Source: http://connorscorcoran.com/tag/caselaw/
Timestamp: 2019-04-19 16:56:17+00:00

Document:
Met Opera’s motion to dismiss a star’s negligence action against it was properly denied.
In a decision by Justice Rolando Acosta, the First Department affirmed Special Term’s denial of the Met Opera’s motion to dismiss plaintiff’s negligence action. The Met based its motion on plaintiff’s status as the Met’s employee or special employee, which would have relegated plaintiff to the exclusive remedy of worker’s compensation per WCL §11.
By way of background, the New York Times reported on December 18, 2011 that mezzo soprano Wendy White, while singing the role of Marthe in Gounod’s “Faust” the preceding evening, fell from a platform eight feet above the stage as she made her entrance in Act III. http://www.nytimes.com/2011/12/18/arts/music/opera-singer-wendy-white-in-stable-condition-after-a-fall-at-the-met.html. As she walked onto a platform from a staircase, a hinge on a piece of plywood that connected the platform to the stairway broke, and Ms. White disappeared from view. The curtain was dropped and Ms. White was taken to the hospital. Id. Ms. White broke no bones but suffered nerve and muscle damage that has prevented her from singing professionally. http://www.nytimes.com/2012/10/02/arts/music/wendy-white-says-met-refuses-to-pay-her-after-injury.html.
Plaintiff performed at the opera house pursuant to a “Standard Contractor’s Agreement (Per Performance”) between the Met and her corporation, Wendy White, Inc. (WW, Inc.), which defined WW, Inc. as the “Contractor”.
The Standard Contractor’s Agreement was between the Met and plaintiff’s corporation and specified that plaintiff was an employee of her corporation.
The Standard Contractor’s Agreement did not cede total control of Ms. White’s performance to the Met, so the Met did not become her special employer.
Plaintiff’s corporation received only 1099’s, not W-2’s from the Met.
The Met paid her no employment benefits and had told her she did not qualify for the Met’s health insurance because she was not an employee.
The Met provided her with no training, supervision, or direction from the Met with respect to how to perform her role and did not pay for her voice lessons or coaching.
The legislative history behind section 2(4) stated that the section was intended to cover the vast majority of musicians and performers who are not in the star category, as opposed to star performers who are independent professionals able to negotiate the terms of their engagements.
Without plaintiff’s consent, the Met filed a worker’s compensation claim in New York with its worker’s compensation, which the Met’s WC carrier accepted “without prejudice”.
The Worker’s Compensation Board cancelled its proposed decision of accident, notice and causal relationship on the ground that claimant wanted the case to be discontinued because she had filed her own WC claim in New Jersey against her corporation-employer.
The Met had previously taken the opposite position in an unrelated case, Inre Metropolitan Opera Assn., Inc. and Operatic Artists of America, (327 NLRB No. 136, 327 NLRB 740, 744-745 1999 WL 112550, *9, 1999 NLRB LEXIS 113, *29-30 [NLRB 1999]).
Plaintiff’s corporation therefore met the definition of an “employer covered by this chapter,” inasmuch as it is a corporation “having one or more persons in employment” per WCL § 2(3).
Lastly, the failure of plaintiff’s corporation to have obtained a workers’ compensation policy compliant with WCL §50(2) did not mean that plaintiff was necessarily covered by the Met’s worker’s compensation policy, because the statutory consequence of failing to obtain such a policy is simply payment of a penalty. In addition, WCL §54(6)(c) provides that a corporation such as plaintiff’s, whose sole employee is an executive officer who owns 100% of the stock, need not purchase workers’ compensation for the employee. Moreover, plaintiff’s corporation was not seeking to invoke the benefits of the immunity provision of WCL §11 without fulfilling its corresponding obligation under the statute.
Defendant homeowner’s insurer properly rescinded the policy based on insureds’ innocent misrepresentation that the home was to be occupied, and the insurance broker had no duty to make sure the insureds properly filled out the application.
The Second Department held that defendant insurer properly rescinded plaintiffs’ fire insurance policy based upon the plaintiffs’ misrepresentation the residence would be owner-occupied because a misrepresentation can be innocently made and still trigger rescission. The Second Department also found that the broker had no obligation to make sure that plaintiffs properly filled out the insurance application.
Before plaintiffs bought the subject residence in Brooklyn, plaintiffs’ mortgage broker told plaintiffs that plaintiffs needed insurance to close. The mortgage broker contacted defendant insurance broker to procure a homeowners’ insurance policy based upon plaintiffs’ representations in their loan application that they would occupy the premises as their primary residence. Plaintiffs signed an application for owner-occupied homeowner’s insurance and defendant insurance carrier issued a homeowner’s insurance policy on the closing date.
After fire damaged the premises, defendant insurer discovered that plaintiffs did not occupy the premises as their primary residence and rescinded the policy, on the ground that plaintiffs’ material representation about occupancy induced the insurer to issue a policy that it normally would not have issued.
Plaintiffs sued the insurer and the insurance broker for breach of contract and negligence. Held: Supreme Court properly granted summary judgment to defendant insurer and defendant insurance and properly denied the plaintiffs’ cross motion for summary judgment against both defendants.
Plaintiffs admitted that, when they signed the application for insurance, they did not intend to occupy the premises. Plaintiffs unsuccessfully contended that, although the application was completed before to closing and before to the inception of the policy, the representation that the premises was an owner-occupied primary residence established, in effect, a material misrepresentation of a then existing fact that the premises would be owner occupied, which was sufficient for rescission under Insurance Law § 3105.
Secondary evidence of plaintiffs’ first application for insurance which plaintiffs signed was proof in admissible form under CPLR 4539[b]). And plaintiff’s unsigned second application was also admissible.
The question on the application about owner occupancy was unambiguous and therefore could properly serve as the basis for a claim of misrepresentation. Moreover, plaintiffs admitted that they did not read the application when they signed it, so they could not have been misled by any unclear language.
The insurer was not required to establish that plaintiffs’ misrepresentation was willful. An innocent or unintentional material misrepresentation is enough to warrant rescission of an insurance policy.
The policy language did not require a showing of willfulness for rescission based on a misrepresentation made when applying for coverage.
Although there was a question of fact as to whether the insurance broker was an agent or a broker vis-à-vis the insurer, there was no issue of fact as to whether the insurance broker knew of the material misrepresentation, so no such knowledge could not be imputed to the insurer.
With regard to the insurance broker, insurance brokers have a common-law duty to obtain coverage that their client request within a reasonable time or inform the client of the inability to do so, but they have no continuing duty to advise, guide or direct a client to obtain additional coverage. So to state cause of action for negligence or breach of contract against an insurance broker, plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy.
Although in exceptional circumstances a special relationship may develop between the broker and client that will make the broker liable for failing to advise or direct the client to obtain additional coverage even in the absence of a specific request, none of those circumstances applied here. The three exceptional situations are: (1) the agent receives compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on.
The insurance broker demonstrated that none of the exception circumstances applied and further demonstrated that it procured the insurance requested.
Tort-plaintiff is entitled to “made whole” rule vis-à-vis his no-fault carrier’s subrogation right against his tort settlement.
Tort-plaintiff (“plaintiff”) had sued tort-defendant (“defendant”) for plaintiff’s personal injuries resulting from their two-car accident. Plaintiff’s no-fault carrier had paid plaintiff $100,000 in APIP (additional personal injury protection), which the no-fault carrier has the right to recoup from plaintiff’s tort settlement.
Defendant’s carrier eventually offered defendant’s policy limit of $100,000 to settle plaintiff’s case. Plaintiff accepted the offer and served a supreme-court order to show cause on plaintiff’s no-fault carrier requesting a declaration that the no-fault carrier’s subrogation rights were limited to extended economic loss (that is, to the portion of the settlement allocable to the category of damages for which APIP benefits were meant to compensate). Respondent did not oppose supreme court’s adjudicating the dispute over its subrogation rights but contended that plaintiff owed it the full amount of the APIP benefits paid (some $39,500). Supreme court directed plaintiff to pay the no-fault carrier the full amount of APIP benefits paid. Plaintiff thereupon formally tendered the amount and pursed his appeal.
The no-fault carrier argued preliminarily that plaintiff’s tender of payment made the appeal moot, but the Fourth Department held that it did not, because the parties’ rights would be affected directly by the outcome of the appeal.
Plaintiff argued that, under the “made whole” rule, the no-fault carrier had no right of subrogation because plaintiff’s damages exceed the amount of the settlement.
[Explanatory note with regard to subrogation: If defendant’s insurance is insufficient to compensate plaintiff fully for plaintiff’s loss, plaintiff retains a right of action against defendant personally. In those cases where plaintiff has his own insurance that covers the balance of plaintiff’s loss (first-party insurance), and plaintiff’s first-party insurer in fact pays him, plaintiff’s first-party insurer acquires plaintiff’s right to pursue the defendant for the amount that plaintiff’s first-party insurer has paid. To state it another way, plaintiff’s first-party insurer is subrogated to plaintiff’s claim against defendant.
[The “made whole” rule then provides that if defendant’s insurance is inadequate to fully compensate plaintiff for his losses, plaintiff’s first-party insurer, whom the insured has paid to assume the risk of loss, has no right to share in the proceeds of the insured-plaintiff’s recovery from the tort-defendant. In other words, plaintiff’s first-party insurer may subrogate against only those funds and assets that remain after plaintiff-insured has been fully compensated. This designation of priority of interests assures that the injured party’s claim against the tort-defendant takes precedence over the subrogation rights of his first-party insurer.
Supreme court here, however, refused to apply the made-whole rule or to prorate the settlement between extended economic loss and pain and suffering, and instead had directed plaintiff to pay his no-fault insurer the entire amount of APIP benefits.
The Fourth Department agreed with plaintiff that supreme court should have applied the made-whole rule but remanded the matter for a determination as to (a) whether the settlement made plaintiff whole and (b) what portion of the $100,000 settlement was for plaintiff’s extended economic loss and what portion was for plaintiff’s pain and suffering.
The Fourth Department therefor reversed supreme court’s judgment (which had the additional defect of failing to declare the rights of the parties) and remitted the matter for the required determinations and for a judgment declaring the rights of the parties in accordance therewith.
Grinage v Durawa [in re ACA Insurance Co., respondent], 2016 NY Slip Op 07429 (4th Dep’t Nov. 10, 2016); http://nycourts.gov/reporter/3dseries/2016/2016_07429.htm.

References: §11
 § 2
 §50
 §54
 §11
 § 3105