurance policies must contain "terms and provisions no less favorable to the insured than those contained in the standard fire policy" (Insurance Law § 3404 [f][1][A]). If a policy contains a less favorable term, it "is enforceable as if it conformed with the statutory standard" (1303 Webster Ave. Realty Corp. v Great Am. Surplus Lines Ins. Co., 63 NY2d 227, 231 [1984]).

In June 2002, TAG obtained insurance specifically excluding any damages caused by terrorism. TAG's insurance policy states "TERRORISM IS EXCLUDED," and it defines a "terrorist purpose" as:
"the use or threatened use of any unlawful means, including the use of force or violence."
The exclusions clause additionally provides that TAG's insurance does not cover any peril caused by terrorists:
"whether such loss or damage is accidental or intentional, intended or unintended, direct or indirect, proximate or remote in whole or in part caused by, contributed to or aggravated by any perils insured by the policy."

ComMet contends that "terrorism" includes actions taken by individuals who may use any of the enumerated perils to cause damage to the building. TAG, on the other hand, contends that the insurance it procured provided coverage for any of the named perils and thus it met its obligations under the lease, even though its policy excluded "terrorism." TAG is mistaken.

TAG's insurance violated Insurance Law § 3404. In Lane v Security Mut. Ins. Co. (96 NY2d 1 [2001]), we held that a fire insurance policy that excludes coverage for an intentional fire set by "an insured" violates Insurance Law § 3404. In that case, the plaintiff-insured's son, a stranger to the policy, damaged the insured premises by setting it on fire. We held that the insurer violated the Insurance Law by providing less coverage than the minimum level of coverage for fire insurance provided in the standard policy, because it disallowed coverage for a third party intentionally using fire to cause damage to the building. The same reasoning can be applied here too, where terrorists may cause fire damage to a building. We reject TAG's contention that because terrorism is not specifically mentioned as a named peril, it is outside of the coverage.

TAG's policy also failed to meet its coverage obligations under the lease. "Terrorism" is commonly defined as "[t]he use or threat of violence to intimidate or cause panic, [especially] as a means of affecting political conduct (see Black's Law Dictionary 1512-1513 [8th ed 2004]). The term is not limited to a specific cause of harm (e.g. a fire, explosion, collision with an aircraft), but rather it can also describe individuals, with a common purpose, who may potentially utilize any of the lease's named perils to cause damage to the building. Thus, by purchasing a policy that excludes from coverage all methods potentially used by terrorists, including the named perils in the lease, TAG breached its lease.[FN6]

The remaining issues are (1) whether ComMet is entitled to damages for the amount of money it paid in insurance premiums for the purchase of the necessary coverage; and (2) whether it is entitled to attorneys' fees. Section 12.01 of the lease permits ComMet to make payments to remedy TAG's default at TAG's expense, immediately and without notice in the case of emergency. In the immediate period following September 11, 2001, terrorist acts - against large Manhattan commercial buildings such as this one - were perceived threats. ComMet acted reasonably in procuring coverage to protect its ownership interests. The lease further required TAG to notify ComMet that it obtained adequate insurance 30 days prior to the lapse of its policy. It is undisputed that TAG eventually obtained insurance for $400 million for various properties, including the property here, but never disclosed nor furnished a copy of the policy until May 2003, many months after its previous policy had expired. By purchasing terrorist insurance, but failing to disclose that information to ComMet, TAG breached Section 6.03 and 6.05 of the lease agreement. Thus, ComMet must be reimbursed for any reasonable damages it incurred as a result of TAG's breach.

As to whether ComMet is entitled to attorneys' fees, generally, in a breach of contract case, a prevailing party may not collect attorneys' fees from the non-prevailing party unless such award is authorized by agreement between the parties, statute or court rule (see Hooper Assoc. Ltd. v AGS Computers Inc., 74 NY2d 487, 491 [1989]). Section 12.01 of the lease states:
"bills for all costs, expenses and disbursements of every kind and nature whatsoever, including reasonable attorneys' fees, involved in . . . enforcing any right against Tenant, under or in connection with this Lease, or pursuant to law . . . shall be due and payable . . ."
Thus, Supreme Court's award of attorneys' fees was proper.

Accordingly, the order of the Appellate Division should be modified, without costs, by reinstating the judgment of Supreme Court and, as so modified, affirmed.
* * * * * * * * * * * * * * * * *
Order modified, without costs, by reinstating the judgment of Supreme Court, New York County, and, as so modified, affirmed.
Opinion by Judge Ciparick. Chief Judge Kaye and Judges Graffeo, Read, Smith, Pigott and Jones concur.
Decided June 3, 2008

Footnotes



Footnote 1: Under this Act, the federal government and the insurance industry share the risk of loss from damage to commercial property and casualty loss arising from acts of terrorism.

Footnote 2: Insurance Law § 3404 (e) codified the New York standard fire insurance policy that insures against all "direct loss" caused by fire and lightning, and provides the "minimum level of coverage permissible" with respect to those perils (see Lane v Security Mut. Ins. Co., 96 NY2d 1, 5 [2001]).

Footnote 3: ComMet also counterclaimed for negligent misrepresentation and breach of the implied covenant of good faith and fair dealing. Such claims were rejected by both Supreme Court and the Appellate Division as duplicative of the breach of contract claim. We do not disturb that determination.

Footnote 4: Although not a subject of this appeal, ComMet additionally sued third-party defendant GMAC, its mortgage lender, for a declaration that (i) it is not obligated to purchase any insurances with respect to the property under the Loan Agreement and therefore is not in default thereunder; or (ii) that the Loan Agreement does not require ComMet to purchase terrorism insurance. GMAC counterclaimed by seeking a declaration, among others, that ComMet is required by the loan agreement to maintain terrorism insurance for the building. Supreme Court held that GMAC is entitled to a declaration that ComMet is required by the loan agreement to provide insurance for terrorism.

Footnote 5: The lease excludes some warlike activities by foreign actors, but it does not specifically disclaim all hostile actions by ad hoc paramilitary groups, such as al Qaeda. Thus, there is no issue that it is specifically tailored to address "terrorism" (see Pan American World Airways v Aetna Casualty & Surety Co., 505 F2d 989 [2d Cir 1974]; cf. Younis Brothers & Co. v Cigna Worldwide Insurance Co., 99 FSupp 1385 [E.D. Pa 1995], aff'd, 91 F3d 13 [3d Cir 1996]; see also 10 Couch on Insurance § 152.18 ["the standard war exclusion does not explicitly extend to acts of terrorism"]).

Footnote 6: Although promulgated after TAG's purchase of the offending policy, the Superintendent of Insurance's pronouncement that terrorism exclusions are against the public policy of the State and barred under the Standard Fire Policy (see NY State Ins Dept, Re: Applicability, Guidelines and Procedures for Compliance with the Provisions of the Terrorism Risk Insurance Act of 2002; Guidelines for the Use of Limitations for Acts of Terrorism in Commercial Property/ Casualty Policies, Circular Letter No. 25 [Dec 23, 2002]) lends support to ComMet's argument that allowing the decision below to stand is inconsistent with New York's public policy.

 

 

Jones v. Bill


Lawrence A. Breslow, for appellant.
Montgomery L. Effinger, for respondents.

KAYE, Chief Judge:

The question before us is whether, for the purposes of the federal Graves Amendment (49 USC § 30106), an action is "commenced" on the date of the initial filing of the summons and complaint, or on the date of joinder of the vehicle lessor. We conclude that the initial filing date is determinative.

On July 7, 2005, plaintiff Jones and defendant Bill were involved in a two-car accident injuring plaintiff. One month later, on August 8, 2005, plaintiff commenced an action [*2]against defendant Bill as "owner and operator" of the vehicle. On November 1, 2005, upon receiving Bill's answer denying ownership of the vehicle and claiming to have leased it from DCFS Trust (DCFS), plaintiff joined DCFS as a defendant by filing an amended summons and complaint.

Between the filing of the summons and complaint and the receipt of Bill's answer, on August 10, 2005, Congress amended the Safe, Accountable, Flexible, Efficient Transportation Equity Act to preempt New York Vehicle and Traffic Law to the extent that it prohibits imposition of vicarious liability on vehicle lessors for injuries resulting from the negligent use or operation of the leased vehicle ("Graves Amendment"). The Graves Amendment applies "to any action commenced on or after the date of enactment of this section" (49 USC § 30106 [c]). Defendants raised the Graves Amendment as an affirmative defense in their answer and then moved to dismiss the complaint against DCFS as barred by the federal statute. Plaintiff opposed, claiming to have commenced the action on August 8, 2005, with the filing of the initial summons and complaint, and in the alternative that the claim against DCFS related back to the original filing date (see CPLR 203 [c]).

Supreme Court granted DCFS's motion, dismissing the complaint against it. "Since the filing of a summons and complaint or summons with notice is the manner an action is commenced under CPLR 304, it follows that the filing under CPLR Rule 305 (a) commences the action against a new party. Thus, the November 1, 2005 filing, well after the August 10, 2005 effective date of the federal statute is untimely and the action against DCFS TRUST is barred by that statute." Plaintiff sought re-argument or leave to serve an amended complaint, which was denied. The Appellate Division affirmed, concluding that "the claim against the newly-added defendant, DCFS, was interposed on November 1, 2005, when the amended summons and amended complaint were filed (see CPLR 305, Perez v Paramount Communications, 92 NY2d 749) and the claim in the amended complaint insofar as asserted against DCFS is, therefore, barred" (34 AD3d 741, 742 [2d Dept 2006]). We now reverse.

Analysis

This case presents a question of pure statutory interpretation, meriting de novo review (see Weingarten v Bd. of Trustees of N.Y. City Teachers' Retirement Sys., 98 NY2d 575, 580 [2002]).

The Graves Amendment provides that it "shall apply with respect to any action commenced on or after the date of enactment of this section without regard to whether the harm that is the subject of the action, or the conduct that caused the harm, occurred before such date of enactment" (49 USC § 30106 [c]). Defendants urge that we read "commenced" - with regard to a party later joined - to refer to the date the claim is "interposed" against such party. Under New York law, however, an action is "commenced" "by filing a summons and complaint or summons with notice" (CPLR § 304). As a general proposition, we need not look further than the unambiguous language of the statute to discern its meaning (see Riley v County of Broome, 95 NY2d 455, 463 [2000]), and in this particular case we find no reason to do so. Thus, under the statute's plain language, any action filed prior to August 10, 2005 has been "commenced" and therefore removed from the federal statute's pre-emptive reach. Here, plaintiff "commenced" his action as of August 8, 2005, when he filed his summons and complaint.

In the context of computation of the statute of limitations, a calculation not relevant here, New York law provides for interposition of a claim against a "defendant or a co-defendant united in interest" (CPLR 203 [c])[FN1]. CPLR 203 (c), however, differentiates between when a "claim . . . is interposed" and "when the action is commenced," a distinction we find significant (see Valladares v Valladares, 55 NY2d 388, 392 [1988]; Williams v White, 40 AD3d 110, 112 [4th Dept 2007]). Section 203, further, requires that an action be commenced before interposition may occur ("[i]n an action which is commenced by filing, a claim . . . is interposed . . . when the action is commenced").

Related provisions of the CPLR additionally support this distinction. CPLR 305 (a) requires filing of a supplemental summons "[w]here . . . a new party is joined in the action and the joinder is not made upon the new party's motion" (emphasis added), and CPLR 1003 provides that "[p]arties may be added at any stage of the action by leave of court or by stipulation of all parties who have appeared, or once without leave of court . . . ." (emphasis added). These provisions clearly indicate that the "action" is already commenced for the purpose of joining the new party. In other words, joinder and interposition occur within the context of an existing action (see Leuchner v Cavanaugh, 42 AD3d 893, 894 [4th Dept 2007]).

The federal statute, moreover, fails to require the result pressed by defendants. Nothing in the language of the Graves Amendment suggests that it bars vicarious claims asserted in an amended pleading in an action commenced prior to its effective date. Congress's understanding of "commencement" as it pertains to initiation of a federal claim is incontrovertible; New York's commencement-by-filing system is modeled on its federal counterpart (see FRCP 3; Perez v Paramount Comm., 92 NY2d 749, 755 [1999]). Nor does the language of the Amendment require that the automobile lessor be named as a party prior to its effective date.

Although defendants urge us to glean congressional intent from the floor minutes surrounding the enactment of this contentious legislation (see 151 Cong. Rec. H1034-01), where the language of a statute is clear there is little room to "add to or take away from that meaning" (see Tompkins v Hunter, 149 NY 117, 123 [1896]). Moreover, if we were to find the word "commenced" somehow ambiguous, which we do not, the debates fail to shed any light whatsoever on Congress's intent with regard to vehicle lessors later joined by amendment, and we have found no other legislative history relevant to this specific point.

The rule we enunciate today is "clear and easy-to-follow" (see McAtee v Capital One, FSB, 479 F3d 1143, 1147 [9th Cir. 2007]). It appropriately limits potential claims against vehicle lessors without unwarranted abridgment of actions already underway. Without clearer indication from Congress, we see no reason to infer greater retroactive application of a law that otherwise denies injured plaintiffs a viable cause of action (see Majewski v Broadalbin-Perth Central School District, 91 NY2d 577 [1998]).

Accordingly, the order of the Appellate Division should be reversed, with costs, and the motion to dismiss plaintiff's amended complaint against defendant DCFS Trust denied.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and motion to dismiss plaintiff's amended complaint against defendant DCFS Trust denied. Opinion by Chief Judge Kaye. Judges Ciparick, Graffeo, Read, Smith,
Pigott and Jones concur.
Decided June 5, 2008

Footnotes



Footnote 1: We need not determine whether substantive application of CPLR 203 - as codifies New York's "relation back" doctrine - is applicable outside the statute of limitations context.

 

 

 

Preserver Insurance Company v Ryba



Max W. Gershweir, for appellant.
Richard J. Cohen, for respondents.

KAYE, Chief Judge:

At the heart of this dispute between two insurers - in a case where a construction worker allegedly suffered a grave jobsite injury - is the question whether the employers' liability insurance coverage is limited to $100,000, as specified in the policy, or unlimited. In this case we conclude that it is limited.

Factual Background

On May 17, 2003 Arthur Ryba, a New Jersey construction worker employed by subcontractor East Coast Stucco Construction, allegedly fell from scaffolding while performing work on premises in Orangeburg, New York, owned by general contractor Joaquim Almeida. At the time of the incident, East Coast Stucco, a New Jersey company, maintained a Workers Compensation and Employers Liability policy issued by Preserver Insurance Company, also of New Jersey. This policy was both underwritten and delivered in New Jersey. Despite East Coast's alleged agreement to have Almeida listed in its policy as an additional insured, it failed to do so.

Claiming that Almeida's negligence resulted in his paraplegia, Ryba asserted various causes of action against Almeida including common-law negligence and violations of New York Labor Law §§ 200, 240(1) and 241(6). Because Ryba claimed a grave injury, Almeida commenced a third-party action against Ryba's employer, East Coast Stucco, asserting causes of action for common-law indemnification/contribution, contractual indemnification and breach of contract for failure to procure the promised liability insurance.

On April 23, 2004, Preserver commenced this declaratory judgment action and sought summary judgment on the complaint's three causes of action. First, Preserver sought a declaration that it has no duty to defend Almeida's cause of action for contractual indemnification or for breach of contract for failure to procure insurance for Almeida because its policy expressly excludes coverage for any liability assumed under a contract. Second, Preserver argued that it had no duty to defend or indemnify East Coast Stucco against Almeida's cause of action for common-law indemnification because Ryba's accident in Orangeburg, New York, was not necessary or incidental to East Coast Stucco's work in New Jersey. Third, Preserver argued that if it must provide employers' liability insurance, coverage is limited to $100,000 as provided by the policy.

In response, Northern Assurance Company of America (Almeida's homeowners' insurer, incorrectly sued as "One Beacon Insurance Company") cross-moved for summary judgment on all three causes of action, contending that Preserver was time-barred under Insurance Law § 3420 (d) from disclaiming coverage, and that the Preserver policy is limitless as to the amount of coverage.

Supreme Court agreed with Northern, holding that Insurance Law § 3420 (d) applied because Preserver's policy was "issued for delivery" in New York and that Preserver was therefore time-barred from disclaiming coverage. The court then concluded that the policy itself required Preserver to provide unlimited employers' liability coverage [FN1]. The Appellate Division affirmed on both grounds. We now reverse.

Analysis

The policy at issue is a standard form workers' compensation and employers' liability contract, mirroring the format and language of model policies that appear in both the New York and New Jersey Workers Compensation and Employers Liability Manuals ("the Manuals").[FN2]

The Information Page. At the front of the policy is an "Information Page," which discloses the Policy Period ("Item 2"), Coverage ("Item 3") and Premium ("Item 4"). For ease of reference, a copy of the page is annexed to this writing.

Most notable is "ITEM 3. COVERAGE," which is divided into four subsections (A) - (D), the first three corresponding to various "Parts" - ONE through THREE - found in the body of the policy. In turn, Part One within the policy refers to "Workers Compensation Insurance," Part Two to "Employers Liability Insurance" and Part Three to "Other States Insurance." While the issue here centers on the coverage afforded by Part Two, all three parts provide useful information.

Item 3.A. in the Information Sheet reads "Workers Compensation Insurance: Part One of the policy applies to the Workers Compensation Law of the states listed here: NEW JERSEY." Item 3.B. states "Employers Liability Insurance: Part Two of the Policy applies to work in each state listed in item 3.A. The limits of our liability under Part Two are: Bodily Injury by Accident $100,000 each accident."[FN3] Item 3.C. reads: "Other States Insurance: Part Three of the policy applies to the states, if any, listed here: ALL STATES EXCEPT ND, OH, WA, WV, WY AND STATES DESIGNATED IN ITEM 3.A OF THE INFORMATION PAGE."

Part One. Within the body of the policy, "Part One-Workers Compensation Insurance" provides both defense and payment for costs resulting from bodily injuries caused by conditions of the insured's employment. Notably, Part One states: "Terms of this [workers compensation] insurance that conflict with the workers compensation law are changed by this statement to conform to that law."

Part Two. "Part Two-Employers Liability Insurance" contains no similar clause. Indeed, in a subsection titled "Exclusions" the policy makes clear that the employers' liability policy does not cover "any obligation imposed by a workers compensation, occupational disease, unemployment compensation or disability benefits law, or any similar law." Also of note in the "Exclusions" is that the employers' liability policy does not cover "liability assumed under a contract." In a subsection entitled "Limits of Liability," Part Two underscores that "[o]ur liability to pay for damages is limited. Our limits of liability are shown in Item 3.B. of the Information Page. They apply as explained below. (1) Bodily Injury by Accident. The limit shown for 'bodily injury by accident-each accident' is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident."

Part Three. Finally, "Part Three-Other States Insurance" states that "[i]f you begin work in any one of those states [shown in Item 3.C. of the Information Page] after the effective date of this policy and are not insured or are not self-insured for such work, all provisions of the policy will apply as though that state were listed in Item 3.A. of the Information Page." Part Three also requires that East Coast "[t]ell us at once if you begin work in any state listed in Item 3.C. of the Information Page" (presumably allowing for increased premiums for increased risk). There is no evidence that East Coast Stucco informed Preserver that it commenced operations on Almeida's New York property.

The policy concludes with several New Jersey endorsements and schedules mirroring stock forms found in the New Jersey Workers Compensation and Employers Liability Insurance Manual. There are no endorsements for New York or any of the other states included in Item 3.C. of the Information Page. Finally, despite East Coast's alleged agreement to have Almeida listed in its policy as an additional insured, he is not.

"Issued for Delivery": The Disclaimer Issue

New York Insurance Law § 3420 (d) provides that when a liability policy is "delivered or issued for delivery in this state, [if] an insurer shall disclaim liability or deny coverage for death or bodily injury . . . it shall give written notice as soon as is reasonably possible." It is undisputed that the policy was actually delivered in New Jersey by a New Jersey insurer to a New Jersey insured. Was the policy nonetheless "issued for delivery" in New York? We answer in the negative.

A policy is "issued for delivery" in New York if it covers both insureds and risks located in this state (see Columbia Casualty Co. v National Emergency Services, Inc., 282 AD2d 346, 347 [1st Dept 2001]; see also American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau, 265 AD2d 49, 53 [2d Dept 2000]). By including New York as an "Item 3.C." state, the policy covers risks located in New York. East Coast Stucco is, however, a New Jersey company, with its only offices located in that state, so it cannot be said that the insured is located in New York. Because the policy was neither actually "delivered" nor "issued for delivery" in New York, Preserver is not required by Insurance Law § 3420 (d) to make timely disclaimer of coverage.

Further, since the policy explicitly excludes coverage for any liability assumed under a contract, Preserver must neither defend nor indemnify East Coast Stucco for the contractual indemnification or breach of contract causes of action. And even if the policy were "issued for delivery" in New York, Preserver still would not be barred from denying coverage for Almeida's breach of contract claim since Insurance Law § 3420 (d) requires timely disclaimer only for denials of coverage "for death or bodily injury."

Limitation of Liability: The Contract Issue

By the terms of the policy, under the section entitled "Limits of Liability" in "Part Two-Employers Liability Insurance," Preserver states that its liability for damages is limited as shown in Item 3.B. of the Information Page and that this limit is the most it will pay for bodily injuries to an employee in any one accident. Item 3.B., in turn, states that the "limits of our liability under Part Two are: Bodily Injury by Accident $100,000 each accident."

Despite this clear limitation on coverage, Northern asks us to construe this contract to require Preserver to provide unlimited employers' liability coverage as if the policy were underwritten in New York, where the New York Manual requires that insurance policies provide unlimited employers' liability coverage. Northern's argument rests first on the fact that New York is included as an Item 3.C. state, and second on the provision of "Part Three - Other States Insurance" that if work begins in a 3.C. state "all provisions of the policy will apply as though that state were listed in Item 3.A. of the Information Page." In short, according to Northern, being listed as a 3.C. state is the same as being listed as a 3A state, and East Coast is entitled to coverage as if the policy were underwritten in New York. This argument misapprehends the plain language of the policy as well as the Manual.

Including New York as "a 3.C. state" means what the policy says it means: that if an accident occurs in such a state, all provisions of the policy will apply. This includes the stated limitation of coverage for employers' liability insurance to $100,000 per accident.

Nothing in the policy suggests that this cap evaporates when an accident occurs in a 3.C. state. Nor, significantly, does Part Two provide - as Part One does - that employers' liability insurance will conform to the workers' compensation laws of the state where the injury occurs. This conclusion is fortified by Part Two's "Exclusions," stating that this portion of the policy does not cover "any obligation imposed by a workers compensation . . . or any similar law." Plainly, nothing in the insurance contract supports Northern's argument for unlimited liability.

Limitation of Liability: The Law Issue

Both insurers agree that no statutory provision mandates unlimited employers' liability coverage. Northern, however, asks us to defer to the New York Manual, arguing that it requires insurance policies to provide unlimited employers' liability coverage, a requirement made applicable in this case because the risk took place in New York.

Northern is wrong. Preserver's "Information Page" mirrors sample information pages found in both the New York and New Jersey Manuals. Moreover, both states' manuals contain "Information Page Notes," which explain the terms and requirements of the information page. In both manuals, these Notes state that "[i]f the [insurance] company learns that the insured is conducting operations in a 3.C. state, and if the company agrees to continue coverage, the company should add that state to Item 3.A. and remove it from Item 3.C. Normal company procedures apply when the state is added to Item 3.A."

Obviously the significance of requiring the insurer to remove a state from 3.C. and add it to 3.A. is that there is a difference between the two categories - they are not automatically coextensive. Moreover, the insurer is required to move a state from 3.C. to 3.A. only if the insured provides notice that it has begun work in a 3.C. state. That did not happen here. In that event, the policy requires the insurer to move the state from 3.C. to 3.A. if it wishes to continue coverage and assume additional risk, presumably including a larger premium.

This last point is confirmed by another portion of the New York Manual, entitled "Rule VIII-Limits of Liability. Item 3.B. of the Information Page." The Manual states that for policies such as Preserver's - which provide both workers' compensation and employers' liability coverage - under Part Two-Employers Liability "[t]here is no limit for employees subject to the New York Workers' Compensation Law. The New York Limit of Liability Endorsement (WC 31 03 08), which must be attached to every policy affording New York coverage, provides for unlimited liability for employees subject to the New York law." This refers us to the endorsement titled "WC 31 03 08" which, in turn, requires an insurer to state that "We may not limit our liability to pay damages for [employers' liability insurance]." However, this form also explains that "This endorsement applies only . . . because New York is shown in Item 3.A." and a note at the bottom of the document states that this "endorsement must be attached to every policy showing New York in Item 3.A. of the Information Page."

Plainly, when a state is listed under Item 3.A., the insurer is required to provide a number of additional endorsements that are not required when the state is merely listed in Item 3.C. In East Coast Stucco's policy, which was underwritten in New Jersey, and which lists only New Jersey under Item 3.A., there are several New Jersey endorsements attached to the policy. None, however, provide unlimited employers' liability insurance. Whether New Jersey is listed as a 3.A. or 3.C. state, nothing in the New Jersey Manual requires that an insurer provide unlimited coverage.

The Preserver policy lacks any New York endorsements, precisely because New York is an Item 3.C. state. Here, even if Preserver is bound by the New York Manual, its employers' liability insurance for Ryba's injury should be capped at $100,000 because Preserver was not informed that East Coast was operating in New York. That being so, Preserver was not required to move New York from a 3.C. state to a 3.A. state, and not required to add an endorsement providing unlimited employers' liability insurance for injuries in New York.

Finally, we note that an amendment, effective September 9, 2007, to New York Workers' Compensation Law § 50 (2), now requires out-of-state employers with operations and/or employees in New York State to maintain workers' compensation insurance "through a policy issued under the law of this state." The New York Workers' Compensation Board has advised that this requirement can only be fulfilled when New York is listed in Item 3.A. of the policy's Information Page (see New York State Insurance Fund, Important Notice to Workers Compensation Insurance Policyholders Who Contract With Out-of-State Subcontractors, http://ww3.nysif.com/nysifmedia/pdf/phs/special_ notice_to_contractors.pdf [accessed May 9, 2008]; see also Workers' Compensation Board, Requirements for Out-of-State Businesses Working in NYS, http://www.wcb.state.ny.us/content/ main/outOfStateReq.jsp [accessed May 9, 2008]).

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted declaring that plaintiff has no duty to indemnify defendant East Coast Stucco & Construction, Inc. with respect to Almeida's contractual indemnification and breach of contract claims in the underlying action, and that plaintiff's duty to indemnify defendant East Coast Stucco & Construction, Inc. with respect to the remaining claims against it is limited to $100,000.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and judgment granted declaring in accordance with the opinion herein. Opinion by Chief Judge Kaye.
Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.
Decided June 10, 2008

Footnotes



Footnote 1: Supreme Court also awarded summary judgment to defendant relating to Preserver's duty to defend and indemnify on the underlying cause of action regarding common law indemnification and contribution. Plaintiff did not appeal that part of Supreme Court's order to the Appellate Division. Thus, that cause of action was not before the Appellate Division and is not before us.

Footnote 2: The New York Manual is issued by the New York Compensation Insurance Rating Board (NYCIRB), a private, non-profit association of licensed insurance companies that provide workers' compensation insurance in New York. The Manual itself declares that it "contains rules and procedures, classifications and rates . . . to govern the underwriting of Workers Compensation and Employers Liability Insurance . . . in the State of New York" (New York Workers Compensation and Employers Liability Manual, Administrative Rules and Procedures [A], at P-1 [eff Dec. 1, 2001][available at http://www.nycirb.org/2007/manuals/pdf/ 4comp.pdf]). While NYCIRB has statutory authority under Insurance Law § 2305 to set insurance rates - subject to approval by the Superintendent of Insurance - the source and scope of its broader lawmaking authority is less clear. For purposes of this case, we accept the concession of both parties that the Manual governs insurance policies underwritten in this state.

Footnote 3: The insured could, of course, have opted for greater amounts of coverage at a higher premium (New Jersey Workers Compensation and Employers Liability Manual, at Part Two, § 2, ¶ 1 [eff Jan. 1, 1999] [available at http://www.njcrib.com/manual/ Part2.pdf]).

Newsletter Sign Up