Source: http://nycoveragecounsel.blogspot.com/2010_12_01_archive.html
Timestamp: 2015-07-04 22:29:38
Document Index: 468521994

Matched Legal Cases: ['§ 3', '§ 3', '§ 5109', '§ 5109', '§ 3420', '§ 5202', '§5202', '§ 388']

Coverage Counsel: December 2010
Federal Appeals Court Rules that "Executed" Means Signed or Fully Performed. Certificate of Insurance Question Certified to New York Court of Appeals.
CGL – ADDITIONAL INSURED – BLANKET ADDITIONAL INSURED ENDORSEMENT – "EXECUTED" – CERTIFICATE OF INSURANCE – ESTOPPEL
10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co.
(2nd Cir. US Ct. Apps., decided 12/23/2010) Plaintiffs were the owner and construction manager for a commercial building in Buffalo, New York. On August 14, 2003, they contracted with Ellicott Maintenance, Inc., to perform some interior demolition at the building. The construction agreement required Ellicott Maintenance to procure and maintain $5,000,000 in public liability insurance for any legal liabilities arising out of the demolition project, which was to be primary to the building owner's own liability insurance. The construction agreement also required that Ellicott Maintenance obtain, prior to the commencement of work, "Certificates of Insurance naming [the plaintiffs] as additional insureds." Representatives of the plaintiffs and Ellicott Maintenance did not actually sign the agreement until September 12, 2003. At the time Ellicott Maintenance entered into the construction contract with the plaintiffs in August, it had in place a $1 million per occurrence primary CGL policy and a $2 million per occurrence umbrella policy with defendant Mountain Valley Indemnity Company. The primary policy's blanket additional insured endorsement extended coverage to any “person or organization with whom [Ellicott Maintenance] agreed, because of a written contract[,] to provide insurance such as is afforded under [the primary policy], but only with respect to liability arising out of [Ellicott Maintenance's] operations," and only when “the written contract or agreement [between Ellicott Maintenance and the additional insured] ha[d] been executed...prior to the ‘bodily injury.’"
The umbrella policy extended coverage to additional insureds with whom Ellicott Maintenance had “agreed in writing prior to any [injury] ... to provide insurance such as is afforded” by the umbrella policy. Unlike the primary policy, however, the umbrella Policy did not provide that its coverage of additional insureds was effective only if the written agreement between Ellicott Maintenance and any additional insureds had been “executed.”
On August 19, 2003,an entity identified by the court as "Mountain Valley's agent", issued a certificate of insurance (COI) identifying Mountain Valley as the issuer of the primary and umbrella policies, Ellicott Maintenance as the named insured, and the plaintiffs as “additional insured with respect to project: Graystone.” The COI contained the standard limiting and disclaiming language on its front and rear sides: THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.
DISCLAIMER: The Certificate of Insurance ... does not constitute a contract between the issuing insurer ... and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.Ellicott Maintenance began work the day after it received the COI. On September 9, 2003, three days before the construction agreement was signed, David DelPrince, an employee of a subcontractor hired by Ellicott Maintenance was injured when a roof collapsed at the Graystone site.
Plaintiffs notified Mountain Valley's agent of DelPrince's injury and potential claim by letter dated October 22, 2003, requesting that Mountain Valley defend and indemnify them in any suit brought by DelPrince. Some six months later, by letter dated April 13, 2004, Mountain Valley informed the plaintiffs that it would not defend or indemnify them because, inasmuch as the construction sgreement had not been signed on behalf of the parties before DelPrince was injured, “there was not in existence on the date of loss a written contract executed prior to the bodily injury,” as required by the terms of the primary policy. The letter further stated that even if the plaintiffs qualified as additional insureds under the primary policy as of the date of the accident, Mountain Valley would deny coverage because the plaintiffs had failed to timely notify Mountain Valley of DelPrince's injury and possible claim, as required by the primary policy.
DelPrince filed suit against plaintiffs and Ellicott Maintenance in New York State Supreme Court, Erie County, in October 2004, alleging negligence and violations of the New York Labor Law, and seeking to recover damages for the injuries he sustained. In late January 2007, plaintiffs commenced this declaratory judgment action, alleging that they were additional insureds under the primary policy and therefore were entitled to coverage from Mountain Valley for the underlying DelPrince suit. The plaintiffs further alleged that the COI bound Mountain Valley to provide coverage despite the absence of a signed agreement between plaintiffs and Ellicott Maintenance. Finally, the plaintiffs alleged that Mountain Valley should be precluded from relying on the defense of untimely notice because Mountain Valley's response disclaiming coverage was itself untimely. The plaintiffs later amended their complaint to add a claim alleging entitlement to indemnification and defense as additional insureds under the umbrella policy.
The parties cross-moved for summary judgment and, adopting the September 2009 report and recommendation of the magistrate judge in whole, the District Court granted plaintiffs' motion and denied defendant's in February 2010. On the question of whether the construction agreement was “executed” prior to DelPrince's injury, the court adopted the magistrate's conclusion that “in light of ‘common speech’ and the reasonable expectations of a businessperson”, and because Mountain Valley, as the drafter of the policy, could have used the term “signed” if it had intended to require a signature, the term “executed” as used in the primary policy should not be interpreted to require the parties' signatures to trigger coverage under that policy. The District Court also accepted the magistrate judge's analysis as being consistent with the Nassau County Supreme Court's November 2008 decision in Burlington Ins. Co. v Utica First Ins. Co., 22 Misc. 3d 1112A, a decision the Second Department reversed on March 9, 2010, less than three weeks after the District Court's decision in this case.
On the question of whether the plaintiffs were entitled to coverage based on the COI, the magistrate judge had recommended finding that the COI incorporated the terms of the primary and umbrella policies. Relying on Niagara Mohawk Power Corp. v. Skibeck Pipeline Co., 271 A.D.2d 867 (4th Dept. 2000), the magistrate judge found that Mountain Valley's agent, acting within the scope of its authority, “issued the certificate of insurance naming [the plaintiffs] as additional insureds, upon which [the plaintiffs] were entitled to rely, regardless of the absence of a signing of the construction contract at that time.” The magistrate judge therefore recommended estopping Mountain Valley from denying coverage to the plaintiffs, a recommendation the District Court judge adopted. Finally, the magistrate judge rejected Mountain Valley's argument that the plaintiffs had not provided timely notice of DelPrince's injury.
Mountain Valley appealed to the United States Court of Appeals for the Second Circuit. In a unanimous opinion, that court affirmed the District Court's finding that plaintiffs were covered as additional insureds under the umbrella policy but reserved decision on the COI estoppel question of coverage under the primary policy pending the New York Court's of Appeals' answer of this certified question:
In a case brought against an insurer in which a plaintiff seeks a declaration that it is covered under an insurance policy issued by that insurer, does a certificate of insurance by an agent of the insurer that states that the policy is in force but also bears language that the certificate is not evidence of coverage, is for informational purposes only, or other similar disclaimers, estop the insurer from denying coverage under the policy?Significantly, the Second Circuit agreed with the Second Department's March 2010 decision in Burlington Ins. Co. v Utica First Ins. Co. that "executed" means signed or fully performed:
Because New York law unambiguously requires either the signing of a contract or its full performance for it to be "executed" within the meaning of an insurance policy requiring such prior execution, and because neither occurred here, the Construction Agreement was not executed as of the date of DelPrince's injury. The district court's finding that it was and its conclusion that for that reason the Primary Policy was in effect at the time of the accident, are therefore in error.On the question of whether Mountain Valley should nonetheless be estopped from denying coverage to the plaintiffs under the primary policy because Mountain Valley's agent issued, and the plaintiffs relied upon, the COI, however, the Second Circuit noted that New York's intermediate appellate courts are divided on this issue -- the First and Second Departments of the Appellate Division having ruled that informational COIs cannot give rise to an estoppel situation, while the Third and Fourth Departments having held that a certificate of insurance can estop an insurer from denying coverage where the parties intended to provide coverage to the party seeking it if the certificate was issued by an agent within the scope of its authority, and if the party seeking coverage reasonably relied on the certificate of insurance by, for example, beginning construction work.
Because of the "diversity of authority among the Appellate Divisions" on this "significant issue of state law," the Second Circuit reserved decision on the COI estoppel issue and certified the above question to the New York Court of Appeals.
With respect to the umbrella policy, however, the Second Circuit found that since the umbrella policy's additional insured endorsement did not provide that its coverage of additional insureds was effective only if the written agreement between its named insured and any additional insureds had been “executed”, plaintiffs were entitled to coverage under that policy:
Section 3(c) of the Umbrella Policy provides: "Any person or organization with whom or with which you have agreed in writing prior to any loss, `occurrence[,]' or `offense' to provide insurance such as is afforded by this policy is an insured...." Fijal Decl. Ex. K at 8 (§ 3(c)). Pursuant to Section 3(d), "Each person or organization who is an `insured' in the `underlying insurance' is an `insured' under this insurance subject to all the limitations of such `underlying insurance' other than the limits of the underlying insurer's liability." Id. (§ 3(d)).
We conclude that Section 3(c) renders the plaintiffs insureds under the Umbrella Policy. The policy requires no more than an agreement in writing. The New York Court of Appeals "ha[s] long held that a contract may be valid even if it is not signed by the party to be charged, provided its subject matter does not implicate a statute... that imposes such a requirement." Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d 363, 368, 828 N.E.2d 593, 596 (2005). "[A]n unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound." Id. at 369, 828 N.E.2d at 597.This case and its certified question will now head to the New York Court of Appeals for an answer. Depending on how the New York Court of Appeals answers the certified question, the Second Circuit will either affirm or reverse the District Court's finding of additional insured coverage to the plaintiffs under the primary policy. Regardless of its impact on the outcome of this particular case, however, the New York Court of Appeals' answer of the certified question will likely affect many, many cases in which certificates of insurance have been issued identifying one or more entities as additional insureds without either a corresponding endorsement of the actual listed primary or umbrella policies or the triggering of additional insured coverage under such policies' blanket additional insured endorsements.
(3rd Dept., decided 12/16/2010) When the record is replete with conflicting testimony and documents regarding when, and to what extent, the insured informed its insurance broker of a carbon monoxide poisoning occurrence prior to commencement of the wrongful death actions against it, neither the insured nor broker is entitled to summary judgment. So held both the Supreme Court and Appellate Division in this case. Posted by
For the past 10 years, coverage attorney Randy Maniloff of the Philadelphia, PA law firm of White & Williams, LLP, has given the insurance industry an annual top 10 list of insurance coverage court decisions. His tenth submission, published in Mealey's Litigation Report: Insurance on December 22, 2010 can be found here or by clicking the image below. In order of their issuance dates, the 10 cases making this year's list (Google Scholar links added for your ease of reference) are: Pharmacists Mutual Insurance Co. v. Myer – Vermont Supreme Court held that an insurer that failed to take action to allocate damages between those that are covered and uncovered was precluded from asserting otherwise applicable coverage defenses.
The Maniloff and Mooney article also includes their third annual Coverage for Dummies et al. special report. Check it out. You'll have to Google Scholar those cases on your own. Posted by
With the 12 days of Christmas starting tomorrow, and before lavishing the one you fancy with a partridge in a pear tree, two turtle doves, three French hens, four calling birds, five golden rings, six geese a-laying, seven swans a-swimming, eight maids a-milking, nine ladies dancing, ten lords a-leaping, eleven pipers piping, and twelve drummers drumming all at an estimated grand total cost of $96,831, pause to consider the risk management issues inherent in such generous expressions of devotion and the fact that your true love's consequential increased insurance premium costs from your gifts could equal nearly a half of million dollars. At the request of Insurance Journal, the very clever folks over at global insurance broker Lockton, Inc. have analyzed and reported on the risk management issues and insurance coverage needs the traditional gifts of the Twelve Days of Christmas would implicate for the recipient. Read their report by clicking here: Merry Christmas everyone. Roy
(1st Dept., decided 11/30/2010) While we're talking about Dr. Rabiner's MRI facilities (see post below), defendant providers contended in this case that the New York State Legislature's post-Mallela enactment of Insurance Law § 5109 overruled Mallela or preempts or precludes Mallela-based recovery actions such as this one. New York County Supreme Court (Eileen Bransten, J.) rejected that argument in denying defendant providers' motion for summary judgment, and the Appellate Division, First Department, AFFIRMED, holding:
Insurance Law § 5109,
Over in No-Fault Paradise, Dave Barshay reports on the recent appeal outcome of the 2008 trial of 30 consolidated cases of Dr. Herbert Rabiner of Metroscan Imaging, P.C., Belt Parkway Imaging, P.C., Diagnostic Imaging, P.C., and Parkway MRI, P.C. no-fault notoriety. Those of you who fancy yourselves no-fault dorks (Barshay's moniker) should head over to No-Fault Paradise and read Dave's post and the Appellate Term's December 20th decision. Among the Mallela-esque issues before the Appellate Term was whether a Mallela defense must be proven by clear and convincing evidence, as the trial judge Bernice Daun Siegel had ruled, or a preponderance of the evidence, as defendant State Wide Insurance Company contended. It is important to note that the Appellate Term did not reach and decide that issue, finding that "the evidence adduced at trial was insufficient to establish, even by a preponderance of the evidence, that plaintiffs were operated in violation of state licensing requirements."
(2nd Dept., decided 12/14/2010) If a party seeking coverage is neither an insured nor an additional insured under the policy, does New York Insurance Law § 3420(d) apply to require a prompt disclaimer of coverage? No, reminds the Second Department. Although Sirius initially disclaimed coverage to York Restoration Corp. based on late notice, in this action Sirius cross-moved for summary judgment on the ground that York was not an additional insured on the date of the accident. Supreme Court denied Sirius' cross motion and granted summary judgment to York.
Sirius correctly contends that York is not entitled to defense and indemnification because it was not a named insured on the date of the accident. The party claiming insurance coverage bears the burden of proving entitlement (see National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 570; Tribeca Broadway Assoc. v Mount Vernon Fire Ins. Co., 5 AD3d 198). A party is not entitled to coverage if it is not named as an insured or additional insured on the face of the policy as of the date of the accident for which coverage is sought (see Essex Ins. Co. v Michael Cunningham Carpentry, 74 AD3d 733; Majawalla v Utica First Ins. Co., 71 AD3d 958; National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d at 571; Tribeca Broadway Assoc. v Mount Vernon Fire Ins. Co., 5 AD3d at 200). Here, York was not named as an additional insured under the policy until approximately five weeks after the underlying accident. The accident occurred on October 29, 2004, but the subsequently issued policy change endorsement, naming York as an additional insured, was not effective until December 6, 2004. Therefore, Sirius had no duty to defend and indemnify York (see ADF Constr. Corp. v Home Insulation & Supply, 237 AD2d 915, 916; Tower Ins. Co. of N.Y. v Joselyn Grocery Corp., 2008 NY Slip Op 31745[U]; see also Travelers Ins. Co. v Utica Mut. Ins. Co., 27 AD3d 456). York's contention that Sirius may not assert that York is not an insured under the policy because Sirius failed to disclaim on that ground is without merit. A disclaimer pursuant to Insurance Law 3420(d) is unnecessary when a claim does not fall within the coverage terms of an insurance policy (see Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; Siragusa v Granite State Ins. Co., 65 AD3d 1216, 1217). An insurer is not required to deny coverage where none exists (see Hargob Realty Assoc., Inc. v Fireman's Fund Ins. Co., 73 AD3d 856, 858). Therefore, when a claim is denied because the claimant is not an insured under the policy, there is no statutory obligation to provide prompt notice of the disclaimer (see Hargob Realty Assoc., Inc. v Fireman's Fund Ins. Co., 73 AD3d at 858; Siragusa v Granite State Ins. Co., 65 AD3d at 1217; Matter of Nationwide Ins. Co. v Smaller, 271 AD2d 537, 537-538; Matter of Fireman's Fund Ins. Co. v Freda, 156 AD2d 364, 366). Under the circumstances, the Sirius policy did not provide coverage to York as of the date of the accident. Requiring payment of a claim upon a failure to timely disclaim would create coverage where it never existed (see Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d at 188). Posted by
(Sup. Ct., Nassau Co., decided 12/17/2010) New York CPLR Rule 3212(f) provides:
(f) Facts unavailable to opposing party. Should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just.After receiving requested verification from plaintiff hospital, NYCM timely denied plaintiff's billing on the grounds that plaintiff's assignor was intoxicated at the time of the accident or was injured while committing an act that would constitute a felony, both excluded conduct under the PIP endorsement of NYCM's policy. Plaintiff sued and moved for summary judgment. NYCM opposed that motion and cross-moved for a stay of trial pending the outcome of criminal proceedings against the plaintiff's assignor and for an opportunity to conduct discovery relative to its intoxication-based defenses.
A party who raises a defense that has not yet been fully developed, but appears to exist, must be able to make some showing that such facts do in fact exist for CPLR 3212(f) to apply; mere hope that discovery may reveal those facts is insufficient. Companion Life Ins. Co. v All State Abstract Co., 35 AD3d 519 (2d Dept. 2006). Nor can mere speculation serve to defeat the motion. Pluhar v Town of Southhampton, 29 AD3d 975 (2d Dept. 2006); Ciccone v Bedford Cent. School Dist., 21 AD3d 437 (2d Dept. 2005). However, denial of the motion on the ground that necessary disclosure is lacking is appropriate if there is some basis in the record for finding that evidence sufficient to defeat the motion may exist, [*3]especially where the facts appear to lie within the knowledge of the opposing party and discovery is in its early stages. See, Adler v City of New York, 52 AD3d 549 (2d Dept. 2008); Baron v Incorporated Vil. of Freeport, 143AD2d 792 (2d Dept. 1988). The Court finds that this is the case here. There is no direct proof of intoxication submitted, or that such intoxication caused the accident. However, the defendant presents the affidavit of the office manager of defendant's law firm, Christopher Roselli, who states that the police report revealed that plaintiff's assignor, Luis Vargas, was arrested at the accident scene on charges of driving while intoxicated. He further states that he spoke to Orange County Assistant District Attorney Steven Goldberg, who informed him that Vargas was indicted on 34 charges, including two counts of driving while intoxicated. A formal request for a copy of the indictment was made, and the results of that request, a copy of the indictment, is annexed to defendant's reply papers. Among other things, the indictment contains not only a charge of driving while intoxicated, but also of vehicular manslaughter in the first degree, as a passenger in Vargas's vehicle was ejected and killed as a result of his operation of the vehicle under the influence of alcohol. Other felony counts are based on injuries to other passengers. Thus, in addition to allegedly driving while intoxicated, his operation of the vehicle may have resulted in his having been injured while committing a felony. While the foregoing clearly is in part hearsay, the indictment does verify the key information referred to by Roselli. For purposes of plaintiff's motion, it is sufficient for the Court to find that evidence sufficient to defeat the motion may exist, and that disclosure should be permitted. See, Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1014 (2d Dept. 2008). This is especially so where information regarding the alleged intoxication, and its role in causing the injury-producing accident, lies in part within the knowledge of plaintiff's assignor, and this action is in its early stages. The Court understands that Vargas may not be available for a deposition, or may choose to invoke his Fifth Amendment rights, which will of necessity slow discovery here. Further, the criminal case also appears to be in its early stages. However, possible difficulties in moving the present civil case forward is not a reason to prejudice the defendant's ability to defend itself given the factors described in this decision. The record here also distinguishes this matter from Westchester Med. Ctr. v Government Employees Ins. Co., 77 AD3d 737, supra, as in that case "the defendant failed to submit any evidence whatsoever from which the circumstances of the accident could be ascertained, the nature of the accident is unknown, and, thus, the defendant's evidence... was insufficient by itself to raise a triable issue of fact as to whether the plaintiff's assignor was "injured as a result of operating a motor vehicle while in an intoxicated condition." (Emphasis in original). Here, the nature of the accident is known, and there is some evidence that discovery may reveal that plaintiff's assignor was injured as a result of operating a vehicle in an intoxicated condition. Accordingly, the plaintiff's motion is denied pursuant to CPLR 3212(f), but may be renewed upon the completion of discovery.
Felony Act Exclusion,
(Sup. Ct., New York Co., decided 11/18/2010) Petitioner, a New Jersey resident, made a motion for an order allowing her to commence a personal injury action against the New York Motor Vehicle Accident Indemnification Corporation (MVAIC) for a broken ankle she sustained when she was struck while riding her bicycle in Manhattan by a bus that left the scene of the accident. In spite of her motion being unopposed, New York County Supreme Court Justice Eileen Rakower DENIED petitioner's application, finding that since New Jersey no-fault law does not afford protection for injuries from being struck by commercial vehicles, petitioner did not meet the definition of a "qualified person" under New York Insurance Law § 5202(b):
Insurance Law §5202(b) states, in relevant part:"Qualified person" means (i) a resident of this state, other than an insured or the owner of an uninsured motor vehicle and his spouse when a passenger in such vehicle, or his legal representative, or (ii) a resident of another state, territory or federal district of the United States or province of the Dominion of Canada, or foreign country, in which recourse is afforded, to residents of this state, of substantially similar character to that provided for by this article, or his legal representative[.]On her police accident report, petitioner lists her address as "518 North 5 Street Harrison NJ 07029." On her Notice of Intention to Make a Claim form, pay stub, household affidavit; and hospital records, petitioner lists her address as 17 Davis Street Harrison, NJ. The court in Simon v. Motor Vehicle Acc Indemnification Corp., 83 AD2d 803 (1st Dept. 1981) found:The record before this Court demonstrates that claimant is not a qualified person. The no-fault statute in the State of New York applies to commercial vehicles, while the statute in the State of New Jersey only applies to passenger cars. Coverage for injuries sustained while being struck by a commercial van are not covered under New Jersey law.(where a New Jersey resident was struck by a commercial van that left the scene of the accident.)In the police report, the offending vehicle is described as an "unknown bus." In her MVAIC paperwork, petitioner checks the option for "A Bus or School Bus," next to "the type of vehicle" that hit her. There is no evidence that the bus involved in the accident was not a commercial vehicle. Here, as in Simon, petitioner has failed to show that New Jersey would afford reciprocal coverage to a New York driver and, thus, is not considered a "qualified person" for purposes of commencing a lawsuit against MVAIC.
(2nd Dept., decided 10/19/2010) A Budget franchisee rented a Budget truck to JBG Trucking. The rental agreement provided that any authorized employee of JBG with a valid driver's license was permitted to operate the vehicle upon presentation of a valid driver's license by the company employee who picks up the vehicle. Jamie Collins presented a restricted driver's license to the Budget location and, while driving the rented truck, struck and killed the plaintiff's decedent, who was riding a bicycle. Plaintiff alleged that the Graves Amendment did not apply because the Budget defendants knew or should have known from Collins' presentation of a restricted driver's license that he had a history of drug and/or alcohol related offenses. In opposition to the Budget defendants' motion to dismiss plaintiff's complaint and for summary judgment, plaintiff argued that the Budget defendants negligently entrusted the rented truck to Collins, and that their negligence precluded application of the Graves Amendment's vicarious liability exemption. While agreeing that the presentation of a restricted license "does not, in and of itself, compel a motor vehicle rental agent of average ken to scrutinize the renter", Kings County Supreme Court Justice Francois Rivera denied the Budget defendants' motion for summary judgment because they had not submitted their written rental policies and procedures and established that the Budget franchisee followed those policies and procedures in renting the truck to JBG.
(3rd Dept., decided 12/9/2010) On January 24, 2007, upon encountering his old high school friend in a bar, Alex Maitland tried to hoist Lisa Turner onto his shoulders but lost his balance and dropped poor Lisa on her head, temporarily rendering her unconscious (Be honest. Who's thinking "there but for the grace of God go I"?). According to Maitland, after she came to, Turner was walking around and did not appear to be injured, even refusing to get into an ambulance that had been summoned until Maitland convinced her to do so as a precautionary measure. Turner was later diagnosed with a head injury and released from the hospital that evening. The decision does not indicate whether Maitland accompanied Turner to the hospital.
"This is not the first case of a subfloor decaying due to the lack of ventilation."
COMMERCIAL PROPERTY – DECAY OR DETERIORATION EXCLUSION – CONTINUOUS OR REPEATED SEEPAGE OF WATER EXCLUSION – DEFECTIVE DESIGN EXCLUSION – COLLAPSE
Bella-Vita LLC v. Tower Ins. Co. of N.Y.
(Sup. Ct., New York Co., decided 12/1/2010) I'm not an engineer or a builder, but even I know that it's not a good idea to pour four inches of concrete over a wood floor that hovers above an unventilated crawlspace through which a steam pipe runs.
Plaintiff owned a five-story building in lower Manhattan. While showing the basement of the building to a prospective tenant, plaintiff's building manager discovered that the doorway leading into the basement was sagging. A small piece of the basement's concrete floor was opened, revealing a rotting wooden floor system beneath the concrete with a steam pipe underneath. Plaintiff's broker notified Tower, and it sent a licensed professional engineer to inspect.
Following his inspection, the engineer opined that the extreme moisture from the damp and cramped crawl space was causing the wood to rot and deteriorate. He also believed that the condition had existed for about 15 years. He rejected the idea that a recent escape of steam from a broken pipe was the cause of the decaying wood. Based on the engineer's findings, Tower denied coverage to plaintiff for damages to the property, and plaintiff commenced this suit, alleging breach of contract.
In granting Tower's motion for summary judgment, New York County Supreme Court Justice Louis York found:
the engineer's findings that the basement's wood joists, beams and subfloor were deteriorating, due “to high levels of moisture within the damp and unventilated crawl space” triggered the policy's exclusion for damages due to “rust, corrosion, fungus, decay, [or] deterioration, hidden or latent defect in property that causes it to damage or destroy itself”;
the engineer's finding that the wooden subfloor had been exposed to water seepage in the crawlspace for over 15 years triggered the policy's exclusion for damages due to "[c]ontinuous or repeated seepage or leakage of water that occurs over a period of 14 days or more";
"This is not the first case of a subfloor decaying due to the lack of ventilation. * * * [C]onstructing an unventilated crawl space is faulty design, because it is readily apparent that decay will ensue. * * * Given that the policy’s coverage does not include property damage deriving from defective design, Plaintiff is further barred from recovery."; and
there was no coverage for a collapse of the insured building since the policy limited the scope of its collapse coverage to include only an “abrupt falling down or caving in of a building ... even if it shows evidence of cracking, bulging, sagging [or] bending.” "Hence, a building in danger of collapsing is not covered under the policy." Posted by
Continuous Seepage of Water Exclusion,
Defective Design Exclusion,
How to Blow Up a $44 Million Personal Injury Award
PERSONAL INJURY – MISCONDUCT OF PLAINTIFF'S COUNSEL AT TRIAL – MOTION TO SET ASIDE VERDICT – OTHER TRIAL ERROR
(4th Dept., decided 11/19/2010) Not an insurance coverage case, but interesting nonetheless.
Brothers Thomas and Matthew Smolinski were in a car leased from Ford Motor Credit Company when it was involved in a single-car rollover accident, causing catastrophic injuries to Thomas that rendered him a quadriplegic. After extensive and contentious litigation that resulted in two mistrials, the case again reached a bifurcated trial on the issue of liability at which the only issue for the jury to decide was whether defendant Matthew or plaintiff Thomas was driving the vehicle at the time of the accident. The accident occurred in 1999, several years before the August 10, 2005 effective date of the Graves Amendment, so the lessor FMCC stood potentially liable under New York Vehicle & Traffic Law § 388.
After a month-long trial, the jury found that Matthew was driving and returned a verdict of more than $40 million. The trial court added lost earnings, raising the award to over $44 million. FMCC appealed, arguing in a 117-page appellate brief that it had been denied a fair trial by reason of erroneous evidentiary rulings by the trial judge and misconduct by plaintiff's counsel, especially in her summation. After noting that "the conduct of both trial and appellate counsel for plaintiff and Ford Credit often fell short of the level of professionalism expected of officers of the court", the Fourth Department, Appellate Division, ruled that the trial court had erred in denying FMCC's post-trial motion to set aside the verdict and for a new trial. The Fourth Department agreed with FMCC that in her summation, plaintiff's trial counsel had improperly: implied that Ford Credit's expert witnesses testified falsely for compensation;
repeatedly alleged that Ford Credit engaged in a conspiracy to cover up the facts; and
made numerous references to the resources that Ford Credit had as a large corporation. The appellate court also agreed that the trial judge had erroneously: (1) allowed plaintiff's counsel to elicit extensive but irrelevant trial testimony regarding plaintiff's life before the accident; (2) excluded certain admissions by plaintiff that he was the driver; and (3) permitted a witness to testify to statements made to Matthew by an unidentified individual. Posted by
(2nd Dept., decided 11/30/2010) Twenty days. That's how long a party has to commence a special proceeding under CPLR 7503(c) to stay an arbitration after receiving a notice of intention to arbitrate.
The Supreme Court should have granted the appellant's cross motion to dismiss the proceeding as time-barred, as the proceeding was not commenced within 20 days of the June 12, 2009, notice of intention to arbitrate (see CPLR 7503[c]; Matter of Liberty Mut. Ins. Co. v Zacharoudis, 65 AD3d 1353, 1354; Matter of Goverment Empls. Ins. Co. v Castillo-Gomez, 34 AD3d 477, 478; Matter of CNA [Pough], 99 AD2d 510). Matter of State Farm Mut. Auto. Ins. Co. v. Urban
Here, once Urban served his notice of intention to arbitrate upon State Farm on December 26, 2008, the 20-day period for State Farm to move for a stay of the arbitration started to run and the subsequent service of the "Request for Arbitration" filed with the AAA did not reset the 20-day period (see Matter of Government Empls. Ins. Co. v Castillo-Gomez, 34 AD3d 477). Consequently, the Supreme Court should have granted Urban's cross motion, regardless of State Farm's contention that there was insurance coverage for the adverse motor vehicle (see Matter of State Farm Ins. Co. v Williams, 50 AD3d at 809) or the Supreme Court's determination that an issue existed with respect to whether there was contact between Urban's vehicle and the motor vehicle which left the scene (see Matter of AIU Ins. Co. v Orellana, 18 AD3d 652; Matter of Merchants Mut. Ins. Co. v Anemone, 271 AD2d 690). Thus, the proceeding should have been dismissed as time-barred (see Matter of Liberty Mut. Ins. Co. v Zacharoudis, 65 AD3d at 1354; Matter of Hermitage Ins. Co. v Escobar, 61 AD3d at 869).The Second Department also held that the lower court erred in directing discovery in the event the matter proceeded to arbitration because "a failure to move to stay arbitration within the applicable 20-day time period is a bar to judicial intrusion into the arbitration proceedings[.]" The court also reasoned that because State Farm had repudiated its liability for Urban's claim in an earlier disclaimer letter, it could not thereafter insist upon adherence to the terms of its policy.
(2nd Dept., decided 11/30/2010) Plaintiff hospital sued Nationwide for monetary damages as a result of defendant's alleged failure to make timely payments on plaintiff's no- fault insurance claims, specifically $124,996 plus statutory no-fault interest and attorney's fees. Plaintiff moved for summary judgment and Nationwide opposed the motion.
To meet its burden and establish its entitlement to judgment as a matter of law, Plaintiff must submit evidence that the prescribed statutory biling forms have been timely mailed and received, and that the defendant failed to pay or deny the claim within the requisite 30-day period (See N.Y. and Presbyterian Hosp. v. Allstate Ins. Co., supra; LMK Psychological Serv., P.C. v. Liberty Mut. Ins., supra, Mount Sinai Hosp. v. Joan Service Corp., 22 A.D.3d 649, 803 N.Y.S.2d 102 (2d Dept., 2005)). Plaintiff has failed in meeting its burden. This Court is satisfied that Defendant did partially deny the claim in a timely fashion by indicating the fees sought were not in accordance with the applicable fee schedules. This Court does not find that the forms submitted were defective or improperly identified the applicant for benefits.Plaintiff appealed and the Second Department, Appellate Division, AFFIRMED: Here, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law on its claim for benefits since the evidence demonstrates that the defendant made a partial payment and a partial denial of the claim within 30 days after receipt thereof (see New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512; see generally Alvarez v Prospect Hosp., 68 NY2d 320).
Since the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law, we need not consider the sufficiency of the defendant's papers in opposition to the motion (see Moore v Stasi, 62 AD3d 764; Marshak v Migliore, 60 AD3d 647). Accordingly, the Supreme Court properly denied the plaintiff's motion for summary judgment on the complaint.If any readers know exactly what the "minor factual discrepancy" of the NF-10 was, please let us all know in a comment to this post. Thanks. Posted by