Source: https://www.hurwitzfine.com/news/coverage-pointers-volume-vii-no-6
Timestamp: 2019-09-19 06:50:18
Document Index: 361604779

Matched Legal Cases: ['§ 3420', '§ 125', '§ 2281', '§ 5102', '§ 5106', '§65', 'art;\n3', '§ 38', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5106', '§ 103', '§ 3420', '§ 3420', '§ 3420', '§ 3420', '§ 3420', '§ 3420', '§ 3420', '§ 311', '§ 3420', '§ 3420', '§ 125', '§ 2281', '§ 2407', '§ 5102', '§ 5102']

Coverage Pointers - Volume VII, No. 6 | Hurwitz & Fine, P.C.
Coverage Pointers - Volume VII, No. 6
9/19/05 City of New York v. St. Paul Fire and Marine Insurance Company
Denial of Coverage Based on Automobile Exclusion Requires Timely Disclaimer, However Additional Insured that Failed to Provide Notice to Excess Carrier Loses that Coverage Even if Notice was Given by Another
Here, the subject policy provided coverage for bodily injury caused by an occurrence, so the claim in the underlying action fell within the coverage terms. The policy would provide coverage but for the exclusion relating to injury arising out of any insured's use of an automobile, which was claimed to apply. Therefore, the Supreme Court properly determined that the insurer was required to issue a timely disclaimer of coverage.
The insurer failed to sustain its burden of justifying the delay of more than four months in disclaiming coverage. "An insurer's explanation is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay". Since St Paul's disclaimer was predicated upon the alleged applicability of the automobile exclusion in the subject policy, its basis for denying coverage was readily apparent and thus, its delay in issuing the disclaimer was unreasonable as a matter of law.
However, additional insured that failed to give timely notice does not get coverage. The fact that an insurer may have received notice of the claim from the primary insured, or from another source, does not excuse an additional insured's failure to provide notice
9/19/05 MTO Associates v. Republic-Franklin Insurance Company
Question of Fact as to Whether Insurance Broker is Agent of Insurer
Insured sought a declaration that the defendant insurance company was obligated to defend and indemnify it in an underlying personal injury action. The defendant disclaimed coverage based on lack of timely notice of the claim. The plaintiff argued that timely notice of the claim was provided to the defendant by notice to a nonparty insurance broker. Generally, an insurance broker is considered the agent of the insured not the insurance company so notice to the broker is not deemed notice to the insurance company. However, when there is some evidence of 'action on the insurer's part, or facts from which a general authority to represent the insurer may be inferred', an agency relationship can be found. Here, where questions of fact whether there was a relevant agency relationship between the insurer and the agent and the defendant's cross motion for summary judgment was properly denied.
9/19/05 Kleynshvag v. GAN Insurance Company
A Warning Revisited:
We addressed this case back in December 2004 and now it returns by a grant of a motion to reargue. The only change is that the court remands for a calculation of interest against the insurer.
But, let’s revisit for old times sake:
Plaintiff made a prima facie showing of entitlement to judgment under Insurance Law § 3420(a)(2). He proved the existence of the judgment in his underlying action to recover damages for personal injuries. He also "establish[ed] that, at the time of the accident, there was in full force and effect an agreement of insurance between the insurer and the judgment debtor covering the latter for the liability merged in the judgment". The plaintiff established the latter element of his claim by showing that GAN was made a party respondent to the proceeding brought to stay the arbitration for uninsured motorist benefits, and knowingly chose not to participate therein. As a result, the Supreme Court, Nassau County, determined, upon GAN's default, that GAN insured the offending vehicle. Further, GAN chose not to seek to vacate that default for some five years, and evidently only after it was faced with the instant action. The latter motion was denied, and the resulting order was not appealed. Accordingly, under the circumstances of this case, the Court concludes that GAN is collaterally estopped from litigating the issue of coverage, even though that issue was initially determined on its default in the arbitration.
The Court noted that GAN admitted that its records were not maintained in such a way as would permit a search by vehicle identification or state registration number. Thus, in opposition to the plaintiff's prima facie showing of entitlement to judgment as a matter of law, GAN failed to raise a triable issue of fact. The Court held that GAN was responsible to pay the $125,000 judgment injured party took against “insured”. “It was GAN's burden to prove any limitation on the plaintiff's right to recover.” So, once again, a word of advice: don’t “refuse to participate” in proceeding and anger the Court!
9/19/05 Mueller v. Allstate Insurance Company
Auto Exclusion in Homeowner’s Policy Applies to ATV
Plaintiff was injured in an accident while a passenger an ATV owned by the Robinsons, and operated by their son, Jamar Robinson, who resided with them. It is undisputed that the accident occurred on a field approximately one-half mile from the premises owned by the Robinsons. Plaintiff commenced an action against the Robinsons and the Robinsons sought defense and indemnification in the underlying action from Allstate under their homeowner's insurance policy. Robinsons argued that an exclusion for motor vehicles designed principally for recreational use off public roads where the vehicle is owned by the insured and used off the insured premises does not apply to an ATV, which is not a "motor vehicle" as defined by Vehicle and Traffic Law § 125. The Court agrees with Allstate and holds that the policy exclusion is intended to apply to an ATV that is owned by the insured and operated off the insured's premises. Vehicle and Traffic Law § 2281 defines an ATV as "any self-propelled vehicle which is manufactured for sale for operation primarily on off-highway trails or off-highway competitions and only incidentally operated on public highways." The Court finds that a plain reading of the policy provision leads to the conclusion that an ATV is a "motor vehicle designed principally for recreational use off public roads".
9/19/05 Nelson v. Amicizia
Without Supporting Physicians’ Reports on Plaintiff's Restrictions, Herniated Disc Not Enough
Defendant made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) Defendant submitted the affirmed medical reports of an orthopedist and a neurologist, who both examined the plaintiff about three years after the accident, and determined that she had completely recovered from her injuries and suffered from no disabilities or impairments, and that she was able to perform all of her normal work and daily living activities without restrictions.
In opposition, the affirmations of the plaintiff's physicians and affidavit of the plaintiff's chiropractor were insufficient to raise a triable issue of fact. One physician's affirmation and the chiropractor's affidavit were based upon examinations of the plaintiff conducted within about one month of the accident and more than three years prior to the motion for summary judgment . Another physician's affirmation failed to set forth the objective tests used to arrive at his opinion of a loss in range of motion and appears to have been mainly based upon the plaintiff's subjective complaints of pain. The mere existence of a bulging herniated disc in the plaintiff's thoracic spine was not conclusive evidence of a serious injury in the absence of objective evidence of a related disability or restriction.
9/15/05 In re Liberty Mutual Insurance Company v, Roland-Staine
Court’s Getting Tougher and Tougher on Non-Cooperation Disclaimers
Here, the carrier tried to contact the insured and sent two certified letters and others by regular mail. It knocked on doors and tried to visit the insured to secure his cooperation. However, insurer was not able to demonstrate that insured owner actually knew that the carrier was looking for him. For example, the insurer did not contact the driver in order to see if the driver could aid in contacting the owner. Thus, the court held that the “evidence is insufficient to support an inference that [insured’s] failure to cooperate was deliberate and willful.” … “While the insurer is not required to show that the insured openly "avowed" its intent to obstruct the investigation of a claim, the facts must support an inference that the failure to cooperate was deliberate.”
9/15/05 Kidalso Gas Corp. v. Lancer Insurance Company
Insured Did Not Establish it Purchased Fire Coverage, Only Liability Coverage
While insured may have sought fire insurance (or even believed it was purchasing it), here, there was no proof that it did. It is apparent, from a review of the policy Lancer issued, that there is no coverage for the fire damage as plaintiff has claimed. All plaintiff established is that it sought insurance through Mystic, who in turn dealt with Insur-It, which placed insurance with Lancer. The application Mystic submitted was for garage keeper’s liability insurance and not for fire loss to plaintiff's premises. This was the type of policy that Lancer issued, that is, one providing for liability arising out of the use of customer automobiles and for incidental coverage for third-party claims for bodily injury sustained on plaintiff's premises.
9/15/05 Hock v. Aviles
Herniated Disks Do Not Necessarily a “Threshold Injury” Make – Toure Stikes Again
With respect to the "permanent loss of use" category, the law is clear that the permanent loss of use must be "total" in order to satisfy the serious injury threshold. Here, the evidence at trial did not establish a total loss of use of plaintiff's cervical spine. Nor did plaintiff's evidence demonstrate a "significant limitation" as required, since there was no objective medical proof as to the extent or degree of the limitation resulting from her injuries (see Toure v Avis Rent A Car Systems, 98 NY2d 345 [2002]. While plaintiff clearly had herniated discs in her spine, neither her testimony nor that of her expert witness established the requisite quantitative or qualitative limitations necessary to support a serious injury.
9/15/05 Automobile Insurance Company of Hartford v. Cook
Suit against Insured for Wrongful Death of Intruder Not Covered under Homeowner’s Policy
Decedent had entered Cook's home without permission and, during their discussions, Cook, armed with a handgun, retreated to his bedroom to retrieve a 12-gauge shotgun and then returned to the living room where the fatal confrontation occurred. Cook was indicted for a number of crimes, including murder in the second degree, stood trial and was acquitted on all counts of the indictment and lesser included crimes. So, the question here is whether Cook’s action which resulted in the death of the intruder was covered under his homeowner’s policy. The majority doesn’t think so. They find the shooting not an “accident” even though the intent to kill the intruder may not be present, the intent to cause bodily injury was certainly present.
The dissent argues that the policy provides that the insurer will supply a defense to Cook for any suit for bodily injury to a third party which arises from an "occurrence." An "occurrence," in turn, is defined as an accident. Similarly, the policy excludes from coverage any bodily injury "which is expected or intended by any insured." The dissent finds it apparent that certain causes of action are predicated upon Cook's allegedly intentional conduct and are, therefore, outside of the scope of this policy's protections. However, the complaint also alleges negligence on Cook's behalf and this claim, if established, would bring the events in question within the contemplation of the policy.
9/12/05 St. Luke's Roosevelt Hospital v. Blue Ridge Insurance Company
Sufficient Proof of Timely Submitted Claim Grounds for Denial of Dispositive Motion
Court holds that written proof of claim on behalf was timely submitted within 180 days after the date the services were rendered, as required pursuant to 11 NYCRR 65.12. The affidavit submitted by the defendant's claims representative was insufficient to demonstrate that the injuries for which Carias was treated did not arise out of an insured incident. Defendant's submissions failed to demonstrate that it denied Mario Delgado's claim for no-fault medical payments within the 30-day period prescribed by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3). Accordingly, the defendant's motion to vacate the judgment entered upon its default in opposing the motion for summary judgment should have been denied.
9/12/05 McCauley v.Vandina
Lack of Quantification of Limitations in IME Report Fails to Meet Defendant’s Initial Burden on Serious Injury
Defendant’s orthopedic expert examined plaintiff’s cervical and lumbar spines and stated in his affirmed report that "[r]otation and lateral bending are mildly limited." Nowhere in the report did he define or quantify the extent of the limitations, nor did he set forth the objective tests he used to arrive at this opinion. Court finds the defendant did meet the initial burden of showing an entitlement to summary judgment on the ground that the plaintiff did not sustain a serious injury.
9/12/05 American Casualty of Reading, PA, v. St. Charles Hospital and Rehabilitation Center
Self Insurance is not Insurance under Other Insurance Claus
A professional liability carrier for a physical therapist sought to impose an obligation to defend that physical therapist on a self-insured clinic where the underlying plaintiff, a patient, was injured and where the physical therapist was employed. The court held that while the clinic may be self-insured, self-insurance is not insurance. Accordingly self-insurance was not “other insurance” as referenced in the professional liability carrier’s policy. Since it was not, an obligation to defend and indemnify and reimburse under the “other insurance” clause in the professional liability policy, did not exist.
9/12/05 Tomco Painting & Contracting, Inc. v. Transcontinental Insurance Company
“Minimum Limits” are Not “Maximum Limits” – Pecker Iron Strikes Again
In this case, the endorsement states that "[t]he Limits of Insurance applicable to the additional insured are those specified in the written contract or agreement or in the Declarations for this policy, whichever is less." The limits of insurance contained in the Declarations for the policy are $1,000,000 per occurrence and $2,000,000 in the aggregate. However, in the written "subcontract" entered into between the plaintiff and the subcontractor, there is no mention of any specific limits of insurance. Therein, the plaintiff required only "[m]inimum general liability limits of 500,000/1,000,000 [emphasis supplied]." Under the facts of this case, the Court held that plaintiff, as an additional insured, is "an 'entity enjoying the same protection as the named insured'" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391 and concluded that the defendant must afford the plaintiff general liability insurance coverage in the sum of $1,000,000, as provided for in the Declarations for the policy.
Arbitrator Richard G. Martino, Esq.
Applicant Fails To Establish Medical Necessity for EMG/NCV Testing
Yet again, the Arbitrator reminds the parties that it is the Applicant’s burden, under 11 NYCRR §65.1(d), to establish medical necessity for the electro diagnostic testing. In the case of electro diagnostic testing, medical necessity is established if:
1. the patient makes subjective complaints consistent with the reason for the testing;
2. the physical examination reveals measurable objective findings of an abnormality with the same body part;
3. the medical provider clearly states the purpose for the test BEFORE it’s conducted; and
4. the results sought from the test are commensurate with the evaluation for further treatment as well as must ACTUALLY be considered in making the recommendation on future treatment.
The Assignor (eligible injured person) was involved in a November 28, 2004, motor vehicle wherein he complained of neck and mid back pain radiating into the upper and lower extremities. Upon initial examination by Dr. Rick J. Singh on March 4, 2005, nearly 4 months after the accident, Assignor demonstrated unquantified restricted cervical and lumbar ranges of motion. More importantly, the neurological examination revealed no loss of muscle strength and normal deep tendon reflexes. A few days later, Assignor followed up with Dr. Singh complaining of the same physical malady but demonstrated normal neurological findings. During that visit, Dr. Singh conducted EMG/NVC testing of the lower extremities.
The insurer denied the EMG/NVC testing based upon the peer review of Dr. James Sarno. Dr. Sarno opined that the testing was not medically necessary as the Assignor failed to demonstrate any significant neurological deficits.
Arbitrator Martino finding in favor of the insurer, held that initially it was the Applicant’s duty to demonstrate medical necessity for the testing. Thereafter, upon review of the evidence submitted Arbitrator Martino held that Dr. Singh’s reports did not establish medical necessity for the testing. Therefore, Arbitrator Martino deferred to the Dr. Sarno’s peer review who opined that the testing was not medically necessary as it was not based upon reported findings from the Assignor’s medical examinations.
Arbitrator Lynn A. Pucino, Esq.
Applicant Barred From Recovering For Service Provided By Another Not Owned By or Employed By the Service Provider
A medical provider cannot bill for services performed by a separate professional corporation that the provider does not own or does not employ the provider.
The Applicant, medical provider located in Dutchess County, billed the Respondent, insurer, for an MRI study conducted on the eligible injury person. However, the Applicant’s evidence revealed that the MRI study was conducted Radiology Associates of Poughkeepsie, PLLC. Moreover, Radiology Associates of Poughkeepsie, PLLC performed the MRI study at Saint Francis Hospital in Poughkeepsie.
Arbitrator Pucino found that there was no evidence that demonstrated the Applicant either owned Radiology Associates of Poughkeepsie or employed by the provider. Further, Arbitrator Pucino noted that had Applicant submitted the prescribed claim forms, i.e., NYS NF-3, it would have had an opportunity to address its relationship with Radiology Associates of Poughkeepsie.
Arbitrator Robyn G. McAllister, Esq.
CPT Testing Is Not Medically Necessary Due To Its Unreliability
CPT testing is not medically necessary due to its unreliability. The testing is based upon subjective responses from the patient and the results are dependent upon motivational factors.
Arbitrator McAllister denied Applicant’s request for reimbursement for CPT testing based upon the evidence submitted by the parties and counsel’s argument at the arbitration. Arbitrator McAllister’s award indicates that the insurer submitted in support of its position a peer review from Dr. William Ross. Dr. Ross, cited various medical journals, opined that CPT testing is not medically necessary as it is not an objective electro diagnostic test due to its dependency upon the patient’s subjective response. Further, Arbitrator McAllister cited prior no-fault arbitration decisions which (Pelham Physical Med & Rehab v. GEICO, NF 2802; McLean Ave. Med. v. GMAC Ins. Co., NF 2979) found CPT testing is not reliable and therefore not medically necessary.
9/15/05 Knoll v. Seafood Express
2005 NY Slip Op 06697 (Court of Appeals)
Plaintiff’s Pre-Existing Brain Condition Not A Serious Injury – Pommells Strikes Again
In a one sentence decision, the Court of Appeals held that plaintiff failed to submit medical proof to rebut the defendant’s submissions that plaintiff’s benign brain stem angioma condition preexisted the accident and was not a serious injury. Of course, the high court cited Pommells.
9/15/05 Eaton Hydraulics Inc. v. Continental Casualty Co.
Statute of Limitations on Excess Carriers’ Duty to Defend Does Not Begin to Run Until Request for Duty to Defend is Refused and Primary Coverage is Exhausted
The plaintiff filed this action against its primary and excess insurers, alleging that the defendants had improperly refused to defend and indemnify it in regards to a lawsuit brought against it by federal and state governmental entities. The lawsuit brought against the plaintiff had resulted in a settlement in which the plaintiff agreed to fund the clean-up of the contaminated sites, and reimburse the respective governmental entities for all response costs. Subsequent to the settlement, the plaintiff sought coverage for the administrative enforcement proceedings that preceded the governments’ lawsuit. Upon their refusal, the plaintiff sued its primary insurers, and, as Does 151 through 200, its excess carriers. The Doe defendants were never identified or served. The trial court held that the environmental claims were the equivalent of a suit, and, as a result, concluded that the insurers had an obligation to defend the plaintiff against the claims. The court of appeals, reversed, holding that the duty to defend a suit does not include the duty to defend an administrative claim. The parties to the suit eventually reached a tolling agreement in which the suit was dismissed with prejudice as to the plaintiff’s claim for defense costs associated with the enforcement proceedings, and without prejudice as to any claim for indemnity for the administrative enforcement proceedings or any other claim or suit and any claim for defense costs arising from suits as defined by California law. Subsequently, the plaintiff filed this lawsuit against the primary insurers it had previously sued, and four umbrella carriers, alleging that the primary carriers owed it defense costs and indemnification with respect to the claims and the lawsuit, and that the excess carriers were liable for coverage to the extent that it was not entitled to coverage under the primary policies. The excess carriers demurred, claiming that they had not been parties to the tolling agreement, and, that the statute of limitations had run in the time since the plaintiff had made the same claims against the primary carriers that the it was now asserting against them. The plaintiff claimed that the statute of limitations did not begin to run until the court decided that the duty to defend did not extend to administrative claims. Thus, it argued that the excess carriers’ obligation to provide coverage when there is no applicable primary insurance was triggered when the court held that the primary policies did not provide coverage for the pre-suit costs of the administrative claims. On appeal, the court held that the trial court erred in sustaining the excess carriers’ demurrer. First, it held that a “cause of action for refusal to defend accrues upon discovery of loss or harm, i.e. when the insurer refuses to defend. It then noted that because the excess carriers had never been identified or served in the underlying lawsuit, the complaint in that lawsuit could not be regarded as establishing that the carriers had refused to defend the plaintiff at the time the complaint was filed. Second, the court stated that the “duty to defend is continuing, and . . . the limitations period is equitably tolled from the time the cause of action accrues . . . until the underlying lawsuit is terminated by a final judgment.” Thus, the fact that the plaintiff commenced a lawsuit against its primary and unknown excess insurers was of no consequence. Instead, it again concluded that the running of the statute of limitations was completely dependent on when the excess carriers refused coverage. Finally, the court determined that, because the carriers were excess, or umbrella insurers, their duty to defend the insured could not arise until the primary coverage had been exhausted. Because this had not occurred at the time the excess carriers claimed the statute of limitations had began to run, the plaintiff could not be precluded from bringing its claims against them. Thus, the court reversed and remanded the case to the trial court.
Submitted by: Bruce Celebrezze & Tara Riedley (Sedgwick, Detert, Moran & Arnold LLP)
9/13/05 Echavarria v. National Grange Mutual Insurance Company
Certificate of Mailing Log Procedure Established Adequate Notice of Cancellation
Defendant insurance company used a mailing log procedure for sending a notice of cancellation to plaintiffs for failure to pay additional premiums with respect to a policy of automobile insurance. Plaintiffs alleged that mailing procedure was ineffective under CT General Statutes § 38a-343(a) to effect cancellation of policy because the mailing procedure was inadequate to show the chain of custody of the letter and defendant had failed to supplement a copy of the certificate of mailing with testimonial evidence that the notice was actually handed over to the post office. In ruling for the defendant, the court held that sending a notice of cancellation by mail evidenced by a certificate of mailing satisfied the obligation imposed by the statute and there is no reference in the statute to any additional evidentiary requirement beyond the certificate itself as proof of mailing.
Submitted by: Bruce Celebrezze & James Shafer (Sedgwick, Detert, Moran & Arnold LLP
9/12/05 Lawson v. Hoke
Statute Denying Claims by Uninsured Motorists for Noneconomic Harm Upheld
The Oregon Supreme Court upheld the constitutionality of a statute, ORS 31.715, which specifically precludes uninsured drivers from recovering “noneconomic damages” for injuries sustained in an action arising out of the operation of a motor vehicle. In this case, an uninsured driver plaintiff suffered economic and noneconomic harm as a result of defendant’s negligence. The Supreme Court upheld the denial of damages for noneconomic harm and rejected plaintiff’s argument that such legislation violated Oregon’s constitution by denying an “absolute common-law right” that existed when the constitution was adopted.
Submitted by: Bruce Celebrezze & James Shafer (Sedgwick, Detert, Moran & Arnold LLP)
8/26/05 Riddle v. Southern Farm Bureau Life Insurance Company
Bad Faith in Underwriting Determination Precludes Denial of Coverage
Here, Mr. Riddle applied for a $200,000 life insurance policy and paid the first month's premium. He received a conditional receipt. stating, among other things, that the insurer must "be satisfied that each person proposed for insurance...is a risk insurable by the Company under its rules, limits and standards for the plan and the amount applied for." Prior to the application being processed Mr. Riddle was killed in a motor vehicle accident. The Company proceeded to conduct an underwriting investigation and determined that Mr. Riddle was not an insurable risk at the time he applied for the policy. Coverage was denied and the premium refunded. This lawsuit followed seeking contractual and punitive damages for bad-faith. A judgment for the full policy benefit was entered against the Company but the District Court Judge did not allow the issue of punitive damages to go to the jury. Both sides appealed.
The Court of Appeals determined that the evidence supported a finding that the Company took extra efforts to find reasons to deny coverage. The Company contended it simply followed its usual procedures, disregarding the fact the applicant had already died. However, there were no manuals or memos supporting this procedure. Evidence established each person reviewing the underwriting file had different reasons for rejection, one of them being that the premium had already been paid. In fact, one employee acknowledged that the file was reviewed more closely and with a "fine tooth comb." In other words, there was significant support for the jury's finding that the Company was looking to deny coverage. Despite this increased scrutiny, the Court also acknowledged the applicant not only had a variety of serious medical conditions but that the application had not been truthfully completed.
Applying Kentucky law, the Court upheld the jury verdict against the insurer, finding that the Company's failure to honor its duty of good faith in properly and fairly investigating the application deprived it of any right to deny coverage due to the applicant's health history and misstatements on the application. "The fact that the [insurer] might have found the applicant uninsurable had the [insurer] acted in good faith is not relevant...." The insurer, according to the Court, was obligated to determine in good faith whether Mr. Riddle satisfied its underwriting requirements and this was a condition precedent to its ability to decline coverage. The insurer's failure to comply, without any fault by the applicant, estops it from declining coverage. "In Kentucky, an insurance company's failure to determine, in good faith, an applicant's insurability before rejecting coverage deprives it of any benefit it might obtain from that condition. So long as the plaintiffs produced sufficient evidence to convince a reasonable jury that the [insurer] rejected Riddle's application in bad faith, the fact that [the insurer] might have found Riddle uninsurable had they acted in good faith is not relevant...."
Finally, the Court held the District Court Judge erred in not allowing the issue of punitive damages to be determined by the jury. Accordingly, the case was remanded for hearing on that issue.
Submitted by: Gary Schuman, Sr. Counsel - Life & Health Insurance, Aon Corporation
In re Liberty Mutual Insurance Company v, Roland-Staine
Robin, Schepp, Yuhas & Harris, New York (Charles V. Hyde of
Law Offices of Bruce A. Lawrence, Brooklyn (Christine L.
Fontaine of counsel), for General Assurance Company,
Order, Supreme Court, New York County (Leslie L. Lowenstein, Special Referee), entered February 27, 2004, which denied petitioner's application to stay an uninsured motorist arbitration, unanimously reversed, on the law, without costs, and the petition to stay arbitration granted.
Respondent Florence Roland-Staine was a passenger in an automobile that was operated by Sandra Bennett and rear-ended by a car owned by respondent Wilfrido Taveraz. The police report indicates that Taveraz lives at 104 West 174th Street, and that his automobile was insured under a policy issued by General Assurance Company (General). At the time of the accident, Nelson Ocana was driving Taveraz's car. Staine filed a third-party claim under the uninsured motorist endorsement of Bennett's policy with Liberty Mutual Insurance Company (Liberty).
Staine then filed a demand for arbitration of her claim against Liberty. Liberty moved to permanently stay the arbitration, or, alternatively, for a temporary stay pending a determination as to whether the Taveraz vehicle was uninsured. Staine opposed the motion, arguing that General had disclaimed coverage based upon Taveraz's lack of cooperation with it. The IAS court held the petition in abeyance pending a determination by a special referee as to whether Taveraz was uninsured. A hearing was held on this issue. Alfred Travers, a special investigator employed by General, testified. Travers stated that on June 24, 2002 he went to 104 West 174th Street, Apt 5B, the address on file with General for Taveraz. No one was there, and he left a letter requesting that Taveraz contact General. He recounted that on July 18, 2002, he looked for Taveraz at 1600 Nelson Avenue, and again at 104 West 174th Street, but no one was at either location, and Travers left "contact letters" in both places. On cross-examination, Travers [*2]admitted that he did not attempt to contact Ocana although he knew that Ocana lived at 1478 Walton Avenue.
General also introduced four letters into evidence, all of which were sent by certified mail to Taveraz. The first and third letters were sent "return receipt requested," and both were returned to sender unclaimed. The first letter, which was returned as unclaimed, was dated May 30, 2002, and sent to the 174th Street address. It advised Taveraz that he had breached the terms of his policy with General by failing to report the accident, but it did not request that Taveraz contact General. The letter stated "[w]e will endeavor to complete an immediate investigation and advise you if we will provide coverage." The second letter, dated June 17, 2002, was also sent to the 174th Street address. It was written by a claims adjustor for General, who requested that Taveraz contact the insurer to provide a statement about the accident. The third letter, also returned as unclaimed, dated June 21, 2002, was sent to the Nelson Avenue address. It informed Taveraz that coverage could be denied because of his failure to fulfill his obligations under the policy. Again, this letter did not request that Taveraz contact the insurer. The fourth letter, dated July 19, 2002, was sent to both 174th Street and Nelson Avenue. It disclaimed coverage due to Taveraz's failure to report the loss, confirm the details of the accident, or contact the insurer.
At the close of evidence, the referee requested written submissions from the parties. He thereafter concluded that Taveraz had failed to cooperate with General, giving it the right to disclaim coverage. This was error.
When an insured deliberately fails to cooperate with its insurer in the investigation of a claim as required by the policy, the insurer may disclaim coverage. However, to prevent innocent injured parties from suffering the consequences of a lack of coverage based upon "the imprudence of the insured, over whom he or she has no control," courts strictly scrutinize the facts and will allow a disclaimer due to lack of cooperation only where, inter alia, the insured's actions are deliberate (Matter of New York Cent. Mut. Fire Ins. Co. v Salomon, 11 AD3d 315, 316 [2004]; Mount Vernon Fire Ins. Co. v 170 E. 106th St. Realty Corp., 212 AD2d 419, 421 [1995], lv denied 86 NY2d 707 [1995], citing Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168 [1967]). To establish lack of cooperation, the insurer, here General, must prove (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that its efforts were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured was one of "willful and avowed obstruction" (New York Cent., id., citing Thrasher, id.).
While the insurer is not required to show that the insured openly "avowed" its intent to obstruct the investigation of a claim, the facts must support an inference that the failure to cooperate was deliberate (Mount Vernon Fire Ins., supra at 420). "Mere inaction" by the insured, as in this case, is an insufficient basis for disclaimer (Matter of Empire Mut. Ins. Co. [Stroud], 36 NY2d 719, 721-722 [1975]).
In Stroud, the insurer's adjuster sent letters to the insured by regular and registered mail. The letters sent regular mail were not returned, but the registered mailings were returned undelivered. The adjuster in Stroud twice visited the addresses known to the insurer, and communicated with the insured's broker and the Department of Motor Vehicles. The Court of Appeals found that these efforts were insufficient to establish lack of cooperation because there was no evidence that the insured had actually received any postaccident communications (id. at 721). As the Court explained, "the inference of non-co-operation must be practically compelling" (id. at 722).
The facts of this case fall squarely under the holding in Stroud. General obtained two [*3]addresses for Taveraz, from DMV records and another database, and its investigator went to these locations in attempts to find the insured. Taveraz was not at either place, and there is no evidence that the investigator spoke to anyone at either location to verify Taveraz's address. Further, there is no indication that Taveraz received any of the the letters mailed to him or left at either of the two locations visited by the investigator. The insurer did not attempt to contact Ocana, the driver of Taveraz's car, to inquire as to Taveraz's whereabouts, and no one else was questioned to determine whether Taveraz actually lived at either of the addresses.
Thus, the evidence is insufficient to support an inference that Taveraz's failure to cooperate was deliberate and willful. Indeed, the inference of noncooperation is far from the "practically compelling" showing contemplated in Stroud. Accordingly, we reverse the order appealed and grant the petitioner's application for a stay of arbitration.
Kidalso Gas Corp. v. Lancer Insurance Company
Nesci Keane Piekarski Keogh & Corrigan, White Plains (Jason
M. Bernheimer of counsel), for appellant.
Altman & Altman, Bronx (Joseph A. Altman of counsel), for
Order, Supreme Court, Bronx County (Patricia Anne Williams, J.), entered on or about May 6, 2004, which denied defendant Lancer Insurance Company's cross motion for summary judgment, unanimously reversed, on the law, without costs, Lancer's cross motion granted and the complaint dismissed. The Clerk is directed to enter judgment accordingly.
In these consolidated actions, plaintiff Khalsa Gas Corp. (mistakenly spelled in the caption as Kidalso) seeks payment from Lancer Insurance Company (Lancer) for a fire loss. Defendant Lancer has denied the claim because it asserts that the insurance it issued to plaintiff was a "Garage Non-Dealer Liability Policy" (the policy), that did not cover fire or other property damage.
Plaintiff obtained the policy through Mystic Brokerage Inc. (a defendant in the second action). On April 4, 1999, Mystic prepared a "garage application" for insurance on behalf of plaintiff. The application was signed by a Mystic employee and, as relevant to the question of whether the policy provided fire insurance, a box on the application requesting "Fire Legal Liability" was checked. However, another box on the application, for "Fire or Explosion" coverage, was not checked. Mystic submitted the application to Insur-It Agency, a codefendant of Lancer. Lancer issued plaintiff Policy No. GN 602663 on April 23, 1999, and on April 27 Insur-It sent Mystic a confirmation that coverage was effective as of April 23. Shortly thereafter, on May 9, 1999, plaintiff's gas station was damaged by fire. After the fire, Mystic sent a memo to Khalsa dated May 20, 1999, stating that the "down payment of $1,481.00 was for full coverage." Plaintiff made a claim under the policy and Lancer declined coverage.
Plaintiff commenced these actions against Lancer, Insur-It Agency d/b/a D.C. White Agency, and Mystic Brokerage. Thereafter, Lancer moved for summary judgment to dismiss the [*2]complaint, arguing that plaintiff had no claim against it because the policy was not a commercial fire policy and it did not have any property extensions. In opposition, plaintiff submitted the affidavit of its president, Dilbag Singh. He asserted that based on the application and memos exchanged by the parties, his fire loss was covered under the Lancer policy. The IAS court denied the cross motion, noting that while plaintiff's opposition may have been confusing, the relationship among the parties was also unclear, precluding summary relief.
We reverse. It is apparent, from a review of the policy Lancer issued, that there is no coverage for the fire damage as plaintiff has claimed. All plaintiff has established is that it sought insurance through Mystic, who in turn dealt with Insur-It, which placed insurance with Lancer. The application Mystic submitted was for garagekeeper's liability insurance and not for fire loss to plaintiff's premises. This was the type of policy that Lancer issued, that is, one providing for liability arising out of the use of customer automobiles and for incidental coverage for third-party claims for bodily injury sustained on plaintiff's premises.
It is basic that it is the insured which has the burden of showing that the insurance contract covers the loss for which the claim is made (Roundabout Theatre Co. v Continental Cas., 302 AD2d 1, 6 [2002]; Simplexdiam v Brockbank, 283 AD2d 34, 37 [2001]; Chase Manhattan Bank v Travelers Group, 269 AD2d 107, 108 [2000]). It is also true that plaintiff's burden on a motion for summary judgment is merely to raise a question of fact as to the coverage under the policy (see Aimatop Rest. v Liberty Mut. Fire Ins. Co., 74 AD2d 516 [1980]). However, even according plaintiff every favorable inference on the record before us, plaintiff has failed to raise an issue as to whether its fire was covered under the subject policy. The after-the-fire (May 20, 1999) memo from Mystic to Khalsa is of no assistance to plaintiff. While it states that Khalsa's down payment was for "full coverage," the meaning of that term is not explained, and the memo was not issued by Lancer. Further, plaintiff has not asserted that there was an agency relationship between Lancer and Mystic. If plaintiff has a remedy, it is not against Lancer.
Hock v. Aviles
Thomas Torto, New York, for appellants.
Seligson, Rothman & Rothman, New York (Martin S. Rothman
Order and judgment (one paper), Supreme Court, Bronx County (Anne E. Targum, J.), entered on or about April 20, 2004, which, after a jury trial, awarded plaintiff $442,845 plus interest, unanimously reversed, on the law, the facts and in the exercise of discretion, without costs, the judgment vacated and the matter remanded for a new trial on the issues of damages and whether the plaintiff satisfied the serious injury threshold of Insurance Law § 5102(d).
Plaintiff was injured on February 18, 1999 when the car she was driving in Upper Manhattan was struck from behind by an ambulette owned by defendant Avet Coach Corp. and driven by defendant Aviles. After the accident, plaintiff complained of pain radiating down her arms and into her hands. She was examined at St. Luke's Hospital, where a cervical collar was placed on her neck and x-rays and MRIs were taken. The MRIs showed multiple disc herniations, straightening of the cervical lordosis and foraminal stenosis at the C4-5 and C6-7 levels. The MRIs further showed preexisting degenerative conditions of her cervical spine, including osteophytes and spondylosis. Surgery was recommended, but plaintiff requested a transfer to a hospital in Pennsylvania near her home.
After plaintiff's transfer to Sacred Heart Hospital in Pennsylvania, her diagnosis by the medical staff was "cervical spondylosis and disc herniation C5-6 left greater than right." After explaining the risks to her, a surgeon at Sacred Heart, Dr. Morrow, performed the following surgery: "Anterior cervical discectomy with allograft fusion and plating at C4-5 and C5-6 for cervical radiculopathy." After the surgery, plaintiff suffered limited movement of her neck, but the conditions in her arm and hands improved substantially.
At trial, plaintiff relied on the expert testimony of a neurologist, Dr. Shields, who was not plaintiff's treating physician, but rather examined her on three occasions between 6 and 12 months after the accident. Dr. Shields, who also reviewed the hospital records and MRI films, diagnosed plaintiff with, inter alia, post-traumatic cervical myofascitis, post-traumatic bilateral radiculopathy, multiple disc herniations and cord impingement at all levels with neuroforaminal narrowing throughout. Dr. Shields acknowledged that the MRIs of plaintiff's cervical spine revealed preexisting degenerative conditions, and gave his medical opinion that the injuries suffered to plaintiff's spine, namely central cord syndrome and nerve root damage, were caused by the accident of February 18, 1999. [*2]
Defendants called three medical experts, including the only radiologist in the case, all of whom testified that plaintiff's condition was the result of the degenerative condition of her back. They further stated that no evidence existed on the MRIs to show that the condition of plaintiff's cervical spine was affected by a traumatic injury.
The jury returned a verdict in favor of plaintiff, specifically finding that she had a degenerative condition in her cervical spine prior to the accident, that such condition was aggravated by the accident, that the accident was a substantial factor in bringing about her injuries and that as a result of the accident plaintiff suffered a "permanent loss of use of a body organ, member, function or system" and a "significant limitation of use of a body function or system" (Insurance Law § 5102[d]). The jury awarded plaintiff $50,000 for past pain and suffering and $350,000 for future pain and suffering for a period of 35 years.
Following the verdict, defendants moved for judgment notwithstanding the verdict, arguing that the evidence failed to establish a serious injury under the Insurance Law, or, alternatively, that the jury's verdict was against the weight of the evidence. Additionally, defendants argued that the court committed "fundamental evidentiary error" in permitting plaintiff's non-treating physician to testify as to plaintiff's history, complaints and causation, and that the damages were excessive.
On appeal, defendants make the same arguments previously raised in their post-trial motion. Initially, we agree with defendants' argument that plaintiff's evidence failed to establish that she suffered a serious injury under Insurance Law § 5102(d). With respect to the "permanent loss of use" category, the law is clear that the permanent loss of use must be "total" in order to satisfy the serious injury threshold (Oberly v Bangs Ambulance, 96 NY2d 295, 297 [2001]; Crespo v Kramer, 295 AD2d 467, 468 [2002]). Here, the evidence at trial did not establish a total loss of use of plaintiff's cervical spine. Nor did plaintiff's evidence demonstrate a "significant limitation" as required, since there was no objective medical proof as to the extent or degree of the limitation resulting from her injuries (see Toure v Avis Rent A Car Systems, 98 NY2d 345 [2002]; Newton v Drayton, 305 AD2d 303 [2003]). While plaintiff clearly had herniated discs in her spine, neither her testimony nor that of her expert witness established the requisite quantitative or qualitative limitations necessary to support a serious injury. Thus, on the present record, defendants' motion for judgment notwithstanding the verdict should have been granted and the complaint dismissed.
Under the unusual circumstances of this case, however, we believe the correct remedy is not dismissal, but a remand for a new trial because of defense counsel's misleading pre-trial assertion that he was not challenging that plaintiff's injuries constituted "serious injury." At the charge conference, the court granted plaintiff's motion for a directed verdict on liability and heard additional arguments from plaintiff's counsel. In response, defense counsel alleged that plaintiff's subjective complaints of pain did not meet the serious injury "threshold." At that point, the following colloquy occurred:
PLAINTIFF'S COUNSEL:The only thing I'm kind of surprised, just now, to hear, judge, is the word threshold from my adversary's mouth.
We had discussed this at the
very beginning of the trial, off the record, and I was told by my adversary there was no issue of threshold in this case.
DEFENDANT'S COUNSEL:Your honor, having made that statement at the beginning of the trial and now, having heard the proofs, I would I would suggest to your Honor that, in fact, there is no evidence in this case as to whether or not [plaintiff] has met the threshold in this case.
Later in the argument, the following exchange occurred:
THE COURT:And this has this is the first time I'm hearing of the threshold because I was under the impression that you were not asking for a threshold issue initially. And we asked that question, we discussed that question
DEFENSE COUNSEL:I am only asking your Honor to have the proofs.
THE COURT: and [plaintiff's] counsel was led down the primrose path, so to speak, in not going into that area to much of a degree.
PLAINTIFF'S COUNSEL:That's absolutely right, your Honor. I've been under the assumption the entire time, based on counsel's assumption to your Honor, that there is no threshold issue here, that I am not trying a threshold case, and I am not trying to elicit proof in that regard. Counsel is suddenly springing threshold on me after the entire case is in...
THE COURT:There is, of course, nothing in the law that prevents a defendant from asking for this particular charge, and, of course, there's nothing in the law that prevents a plaintiff from proving the fact that there is no threshold issue here.
The next day, the court heard more argument on the issue. Plaintiff's counsel argued that defense counsel's off-the-record statements in the judge's presence that there was no threshold issue was "tantamount to withdrawal of a defense." Counsel explained that he was prejudiced by the untimely injection of the issue since he did not introduce evidence regarding the 90/180 category of serious injury or any range of motions restrictions "because counsel told me and Your Honor that there was no issue on the threshold." Plaintiff's counsel concluded his argument by stating:
"[N]ow, after all proof is in, I am hit in the back of the head with a two by four, Judge, because I never saw this coming and I tried a case without concern on the threshold issue based on counsel's assertion. It's in their bill of particulars . . . their answer rather, that they claim the threshold, but then it was withdrawn before the Court but off the record by counsel saying there is no issue on threshold.
To now charge the jury on the threshold after it was withdrawn as a defense is absolutely prejudicial to the Plaintiff's case and I object to any charge on the threshold going before the jury." [*4]
Defense counsel responded that he only brought up the threshold issue because of the testimony of plaintiff's expert which, in his view, merely showed complaints of subjective pain, instead of serious injury. Ultimately, the court denied plaintiff's motion and charged the jury with respect to two categories of serious injury.
As may be seen from the above, defense counsel's injection of the serious injury threshold into the case was a complete surprise to plaintiff and the court. Although his prior statement that the serious injury threshold was not in issue was off the record, no one denies that it occurred. Indeed, statements by the court and defense counsel during the colloquy demonstrate that there is no factual dispute at all here - defense counsel clearly and indisputably announced that there was no threshold issue in the case. A review of the parties' opening statements further support the conclusion that the parties did not consider the serious injury threshold a part of the case. When defense counsel raised the issue at the charge conference, after both sides had rested, there was nothing plaintiff could do to salvage her case.
Where the parties have conducted a trial based on a mutual understanding that a particular issue was not being contested, it is unfair to the party acting in reliance on that understanding to be forced to defend that issue after the close of evidence (see Simone v City of Niagra Falls, 281 AD2d 923 [2001] [court did not err in refusing to give serious injury threshold charge where defendant conceded "liability" in stipulation and record otherwise shows that defendant conceded the issue of serious injury]; see also Cullen v Naples, 31 NY2d 818, 820 [1972] [record clear that it was judgment of parties that reasonableness of disclaimer was not to be an issue in this litigation]).
Plaintiff's case was fatally prejudiced by defense counsel's last-minute decision to raise the serious injury threshold. Therefore, plaintiff is entitled to a new trial notwithstanding her failure to prove her injuries were serious at the first trial. In light of this conclusion, we decline to address defendants' additional arguments for reversal.
ENTERED: SEPTEMBER 15, 2005
American Casualty of Reading, PA, v. St. Charles Hospital and Rehabilitation Center
Montfort, Healy, McGuire & Salley, Garden City, N.Y. (Donald
S. Neumann, Jr., of counsel), for appellant.
L'Abbate, Balkan, Colavita & Contini, LLP, Garden City,
N.Y. (Maureen E. O'Connor of
In an action for a judgment declaring, inter alia, that the defendant is obligated to defend and indemnify its insured, Karen Fitterer, a second third-party defendant in an action entitled Copeland v Board of Cooperative Educ. Servs., pending in the Supreme Court, Suffolk County, under Index No. 09050/99, the defendant appeals from an order of the Supreme Court, Suffolk County (Cohalan, J.), dated September 28, 2004, which, in effect, granted that branch of the plaintiff's motion which was to compel certain discovery and denied its cross motion for summary judgment, in effect, declaring that it is not obligated to defend and indemnify Karen Fitterer in the underlying action or to reimburse the plaintiff for the defense costs incurred in that action.
ORDERED that the order is reversed, on the law, with costs, that branch of the motion which was to compel certain discovery is denied, the cross motion is granted, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify Karen Fitterer, a second third-party defendant in the underlying action entitled Copeland v Board of Cooperative Educ. Servs., pending in the Supreme Court, Suffolk County, under Index No. 09050/99, or to reimburse the plaintiff for the defense costs incurred in that action. [*2]
The plaintiff is an insurance company which issued a policy of professional liability insurance (hereinafter the plaintiff's policy) to Karen Fitterer, a physical therapist, who was previously employed by the defendant. On February 27, 1998, a special-education student of the Central Islip Union Free School District (hereinafter CIUFSD) and the Board of Cooperative Educational Services (hereinafter BOCES) attended a program at the defendant's clinic. The child allegedly was injured on that visit during a physical therapy session. At the time of the alleged incident, the plaintiff's policy was in effect. In 1999 the child's mother commenced an action against CIUFSD and BOCES, and in 2000, BOCES, commenced separate third-party actions against the defendant herein and Fitterer. BOCES' third-party action against Fitterer sought indemnification or contribution based upon Fitterer's alleged negligence.
In 2001 the plaintiff insurer brought this action for a judgment declaring, inter alia, that the defendant is obligated to defend and indemnify Fitterer in the underlying action and to reimburse the plaintiff for the defense costs incurred in that action.
In response to a motion by the plaintiff, inter alia, to compel certain discovery, the defendant cross-moved for summary judgment, in effect, declaring, among other things, that it is not obligated to defend and indemnify Fitterer in the underlying action. The Supreme Court, in effect, granted that branch of the plaintiff's motion which was to compel discovery and denied the defendant's cross motion. We reverse.
The defendant established its entitlement to judgment as a matter of law (see Matter of Midland Ins. Co., 269 AD2d 50; Stratford School Dist. S.A.U. No. 58 v Employers Reins. Corp., 162 F3d 718; Consolidated Edison of N. Y. v Liberty Mut., 193 Misc 2d 399 [citing, inter alia, Guercio v Hertz Corp., 40 NY2d 680]) and, in response thereto, the plaintiff failed to raise a triable issue of fact (see Zambito v Catanzaro, 264 AD2d 839). The defendant correctly contended that its self-insurance to cover claims, such as the one asserted against its employee Fitterer in the underlying action, was not "other insurance" as defined in the plaintiff's policy which would obligate the defendant to defend and indemnify Fitterer in the underlying action or reimburse the plaintiff for the defense costs incurred therein (see Matter of Midland Ins. Co., supra; Stratford School Dist. S.A.U. No. 58 v Employers Reinsurance Corp., supra). Therefore, the Supreme Court should have granted the defendant's cross motion and denied that branch of the plaintiff's motion which was to compel discovery.
Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the defendant is not obligated to defend and indemnify Karen Fitterer, a second third-party defendant in the underlying action entitled Copeland v Board of Cooperative Educ. Servs., pending in the Supreme Court, Suffolk County, under Index No. 09050/99, or to reimburse the plaintiff for the defense costs incurred therein (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
ADAMS, J.P., KRAUSMAN, FISHER and LIFSON, JJ., concur.
Tomco Painting & Contracting, Inc. v. Transcontinental Insurance Company
Quirk and Bakalor, P.C., New York, N.Y. (Gloria B. Dunn of
Melito & Adolfsen, P.C., New York, N.Y. (Ignatius John
Melito and S. Dwight Stephens of
In an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Brady v Kapson Senior Quarters Corp., pending in the Supreme Court, Suffolk County, under Index No. 10475/98, the defendant appeals from so much of an order of the Supreme Court, Nassau County (Martin, J.), entered July 16, 2004, as granted that branch of the plaintiff's motion which was for summary judgment declaring that the defendant shall afford the plaintiff general liability insurance coverage in the sum of $1,000,000 and, in effect, denied that branch of the defendant's cross motion which was for summary judgment declaring that the general liability insurance coverage which the defendant must afford to the plaintiff is limited to the sum of $500,000.
On March 13, 1997, the plaintiff, a general contractor on a construction project, entered into a contract with Warren R. Cervini, Inc. (hereinafter the subcontractor), whereby the subcontractor agreed to perform sheetrock and carpentry work. Pursuant thereto, the plaintiff required the subcontractor to obtain general liability insurance with "[m]inimum general liability limits of 500,000/1,000,000" and to name the plaintiff as an additional insured. The subcontractor added the plaintiff, as an additional insured, to an existing policy issued by the defendant. This policy provided for, inter alia, a limit of coverage of $1,000,000 per occurrence and $2,000,000 in the aggregate. A "Blanket Additional Insured Endorsement" (hereinafter the endorsement) to the policy provided that "[t]he Limits of Insurance applicable to the additional insured are those specified in the written contract or agreement or in the Declarations of this policy, whichever is less." [*2]
Thereafter, John R. Brady, an employee of the subcontractor, commenced an action entitled Brady v Kapson Senior Quarters Corp., pending in the Supreme Court, Suffolk County, under Index No. 10475/98 (hereinafter the underlying action), against, among others, the plaintiff.
The plaintiff commenced the instant action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify it in the underlying action. As is relevant to the instant appeal, the Supreme Court granted that branch of the plaintiff's motion which was for summary judgment declaring that the defendant shall afford the plaintiff liability insurance coverage in the sum of $1,000,000 and, in effect, denied that branch of the defendant's cross motion which was for summary judgment declaring that the liability insurance coverage which the defendant must afford to the plaintiff is limited to the sum of $500,000.
While unambiguous provisions of a policy are given their plain and ordinary meaning, where there is ambiguity as to the existence of coverage, doubt must be resolved in favor of the insured and against the insurer (see Lavanant v Gen. Acc. Ins. Co. of Am., 79 NY2d 623, 629). "Whether or not a writing is ambiguous is a question of law to be resolved by the courts" (W.W.W. Assocs. v Giancontieri, 77 NY2d 157, 162).
In this case, the endorsement states that "[t]he Limits of Insurance applicable to the additional insured are those specified in the written contract or agreement or in the Declarations for this policy, whichever is less." The limits of insurance contained in the Declarations for the policy are $1,000,000 per occurrence and $2,000,000 in the aggregate. However, in the written "subcontract" entered into between the plaintiff and the subcontractor, there is no mention of any specific limits of insurance. Therein, the plaintiff required only "[m]inimum general liability limits of 500,000/1,000,000 [emphasis supplied]." Under the facts of this case, the plaintiff, as an additional insured, is "an 'entity enjoying the same protection as the named insured'" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391, 392 quoting Del Bello v Gen. Acc. Ins. Co. of Am., 185 AD2d 691, 692). The defendant must afford the plaintiff general liability insurance coverage in the sum of $1,000,000, as provided for in the Declarations for the policy.
ADAMS, J.P., KRAUSMAN, RIVERA and FISHER, JJ., concur.
McCauley v.Vandina
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her notice of appeal and brief, from so much of an order of the Supreme Court, Kings County (Ruditzky, J.), dated January 14, 2004, as, upon renewal, granted the motion of the defendant Esta A. Goldman, and the separate motion of the defendants Melvin Brill and Leonard Brill, which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and denied, as academic, her cross motion for summary judgment on the issue of liability against these defendants.
ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs to the plaintiff payable by the respondents appearing separately and filing separate briefs, the motion of the defendant Esta A. Goldman, and the separate motion of the defendants Melvin Brill and Leonard Brill, are denied, the complaint is reinstated insofar as asserted against them, and [*2]the plaintiff's cross motion for summary judgment on the issue of liability against those defendants is granted.
The Supreme Court erred in granting the motion of the respondent Esta A. Goldman, and the separate motion of the respondents Melvin Brill and Leonard Brill (hereinafter the Brills), which were for summary judgment dismissing the complaint insofar as asserted against them on the ground that the appellant did not sustain a serious injury within the meaning of Insurance Law § 5102(d). The respondents' orthopedic expert, Dr. Michael Miller, examined the appellant's cervical and lumbar spines and stated in his affirmed report that "[r]otation and lateral bending are mildly limited." Dr. Miller nowhere defined or quantified the extent of the appellant's limitations, nor did he set forth the objective tests he used to arrive at this opinion. In light of this finding, the respondents did not meet their initial burden of showing an entitlement to summary judgment on the ground that the appellant did not sustain a serious injury (see McDowall v Abreu, 11 AD3d 590, 591; Cordero v Salazar, 10 AD3d 380, 381; Scotti v Boutureira, 8 AD3d 652). It is, therefore, unnecessary to consider whether the appellant's papers in opposition to the respondents' motions were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538; Mariaca-Olmos v Mizrhy, 226 AD2d 437).
In addition, the appellant was entitled to summary judgment on her cross motion against Goldman and the Brills on the issue of liability. In opposition to her prima facie showing of her entitlement to summary judgment, Goldman and the Brills failed to come forward with a non-negligent explanation for the rear-end collision with the stopped vehicle in which the appellant was a passenger (see Tricoli v Malik, 268 AD2d 469, 470; Leal v Wolff, 224 AD2d 392, 393-394).
St. Luke's Roosevelt Hospital v. Blue Ridge Insurance Company
In an action to recover no-fault medical payments, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Jonas, J.), dated August 20, 2004, which granted the defendant's motion to vacate a judgment of the same court entered April 30, 2004, upon its default in opposing the plaintiffs' motion for summary judgment.
ORDERED that the order is reversed, on the law, with costs, the motion is denied, and the judgment is reinstated.
A defendant seeking to vacate a judgment entered upon default is required to demonstrate both a reasonable excuse for the default and the existence of a meritorious defense (see CPLR 5015[a][1]; Carnazza v Shoprite of Staten Is., 12 AD32d 393; Henry v Kuveke, 9 AD3d 476; Weekes v Karayianakis, 304 AD2d 561). The defendant failed to do either. The defense counsel's excuse of law office failure was conclusory and devoid of any detailed factual allegations, and thus did not constitute a reasonable excuse (see Fekete v Camp Skwere, 16 AD3d 544; Juarbe v City of New York, 303 AD2d 462; Morris v Metropolitan Transp. Auth., 191 AD2d 682).
In addition, the defendant failed to present a meritorious defense to the action. [*2]Contrary to the defendant's contention, written proof of claim on behalf of Michelle Carias was timely submitted to it within 180 days after the date the services were rendered, as required pursuant to 11 NYCRR 65.12 (see New York Hosp. Med. Ctr. of Queens v Motor Veh. Acc. Indem. Corp., 12 AD3d 429; Montefiore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 9 AD3d 354). The affidavit submitted by the defendant's claims representative was insufficient to demonstrate that the injuries for which Carias was treated did not arise out of an insured incident (see New York Hosp. Med. Center of Queens v Ins. Co. of State of Penn., 16 AD3d 391; Santiago v Sansue Realty Corp., 243 AD2d 622, 623; Peacock v Kalikow, 239 AD2d 188). Moreover, the defendant's submissions failed to demonstrate that it denied Mario Delgado's claim for no-fault medical payments within the 30-day period prescribed by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3) (see New York Hosp. Med. Center of Queens v Ins. Co. of State of Penn., supra; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664). Accordingly, the defendant's motion to vacate the judgment entered upon its default in opposing the motion for summary judgment should have been denied (see Presbyterian Hosp. in City of N.Y. v New York Cent. Mut. Ins. Co., 277 AD2d 299, 300).
Tomco Painting & Contracting v. Transcontinental Insurance Company
Appeal from an order of the Supreme Court (Sheridan, J.), entered June 8, 2004 in Albany County, which, inter alia, denied plaintiff's motion for summary judgment.
In this appeal, we are presented with the legal question of whether an individual's homeowner's insurance policy affords coverage when that individual is sued for wrongful death after killing a person in self-defense. Disclosure is completed and there is little dispute regarding the underlying facts. On February 20, 2002, defendant Alfred S. Cook shot and killed Richard A. Barber (hereinafter decedent) after a disagreement over a business arrangement spun out of control. Decedent had entered Cook's home without permission and, during their discussions, Cook, armed with a handgun, retreated to his bedroom to retrieve a 12-gauge shotgun and then returned to the living room where the fatal confrontation occurred. Cook was indicted for a number of crimes, including murder in the second degree, stood trial and was acquitted on all counts of the indictment and lesser included crimes. The jury apparently concluded in the criminal case that the prosecution failed to prove beyond a reasonable doubt that the 120-pound Cook did not have legal justification for shooting the 360-pound decedent who had previously attacked and injured Cook after he refused to leave Cook's home and approached Cook in a [*2]menacing way.
Thereafter, defendant Victoria Pruyn, as the administrator of decedent's estate and as the parent and guardian of decedent's son, resumed prosecution of a wrongful death action commenced against Cook shortly after the shooting. In response, Cook sought coverage under his homeowner's insurance policy issued to him by plaintiff. Subsequently, plaintiff commenced this action against Cook and Pruyn, seeking a declaration that it had no duty to either defend or indemnify Cook in the underlying wrongful death action.
Following discovery, plaintiff moved for summary judgment seeking a declaration in its favor on the grounds that Cook's shooting of decedent was not a covered occurrence under the policy and, in any event, fell within the policy's "expected or intended" exclusion. Defendants opposed the motion and Cook cross-moved for summary judgment, seeking a declaration that plaintiff was obligated to defend and indemnify him because he acted in self-defense, never expecting to be put in the position of shooting decedent to protect himself from harm. Supreme Court denied plaintiff's motion and partially granted Cook's motion, finding that plaintiff was obligated to provide Cook with a defense. Plaintiff now appeals.
Cook's policy defines "occurrence" as an "accident." It is well settled that "in deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual and unforeseen" (Agoado Realty Corp. v United Intl. Ins. Co., 95 NY2d 141, 145 [2000] [emphasis in original]; see Miller v Continental Ins. Co., 40 NY2d 675, 677 [1976]). The Court of Appeals has established a "transaction as a whole" test for determining whether an occurrence constituted an accident (see McGroarty v Great Am. Ins. Co., 36 NY2d 358, 364 [1975]; see also National Grange Mut. Ins. Co. v Utica Mut. Ins. Co., 5 AD3d 1045, 1046-1047 [2004]). Under this test, it is "not legally impossible to find accidental results flowing from intentional causes" (McGroarty v Great Am. Ins. Co., supra at 364). However, "where harm to the victim is inherent in the nature of the act performed, whatever injuries result are, as a matter of law, intentionally caused" (Travelers Ins. Cos. v Stanton, 223 AD2d 104, 105 [1996], lv denied 89 NY2d 804 [1996]; see Monter v CNA Ins. Cos., 202 AD2d 405, 406 [1994]). Cook admitted at his deposition that he knew "a shot with a shotgun would injure, yes. I expected it to injure him, I certainly did not expect to kill him." On these unrebutted facts set forth by plaintiff in support of its motion for summary judgment, the result of Cook's intentional act cannot be characterized as accidental and the dissent's suggestion that the negligence cause of action alleged in the complaint remains viable must be rejected. While he allegedly did not anticipate that the injury inflicted would result in death, the facts (and his admission) establish that he intended the result of a bodily injury. Indeed, he fired a 12-gauge shotgun at close range into decedent's stomach. We thus conclude as a matter of law that Cook's actions were not covered by the homeowner's policy issued by plaintiff (see Peters v State Farm Fire & Cas. Co., 306 AD2d 817, 818 [2003], mod on other grounds 100 NY2d 634 [2003])[FN1]. [*3]
Although our finding that Cook's shooting of decedent was not a covered occurrence under the policy makes it unnecessary to address the further issue argued by the parties of whether Cook's acts fell within the policy's exclusion for bodily injury which is "expected or intended," we will nevertheless comment briefly. That exclusion essentially reinforces the policy's coverage clause by reiterating that the bodily injury or harm must flow from an accident and not be the expected result of intentional conduct (see Jubin v St. Paul Fire & Marine Ins. Co., 236 AD2d 712, 713 [1997]) and, upon consideration of the exclusion in the context of this case, we find it applies. We further note that the exclusion can take on independent significance when accompanied by a relevant exception. In Handlebar, Inc. v Utica First Ins. Co. (290 AD2d 633 [2002], lv denied 98 NY2d 601 [2002]), the exclusion in that commercial liability policy was accompanied by an exception for "bodily injury resulting from the use of reasonable force to protect persons or property" (id. at 634). Such an exception, which would provide a basis for coverage for justifiable acts of self-defense, did not accompany the exclusion in Cook's homeowner's policy.
Crew III, Spain and Kane, JJ., concur.
I do not believe that plaintiff has established, as a matter of law, that the events in question are not a covered "occurrence" within the meaning of the policy or that they fall within the policy's "expected or intended" exclusion. Therefore, I agree with Supreme Court that plaintiff has a duty to defend defendant Alfred S. Cook in the underlying action and, accordingly, I respectfully dissent.
It is well established that an insurer's duty to defend its insureds in pending litigation is exceptionally broad and far surpasses the insurer's duty to ultimately indemnify in the event that the insured is found liable (see Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640, 648 [1993]; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310 [1984]; Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669-670 [1981]; International Paper Co. v Continental Cas. Co., 35 NY2d 322, 326-327 [1974]). An insured's duty to indemnify, on the one hand, "'is determined by the actual basis for the insured's liability to a third person'" (Atlantic Mut. Ins. Co. v Terk Tech. Corp., 309 AD2d 22, 28 [2003], quoting Servidone Constr. Co. v Security Ins. Co. of Hartford, 64 NY2d 419, 424 [1985]) and, thus, may generally be deduced from the factual determinations established after trial in the underlying action (see Incorporated Vil. of Cedarhurst v Hanover Ins. Co., 89 NY2d 293, 300 [1996]; see generally Prashker v United States Guar. Co., 1 NY2d 584, 590-591 [1956]). The duty to defend is, by contrast, "'litigation insurance'" for the insured that must be provided by the insurer no matter how groundless the underlying action may appear at the outset (Servidone Constr. Co. v Security Ins. Co. of Hartford, supra at 423, quoting International Paper Co. v Continental Cas. Co., supra at 325-326; accord Atlantic Mut. Ins. Co. v Terk Tech. Corp., supra at 29). In fact, "[e]ven where there exist extrinsic facts suggesting that the claim may ultimately prove meritless or outside the policy's coverage, the insurer cannot avoid its commitment to provide a defense, since '[a] complaint subject to defeat because of [*4]debatable theories . . . must [nevertheless] be defended by the insured'" (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 66 [1991], quoting International Paper Co. v Continental Cas. Co., supra at 326). Thus, the insurer's duty to defend and the insured's correlative contractual right to representation is solely determined on the basis of the complaint in the underlying action and applies unless there is simply no plausible reading of the allegations in the complaint which could bring the contested events within the purview of the insurance policy at issue (see Fitzpatrick v American Honda Motor Co., supra at 65; Seaboard Sur. Co. v Gillette Co., supra at 310; Curtis v Nutmeg Ins. Co., 204 AD2d 833, 834 [1994], lv dismissed 84 NY2d 1027 [1995]). Stated differently, the duty to defend will be found to exist unless there is no reasonable possibility that the insurer's duty to indemnify will eventually arise from the four corners of the underlying complaint (see Allstate Ins. Co. v Zuk, 78 NY2d 41, 45 [1991]; Seaboard Sur. Co. v Gillette Co., supra at 310-311).
An insurer's twin duties of defense and indemnity are thus somewhat analytically interrelated, but the association of the two should not be assumed. Rather, an insurer's duty to defend should be liberally construed, "in order to ensure the adequate and timely investigation of a claim and defense of an insured, regardless of the insured's ultimate likelihood of success on the merits" (General Motors Acceptance Corp. v Nationwide Ins. Co., 4 NY3d 451, 456 [2005]). Moreover, where, as here, the insurer seeks to prospectively insulate itself from its obligation to defend on the basis of a policy exclusion, it is the insurer's heavy burden to prove, as a matter of law, that there is no potential set of factual conclusions, given what is alleged in the underlying complaint, that could give rise to the insurer's responsibility to indemnify the insured (see Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1991]; Allstate Ins. Co. v Mugavero, 79 NY2d 153, 159 [1992]; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73-74 [1989]; Seaboard Sur. Co. v Gillette Co., supra at 311).
With the above principles in mind, I cannot conclude that plaintiff herein is entitled to be freed from its contractual obligation to defend Cook at this stage of the litigation. The policy in question provides that plaintiff will supply a defense to Cook for any suit for bodily injury to a third party which arises from an "occurrence." An "occurrence," in turn, is defined as an accident. Similarly, the policy excludes from coverage any bodily injury "which is expected or intended by any insured." Comparing these policy terms with the complaint in the wrongful death action underlying this dispute (see Allstate Ins. Co. v Mugavero, supra at 159; Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298, 302-303 [1989]; Pistolesi v Nationwide Mut. Fire Ins. Co., 223 AD2d 94, 95-96 [1996], lv denied 88 NY2d 816 [1996]), it is apparent that certain causes of action are predicated upon Cook's allegedly intentional conduct and are, therefore, outside of the scope of this policy's protections. However, the complaint also alleges negligence on Cook's behalf and this claim, if established, would unquestionably bring the events in question within the contemplation of the policy (see National Union Fire Ins. Co. of Pittsburgh, Pa. v City of Oswego, 295 AD2d 905, 906 [2002]; State Farm Mut. Auto. Ins. Co. v Van Dyke, 247 AD2d 848, 848-849 [1998]; Aetna Cas. & Sur. Co. v Gigante, 229 AD2d 975, 976 [1996]; Amica Mut. Ins. Co. v Grose, 166 AD2d 877, 878 [1990], lv dismissed 76 NY2d 1018 [1990]; Michigan Millers Mut. Ins. Co. v Christopher, 66 AD2d 148, 152 [1979]). Thus, although it might ultimately be determined that Cook's liability to decedent's estate, if any, is based upon his intentional conduct, thereby obviating plaintiff's duty to indemnify Cook, I cannot conclude that this is the only possible outcome considering the allegations in the underlying complaint (see Jubin v St. Paul Fire & Mar. Ins. Co., 236 AD2d 712, 713 [1997]; Merrimack Mut. Fire Ins. Co. v Carpenter, 224 AD2d 894, 895 [1996], lv dismissed 88 NY2d 1016 [1996]). Accordingly, I would affirm Supreme Court in declaring that plaintiff has a duty to defend Cook.
ORDERED that the order is modified, on the law, with costs to plaintiff, by reversing so much thereof as partially granted defendant Alfred S. Cook's cross motion and as denied plaintiff's motion; cross motion denied in its entirety, motion granted, summary judgment awarded to plaintiff and it is declared that plaintiff has no duty to defend or indemnify said defendant in the underlying wrongful death action; and, as so modified, affirmed.
Footnote 1: In reaching this conclusion, we acknowledge the differing views of other jurisdictions which have addressed the issue (compare Farmers & Mechs. Mut. Ins. Co. v Cook, 210 W Va 394, 401-403, 557 SE2d 801, 808-810 [2001] [coverage] and Transamerica Ins. Group v Meere, 143 Ariz 351, 694 P2d 181 [1984] [coverage], with Auto-Owners Ins. Co. v Harrington, 455 Mich 377, 383-386, 565 NW2d 839, 841-843 [1997] [no coverage] and Espinet v Horvath, 157 Vt 257, 261, 597 A2d 307, 309-310 [1991] [no coverage]; see generally Russ & Segalla, Couch on Insurance 3d § 103:32; Annotation, Acts in Self-Defense as Within Provision of Liability Insurance Policy Expressly Excluding Coverage for Damage or Injury Intended or Expected By Insured, 34 ALR4th 761).
City of New York v. St. Paul Fire and Marine Insurance Company
In an action, inter alia, for a judgment declaring that the defendants St. Paul Fire and Marine Insurance Company, Northbrook Property & Casualty Insurance Company, and Insurance Company of North America are obligated to defend and indemnify the plaintiff in an underlying action entitled Pastuizaca v City of New York, pending in the Supreme Court, Kings County, under Index No. 4441/96, (1) the defendants St. Paul Fire and Marine Insurance Company and Northbrook Property & Casualty Insurance Company appeal from so much of an order of the Supreme Court, Kings County (Jacobson, J.), dated December 17, 2003, as granted the plaintiff's motion for summary judgment, denied their cross motion for summary judgment, and directed them to reimburse the plaintiff for litigation expenses incurred in the defense of that action, and (2) the plaintiff cross-appeals, as limited by its brief, from so much of the same order as granted the cross motion of the defendant Insurance Company of North America for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff in the underlying action.
ORDERED that the order is affirmed insofar as appealed and cross-appealed from, with one bill of costs payable to the defendant Insurance Company of North America by the plaintiff and one bill of costs payable to the plaintiff by the defendants St. Paul Fire and Marine Insurance Company and Northbrook Property & Casualty Insurance Company, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendants St. Paul Fire and Marine Insurance Company and Northbrook Property & Casualty Insurance Company are obligated to defend and indemnify the plaintiff in the underlying action entitled Pastuizaca v City of New York, pending in the Supreme Court, Kings County, under Index No. 4441/96, and that the defendant Insurance Company of North America is not obligated to defend and indemnify the plaintiff in that underlying action.
On December 9, 1992, the City of New York entered into a contract with Rutigliano Paper Stock, Inc. (hereinafter Rutigliano), for the processing and marketing of recyclable materials. Under the terms of the contract, Rutigliano was required to procure comprehensive general liability insurance naming the City as an additional insured. Rutigliano obtained the required coverage from the defendant Northbrook Property & Casualty Insurance Company (hereinafter Northbrook). Rutigliano also procured a commercial umbrella liability policy for excess coverage from the defendant Insurance Company of North America (hereinafter ICNA).
On March 31, 1995, one of Rutigliano's employees was struck and killed by a City sanitation truck while performing work related to the recyling services contract. About 11 months later, the employee's estate commenced the underlying wrongful death action against the City, the New York City Department of Sanitation, and several other parties. Thereafter, by letter dated November 12, 1998, the City requested Northbrook's successor, the defendant St. Paul Fire and Marine Insurance Company (hereinafter St. Paul) to assume its defense in the underlying action because it was an additional insured under the general liability policy issued to Rutigliano. Over four months later, on March 18, 1999, St. Paul disclaimed coverage on the ground that the subject policy excluded claims for bodily injury arising out of the ownership, maintenance, and use of an auto owned or operated by any insured.
The City subsequently commenced this action, inter alia, for a judgment declaring that Northbrook, its successor St. Paul, and the excess coverage carrier ICNA were required to defend and indemnify it in the underlying action. The City then moved for summary judgment against Northbrook and St. Paul, contending that St. Paul's disclaimer was untimely pursuant to Insurance Law § 3420(d), which requires written notice of disclaimer to be provided "as soon as is reasonably possible." Northbrook and St. Paul cross-moved for summary judgment, arguing, inter alia, that the subject policy did not cover accidents caused by the use of an automobile or truck by any insured. ICNA also separately cross-moved for summary judgment, alleging that it had not received notice that the City was seeking coverage under its policy until it was served with the summons and complaint in this action on February 15, 2000, and that it timely disclaimed coverage in its answer served on March 21, 2000. The Supreme Court granted the City's motion for summary judgment against Northbrook and St. Paul and denied their cross motion, finding that they had failed to timely disclaim coverage pursuant to Insurance Law § 3420(d). The court also granted INCA's cross motion for summary judgment.
On appeal, Northbrook and St. Paul maintain that they had no obligation to issue a timely disclaimer pursuant to Insurance Law § 3420(d) because the subject liability policy did not include coverage for bodily injury arising from the use of an insured's automobiles. We disagree. [*3]A disclaimer is unnecessary when a claim falls outside the scope of a policy's coverage portion, since "requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed" (Worcester Insurance Co. v Bettenhauser, 95 NY2d 185; see Markevics v Liberty Mutual Insurance Co., 97 NY2d 646; American Ref-Fuel Co. of Hempstead v Employers Insurance Co. of Wausau, 265 AD2d 49). "Conversely, a timely disclaimer pursuant to Insurance Law § 3420(d) is required when a claim falls with the coverage terms but is denied based on a policy exclusion" (Markevics v Liberty Mutual Insurance Co., supra). An insurer's failure to comply with Insurance Law § 3420(d) precludes it from denying coverage based upon a policy exclusion (see Worcester Insurance Co. v Bettenhauser, supra). Here, since the subject policy provided coverage for bodily injury caused by an occurrence, the claim in the underlying action falls within its coverage terms. The policy would thus provide coverage but for the exclusion relating to injury arising out of any insured's use of an automobile, which is claimed to apply. Accordingly, the Supreme Court properly determined that Northbrook and St. Paul were required to issue a timely disclaimer of coverage (see Markevics v Liberty Mutual Insurance Co., supra; Worcester Insurance Co. v Bettenhauser, supra; Neglia v Blue Ridge Insurance Co., 9 AD3d 453; American Re-Fuel Co. of Hempstead v Employers Insurance Co. of Wausau, supra).
Furthermore, Northbrook and St. Paul failed to sustain their burden of justifying the delay of more than four months in disclaiming coverage (see First Financial Insurance Co. v Jetco Contracting Corp., 1 NY3d 64). "An insurer's explanation is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay" (First Financial Insurance Co. v Jetco Contracting Corp., supra). Since St Paul's disclaimer was predicated upon the alleged applicability of the automobile exclusion in the subject policy, its basis for denying coverage was readily apparent and thus, its delay in issuing the disclaimer was unreasonable as a matter of law (see First Financial Insurance Co. v Jetco, supra; Uptown Whole Foods, Inc. v Liberty Mutual Fire Insurance Co., 302 AD2d 592; City of New York v Northern Insurance Co. of New York, 284 AD2d 291; North Country Insurance Co. v Tucker, 273 AD2d 683).
However, the Supreme Court properly granted the cross motion of the excess insurer ICNA for summary judgment declaring that it is not obligated to defend and indemnify the City in the underlying action. As an additional insured under the ICNA policy, the City had an independent duty to provide the excess insurer with timely notice of the claim against it and its demand for coverage (see American Home Assurance Co. v International Insurance Co., 90 NY2d 433; Travelers Insurance Co. v Volmar Construction Co., Inc., 300 AD2d 40; Nationwide Insurance Co. v Empire Insurance Group, 294 AD2d 546; Roofing Consultants v Scottsdale Insurance Co., 273 AD2d 933; American Manufacturers Mutual Ins. Co. v CMA Enterprises, 246 AD2d 373). The fact that an insurer may have received notice of the claim from the primary insured, or from another source, does not excuse an additional insured's failure to provide notice (see Travelers Insurance Co. v Vomar Construction Co., supra; Sayed v Macari, 296 AD2d 396; Roofing Consultants v Scottsdale Insurance Co., supra; American Manufacturers Mutual Insurance Co. v CMA Enterprises, Ltd., supra). Here, ICNA was not notified by the City of the underlying action and the City's demand for coverage until it was served with the summons and complaint in this action on February 15, 2000. Under these circumstances, ICNA's assertion of untimely notice as a basis for denying coverage in its answer satisfied the disclaimer requirements of Insurance Law § 3420(d) (see Roofing Consultants v Scottsdale Insurance Co., supra; American Manufacturers Mutual Insurance Co. v CMA Enterprises, Ltd., supra; Thomson v Power Authority of the State of New York, 217 AD2d 495).
The parties' remaining contentions are either without merit or need not be addressed in light of our determination.
Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Kings County, for the entry of a judgment declaring that St. Paul Fire and Marine Insurance Company and Northbrook Property & Casualty Insurance Company are obligated to defend and indemnify the plaintiff in the underlying action and that ICNA is not obligated to defend and indemnify the plaintiff in the underlying action (see Lanza v Wagner, 11 NY2d 317, appeal dismissed 371 US 74, cert denied 371 US 901).
In light of the fact that plaintiff's benign brain stem angioma condition preexisted the accident, plaintiff failed to submit medical proof sufficient to rebut defendants' submissions [*2]and to show that he suffered a serious injury that is causally related to the accident (see Pommells v Perez, 4 NY3d 566, 580 [2005]).
Motion by the appellant-respondent, in effect, for leave to reargue an appeal from an order of the Supreme Court, Kings County, dated September 30, 2003, which was determined by decision and order of this court dated December 27, 2004, and motion by the respondent-appellant for leave to reargue the appeal or, in the alternative, for leave to appeal to the Court of Appeals from the decision and order of this court.
ORDERED that the appellant-respondent's motion, in effect, for leave to reargue is granted; and it is further,
ORDERED that the respondent-appellant's motion is denied; and it is further,
ORDERED that upon reargument, the decision and order of this court dated December 27, 2004, is recalled and vacated and the following decision and order is substituted therefor:
Jeffrey A. Berson, New York, N.Y., for appellant-respondent.
Zaklukiewicz, Puzo & Morrissey, LLP, Islip Terrace, N.Y. (Joseph M. Puzo of counsel), for respondent-appellant. [*2]
ORDERED that the order is modified, on the law, by deleting the second decretal paragraph thereof; as so modified, the order is affirmed, with costs to the plaintiff, and the matter is remitted to the Supreme Court, Kings County, for calculation of the interest due the plaintiff on the sum of $162,252.50 from the date of entry of the underlying judgment (February 13, 2002), through the date of payment of the $162,252.50, and for entry of an appropriate amended judgment thereon.
The plaintiff, while driving his own vehicle, was struck by a vehicle driven by Emad S. Abdelmonen and owned by Samir Abdelminen. Although it was joined as a party respondent to a subsequent proceeding brought to stay the plaintiff's arbitration of a claim for uninsured motorist benefits, the defendant GAN Insurance Company, d/b/a Western Continental Insurance Company (hereinafter GAN), did not appear at the framed-issue hearing that was held in that proceeding. By order and judgment dated May 7, 1997, which was served upon GAN on May 23, 1997, the Supreme Court, Nassau County (Trainor, R.), noted that GAN had notice of the proceeding, and permanently stayed the arbitration on the ground that GAN insured the offending vehicle.
Ultimately, the complaint was dismissed insofar as asserted against Samir for reasons that do not appear in the record. By order dated November 23, 1998, the Supreme Court, Kings County (Belen, J.), granted the plaintiff's motion for leave to enter a judgment against Emad upon his default. An inquest on damages was held on December 7, 2001. Emad did not appear, and by judgment entered February 13, 2002, the Supreme Court awarded the plaintiff the principal sum of $125,000, plus interest, costs, and disbursements for a total sum of $162,252.50. On February 19, 2002, the judgment was served with notice of entry on, among others, Samir, Emad, and GAN. On April 5, 2002, a second copy of the judgment with notice of entry was served upon GAN.
On May 13, 2002, the plaintiff commenced this action against GAN to recover the amount of the still-unsatisfied judgment pursuant to Insurance Law § 3420(a)(2). GAN answered the complaint and asserted as an affirmative defense, inter alia, that this action was "barred" because it did not issue an insurance policy covering the "accident." Following joinder of issue, the parties moved and cross-moved for summary judgment. The plaintiff argued that GAN knew about the underlying action to recover damages for personal injuries and chose not to participate in it. Further, GAN was served with the ensuing default judgment, which had remained unsatisfied for over 30 days. In support of its cross motion, GAN argued, inter alia, that it did not issue an insurance policy [*3]covering Samir or Emad; however, the GAN officer who submitted a supporting affidavit conceded that GAN's record search was done by name, reverse name, and address. He conceded that GAN's records were not maintained in a fashion that would allow a search by vehicle identification number or state registration number.
In this action, the Supreme Court granted the plaintiff's motion for summary judgment, and denied GAN's cross motion for summary judgment dismissing the complaint. However, although the principal amount of the judgment in the underlying personal injury action was $125,000, the Supreme Court limited GAN's liability to $25,000. In its memorandum decision, the Supreme Court explained that it was "constrained" by the earlier proceedings in the Supreme Court, Nassau County, to find there was a GAN insurance policy covering the offending vehicle in effect at the relevant time. Nevertheless, at the same time, the Supreme Court was faced with the task of "ascertain[ing] the terms of a policy which, in fact, does not appear to exist." Accordingly, the Supreme Court limited GAN's liability to the statutory minimum automobile liability policy limit set forth in Vehicle and Traffic Law § 311(4)(a) which, as noted above, was $25,000. The parties now appeal and cross-appeal from the Supreme Court's order. We modify the order to increase the principal amount of the award to the plaintiff to $162,252.50, the full amount of the underlying judgment, together with interest and costs, that he obtained in his action to recover damages for personal injuries.
Here, the plaintiff made a prima facie showing of entitlement to judgment as a matter of law under Insurance Law § 3420(a)(2) (see Alvarez v Prospect Hosp., 68 NY2d 320). He proved the existence of the judgment in his underlying action to recover damages for personal injuries (see Lang v Hanover Ins. Co., 3 NY3d 350). He also "establish[ed] that, at the time of the accident, there was in full force and effect an agreement of insurance between the insurer and the judgment debtor covering the latter for the liability merged in the judgment" (Holmes v Allstate Ins. Co., 33 AD2d 96, 98). The plaintiff established the latter element of his claim by showing that GAN was made a party respondent to the proceeding brought to stay the arbitration for uninsured motorist benefits, and knowingly chose not to participate therein. As a result, the Supreme Court, Nassau County, determined, upon GAN's default, that GAN insured the offending vehicle. Further, GAN chose not to seek to vacate that default for some five years, and evidently only after it was faced with the instant action. The latter motion was denied, and the resulting order was not appealed. Accordingly, under the circumstances of this case, we conclude that GAN is collaterally estopped from litigating the issue of coverage, even though that issue was initially determined on its default in the arbitration (see Chai Props. Corp. v Carb, Luria, Glassner, Cook & Kufeld, 288 AD2d 44; Harris v Stein, 207 [*4]AD2d 382). In doing so, we perceive no unfairness to GAN, in light of the procedural course, outlined above, that it knowingly followed.
There remains the issue of the plaintiff's damages. We conclude that the plaintiff's recovery should not have been limited to the statutory minimum of $25,000, but instead should have been allowed to the full extent of the judgment in the underlying action to recover damages for personal injuries. First, having ignored every step in the judicial processes leading to this action, one which may have been unnecessary had GAN chosen to participate earlier, GAN should not be heard to complain now that it is called upon to satisfy a judgment that was entered following its calculated decision to ignore the earlier stages of the plaintiff's claim. It was GAN's burden to prove any limitation on the plaintiff's right to recover. In an analogous context, where an insurer seeks to avoid liability to the injured party altogether by claiming that the insured failed to cooperate with the insurer in violation of a policy provision, the Insurance Law explicitly places the burden upon the insurer to prove the alleged failure or refusal to cooperate (see Insurance Law § 3420[c]). As the Court of Appeals has observed, this defense "penalizes the plaintiff for the action of the insured over [which] he has no control, and . . . the defense frustrates the policy of this State that innocent victims of motor vehicle accidents be recompensed for the injuries inflicted upon them" (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168). Since a limitation on an insurer's liability similarly may frustrate the policy of this State that victims of motor vehicle accidents receive compensation for their injuries, we conclude that GAN carries the burden of proving the limit of the relevant coverage. GAN argues that it did not issue an insurance policy at all; thus, any liability on its part arose by operation of law, and should be limited to the statutory minimum in effect at the time of the accident, which it argues was $10,000. However, GAN never demonstrated that it did not issue a policy. As noted, its record search was limited to one by name and address. It admitted that its records were
not kept in such a way as would permit a search by vehicle identification or state registration number. In sum, GAN did not carry its burden of showing that its liability should be limited to any amount less than the full amount of the plaintiff's judgment.
Mueller v. Allstate Insurance Company
In an action for a judgment declaring that the defendant Allstate Insurance Company is obligated to defend and indemnify the defendants Everett Robinson, Shirley Robinson, and Jamar Robinson in an underlying personal injury action entitled Mueller v Robinson, pending in the Supreme Court, Suffolk County, under Index No. 4066/00, the plaintiff appeals from a judgment of the Supreme Court, Suffolk County (Oliver, J.), entered June 28, 2004, which, upon the denial of her motion for summary judgment and the granting of the cross motion of the defendant Allstate Insurance Company for summary judgment, declared that Allstate Insurance Company was not obligated to defend and indemnify the defendants Everett Robinson, Shirley Robinson, and Jamar Robinson in the underlying personal injury action.
ORDERED that the judgment is affirmed, with one bill of costs payable by the appellant to Allstate Insurance Company.
The plaintiff was injured in an accident while a passenger on an All Terrain Vehicle (hereinafter ATV) owned by the defendants Everett Robinson and Shirley Robinson, and operated by their son, the defendant Jamar Robinson, who resided with them. It is undisputed that the [*2]accident occurred on a field approximately one-half mile from the premises owned by Everett Robinson and Shirley Robinson.
The plaintiff commenced an action against the Robinsons to recover damages for the personal injuries she sustained (hereinafter the underlying action). The Robinsons sought a defense and indemnification in the underlying action from Allstate Insurance Company (hereinafter Allstate) under their homeowner's insurance policy. Allstate disclaimed coverage, and the plaintiff thereafter commenced this action against Allstate and the Robinsons for a judgment declaring that Allstate was obligated to defend and indemnify the Robinsons in the underlying action.
The Supreme Court held that Allstate was not obligated to defend and indemnify the Robinsons in the underlying action, based on the following provision in the homeowner's insurance policy:
"We do not cover bodily injury or property damage arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motor vehicle or trailer. However this exclusion does not apply to . . .
"b) any motor vehicle designed principally for recreational use off public roads, unless that vehicle is owned by an insured person and is being used away from an insured premises."
The plaintiff and the Robinsons argue that this exclusion for motor vehicles designed principally for recreational use off public roads where the vehicle is owned by the insured and used off the insured premises does not apply to an ATV, which is not a "motor vehicle" as defined by Vehicle and Traffic Law § 125. We agree with Allstate, however, that the policy exclusion is intended to apply to an ATV that is owned by the insured and operated off the insured's premises. Vehicle and Traffic Law § 2281 defines an ATV as "any self-propelled vehicle which is manufactured for sale for operation primarily on off-highway trails or off-highway competitions and only incidentally operated on public highways." A plain reading of the policy provision, therefore, leads to the conclusion that an ATV is a "motor vehicle designed principally for recreational use off public roads" (see Bassuk Bros. v Utica First Ins. Co., 1 AD3d 470 [unambiguous policy provision must be accorded its plain and ordinary meaning]).
Moreover, we agree with the Supreme Court's conclusion that the policy exclusion for recreational use vehicles, including ATVs, which are owned by the insured and used off the insured's premises, is consistent with Vehicle and Traffic Law § 2407(1), which requires an ATV to be insured if it is "operated anywhere in this state other than on the lands of the owner."
CRANE, J.P., S. MILLER, LUCIANO and LIFSON, JJ., concur.
James Edward Pelzer [*3]
Nelson v. Amicizia
In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Suffolk County (Molia, J.), dated May 27, 2004, which denied his 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).
Contrary to the determination of the Supreme Court, the defendant made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendant submitted the affirmed medical reports of an orthopedist and a neurologist, who both examined the plaintiff about three years after the accident, and determined that she had completely recovered from her injuries and suffered from no disabilities or impairments, and that she was able to perform all of her normal work and daily living activities without restrictions.
The affirmations of the plaintiff's physicians and affidavit of the plaintiff's chiropractor were insufficient to raise a triable issue of fact. One physician's affirmation and the chiropractor's affidavit were based upon examinations of the plaintiff conducted within about one [*2]month of the accident and more than three years prior to the motion for summary judgment (see e.g. McKinney v Lane, 288 AD2d 274; Bucci v Kempinski, 273 AD2d 333). Another physician's affirmation failed to set forth the objective tests used to arrive at his opinion of a loss in range of motion (see Kauderer v Penta, 261 AD2d 365), and appears to have been mainly based upon the plaintiff's subjective complaints of pain (see Barrett v Howland, 202 AD2d 383; LeBrun v Joyner, 195 AD2d 502; Coughlan v Donnelly, 172 AD2d 480). The mere existence of a bulging herniated disc in the plaintiff's thoracic spine is not conclusive evidence of a serious injury in the absence of objective evidence of a related disability or restriction (see Kearse v New York City Tr. Auth., 16 AD3d 45; Guzman v Michael Mgt., 266 AD2d 508).
Finally, the plaintiff failed to submit any competent medical evidence to corroborate her claim that she was unable to perform substantially all of her daily activities for not less than 90 of the 180 days immediately following the subject accident as a result of the accident (see Sainte-Aime v Ho, 274 AD2d 569; Jackson v New York City Tr. Auth., 273 AD2d 200; Greene v Miranda, 272 AD2d 441).
MTO Associates v. Republic-Franklin Insurance Company
Stim & Warmuth, P.C., Farmingdale, N.Y. (Glenn P. Warmuth
In an action for a declaration that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Grosso v MTO Associates, Limited Partnership, pending in the Supreme Court, Orange County, under Index No. 888/01, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Woodard, J.), dated September 22, 2004, as denied its cross motion for summary judgment
The plaintiff insured commenced this action seeking a declaration that the defendant insurance company was obligated to defend and indemnify it in an underlying personal injury action. The defendant disclaimed coverage based on lack of timely notice of the claim. The plaintiff argued that timely notice of the claim was provided to the defendant by timely notice to a nonparty insurance broker, Bradley & Parker, Inc. The defendant appeals the denial of its cross motion for summary judgment. We affirm.
In general, an insurance broker is considered the agent of the insured, not the insurance company, and notice to the broker is not deemed notice to the insurance company (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 442, n 3). However, "a broker will be held [*2]to have acted as the insurer's agent where there is some evidence of 'action on the insurer's part, or facts from which a general authority to represent the insurer may be inferred'" (Rendeiro v State-Wide Ins. Co., 8 AD3d 253, quoting Bennion v Allstate Ins. Co., 284 AD2d 924; see U.S. Delivery Sys., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa, 265 AD2d 402). Here, there are questions of fact whether there was a relevant agency relationship between the defendant and Bradley & Parker, Inc. Thus, the defendant's cross motion for summary judgment was properly denied.