Source: https://www.hurwitzfine.com/news/coverage-pointers-volume-vi-no-21
Timestamp: 2020-01-28 13:47:04
Document Index: 780958761

Matched Legal Cases: ['§ 3420', '§ 5102', '§ 3404', '§ 15', '§ 576', '§ 576', '§ 38', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 576', '§ 576', '§ 576', '§ 576', '§ 576', '§ 2', '§ 142', '§ 142', '§ 76', '§ 76', '§ 1016', '§ 18', '§ 15', '§ 15', '§ 15', '§ 15', '§ 15', '§ 1', '§ 1', '§ 2', '§ 2', '§ 11', '§ 3404', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102', '§ 5102']

Coverage Pointers - Volume VI, No. 21 | Hurwitz & Fine, P.C.
Coverage Pointers - Volume VI, No. 21
6/16/05 Great Canal Realty v. Seneca Insurance
Insured’s Late Notice Inexcusable; High Court Reaffirms the New York “No Prejudice Rule.” Insured’s Failure to Know Which Carrier was Primary is Unacceptable Excuse
Here, the court concludes that when a policy requires that notice of an occurrence be given "as soon as practicable," such notice must be accorded the carrier within a reasonable period of time. The insured's failure to satisfy the notice requirement constitutes "a failure to comply with a condition precedent which, as a matter of law, vitiates the contract". Therefore, the carrier need not show prejudice before disclaiming based on the insured's failure to timely notify it of an occurrence. The Court recognized that there may be circumstances that excuse a failure to give timely notice, such as where the insured has "a good-faith belief of nonliability," provided that belief is reasonable but found the insured’s reason in this case unreasonable. A review of the First Department Appellate Division decision indicates that the excuse given by the insured was that she
…had not notified Seneca earlier because of its belief that Workers' Compensation was the sole and exclusive remedy available to the injured party, and such compensation was available through the general contractor's insurance policy. In addition, Great Canal argued that its belief of non-liability was reasonable since Ms. Lai did not know much more than the basic fact of the accident, and had no knowledge of how the accident happened, or the nature of the injury.
13 A.D.3d 227, 228.
Compare this decision to the 1979 opinion Mighty Midgets, Inc.v. Centennial Insurance Company, 47 NY 2d, 12, 416 NYS2d 559, where the Court accepted, as a valid excuse, a little league football team’s notice to the wrong “agent” when it had reason to believe it was giving notice to the right one. Here, there appears to be no attempt to give notice to the carrier and the excuse was not deemed acceptable.
6/7/05 Country Wide Ins. Co. v. Amtrak New York State Court of Appeals
New York High Court to Clarify “Permission” Under Vehicle & Traffic Law Section 388
It has long been settled that there is a very strong presumption that a person operating a car on the roads in New York is doing so with the permission of the owner. While that presumption is rebuttable, there are very few cases when the Courts have been convinced that permission has not been granted, expressly or impliedly. Would affidavits of the owner and driver that the driver did not have permission be enough to convince a court that permission was not granted? Would they be enough, at least, to eliminate the presumption? The Second Circuit Court of Appeals in Country Wide Ins. Co. v. Amtrak, 407 F.3d 84 (2d Cir., 2005) has certified to the New York State Court and the New York State Court of Appeals, has now accepted, the following five questions which will help clarify the breadth of that long-established presumption. Expect a decision in the fall:
1. Under New York law, are uncontradicted statements of both the owner and the driver that the driver was operating the vehicle without the owner's permission sufficient to warrant a court in awarding summary judgment to the owner?
2. If the answer to question # 1 is "no," is additional circumstantial evidence such as contemporaneous accident reports submitted by the owner sufficient to tip the balance and warrant a court in awarding summary judgment despite the interested nature of the source?
3. Is the uncontradicted testimony of driver and owner that the driver was operating the vehicle without permission, even if not sufficient to warrant summary judgment, sufficient at a trial to overcome the statutory presumption of permissive use, thereby placing the burden on plaintiff to prove permissive use?
4. If the answer to question # 3 is "no," is the addition of such further evidence as contemporaneous accident reports by the owner sufficient to rebut the presumption of permissive use at trial?
5. Does New York law allow the absence of a report of unauthorized use of a vehicle to law enforcement to count as evidence of permissive use sufficient, alone or together with other evidence, to defeat summary judgment?
6/16/05 Martin v. Safeco Insurance Company
Insurer Estopped from Arguing Intentional Acts in Light of Jury Verdict Finding Negligence
Now this one is a dangerous one and we suggest, may be wrongly decided. However, there is a trend suggesting this outcome may be more common.
Here’s the set-up. Safeco disclaimed coverage on the basis that the insured’s acts either were not a covered "occurrence" within the policy or fell entirely within policy exclusions for intentional torts and criminal acts. The underlying action proceeded to verdict finding the insured had acted negligently. The Court found that the jury's finding of negligence collaterally estops the insurer from arguing the acts were intentional. At least one possibility of coverage was reasonably suggested in the underlying action – the insured acted in self-defense. Given such a possibility, and absent a court order otherwise, defendant was under a duty to defend its insured.
This seems to be a court-imposed punishment for not-defending. It doesn’t contemplate the fact that often in these situations, the plaintiff and the insured enter into a quiet conspiracy to make certain that the verdict in such a case comes out in such a way that the jury never even considers a cause of action that would fall outside coverage.
Would the court have felt differently if the insured was provided counsel and the verdict was for negligence? Of course, if the carrier provided counsel, its defense counsel could not put on witnesses that would take the case out of coverage, because that would not be in the insured’s best intersest.
The Court of Appeals recently suggested the same “penalty,” when, without citation, it included this language in dicta:
Finally, we note that an insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured. If it disclaims and declines to defend in the underlying lawsuit without doing so, it takes the risk that the injured party will obtain a judgment against the purported insured and then seek payment pursuant to Insurance Law § 3420. Under those circumstances, having chosen not to participate in the underlying lawsuit, the insurance carrier may litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment. Lang v. Hanover Ins. Co., 3 N.Y.3d 350, 356 (N.Y., 2004)
Why do we believe these cases are wrongly decided? What the Courts are doing is creating coverage where none may exist. Both of these cases fail to take into account the long line of cases that have held that coverage cannot be created by waiver – that the penalty for not defending is not to create coverage if the underlying facts – the truth – demonstrate that in fact the loss was not covered:
Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 423 (N.Y., 1985)
6/14/05 United States Fire Insurance Company v. American Home Assurance
Failure to Establish Underlying Claims Were Not Covered As a Matter of Law Fatal to Declaratory Judgement Action
Plaintiff alleged that it paid the loss incurred by its insured that defendant is a co-insurer obligated to pay a pro rata share, and that defendant has failed and refused to pay the amount it owes. Court finds that defendant did not establish as a matter of law, through documentary evidence or otherwise, that its policy with the insured did not cover the underlying claims. However, the court found the Lower Court properly dismissed plaintiff's claims for breach of contract, estoppel and quantum meruit. The breach of contract claim is merely a restatement of its declaratory judgment claim. Plaintiff was not in privity with defendant and it’s insured in the insurance policy, so plaintiff's proper remedy was to seek declaratory judgment for contribution.
Availability of Excess Coverage Is Triggered by an “Occurrence" – the Last Link Leading to Liability
In an asbestos exposure case, the excess policy defined “occurrence” as "an accident, event, happening or continuous or repeated exposure to conditions . . . which results in personal injury, sickness, disease or death." For the purpose of determining the attachment point of the excess coverage, the appellate division upholds the motion court finding that such clause is not ambiguous; that the operative "occurrence" is the last link in the causal chain leading to liability, i.e., the exposure of each individual claimant to asbestos contained in the turbines manufactured by the insured, rather than earlier events creating the potential for future injury.
6/13/05 Manceri v. Bowe
Failure to Compare Past and Present Ranges of Motion Fatal to Threshold Motion
Defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Although an orthopedist's report submitted by the defendants specified the degrees of the range of motion the orthopedist found in the plaintiff's cervical spine, the orthopedist failed to compare those findings to the normal range of motion, thereby leaving the court to speculate as to the meaning of those figures. Thus, the proof failed to objectively demonstrate that the plaintiff did not sustain a permanent consequential or significant limitation of use of his cervical spine as a result of the subject accident.
6/13/05 Teodoru v. Conway Transport Service
Failure to Explain 2 ½ Year Gap in Treatment and No Objective Tests on Range of Motion Fatal to Threshold Motion
Dismissal for failure to meet serious injury threshold. In opposition to defendants’ motion, the plaintiff's physician affirmation was insufficient to raise a triable issue of fact. No explanation or discussion was made for the lapse of over 2½ years between the physician's last examination of the plaintiff in October 2000 and the re-examination in July 2003. Moreover, while the physician indicated that the plaintiff had restrictions of range of motion in his cervical spine, he failed to set forth the objective tests that he used to arrive at this conclusion
6/13/05 Khan v. Hamid
Three Year Lapse Left Unexplained by Plaintiff’s Tailored Affidavit
Plaintiff's subjective complaints of pain made at an examination held after an unexplained, approximately three-year lapse in time since the conclusion of the original medical treatments not sufficient to oppose defendant’s threshold motion. Furthermore, the court finds that the report merely parroted language designed to tailor the claim to meet statutory requirements.
6/10/05 New York Mutual v. Baumgartner
Question of Fact as to Whether Proper Notice Was Provided to Insurer
New York Mutual disclaimed coverage to various potential insureds on the grounds that they failed to provide notice of the occurrence "as soon as practicable" and failed to forward to plaintiff a letter received regarding the suit. The court found an issue of fact whether Baumgartner received any legal papers prior to receipt of the summons and complaint and thus whether he failed to comply with the requirement that he promptly forwards all legal papers to plaintiff. Pursuant to the policy, Baumgartner was required to "forward to [plaintiff] copies of all notices, demands, or legal papers received in connection with the occurrence" in a prompt manner. That additional notice requirement is a condition precedent to coverage, and the failure to comply with the provision will justify denial. Here, Baumgartner informed plaintiff that he did not learn until October 2000 that defendant in the underlying suit intended to pursue a claim against him. However, there was evidence that another potential defendant stated to plaintiff that, a year prior, Baumgartner received a letter from a law firm regarding the accident. Therefore, there was an issue of fact whether Baumgartner complied with that condition precedent. In addition, there was a question of fact whether the property where the accident occurred was on the insured property.
6/10/05 Prudential Property and Casualty v. Ambreau
Failure to Obtain Consent to settle is Grounds for Permanent Stay of Arbitration
Petition for permanent stay of arbitration is granted. Prudential established that respondents violated the terms of the policy by failing to obtain its written consent to settle with the tortfeasor prior to asserting a claim for supplementary uninsured/underinsured motorist coverage and respondents failed to raise a triable issue of fact with respect thereto.
6/10/05 Santilli v. Allstate Insurance Company
Failure to Cooperate Is Valid Affirmative Defense for the Insurer
The Court rejects the contention that the affirmative defenses were barred by Insurance Law § 3404. Section 3404 (e) sets forth the form of the standard fire insurance policy of the State of New York, which contains a provision requiring "[t]he insured" to submit to examinations under oath, and plaintiff contends that his roommate is not an "insured" under the policy. In the affirmative defenses, Allstate alleged that plaintiff's roommate is an "additional insured" under the policy and that plaintiff, either personally or through the actions of his representatives, impeded Allstate's investigation of the claim. Consistent with the statute, a fire insurance policy may require that an insured cooperate with the insurer in the investigation. Defendant may therefore plead affirmative defenses asserting that plaintiff failed to cooperate by causing or contributing to his roommate's refusal to testify.
6/9/05 State Insurance Fund v. Photocircuits Corporation
State Fund has duty to Investigate Workers Compensation Claims
Action for recovery of additional Workers' Compensation insurance premiums, Photocircuits Corporation, appeals the grant of summary judgment to the State Fund. Photocircuits asserts that the Fund breached the express terms of its policy to investigate and defend claims. Appellate Court reverses and holds that the Fund has an important role in protecting against runaway and fraudulent claims. If the Fund does not properly investigate a claim or fails to invoke the statutory protections given to employers, the Board cannot make fully informed decisions and sort out the real claims from the inflated and false ones. As it was uncontested that the Fund paid benefits to a known impostor, and that it failed to apply for benefits under Workers' Compensation Law § 15(8), appear at hearings and timely file appeals, the Fund did not meet its basic obligation to perform its duties to Photocircuits under the Policy in a reasonable manner.
6/6/05 Deerbrook Insurance Company v. McGregor
Policy Cancellation by Finance Company Ineffective When Insufficient Proof of Notice is given to Insurer
Liberty Mutual sought to prove that the policy issued to the insured was cancelled several days before the accident in accordance with Banking Law § 576. The Supreme Court determined that the policy was cancelled before the date of the accident. The Appellate Division reverses. Banking Law § 576 provides for a two-step process by which an insurance premium finance agency may cancel the policy. First, the finance agency must give both the client and the client's insurance agent or broker no less than 10 days notice (13 days if the notice is mailed) of intent to cancel the policy unless the default is cured. If the default is not cured, the finance agency may cancel the policy by mailing to the insurer a notice of cancellation stating when thereafter the policy is cancelled. But, the policy remains in effect until the insurance company actually receives a copy of the notice of cancellation. Here, Liberty Mutual presented no evidence as to when it actually received a copy of the notice of cancellation. Rather, at the hearing, Liberty Mutual argued that the policy was cancelled on the date stated in the notice of cancellation, a date before the notice was mailed. Moreover, the cancellation was not filed with the Department of Motor Vehicles until more than a week after the accident. Therefore, there was a failure of proof that the Liberty Mutual policy was cancelled before the accident.
6/6/05 Boyle v. Gundogan
Serious Injury Threshold – 90 Day Disability Claim Dismissed
The defendant’s doctor submitted an affidavit establishing that plaintiff did not suffer a serious injury. The affirmation of the plaintiff’s treating physician was insufficient to defeat the motion, based upon examinations that were made more than a year before the motions. Moreover, there was no competent medical evidence which would support a claim that the plaintiff was unable to perform substantially all of her daily activities for not less than 90 of the first 180 days as a result of the subject accident.
6/6/05 Hernandez v. Taub
Serious Injury Threshold – Gap in Treatment and Failure to Show More Than Disc Herniation Fatal to Serious Injury Claim
Again, defense submitted an examining doctor’s affidavit to establish lack of serious injury including ER records and the affirmed medical reports of the defendant's examining neurologist and orthopedist indicating that the plaintiff had completely recovered from his injuries and was neither impaired nor disabled, as well as the affirmation of a radiologist indicating that MRIs of the plaintiff's spine had shown only degenerative conditions. The plaintiff's opposition was insufficient, and included only computerized range of motion and sensory nerve conduction testing, unaffirmed medical reports and the affidavit of a chiropractor which failed to explain a 2½ year gap in treatment. Claim of disc herniation, without more, fails to establish serious injury.
6/6/05 Kaminsky v. Waldner
Serious Injury Threshold – No Hat Trick for Defense. Defense Fails to Establish Enough to Justify Plaintiff’s Response
Here, the defense doctors claimed there was no serious injury but they found “restrictions of range of motion which were not sufficiently quantified or qualified to establish the absence of a significant limitation of motion.” Therefore, motions by the defense for summary judgment were denied; as was the motion by plaintiff’s counsel to establish a serious injury. Question of fact for the jury.
6/13/05 Prundential Property v. Remed Recovery Care
Auto Coverage Extends to Personal Injury Suffered in Fall that Occurred Fourteen Years After the Collision, but Arose Out Of the Original Collision
Defendant Cashen was injured in an automobile collision in 1976, leaving with him with severe and permanent brain damage. Cashen was moved to a facility managed by Defendant REMED where he fell as a result of his neurological disorder. While being treated for injuries sustained as a result of the fall, Cashen’s condition worsened and sustained further injury as a result of surgery. Plaintiff filed for declaratory judgment seeking to avoid coverage for the new injuries. Plaintiff argued that the new injuries were not causally related to the original automobile collision and therefore ought not to be compelled to provide coverage. The District Court for the Eastern District of Pennsylvania granted judgment in favor of Cashen and coverage after a non-jury filed. Plaintiff appealed and the Third Circuit affirmed, finding that the Cashen’s injuries "arose out of" the use of an automobile as interpreted by Pennsylvania’s No Fault statute.
Submitted by: Richard K. Traub and Stuart A. Panensky (Traub Eglin Lieberman Straus LLP)
6/10/05 Peagler v. USAA Insurance Co.
South Carolina Supreme Court to Decide What Constitutes Injury Arising out of the Ownership, Maintenance, or Use of a Motor Vehicle under S.C. Code
Thompson was killed when shotguns which were being unloaded out of the vehicle she was occupying discharged. At the time of the accident, Thompson and her husband were covered under an automobile insurance policy issued to them by USAA. The district court held that when determining whether an injury arises out of the ownership, maintenance, or use of a motor vehicle, the three-part test enunciated in State Farm Fire & Casualty Co. v. Aytes, 503 S.E.2d 744 (S.C. 1998), applies: (1) "the party seeking coverage must establish a causal connection between the vehicle and the injury," (2) "there must exist no act of independent significance breaking the causal link,"; and (3) "it must be shown the vehicle was being used for transportation at the time" of the injury. The Fourth Circuit reviewed existing South Carolina case law on the question of what constitutes ownership, maintenance, or use of a motor vehicle, and concluded that there is no dispositive South Carolina case. The Fourth Circuit certified the following question to the South Carolina Supreme Court: Did Kathy Thompson's fatal injury arise out of the "ownership, maintenance, or use" of a motor vehicle? S.C. Code Ann. §§ 38-77-30(10.5).
Submitted by: Thomas K. Hanekamp and Tyler Garrett (Tressler, Soderstrom, Maloney & Priess)
6/9/05 Travelers Casualty & Surety v. Wausau
Duty to Defend Extended Until the Completion of an Action Where No Applicable Exclusion was Found to Negate the Potential of Coverage
BTP Acquisition Corp. (“BTP”) acquired all of the shares of stock of R&D Latex, Inc. (“R&D”), and through two mergers, R&D became a subsidiary of BTP, which was ultimately named Mydrin, Inc. (“Mydrin”), and R&D ceased to exist. Prior to the acquisition and mergers, Travelers Casualty & Surety Co. (“Travelers”) insured R&D under a commercial property and general liability policy. After the merger and name change to Mydrin, Employers Insurance of Wausau (“Wausau”) issued CGL policies to BTP, under which Mydrin was an insured. Thereafter, carpet companies filed actions against R&D and Mydrin, manufacturers of a latex mix used by the carpet companies, which alleged that the latex mix was defective. In the first action, the “Royalty action,” both R&D and Mydrin were named as defendants; in the second action, the “Western action,” only Mydrin was named as a defendant. Mydrin tendered its defense in the actions to Travelers and Wausau; Travelers agreed to defend Mydrin against the actions. Wausau denied coverage for the actions and asserted, among other things, that an endorsement contained in the Wausau policy excluded coverage for liability arising out of products manufactured by R&D (“R&D Exclusion”), which were allegedly at issue in the actions; thus, no coverage was available for Mydrin in connection with the actions. Travelers filed a contribution action against Wausau, in which the lower court granted Wausau’s motion for summary adjudication on the issue of Wausau’s duty to defend and indemnify Mydrin with respect to the Royalty action, while the same issue proceeds to a bench trial in the Western action. At trial, the court entered judgment in favor of Travelers for one-half of the costs to defend Mydrin in the Western action, but for only a specified period of time. On appeal, the appellate court affirmed the lower court’s decision with respect to the Royalty action, but reversed in part with respect to the Western action, stating that Wausau’s duty to defend continued until the Western action was concluded. With respect to the Western action, the appellate court discussed the R&D Exclusion, found that it was not ambiguous when viewed in context with the entire policy, but stated that it did not reach as far as the trial court had determined, and was not applicable to the Western action, which implicated only products-completed operations coverage. Wausau’s agent had admitted that some of the defective latex at issue in the Western action was manufactured and distributed by Mydrin itself. Wausau failed to establish that any exclusion applied to Mydrin’s products, and therefore, failed to establish that there was no potential for coverage in the Western action. As such, Wausau’s duty to defend extended until the Western action was concluded.
6/9/05 Autumn Ridge v. Accordia of Virginia Insurance
When No Loss Has Occurred That Would Have Been Covered By The Requested Insurance Policy, The Measure of Damages For Failure to Procure Insurance Is The Amount Paid By the Intended Insured As The Premium
Twelve limited partnerships each owned a separate multi-family housing project. National Housing Corporation (NHC), acted as the limited partnerships' agent for the purpose of procuring the builders risk insurance policy for the limited partnerships. NHC contracted with Acordia, an insurance broker, to purchase a builders risk insurance policy to insure the 12 limited partnerships and each partnership's respective housing project. Acordia contracted with Security Insurance Company of Hartford (Security) to provide the requested insurance. The policy named NHC as the insured and listed the housing projects owned by the limited partnerships as covered properties. The policy, however, did not include the limited partnerships that actually owned the housing projects as named insureds. Acordia admitted that it had failed to comply with the applicable standard of care, or was negligent or in breach of its contract, by not including the limited partnerships as named insureds on the builders risk insurance policy. The circuit court concluded that the limited partnerships' damages in contract were limited to their losses due to the breach and had been restored to the condition in which they would have been had the contract been performed as promised. The circuit court also concluded that the measure of damages for a breach of contract to procure insurance is the amount of loss that would have been subject to insurance coverage and not the return of paid premiums. The Supreme Court disagreed and reversed. The Court reasoned that when the intended insured suffers a loss, the measure of damages for failure to procure insurance is the amount that would have been due under the policy. However, when no loss has occurred, the measure of damages is the amount paid by the intended insured as the premium.
6/7/05 Nautilus Insurance v. Our Camp
Molestation Exclusion Applied to Defeat Coverage for Alleged Sexual Abuse at Summer Camp
The plaintiff in the underlying action alleged he was subjected to sexual acts by a co-camper while attending the insured's summer camp program. He alleged negligent training and supervision of camp counselors. As a result of the incidents, plaintiff claimed that he "suffered extreme emotional harm, humiliation and bodily injury." The camp's insurer denied coverage under the policy exclusion for abuse or molestation. The Tenth Circuit affirmed an order of summary judgment in favor of the camp's insurer. The court found that failure to specifically identify the exclusion on the declarations page was not fatal since the exclusion was included on an endorsement that was referenced in the declarations. The presence of a "special events" endorsement, that did not expressly include the abuse and molestation exclusion, but did indicate that all other terms and conditions of the policy remained unchanged, did not conflict with application of the exclusion. The Court rejected the argument that the injuries actually arose from the negligence of the camp, not the actions of the abuser. The court also rejected the argument that the camp's negligence was at least a concurrent cause of the injuries and should be covered. The court noted the broad wording of the exclusion that applied to bodily injury arising out of actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured.
Submitted by: Thomas K. Hanekamp (Tressler, Soderstrom, Maloney & Priess)
Country Wide Insurance Company v. National Railroad Passenger Corporation,
Certification of questions by the United States Court of Appeals for the Second Circuit, pursuant to section 500.17 of this Court's Rules of Practice, accepted and the issues presented are to be considered after briefing and argument. Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and
Boyle v. Gundogan
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Kramer, J.), dated March 9, 2004, which granted the separate motions of the defendant Musa Gundogan and the defendant Ali Liaqat for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The affirmations of the defendants' examining neurologist and orthopedist, as well as the affirmation of a radiologist, were sufficient to establish, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affirmation of the plaintiff's treating physician, on the other hand, was based upon examinations that were made more than a year before the motions for summary judgment (see [*2]Kauderer v Penta, 261 AD2d 365; Carroll v Jennings, 264 AD2d 494). Moreover, there was no competent medical evidence which would support a claim that the plaintiff was unable to perform substantially all of her daily activities for not less than 90 of the first 180 days as a result of the subject accident (see Sainte-Aime v Ho, 274 AD2d 569; Jackson v New York City Tr. Auth., 273 AD2d 200; Greene v Miranda, 272 AD2d 441).
Hernandez v. Taub
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Baisley, J.), dated July 1, 2004, which granted the defendant's motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The plaintiff's hospital emergency room records, and the affirmed medical reports of the defendant's examining neurologist and orthopedist indicating that the plaintiff had completely recovered from his injuries and was neither impaired nor disabled, as well as the affirmation of a radiologist indicating that MRIs of the plaintiff's spine had shown only degenerative conditions, sufficiently established a prima facie case that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The plaintiff's opposition consisted, inter alia, of computerized range of motion and sensory nerve conduction testing, unaffirmed medical reports which were without probative value (see Grasso v Angerami, 79 NY2d 813, 814; Pagano v Kingsbury, 182 AD2d 268, 270), and the affidavit of a chiropractor which failed to explain a 2 ½ year gap in treatment (see Jimenez v Kambli, 272 AD2d 581, 582; Smith v Askew, 264 AD2d 834). Moreover, the mere claim [*2]of a disc herniation, without more, is insufficient to show the existence of a serious injury (see Kearse v New York City Tr. Auth., 16 AD3d 45, 49-50; Guzman v Michael Mgt., 266 AD2d 508, 509). Accordingly, the plaintiff failed to raise a triable issue of fact, and the defendant's motion for summary judgment dismissing the complaint was properly granted.
Kaminsky v. Waldner
In an action to recover damages for personal injuries, the defendant MTA Long Island Bus appeals from an order of the Supreme Court, Nassau County (Brandveen, J.), dated February 28, 2004, which granted that branch of the plaintiff's motion which was for leave to reargue its prior motion for summary judgment dismissing the complaint insofar as asserted against it on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) and the plaintiff's prior cross motion for summary judgment on the issue of liability, which were determined in an order dated September 9, 2003, and, upon reargument, vacated the order dated September 9, 2003, denied its motion, and granted the plaintiff's cross motion.
ORDERED that the order dated February 28, 2004, is modified, on the law, by (1) deleting the provision thereof, upon reargument, granting the plaintiff's cross motion, and substituting therefor a provision, upon reargument, adhering to so much of the determination in the order dated September 9, 2003, as denied the cross motion, and (2) deleting the provision thereof, upon reargument, vacating so much of the order dated September 9, 2003, as granted the plaintiff's cross motion; as so modified, the order dated February 28, 2004, is affirmed, without costs or disbursements.
The defendant failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; McDowall v Abreu, 11 AD3d 590, 591; Taccetta v Scotto, 287 AD2d 707, 709). The [*2]opinions of the defendant's examining physicians that the plaintiff did not sustain a serious injury were belied by their own findings of restrictions of range of motion which were not sufficiently quantified or qualified to establish the absence of a significant limitation of motion (see Insurance Law § 5102 [d]; McDowall v Abreu, supra; McCluskey v Aquilar, 10 AD3d 388; Christman v Cueva, 6 AD3d 375; Meyer v Gallardo, 260 AD2d 556, 557). Accordingly, the court need not address the plaintiff's opposition to the original motion (see Berkowitz v Decker Trans. Co., 5 AD3d 712; Coscia 938 Trading Corp., 283 AD2d 538).
However, under the circumstances of this case, the Supreme Court, upon reargument, should not have granted the plaintiff's cross motion for summary judgment as there are triable issues of fact with respect to the issue of liability (see Schustar v Amboy Bus Co., 267 AD2d 448; cf. Vidal v Tsitsiashvili, 297 AD2d 638).
Deerbrook Insurance Company v. McGregor
In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from an order of the Supreme Court, Kings County (Bernstein, J.H.O.), dated July 14, 2004, which, after a hearing, determined that an insurance policy issued by the proposed additional respondent-respondent, Liberty Mutual Insurance Company, was cancelled before the date of the subject accident, and, in effect, denied the petition and dismissed the proceeding.
Jamel McGregor, a pedestrian, was injured when he was struck by a vehicle driven by the proposed additional respondent Cheryl F. Davis. After obtaining a judgment against Davis, McGregor demanded arbitration of a claim for uninsured motorist coverage made pursuant to an insurance policy issued to his mother by the petitioner, Deerbrook Insurance Company (hereinafter Deerbrook). Deerbrook commenced this proceeding to permanently stay arbitration. Deerbrook asserted, inter alia, that the Davis vehicle was insured on the date in question by the proposed additional respondent Liberty Mutual Insurance Company (hereinafter Liberty Mutual). At a [*2]hearing, Liberty Mutual sought to prove that the policy issued to Davis had been cancelled several days before the accident by Davis' insurance premium finance agency in accordance with Banking Law § 576. The Supreme Court, in effect, determined that the policy was cancelled before the date of the accident and, in effect, denied the petition. We reverse.
Banking Law § 576 provides for a two-step process by which an insurance premium finance agency may cancel a policy of insurance issued to a client when the client defaults. First, the insurance premium finance agency must give both the client and the client's insurance agent or broker no less than 10 days notice (13 days if the notice is mailed) of an intent to cancel the policy if the default is not cured within such time period (see Banking Law § 576[1][a]). If the default is not cured, the insurance premium finance agency "may thereafter, in the name of the insured, cancel such insurance contract by mailing to the insurer a notice of cancellation stating when thereafter the policy shall be cancelled" (Banking Law § 576[d]). The Court of Appeals has held that Banking Law § 576 did not abrogate the common-law rule that the policy remains in effect until the insurance company actually receives a copy of the notice of cancellation (see Crump v Unigard Ins. Co., 100 NY2d 12, 17-18). Strict compliance with the statute is required (see Parkside Food Ctr. v United Intl. Ins. Co., 193 AD2d 658, 659; L.Z.R. Raphaely Galleries v Lumbermens Mut. Cas. Co., 191 AD2d 680, 681). Here, Liberty Mutual presented no evidence as to when it actually received a copy of the notice of cancellation. Rather, at the hearing, Liberty Mutual argued that the policy was cancelled on the date stated in the notice of cancellation, which was before the date the notice was mailed. The cancellation was not filed with the Department of Motor Vehicles until more than a week after the accident. Thus, there was a failure of proof that the Liberty Mutual policy was cancelled before the accident. Consequently, the petition should have been granted.
State Insurance Fund v. Photocircuits Corporation
Defendant appeals from an order (denominated a judgment) of the Supreme Court, New York County (Carol R. Edmead, J.), entered October 9, 2003 (as amended by the so-ordered stipulation dated on or about October 27, 2003), which, inter alia, granted plaintiff's motion for summary judgment and denied defendant's motion for summary judgment, and judgment, same court and Justice, entered November 20, 2003, which awarded plaintiff damages.
In this action for recovery of additional Workers' Compensation insurance premiums, defendant, Photocircuits Corporation, appeals the grant of summary judgment to the plaintiff, Commissioners of the State Insurance Fund (Fund). Defendant asserts that the Fund breached the express terms of its policy to investigate and defend claims. Plaintiff responds that defendant is required to pay these premiums for documented losses and that defendant has no defense as there is no cognizable action in New York for breach of an "implied obligation of good faith and fair dealing" against a workers' compensation insurer.
Employers have long been required to provide their employees with workers' compensation insurance. Indeed, this requirement goes back to the early years of the Twentieth Century. Previously, work-related injuries were governed by traditional tort law. However, because of the Industrial Revolution in the 19th and early 20th centuries, and the concomitant increase in workplace injuries, a number of states enacted workers' compensation legislation (see 1 Larson's Workers' Compensation Law § 2.07 at 2-13).
In 1914, New York enacted its first workers'[FN1] compensation statute (L 1913, ch 816). While the statute has been amended numerous times over the years, its purpose remains the same, to ensure a swift and secure source of benefits to the worker while protecting the employer from multiple common-law tort actions (O'Rourke v Long, 41 NY2d 219, 222 [1976]). The price to the worker was the loss of the right to bring an action, making an award by the Workers' Compensation Board (the Board) the sole remedy. The price to the employer was the payment of insurance premiums.
The Workers' Compensation Board, a unit of the State's Department of Labor, has assumed all of that department's rights, powers and duties with respect to workplace injuries (Workers' Compensation Law § 142). The Board, which has some of the characteristics of a court, essentially administers the compensation program. Some of its responsibilities include:
"[the] power to hear and determine all claims for compensation or benefits or relating to special funds created under the provisions of [*3]this chapter . . . ; to require medical service for injured employees . . . ; to approve and fix attorney's fees and claims for medical service . . . to approve agreements, to modify or rescind awards, to make conclusions of fact and rulings of law, to certify questions to the appellate division of the supreme court, to enter orders in appealed cases, to determine the time for the payment of compensation, to order the reimbursement of employers for amounts advanced, to assess penalties, . . . to order physical examinations, to take testimony by depositions; and to have and exercise all other powers and duties, exclusive of purely administrative functions, originally conferred or imposed upon the workmen's compensation commission by this chapter . . . ."
(Workers' Compensation Law § 142[1]).
The Workers' Compensation Law governs compensation by an employer [FN2] to its employees [FN3] for injuries or death in the course of employment. Except in the limited circumstances where an employer can become self-insured, employers generally purchase workers' compensation insurance policies to guarantee performance of this obligation [FN4]. They can obtain these policies from either an authorized private company or, as here, from the Fund. The Fund is also under the jurisdiction of the State Department of Labor (Workers' Compensation Law § 76). Its premiums are "generally competitive with those charged by private insurance companies, although the latter may, unlike the [Fund], reject applicants for policies based upon their own underwriting criteria" (Minkowitz, Practice Commentaries, Workers' Compensation Law § 76, at 136 [1994]). Fewer than half of the states in this country have state-sponsored funds, and the New York Fund provides coverage for more than a third of all employers in the state, including all state employees (id.) Moreover,
"[The Fund is] vested with certain sovereign powers and the [*4]mantle of the state's sovereign immunities . . . . [However] its function is akin to that of a private insurance carrier, and in addition to insuring employers against the liability imposed upon them by law, is a self-insurer of its own employees . . . . A claim against [the Fund] is cognizable only in the Court of Claims, and may not be presented as a setoff or counterclaim in the Supreme Court."
(111 NY Jur 2d, Workers' Compensation § 1016).
For the policies it provides, the Fund offers two types of premium plans: a "Retrospective Rating Plan" (RRP) and a "Guaranteed Cost Plan" (GCP). Under the RRP, premiums are dependent upon the insured's claims experience during a policy period. The Fund is supposed to issue the insured periodic bills for this type of premium which reflect claims activity. By connecting the premium to claims experience, RRP gives the employer an incentive to take an active role to reduce employee claims. The amount of any Fund retrospective premium is not considered final until all awards for claims during the policy period are paid in full. By contrast, a GCP premium does not take claims experience into consideration.
In this case Photocircuits purchased its policy from the Fund for the period October 1, 1992 to October 1, 1993 and elected the RRP premium. Part One of the policy provides:
This workers compensation insurance applies to bodily injury by accident or bodily injury by disease . . . .
2. Bodily injury by disease must be caused or aggravated by the conditions of your employment . . . .
We have the right and duty to defend at our expense any claim or proceeding against you for benefits payable by this insurance. We have the right to investigate and settle these claims or proceedings.
We have no duty to defend a claim or proceeding for benefits payable by this insurance.
While defendant's initial basic premium under the policy was $150,177.39 for October [*5]1992 to October 1993, by 1996, it had paid $627.020.39 for that period. Now, the Fund, through this action, is seeking an additional $466,100, plus costs (pursuant to State Finance Law § 18[5]), to cover certain additional claims which arose during the term of the policy but were resolved between 1996 and 2001.
The Fund's handling of four employees' claims are at issue. They are: Traore Sekou, Maria Labrada, Gennaro Larice and Valeria Diaz. The bulk of the $466,100 claimed by the Fund is attributable to Labrada, Larice and Diaz.
The Board paid Traore Sekou for injuries he allegedly sustained at Photocircuits on December 7, 1992. In May 1996, four years after this claim was filed and substantial sums had been issued, the Fund's Office of Claimant Services called Sekou. During this call, Sekou advised the Fund that he had never worked for Photocircuits, and that he suspected a former roommate had used his name and Social Security number to file for Workers' Compensation and had taken the checks. Apparently, after Sekou informed the Fund that the claim had been made by an imposter, it nevertheless paid that imposter another $39,000. In total, the Fund paid $66,626.64 on this claim.
The second contested claim was that of Maria Labrada, who filed for work-related asthma. Labrada did not produce any medical evidence that her injuries were related to her job; however, a physician employed by the Fund did confirm that she had asthma. That report, dated June 24, 1997, did not discuss when the asthma began, and it was the sole basis for the Board's subsequent award of benefits to her. It is uncontested that years earlier, on February 8, 1993, Photocircuits had reported to the Board that Ms. Labrada's asthma was a condition which pre-existed her employment with them. Photocircuits gave the Fund information that Labrada had filed a prior claim, and it anticipated that the Fund would ask the Board to invoke a specific provision of the Workers' Compensation Law that limits an employee's liability for pre-existing injuries and qualifies her for the Special Disability Fund (see Workers' Compensation Law § 15(8), discussed infra). Had the Board found the provision applicable, Photocircuits' liability would have been reduced from $116,501 to $14,197.
The third contested claim was that of Gennaro Larice. On August 19, 1993 Larice filed a workers' compensation claim reporting a work-related lung injury. On or about November 5, 1993, Photocircuits informed the Fund that Larice had had the lung condition, sarcoidosis, before he was employed by it. Defendant produced evidence that this condition had existed since 1990. Again, the Fund did not invoke the limiting provision which would have capped Photocircuits' exposure to $38,964. Instead, Larice received a lifetime award of $367,762.
The fourth contested claim was that of Valerie Diaz. On April 23, 1993, Diaz, who was seven months pregnant, allegedly fainted at work and suffered head and back injuries. She thereafter filed a claim for workers' compensation benefits. The Fund controverted her claim, but apparently lost her claim file. Fund representatives went to several of Diaz's Board hearings without her claim file, and the Fund was fined by the Board for repeatedly, unnecessarily adjourning claim hearings. After Diaz prevailed before the Board, a Fund representative recommended that the case be appealed, noting that "[t]his is a time critical issue and must be done immediately." The Fund thereafter prepared a notice of appeal, but failed to file it. After [*6]the statutory time limit had elapsed, the Fund settled this claim for a payment of $40,000 to Diaz. In addition, Photocircuits asserted that Diaz's claim file contains billings from other individuals' cases, raising a question as to whether the amounts claimed for Diaz are even attributable to her claim or in fact relate to other cases.
The Fund moved for summary judgment asserting that there were no issues of fact as to its entitlement to the amounts sought. In support of its motion, the Fund submitted the policy, an audit dated October 31, 1993, a number of accounting statements, and a final statement of account showing a balance due of $466,100. The Fund also submitted the affidavits of Vincent Troianiello, the Fund's Director of Underwriting, and Reuben Epstein, the Fund's Director of Actuarial Services. Both Troianiello and Epstein explained the RRP concept and provided evidence of the underlying accountings to support the $466,100 claimed premium.
Photocircuits opposed the motion and cross-moved for summary judgment. It claimed that the Fund had breached the terms of the policy in failing to discharge its obligations to minimize and defend against unauthorized payments. In support of the cross-motion, Photocircuits presented the affidavit of Jennifer Minerva, its Manager of Risk Management. Minerva affirmed that she had worked for Photocircuits for five years and has responsibility for the oversight of workers' compensation claims. The Minerva affidavit detailed the Fund's mishandling of the Larice, Labrada and Diaz claims. Photocircuits also submitted the affidavit of Maureen Seward, an outside workers' compensation specialist. Seward stated that she had 23 years of experience in the administration of workers' compensation claims. She asserted that the Fund mishandled Sekou's case by paying benefits to a known impostor, and that it failed to limit Photocircuits liability for Labrada's and Larice's claims for pre-existing injuries. She also opined that the Fund acted improperly regarding Diaz's claim by failing to appear at a number of hearings because of a misplaced claim file. She stated that as a result of unnecessary adjournments with respect to the Diaz hearing, the Fund was fined by the Board, and she questioned the propriety of the Fund's settlement of this concededly ambiguous claim. Seward also took issue with the Fund's billing practices, noting that the Diaz file contained claims from other Photocircuits employees. Seward summarized her review of the files as follows:
"the manner in which [the Fund] handled [these 4 employees'] cases goes beyond mere negligence or carelessness. Instead, these claims files show [the Fund's] personnel's total disregard for Photocircuits' obligation to pay for the results of their inaction, as well as [the Fund's] failure to even attempt to meet its obligations as a Workers' Compensation claims handler for Photocircuits."
In its response to Seward's affidavit, the Fund offered reply affidavits from Troianiello, Epstein and Robert Sammons, the Fund's Director of Claims. Sammons affirmed that there is no requirement in the Policy that the Fund communicate the status of its claims processing to Photocircuits. However, the Fund did not contradict Seward's allegations that it failed to defend Photocircuits' rights and that it paid a claim to a known impostor.
Supreme Court granted the Fund's motion for summary judgment for $466,100 plus costs. As relevant to the appeal, the court denied defendant's application for additional discovery [*7]regarding the parties' performance under the contract and the amount of claimed premiums attributable to plaintiff's failures versus the amount attributable to properly administered claims. The court also noted that Photocircuits did not object to the calculation of premiums until it received the Fund's final accounting statement. The court rejected defendant's contentions, characterizing them as breaches of the implied obligation of good faith and fair dealing, which, it said, is not recognized in this context. It also noted that there was no provision in the policy requiring the insurer to advise the insured as to the status of claims.
On appeal, Photocircuits argues that the evidence is undisputed that the Fund materially breached the policy by failing to perform its express duties. Photocircuits urges this Court to reverse the order appealed and grant its cross motion for summary judgment. The Fund counters that the Court correctly granted its motion for summary judgment.
Workers' compensation insurance policies are no more than contracts, and as such are governed by the ordinary rules of contractual construction (see Matter of Covert, 97 NY2d 68, 76 [2001]; Matter of Davis v Block & Smith, 297 NY 20 [1947]). As in every contract for the performance of services, the party obligated to perform a service is required to do so in an "objectively reasonable manner under the circumstances" (Pierson v Willets Point Contr. Corp., 899 F Supp 1033, 1049 [1995]). Here, Part One of the Fund's policy with Photocircuits specifically obligated it to defend Photocircuits against claims for workers' compensation benefits brought by its employees, and to pay only those claims for injuries caused or aggravated by the conditions of the claimant's employment.
Thus, the issue here is whether the Fund fulfilled this duty in an objectively reasonable manner. The majority of the contested premiums concern the two lifetime awards made to claimants Larice and Labrada. In both of those claims, Photocircuits had informed the Fund that the employees had injuries pre-existing their employment. In such cases Workers' Compensation Law § 15(8)(d) provides:
"[T]he employer or his insurance carrier shall in the first instance pay all awards of compensation and all medical expense provided by this chapter, but such employer or his insurance carrier, except as specifically provided in paragraph (ee) of this subdivision, shall be reimbursed from the special disability fund created by this subdivision for all compensation and medical benefits subsequent to those payable for the first one hundred four weeks of disability
. . . regardless of knowledge on the part of the employer as to the existence of such pre-existing permanent physical impairment" (emphasis supplied).
This section provides that The Special Disability Fund, rather than the general fund allocated for workers' compensation claims, reimburses claimants with pre-existing injuries, and limits the employer's exposure to 104 weeks. It is unrefuted that the Fund twice failed to file for these benefits for Photocircuits' employees. In defense of its errors, the Fund claims that failure to file the necessary applications is not dispositive, because Photocircuits cannot establish that the Board would have granted the applications under § 15(8). However, the Fund's argument [*8]ignores the fact that the Board cannot make a determination on a matter not submitted to it. Had the applications been submitted and approved, Photocircuits' retrospective premiums would have been reduced by some $484,263. Some of this has already been paid. Thus, Photocircuits asserts 85% of its liability to the Fund could have been eliminated had the payments to Larice and Labrada been capped at 104 weeks pursuant to Workers' Compensation Law § 15(8).
In contending that summary judgment was properly granted, plaintiff relies on Insurance Co. of Greater N.Y. v Glen Haven Residential Health Care Facility (253 AD2d 378 [1998]) and Commissioners of State Ins. Fund v J.D.G.S. Corp. (253 AD2d 368 [1998]). These cases hold that New York does not recognize breach of the implied obligation of good faith and fair dealing as a defense to a claim that the insurer's deficient investigation or mismanagement of a claim file resulted in an increased retrospective premium. Both Glen Haven and J.D.G.S. deal with workers' compensation claims, and, in the ordinary course would provide plaintiff with immunity from the type of defense Photocircuits is asserting here. However, they cannot be read to give the Fund a blanket excuse for a failure to even minimally comply with its basic contractual obligations to perform in a reasonable manner.
In reviewing the settlement of insurance claims, the Court of Appeals has stated,
"The notion that an insurer may be held liable for the breach of its duty of 'good faith' in defending and settling claims over which it exercises exclusive control on behalf of its insured is an enduring principle, well settled in this State's jurisprudence (see, Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, supra; Best Bldg. Co. v Employers' Liab. Assur. Corp., 247 NY 451, 453; Brassil v Maryland Cas. Co., 210 NY 235, 241)."
(Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 452 [1993]).
While in Pavia, the Court of Appeals ultimately held that because the insured had not shown more than ordinary negligence, the insured could not prevail (id. at 456), here, by contrast, the insured is relying on more than mere negligence. Photocircuits is asserting what amounts to a conscious disregard by the Fund of its basic contractual obligations to perform reasonably. To view these facts otherwise would be myopic. If one were to accept the Fund's position, there would no incentive for the Fund to control the insured's exposure to claims. Because of the mechanics of the RRP plan, the result would simply be: if the Fund pays more, it just passes it on to the insured as retrospective premiums. Further, the Fund has an important role in protecting against runaway and fraudulent claims. If the Fund does not properly investigate a claim or fails to invoke the statutory protections given to employers, the Board cannot make fully informed decisions and sort out the real claims from the inflated and false ones. It is uncontested that the Fund paid benefits to a known impostor, and that it failed to apply for benefits under Workers' Compensation Law § 15(8), appear at hearings and timely file appeals. The facts here are extreme, and our ruling reversing the grant of summary judgment in favor of the Fund should not be considered as relaxing the rule articulated in Glen Haven and J.D.G.S. However, in this case there is clearly a question of fact as to whether the Fund met its basic obligation to perform its duties to Photocircuits under the Policy in a reasonable manner. [*9]
Accordingly, the judgment of the Supreme Court, New York County (Carol R. Edmead, J.), entered November 20, 2003, awarding the amount of $466,100 in favor of plaintiff Commissioners of the State Insurance Fund, and bringing up for review the order (denominated a judgment), same court and Justice, entered October 9, 2003 (as amended by the so-ordered stipulation dated on or about October 27, 2003), which, inter alia, granted plaintiff's motion for summary judgment and denied defendant's motion for summary judgment, should be reversed, on the law, without costs, the judgment vacated, and both the motion and cross motion for summary judgment denied. Appeal from the aforesaid order should
be dismissed, without costs, as subsumed in the appeal from the judgment.
ENTERED: JUNE 9, 2005
Footnote 1:In 1984 the Legislature added language to § 1 of the statute to make it gender neutral. In 1978 the Legislature also changed the language throughout the article from "workman" for "worker" and "workmens" to "workers" (Minkowitz, Practice Commentaries, McKinney's Cons Laws of NY, Book 64, Workers' Compensation § 1, at 5 [2005]).
Footnote 2:"employer" is defined at Workers' Compensation Law § 2(3).
Footnote 3:"employee" is defined at Workers' Compensation Law § 2(4).
Footnote 4:If an employer does not provide workers' compensation insurance, an employee injured on the job has the option to either claim compensation under the statute, or bring an action for damages (Workers' Compensation Law § 11). If the employee opts for such an action, he or she need not "plead or prove freedom from contributory negligence nor may the [employer] plead as a defense that the injury was caused by the negligence of a fellow servant nor that the employee assumed the risk of his or her employment, nor that the injury was due to the contributory negligence of the employee" (id.).
Prudential Property and Casualty v. Ambreau
Appeal from an order of the Supreme Court, Wayne County (Dennis M. Kehoe, A.J.), entered December 8, 2003 in a proceeding pursuant to CPLR 7503 (b). The order, insofar as appealed from, denied petitioner's application for a permanent stay of arbitration.
CONNORS & CORCORAN, LLP, ROCHESTER (STEPHANIE A. MC NINCH OF COUNSEL), FOR PETITIONER-APPELLANT.
FOLEY AND FOLEY, PALMYRA (JAMES F. FOLEY OF COUNSEL), FOR RESPONDENTS-RESPONDENTS DAVID W. AMBEAU AND MONICA L. AMBEAU.
It is hereby ORDERED that the order insofar as appealed from be and the same hereby is unanimously reversed on the law without costs and the application is granted.
Memorandum: We agree with petitioner that Supreme Court erred in denying its application for a permanent stay of arbitration. We reject at the outset the contention of David W. Ambeau and Monica L. Ambeau (respondents) that the appeal should be dismissed because the denial of the application was without prejudice (see Allen v General Elec. Co., 11 AD3d 993, 994; Gruet v Care Free Hous. Div. of Kenn-Schl Enters., 305 AD2d 1060). With respect to the merits, we conclude that petitioner established that respondents violated the terms of the policy by failing to obtain its written consent to settle with the tortfeasor prior to asserting a claim for supplementary uninsured/underinsured motorist coverage (see Matter of Allstate Ins. Co. [Brown], 288 AD2d 955; Friedman v Allstate Ins. Co., 268 AD2d 558; State Farm Mut. Auto. Ins. Co. v Taglianetti, 122 AD2d 40, 40-41; see also Weinberg v Transamerica Ins. Co., 62 NY2d 379, 381-382), and respondents failed to raise a triable issue of fact with respect thereto.
Respondents failed to preserve for our review their contention that petitioner failed to disclaim coverage in a timely manner based on respondents' settlement with the tortfeasor without petitioner's consent (see Matter of Aetna Cas. & Sur. Co. v Scirica, 170 AD2d 448, 448-449, lv denied 78 NY2d 851). Finally, respondents' further contention that petitioner failed to comply with discovery ordered by the court after issuance of the order on appeal herein is based upon matters outside the record on appeal and thus, likewise, is not properly before us (see Stevenson v City of Rome [appeal No. 1], 237 AD2d 946, appeal dismissed 90 NY2d 844). [*2]
Entered: June 10, 2005
Appeal from an order of the Supreme Court, Ontario County (Frederick G. Reed, A.J.), entered November 9, 2004. The order denied that part of the motion of plaintiff Dominic J. Santilli seeking to dismiss the second, sixth, seventh and eighth affirmative defenses.
Memorandum: In an action to recover indemnification for a fire loss under a homeowner's insurance policy, Dominic J. Santilli (plaintiff) appeals from an order that denied that part of his motion seeking to dismiss the second, sixth, seventh and eighth affirmative defenses raised in the answer of defendant, Allstate Insurance Company (Allstate). Plaintiff moved to dismiss the affirmative defenses pursuant to CPLR 3211 (b) and therefore bore the burden of establishing that the affirmative defenses were without merit as a matter of law (see Pellegrino v Millard Fillmore Hosp., 140 AD2d 954, 955). Plaintiff failed to meet his burden, and thus that part of the motion was properly denied (see Connelly v Warner, 248 AD2d 941, 943; Triple Crown Auto v Utica Mutual Ins. Co., 233 AD2d 436).
We reject the contention of plaintiff that the affirmative defenses were barred by Insurance Law § 3404. Section 3404 (e) sets forth the form of the standard fire insurance policy of the State of New York, which contains a provision requiring "[t]he insured" to submit to examinations under oath, and plaintiff contends that his roommate is not an "insured" under the policy. In the affirmative defenses, Allstate alleges that plaintiff's roommate is an "additional insured" under the policy and that plaintiff, either personally or through the actions of his representatives, impeded Allstate's investigation of the claim. Consistent with the statute, a fire insurance policy may require that an insured cooperate with the insurer in the investigation of a fire (see Dyno-Bite, Inc. v Travelers Cos., 80 AD2d 471, 473, appeal dismissed 54 NY2d 1027; see also Somerstein Caterers of Lawrence v Insurance Co. of State of Pa., 262 AD2d 252; Scher v Republic Ins. Co., 226 AD2d 521). Defendant may therefore plead affirmative defenses asserting that plaintiff failed to cooperate by causing or contributing to his roommate's refusal to [*2]testify.
New York Mutual v. Baumgartner
Appeal from a judgment (denominated order) of the Supreme Court, Erie County (John F. O'Donnell, J.), entered June 17, 2003. The judgment denied plaintiff's motion, granted the cross motion of defendant Mark Mach and declared that plaintiff must defend and indemnify defendants John Baumgartner, individually, and John Barmgartner, doing business as Rainbow Enterprises, and Paul Goldsmith, also known as Paul Baumgartner, in an underlying action.
SLIWA & LANE, BUFFALO (KEVIN A. LANE OF COUNSEL), FOR PLAINTIFF-APPELLANT.
COLLINS, COLLINS & MAXWELL, LLP, BUFFALO (ALAN D. VOOS OF COUNSEL), FOR DEFENDANT-RESPONDENT MARK MACH. It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously modified on the law by granting the motion in part, denying the cross motion, vacating the declaration, and granting judgment in favor of plaintiff as follows: It is ADJUDGED AND DECLARED that plaintiff is not obligated to defend or indemnify defendants Mary Beth Baumgartner and Paul Goldsmith, also known as Paul Baumgartner, in the underlying action
Memorandum: Plaintiff commenced this action seeking a judgment declaring that it has no obligation to defend or indemnify the defendants in the underlying action brought by Mark Mach, a named defendant herein. Mach commenced the underlying action seeking damages for injuries he sustained on August 12, 1997 when he fell from a ladder while removing trees on property allegedly owned by John Baumgartner, individually, and John Baumgartner, doing [*2]business as Rainbow Enterprises (Baumgartner), also a named defendant herein. Baumgartner owns two adjacent parcels, only one of which, i.e., the parcel located at 5661 Clinton Street, is insured by plaintiff. It is undisputed that plaintiff did not receive notice of Mach's accident until late September 2000, after Mach commenced the underlying action. By letter dated November 9, 2000, plaintiff disclaimed coverage to Baumgartner on the grounds that, inter alia, Baumgartner failed to comply with the policy provision requiring that notice of the occurrence be given "as soon as practicable" and failed to forward to plaintiff a letter he had received from Mach's attorney in approximately November 1999. Also by letter dated November 9, 2000, plaintiff disclaimed coverage to, inter alia, Mary Beth Baumgartner (M. Baumgartner), Paul Goldsmith, also known as Paul Baumgartner (Goldsmith), and Golden Crescent Inc., doing business as Kuznik's Casino, Golden Crescent Inc., doing business as Kuznik's House of Blues, and Golden Crescent Inc., doing business as Belle Starr (collectively, Golden Crescent), all of whom are named defendants herein. The stated grounds for that disclaimer were that those defendants were not insureds under the policy, they did not provide timely notice of the occurrence, and they did not timely forward "suit papers" to plaintiff. By letter dated December 29, 2000, plaintiff disclaimed coverage to Baumgartner on the additional ground that the accident did not occur on property insured by plaintiff.
Plaintiff commenced this declaratory judgment action and, in his answer, Mach asserted as a counterclaim that plaintiff is obligated to indemnify Baumgartner "and/or" Goldsmith "and/or" the other defendants. Plaintiff thereafter moved for a default judgment against Baumgartner, M. Baumgartner, Goldsmith, and Golden Crescent; for partial summary judgment dismissing the affirmative defenses of Mach and defendant Patricia Frye, who holds the mortgage on the property where the accident occurred; and for "leave to serve" defendant Leon R. Kuznik. Mach cross-moved for summary judgment seeking a declaration that plaintiff must indemnify Baumgartner and Goldsmith. Supreme Court denied plaintiff's motion and granted Mach's cross motion, declaring that plaintiff must defend and indemnify Baumgartner and Goldsmith in the underlying action. Plaintiff appeals.
Plaintiff contends that it is not required to defend or indemnify Baumgartner because Baumgartner failed to provide notice of the occurrence to plaintiff or its agent as soon as practicable. We reject that contention. Although plaintiff did not receive notice of the occurrence until after Mach commenced his action, Goldsmith submitted an affidavit wherein he averred that he told Ken Ross of The Kreiner Company, Inc. (Kreiner) of the occurrence shortly after the accident. Although in the proceedings before the motion court plaintiff argued that Kreiner was the agent of Baumgartner, we note that plaintiff has admitted in its motion papers in support of its motion to withdraw its brief and serve an amended brief in this appeal that, at least at one point in time, there was an agency relationship between Kreiner and plaintiff. The insurance policy lists Kreiner as "AGENT" and allowed Baumgartner to give the required notice of the occurrence to "our agent." Baumgartner thus complied with the policy requirement that he give notice of the occurrence as soon as practicable. Plaintiff contends that there is an issue of fact whether Goldsmith informed Ross of the accident, but plaintiff failed to submit any evidence contradicting Goldsmith's sworn statement.
We agree with plaintiff, however, that there is an issue of fact whether Baumgartner received any legal papers prior to receipt of the summons and complaint and thus whether he failed to comply with the requirement that he promptly forward all legal papers to plaintiff. We thus agree with plaintiff that the court erred in declaring that plaintiff must defend and indemnify Baumgartner. Pursuant to the policy, Baumgartner was required to "forward to [plaintiff] copies of all notices, demands, or legal papers received in connection with the occurrence" in a prompt manner. That additional notice requirement is a condition precedent to coverage, and the failure to comply with the provision will justify denial of coverage (see Fisher v Hanover Ins. Co., 288 [*3]AD2d 806, 806-807; Steadfast Ins. Co. v Sentinel Real Estate Corp., 283 AD2d 44, 54; Almalabeh v Chelsea 19 Assoc., 273 AD2d 261, 262). Here, Baumgartner informed plaintiff that he did not learn until October 2000 that Mach intended to pursue a claim against him. However, Goldsmith stated to plaintiff that, a year prior to October 2000, or perhaps in May 2000, Baumgartner received a letter from a law firm regarding Mach's accident. There is thus an issue of fact whether Baumgartner complied with that condition precedent.
Furthermore, the court erred in declaring that plaintiff must defend and indemnify Baumgartner because there is a further issue of fact whether Mach was injured on property insured by plaintiff. At his deposition, Mach could not state precisely where the accident occurred and it is undisputed that, although plaintiff insures Baumgartner's property at 5661 Clinton Street, Baumgartner also owns an adjacent wooded parcel. In his complaint, Mach alleged that Baumgartner "was the owner of the building at 5661 Clinton Street and all adjacent property at that address hereinafter referred to as the construction site" and alleged that he was injured at the construction site. The policy provides that plaintiff will pay for bodily injury caused by an occurrence, and it further provides that "[t]he bodily injury or property damage must result from the ownership, maintenance or use of the insured premises, and operations necessary or incidental to your business and conducted from the insured premises." Under the exclusions portion, the policy provides that plaintiff will not pay for "bodily injury or property damage arising out of operations on or from premises (other than the insured premises) owned by, rented to or controlled by the named insured." Plaintiff relied on both of those policy provisions in its disclaimer letter of December 29, 2000. We agree with plaintiff that, pursuant to the terms of the policy, there is no coverage if the accident occurred on that portion of Baumgartner's property that was not insured under the policy, and there is an issue of fact whether the accident occurred on the insured property.
We reject Mach's contention that plaintiff waived any reliance on the policy provisions regarding the covered premises because its disclaimer was untimely as a matter of law. An insurer need not issue a disclaimer "when a claim falls outside the scope of the policy's coverage portion," but a disclaimer is necessary "when denial of coverage is based on a policy exclusion without which the claim would be covered" (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188-189). Here, the policy provision that the injury must result from the ownership, maintenance or use of the insured premises and operations conducted from the insured premises necessarily excludes this incident if it occurred outside the insured premises. Plaintiff need not rely on the exclusion that plaintiff will not pay for bodily injury arising out of operations on or from premises, other than the insured premises, owned by the named insured (cf. Markevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648-649). Rather, the exclusion simply reinforces the provision that plaintiff will pay only for those injuries resulting from operations conducted from the insured premises. Thus, contrary to Mach's contention, this is not a situation in which the claim would be covered but for the policy exclusion.
Although plaintiff contends that it has no obligation to defend or indemnify any of the defendants, it does not specifically address Frye and Kuznik in its brief on appeal and thus is deemed to have abandoned its appeal with respect to those defendants (see Ciesinski v Town of Aurora, 202 AD2d 984). With respect to Golden Crescent, M. Baumgartner, and Goldsmith, plaintiff contends that it is entitled to a declaration against those parties based on their default. Plaintiff is not entitled to a default judgment against Golden Crescent because "[a] default judgment may not be granted against a nonappearing corporation without proof of compliance with the additional service requirements of CPLR 3215 (g) (4) (i)" (Ocuto Blacktop & Paving Co. v Trataros Constr., 277 AD2d 919, 920), and there was no such proof of compliance here. Plaintiff is entitled to a default judgment against M. Baumgartner and Goldsmith only if it establishes that it is entitled to the declaration sought with respect to them (see Merchants Ins. [*4]Co. of N. H. v Long Is. Pet Cemetery, 206 AD2d 827, 828). Here, plaintiff established its right to a declaration that it has no obligation to defend or indemnify those two defendants inasmuch as they are not named insureds under the policy, and thus plaintiff established its entitlement to a default judgment with respect to them.
We therefore modify the judgment accordingly.
United States Fire Insurance Company v. American Home Assurance Company
Order, Supreme Court, New York County (Leland DeGrasse, J.), entered on or about May 24, 2004, which, to the extent appealed from, granted defendant's motion to dismiss the complaint for failure to state a cause of action, unanimously modified, on the law, the first cause of action, for declaratory relief, reinstated, and otherwise affirmed, without costs.
Giving the complaint a liberal construction and every favorable inference (Leon v Martinez, 84 NY2d 83, 87-88 [1994]), and accepting that the question under CPLR 3211(a)(7) is not whether plaintiff has clearly stated a cause of action but whether it has one in the first place (Guggenheimer v Ginzberg, 43 NY2d 268, 275 [1977]), plaintiff has sufficiently alleged a cause of action for a declaratory judgment as to contribution
from a co-insurer (see National Union Fire Ins. Co. of Pittsburgh, Pa. v Hartford Ins. Co. of Midwest, 248 AD2d 78, 85 [1998], affd 93 NY2d 983 [1999]). Plaintiff has alleged that it paid the loss incurred by its insured, that defendant is a co-insurer obligated to pay a pro rata share, and that defendant has failed and refused to paid the amount it owes. Defendant has not established as a matter of law, through documentary evidence or otherwise, that its policy with the insured did not cover the underlying claims.
However, the court properly dismissed plaintiff's claims for breach of contract, estoppel and quantum meruit. The breach of contract claim is merely a restatement of its declaratory judgment claim. Plaintiff was not in privity with defendant and its insured in the insurance policy, so plaintiff's proper remedy is to seek declaratory judgment for contribution. With regard to the estoppel claim, plaintiff was required to provide a defense and indemnification to its insured, regardless of any agreement between the insuring parties, and thus it cannot assert any detrimental reliance on that alleged agreement (see Matter of Mendez v Reynolds, 248 AD2d 62, 65-66 [1998]). To the extent plaintiff asserts that defendant is estopped from denying coverage to its insured because it undertook a defense, the documentary evidence conclusively establishes that defendant undertook such defense with a reservation of rights (see Prestige Caterers v Kaufman, 290 AD2d 295 [2002]).
Appalachian Insurance Company v. General Electric
Under the subject policies, the availability of excess coverage is triggered by an "occurrence," defined as "an accident, event, happening or continuous or repeated exposure to conditions . . . which results in personal injury, sickness, disease or death." For the purpose of determining the attachment point of the excess coverage, the motion court correctly held that such clause is not ambiguous; that the operative "occurrence" is the last link in the causal chain leading to liability, i.e., the exposure of each individual claimant to asbestos contained in the turbines manufactured by the insured, rather than earlier events creating the potential for future injury, i.e., the insured's design, manufacture and sale of the turbines without warnings about asbestos; and that, accordingly, individual claims could not be aggregated (see Metropolitan Life [*2]Ins. Co. v Aetna Cas. & Sur. Co., 255 Conn 295, 765 A2d 891 [2001]). We have considered the insured's other arguments and find them unavailing.
Manceri v. Michael M. Bowe
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Berler, J.), dated March 31, 2004, which granted the motion of the defendant Michael M. Bowe and the separate motion of the defendants Ted R. Niranjan and David Niranjan for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The defendants failed to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). Although an orthopedist's report submitted by the defendants Ted R. Niranjan and David Niranjan [*2]and adopted by the defendant Michael M. Bowe specified the degrees of the range of motion the orthopedist found in the plaintiff's cervical spine, the orthopedist failed to compare those findings to the normal range of motion, thereby leaving the court to speculate as to the meaning of those figures. Thus, the proof failed to objectively demonstrate that the plaintiff did not sustain a permanent consequential or significant limitation of use of his cervical spine as a result of the subject accident (see Aronov v Leybovich, 3 AD3d 511, 512; Claude v Clements, 301 AD2d 554, 555). Since the defendants failed to meet their initial burden of establishing a prima facie case, it becomes unnecessary to consider whether the plaintiff's papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538; Mariaca-Olmos v Mizrhy, 226 AD2d 437).
Accordingly, the Supreme Court erred in granting the motion of the defendant Michael M. Bowe and the separate motion of the defendants Ted R. Niranjan and David Niranjan for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
Teodoru v. Conway Transport Service
In an action to recover damages for personal injuries, etc., the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Grays, J.), dated November 19, 2003, as granted the separate motions of the defendants Conway Transport Service, Inc., and Franklin Crane, and the defendant Juan C. Quintero, for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff Michael Teodoru did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The defendants made a prima facie showing that the plaintiff Michael Teodoru (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The defendants' examining orthopedist and neurologist both reported that the plaintiff had no disability, [*2]and that he was able to perform all of his normal activities of work and daily living. The defendants' remaining evidence, including an affirmed report by their radiologist, and the plaintiff's own deposition testimony and medical records, also supported a finding that the plaintiff did not sustain a serious injury (see Nozine v Sav-On Car Rentals, 15 AD3d 555; Sims v Megaris, 15 AD3d 468).
In opposition, the affirmation of the plaintiff's physician was insufficient to raise a triable issue of fact. No explanation or discussion was made for the lapse of over 2½ years between the physician's last examination of the plaintiff in October 2000 and the re-examination in July 2003 (see Pommells v Perez, NY3d [Apr. 28, 2005]; Jimenez v Kambli, 272 AD2d 581, 582; Smith v Askew, 264 AD2d 834). Moreover, while the physician indicated that the plaintiff had restrictions of range of motion in his cervical spine, he failed to set forth the objective tests that he used to arrive at this conclusion (see Kauderer v Penta, 261 AD2d 365, 366).
Finally, the plaintiff failed to demonstrate that he was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days immediately following the accident as a result thereof (see Sainte-Aime v Ho, 274 AD2d 569, 570; Jackson v New York City Tr. Auth., 273 AD2d 200, 201; Greene v Miranda, 272 AD2d 441, 442; Arshad v Gomer, 268 AD2d 450, 450-451; Bennet v Reed, 263 AD2d 800, 801).
Khan v. Hamid
Marshall and Bellard, Garden City, N.Y. (Marshall D. Sweetbaum
In an action to recover damages for personal injuries, the defendants Shoaib Hamid and Mogilboin Taxi, Inc., appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Hubsher, J.), dated May 18, 2004, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
The examining physician of the defendants Shoaib Hamid and Mogilboin Taxi, Inc. (hereinafter the defendants), submitted an affirmed medical report setting forth the results of his examination of the plaintiff. He concluded that the plaintiff had recovered from his injuries, had no disabilities, and was able to perform all of his normal work and daily living activities. Together with the plaintiff's deposition testimony and medical records submitted by the defendants with their motion, this evidence was sufficient to make a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Nozine v Sav-On Car Rentals, 15 AD3d 555; Sims v Megaris, 15 AD3d 468). The affirmation of the plaintiff's examining physician, on the other hand, was insufficient to raise a triable issue of fact. The affirmation was [*2]clearly based upon the plaintiff's subjective complaints of pain (see Scheer v Koubek, 70 NY2d 678; Barrett v Howland, 202 AD2d 383; LeBrun v Joyner, 195 AD2d 502), made at an examination held after an unexplained, approximately three-year lapse in time since the conclusion of the original medical treatments (see Pommells v Perez, NY3d [Apr. 28, 2005]; Jiminez v Kambi, 272 AD2d 581; Smith v Askew, 264 AD2d 834), and merely parroted language designed to tailor the claim to meet statutory requirements (see Giannakis v Paschilidou, 212 AD2d 502; Powell v Hurdle, 214 AD2d 720).
Moreover, there was no competent medical evidence to show that the plaintiff was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days as a result of the subject accident (see Sainte-Aime v Ho, 274 AD2d 569; Jackson v New York City Tr. Auth., 273 AD2d 200; Greene v Miranda, 272 AD2d 441).
Accordingly, the defendants were entitled to summary judgment in their favor dismissing the complaint insofar as asserted against them.
Great Canal Realty v. Seneca Insurance
The order of the Appellate Division should be reversed, with costs, defendant's motion for summary judgment granted and judgment granted declaring that defendant Seneca [*2]Insurance Company is not required to defend and indemnify Great Canal Realty Corp. in the underlying action. The certified question should be answered in the negative.
Where a policy of liability insurance requires that notice of an occurrence be given "as soon as practicable," such notice must be accorded the carrier within a reasonable period of time (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]). The insured's failure to satisfy the notice requirement constitutes "a failure to comply with a condition precedent which, as a matter of law, vitiates the contract" (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]). Hence, the carrier need not show prejudice before disclaiming based on the insured's failure to timely notify it of an occurrence (see id.).
We have recognized that there may be circumstances that excuse a failure to give timely notice, such as where the insured has "a good-faith belief of nonliability," provided that belief is reasonable (Security Mut. Ins. Co., 31 NY2d at 441). But we have further explained that "the insured's belief must be reasonable under all the circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence" (id.; see also White v City of New York, 81 NY2d 955, 958 [1993] [stating that, "where a reasonable person could envision liability, that person has a duty to make some inquiry"]). Additionally, the insured bears the burden of establishing the reasonableness of the proffered excuse. Under the facts and circumstances of this case, plaintiff has failed to raise a triable issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of nonliability.
On review of submissions pursuant to section 500.4 of the Rules, order reversed, with costs, defendant's motion for summary judgment granted, judgment granted declaring that defendant Seneca Insurance Company is not required to defend and indemnify Great Canal Realty Corp. in the underlying action and certified question answered in the negative, in a memorandum. Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.
Martin v. Safeco Insurance Company
Judgment, Supreme Court, New York County (Edward H. Lehner, J.), entered August 24, 2004, awarding plaintiff assignee damages against defendant insurer, and bringing up for review an order, same court and Justice, entered on or about March 10, 2004, which, upon the parties' respective motions for summary judgment, declared that defendant is obligated to satisfy the judgment entered against its insured (Schneider) and in favor of plaintiff in an underlying action for personal injuries, unanimously affirmed, without costs.
Schneider's written notice of claim advised defendant, inter alia, that he had been involved in an "altercation" with plaintiff and arrested; plaintiff's complaint against Schneider alleged, inter alia, that he sustained personal injury as a result of Schneider's negligence; defendant disclaimed coverage; and the jury in plaintiff's action against Schneider found that plaintiff's injuries were caused by Schneider's negligence. The motion court correctly held, inter alia, that the jury's finding of negligence collaterally estops defendant from presently arguing that Schneider's acts either were not a covered "occurrence" within the policy or fell entirely within policy exclusions for intentional torts and criminal acts. At least one possibility of coverage was reasonably suggested in the underlying action (see Continental Cas. Co. v Rapid Am. Corp., 80 NY2d 640, 648 [1993]), namely, that Schneider acted in self-defense. Given such a possibility, and absent a court order otherwise, defendant was under a duty to defend Schneider, and its refusal to do so collaterally estops it from attacking the judgment in plaintiff's favor or raising defenses with respect to its merits (see Ramos v National Cas. Co., 227 AD2d 250 [1996]). We have considered defendant's other arguments and find them unavailing.
ENTERED: JUNE 16, 2005 [*2]