Source: https://www.hurwitzfine.com/news/coverage-pointers-volume-xi-no-8
Timestamp: 2019-07-18 20:04:30
Document Index: 377357776

Matched Legal Cases: ['§ 1182', '§ 216', '§ 1182', '§ 1182', '§ 1182', '§ 1182', '§ 1182', '§ 1182', '§ 5218']

Coverage Pointers - Volume XI, No. 8 | Hurwitz & Fine, P.C.
Coverage Pointers - Volume XI, No. 8
It’s so nice to write to you again with this week’s issue of Coverage Pointers.
Mediation of Coverage Disputes
This has been a week for mediations, both as a participant in a construction defect case in midtown Manhattan and prepping for a mediation where as a neutral, I will try to bring two good carriers to a resolution on a coverage dispute. We’ve mentioned it before – consider, in the right case, the alternative of early mediation of insurance coverage problems, rather than engaging in the expense of a long, drawn out declaratory judgment action. The precedent you create in court in winning the one you are litigating this time may come back to sink you in the next case.
Another alternative is binding arbitration of coverage disagreements and that can be handled through single or three member panels, either privately or through organizations such as the AAA or Arbitration Forums.
This Week’s Hot One
The big talk this week among the coverage mavens was the First Department’s spanking of AIG and its counsel in the Osowski case. Here, we offer you the down and dirty version. See a more extensive summary in the issue attached.
Basically, AIG is behind an OCIP (Owner Controlled Insurance Program) that wraps up most of the contractors and subs under one policy. Waivers of subrogation abound. A subcontractor’s employee is seriously injured and a lawsuit is commenced against the owner and general contractor, both part of the program. AIG is the first layer excess carrier. AIG denies coverage to all insureds based on an auto exclusion.
Because AIG denied coverage to DCM (the injured worker’s employer), the owner and GC sued DCM for common law and contractual indemnification. Had coverage been provided to the owner, GC and DCM by AIG, the anti-subrogation rule would have precluded the suit.
The plaintiff, owner and GC then settle the case for $12 million in a confidential agreement and continue to pursue the third-party action against DCM. DCM’s counsel presses for the release of the settlement agreement and after the trial court reviews it in camera the court finds that AIG had funded the settlement to the tune of $10 million (over the primary policy)
The settlement agreement provided, (so that the action against DCM could continue) that AIG’s disclaimer of coverage was in full force and effect (nice to pay $10 million when one contends that there is no coverage). The court then dismissed the third party action against DCM holding, in effect, that AIG’s funding of the settlement was the equivalent of providing coverage and thus the anti-subrogation rules barred the third party action.
The appellate court was angered at AIG’s conduct in hiding the settlement funding so that it could pursue the third party action against its own insured (to try to get the money back from another carrier, no doubt). The disclaimer became a fiction and, a “clear attempt to perpetrate a fraud on the court. “
The court was so critical of AIG’s conduct in allegedly trying to hide the AIG payment from the court and parties, that it referred the conduct of the AIG’s outside counsel to the Disciplinary Committee to consider sanctions against the attorney.
I’ve never seen an appellate court refer a matter to a disciplinary committee. Tough sanction. Ouch.
This Week’s Interesting One
There’s another interesting decision today involving default judgments in declaratory judgment actions. The carrier defaulted in appearance and the lower court granted the declaratory relief that was sought in the complaint. The Appellate Division held that it was inappropriate to grant declaratory relief on default without some proof that there was a substantive right to it.
Think about it – why would you allow automobile owners to buy auto insurance anyway? Wouldn’t that just make them less cautious when they drove their own cars, knowing that any injuries caused could be passed onto an unsuspecting automobile insurer?
A century ago, in the State of Iowa, the Attorney General announced that he agreed with the Insurance Department that automobile insurance would not be sold in that state:
RISKS ON ACCIDENTS CAN NOT
Attorney General Byers Hands Down
Opinion on Much Argued Question – His
Iowa automobile owners cannot protect themselves with an insurance policy, from paying damages for accidents resulting from reckless driving, in the opinion, of Attorney General Byers. The attorney general upholds the state insurance department in its ruling that insurance companies cannot take such risks in this
Auditor Bleakly made his ruling about four months ago, basing it on an opinion "written by former Attorney General Mullan. The companies which had been writing "automobile accident insurance" protested, setting up the claim that such risks were permitted by a provision of law passed in 1907, authorizing insurance against personal injury or death by general accidents. In case this was not true they held that they could write automobile risks under the employers' liability insurance clause.
Attorney General Byers holds that both these claims are without foundation. He also answers the argument presented by the insurance companies to the effect that the auditor’s ruling would work a hardship on automobile owners. "We are unable 'to see any very great importance in this suggestion for the reason that under, a liberal construction of the employers' liability clause — and the clause should have a liberal construction — the automobile owner may be indemnified against almost every possible liability except in the case of accidents occurring while the owner is operating his machine for pleasure," says Attorney General Byers in his opinion.
'In all such cases, as the law now stands, the owner of the machine must carry his own risk and protect himself against loss by the exercise of care and caution in operating his machine. To require this cannot be said to be a hardship. The safety of the public in its use of the streets and highways demands – upon the part of the driver of an automobile – the highest degree of care and caution, and it and it is only when injury results from the lack of such care and caution that liability follows."
Editor’s Note: It wasn’t until July 4, 1913 that Iowa permitted the sale of automobile insurance in its state. Think how much lower insurance rates would be if it was still illegal! (It’s mandatory now, of course.)
It's All About Training, No?
Again, our coverage team is at the ready to visit your location and help empower your claims professionals. Suggested topics include the following, but we can merge, mold, alter or add as you might need. The bolded topics are the ones most frequently requested:
Tackling Tenders, Additional Insureds and Priority of Coverage
Where Claimant Sues Liability Carrier for Declaratory Relief, Court Grants Stay of Action to Permit Carrier to Commence Its Own Action for Declaratory Relief
Where There Is Proof that Coverage Was Provided by Contractor for Owner, Remedy for Owner is to Sue Carrier
Scheme by AIG to Avoid Revealing Funding of Settlement Which Would (a) Implicate Anti-Subrogation Rule and (b) Preclude It from Pursuing Third-Party Action for Contribution and Indemnity, Incenses Court
Insurer Moves Office from Time of Original Notice to Time of Suit Notice – Court Excuses Claimant’s Late Notice Since He Sent Notice of Suit to Earlier Address
Where Insurer Claims Misrepresentations in Policy Application, Insurer Still Required to Defend Insured; Court Sidesteps Misrepresentation Claim
Just What IS A Police Report?
Default Judgment Should Not Be Granted Purely on Pleadings, But Court Should Consider Substance
What Is a “Speed Contest,” Anyway? Second Department Gets It Wrong
Another Reminder – Only 20 Days to Start Proceeding to Stay SUM Arbitration – State’s Briefest Statute of Limitations Rears Its Ugly Head Again
Contemporaneous And Recent Examinations Are Required . . .
Affirmation Concluding That Injury Is Permanent Must Be Based on Recent Examination
Applicant Must Demonstrate Good Cause to Withdraw Without Prejudice Because of Pending BI Suit.
More Definitive Decision on Plaintiff’s Prima Facie Case?
Regulatory Update – REGULATION 64 : UNFAIR CLAIMS SETTLEMENT ACT
Evidence Submitted in Support of Motion Is Also Sufficient to Satisfy Particularity Requirement for Fraud/Misrepresentation Claims
Plaintiff’s Malpractice Claim Failed Where He Could Not Establish an Attorney-Client Relationship with Defendant Law Firm
For Purposes of Timeliness of Suit on Surety Bond, Work Was On-Going Where Punch List Items Were Not Complete
Green House Claims – Are They Covered?
PROFESSIONAL LIABILITY POLICIES:
WHEN IS A CLAIM A CLAIM AND NOT ALMOST A CLAIM?
Keep those nice notes coming in – it warms the cockles of our little hearts to know how much you enjoy our little offerings.
10/9/09 Thomas v. Burrus
Odd case. Carrier should have moved to dismiss, instead moved for stay.
Tupper commenced this wrongful death action alleging that decedent was killed when he was struck by a vehicle negligently driven by Burrus. Plaintiff initially commenced the action against Burrus, but then adding defendant Geico seeking declaratory relief that Geico should defend Burris.
For reasons that are unclear, Geico did not move to dismiss the lawsuit which was improperly commenced against it. An injured party cannot commence a declaratory judgment action against a liability carrier until after it secures a judgment against the insured. Instead, Geico asked for a stay of the action against it (rather than dismissal) so it could commence its own DJ action. That, the court granted.
10/9/09 Hunt v. Ciminelli-Cowper Co.
In a Labor Law case, plaintiff fell on ice while doing construction work at Jamestown Community College (JCC). Hunt sued JCC and Ciminelli-Cowper (Ciminelli), the construction manager on the project. Ciminelli and the JCC defendants each commenced a third-party action against various contractors on the project, asserting causes of action for contractual defense and indemnification and breach of contract based on their failure to procure insurance naming Ciminelli and the JCC as additional insured. .
On the insurance issue, one contractor, the court found that there was evidence insurance coverage was provided. If the carriers denied coverage, JCC and Cowper’s remedy was to commence declaratory judgment actions against the carriers.
10/8/09 Osowski v. AMEC Construction Management, Inc.
Scheme by AIG to Avoid Revealing Funding of Settlement which Would Implicate Anti-Subrogation Rule and Preclude It from PursuingThird-Party Action for Contribution and Indemnity Incenses Court
This is a lengthy report but a very interesting decision. AIG ends up getting its hand slapped and its counsel may face disciplinary charges.
During the construction of the New York Times building in mid-town Manhattan, Osowski, a construction worker, was seriously hurt when a four-ton beam fell upon him.
Before the construction started, the building owner, NYTB hired AMEC as the Construction Manager. AMEC subcontracted the steel erection work to Osowski’s employer, DCM.
Both AMEC and DCM were enrolled in the Owner Controlled Insurance Program ("OCIP") that NYTB had obtained. Under it, all coverages were obtained (CGL, excess, Workers Comp and Employers Liability) and all enrolled contractors were insured and waived claims against each other as to those covered by the OCIP program.
In May 2005, Osowski sued NYTB and AMEC in the main action. Over two years later, AIG, the first layer excess carrier, denied coverage for bodily injury arising out of the loading or unloading of a vehicle.
In light of the denial, NYTB/AMEC sued DCM for common-law contribution and contractual indemnification and contribution in the third-party action. Had AIG not denied coverage, the anti-subrogation rule would have precluded that claim (since they all would have been insured under the same policies).
What DCM didn’t know at that time was that AIG had help fund the $12 million settlement through a letter of credit and that the confidentiality agreement provided for that funding. It also provided (so that the action against DCM could continue) that AIG’s disclaimer of coverage was in full force and effect (even though AIG was funding the settlement). DCM pressed the court to uncloak the confidentiality agreement and the court – after reviewing its provisions – did just that. DCM then successfully moved to dismiss the third party action, asserting that AIG’s funding of the settlement was the equivalent of providing coverage and thus the anti-subrogation rules barred the third party action.
The appellate court determined it was proper for the court below to disclose the confidential settlement agreement because the question of who funded the settlement of the main action was critical to whether AMEC/NYTB could continue to maintain the third-party action. To the extent NYTB/AMEC did not have any out of pocket losses, it could not maintain common-law or contractual indemnity claims and if AIG was funding the settlement, anti-subrogation principles would bar the third party action.
AIG’s funding of the settlement (through a letter of credit) was the same as AIG providing coverage (thus implicating the anti-subrogation rule). The fact that the settlement agreement indicated that AIG's disclaimer was in full force and effect was meaningless where the DJ action was not going to continue and there was no chance of AIG getting its money back. The disclaimer became a fiction and, a “clear attempt to perpetrate a fraud on the court. “
The court was so incensed by AIG’s conduct in allegedly trying to hide the AIG payment from the court and parties, that it referred the conduct of the AIG’s outside counsel to the Disciplinary Committee to consider sanctions against the attorney.
10/8/09 American Transit Insurance Company v. Brown
On November 12, 2002, Brown was involved in an accident with American Transit (ATIC) insured, Batista. In January 2003, Brown put ATIC on notice of a property damage claim and ATIC paid the claim.. In November of 2005, Brown sued Battista for personal injuries and Brown sent a copy of the summons and complaint to ATIC at the address set forth in the January 2003 letter from ATIC. ATIC had moved in November 2003. When nobody appeared on behalf of Battista, Brown took a default judgment against him in the amount of $81,830. Brown then brought a direct action against ATIC to enforce the judgment and ATIC commenced a declaratory judgment action denying coverage based on late notice by Batista and Brown.
The court founds that Brown’s lack of prompt notice is excused because he was never notified by ATIC of its change of address and that was a reasonable excuse for a delay in notification.
Two dissenting judges noted (oh so correctly) that there is no obligation on the part of a liability carrier to advise of a change in address. We love this language:
To put forth the lack of such notice as a valid excuse for the failure to notify the insurer of pending litigation ignores the reality that American Transit's address could have been verified on the Internet in approximately three-tenths of a second.
10/6/09 Burlington Insurance Company v. Guma Construction Corp.
Burlington issued a CGL policy to Guma with a “classification limitation” endorsement, limited the policy to apply only to those operations listed in the “classifications” section. “Garbage, Ash or Refuse Collecting” was so listed.
A fire broke out in a building where Guma was working and a firefighter was injured. He sued Guma, alleging that it negligently performed certain "construction, alteration, renovation, and/or demolition, work, labor and/or other services" and improperly removed pipe as part of the work it performed, and used one or more torches in connection with the work it performed.
Burlington refused to defend claiming that Guma had made misrepresentations in its application for insurance by describing its business as "garbage, ash or refuse collecting," when it was actually "supervising the removal of pipes.
The appellate court finds that the allegations are broad enough to require Burlington to defend. Whether there is an obligation to indemnify will be determined, not in the underlying action (where Burlington is not a party) but in the declaratory judgment action (where Burlington can present proof).
Editor’s Note: The court really does not deal, as it should, with the issue of the alleged policyholder misrepresentations.
10/6/09 In the Matter of Gurwich v. Motor Vehicle Accident Ind. Corporation
MVAIC opposed an application for leave to file a claim on the ground that the petitioner failed to report the accident to the policy within 24 hours of the accident as required under the MVAIC rules. “Well,” says the court. We have "consistently afforded a very liberal interpretation to the notice requirement, accepting police contacts that fall far short of the operator's obtaining a written report." While the petitioner didn’t file a formal police report, whatever other contact he had with the police during those 24 hours was deemed sufficient to satisfy the requirement.
10/2/09 Dole Food Company v. Lincoln General Insurance Company
Here’s one to remember. The insured commenced a coverage action against Lincoln and Lincoln defaulted. Plaintiff sought to take a judgment based on the pleadings, which it claimed were admitted by reason of the default. The court rejected that application, holding that a “default judgment in a declaratory judgment action will not be granted on the default and pleadings alone.” Instead, it is necessary for the plaintiff to establish a right to a declaration based on other filings with the court. Here, Dole did not provide any documentation to the court establishing its entitlement to coverage.
9/29/09 MIC Property & Casualty Corp. v. Avila
You’ve seen the exclusion – we won’t provide coverage for “race or speed contests.” Two guys, drag racing down a street, jockeying for position, cause a fatal accident. Is that a “speed contest?”
On October 3, 2005, Merqui Avila was driving a car owned by Pedro Avila when the car struck another vehicle killing Singleton and two others. Merqui and the driver of another vehicle, Carlos, were each charged with manslaughter in the second degree as a result of the accident. During their plea allocution to the reduced charge of criminally negligent homicide, both admitted that at the time of the accident, they were engaged in a speed contest. In their prior statements to the police, however, they admitted only that after being stopped adjacent to each other at a traffic light, they each attempted to pass the other over the ensuing blocks until the accident occurred.
Singleton’s estate and others commenced an action against Merqui, Pedro and Carlos Molina based upon Merqui's alleged negligence. MIC, Pedro’s carrier, disclaimed coverage based upon a policy provision that excluded liability for a vehicle that was used in or preparing for "any race, speed contest or performance contest."
The court finds that Merqui's plea of guilty to criminally negligent homicide does not, in itself, establish that he was engaged in a speed contest at the time of the accident. Since nothing in the statutory language requires that, to be convicted of that crime, a person have been engaged in a speed contest, the conviction of criminally negligent homicide does not, in itself, establish that Merqui was involved in a speed contest.
Merqui admitted, in his plea colloquy, that he was engaged in a speed contest at the time of the accident. However, in a 3-2 decision, the Second Department found that the specific admission by the defendant that he was engaged in a “speed contest” does not establish that there is “no other reasonable interpretation" of the term “speed contest.”
The policy does not define the term "speed contest." ,Where the term is used in New York law, however, in Vehicle and Traffic Law § 1182(1), it does not encompass the conduct in which Merqui engaged here. ,Merely speeding down the street, even in tandem with another vehicle, does not constitute a "speed contest" within the meaning of that statute, says the court. The criminal statute requires that there be a race course established for there to be a “speed contest” rather than a couple of car trying to race each other down the street.
Two dissenting judges disagreed believing that the statement by each defendant specifically admitted that they were “engaged in a speed contest” and an exclusion that applied to “speed contests” should lead to a contrary conclusion.
Editor’s Note: The majority was simply wrong here to rely upon the definition of “speed contest” in a criminal statute to define a term in an insurance policy. The test is how reasonably people being issued this kind of policy should understand the term to be defined.
9/29/09 In the Matter of Liberty Mutual Insurance Company v. Zacharoudis
As a reminder, under CPLR 7503(c), if a SUM (uninsured/underinsured) carrier receives an arbitration demand and believes that the matter should not proceed, it must make an application, in court, to stay arbitration within 20 days after service of a notice of intention to arbitrate. In the uninsured motorists arena, if the carrier believes, for example, that the other car was not uninsured, or there was not physical contact in a hit-and-run, etc., those issues cannot be resolved by the arbitrator. They must be brought before a judge and that filing must take place within 20 days of service of the notice of intention to arbitrate. A failure to make that timely application will generally preclude the party from objecting to the arbitration thereafter." There are exceptions which we have discussed in this column before.
In this case, the proceeding was commenced more than 20 days after service upon the petitioner insurer by its insured of two separate notices of intention to arbitrate and was therefore time barred. The SUM carrier waived its right to complain and object.
MARGO’S MUSINGS ON SERIOUS INJURY UNDER NEW YORK FAULT
10/6/09 Nisanov v Kiriyenko
Sanevich v Lyubomir
to raise a triable issue of fact with regard to the permanent consequential limitation and/or significant limitation of use categories, as well as to causally relate the injuries to the subject accident. In both cases the plaintiffs survived on appeal because they submitted reports of both contemporaneous and recent examinations, in addition to MRI reviews. As such, the examining physicians’ conclusions that the injuries were permanent, consequential and causally related to the accidents in question, defeated summary judgment.
9/29/09 Ciancio v. Nolan
Affirmation Concluding that Injury as Permanent Must be Based on Recent Examination
Here the plaintiff’s treating chiropractor did not base his findings on a recent examination which resulted in his conclusion being insufficient to raise a triable issue of fact as to the permanency of the alleged injuries. In addition, the plaintiff did not submit objective medical evidence of the extent or duration of the alleged physical limitations resulting from herniated and bulging discs and a tear in a tendon. As repeatedly noted, without such evidence, those findings are not evidence of a serious injury. Furthermore, the plaintiff failed both to explain the cessation in his treatment after 2006, and to submit any competent medical evidence to support his claim under the 90/180-day category.
10/13/09 Applicant v. Progressive Ins. Co.
This is an interesting decision as this issue arises from time to time in the no-fault world. The issue is whether an applicant can withdraw without prejudice its arbitration demand because he or she is concerned about the collateral estoppel effect on a pending personal injury case. As an aside, generally the concern over collateral estoppel arises if the arbitration involves a causation issue.
In this arbitration it is alleged that the Applicant’s counsel was recently substituted and was only recently advised of a pending personal injury lawsuit. Based upon this, the Applicant appeared at the live hearing and requested the ability to withdraw the case without prejudice over concern of the collateral estoppel effect of this decision on the pending personal injury suit.
The assigned arbitrator granted the request and cited a decision from Master Arbitrator Godson which determined that such as request should be granted as a matter of course. The reasoning is that granting such a request, without good cause shown, may create an appearance of biasness.
Here, the assigned arbitrator determined that the applicant’s counsel’s representation that it was recently substituted and apprised of the unresolved pending personal injury action was good cause to dismiss the arbitration without prejudice.
10/2/09 Sunshine Imaging Assoc./WNY MRI a/a/o Carol Vancheri v. GEICO
The only decision we had, prior to this one, on what constitutes plaintiff’s prima facie case was Hobby v. CNA. This decision actually directly indicates that Plaintiff established its prima facie case by submitting evidence that the billing forms were received by the insurer and that the insurer’s payment of the benefit is overdue. The Court cited LMK (appellate division decision) and AB Med Services v. Liberty Mut.
Superintendent proposes changes to regulations governing releases/waivers when claims are settled.
Very recently, the Superintendent of Insurance introduced a draft amendment to Regulation 64 as promulgated at 11 NYCRR 216, et seq.. As most insurance professionals already know, Regulation 64 is better known as the Unfair Claims Settlement Act. Specifically at issue in the proposed amendment, the Superintendent seeks to expand the language of Section 216.6(g) which currently addresses payments of claims and releases.
As currently drafted, Section 216.6(g) contains two distinct directives.
The first directive prohibits an insurance company from issuing a check or draft payment in a first party claim which also contains waiver/release language indicating that the payee’s acceptance of the check will result in a final settlement and release of all future obligations arising from the covered event.
The second directive goes on to prohibit a carrier from requiring a waiver/release which is broader than the “scope of the settlement” at issue.
The proposed amendment to Section 216.6(g) would only moderately tweak the first directive to prohibit a carrier from issuing a check or settlement draft that releases all claims arising from the loss or the claim that led to the settlement. As currently drafted, the first directive only applies to releases applying to further obligations arising from the loss.
However, the changes to the second directive as currently found at Section 216.6(g) are much more expansive.
First, the proposed amendment prohibits an insurer from requiring any release unless it contains certain provisions. In short, the proposed draft requires that all releases contain:
a specific description of the settlement; and,
for property damage claims only – an explanation and calculation of the amount paid in settlement
A carrier cannot require the payee to execute a release which contains a confidentiality agreement unless such an agreement is “warranted by the circumstances.”
A carrier must use separate releases for bodily injury and property damage. Such release must clearly state in “bolded capital letters” that it is applicable only to a bodily injury claim or a property damage claim.
Lastly, with respect to settlements involving third-party automobile claims, carriers will be required to issue a special Third-Party Motor Vehicle Release (or something substantially equivalent) which is being created by the Superintendent.
The preferred form of the Third-Party Motor Vehicle Release will be incorporated into the regulation at 11 NYCRR § 216.12.
Although cosmetic in some respects, the proposed amendment makes a few distinct changes to the current status. Sure, a significant change would be the prohibition of a carrier seeking a confidentiality agreement unless there were unique circumstances. In addition, if passed, carriers will now have to issue separate releases on the BI and PD components of a claim. Finally, carriers will have to adopt and incorporate the so-called Third-Party Motor Vehicle Release for third-party auto claims.
Naturally, we will continue to monitor this as it proceeds through the regulatory process.
10/09/09 Old Williamsburg Candle Corp. v Seneca Insurance Co., Inc.,
Although this case involves a coverage dispute, the procedural rulings by the Second Department make this decision of note. By way of background, Old Williamsburg purchased a candle factory and warehouse from Seneca’s named insured. Shortly after the purchase, a fire destroyed the building and its contents. As a result, Old Williamsburg presented a claim to Seneca for the loss which Seneca promptly denied.
In response to the ensuing lawsuit, Seneca asserted several affirmative defenses. Among them, Seneca asserted that (1) Plaintiff had failed to state a cause of action; (2) fraud; (3) material misrepresentation; and, (4) concealment of material facts.
Relying on previous case law in the Second Department, the Trial Court dismissed Seneca’s affirmative defense that plaintiff had failed to state a cause of action. However, between the time of the Trial Court’s ruling and the decision in this appeal, the Second Department reversed their ruling and held that the CPLR explicitly provides a defendant with the ability to assert the affirmative defense of failure to state a cause of action upon which relief can be granted. Relying upon the rule that the law – as of the date of a decision - is controlling, the Second Department overturned the Trial Court’s dismissal and reinstated the affirmative defense.
Further, although not plead with particularity; the Second Department also ruled that the Trial Court erred in dismissing Seneca’s fraud/misrepresentation defenses. The Second Department ruled that the evidence produced in motion practice was sufficient to establish a question of fact as to the viability of the proposed defenses.
10/02/09 Berry v. Utica National Group
Trial Court’s dismissal of plaintiff’s legal malpractice claim was affirmed where the plaintiff was unable to establish the existence of an attorney-client relationship. Plaintiff’s downfall was his failure to establish evidence of “an explicit undertaking [by the defendant law firm to perform a specific task.”
10/1/09 Arch Insurance Company, Lumbermens Mutual Insurance Company
v. Precision Stone, Inc.
Precision Stone Incorporated [“Precision”] provided materials for and performed work on a construction project in White Plains, New York pursuant to a subcontracting agreement with George A. Fuller Company and its construction manager HRH Construction [collectively referred to as “Fuller”]. According to Precision, Fuller paid only a portion of the amount due to Precision for the work. Precision brought an action in an attempt to recover full payment for the work it performed from Arch Insurance Company and Lumbermens Mutual Casualty Company, two insurance companies that had issued labor and materials payment bonds in connection with the project.
On May 8, 20003, at Fuller’s request, Precision submitted a $536, 665 bid to perform stone work for the project’s fountains and plaza. Fuller issued a “Letter of Intent” for Precision to perform the stone work for $515,000. Precision executed the letter, but with various qualifications and conditions, including a condition that the agreed upon price excluded costs associated with overtime work. At the time the letter was issued, Precision had not been provided with a completing date, and it never bound itself to a “time-of-the-essence” provision. On August 12, 2003, however, Precision agreed to complete its work by October 27, 2003, but only under specified conditions, including that Fuller timely and property prepare the work site and necessary substrates.
The project was beset with delays which the District Court found were caused by Fuller. As a result of the delays Fuller was in jeopardy of completing the project on time and in early October, 2003, while Precision was performing work under the subcontract, Fuller engaged Berardi to perform a portion of that work. Berardi’s cost was higher that Precision’s but worked overtime to complete the work by the end of October.
Fuller later refused to pay Precision for a portion of the work that Precision had completed. On December 17, 2004, Precision filed suit under the terms of the bond. In their answer the Sureties asserted affirmative defenses that the suit was untimely under the terms of the bond. The Sureties alleged that Fuller ceased work on the contract more than one year prior to the filing of Precision’s complaint.
Pursuant to the bond, those who had provided labor and materials on the project and who had not been paid in full within ninety days after the completing of their work on the project were entitled to:
“sue [the Sureties] and [Fuller] on this bond for such sum as may be justly due, provided, however, that no such suit or action shall be commended by such claimant after the expiration of one (1) year following the date on which [Fuller] ceased work on said contract . . .
Following a bench trial the District Court found that, under the terms of the bond, Precision had timely commenced its action and was entitled to damages. The Court reduced Precision’s award, however, by the full amount of payments made by Fuller to Berardi Stone [“Berardi”] a contractor which was hired by Fuller to take over the work started by Precision when the work on the project was behind schedule.
The Sureties appealed from the District Court’s decision that the Precision suit was timely. Precision cross-appealed from the District Court’s decision to offset Precision’s damages by the full amount of payments made to Berardi, including those payments exceeding the outstanding balance of Precision’s subcontract with Fuller.
The facts revealed that as of December 17, 2003, one year prior to the initiation of the complaint, “punch list” work had yet to be completed. The District Court determined Fuller had not completed work by December 17, 2003. The court held that the punch list was part of the original contract and therefore, completion of the punch list would be completion of the contract. The Second Circuit found no clear error in the District Court’s finding.
On the issue of damages Precision argued that the District Court improperly accounted for the additional Berardi Payment in calculating damages. The Second Circuit agreed with Precision. Looking to the provisions of the payment bond, the Second Circuit noted that the payment bond provided for damages that are “justly due”. When a contractor defaults or breaches an agreement with a subcontractor, the subcontractor ordinarily is entitled to “collect either in quantum meruit for what had been finished, or in contract for the value of what plaintiff had lost, i.e., the contract price, less payments made and less cost of completion.
Contrary to the District Court’s decision that Second Circuit held that in the absence of a default by Precision, the amount paid by Fuller to Berardi to complete the job is irrelevant, whether the theory of recovery is in contract or in quantum meruit. The Second Circuit went on to state, however, that there may be circumstances where the additional Berardi payment may be taken into account in measuring Precision’s damages. Had there been some wrong on Precision’s part, the Sureties might have been entitled to set off the additional Berardi Payment from the amounts due to Precision under the bond.
As a final point, the Second Circuit agreed with Precision that setoff to a contract is an affirmative defense is waived by failure to plead.
10/1/09 State of Connecticut v. American Electric Power Co., Inc.
This is a Second Circuit case which was originally decided on September 21, 2009 and corrected on October 2, 2009. We want to give credit to Michael F. Aylward for bringing this case to our attention. Mr. Aylward is a partner at the law firm of Morrison Mahoney, LLP, in Boston, Massachusetts.
This is a case which involved green house gas claims, claims which have not received a lot of attention from the courts. State of Connecticut may well open the door to widespread climate change litigation, much as plaintiffs overcame early failures with respect to litigation involving asbestos and tobacco. Even so, claimants that get over this initial hurdle will face significant further problems of proof, notably with respect to causation. There is certainly no way of declaring with reasonable certainty what greenhouse effects are attributable to any individual emitter. While it is possible that courts will permit plaintiffs to overcome this hurdle by adopting easier causation tests on the model of market share liability, as was the case with DES litigation in the 1980s, there are also reasons to question whether greenhouse gases are, in fact, a generic product akin to that considered by the California Supreme Court in Sindell v. Abbott Laboratories, 26 Cal.3d 558, 607 P.2d 924 (1980).
Nevertheless, at least one court has extended market share liability in a manner that might apply to greenhouse gases. In holding that MTBE claimants were not required to link each incidence of environmental harm to a particular defendant’s releases of gasoline, Judge Schiendlin observed in In Re MTBE Products Liability Litigation, 379 F. Supp.2d 348, 377 (S.D.N.Y. 2005) that:
From time to time, the courts have fashioned new approaches in order to permit plaintiffs to pursue a recovery when the facts and circumstances of their actions raised unforeseen barriers to relief. Those courts made a policy decision that in balancing the rights of all parties, it would be inappropriate to foreclose plaintiffs entirely from seeking relief merely because their actions did not fit the parameters of existing liability theories.
In the long term, it is possible that climate change claims will follow the trajectory of public nuisance claims involving guns or lead paint, cases that generated a great deal of controversy and legal expense for several years but petered out in the face of repeated appellate losses. See, e.g. State of Rhode Island v. Lead Industries Association, 921 A.2d 96 (R.I. 20087(dismissing State’s nuisance action against paint pigment manufacturers for the cost of remediating lead paint from public housing). On the other hand, while the likelihood of such cases getting to a jury seems remote, the potential damages awardable are incalculable.
Insurer efforts to avoid coverage for climate change have been complicated by the difficulty in drafting a standardized exclusion that would encompass such claims. Unlike Y2K or even claims involving exposure to asbestos or environmental liabilities, the scope of operations and processes allegedly contributing to climate change as well as the diverse nature of the injuries resulting from such claims make it extremely difficult to isolate such risks and preclude coverage for them.
Pending the introduction of some sort of “total” climate change exclusion, climate change claims are likely to be disputed by liability insurers on numerous bases, including the following:
● Property Damage/Trigger of Coverage
What does “property damage” mean in the context of climate change? It surely cannot be the emission of carbon dioxide into the atmosphere, a process that has occurred through natural biosynthesis since the dawn of time. Nor is there an objective threshold or temperature that would enable courts to conclude that the atmosphere or environment had become damaged. If so, does “property damage” only occur when the consequences of climate change are felt, as through droughts or hurricanes that may or may not be causally related?
American Electric is potentially instructive in this regard. In discussing whether the plaintiffs have suffered an “injury in fact” so as to have standing to sue, the court pointed out that although the plaintiffs were mainly concerned about the future consequences of global warming, they had alleged specific current injuries due to climate changes, such as coastal erosion in Massachusetts or the premature melting of glacial snowpack and associated flooding in California.
● Fortuity
If the emission of greenhouse gases is claimed by policyholder to immediately result in property damage so as to require a “continuous trigger,” much as insureds have argued in the context of gas utility plans and hazardous waste sites, may not insurers respond that the intentional discharge of an inherently injurious by-product is not an “accident”? Alternatively, given the publicity in recent years concerning the phenomenon of global warning, at what point would an insured’s failure to cease or limit such emissions preclude an argument that the resulting harm was not “expected or intended.” Similarly, at what point would these resulting injuries become a “known loss”?
● Pollution Exclusions
Liability policies have contained pollution exclusions since the early 1970s and, for the past twenty years, these exclusions have been “absolute” as regards emissions of pollutants from the insured’s own property and facilities. Insurer arguments that such exclusions would apply to climate change claims find support in the U.S. Supreme Court’s seminal 2007 opinion in Massachusetts v. EPA that held that greenhouse gases are “pollutants” subject to regulation by the U.S. Environmental Protection Agency under the Clean Air Act.
Insureds may also seek coverage for the cost of installing new scrubber technologies and other measures designed to reduce or prevent greenhouse gas emissions. For the most part, courts have refused to require insurers to pay for prophylactic measures to abate or prevent future losses. Thus, in Cinergy Corp. v. AEGIS, 865 N.E.2d 571 (Ind. 2007), the Indiana Supreme Court held that AEGIS did not owe coverage for a lawsuit in which the federal government sought to compel Duke Energy and other utilities to comply with the federal Clean Air Act and implement new clean air technologies to prevent widespread harm to public health and the environment, the Supreme Court agreed with other jurisdictions that a distinction should be drawn between remedial and prophylactic remedies and that coverage was not required here where the federal lawsuit was directed at preventing future harm to the public not obtaining control, mitigation or compensation for past or existing environmentally hazardous emissions. The court ruled that the policy’s requirement that injury be “caused by an accident” precluded coverage for cases such as this where the complaint sought to prevent an occurrence from happening. Accord Newman Manufacturing, Inc. v. Transcontinental Ins. Co., 871 N.E.2d 396 (Ind. Ct. App. 2007).
● CoverageTerritory
Current CGL forms require that property damage happen within the Coverage Territory, which is defined as:
(1) Goods or products made or sold by you in the territory described in a. above;
(2) The activities of a person whose home is in the territory described in a. above, but is away for a short time on your business; or
Plainly damage to the atmosphere is not property damage with this Coverage Territory. On the other hand, claims that private or public entities may assert for damage to their own property, such as the Massachusetts coastal erosion claims, are not subject to this limitation.
As yet, there is only one reported coverage case in which these issues are being contended. In 2008, Steadfast Insurance commenced an action for declaratory relief in state court in Arlington, Virginia arguing that it does not owe coverage for global warming claims brought against AES Corporation by the Native Village of Kivalina, Alaska. The DJ asks the state court to find that Steadfast does not owe coverage on the grounds that (1) global warming is not the result of any “accident” given the industry’s long-standing knowledge of risks associated with greenhouse gases; (2) in light of the long-standing nature of the problem, it is clearly a “loss in progress” subject to a Montrose endorsement in the policy; (3) the emission of greenhouse gases is “air pollution” subject to a total pollution exclusion in the Steadfast policy.
As above, it is far too early to tell whether American Electric will usher in a future wave of climate change litigation in the way that Borel v. Fibreboard opened the door to the modern era of mass tort litigation in 1975. Nor is it clear how the panel’s opinion will fare following potential en banc or cert challenges. It is clear, however, that in the near term this opinion will provide a road map to other challengers to pursue federal nuisance claims.
WHEN IS A CLAIM A CLAIMAND NOT ALMOST A CLAIM?
A Federal District Court in New York recently had occasion to consider issues raised concerning claims made under a legal malpractice-professional liability insurance policy. St. Paul Fire & Marine Insurance Company v. Sledjeski & Tierney, PLLC, 2009 WL 2151425 (E.D. N.Y. July 17, 2009). In Sledjeski & Tierney, the Court held that under the terms of the claims made policy, the determination of insurance coverage was made under the policy in effect when the insured provided notice of a potential claim, not another policy in effect when the actual claim (the lawsuit) was filed against the insured. The problem for the insured, and which engendered the litigation, was that as a result coverage was subject to possible denial and problems caused by a “prior knowledge exclusion” in the relevant policy.
A potential plaintiff retained Sledjeski & Tierney to represent her in a personal injury suit. On the date of the statute of limitations, Sledjeski & Tierney filed a Summons and Complaint, but it was apparently defective and never served. In October 2007, Sledjeski & Tierney informed its insurance company of the alleged error, and the law firm also disclosed the alleged error in a renewal application on October 31, 2007. However, it was not until March 2008 that the client filed a legal malpractice suit arising from the firm’s failure to file the underlying case prior to expiration of the statute of limitations.
Delving into the layers of insurance coverage, the firm was insured under one professional liability policy from December 20, 2006 to December 20, 2007 (the “2007 Policy”). The insurer’s declaratory judgment action contended that there was no coverage under the 2007 Policy because before the 2006 Policy went into effect the law firm knew or could have reasonably foreseen that its error would result in a potential claim. The law firm moved to dismiss the declaratory judgment claim under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, but the Court denied the motion.
Delving deeper into the policies, the problem was that the 2007 Policy contained an exclusion that there was no coverage for claims arising out of any error, omission, negligent act or personal injury occurring prior to the inception date of the policy if the insured, prior to the inception date, knew or could have reasonably foreseen that such error, omission, negligent act or personal injury would be expected to be the basis of a claim or suit. In short, the insurance company wanted the 2007 Policy to apply because it might potentially exclude this claim, whereas the law firm wanted the later policy to apply which was in effect in 2008 when the law suit was filed because, presumably, it did not contain such an exclusion or contained different provisions.
In deciding the motion, the Court first noted that the insurer sought a declaration of rights only with respect to the 2007 Policy. This policy had been renewed for 2007-2008, but the insurer apparently did not seek any declaration of rights as to that renewed 2008 policy. Therefore, the policy at issue in the declaratory judgment action was the 2007 Policy with the actual inception date of December 20, 2006.
In reviewing the 2007 Policy, the exclusion would preclude coverage if, prior to December 20, 2006, the law firm knew or reasonably should have foreseen that the error could lead to a malpractice suit. It was deemed immaterial that the law firm notified the insurer of the error prior to the expiration of the 2007 Policy.
The Court also reviewed sections of the policy relating to notice and disclosure and held that the insured’s notice during the 2007 Policy period of a potential claim triggered coverage under the policy even if the claim was filed after the policy period. Here, coverage under the 2007 Policy may have been triggered by notice in October 2007 of the alleged error in handling the case. To some degree, therefore, the law firm was being penalized for its relatively early disclosure in October 2007 of the alleged error which might trigger coverage under the 2007 Policy, which coverage was now jeopardized by the “prior knowledge exclusion”.
The law firm argued that there was coverage under the 2007 Policy as a matter of law because the “potential claim” provision of the notice section was inconsistent with the nature of a claims made policy and thus created an ambiguity that had to be construed in favor of the insured. The law firm argued that the effect of the exclusion was to, in effect, make the 2007 Policy more like an occurrence policy rather than a claims made policy if coverage could be excluded based on prior knowledge of the occurrence giving rise to the claim. The Court found that there was no ambiguity since all the notice provision did was establish that some potential claims could trigger the applicability of a policy in effect before the policy period when a claim is actually filed.
The Court essentially concluded that, by providing the insurer with notice of the alleged error in the Fall of 2007, the law firm potentially triggered coverage for the malpractice suit even if suit was not filed until after the 2007 Policy expired. However, coverage under the 2007 Policy was jeopardized by the prior knowledge exclusion, which question was not decided on the motion to dismiss. However, the tenor of the decision seems to indicate that the law firm knew or could have reasonably foreseen that its error in July 2005 could be the basis of a suit before the inception of the 2007 Policy (which actually commenced December 20, 2006).
Despite the holding and outcome of this case, it is still incumbent upon professionals to timely and fully notify their professional liability carriers of a potential claim, or set of circumstances that could give rise to a potential claim, as soon as the insured knows “or could reasonably foresee” that the error might form the basis of a claim or suit.
This case also emphasizes the importance to professionals of closely reading their professional liability policies with respect to their duties of notice, and requirements with respect to prior acts and knowledge of potential claims.
This case also reveals the challenges and perils when policies cover subsequent periods, and may even be with different carriers and contain very different endorsements, covering language and exclusions, all of which may not necessarily be consistent. This case also suggests the importance of reviewing historical liability policies to determine if coverage may have been triggered at an earlier date, i.e. before the claim period of actual suit.
The 2007 Policy contained the prior knowledge exclusion but it seems apparent from the Court decision that this exclusion was not contained in the 2008 policy which the law firm sought to be made applicable. Professionals and underwriters need to closely track insurance forms, policies and language to insure continuity of coverage, consistency of provisions and endorsements, and an awareness of the insured’s rights and obligations particularly if coverages change from year to year, from company to company, or from underwriting program to program. Here, it made all the difference in the world to the law firm whether the 2007 Policy applied as opposed to the 2008 policy and it seems that the odds are stacked against the law firm if indeed the 2007 Policy is the one deemed applicable to the claim.
10/08/09 Medical Mut. Ins. Co. of Maine v. Indian Harbor Ins. Co,
D & O Insurance Policies Do Not Provide Coverage for Losses Stemming from Judicial And Administrative Complaints Filed Against a Company, Alleging Wrongful Conduct of Its Directors And Officers.
Plaintiff’s CEO suffered a stroke and was subsequently ousted from his position. Several months later, the CEO retained counsel who wrote a demand letter to the company, seeking compensation for disability discrimination. When that letter received no positive response, the former CEO filed an administrative complaint against the company with the Maine Human Rights Commission and the federal Equal Employment Opportunity Commission, naming the company as the lone respondent, but alleging discriminatory conduct on the parts of the company, its directors, and its officers. The agencies issued right-to-sue letters, and the former CEO filed a civil action in the United States District Court for the District of Maine against the company only. However, the prayers for relief asked for an injunction against the company, its agents, employees and successors from continuing to violate the former CEO’s rights. The company settled for $325,000 out of its own pockets in exchange for a release of all claims against the company, its officers, agents, employees, attorneys, and members of the Board of Directors. The company then sought reimbursement from Defendant, which issued a D&O policy to the company. The Defendant refused to pay, arguing that the claims were only against the company. Plaintiff then filed the instant action, and the District Court granted summary judgment. On appeal, the First Circuit affirmed, finding that the policy required a claim to be raised against the directors and officers, for the claim to be made against an insured person. Therefore, the First Circuit affirmed the decision of the District Court.
Submitted by: Mark Gesk and Ian Walchesky of Wayman, Irvin, & McAuley, LLC.
10/08/09 Oregon Mut. Ins. Co., v. Farm Bureau Mut. Ins. Coi. of Idaho
The Supreme Court of Idaho Clarifies the Application of Collateral Estoppel Where Default Judgment Is Rendered Against An Insured, But Not Against His Alleged Insurers
Thompson and Kiser were involved in an automobile accident. At the time of the accident, Thompson was driving a Toyota Celica owned by his girlfriend, Tananda Bramlette. The vehicle was insured by Oregon Mutual, and the policy excluded coverage for any person using the vehicle without a reasonable belief that he or she is entitled to do so, or that the vehicle is being used within the scope of permission granted. Kiser was insured by Farm Bureau and Western Community. Thompson claimed that the accident with Kiser occurred while he was using Tananda’s vehicle within the scope of permission. After the accident, Farm Bureau and Western Community filed arbitration claims against Oregon Mutual, seeking indemnification and reimbursement for benefits paid to Kiser for damages related to the accident. Subsequently, Oregon Mutual filed a declaratory action, seeking a judgment that Thompson did not have permission to drive the vehicle and therefore, Oregon Mutual was not required to defend, indemnify, or otherwise provide coverage for Thompson. Farm Bureau and Western Community filed an answer to Oregon Mutual’s complaint, but Thompson failed to respond so default judgment was entered against him. Afterwards, Oregon Mutual moved for summary judgment against Farm Bureau and Western Community, arguing that the default judgment against Thompson precluded him from testifying that he had permission to drive the vehicle. The district court denied the motion, finding that collateral estoppel did not apply to the issue of Thompson’s coverage and that Thompson’s deposition testimony created a genuine issue of material fact regarding coverage. Thereafter, a bench trial was conducted to resolve the issue of whether Thompson had permission. The court held that Thompson did have permission to use the vehicle, and therefore, Oregon Mutual covered him while driving. On appeal, the issue was whether the default judgment against Thompson precluded Farm Bureau and Western Community from litigating the issue of whether Thompson had permission. The Supreme Court stated that five factors are required for collateral estoppel to bar re-litigation of an issue decided in an earlier proceeding, including that the party against whom the earlier decision was asserted had a full and fair opportunity to litigate the issue decided in the earlier case. Here, the Court found that that factor was not fulfilled. The Court found that Farm Bureau and Western Community had no grounds to object to the default judgment because their interests and Thompson’s interests regarding whether permission existed were in conflict, so they could not raise an objection on Thompson’s behalf. Additionally, they lacked standing to raise an I.R.C.P. 60(b) motion on behalf of Thompson’s position because they were not the party against whom a final judgment was entered. Since they were not the party against whom the earlier decision was asserted, they did not have a full and fair opportunity to litigate the issue of permission at the time that the default judgment was entered. Therefore, the judgment did not bar them from re-litigating the issue of permission. The Supreme Court affirmed the district court.
Submitted by: Phil Reeves and Hilary Moore of Gallivan, White & Boyd, P.A.
In the Matter of Liberty Mutual Insurance Company v. Zacharoudis
Campbell & Miller, Smithtown, N.Y. (Edwin Miller of counsel), for
Finder and Cuomo, LLP, New York, N.Y. (Sherri A. Jayson of
The policy does not define the term "speed contest." Where the term is used in New York law, however, in Vehicle and Traffic Law § 1182(1), it does not encompass the conduct in which Merqui engaged here. Merely speeding down the street, even in tandem with another vehicle, does not constitute a "speed contest" within the meaning of that statute (see People v Grund, 14 NY2d 32; see also Shea v Kelly, 121 AD2d 620, 621). "Violation of this statute means that, at least by implication, some race course must have been planned by the competitors along a street. It is not enough that an automobile operated by defendant and one by his codefendant left an intersection abreast when the traffic light changed to green and, thereafter, travelled abreast at about 55 miles an hour, each car jockeying for position" (People v Grund, 14 NY2d at 34).
MIC's remaining contention is not properly before this Court.
SPOLZINO, J.P., FISHER and FLORIO, JJ., concur.
Contrary to the conclusion of my colleagues in the majority, I conclude that the insurer herein did establish a prima facie case for disclaiming coverage by virtue of a policy exclusion (see Incorporated Vil. of Cedarhurst v Hanover Ins. Co., 89 NY2d 293, 298). The appellant contends, inter alia, that the plaintiff, MIC Property & Casualty Corp. (hereinafter MIC), failed to meet its burden because the policy does not define the term "speed contest," and because the conduct of the drivers, the defendants Merqui G. Avila (hereinafter Merqui) and Carlos Molina (hereinafter together the drivers), did not rise to a level that can be considered a violation of Vehicle and Traffic Law § 1182(1)— the provision that prohibits unregulated "speed contests." At the time of the accident, Vehicle and Traffic Law § 1182(1) provided, in pertinent part:
"No races or contests for speed shall be held and no person shall engage in or aid or abet in any motor vehicle speed contest or exhibition of speed on a highway without the permission of the authorities of the state, city, town or village having jurisdiction and unless the same is fully and efficiently patrolled for the entire distance over which such race or contest for speed is to be held."
As noted by the majority, the Court of Appeals, in interpreting this statute, has held that "[v]iolation of this statute means that, at least by implication, some race course must have been planned by the competitors along a street" (People v Grund, 14 NY2d 32, 34), and that even though the defendant in that case and another driver may have been speeding and jockeying for position, the evidence was "not sufficient to convict [the defendant] beyond a reasonable doubt of drag racing' in violation of section 1182 of the Vehicle and Traffic Law" (id.). Thus, the Grund case is persuasive to the extent that it defines what constitutes a speed contest insofar as it relates to evidence sufficient to convict under Vehicle and Traffic Law § 1182.
However, in the case at bar, the issue is not the sufficiency of evidence with respect to the drivers' criminal convictions, but rather, whether MIC met its burden of establishing that the conduct at issue falls within the policy exclusion. In contrast to Vehicle and Traffic Law § 1182, the policy at issue does not require that a race be prearranged or organized, nor does it cite to the Vehicle and Traffic Law. The policy merely uses the same phrase, "speed contest." In this regard, it is to be noted that the phrase "speed contest" also has been interpreted to mean "a challenge coupled with a response in speed and relative position indicating acceptance of the challenge," which is a lower standard of proof than that required for a criminal conviction for drag racing under Vehicle and Traffic Law § 1182 (Shea v Kelly, 121 AD2d 620, 621, citing People v Grund, 14 NY2d 32). Moreover, based on the statements which the drivers made to the police at the time of their arrest, I believe that it is fair to conclude that their actions prior to the accident constituted such a "speed contest." Indeed, both drivers indicated that just before the accident occurred, and after stopping at a traffic light, Merqui pulled away at a high rate of speed and Molina raced to catch up with him. After stopping at a second traffic light, they continued "playing with each other," and pulled away at a high rate of speed as Merqui tried to pass Molina.
"THE COURT: And . . . the speed contest was . . . the criminal negligence on your part. ]Do you agree to that?
"DEFENDANT [MERQUI] AVILA: Yes.
Accordingly, by submission of the insurance policy exclusion and a transcript of the drivers' plea allocutions in which they admitted participating in a "speed contest," MIC met its prima facie burden of establishing entitlement to judgment as a matter of law (see Utica Fire Ins. Co. of Oneida County, N.Y. v Shelton, 226 AD2d 705, 706). In opposition thereto, the appellant and the defendants Herbert Hill, Alice Gordon, and Herbert Singleton failed to raise a triable issue of fact. Therefore, in my opinion, the Supreme Court properly granted MIC's motion for summary judgment, and I would affirm the order appealed from and remit the matter to the Supreme Court, Suffolk County, for the entry of a judgment declaring the MIC is not obligated to defend or indemnify Merqui or Pedro in an underlying personal injury action entitled Hill v Avila, pending in the Supreme Court, Nassau County, under Index No. 20620/05, and an underlying personal injury and wrongful death action entitled Beards v Avila, pending in the Supreme Court, Nassau County, under Index No. 10988/06.
Dole Food Company v. Lincoln General Insurance Company
Appeal from an order of the Supreme Court, Erie County (Frederick J. Marshall, J.), entered July 17, 2008. The order, inter alia, granted plaintiffs' motion for a default judgment against defendants Lincoln General Insurance Company and Leonard's Express, Inc.
LITCHFIELD CAVO LLP, NEW YORK CITY (EDWARD FOGARTY, JR., OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
COLUCCI & GALLAHER, P.C., BUFFALO (REGINA A. DELVECCHIO OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS.
It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs, the motion is denied, the cross motion is granted and plaintiffs are directed to accept service of the answer of defendants Lincoln General Insurance Company and Leonard's Express, Inc. dated May 14, 2008.
Memorandum: In this declaratory judgment action, Lincoln General Insurance Company and Leonard's Express, Inc. (collectively, defendants) appeal from an order granting plaintiffs' motion for a default judgment against them based on their failure to serve a timely answer and denying their cross motion seeking to compel plaintiffs to accept service of their late answer (see CPLR 3012 [d]). We agree with defendants that Supreme Court abused its discretion in granting the motion and in denying the cross motion. "A default judgment in a declaratory judgment action will not be granted on the default and pleadings alone for it is necessary that plaintiff[s] establish a right to a declaration" and, here, plaintiffs did not establish their entitlement to the declaration sought (Merchants Ins. Co. of N.H. v Long Is. PetCemetery, 206 AD2d 827 [internal quotation marks omitted]; cf. New York Mut. Underwriters v Baumgartner, 19 AD3d 1137, 1141).
American Transit Insurance Company v. Brown
Blank & Star, PLLC, Brooklyn (Scott Star of counsel), for
Marjorie E. Bornes, New York, for respondent-appellant.
Burlington Insurance Company v. Guma Construction Corp.
N.Y. (James M. Adrian and Matthew C. Ferlazzo of counsel),
Goldberg & Rimberg, PLLC, New York, N.Y. (Israel
Goldberg and Brad Coven of counsel), for
The parties' remaining contentions are without merit or not properly before this Court
Hunt v. Ciminelli-Cowper Co.
Appeal from an order of the Supreme Court, Erie County (Rose H. Sconiers, J.), entered May 1, 2008 in a personal injury action. The order, inter alia, granted the motions of third-party defendants for summary judgment dismissing the third-party complaint and all cross claims against them.
TREVETT CRISTO SALZER & ANDOLINA P.C., ROCHESTER (MARK M. CAMPANELLA OF COUNSEL), FOR THIRD-PARTY PLAINTIFF-APPELLANT.
BROWN & KELLY, LLP, BUFFALO (LISA T. SOFFERIN OF COUNSEL), FOR THIRD-PARTY DEFENDANT-RESPONDENT DAVID OGIONY DEVELOPMENT CO., INC.
CHELUS, HERDZIK, SPEYER & MONTE, P.C., BUFFALO (THOMAS J. SPEYER OF COUNSEL), FOR THIRD-PARTY DEFENDANT-RESPONDENT AHLSTROM-SCHAEFFER ELECTRIC CORPORATION.
BAXTER SMITH & SHAPIRO, P.C., WEST SENECA (WILLIAM BOLTREK OF COUNSEL), FOR THIRD-PARTY DEFENDANT-RESPONDENT PETTIT & PETTIT, INC.
It is hereby ORDERED that the order so appealed from is unanimously modified on the law by denying the motions of third-party defendants David Ogiony Development Co., Inc. and Pettit & Pettit, Inc. and reinstating the third-party complaint and cross claim against them and as modified the order is affirmed without costs. [*2]
Memorandum: Plaintiff commenced this Labor Law and common-law negligence action seeking damages for injuries he sustained when he slipped and fell on an icy and unlit path while performing construction work on property owned by Jamestown Community College, Jamestown Community College Region and Jamestown Community College Regional Board of Trustees (collectively, JCC defendants), defendants in appeal Nos. 1 and 2 and the third-party plaintiffs in appeal No. 2. Ciminelli-Cowper Co., Inc. (Ciminelli), a defendant in appeal Nos. 1 and 2 and the third-party plaintiff in appeal No. 1, served as the construction manager on the project. Ciminelli and the JCC defendants each commenced a third-party action against various contractors on the project, asserting causes of action for contractual defense and indemnification and breach of contract based on their failure to procure insurance naming Ciminelli and the JCC defendants as additional insureds on the project. The JCC defendants also asserted a cause of action for common-law indemnification. The contracts between the JCC defendants and third-party defendants Ingalls Site Development, Inc., formerly known as David Ogiony Development Co., Inc. (Ogiony), Pettit & Pettit, Inc. (Pettit), and Ahlstrom-Schaeffer Electric Corporation (Ahlstrom) provided in relevant part that "the Contractor shall indemnify and hold harmless the Owner[, i.e., the JCC defendants, and the] Construction Manager[, i.e., Ciminelli,] . . . from and against claims, damages, losses and expenses . . . arising out of or resulting from performance of the Work . . . but only to the extent caused in whole or in part by negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable . . . ." The contracts also provided that those third-party defendants (hereafter, third-party defendants) shall obtain an endorsement to their general liability policies naming, inter alia, Ciminelli and the JCC defendants as additional insureds on a primary basis.
In appeal No. 1, Ciminelli appeals from an order granting, inter alia, the motions of third-party defendants for summary judgment dismissing Ciminelli's third-party complaint and all cross claims against them. The order in appeal No. 1 also denied the cross motion of Ciminelli for partial summary judgment seeking a determination that third-party defendants are obligated to procure insurance naming Ciminelli as an additional insured and to defend and indemnify Ciminelli in the main action. In appeal No. 2, the JCC defendants appeal from an order granting the motions of third-party defendants for summary judgment dismissing the JCC defendants' amended third-party complaint and all cross claims against them. The order in appeal No. 2 also denied the cross motion of the JCC defendants for partial summary judgment seeking a determination that third-party defendants are obligated to procure insurance naming the JCC defendants as additional insureds and that third-party defendants are obligated contractually and under the common law to defend and indemnify the JCC defendants in the main action.
We agree with Ciminelli in appeal No. 1 that Supreme Court erred in granting the motions of Ogiony and Pettit for summary judgment dismissing the third-party complaint and all cross claims against them. We also agree with the JCC defendants in appeal No. 2 that the court erred in granting the motion of Ogiony for summary judgment dismissing the amended third-party complaint and all cross claims against it, as well as those parts of the motion of Pettit for summary judgment dismissing the contractual defense and indemnification cause of action and the common-law indemnification cause of action and all cross claims against it. We therefore modify the orders in appeal Nos. 1 and 2 accordingly.
Ogiony, the snow removal contractor, established as a matter of law that it was not obligated to defend or indemnify Ciminelli and the JCC defendants in the main action by submitting evidence that there was no snow on the path where plaintiff felland that its contract with the JCC defendants did not require the application of sand, salt or other ice melting products (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Ciminelli and the JCC defendants, however, raised a triable issue of fact whether Ogiony was negligent in its failure to [*3]remove snow from the area where the accident occurred and, if so, whether such negligence caused or contributed to the icy conditions of the path (see generally id.). Ciminelli and the JCC defendants submitted evidence that the contract between Ogiony and the JCC defendants required Ogiony to remove snow from the area where plaintiff's accident occurred, that Ogiony's subcontractor failed to remove snow from that area, and that the ice on the path was attributable, at least in part, to the melting and re-freezing of accumulated snow.
With respect to the breach of contract cause of action asserted against it by Ciminelli, Pettit failed to submit any evidence demonstrating that it procured the required insurance and thus failed to establish its entitlement to judgment as a matter of law dismissing that cause of action (see generally id.). We conclude, however, that Pettit established its entitlement to judgment as a matter of law dismissing the breach of contract cause of action asserted against it by the JCC defendants. Pettit submitted the deposition testimony of its president, who testified that he procured the required insurance, as well as a certificate of general liability insurance naming the JCC defendants and Ciminelli as additional insureds on a primary basis. The JCC defendants failed to raise a triable issue of fact with respect thereto in opposition to the motion (see generally id.).
We conclude with respect to Ahlstrom that the court properly granted its motions for summary judgment dismissing the third-party complaint, the amended third-party complaint and all cross claims against it. Pursuant to its contract with the JCC defendants, Ahlstrom was obligated to install six security lights on the project site. Ahlstrom established as a matter of law that it was not required to defend or indemnify Ciminelli and the JCC defendants in the main action by submitting evidence that it installed the lights pursuant to Ciminelli's directions and that it was not negligent in its placement of the lights (see generally id.). In opposition to the motions, Ciminelli and the JCC defendants failed to raise a triable issue of fact whether the lights functioned properly or whether inadequate lighting in the area of plaintiff's fall was attributable to any act or omission on the part of Ahlstrom (see generally id.). Ahlstrom also established as a matter of law that it procured the requisite insurance for both the JCC defendants and Ciminelli pursuant to its contract with the JCC defendants. In support of its motions, Ahlstrom submitted a certificate of insurance for the time period covering plaintiff's accident that named the JCC defendants and Ciminelli as additional insureds on a primary basis. The JCC defendants and Ciminelli failed to raise a triable issue of fact with respect thereto in opposition to the motions (see generally id.). [*4]
We reject the contention of Ciminelli in appeal No. 1 and the contention of the JCC defendants in appeal No. 2 that the court erred in denying those parts of their respective cross motions for summary judgment on the third-party complaint and the amended third-party complaint with respect to Ogiony and Pettit. We do not address those parts of the cross motions with respect to Ahlstrom in view of our determination that the court properly granted Ahlstrom's motions, inasmuch as the third-party complaint, amended third-party complaint and cross claims have been dismissed against Ahlstrom. We also do not address that part of the cross motion of the JCC defendants with respect to their breach of contract cause of action against Pettit, for the same reason.
With respect to Ogiony and Pettit, Ciminelli and the JCC defendants failed to establish their entitlement to contractual indemnification as a matter of law because, as we previously concluded herein, there are triable issues of fact with respect to the negligence of Pettit and Ogiony (see Malecki v Wal-Mart Stores, 222 AD2d 1010, 1011). With respect to the common-law indemnification cause of action asserted against Ogiony and Pettit by the JCC defendants, they failed to establish as a matter of law that those third-party defendants were "guilty of some negligence that contributed to the causation of the accident" (Correia v Professional Data Mgt., 259 AD2d 60, 65; see DiPasquale v M.J. Ogiony Bldrs., Inc., 60 AD3d 1338, 1339-1340). With respect to the breach of contract causes of action alleging that those third-party defendants failed to procure insurance naming Ciminelli and the JCC defendants as additional insureds, Ciminelli and the JCC defendants failed to submit any evidence that those third-party defendants did not obtain that insurance (see Zuckerman, 49 NY2d 557, 562). Finally, to the extent that Ciminelli or the JCC defendants contend that they have been denied a defense pursuant to the insurance contracts obtained by third-party defendants, the proper remedy is to commence a declaratory judgment action against third-party defendants' insurers based upon their rights as additional insureds (see Garcia v Great Atl. & Pac. Tea Co., 231 AD2d 401).
Thomas v. Burrus
Appeal from an order of the Supreme Court, Oneida County (Anthony F. Shaheen, J.), entered November 13, 2008 in a wrongful death action. The order, inter alia, granted the motion of defendant Geico Insurance Company for a change of venue.
MELVIN & MELVIN, PLLC, SYRACUSE (SUSAN E. OTTO OF COUNSEL), FOR DEFENDANT-RESPONDENT.
Memorandum: Plaintiff, as administratrix of the estate of Christopher Tupper (decedent), commenced this wrongful death action alleging that decedent was killed when he was struck by a vehicle negligently driven by defendant Brooke L. Burrus. Plaintiff initially commenced the action solely against Burrus, but thereafter filed an amended summons and amended complaint adding defendant Geico General Insurance Company, incorrectly sued as Geico Insurance Company (Geico), as a defendant. As against Geico, plaintiff sought a declaration that Geico was obligated to defend and indemnify Burrus in the action based on an automobile liability policy issued to her by Geico.
After learning of the amended summons and amended complaint but prior to personal service thereof, Geico served an answer and moved for a change of venue from Oneida County to Jefferson County. In addition, Geico, inter alia, sought a stay of the action pending a determination of plaintiff's cause of action seeking a declaration that Geico is obligated to defend and indemnify Burrus in the action or, alternatively, a stay to permit Geico to commence its own declaratory judgment action with respect to Geico's obligation to Burrus in this action. We conclude that Supreme Court properly granted Geico's motion for a change of venue as well as that part of the motion of Geico for a stay of the action to enable it to commence its own declaratory judgment action.
We note at the outset that we reject plaintiff's contention that Geico is "not in this case." Plaintiff filed an amended summons and amended complaint adding Geico as a defendant, and plaintiff was served with Geico's answer. Thus, we conclude that Geico properly appeared in this action (see CPLR 320 [b]).
We reject plaintiff's further contention that the court erred in granting Geico's motion for a change of venue. The record establishes that plaintiff selected an improper venue, which was based upon the location of the office of plaintiff's attorney, and we conclude that plaintiff thereby forfeited her right to designate the place of trial (see Searle v Suburban Propane Div. of Quantum Chem. Corp., 229 AD2d 988, 989). In any event, in view of the fact that plaintiff's amended summons identified Jefferson County as the residence of Burrus, plaintiff cannot be heard to complain that Jefferson County is an improper venue (see CPLR 503 [a]).
Finally, contrary to plaintiff's contention, it is well settled that an insurer may commence an action seeking a declaration concerning the validity of its disclaimer of the duty to defend or indemnify its insured (see Lang v Hanover Ins., Co., 3 NY3d 350, 356).
In the Matter of Gurvich v. Motor Vehicle Accident Indemnification Corporation
Cruz and Gangi and Associates (Connors & Connors, P.C., Staten
Island, N.Y. [Robert J. Pfuhler] of counsel), for appellant.
In a proceeding pursuant to Insurance Law § 5218(c) for leave to commence an action against the Motor Vehicle Accident Indemnication Corporation, the appeal is from an order of the Supreme Court, Kings County (Knipel, J.), dated September 10, 2008, which granted the petition.
Shaub Ahmuty Citrin & Spratt, LLP, Lake Success
(Steven J. Ahmuty, Jr. of
Mauro Goldberg & Lilling LLP, Great Neck
(Kenneth Mauro, Matthew W.
Naparty and Anthony F.
DeStafano of counsel), for
Both AMEC and DCM were enrolled in the Owner Controlled Insurance Program (hereinafter referred to as "OCIP") that NYTB had procured and implemented for the project [FN1] . The OCIP provided, inter alia, commercial general liability insurance, workers' compensation and employers liability insurance, and excess insurance to NYTB, AMEC and all enrolled contractors, including DCM. The OCIP contained a waiver-of-subrogation provision which provided that "[t]he Owner and Contractor hereby waive all rights against each other and any of their Subcontractors [...] as to claims and damages covered by insurance obtained by the Owner under its OCIP program [...]" (emphasis added).
On May 19, 2005, Osowski and his wife commenced an action against NYTB/AMEC (hereinafter referred to as the "main action"). Nearly 2½ years later, on October 22, 2007, American International Speciality Lines Insurance Corp. (hereinafter referred to as "AIG"), the first-layer excess insurer, issued a written denial of coverage to AMEC/NYTB in the main action. Its ground for denial was that, inter alia, its excess policy excluded coverage for bodily injury arising out of the loading or unloading of a vehicle.
At that point, DCM was still a party to the two other actions involving the Osowski accident pending before the same court (i.e. the declaratory judgment action and the third-party action brought by AMEC/NYTB). The court, acknowledging the fact that DCM was preparing for a trial in the third-party action, inquired of AMEC/NYTB's counsel, Steve Palley, as to whose interests the confidentiality clause was designed to protect [FN2] . Palley responded, "I can fairly say that the confidentiality provision[s] are for the benefit of all parties involved to offset the arguments we will have closing argument in front of the jury."
On June 3rd, AMEC/NYTB was ordered to disclose the related settlement agreements. Thereupon, DCM learned the details of the related confidential "Settlement Agreement and Release" among AMEC, NYTB and AIG. DCM discovered that: (1) AIG agreed to provide AMEC/NYTB with an irrevocable letter of credit in the amount of $10 million designating the Osowskis as intended beneficiaries, (2) AMEC/NYTB agreed to dismiss the declaratory judgment action, with prejudice, and to release all claims and actions against AIG for any matters connected to the Osowski action (3) AMEC/NYTB agreed to assign to AIG any and all claims it had against any person or entity arising out of or in connection with the Osowski action, including but not limited to the claims in the third-party action [FN3] and (4) AMEC/NYTB agreed that settlement was without prejudice to AIG's disclaimer of coverage with respect to the third-party action, and that such disclaimer "remain[ed] in full force and effect."
After the parties reconvened on June 5, DCM made an offer to support its previously articulated motion to dismiss. DCM concluded that by virtue of the confidential settlement agreement and associated documents:
"there was, in fact, insurance that covered the loss; that there has been a promise and payment of those damages and, therefore, based upon the provisions in the contract that are now in evidence, the waiver of subrogation provision bars completely the pursuit of the third-party claim against DCM."
According to CPLR 3101(a), "full disclosure of all matter material and necessary in the prosecution or defense of an action" is required. In Allen v. Crowell-Collier Publ. Co. (21 N.Y.2d 403, 288 N.Y.S.2d 449, 235 N.E.2d 430 (1968)), the Court of Appeals interpreted the CPLR phrase "material and necessary" to mean nothing more or less than "relevant." Id. at 407, 288 N.Y.S.2d at 453. The Court stated that the phrase must be "interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity" Id. at 406, 288 N.Y.S.2d at 452. The Court concluded that the "test is one of usefulness and reason." Id. Thus, disclosure of the terms of a settlement agreement by a settling party to a nonsettling party may be appropriate, despite the presence of a confidentiality clause in the agreement, where the terms of the agreement are "material and necessary" to the nonsettling party's case. Masterwear Corp. v. Bernard, 298 A.D.2d 249, 250, 750 N.Y.S.2d 5, 6 (1st Dept. 2002); see Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 3101:18a ("[t]he central inquiry in resolving [...] disclosure requests [regarding settlement agreements] should focus on relevance").
AMEC/NYTB's reliance on Matter of New YorkCountyData Entry Worker Prod. Liab. Litig. (162 Misc 2d 263 (Sup. Ct. N.Y. County 1994), aff'd, 222 A.D.2d 381, 635 N.Y.S.2d 641 (1st Dept 1995)) is misplaced. That case involved a repetitive stress injury action against multiple defendants involving multiple claims of contribution. This Court found that the nonsettling defendants were not entitled to discover the terms of confidential settlement agreements entered into between the plaintiffs and the codefendants, because the terms of agreement were not material to the resolution of the issues involved in the case. Specifically, we concluded that other than the amount of settlement, a confidential settlement between the plaintiff and the codefendants had no relevance to a possible post verdict apportionment under General Obligations Law 15-108. 222 AD2d at 382, 635 N.Y.S.2d at 641. Here, however, the settlement of the main action directly bears on the underlying issue of fault and damages since the third-party action was one for indemnification and was necessarily predicated on the fact that AMEC/NYTB was "out-of-pocket" for a loss which should have been borne by DCM. [*7]
Judgment, Supreme Court, New York County (Jane Solomon, J.), entered July 21, 2008, affirmed, with costs. Appeals from orders, same court and Justice, entered June 4, 2008 and June 23, 2008, dismissed, without costs, as subsumed in the appeal from the judgment. The Clerk is directed to refer the matter of the conduct of Steven Ahmuty Jr., Esq., to the Departmental Disciplinary Committee.
Footnote 1: "OCIPs were developed to make the insurance programs used primarily for construction projects more equitable, uniform and efficient. OCIPs eliminate the costs of overlapping coverage and delays caused by coverage or other disputes between the parties involved in a project and, at the same time, protect all the contracting parties by bringing the risk of loss from the project within the insurance coverage of the OCIP." John Loveless, Construction Insurance: Do You Only Get What You Pay For? 78 APR N.Y. St. B.J. 10, 10 (2006).
Footnote 2: The attorney assigned by Travelers, the primary liability insurer, to defend AMEC/NYTB in the Osowski matter was Steven Cohen. Steven Palley was retained additionally to represent the interest of AMEC/NYTB. Three attorneys from the firm of Shaub Ahmuty Citrin & Spratt, LLP were also present: (1) Timothy Capowski, Esq. was the "voice" for AIG relative to settlement discussions between AIG, AMEC/NYTB (Mr. Palley) and the plaintiffs (Kenneth Sacks, Esq.); (2) Robert Ortiz, Esq. was monitoring the trial on behalf of AIG; and (3) once settlement was reached with the plaintiffs, Steven Ahmuty, Jr., Esq. appeared on behalf of AIG to prosecute its third-party action as assignee of AMEC/NYTB.
Footnote 3: It was expressly agreed that the rights conveyed to AIG by this latter provision represented an assignment, not subrogation.
Richard T. Lau & Associates, Jericho, N.Y. (Keith E. Ford of
Domenic M. Recchia, Jr., Brooklyn, N.Y. (Andrew G.
Sfouggatakis of counsel), for respondents.
Asher & Associates, P.C., New York, N.Y. (Robert J. Poblete of
New York, N.Y. [Brian J. Isaac and
Jillian Rosen], of counsel), for
Old Williamsburg Candle Corp. v Seneca Insurance Company, Inc.
Shay & Maguire LLP, East Meadow, N.Y. (Kenneth R. Maguire and
Saretsky Katz Dranoff & Glass, LLP, of counsel), for appellant.
Weg & Myers, P.C., New York, N.Y. (Joshua L. Mallin and Lisa
N. Wall of counsel), for respondent.
BERRY v UTICA NATIONAL INSURANCE GROUP,
Appeal from an order and judgment (one paper) of the Supreme Court, Oneida County (Samuel D. Hester, J.), entered November 18, 2008 in a legal malpractice action. The order and judgment granted the motion of defendant McClusky Law Firm, LLC for summary judgment dismissing the complaint against it.
MICHELE E. DETRAGLIA, UTICA, FOR PLAINTIFF-APPELLANT.
HISCOCK & BARCLAY, LLP, SYRACUSE (MATTHEW J. SKIFF OF COUNSEL), FOR DEFENDANT-RESPONDENT.
Memorandum: Plaintiff commenced this action seeking, inter alia, damages arising from the alleged malpractice of McClusky Law Firm, LLC (defendant) in failing to commence a timely action against defendant Utica National Insurance Group (Utica National). Supreme Court properly granted the motion of defendant seeking summary judgment dismissing the complaint against it. "To recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship" (Moran v Hurst, 32 AD3d 909, 910). Defendant met its burden of establishing as a matter of law that it had no attorney-client relationship with plaintiff, and plaintiff failed to raise a triable issue of fact (see Volpe v Canfield, 237 AD2d 282, 283, lv denied 90 NY2d 802). The unilateral belief of plaintiff that he was defendant's client does not by itself confer that status upon him (see Rechberger v Scolaro, Shulman, Cohen, Fetter & Burstein, P.C., 45 AD3d 1453; Moran, 32 AD3d at 911). Further, evidence that plaintiff contacted defendant concerning his dispute with Utica National does not establish the existence of an attorney-client relationship absent further evidence of an "explicit undertaking [by defendant] to perform a specific task" (Wei Cheng Chang v Pi, 288 AD2d 378, 380, lv denied 99 NY2d 501; see McGlynn v Gurda, 184 AD2d 980, appeal dismissed and lv denied 80 NY2d 988).