Source: https://www.hurwitzfine.com/news/coverage-pointers-volume-v-no-13
Timestamp: 2020-08-04 05:56:40
Document Index: 351742922

Matched Legal Cases: ['§ 5102', '§ 5102', '§3420', '§ 5102', '§ 5102', '§ 5102', '§ 3420', '§ 5217']

Coverage Pointers - Volume V, No. 13 | Hurwitz & Fine, P.C.
Coverage Pointers - Volume V, No. 13
01/26/04 CENATUS v ROSEN
Evidence of Loss of Range of Motion Raised Issue of Fact Whether Plaintiff Sustained Significant Limitation of Use of Body Function or System under “Serious Injury” Threshold
Plaintiff claimed he sustained a significant limitation of his cervical and lumbosacral spine as the result of an accident. Defendants moved for summary judgment on the ground that the plaintiff’s injuries did not satisfy the “serious injury” threshold under Insurance Law § 5102(d). Defendants’ experts noted that a MRI of plaintiff’s back revealed a herniated disc in the lumbosacral spine and two herniated discs in the cervical spine. After examining the plaintiff, one of the defendants’ examining physicians concluded that the plaintiff demonstrated a “full range of motion … throughout the spinal column” and diagnosed his injury as cervical and lumbar sprains which had resolved. This evidence established defendants’ prima facie case for summary judgment. In opposition, plaintiff submitted an affirmation from a physician who performed a recent examination of the plaintiff, and quantified the results with percentages of the loss of range of motion of the cervical and lumbosacral spine, which the court concluded was sufficient to establish an issue of fact whether he sustained a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102(d).
01/26/04 MANN v GULF INS. CO.
Insurer’s Four-Month delay in Disclaiming Coverage Based on Late Notice Deemed Unreasonable
In October 1997, plaintiffs were injured when a truck owned by All Waste Systems struck their cherry picker, which was parked along the side of a road while they were working. Plaintiffs brought actions to recover damages for their injuries, and, in September 2000, settled the two personal injury actions for a total of $4,500,000, with All Waste contributing $250,000, its primary insurer contributing $1,000,000, and its excess insurer contributing $3,250,000. The settlement was made without prejudice to the excess insurer’s disclaimer of coverage issued on the ground that notification to it was untimely. The primary insurer was notified of the accident soon after it occurred; however, the excess insurer did not receive its first notice of the accident until November 1999. On November 29, 1999, the excess insurer wrote the primary carrier, stating that it was investigating the claim but that the late notification to it had deprived it of its rights under the policy, and stated it was investigating whether or not there was notification to insurance brokers who were its agents under the terms of the policy. By January 10, 2000, the excess insurer’s coverage counsel opined that there were grounds to disclaim based upon late notice. Thereafter, by letter dated January 18, 2000, All Waste’s personal counsel requested that the excess insurer examine certain items before determining whether or not to disclaim coverage. The excess insurer finally issued a formal notice of disclaimer on March 21, 2000. Court held that the excess insurer’s delay in formally disclaiming was unreasonable as a matter of law. Insurance Law §3420(d) requires that written notice of a disclaimer be given “as soon as is reasonably possible” after the insurer learns of the grounds for disclaimer of liability. The basis for the disclaimer was apparent from the notices and information the excess insurer received by November 30, 1999. By that date, the excess insurer’s vice-president and claims manager had investigated and ascertained that the brokers to whom notice was allegedly sent were not its agents. Thus, the excess insurer had sufficient facts to allow its claims manager to conclude, at the latest by the beginning of December 1999, that All Waste had breached the notice provisions of the policy. The four-month delay in disclaiming was deemed unreasonable as a matter of law.
01/26/04 MATTER OF UTICA MUT. INS. CO. v LECONTE
Issue of Fact Concerning Physical Contact with “Hit-and-Run” Vehicle Warrants Hearing
In a proceeding pursuant to CPLR Article 75 to stay arbitration of an uninsured motorist claim, court held that a hearing on the issue of whether there was physical contact between the respondent's vehicle and an alleged “hit-and run” vehicle was required. In support of its petition, petitioner submitted a police accident report wherein respondent told the reporting officer that an unknown vehicle “cut him off.” In opposition to the petition, the respondent offered his affidavit wherein he stated that his car was “suddenly struck on the driver’s side” by an unidentified car which left the scene. Court held that physical contact is a prerequisite to the applicability of the uninsured motorist endorsement in the insured’s policy. When there is a triable issue of fact with respect to whether a claimant’s vehicle had physical contact with an alleged “hit-and-run” vehicle, the appropriate procedure is to stay the arbitration pending a determination of that issue.
01/20/04 ZURICH AMERICAN INS. CO. v LUIS BASTOS CONSTRUCTION
Employers’ Liability Policy Did Not Afford Coverage for Work Performed Out of Covered Territory
Plaintiff issued a workers’ compensation/employers’ liability policy to defendant/insured. While the policy was in effect, one of the insured's employees was seriously injured while working on a job in New York that had nothing to do with any work being performed in New Jersey. The employee commenced an action to recover damages for his personal injuries. Defendants in that action impleaded the insured as a third-party defendant, and plaintiff commenced this action seeking a judgment declaring it was not obligated to defend or indemnify its insured in the underlying action. Court held that the policy provided, in clear and unambiguous terms, that the insured had employers’ liability coverage only for claims arising out of accidents occurring during work performed in New Jersey, or for claims arising out of accidents occurring during work performed in another state that was necessary or incidental to work being performed in New Jersey. As such, the insurer was entitled to summary judgment declaring it had no obligation to defend or indemnify its insured in the underlying action.
01/28/04 PICARD v THOMAS
Specific Permission from Owner to Use Auto is not the same as Grant of “Unfettered” Access for Purposes of Permissive User Auto Coverage
This case arises out of an automobile accident that occurred when two cars full of teenage friends were traveling together to a common destination. The defendant Thomas drove the lead automobile with Samantha Pearlman (Samantha) as his passenger. This car, a Toyota Avalon, was leased by David Pearlman, Samantha’s father, for Samantha’s use and was insured by Commerce Insurance Company (Commerce). Two of the passengers in the other vehicle were killed in the accident. Following the accident, negligence actions were brought against Thomas and both Samantha and David Pearlman. Commerce filed a declaratory judgment action seeking a ruling that it had no duty to defend or indemnify Thomas in the litigation based on the accident. The cases were consolidated, and the motion judge allowed summary judgment for Commerce in its declaratory judgment action. The Appeals Court affirmed that Commerce had no duty to defend or indemnify Thomas for any damages recovered against him in these actions because there was no evidence that Thomas operated the vehicle with the express or implied consent of David Pearlman. The person named as the policyholder was David Pearlman and, while Samantha Pearlman was listed as an operator of the vehicle, she did not have David Pearlman's permission to allow Thomas to operate the vehicle or permission to allow anyone else to operate the vehicle except in an emergency. The court distinguished those cases in which the insurer has been held liable to defend and indemnify a third party because the child who gave permission to the third party had unfettered permission to operate the car.
Bruce D. Celebrezze and Joseph Pelochino, Sedgwick, Detert, Moran & Arnold LLP
01/27/04 GALGANO v METROPOLITAN PROPERTY AND CAS. INS. CO.
No Recovery for Uninsured Motorist Benefit for Bystander Emotional Distress where “Each Person” Coverage Limit Exhausted
The court determined that, under the underinsured motorist provision of the plaintiff’s insurance policy, the plaintiff was not entitled to compensation, for bystander emotional distress arising from his having witnessed bodily injury to his son, where to the extent of the “each person” bodily injury coverage limit applicable to the plaintiff, when the defendant already had paid to the plaintiff’s son the full amount of the “each person” bodily injury limit available to the son and the policy provided that the maximum amount that the defendant was required to pay “for all claims by all persons for damages for bodily injury to any one person is the ‘each person’ Uninsured Motorist Coverage limit.” The court reasoned that although any damages that flowed to the plaintiff from his son’s bodily injury may be covered under the policy, in theory, those damages fall under the limit applicable to the plaintiff’s son, the person who had sustained the bodily injury.
01/23/04 PROGRESSIVE PALOVERDE INS. CO. v HARTFORD FIRE INS. CO.
Consistent with West Virginia’s bright line rule that “insurance follows the automobile rather than the driver,” defendant’s policy provided primary coverage for injuries sustained by a motorist while occupying a tow truck insured by defendant; plaintiff’s policy provides only excess coverage.
01/22/04 JOHNSON v AM. FAMILY MUT. INS. CO.
Carrier Permitted to Call Expert Witnesses to Demonstrate Lack of Bad Faith in Refusing to Offer Policy Limits
An automobile accident occurred between plaintiff, Johnson, and Eric Jennings. American Family Mutual provided Jennings with $100,000 of liability insurance coverage and retained counsel on his behalf. It was apparent from the outset that Jennings had no basis for disputing liability, but medical experts differed as to whether plaintiff developed fibromyalgia from the accident. Plaintiff obtained an expert economic witness who would testify he had sustained damages in excess of $600,000. Plaintiff offered to settle for the policy limits but rejected American Family’s $75,000 offer and, after trial, obtained a $597,014 verdict. Plaintiff, as Jennings’ assignee, then brought a bad-faith action against American Family for refusing to settle for its policy limit. On appeal, the court held: I. The district court properly instructed the jury that plaintiff had to show there was no reasonable basis for American Family’s rejection of the demand for its policy limits. II. The district court did not abuse its discretion in allowing the testimony of three personal-injury attorneys who testified as expert witnesses and supported the decisions of American Family and its attorneys. This was relevant evidence in aid of American Family’s defense of the bad-faith claim. III. In defending itself against plaintiff’s claims that a verdict of that size should reasonably have been anticipated, American Family was entitled to produce evidence that militated against a recovery of that magnitude.
01/21/04 GRANGE INS. ASSOCIATION v EVANS
Exclusionary Clause Precludes Proximate Cause Analysis of Whether Negligence Facilitated Accident
The Court of Appeals affirmed the trial court’s grant of summary judgment finding that plaintiff Grange Insurance Association had no duty to defend or indemnify for injuries sustained in an all-terrain vehicle accident on defendant’s property. The insurance policy excluded coverage for injuries arising out of motor vehicle accidents. The court found that the exclusionary language “arising out of” use of a motor vehicle was unambiguous, and that the injuries arose directly out of riding on the all-terrain vehicle, which flipped over on top of one of the passengers. The court further found that the exclusionary clause precludes a proximate cause analysis of whether negligence facilitated the all-terrain vehicle accident.
01/21/04 PINTO v NEW JERSEY MANUFACTURERS INS. COMPANY
Step-Down Clause Limits UIM Coverage
The issue on appeal was whether the underinsured motorists (UIM) benefits claim of an employee, injured while operating a motor vehicle owned and insured by his employer, was effectively reduced by the “step-down” coverage clause contained in the UIM endorsement of the employer’s business auto policy to the limit of UIM coverage contained in the employee’s personal auto policy when that employee is listed as an individual “named insured” in his personal auto policy but is not listed as an individual named insured under the employer’s business auto policy. Here, plaintiff was injured in an auto accident while operating a vehicle owned by his employer that was insured by defendant New Jersey Manufacturers Insurance Company (NJM) under a business auto policy. The NJM policy contained a $1 million UM/UIM coverage limit, and a step-down clause in its UM/UIM endorsement that limited UM/UIM claims to the UM/UIM coverage limit contained in any other policy having similar coverage that listed the claimant as an individual named insured when that claimant was not an individual named insured under the NJM policy. The tortfeasor’s auto policy had $300,000 in auto liability coverage. Plaintiff had a personal auto policy naming him as a named insured with $100,000 in UIM coverage. Because plaintiff was a “named insured” under his personal auto policy and was not a named insured under his employer’s business auto policy issued by NJM, his claim for UIM coverage under the business auto policy was limited by the step-down clause contained in that policy’s UM/UIM endorsement to the amount of UIM coverage he elected in his personal auto policy. The language of the step-down, coverage limitation clause to be clear, unambiguous and uncontroverted by any other provisions contained in the business auto policy issued by NJM. Furthermore, because the limit of liability coverage contained in the tortfeasor’s policy exceeded the limit of UIM coverage contained in plaintiff's personal auto policy, plaintiff was not an “underinsured motorist” as defined in the NJM policy.
01/21/04 ARCHER DANIELS MIDLAND CO. v AON RISK SERVS., INC. OF MINNESOTA,
Broker Liable for Failing to Secure Contingent Business Interruption Insurance
Defendant, an insurance broker, failed to obtain contingent business interruption and extra expense insurance coverage as requested by plaintiff; damages award for plaintiff, plus prejudgment interest, was affirmed.
01/21/04 ALLSTATE INS. CO. v LANE
Homeowner’s Carrier Has No Obligation to Defend Claim Arising Out of Negligent Representation of Property Being Sold
Defendants appealed from a summary judgment in favor of plaintiff Allstate Insurance Company. The trial court concluded that Allstate had no obligation to defend or indemnify the Lanes in a lawsuit seeking rescission of a real estate contract and damages because the home they purchased from defendants had been damaged by extensive water infiltration before the closing. Court founds no obligation to defend.
01/20/04 MINNESOTA PROPERTY INS. v SLATER
Vehicle Undergoing Maintenance is not in Dead Storage and may Satisfy Homeowners Insurance Exclusion for Injury Arising out Of Use of Motor Vehicle
An operable vehicle undergoing maintenance and repair to meet the Minnesota Department of Transportation registration requirements for commercial hauling is not in dead storage and may satisfy the homeowners’ insurance policy exclusion of covering bodily injury arising out of maintenance or use of a motor vehicle. Vehicle repair and maintenance work that is necessary to facilitate the commencement of a business’s primary activity satisfies the business- pursuits exclusion to the homeowners’ insurance policy.
01/15/04 SAFECO INS. CO. v WOODLEY
Insurer Must Pay Insured's Legal Expenses before Being Entitled to Offset
A no-fault motorist was injured in a car accident with an underinsured motorist (tortfeasor). She received both personal injury protection (PIP) benefits and underinsured motorist (UIM) benefits from the same insurance carrier, as well as a recovery from the tortfeasor. After arbitration of the UIM claim was complete, the insurance carrier took an offset, in an amount equal to the PIP benefits it previously paid, against the amount it owed in its capacity as UIM carrier. The Court held that in order to take the offset, the insurance carrier must pay a pro rata share of the legal expenses incurred by the insured to recover from the tortfeasor and to arbitrate the UIM claim.
CENATUS v ROSEN
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Barasch, J.), dated December 5, 2002, which granted the defendants' motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The plaintiff claims that he sustained, inter alia, a significant limitation of his cervical and lumbosacral spine as the result of an accident which occurred on August 26, 1998, when he was 18 years old. The defendants moved for summary judgment on the ground that the plaintiff's injuries "do not satisfy the threshold requirement of a serious injury" under any definition set forth in Insurance Law § 5102(d).
In support of their motion, the defendants' experts noted that a magnetic resonance imaging of the plaintiff's back revealed a herniated disc in the lumbosacral spine and two herniated discs in the cervical spine. After examining the plaintiff, one of the defendants' examining physicians concluded that the plaintiff demonstrated a "full range of motion * * * throughout the spinal column" and diagnosed his injury as cervical and lumbar sprains which had resolved. Accordingly, the defendants established a prima facie case for summary judgment in their favor.
In opposition, the plaintiff submitted an affirmation from a physician who performed a recent examination of the plaintiff. The physician quantified the results with percentages of the loss of range of motion of the cervical and lumbosacral spine.
In view of the foregoing, the plaintiff established that there is an issue of fact as to whether he sustained a significant limitation of use of a body function or system within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 353).
MANN v GULF INS. CO.
In related actions, inter alia, for a judgment declaring, among other things, that the defendant Gulf Insurance Company is obligated to defend and indemnify the plaintiff All Waste Systems, Inc., in two underlying actions which were pending in the Supreme Court, Orange County, one entitled Mann v All Waste Sys., under Index No. 7848/97, and the other entitled Hernandez v All Waste Sys., under Index No. 2751/98, the defendant in Action No. 2, Gulf Insurance Company, appeals from (1) an order of the Supreme Court, Orange County (Peter C. Patsalos, J.), dated December 10, 2002, which denied its motion for summary judgment dismissing the complaint insofar as asserted against it and granted the plaintiff's motion for summary judgment, and (2) a judgment of the same court entered January 15, 2003, which, upon the order, inter alia, declared that the defendant Gulf Insurance Company is obligated to indemnify the plaintiff All Waste Systems, Inc., and that its disclaimer was untimely.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the intermediate order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).
On October 22, 1997, Timothy Mann, Sr., and Nathan Hernandez were injured when a truck owned by All Waste Systems, Inc. (hereinafter All Waste), struck their cherry picker truck which was parked along the side of a road while Mann and Hernandez were working. Mann and Hernandez brought separate actions to recover damages for their personal injuries. Mann suffered severe brain injuries.
In September 2000 the parties settled the two personal injury actions for a total of $4,500,000, with All Waste contributing $250,000, Empire Fire and Marine Insurance Company (hereinafter Empire), All Waste's primary insurer, contributing $1,000,000, and Gulf Insurance Company (hereinafter Gulf), All Waste's excess insurer, contributing $3,250,000. The settlement was made without prejudice to Gulf's disclaimer of its obligation to provide excess insurance coverage on the ground that the notification to it was untimely, in violation of All Waste's obligations under its insurance policy.
Empire was notified of the accident soon after it occurred. However, Gulf did not receive its first notice of the accident until November 1999 more than two years after the accident. At that time, Empire notified Gulf that it had received a settlement demand of $17,500,000 in the Mann personal injury action. By letter dated November 19, 1999, All Waste's litigation counsel, retained by Empire, notified Gulf that Empire was tendering its policy limits to counsel for Mann and Hernandez. On November 29, 1999, Gulf wrote Empire, stating that it was investigating the claim but that the late notification to Gulf had deprived it of its rights under the policy. Gulf also stated that it was investigating whether or not there was notification to insurance brokers who were its agents under the terms of the policy. By January 10, 2000, Gulf's coverage counsel opined that there were grounds to disclaim based upon late notice. Thereafter, by letter dated January 18, 2000, which followed up on his telephone call of January 10, 2000, to Gulf, and before Gulf's issuance of a formal disclaimer letter, All Waste's "personal counsel" requested that Gulf examine certain items before determining whether or not to disclaim coverage. Gulf finally issued a formal notice of disclaimer on March 21, 2000.
Gulf's delay in formally disclaiming was unreasonable as a matter of law. Insurance Law § 3420(d) requires that written notice of a disclaimer be given "as soon as is reasonably possible" after the insurer learns of the grounds for disclaimer of liability (see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029-1030; Uptown Whole Foods v Liberty Mut. Fire Ins. Co., 302 AD2d 592, 593; McGinnis v Mandracchia, 291 AD2d 484, 485). The basis for the disclaimer was apparent from the notices and information Gulf received by November 30, 1999. By that date, Gulf's vice-president and claims manager had investigated and ascertained that the brokers to whom notice was allegedly sent were not agents of Gulf. Thus, Gulf had sufficient facts to allow its claims manager to conclude, at the latest by the beginning of December 1999, that All Waste had breached the notice provisions of the policy. Therefore, Gulf's nearly four-month delay in disclaiming was unreasonable as a matter of law (see Uptown Whole Foods v Liberty Mut. Fire Ins. Co., supra at 593; McGinnis v Mandracchia, supra at 485; Matter of Interboro Mut. Indem. Ins. Co. v Rivas, 205 AD2d 536, 537; Mount Vernon Fire Ins. Co. v Gatesington Equities, 204 AD2d 419, 420-421; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507, 508; see also First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64).
MATTER OF UTICA MUT. INS. CO. v LECONTE
In a proceeding pursuant to CPLR article 75, inter alia, to stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Queens County (Thomas, J.), entered November 25, 2002, which denied the petition.
ORDERED that the order is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Queens County, for a hearing on the issue of whether there was physical contact between the respondent's vehicle and the alleged "hit-and run" vehicle.
Physical contact is a prerequisite to the applicability of the uninsured motorist endorsement in the insured's policy (see Insurance Law § 5217; Matter of Great N. Ins. Co. v Ballinger, 303 AD2d 503, 504; Matter of New York Cent. Mut. Fire Ins. Co. v Paredes, 289 AD2d 495, 496; Matter of Maryland Cas. Co. v Piasecki, 235 AD2d 423, 424; Matter of Atlantic Mut. Ins. Co. v Shaw, 222 AD2d 581). When there is a triable issue of fact with respect to whether a claimant's vehicle had physical contact with an alleged "hit-and-run" vehicle, the appropriate procedure is to stay the arbitration pending a determination on that issue (see Matter of New York Cent. Mut. Fire Ins. Co. v Paredes, supra).
In support of its petition to stay arbitration, the petitioner submitted a police accident report wherein the respondent told the reporting officer that an unknown vehicle "cut him off." In opposition to the petition, the respondent offered his affidavit wherein he stated that his car was "suddenly struck on the driver's side" by an unidentified car which left the scene. Under these circumstances, there is an issue of fact with respect to physical contact, and the matter must be remitted to the Supreme Court, Queens County, for a hearing on that issue (see Matter of New York Cent. Mut. Fire Ins. Co. v Paredes, supra; Matter of Maryland Cas. Co. v Piasecki, supra).
ZURICH AMERICAN INS. CO. v LUIS BASTOS CONSTRUCTION
In an action for a judgment declaring that the plaintiff is not obligated to defend or indemnify the defendant Luis Bastos Construction, in an underlying action entitled Cruz v A.P. Roofing & Siding Corp., pending in the Supreme Court, Westchester County, under Index No. 00-16320, the defendant A.P. Roofing & Siding Corp. appeals from an order and judgment (one paper) of the Supreme Court, Westchester County (LaCava, J.), entered November 13, 2002, which granted the plaintiff's motion for summary judgment, declared, in effect, that the plaintiff is not obligated to defend or indemnify Luis Bastos Construction, Inc., in the underlying action, and denied its cross motion for summary judgment declaring that the plaintiff was obligated to defend and indemnify Luis Bastos Construction, Inc., in the underlying action.
The plaintiff Zurich American Insurance Co. (hereinafter Zurich) issued a workers' compensation/employers' liability insurance policy to the defendant Luis Bastos Construction, Inc. (hereinafter Bastos), a New Jersey Corporation. While the policy was in effect, the defendant Hermilo Cruz, one of Bastos's employees, was seriously injured while working on a job in New York that had nothing to do with any work being performed in New Jersey.
Cruz commenced an action to recover damages for his personal injuries. The defendants in that action impleaded Bastos as a third-party defendant. Zurich subsequently commenced the instant action, seeking a judgment declaring that it was not obligated to defend or indemnify Bastos in the underlying action.
The subject policy effectively provides, in clear and unambiguous terms, that Bastos had employers' liability coverage only for claims arising out of accidents occurring during work performed in New Jersey, or for claims arising out of accidents occurring during work performed in another state that was necessary or incidental to work being performed in New Jersey (see Chase Manhattan Bank v Travelers Group, 269 AD2d 107, 108). Accordingly, the Supreme Court properly granted Zurich's motion for summary judgment declaring that it is not obligated to defend or indemnify Bastos in the underlying action.