Source: https://www.hurwitzfine.com/news/coverage-pointers-volume-vi-no-18
Timestamp: 2019-05-27 03:21:16
Document Index: 682027998

Matched Legal Cases: ['§ 3420', '§ 3420', '§ 5106', '§ 5106', '§ 3420', '§ 5102', '§ 5104', '§ 5102', '§ 5102', '§ 5102', '§ 3420', '§ 3420', '§ 3420', '§ 5106', '§ 3420', '§ 3420', '§ 5102', '§ 3420', '§ 5', '§ 3420']

Coverage Pointers - Volume VI, No. 18
4/28/05 Pommells v. Perez
No Fault Serious Injury Revisited by the Court of Appeals in a Significant Decision. When there are Gaps in Treatment, Preexisting Conditions and Intervening Medical Problems, Plaintiff has Obligation to Explain, or Else Face Dismissal.
Even where there is objective medical proof, when additional contributory factors interrupt the chain of causation between the accident and claimed injury — such as a gap in treatment, an intervening medical problem or a pre-existing condition — summary dismissal of the complaint may be appropriate. Plaintiff needs to explain gaps in treatment, relationship of post-accident medical problems and conditions and pre-existing conditions.
· Where there is a significant “gap in treatment,” a very popular description in many recent Appellate Division “Serious Injury” cases, the plaintiff has an additional burden. The Court found that “while a cessation of treatment is not dispositive — the law surely does not require a record of needless treatment in order to survive summary judgment — a plaintiff who terminates therapeutic measures following the accident, while claiming "serious injury," must offer some reasonable explanation for having done so.” However, a “plaintiff need not incur the additional expense of consultation, treatment or therapy, merely to establish the seriousness or causal relation of his injury.”
· Where there a pre-existing conditions and other later accidents and there is good evidence that plaintiff's alleged pain and injuries were related to a pre-existing condition or subsequent accident, plaintiff had the burden to come forward with evidence addressing defendant's claimed lack of causation.
· “Proof of a herniated disc, without additional objective medical evidence establishing that the accident resulted in significant physical limitations, is not alone sufficient to establish a serious injury.”
5/5/05 Tikhonova v. Ford Motor Company
Court of Appeals Exercises Diplomacy to Protect Victim Injured by Diplomat
While a diplomat enjoys immunity from civil lawsuits; the Court of Appeals has held that the statute that imposes liability on the owner of a vehicle will still apply to impose legal responsibility on the owner of a car driven by a diplomat. So, for example, if a diplomat is driving a leased vehicle and the leasing company is sued, Section 388 of the Vehicle and Traffic Law will apply even though the driver cannot be held responsible to the injured victim.
5/5/05 Walls v. Turner Construction Company,
In Certain Circumstances, Construction Manager Can Be Statutory Agent for Labor Law Section 240(1) Purposes
Yea, we know that Labor Law cases have little to do with insurance coverage but we’ve had so many inquiries about Labor Law decisions, that we sprinkle a few in from time to time, particularly when from New York’s highest court.
On the facts of this case, given (1) the specific contractual terms creating agency, (2) the absence of a general contractor, (3) construction manager’s duty to oversee the construction site and the trade contractors, and (4) the construction manager’s representative's acknowledgment that it had authority to control activities at the work site and to stop any unsafe work practices, the Court of Appeals we agreed that the Appellate Division was correct in holding Turner liable as a statutory agent of the owners under Labor Law ' 240 (1).
5//5/05 Triangle Transport, Inc. v. Markel Insurance Company
Mislaid Pleadings by Claim Administrator Sufficient Proof to Vacate Default Judgment Defendant had reasonable excuse for its failure to answer the complaint by adducing evidence, in admissible form, demonstrating that although it duly forwarded plaintiff's pleadings to its claims administrator, the pleadings were inadvertently mislaid or incorrectly filed and accordingly never assigned to counsel for handling. Defendant was unaware that the action had gone undefended until it received a notice of execution on the judgment.
5/5/05 In re Highlands Insurance Company v. Baez
DMV Records Not Sufficiently Rebutted by Insurer to Obtain Stay of UM Arbitration
Framed issue hearing related to petition to stay UM arbitration found Highlands was the insurer of the offending vehicle. First Department affirms holding petitioner made a prima facie showing of coverage with a Department of Motor Vehicle FS-25 form listing appellant as the insurer. In response, the insurer made less than an "exhaustive search" of its own records to rebut the DMV documentation which was required to shift the burden back to petitioner to produce additional evidence of coverage.
5/3/05 Brownstone Partners/AF&F, LLC, et al. v. A. Aleem Construction, Inc., et al Appellate Division, First Department
Insured’s Excuse for Not Giving Notice to Liability Carrier is Inexcusable
Although the subject comprehensive general liability policy issued by defendant required that notice be given "as soon as practicable" and plaintiffs, the owner of and general contractor at the subject work site, indisputably knew immediately after the fact that there had been a work-related accident at the work site in which a subcontractor's employee was injured, plaintiffs did not tender their defense of the underlying, ensuing action to defendant as additional insureds under the comprehensive general liability policy until nearly five months after the accident and four months after the underlying action was commenced against them. Plaintiffs' proffered excuse for failing to notify defendant sooner of the accident, namely, that they relied upon the subcontractor's assurances that the subcontractor would bear responsibility for injuries caused by the reckless conduct of its employees, was insufficient to raise any triable issue as to whether plaintiffs had a reasonable, good-faith belief in their non-liability
5/3/05 National Union Fire Insurance Co. v. The State Insurance Fund
Carrier Playing Loose and Cute With Purported Settlement Allocation Among its Insureds to Maximize “Other Insurance” Can’t Get Away With It
Insurer had several policies of insurance covering a number of defendants, including an employers liability policy covering plaintiff’s employer. It settled case, and sought to allocate all of the settlement proceeds to be paid from its employers liability policy. It then commenced a DJ action against another employer’s liability carrier, the State Insurance Fund (SIF) seeking to recover a 50% share of the settlement from the SIF. Court refused to allow it. No claim was ever made against the employer. The decision to allocate the settlement to one insured, not a party to the litigation, rather than its other insureds, parties to the litigation and against whom an award of summary judgment on liability had already been granted, was improper. In structuring the settlement to ignore its CGL policy and to allocate the payment to its Employer's Liability policy on behalf of a party against whom no claim had been made, National Union acted as a “volunteer,” the court said. It had no obligation to make a payment on behalf of Septic.
5/2/05 Lancer Insurance Company v. T.F.D. Bus Co., Inc
Disclaimer Issued After Insured Decided Against Appeal Is Timely
In this declaratory judgment action, the insured had defaulted in a personal injury lawsuit and their motion to vacate the default was denied. Lancer claimed that it had an agreement with TFD to postpone a decision on coverage under the policy. When Lancer learned TFD was not pursuing an appeal from the adverse determination, it disclaimed coverage in early February 1999. The Appellate Division upholds the jury finding that there was a postponement agreement between Lancer and TFD. Furthermore, the Court finds that the modest delay from the time Lancer learned that TFD would not be pursuing an appeal with respect to the default judgment and Lancer's disclaimer - from the last week in January 1999 to early February 1999 - was reasonable, and thus Lancer's disclaimer was timely, vitiating coverage under the subject policy.
5/2/05 Liao v. Festa
Unaffirmed Expert Proof Insufficient to Meet Serious Injury Threshold
In this threshold motion, the only category under Insurance Law 5102[d] was the “90/180” category. The plaintiffs failed to submit competent medical evidence demonstrating that they were unable to perform substantially all of their daily activities for not less than 90 of the 180 days immediately following the accident because of "a medically determined injury or impairment of a non-permanent nature” They did submit records of the plaintiffs' expert but they did not constitute competent proof on this issue because they were not affirmed. The purported "affirmations” did not meet the requirements of CPLR 2106 (affirmed to be true under the penalties of perjury).
4/29/05 Mack v. State Farm Mutual Ins. Co.
No Fault Class Action Dismissed
A few years back, in a case entitled Canastraro v State Farm Mut. Auto. Ins. Co., the Appellate Division, Fourth Department held that wording in this insurer’s No Fault policy was ambiguous and as a result, the insurer was required to afford $50,000 more per claim under a category of its No Fault coverage which was originally designed only to expand the geographical (not monetary) coverage of the policy. The lawyers who represented the plaintiffs in Canastraro then commenced this action in Supreme Court, Erie County, as a purported class action, to extend the reach of Canastraro to all New York policy holders who purchased this category of No Fault coverage from State Farm. State Farm, however, had since amended its policy language to comply with the Circular Letter issued by the NYS Insurance Department following the adopted of OBEL coverage, with intent to remove whatever ambiguity the Canastraro court had found. State Farm, moved to dismiss the lawsuit, before the plaintiff’s applied for class certification and in a very well-reason decision by Hon. Donna M. Siwek, JSC, the Court dismissed the lawsuit declaring that State Farm’s new policy language resolved the Canastraro ambiguity. A unanimous Fourth Department adopted Justice Siwek’s reasoning and affirmed the dismissal of the lawsuit.
Hurwitz & Fine, PC (Dan D. Kohane and Scott C. Billman) represented State Farm in this matter.
4/29/05 Agostinelli v. Stein
Subrogation Action Cannot be Maintained Due to Waiver by Condo Owners
Stein performed plumbing work for his sister at her condominium. The on-site property manager employed by the Condo Board had shut off the water to the building in which Michael Stein was working so that the plumbing work could be performed. For reasons not clear from the decision, a fire occurred as a result of Stein actions causing damage to several condominium units in two buildings. Actions were commenced by plaintiff insurers as subrogees. The condo bylaws provided that the unit owners "are encouraged to carry other insurance for their own benefit provided that all such policies shall contain waivers of subrogation against the ... Board ...." The court holds that while parties to an agreement may waive their insurer's right of subrogation, a waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears" (Kaf-Kaf, Inc. v Rodless Decorations, 90 NY2d 654, 660). Here, the bylaws provide for a waiver of subrogation claims for any amounts that "benefit" the unit owner, and thus the court concludes that the subrogation actions herein cannot be maintained against any of the Westage defendants by the insurers.
4/29/05 Essex Insurance Company v. Young
No Duty to Defend “Negligent Hiring” Claim Where Assault Exclusion in Policy and “But For” Assault, Injuries Would Not Have Occurred
If no cause of action would exist but for the assault, the claim is based on assault and there is an “assault exclusion,” it will apply to deny coverage. Here, the causes of action for negligent and reckless conduct in the underlying action, including those alleging, inter alia, negligent training and supervision, arise out of the alleged assault and/or battery, and thus fall within the policy exclusions
4/29/05 Weierheiser v. Hermitage Insurance Company
Remember, Injured Party Cannot Commence Declaratory Judgment Action to Challenge Insurer’s Disclaimer. For Injured Party to Test Disclaimer, It must be By Direct Action after Injured Party Obtains Judgment against Insured
although this case has an odd procedural history, the message is important. Injured part commenced a declaratory judgment action seeking a determination that the liability insurer’s disclaimer was in error. Carrier moved to dismiss, asserting that (a) injured party cannot commence a declaratory judgment action to test the validity of a disclaimer and (b) injured party’s remedy is to take judgment against insured and then commence an Insurance Law Section 3420 “direct action” against carrier to enforce the judgment. Apparently the lower court denied that motion but thereafter granted the insurer’s motion for summary judgment determining that it had no obligation to defend or indemnity. The Appellate Division reversed, agreeing the with plaintiff that he, the plaintiff as injured party, had no standing to bring the lawsuit and thus the Court had no standing to grant the insurer’s motion for declaratory relief.
4/29/05 Cardeon v. New York Central Mutual Ins. Co
Impartiality of No Fault Arbitrator Can Void No Fault Award, But Not Here
There are only a few grounds available for a court to overturn the decision of an arbitrator’s award in the No Fault arena, including bias or partiality on the part of the arbitrator. Here, the appellant claimed that the arbitrator showed bias and partiality by keeping the record open to accept later-produced evidence. The Court found that the arbitrator was acting within his authority to do so and that kind of conduct does not constitute bias.
4/28/05 Milbank Housing Development Fund v. Royal Indemnity Company
Sixty (60) Day – Unexcused -- Delay in Denying Coverage is Too Late for Liability Carrier
Plaintiff may have failed to provide timely notice of the occurrence as required by the policy, but defendant's delay of more than 60 days in disclaiming coverage was unreasonable as a matter of law (Insurance Law § 3420[d]). The grounds for a disclaimer were readily apparent, before the onset of the delay, from the documents submitted to defendant, including the summons and complaint, the incident report, and a memo from plaintiff's director indicating that plaintiff had timely notice of the occurrence and failed to report it. Accordingly, late notice defense can no longer be pursued.
4/28/05 Grimes-Carrion v. Carroll
Lack of Quantification of Range of Motion Limitations Insufficient to Meet Serious Injury
Plaintiff's cumulative submissions were insufficient to meet the serious injury threshold. Plaintiff’s expert did not quantify the alleged spinal range of motion limitations until much later after the accident. Furthermore, no other expert ever described or measured spinal limitations at any earlier date. The plaintiff offered no medical evidence to support a claim that he suffered range of motion limitation in either leg. The Court finds that although quantified range of motion limitations can alone be sufficient to demonstrate that plaintiff suffered a serious injury, these did not.
4/26/05 AIU Insurance Company v. Investors Insurance Company
Duty to Disclaim “As Soon as Reasonably Possible” Not Triggered By Request for Contribution by Co-Insurer
Investors directly insured Arnell and did not receive any notice of the underlying accident for five years. AIU also insured Arnell under a "wrap-up" policy and undertook the costs of defense of the personal injury lawsuit. AIU made a demand to Investors to co-insure Arnell after four years of litigation. The Court held that the purpose of the notice requirements under Insurance Law § 3420(d) was “to protect the insured, the injured person, and any other interested party who has a real stake in the outcome' from prejudice resulting from a belated denial of coverage". The protection under this statute was inapplicable to a co-insurer's request for contribution especially in light of the fact that AIU did receive notice of the accident, conducted an investigation, undertook the defense of the lawsuit and managed the defense on its own for those four years.
4/25/05 Danna Construction Corp v. Utica First Insurance Company
78 Days Disclaimer Delay Unreasonable as a Matter of Law
The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage and it is the responsibility of the insurer to explain its delay. An unsatisfactory explanation will render the delay unreasonable as a matter of law. Here, the insurer disclaimed coverage 78 days after receiving notice of the facts upon which its disclaimer was based. The Appellate Division upholds the Lower Court’s determination that this delay was unreasonable as a matter of law.
4/25/05 New York and Presbyterian Hospital v. Eagle Insurance Company
Insurer Cannot Raise Untimeliness When Response Time for Verifications Not Given
Despite the verification of the claim for no-fault medical payments was provided long after the 180-day period within which written proof of claim must be submitted under 11 NYCRR 65.12), the defendant was precluded from asserting the defense of the hospital's untimeliness in this action pursuant to Insurance Law § 5106(a). The Court finds that the defendant was
precluded from asserting the defense of the hospital's untimeliness pursuant to Insurance Law § 5106(a) as the defendant's requests for verification, sent by mail, did not demand or require a response within any identified number of days.
4/25/05 Sears, Roebuck and Co v. Zurich North America Insurance Company
Party Promised but Not Provided Coverage, Has No Standing to Commence Declaratory Judgment Action Against Contracting Party’s Liability Carrier Until it has Judgment Against Insured
Sears was apparently promised insured status under a contract but the policy did not provide that which was promised. There was an indemnity agreement running. It commenced a declaratory judgment action seeking to compel the contractor’s carrier to defend it. The Court found that Sears could not maintain such a lawsuit. It was not an insured, and was only an “incidental” rather than an “intended” beneficiary under the policies. As an incidental beneficiary, Sears could not enforce the policies against Zurich until it satisfied the requirements of Insurance Law § 3420 (injured party must first obtain a judgment against the tortfeasor, serve the insurance company with a copy of the judgment and await payment for 30 days). Therefore, Zurich was not obligated to defend and indemnify Sears in the seven underlying actions.
4/25/05 In the Matter of AIU Insurance Company v. Nunez
Question of Fact as to Whether Collision Staged Supports Denial of Permanent Stay
This was a CPLR Article 75 proceeding to permanently stay arbitration of an uninsured motorist claim. Petitioner made a prima facie case for permanent stay of arbitration by submitting the police accident report and the DMV record that indicated State Farm as the insurer of the alleged offending vehicle at the time of the accident. But, AIU raised issues of fact as to whether the collision was deliberate or intentional, and whether the claimants participated in staging the collision, in which case the claim sought to be arbitrated would not be covered. The Court remits to the Supreme Court for a framed-issue hearing as to whether the collision was intentional and/or staged.
4/25/05 Harleysville Insurance Company v. Rosario
Failure to Raise a Defense in the Original Petition Fatal to Permanent Stay
Another Article 75 petition to permanently stay arbitration of a UM claim, with cautionary twist. Here, the Lower Court grants the permanent stay on the grounds that Rosario failed to demonstrate the existence of insurance coverage with Harleysville. Unfortunately, Harleysville raised this for the first time in their reply papers, not their original petition. The Court reiterates the age old procedural rule : "The function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of, or new grounds for the motion". These new grounds should not be considered by the Lower Court and as that was the basis of the grant of permanent stay, the proceeding to stay is dismissed.
4/29/05 Romano v. Mercury Insurance
Insolvent Insurer Triggers Claimant’s Uninsured Motorist Coverage
Plaintiff was rear-ended by motorist who was insured by Legion Insurance Company. Legion was subsequently ordered by the state of Pennsylvania into “rehabilitation” due to severe financial under funding. Plaintiff then made a claim to her own auto insurer for her uninsured motorist (“UM”) benefits. Her insurer denied the claim. Court held since Legion was insolvent this triggered UM benefits.
4/26/05 White v. Insurance Company of PA
Since The Injured Plaintiff’s Employer Had Not Proven Financial Responsibility Pursuant To Ohio Law, The Employer’s Partial Fronting Arrangement Did Not Make The Employer A Self-Insurer
Plaintiff, who was injured during the scope of his employment, filed an action seeking a declaration that he was entitled to uninsured/underinsured motorist coverage under two insurance policies issued to his employer by the defendant. The Sixth Circuit agreed that plaintiff was entitled to such coverage under the automobile insurance policy, but not under the excess indemnity policy. The court held that since the employer had not proven financial responsibility pursuant to Ohio law, the employer’s partial fronting arrangement did not make the employer a self-insurer. Therefore, provision of the then existing Ohio law regarding uninsured/underinsured motorist coverage applied to the plaintiff and he was entitled to uninsured/underinsured motorist coverage. The uninsured/underinsured motorist coverage only applied to automobile or motor vehicle insurance policies, which the excess indemnity policy was not.
Submitted by: Bruce D. Celebrezze and Serena Hunn [Sedgwick, Detert, Moran & Arnold LLP]
4/22/05 Asplundh Tree Expertt Co. v. Pacific Employers Insurance
Court Retains Jurisdiction Even When No Coverage
Insurer brought a declaratory judgment action to determine its motor vehicle liability policy obligations after funding a settlement under a reservation of rights in a tort action brought against the policyholder by an injured employee in another forum. Trial court properly determined that it retained jurisdiction after settlement of the underlying tort action even where it determined that the insurer was not liable on the policy. The trial court properly directed the policyholder to refund to the insurer the amount tendered to fund the settlement.
4/22/05 Forry v. Scotsdale Ins. Co.
Florida Court of Appeals, Second Appellate District
Even if a Violation of a Nursing Home Resident’s Rights Can be a Continuing Tort, No Duty to Defend or Indemnify Where Alleged Tort Did Not Begin Until Expiration of the Policy Period
Forry, as the personal representative of a decedent’s estate, filed an action against the nursing home in which the decedent resided from 1994 until her death in February 2001. The complaint alleged causes of action for wrongful death and violation of a nursing home resident’s rights. Scottsdale Insurance Company (“Scottsdale”) had issued a policy of commercial general liability and professional liability insurance to the nursing home, which was effective from July 23, 1994 to July 23, 1995. After receiving Forry’s complaint, Scottsdale filed a declaratory relief action to determine its obligations, if any, under the policy. Forry’s allegations state that the decedent first became a resident of the nursing home in 1994, but the allegations do not describe any bodily injury or relevant medical incidents occurring in that time period. Further, Forry’s responses to interrogatories identify that relevant incidents occurred from 1996 to 2001. As such, the court affirmed that Scottsdale was under no duty to defend or indemnify the nursing home, because even if a violation of a nursing home resident’s rights can be classified as a continuing tort, any tort in this matter did not occur or begin until after the expiration of the Scottsdale policy.
Submitted by: Bruce D. Celebrezze and Michelle M. Hancharik [Sedgwick, Detert, Moran & Arnold LLP]
In 1973 the Legislature enacted the "Comprehensive Automobile Insurance Reparations Act" (see L 1973, ch 13) — commonly known as the No-Fault Law — with the objective of promoting prompt resolution of injury claims, limiting cost to consumers and alleviating unnecessary burdens on the courts (see Governor's Mem Approving L 1973, ch 13, 1973 McKinney's Session Laws of NY, at 2335). Every car owner must carry automobile [*2]insurance, which will compensate injured parties for "basic economic loss" occasioned by the use or operation of that vehicle in New York State, irrespective of fault (Insurance Law §§ 5102 [a], 5103). Only in the event of "serious injury" as defined in the statute, can a person initiate suit against the car owner or driver for damages caused by the accident (Insurance Law § 5104 [a])[FN1].
No-Fault thus provides a compromise: prompt payment for basic economic loss to injured persons regardless of fault, in exchange for a limitation on litigation to cases involving serious injury (see Montgomery v Daniels, 38 NY2d 41, 50-51 [1975]). Abuse nonetheless abounds. From 1992 to 2000, reports of No-Fault fraud rose more than 1700% and constituted 75% of all automobile fraud reports received by the Insurance Department in 2000 (see Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854 [2003]; see also State Farm Mutual Auto. Ins. Co. v Mallela, 4 NY3d [2005]; 2005 NY Slip Op 02416). There is, similarly, abuse of the No-Fault Law in failing to separate "serious injury" cases, which may proceed in court, from the mountains of other auto accident claims, which may not. That "basic economic loss" has remained capped at $50,000 since 1973 provides incentive to litigate.
In the context of soft-tissue injuries involving complaints of pain that may be difficult to observe or quantify, deciding what is a "serious injury" can be particularly vexing. Additionally, whether there has been a "significant" limitation of use of a body function or system (the threshold statutory subcategory into which soft-tissue injury claims commonly fall) can itself be a complex, fact-laden determination. Many courts have approached injuries of this sort with a well-deserved skepticism. Indeed, failure to grant summary judgment even where the evidence justifies dismissal, burdens court dockets and impedes the resolution of legitimate claims. As a hint of the dimension of the situation, in less than three years, Toure v Avis Rent A Car Sys. (98 NY2d 345 [2002]) — addressing similar issues — already has been cited more than 500 times in published decisions of our trial and appellate courts (representing only a small portion of the trial court activity). [*3]
In all three cases we decide today, as in Toure, plaintiffs claim to have suffered soft-tissue injuries — herniated discs — caused by car accidents, challenging us once again to articulate criteria that will enable serious injury claims to proceed yet prevent abuses that clog the courts and harm the public. We conclude that, even where there is objective medical proof, when additional contributory factors interrupt the chain of causation between the accident and claimed injury — such as a gap in treatment, an intervening medical problem or a pre-existing condition — summary dismissal of the complaint may be appropriate.
Pommells v Perez
Plaintiff Anthony Pommells was in a three-car accident on March 15, 1998. Days later, on his lawyer's referral, plaintiff visited the North Bronx Medical Center where he had a neurological exam and began a course of daily physical therapy, which he continued for six months, while he remained out of work. Plaintiff initiated suit on June 24, 1998, alleging that he suffered serious injury under Insurance Law § 5102 (d)[FN2]. Plaintiff sought no further medical treatment or review of his alleged accident-related injury for more than three years, when, on January 11, 2002, he consulted with the physician who furnished a report in this case.
Defendants sought summary judgment dismissing plaintiff's claim for failing to raise a triable issue of fact as to the existence of serious injury. In support of their motion, defendants submitted three doctors' affidavits. Neurologist Michael J. Carciente, based on an October 22, 2001 examination of plaintiff and plaintiff's medical records (including the unsworn MRI and consideration of plaintiff's kidney problem), opined that there was "no evidence of a cervical or a lumbosacral spine radiculopathy" and "no evidence of a causally related neurologic disability." Radiologist Steven Brownstein, after also reviewing plaintiff's unsworn MRI, reported that plaintiff suffered "no diffuse bulge or focal disc protrusion" and stated that he could [*4]detect only a muscle spasm in plaintiff. Radiologist Richard Rafal reported plaintiff suffered "[n]o gross acute pathology."
In response, plaintiff submitted an unsworn report by Dr. Leonid Slutsky [FN3] from the March 1998 examination, which, based on a stated series of range of motion tests, revealed limitations in mobility and recommended a course of follow-up medical treatment, including physical therapy, chiropractic treatment, painkilling medication and neurological examinations. Plaintiff also offered a May 11, 1998 unsworn report by Dr. Robert Kronenberg relying on somatosensory evoked potentials (or SSEPs), and which, based on nerve stimulations and recorded limitations in movement, recommended physical therapy, but did not opine as to injury or causation.
We first address the "gap in treatment" noted by the trial court and Appellate Division — the period of time between the end of plaintiff's physical therapy in 1998 and his visit to Dr. Rose to obtain an expert medical report in 2002 [FN4]. Defendants argue that the "gap" both [*5]renders the medical expert's later opinion on causation speculative and places into question the seriousness of the injuries themselves.
In the present case, the so-called gap in treatment was, in reality, a cessation of all treatment. Plaintiff ended his physical therapy six months after the accident and sought no other treatment until years later, when he visited Dr. Rose in connection with this case. While a cessation of treatment is not dispositive — the law surely does not require a record of needless treatment in order to survive summary judgment — a plaintiff who terminates therapeutic measures following the accident, while claiming "serious injury," must offer some reasonable explanation for having done so. Here, plaintiff provided no explanation whatever as to why he failed to pursue any treatment for his injuries after the initial six-month period, nor did his doctors (see Franchini v Palmieri, 1 NY3d 536 [2003]).
Further, plaintiff failed to address the effect of his kidney disorder on his claimed accident injuries. Dr. Rose's report — the only competent evidence supporting plaintiff's response to the summary judgment motion (see Grasso v Angerami, 79 NY2d 813 [1991]) — in fact noted the kidney surgery in plaintiff's medical history and then relied on that medical history in opining as to causation. Plaintiff's submission left wholly unanswered the question whether the claimed symptoms diagnosed by Dr. Rose were caused by the accident (see Franchini, 1 NY3d at 537; see also Simms v APA Truck Leasing Corp., 14 AD3d 322 [1st Dept 2005]; Blackwell v Fraser, 13 AD3d 157 [1st Dept 2004]; Mooney v Edwards, 12 AD3d 424 [2d Dept 2004]; Shaw v Looking Glass Assoc., LP, 8 AD3d 100 [1st Dept 2004]; Shinn v Catanzaro, 1 AD3d 195 [1st Dept 2003]; Lagois v Public Adm'r of Suffolk County, 303 AD2d 644 [2d Dept 2003]; Pajda v Pedone, 303 AD2d 729 [2d Dept 2003]; Monette v Keller, 281 AD2d 523 [2d Dept 2001]). On this record, we conclude that defendants' motion for summary dismissal of the complaint was correctly granted.
Brown v Dunlap
On June 25, 1999, plaintiff, then 17 years of age, was a rear seat passenger in a vehicle owned by defendant Athena Dunlap and operated by defendant Louis Saunders (collectively Saunders) when it was struck from behind by a vehicle owned by defendant Trucklease Corporation and operated by defendant Gilberto Schasiepen (collectively Schasiepen). An ambulance transported plaintiff to St. Luke's Roosevelt Hospital, where he complained of neck and back pain. After x-rays revealed no fracture, plaintiff was given pain medication and released. A week later, referred by his counsel, plaintiff sought treatment from Dr. Samuel Melamed who, in August 1999, sent him to Ultra Diagnostics Imaging for an MRI of the lumbosacral spine. At that time, radiologist Mark Freilich reported: "Bulging is seen of discs [*6]L3-L5. There is herniation of disc L5-S1 towards the right and centrally indenting the thecal sac. Desiccative changes are noted of herniated disc L5-S1 as well."
In September 1999, neurologist Daniel Feuer diagnosed plaintiff with a lumbosacral herniated disc and lumbosacral radiculitis. He recommended that plaintiff continue a course of physical therapy supplemented by over-the-counter anti-inflammatory medications. Additionally, Dr. Melamed, relying on Dr. Freilich's earlier MRI report, noted spasms and tenderness and opined that, as a result of the accident, plaintiff sustained an acute cervical sprain and a lumbosacral sprain, and explained that plaintiff's continued pain and limitation of movement over the spine was a permanent injury.In March 2000, plaintiff commenced this action alleging that he had sustained serious injury within the meaning of Insurance Law § 5102 (d).
Following joinder of issue, defendant Schasiepen moved for summary judgment dismissing the complaint on the ground that plaintiff did not suffer a serious injury, and submitted the sworn reports of radiologist Jessica Berkowitz, orthopedist Norman Heyman and neurosurgeon Donald Frank. Defendant Saunders thereafter joined in the motion, adopting Schasiepen's arguments and submissions, and adding the reports of orthopedic surgeon Howard Baruch and neurologist Robert April. According to defendants' medical evidence, any limitations plaintiff suffered as a result of the accident were minor at best. However, those injuries that existed, according to Dr. Frank and Dr. Baruch, were causally related to the car accident. Only defendants' radiologist, Dr. Berkowitz, noted — without more — that the "disc desiccation and minimal diffuse disc bulge" were "chronic and degenerative in origin."
In opposition, plaintiff submitted the affirmation of his treating physician, Dr. Melamed, opining that plaintiff suffered from "a herniated disc, confirmed by MRI testing, at L5-S1 towards the right centrally indenting the thecal sac; bulging discs, also confirmed by MRI, at levels L3-L5; and acute cervical sprain." He added that his April 22, 2002 examination revealed numerical deficiencies in plaintiff's extension and flexion of the cervical and lumbar spine, and he opined, with a reasonable degree of medical certainty, that plaintiff's "inability to move his spine (lower back and neck) to the full range of what is normal [constituted a] definite severe and permanent injury" that was causally related to the accident. Finally, Dr. Melamed explained that "[w]hen it became clear, after extensive therapy in my office, that further treatment and visits would be only palliative in nature, upon discharge from this office, I instructed [plaintiff] as to strengthening and stabilizing home exercises, which consisted of back and neck stretches and strengthening techniques." Plaintiff's own affidavit noted that he continues to suffer "excruciating" pain in his neck and lower back when he stands for more than 15 minutes, and can no longer lift heavy objects; experiences numbness in his legs when he remains too long in the same position; and cannot continue his prior sports activities.
Based on these submissions, Supreme Court granted defendants' motions dismissing the complaint, holding that plaintiff failed to explain a two and one-half year gap in treatment and also fatally relied on unsworn MRI reports. The Appellate Division affirmed, [*7]holding that plaintiff failed to both furnish an adequate explanation of the gap in treatment and address the suggested chronic disc condition. Two Justices dissented, bringing the appeal before us as a matter of right. We now reverse and reinstate the complaint.
On plaintiff's behalf, Dr. Melamed identified measurements of loss of range of motion in plaintiff's cervical and lumbar spine, and on that predicate opined that plaintiff suffered severe and permanent injuries as a result of the accident. Dr. Melamed concluded that plaintiff's "continuing condition accounts for [his] extreme pain, stiffness and inability to move his . . . spine[] to the degree of range of motion characteristic of a normal twenty year-old" (see Toure, 98 NY2d at 350-351, 353; Melino v Lauster, 195 AD2d 653, 655 [3d Dept 1993], affd 82 NY2d 828 [1993]). Moreover, Dr. Melamed, in his own sworn statement, noted that the MRI of plaintiff's spine — taken by Dr. Freilich approximately two months after the accident, and made part of the record - revealed one herniated and three bulging discs (cf. Toure [Nitti], 98 NY2d at 357-358).[FN5]
Neither of the dispositive grounds in Pommells applies here. First, as to the so-called gap in treatment — the two and one-half years when plaintiff's injuries received no outside attention — Dr. Melamed explained that, once he determined further medical therapy would "be only palliative in nature," he terminated treatment and instructed plaintiff to continue exercises at home. A plaintiff need not incur the additional expense of consultation, treatment or therapy, merely to establish the seriousness or causal relation of his injury. Unlike Pommells, plaintiff's cessation of treatment was explained sufficiently to raise an issue of fact and survive summary judgment.
Second, as to an alleged pre-existing condition, there is only Dr. Berkowitz's conclusory notation, itself insufficient to establish that plaintiff's pain might be chronic and unrelated to the accident. As opposed to the undisputed proof of plaintiff's contemporaneous, causally relevant kidney condition in Pommells, here even two of defendants' other doctors acknowledged that plaintiff's (relatively minor) injuries were caused by the car accident. On this record, plaintiff was not obliged to do more to overcome defendants' summary judgment motions (contrast Shinn, 1 AD3d at 195; Lorthe v Adeyeye, 306 AD2d 252 [2d Dept 2003]), and we therefore reverse the Appellate Division's order and reinstate the complaint.
Carrasco v Mendez
In support of her motion, defendant submitted two reports of the doctor, Vadim Miloradovich, who treated plaintiff for several months immediately following the accident. Initially, Dr. Miloradovich diagnosed plaintiff with "[a]nterior spur formation of C5-C6 and C6-C7 disc," traumatic herniation of the disc (C4-C5, C5-C6, C6-C7 and L2-L3) and "[d]isc bulge L3-L4," and opined that plaintiff's injuries were a direct result of the accident. Several months later, however, in his "Final Report," Dr. Miloradovich noted that "any degenerative condition that existed prior to [plaintiff]'s current trauma ha[d] served to destabilize the spine" and that "although the return to 'Base line' ha[d] been achieved, prior existing conditions may continue with limited symptomatology." Having determined that therapy would no longer benefit plaintiff, Dr. Miloradovich discharged plaintiff in December 2000 "with instruction to continue physical therapy and exercise at home for maintenance and to preclude exacerbation."
Plaintiff rejoined with the affidavit of Dr. Emmanuel Lambrakis, who explained that he had treated plaintiff since August 30, 2001 — beginning more than a year after the accident. Dr. Lambrakis averred that his November 21, 2002 physical examination of plaintiff — conducted after defendant's motion — revealed specific numerical deficiencies in plaintiff's extension, flexion and rotation of the cervical and lumbar spine. In addition, Dr. Lambrakis noted that he found "severe muscle spasms in the cervical spine with excruciating pain when compressing C3 and C7" and that "[t]he pain complained of and the loss of motion in the cervical spine is completely consistent with the disc herniations diagnosed at C4, 5, 6 and 7, as well as the anterior spur formation on C5, 6 and 7, after MRIs of the cervical spine were conducted after the accident." He also explained that "the degree of pain exhibited by the plaintiff with regard to his lumbar spine is consistent with the herniated disc at L2-L3, as well as a protrusion bulge on the L3-L4 level," also diagnosed after an MRI. Dr. Lambrakis opined to a reasonable degree of medical certainty that plaintiff "sustained permanent severe partial disabilities as a result of the motor vehicle accident." [*9]
As in Pommells and Brown, defendant's submissions shifted to plaintiff the burden of coming forward with evidence indicating a serious injury causally related to the accident. Unlike Brown, however, defendant presented evidence of a pre-existing degenerative disc condition causing plaintiff's alleged injuries, and plaintiff failed to rebut that evidence sufficiently to raise an issue of fact.
Dr. Orlandi, after physically examining plaintiff and reviewing prior medical records, including MRIs and x-rays, concluded that the pain in areas identified as herniated by Dr. Miloradovich was caused by pre-existing and degenerative conditions. Even plaintiff's original doctor, Dr. Miloradovich, noted, in his final report, that plaintiff's pain was related to a prior condition.
While plaintiff provided Dr. Lambrakis's expert's report of specific losses of range of motion in plaintiff's spine, opining that plaintiff suffered serious and permanent injuries which were causally related to the accident (Lopez v Senatore, 65 NY2d 1017, 1020 [1985]), plaintiff did not refute defendant's evidence of a pre-existing degenerative condition. To the contrary, the Lambrakis report supplied by plaintiff explained that the pain and loss of range of motion in the cervical spine was entirely consistent with those formations identified by the MRI and set forth by Drs. Miloradovich and Orlandi as related to a degenerative condition. In this case, with persuasive evidence that plaintiff's alleged pain and injuries were related to a pre-existing condition, plaintiff had the burden to come forward with evidence addressing defendant's claimed lack of causation. In the absence of any such evidence, we conclude — as did the trial court and Appellate Division — that defendant was entitled to summary dismissal of the complaint (see Franchini, 1 NY3d at 537; see also Licari v Elliot, 57 NY2d 230, 237 [1982]).
Accordingly, in Pommells v Perez and Carrasco v Mendez, the orders of the Appellate Division should be affirmed, with costs, and in Brown v Dunlap, the order of the Appellate Division should be reversed, with costs, and defendants' motions for summary judgment denied.
Case No. 56: Order affirmed, with costs. Opinion by Chief Judge Kaye. Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.
Case No. 57: Order reversed, with costs, and defendants' motions for summary judgment denied. Opinion by Chief Judge Kaye. Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.
[*10]Case No. 126 SSM 5: On review of submissions pursuant to section 500.4 of the Rules, order affirmed, with costs. Opinion by Chief Judge Kaye. Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.
Footnote 1: Insurance Law § 5102 (d) defines a "serious injury" as "a personal injury which results in death; dismemberment; significant disfigurement; a fracture; loss of a fetus; permanent loss of use of a body organ, member, function or system; permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system; or a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred and eighty days immediately following the occurrence of the injury or impairment."
Footnote 2: Plaintiff claimed a serious injury under two section 5102 (d) subdivisions: "significant limitation of use of a body function or system" and "a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment."
Footnote 3: Throughout this writing, where areas of specialization are not stated, it is because they are unidentified in the record.
Footnote 4: In recent No-Fault cases, "gap in treatment" has become a prominent factor in summary judgment motions (see e.g. Garces v Yip, AD3d , 2005 NY Slip Op 01678 [2d Dept 2005]; Bent v Jackson, AD3d , 2005 NY Slip Op 00022 [1st Dept 2005]; Brown v Achy, 9 AD3d 30 [1st Dept 2004]; Rivera v Francis, 7 AD3d 690 [2d Dept 2004]; Melendez v Feinberg, 306 AD2d 98 [1st Dept 2003]; Vaughan v Baez, 305 AD2d 101 [1st Dept 2003]).
Footnote 5: Though the MRI reports were unsworn, the various medical opinions relying on those MRI reports are sworn and thus competent evidence (see Grasso, 79 NY2d at 814).
AIU Insurance Company v. Investors Insurance Company
Order, Supreme Court, New York County (Louis B. York, J.), entered March 17, 2004, which, upon reargument, vacated a prior order, same court and Justice, entered May 28, 2003, and declared defendant obligated neither to co-insure plaintiff Arnell Contracting nor to reimburse plaintiff AIU Insurance for defense and indemnification, unanimously affirmed, without costs.
Defendant, which directly insured Arnell, did not receive any notice of the underlying accident for five years. AIU Insurance, which also insured Arnell under a "wrap-up" policy issued to plaintiff New York City School Construction Authority, undertook the costs of defense of the personal injury lawsuit. AIU made a demand to defendant to co-insure Arnell after the litigation had been ongoing for four years.
While an insurer must give timely notice of disclaimer to its insured even where, as here, the insurer has not in the first instance received timely notice of the accident (see Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507 [1993]), the duty to disclaim as soon as is reasonably possible (Insurance Law § 3420[d]) is not triggered where, as here, the request is for contribution by a co-insurer (Tops Mkts. v Maryland Cas., 267 AD2d 999, 1000 [1999]). "The purpose of Insurance Law § 3420(d) is to protect the insured, the injured person, 'and any other interested party who has a real stake in the outcome' from prejudice resulting from a belated denial of coverage" (Top Mkts., id., quoting Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124, 127 [1999]). That the protection of the statute is inapplicable to a co-insurer's request for contribution is demonstrated by the facts of this case. AIU received notice of the accident, conducted an investigation, undertook the defense of the lawsuit and managed the defense on its own for four years. Manifestly, it has not been prejudiced by any late disclaimer by Investors.
ENTERED: APRIL 26, 2005 [*2]
Danna Construction Corp v. Utica First Insurance Company
In an action for a judgment declaring that the defendant Utica First Insurance Company is obligated to defend and indemnify Gregory Kirkham in an underlying personal injury action entitled Chumsky v Danna Construction Corp., commenced in the Supreme Court, Kings County under Index No. 2963/01, the defendant Utica First Insurance Company appeals from an order of the Supreme Court, Kings County (G. Aronin, J.), dated January 14, 2004, which upon, in effect, granting its application pursuant to CPLR 3211(c) to treat its motion to dismiss pursuant to CPLR 3211(a)(1) and (7) insofar as asserted against it as one for summary judgment insofar as asserted against it, denied the motion and granted the plaintiffs' cross motion, in effect, for summary judgment.
ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the defendant Utica First Insurance Company is obligated to defend and indemnify Gregory Kirkham in the underlying personal injury action entitled Chumsky v Danna Construction Corp., commenced in the Supreme Court, Kings County under Index No. 2963/01.
Pursuant to Insurance Law § 3420(d), an insurer is required to provide the insured with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion and will [*2]be estopped from disclaiming liability or denying coverage if it fails to do so (see Moore v Ewing, 9 AD3d 484). Timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage. It is the responsibility of the insurer to explain its delay, and an unsatisfactory explanation will render the delay unreasonable as a matter of law. An insurer's explanation is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay (see First Financial Ins. Co. v Jetco Contr. Corp., 1 NY3d 64).
Here, the record demonstrated that the appellant insurer disclaimed coverage 78 days after receiving notice of the facts upon which its disclaimer was based. The Supreme Court properly determined that the insurer's delay was unreasonable as a matter of law (see First Financial Ins. Co. v Jetco Contr. Corp., supra; Squires v Marini Bldrs., 293 AD2d 808).
Since the action is a declaratory judgment action, the matter must be remitted to the Supreme Court, Kings County, for the entry of a judgment declaring that the appellant is obligated to defend and indemnify Gregory Kirkham in the underlying personal injury action (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
H. MILLER, J.P., COZIER, GOLDSTEIN and SKELOS, JJ., concur.
New York and Presbyterian Hospital v. Eagle Insurance Company
In an action to recover no-fault medical payments under insurance contracts, the plaintiffs, New York and Presbyterian Hospital, a/a/o Jorge Peralta, New York Hospital Medical Center of Queens, a/a/o Christopher O'Neill, Mary Immaculate Hospital, a/a/o Racheal Castro, and Nyack Hospital, a/a/o Lourdes Veras, appeal from so much of an order of the Supreme Court, Nassau County (Joseph, J.), entered August 5, 2004, as denied the branch of their motion which was for summary judgment on the first cause of action and granted that branch of the defendant's cross motion which was for summary judgment dismissing the first cause of action.
ORDERED that the appeal by the plaintiffs New York Hospital Medical Center of Queens, a/a/o Christopher O'Neill, Mary Immaculate Hospital, a/a/o Racheal Castro, and Nyack Hospital, a/a/o Lourdes Veras is dismissed, as those plaintiffs are not aggrieved by the order appealed from (see CPLR 5511); and it is further,
ORDERED that the order is reversed insofar as appealed from, on the law, that branch of the motion which was for summary judgment on the first cause of action is granted and that branch of the cross motion which was for summary judgment dismissing the first cause of action is denied; and it is further, [*2]
ORDERED that one bill of costs is awarded to the plaintiff New York and Presbyterian Hospital, a/a/o Jorge Peralta.
The Supreme Court erred in granting the defendant summary judgment dismissing the first cause of action based upon the fact that the verification of the claim for no-fault medical payments (pursuant to a timely assertion of the claim and, in response, a timely request by the defendant for verification) was provided long after the 180-day period within which written proof of claim must be submitted (see 11 NYCRR 65.12), specifically, more than one year after original submission of the claim to the defendant. Despite this undisputed delay by the plaintiff New York and Presbyterian Hospital (hereinafter the hospital), the defendant, upon its receipt of the requested verification in June 2003, failed to either pay or deny the claim as required by 11 NYCRR 65.15(g)(2)(iii). The defendant is precluded from asserting the defense of the hospital's untimeliness in this action pursuant to Insurance Law § 5106(a) (see New York and Presbyt. Hosp. v Empire Ins. Co., 286 AD2d 322; Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210; St. Clare's Hosp. v Allcity Ins. Co., 201 AD2d 718; cf. Hempstead Gen. Hosp. v New York Cent. Mut. Fire Ins. Co., 232 AD2d 454). In reaching this conclusion, we observe that the defendant's requests for verification, sent by mail on April 15, 2002, and May 20, 2002, did not demand or require a response within any identified number of days.
Sears, Roebuck and Co v. Zurich North America Insurance Company
In an action for a judgment declaring that the defendants are obligated to defend and indemnify the plaintiff in seven underlying actions pending in the Supreme Court, Kings County, the plaintiff appeals (1) from an order of the Supreme Court, Westchester County (Jamieson, J.), entered November 3, 2003, which denied its motion for summary judgment declaring that the defendants are obligated to defend and indemnify it in the underlying actions and granted the defendants' cross motion for summary judgment, and (2), as limited by its brief, from so much of an order of the same court entered March 29, 2004, as, upon granting, in effect, reargument, adhered to the prior determination.
ORDERED that the appeal from the order entered November 3, 2003, is dismissed, as that order was superseded by the order entered March 29, 2004, made upon reargument; and it is further,
ORDERED that the order entered March 29, 2004, is affirmed insofar as appealed from, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment declaring that the defendants are not obligated to defend and indemnify the plaintiff in the [*2]underlying actions; and it is further,
A review of the insurance policies at issue here reveals that the plaintiff was an incidental rather than an intended beneficiary thereof (see Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38; Tribeca Broadway Assoc. v Mount Vernon Fire Ins. Co., 5 AD3d 198; Chumsky v Danna Constr. Corp., 304 AD2d 604; Kreisler Borg Florman Gen. Const. Co. v Moleon, 304 AD2d 337; Tilden Commercial Alliance v 2nd Edition Originals, 242 AD2d 702). Since the plaintiff was not an intended beneficiary of the policies, it cannot enforce the policies against the defendants until it satisfies the requirements of Insurance Law § 3420 (see Lang v Hanover Ins. Co., 3 NY3d 350). Thus, the Supreme Court properly denied the plaintiff's motion for summary judgment declaring that the defendants are obligated to defend and indemnify it in the underlying actions and granted the defendants' cross motion for summary judgment.
Since this is an action for a declaratory judgment, the Supreme Court should have directed the entry of a judgment declaring that the defendants are not obligated to defend or indemnify the plaintiff in the underlying actions (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed, 371 US 74, cert denied 371 US 901).
In the Matter of AIU Insurance Company v. Nunez
In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Kings County (Lewis, J.), dated December 5, 2003, which denied the petition and dismissed the proceeding.
ORDERED that the order is reversed, on the law, without costs or disbursements, and the matter is remitted to the Supreme Court, Kings County, for a framed-issue hearing in accordance herewith, and for a new determination of the petition thereafter.
The petitioner made a prima facie showing of entitlement to a stay of arbitration by submitting the police accident report and the Department of Motor Vehicles registration record which each showed the respondent State Farm Mutual Insurance Company (hereinafter State Farm) as the insurer of the alleged offending vehicle at the time of the accident. However, the papers submitted in opposition raise issues of fact as to whether the automobile collision giving rise to the [*2]underlying request for arbitration was deliberate or intentional, and whether the claimants participated in staging the collision, in which case the claim sought to be arbitrated would not be covered by the uninsured provisions of the petitioner's policy (see Government Empls. Ins. Co. v Robbins, 15 AD3d 484 ["The issue of whether the accident was 'staged' was a relevant, while not fully dispositive issue, and was subsumed under the issue of whether the vehicle was uninsured"]; see also State Farm Mut. Auto Ins. Co. v Laguerre, 305 AD2d 490; Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522). Accordingly, we remit the matter to the Supreme Court, Kings County, for a framed-issue hearing as to whether the automobile collision giving rise to the underlying request for arbitration was deliberate or intentional, and whether the claimants participated in staging the collision (see Government Empls. Ins. Co. v Robbins, supra; United Community Ins. Co. v Gabriel, 229 AD2d 444).
CRANE, J.P., RIVERA, SKELOS and LIFSON, JJ., concur.
Harleysville Insurance Company v. Rosario
In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the appeal is from an order of the Supreme Court, Kings County (Bayne, J.), dated May 4, 2004, which granted the petition and permanently stayed arbitration.
The Supreme Court granted the petition to permanently stay arbitration of an uninsured motorist claim on the ground that the appellants failed to demonstrate the existence of insurance coverage with the petitioner, Harleysville Insurance Company (hereinafter Harleysville). Harleysville first raised this claim concerning whether an agreement to arbitrate existed between the parties in its reply papers. "The function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of, or new grounds for the motion" (Matter of TIG Ins. Co. v Pellegrini, 258 AD2d 658; see Dannasch v Bifulco, 184 AD2d 415, 417). Since the appellants did not have the opportunity to oppose the newly-raised claim in a surreply, it was improper for the court to grant the petition based upon that claim (see Johnston v Continental Broker-Dealer Corp., 287 AD2d 546; Tobias v Manginelli, 266 AD2d 532). [*2]
Milbank Housing Development Fund v. Royal Indemnity Company
Order and interlocutory judgment, Supreme Court, New York County (Karla Moskowitz, J.), entered April 9, 2004, which granted plaintiff-insured's renewed motion for summary judgment and compelled defendant to defend and indemnify plaintiff in the underlying personal injury action, and judgment, same court and Justice, entered May 14, 2004, which awarded plaintiff $20,000, plus interest and costs, for legal fees it incurred in defending the underlying action, unanimously affirmed, with one bill of costs.
Plaintiff may have failed to provide timely notice of the occurrence as required by the policy, but defendant's delay of more than 60 days in disclaiming coverage was unreasonable as a matter of law (Insurance Law § 3420[d]). The grounds for a disclaimer were readily apparent, before the onset of the delay, from the documents submitted to defendant, including the summons and complaint, the incident report, and a memo from plaintiff's director indicating that plaintiff had timely notice of the occurrence and failed to report it (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64 [2003]); 2833 Third Ave. Realty Assoc. v Marcus, 12 AD3d 329 [2004]; West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278 [2002]).
The trial court did not exercise its discretion improvidently in determining that existing conflicts precluded an attorney who participated in the defense from testifying as an expert as to the reasonableness of the legal fees requested. The roles of a witness and an advocate are entirely incompatible in these circumstances (Code of Professional Responsibility EC 5-9; see also DR 5-102[A] [22 NYCRR 1200.21(a)]; see generally People v Berroa, 99 NY2d 134, 139-140). The attorney's testimony was not essential in that any expert could have been retained to testify as to the reasonableness of the fees. Nor did the court exercise its discretion improvidently in its ruling as to a continuance (see Harper v Han Chang, 267 AD2d 1011 [1999]; Matter of Noreli Indus. v [*2]Kleinert's, 57 AD2d 792 [1977]) or the award of a reasonable attorney's fee (see e.g. Utica Mut. Ins. Co. v Magwood Enters., __ AD3d __, 790 NYS2d 179 [2005]).
Grimes-Carrion v. Carroll
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered February 24, 2004, which, to the extent appealed from, denied the motion by defendants Urena and Nunez for summary judgment dismissing the complaint as against them, unanimously reversed, on the law, without costs, and said defendants' motion granted. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complaint as against them.
Defendants Urena and Nunez made a prima facie showing that plaintiff had not sustained a serious injury within the meaning of Insurance Law § 5102(d), thereby shifting the burden to plaintiff to raise a triable issue of fact (see Gaddy v Eyler, 79 NY2d 955, 957 [1992]). Plaintiff's cumulative submissions were insufficient to meet the statutory threshold.
In support of plaintiff's claim that he suffered a "significant limitation of use of a body function or system," plaintiff submitted various reports from a chiropractor who treated him 2-3 times per week from October 31, 2000 to August 28, 2001, and periodically thereafter. This expert did not quantify plaintiff's spinal range of motion limitations until January 15, 2004. Neither this nor any other expert described or measured spinal limitations at any earlier date. Plaintiff's bill of particulars also refers to positive straight leg tests, but plaintiff offers no medical evidence to support a claim that he suffered range of motion limitation in either leg. While quantified range of motion limitations can, alone, be sufficient to demonstrate that plaintiff suffered a serious injury (see Desulme v Stanya, 12 AD3d 557 [2004]), the submissions here do not establish that the spinal limitations measured in January 2004 were caused by the [*2]October 2000 accident. Moreover, the totality of plaintiff's evidence was insufficient to raise an issue of fact as to serious injury under the category of "significant limitation" of the maneuverability of either his spine or his leg (cf. Toure v Avis Rent A Car Sys., 98 NY2d 345, 353 [2002]).
Plaintiff's submissions were similarly insufficient to establish that his injuries prevented him from performing substantially all of the material acts constituting his usual and customary daily activities for at least 90 of the 180 days immediately following the accident (see Gaddy, 79 NY2d at 958). Plaintiff was unable to work for nine days after he was injured. While he testified at his deposition that he was informally put on restricted duty when he returned to his job, he has not provided independent evidence to indicate that his inability to perform certain tasks was medically indicated (Relin v Brotherton, 221 AD2d 840 [1995]). Further, plaintiff's complaints that he had problems driving and sleeping, and slight numbness in his hand are insufficient to establish substantial curtailment of his normal activities during the three-month period immediately following the accident (Nega v Janella Cab, 249 AD2d 71 [1998]).
We note that the motion court correctly dismissed the cross claims against defendant Carroll, the driver of the car in which plaintiff was a passenger. The disposition of the complaint as against that defendant has been resolved in Grimes-Carrion v Carroll (13 AD3d 125 [2004]).
ENTERED: APRIL 28, 2005
Mack v. State Farm Mutual Automobile Insurance Company
Appeal from an order of the Supreme Court, Erie County (Donna M. Siwek, J.), entered March 8, 2004 in an action for money damages and declaratory relief. The order granted defendant's motion to dismiss the complaint.
DAMON & MOREY LLP, BUFFALO (MICHAEL J. WILLETT OF COUNSEL), BROWN CHIARI LLP, LANCASTER, FOR PLAINTIFFS-APPELLANTS.
Memorandum: We affirm for reasons stated in the decision at Supreme Court. We add only that revisions in defendant's insurance policy, made in accordance with directives of the Insurance Department of the State of New York, have resolved the ambiguities previously found by this Court in Canastraro v State Farm Mut. Auto. Ins. Co. (256 AD2d 1161, lv denied 93 NY2d 806).
Cardeon v. New York Central Mutual Ins. Co.
Memorandum: Petitioners appeal from an order denying their petition to vacate an arbitration award on the ground that the arbitrator did not act impartially. "An arbitrator's award may be vacated only upon the grounds specified in CPLR 7511" (Matter of Blamowski [Munson Transp.], 91 NY2d 190, 194). Among the grounds for vacating an arbitration award is the partiality of an arbitrator (CPLR 7511 [b] [1] [ii]). Petitioners contend that the arbitrator displayed partiality by keeping the record open so that respondent could submit the supplemental report of a doctor it retained to review the medical records of petitioner Sheree L. Cardeon. That course of action does not establish "actual bias or the appearance of bias from which a conflict of interest may be inferred" (Matter of City School Dist. of Oswego [Oswego Classroom Teachers Assn.], 100 AD2d 13, 17, amended on other grounds 100 AD2d 1027).
Weierheiser v. Hermitage Insurance Company
Appeal from a judgment (denominated order) of the Supreme Court, Allegany County (Thomas P. Brown, A.J.), entered February 27, 2004 in a declaratory judgment action. The judgment granted the motion of defendants Hermitage Insurance Company and Allegany County Federation of Snowmobilers, Inc. for summary judgment declaring that Hermitage Insurance Company has no duty to defend or indemnify defendant Kenneth C. Frazier in an underlying personal injury action.
It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously reversed on the law without costs and the complaint is dismissed.
Memorandum: Plaintiff appeals from a judgment granting the motion of defendants Hermitage Insurance Company (Hermitage) and Allegany County Federation of Snowmobilers, Inc. (ACFS) for summary judgment declaring that Hermitage has no duty to defend or indemnify Kenneth C. Frazier (defendant) in an underlying personal injury action. On December 17, 1999, plaintiff was snowmobiling with defendant and another individual on land owned by defendant's grandfather. Plaintiff sustained injuries when he fell off his snowmobile and was struck by the snowmobile operated by defendant. At the time of the accident, defendant was a member of ACFS. Hermitage issued a commercial general liability policy to ACFS. Hermitage subsequently disclaimed coverage under an exclusion in the policy for claims or suits brought by one member of ACFS against another. Plaintiff thereafter commenced this action against Hermitage seeking a judgment declaring, inter alia, that the disclaimer was improper.
Hermitage previously moved to dismiss the declaratory judgment action on the ground that plaintiff lacked standing, and the motion was denied. As a nonfinal order necessarily affecting the final judgment, Supreme Court's order denying the motion is brought up for review by this appeal from the final judgment (see CPLR 5501 [a] [1]). We agree with plaintiff that he lacked standing to bring a declaratory judgment action against Hermitage because he has not [*2]obtained a judgment against Hermitage's insured (see Insurance Law § 3420; Lang v Hanover Ins. Co., 3 NY3d 350, 354-355). Although decided in November 2004, Lang does not establish a new principle of law and thus must be applied retroactively (see Gurnee v Aetna Life & Cas. Co., 55 NY2d 184, 192, rearg denied 56 NY2d 567, cert denied 459 US 837). Consequently, we reverse the judgment and dismiss the complaint.
Essex Insurance Company v. Young
Appeal from a judgment (denominated order) of the Supreme Court, Erie County (Nelson H. Cosgrove, J.), entered February 26, 2004 in a declaratory judgment action. The judgment, among other things, granted the motion of defendant Dwight Hicks and the cross motion of defendants Brian J. Nelson and 8-Ball Laundry Lounge, Inc., doing business as Groove, for summary judgment declaring that plaintiff must defend and indemnify them in an underlying personal injury action.
It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously modified on the law by denying the motion of defendant Dwight Hicks and the cross motion of defendants Brian J. Nelson and 8-Ball Laundry Lounge, Inc., doing business as Groove, granting the cross motion of plaintiff in its entirety and vacating the award of attorneys fees and costs and as modified the judgment is affirmed without costs and judgment is granted in favor of plaintiff as follows:
It is ADJUDGED AND DECLARED that plaintiff has no duty to defend or indemnify those defendants in the underlying personal injury action.
Memorandum: Defendant Lawanda Young commenced an action to recover damages for injuries allegedly inflicted by defendant Dwight Hicks, a bouncer employed by defendant 8-Ball Laundry Lounge, Inc., doing business as Groove (Groove), in an incident at Groove. Hicks allegedly grabbed Young by the arm, put her in a chokehold and threw her to the ground. Plaintiff, Groove's liability carrier, commenced the instant action seeking judgment declaring that it has no obligation to defend or indemnify Hicks, Groove or defendant Brian J. Nelson, the owner of Groove, in the underlying action, based upon exclusions in the policy for claims arising out of "Assault and/or Battery" and "[a]ny charges or allegations of negligent hiring, employment training, placement or supervision ...." Hicks thereafter sought summary judgment declaring that plaintiff must defend and indemnify him in the underlying action on the ground that the [*2]negligence causes of action therein trigger the duty to defend and indemnify him with respect to all causes of action. In addition, Hicks contended that plaintiff failed to disclaim coverage in a timely manner and thus must both defend and indemnify Hicks on that ground as well. Plaintiff cross-moved for summary judgment declaring that it has no duty to defend or indemnify Hicks, Nelson or Groove in the underlying action based on the policy exclusions. Nelson and Groove then cross-moved for summary judgment declaring that plaintiff must defend and indemnify them "with respect to the complaint allegations sounding in negligence, carelessness, and/or recklessness ...."
Supreme Court properly rejected the contention of Hicks that plaintiff's notice of disclaimer was untimely (see Public Serv. Mut. Ins. Co. v Harlen Hous. Assoc., 7 AD3d 421, 423). The court erred, however, in otherwise denying plaintiff's cross motion and granting the motion of Hicks and the cross motion of Nelson and Groove insofar as they sought summary judgment declaring that plaintiff must provide them with a defense and indemnify them if it is determined that they are entitled to coverage for their liability in the underlying action. We therefore modify the judgment accordingly. "[I]f no cause of action would exist but for the assault, the claim is based on assault and the exclusion applies" (Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 350; see U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821, 823). Here, Young's causes of action for negligent and reckless conduct in the underlying action, including those alleging, inter alia, negligent training and supervision, arise out of the alleged assault and/or battery by Hicks, and thus fall within the policy exclusions (see Mark McNichol Enters. v First Fin. Ins. Co., 284 AD2d 964, 965; Dudley's Rest. v United Natl. Ins. Co., 247 AD2d 425, 426; Tower Ins. Co. of N.Y. v Old N. Blvd. Rest. Corp., 245 AD2d 241, 242). Because plaintiff owes no duty to defend Hicks, Nelson or Groove in the underlying personal injury action, the court erred in awarding those defendants reasonable attorneys fees and costs incurred in defending the underlying personal injury action and this declaratory judgment action (see generally Chase Manhattan Bank v Each Individual Underwriter Bound to Lloyd's Policy No. 790/004A89005, 258 AD2d 1, 4-5).
Appeals from an order of the Supreme Court, Monroe County (Andrew V. Siracuse, J.), entered November 5, 2003. The order denied the motion of defendants David Griffo, Westage at the Harbor and Westage Board of Managers for summary judgment dismissing the complaints in action Nos. 1 and 5 through 7 against defendants David Griffo and Westage Board of Managers, the complaints in action Nos. 3 and 8 against defendant Westage Board of Managers and the amended complaint in action No. 4 against defendant Westage at the Harbor and denied the motion of defendant Rainaldi Real Estate Management Company for summary judgment dismissing the complaints against it in action Nos. 1, 3 and 5 through 8.
Memorandum: Defendants David Griffo, Westage Board of Managers (Board) and Westage at the Harbor (collectively, Westage defendants) appeal from an order insofar as it [*4]denied their motion seeking summary judgment dismissing the complaints in action Nos. 1, and 5 through 7 against Griffo and the Board, the complaints in action Nos. 3 and 8 against the Board, and the amended complaint in action No. 4 against Westage at the Harbor. Defendant Rainaldi Real Estate Management Company (Rainaldi) appeals from the order insofar as it denied its motion seeking summary judgment dismissing the complaints against it in action Nos. 1, 3, and 5 through 8. The underlying facts are essentially undisputed. On August 30, 1999, defendant Michael L. Stein performed plumbing work for his sister, defendant Michelle Stein, at her condominium at Westage at the Harbor. Griffo, the on-site property manager employed by the Board, had shut off the water to the building in which Michael Stein was working so that the plumbing work could be performed. As a result of the actions of Michael Stein, a fire occurred, causing damage to several condominium units in two buildings.
We conclude that Supreme Court erred in denying those parts of the motion of the Westage defendants seeking summary judgment dismissing the complaints in action Nos. 3 and 8 against the Board, the complaints in action Nos. 5 through 7 against Griffo and the Board, and the amended complaint in action No. 4 against Westage at the Harbor, and we therefore modify the order accordingly. Those actions were commenced by plaintiff insurers as subrogees. The bylaws provide that the unit owners "are encouraged to carry other insurance for their own benefit provided that all such policies shall contain waivers of subrogation against the ... Board ...." The bylaws are, "in essence, an agreement among all of the individual unit owners ... which set forth the respective rights and obligations of unit owners" (Schoninger v Yardarm Beach Homeowners' Assn., 134 AD2d 1, 6). "While parties to an agreement may waive their insurer's right of subrogation, a waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears" (Kaf-Kaf, Inc. v Rodless Decorations, 90 NY2d 654, 660). Here, the bylaws provide for a waiver of subrogation claims for any amounts that "benefit" the unit owner, and thus we conclude that the subrogation actions herein cannot be maintained against any of the Westage defendants (see S.S.D.W. Co. v Brisk Waterproofing Co., 76 NY2d 228, 233-234; Loctite VSI v Chemfab N.Y., 268 AD2d 869, 871).
Contrary to the contention of the Westage defendants with respect to action No. 1, the sole remaining action that is the subject of their motion, the bylaws do not provide the Board with immunity from liability. Rather, the bylaws provide immunity for the individual members serving on the Board. In any event, "the disputed clause was prepared by [the Board] 'and any ambiguity in the interpretation of the language contained therein must be construed against the drafter'" (Clifton Steel Corp. v County of Monroe Pub. Works Dept., 136 AD2d 950, 951; see generally Steuben Contr. v Griffith Oil Co., 283 AD2d 1008). Nevertheless, although we conclude that the Westage defendants otherwise established their entitlement to judgment as a matter of law with respect to action No. 1, the court properly determined that plaintiffs raised an issue of fact whether Griffo was negligent (see generally Zuckerman v City of New York, 49 NY2d 557, 562), which negligence would be imputed to the Board (see generally Riviello v Waldron, 47 NY2d 297, 302-304). We note, however, that the plaintiffs in action No. 1 failed to raise an issue of fact whether the Board violated the business judgment rule, and we therefore further modify the order by granting that part of the motion of the Westage defendants seeking summary judgment dismissing the complaint in action No. 1 against Griffo and the Board to the extent that it alleges a violation of that rule (see Schoninger, 134 AD2d at 10).
We further conclude that the court properly denied the motion of Rainaldi seeking summary judgment dismissing the complaints against it in action Nos. 1, 3, and 5 through 8. In support of the motion, Rainaldi contended that Griffo is an employee of the Board, and thus Rainaldi is not liable to the plaintiffs in those actions under the doctrine of respondeat superior for any negligence on the part of Griffo. Although Griffo is employed by the Board, the respective plaintiffs in those actions raised an issue of fact whether Rainaldi supervised Griffo [*5]and thus whether the doctrine of respondeat superior applies (see generally Gorea v Glover, 249 AD2d 887). Finally, we conclude that, to the extent that the management agreement between the Board and Rainaldi requires the Westage at the Harbor condominium association (association) and unit owners to indemnify Rainaldi for damages arising from Rainaldi's own negligence, the agreement is deemed void and unenforceable (see General Obligations Law § 5-322.1; Giglio v St. Joseph Intercommunity Hosp., 309 AD2d 1266, 1268; Vick v American Re-Fuel Co. of Niagara, 283 AD2d 915, 916). We note, however, that the management agreement also requires that the association purchase insurance for the benefit of Rainaldi, which is "clearly distinct from and treated differently [from] an agreement to indemnify," and that provision therefore is enforceable (Moll v Wegmans Food Mkts., 300 AD2d 1041, 1042 [internal quotation marks omitted]).
All concur except Lawton, J., who concurs in the result in the following Memorandum: I concur in the result only because, contrary to the view of the majority, I do not believe that plaintiff insurers can be precluded from exercising their right of subrogation based on a unit owner's breach of the bylaws of defendant Westage at the Harbor (Condominium) requiring that, if a unit owner obtains a policy of insurance, the policy must contain a waiver of subrogation clause against the Condominium and defendant Westage Board of Managers (Board). The majority relies on Kaf-Kaf, Inc. v Rodless Decorations (90 NY2d 654, 660) for the proposition that an insured can waive an insurer's right of subrogation. Kaf-Kaf, Inc., however, involved a lease agreement pursuant to which the tenant expressly released and waived all right of recovery against the owner. In holding that the insurer was precluded from asserting a subrogation claim, the Court of Appeals applied the general rule that the insurer stands in the shoes of the insured subject to whatever defenses that could be raised against the insured (see id. at 660-661). In relying on Kaf-Kaf, Inc., the majority equates the provision in the bylaws requiring that the unit owners' insurance policies, if obtained, must contain a waiver of subrogation against the Condominium and Board to a requirement in a lease that the tenant waive any claims against the owner. The requirement at issue herein, i.e., that a policy of insurance obtained by a unit holder must contain a waiver of subrogation clause, merely places a duty on the unit owners and does not create the waiver of liability at issue in Kaf-Kaf, Inc. A breach of that requirement by a unit owner does not preclude the unit owner from recovering damages from the Condominium and Board or others for damages if it could be shown that the Board or its employees were at fault for the fire at issue herein. Logically, if a unit owner has the right to sue the Condominium and Board then, under the principle that the insurer stands in the shoes of its insured (see id. at 660), the insurer of the unit owner also has that right.
I note that, if the bylaws specifically precluded a subrogation claim, I would agree with the majority's analysis that all insurers would be barred from bringing any subrogation claims. Here, however, they do not. I also do not believe that this case turns on "the legal issue of what the parties intended" (S.S.D.W. Co. v Brisk Waterproofing Co., 76 NY2d 228, 232), despite the reliance of the majority on two cases in which that test was applied (see id. at 233-234; Loctite VSI v Chemfab N.Y., 268 AD2d 869, 871). Consequently, in my view Supreme Court had a sound basis for determining that the Board is limited to its remedy against the unit owners for failing to obtain insurance with a waiver of subrogation clause, as required by the bylaws.
Because there was insurance in this instance, the issue is whether plaintiff insurers are barred by the bylaws from bringing subrogation claims. In my view, they are not, inasmuch as the bylaws do not require a unit owner to obtain an insurance policy in the first instance but instead, they require only that, if an insurance policy is obtained, it must contain a waiver of subrogation clause. The issue thus is, what is the proper result if there is no bar of subrogation. If there is indeed liability for the fire on the part of the Board, plaintiff insurers could then recover for their losses. The Board in turn would then have a claim against the unit owners for [*6]failing to obtain insurance with a waiver of subrogation clause. The effect, under this "round robin" of liability, is that plaintiff insurers would be making subrogation claims against their insureds when, in fact, it is well established that "[a]n insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered" (Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 468).
In my view, plaintiff insurers in this case are barred from making subrogation claims against the Board and its employees only, under equitable principles and for public policy reasons. Such a split in coverage was sanctioned by the Court of Appeals in S.S.D.W. Co. (76 NY2d at 230). In all other respects, I concur with the majority.
Entered: April 29, 2005
National Union Fire Insurance Company of Pittsburgh, PA v. The State Insurance Fund
Order, Supreme Court, New York County (Harold B. Beeler, J.), entered on or about June 23, 2003, which granted plaintiff's motion for summary judgment, denied defendant's motion for summary judgment dismissing the complaint, and declared, inter alia, that defendant was obligated to reimburse plaintiff for one-half the costs and disbursements incurred in the settlement of the underlying personal injury action, unanimously reversed, on the law, with costs, plaintiff's motion denied, defendant's motion granted and a declaration made that defendant is not obligated to reimburse plaintiff for any portion of the settlement of the underlying claim and the costs and disbursements incurred therein, and the complaint otherwise dismissed. The Clerk is directed to enter judgment in favor of defendant dismissing the complaint.
In this declaratory judgment action, plaintiff insurer, National Union, sought reimbursement for one-half the costs and disbursements incurred in the settlement of an underlying personal injury action brought by an injured employee. Plaintiff was the insurer under a Commercial General Liability (CGL) policy for all defendants as well as the insurer for the nonparty employer, Septic Systems. It also insured Septic under a separate Employer's Liability and Workers' Compensation policy. Septic was a subcontractor on New York City public school renovations. Septic's employee was injured on January 28, 1992 in a fall from a ladder, and commenced litigation in March 1994. National Union defended the litigation for all non-governmental defendants.
The State Insurance Fund had issued an Employer's Liability and Workers' Compensation policy to Septic Systems for ". . . damages . . . for which you are liable to a third party by reason of a claim or suit against you by that third party to recover the damages claimed against such third party as a result of bodily injury to your employee." The policy also required prompt notification of all notices, demands and legal papers related to such claim or suit.
It is undisputed that Septic Systems never notified defendant of any claim or suit. National Union failed to notify defendant of the Septic employee's personal injury litigation until completion of all discovery and the filing of a Note of Issue in February 1997. National Union further delayed providing the pleadings in response to defendant's request for all relevant documents until September 18, 1997, long after an April 15, 1997 grant of partial summary [*2]judgment in favor of Septic's employee against the prime defendants, the owner, general contractor and project manager. National Union settled the litigation a few weeks later on behalf of Septic, a nonparty to the litigation, and only then informed defendant that it had done so under its Employer's Liability policy covering Septic and demanded defendant's position on co-insurance of the "claim." In the present action, the IAS court granted plaintiff's motion for summary judgment, essentially on the ground that defendant had failed to give timely notice of a disclaimer of coverage.
While the duty to defend is broader than the duty to indemnify, there is no duty unless there is a covered loss (Servidone Constr. Corp. v Sec. Ins. Co. of Hartford, 64 NY2d 419, 423 [1985]). Defendant's insured, Septic, was never sued or impleaded into the litigation brought by Septic's employee. No claim was ever made against Septic. The decision to allocate the settlement to one insured, not a party to the litigation, rather than its other insureds, parties to the litigation and against whom an award of summary judgment on liability had already been granted, was improper. In structuring the settlement to ignore its CGL policy and to allocate the payment to its Employer's Liability policy on behalf of a party against whom no claim had been made, National Union acted as a volunteer. It had no obligation to make a payment on behalf of Septic. Since defendant's coverage was never triggered by a claim or suit, defendant was not required to make a timely disclaimer of coverage to National Union (see Zappone v Home Ins. Co., 55 NY2d 131, 137 [1982]). Nor did it have a duty to indemnify its insured or participate in coinsurance with National Union. In any event, defendant's disclaimer, given less than 30 days after receipt of the pleadings and less than two weeks after notification of the settlement of the underlying action, was timely. In light of the foregoing, we do not reach the other issues presented.
Brownstone Partners/AF&F, LLC, et al. v. A. Aleem Construction, Inc., et al
Order and judgment (one paper), Supreme Court, New York County (Leland DeGrasse, J.), entered January 15, 2004, which, inter alia, granted defendant insurer's cross motion for summary judgment and declared that defendant was not obligated to indemnify and defend plaintiffs in the underlying action, unanimously affirmed, with costs.
Although the subject comprehensive general liability policy issued by defendant required that notice be given "as soon as practicable" and plaintiffs, the owner of and general contractor at the subject work site, indisputably knew immediately after the fact that there had been a work-related accident at the work site in which a subcontractor's employee was injured, plaintiffs did not tender their defense of the underlying, ensuing action to defendant as additional insureds under the comprehensive general liability policy until nearly five months after the accident and four months after the underlying action was commenced against them. Plaintiffs' proffered excuse for failing to notify defendant sooner of the accident, namely, that they relied upon the subcontractor's assurances that the subcontractor would bear responsibility for injuries caused by the reckless conduct of its employees, was insufficient to raise any triable issue as to whether plaintiffs had a reasonable, good-faith belief in their non-liability (see Heydt Contr. Corp. v Am. Home Assur. Co., 146 AD2d 497, 499 [1989], lv dismissed 74 NY2d 651 [1989]; and see DiGuglielmo v Travelers Prop. Cas., 6 AD3d 344 [2004], lv denied 3 NY3d 608 [2004]). We note that the insurer need not show prejudice in order to disclaim, based on untimely notice of the claim (see Argo Corp. v Greater New York Mut. Ins. Co., ___ NY3d ___, 2005 NY LEXIS 770 [2005]; cf. Rekemeyer v State Farm Mut. Auto. Ins. Co., NY3d , 2005 NY LEXIS 771 [2005]).
Lancer Insurance Company v. T.F.D. Bus Co., Inc
In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendants T.F.D. Bus Co., Inc., and Michael A. Thomas in an action entitled Lyons v Thomas, commenced in the Supreme Court, Westchester County, under Index No. 14941/92, the defendants T.F.D. Bus Co., Inc., Thomas E. Lyons, and Celeste M. Lyons separately appeal from a judgment of the Supreme Court, Nassau County (Davis, J.), dated July 29, 2003, which, upon a jury verdict finding that there was an agreement between the plaintiff and T.F.D. Bus Co., Inc., to postpone the plaintiff's disclaimer of insurance coverage, inter alia, determined that there was no coverage under a business automobile liability policy issued by the plaintiff to the defendant T.F.D. Bus Co., Inc., for any claims, allegations, losses, costs, expenses, or judgments asserted by Thomas E. Lyons and Celeste Lyons in the underlying action, and declared that the plaintiff is not obligated to defend or indemnify T.F.D. Bus Co., Inc., or Michael A. Thomas in the underlying action and dismissed the defendants' counterclaims.
ORDERED that the judgment is affirmed, with costs. [*2]
On February 14, 1989, Thomas E. Lyons sustained injuries in an automobile accident involving his car and a bus owned by the defendant T.F.D. Bus Co., Inc. (hereinafter TFD), and operated by the defendant Michael A. Thomas. In 1992 Thomas E. Lyons and Celeste M. Lyons brought an action, inter alia, to recover damages for personal injuries (hereinafter the underlying action). Later in 1992, upon the failure of TFD and Thomas to answer or appear, the Lyons' motion for leave to enter judgment on the issue of liability in their favor and against TFD and Thomas was granted. Following an inquest, the Lyons received a judgment for damages and on or about September 1997 TFD's bank accounts were restrained. At that time, TFD informed the plaintiff, Lancer Insurance Company (hereinafter Lancer), its insurer, of the underlying action and sought coverage under its liability insurance policy.
TFD subsequently moved to vacate the default judgment insofar as asserted against it. The motion initially was granted, but by order dated February 10, 1998, upon reargument, the Supreme Court directed that a hearing be held to determine whether TFD was properly served with process in the underlying action. The court made clear that the default judgment already previously rendered against Thomas was unaffected, and remained valid. On November 10, 1998, following the hearing in the underlying action, it was determined that TFD had been properly served, thus, in effect, reinstating the default judgment against TFD in the underlying action.
In this subsequent action for a declaration of the parties' respective rights and obligations under the subject insurance policy, Lancer claimed that it had an agreement with TFD to postpone a decision on coverage under the subject policy, and when it learned in the last week of January 1999 that TFD was not pursuing an appeal from the adverse determination following the hearing on the issue of service, it disclaimed coverage in early February 1999. The Supreme Court submitted to the jury the issue whether there was, in fact, a postponement agreement between Lancer and TFD. The jury responded in the affirmative. Based on our review of the record, we conclude that the evidence supports that conclusion.
Insurance Law § 3420(d) requires written notice of a disclaimer to be given "as soon as is reasonably possible" after the insurer learns of the grounds for disclaimer of liability (see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64; Zappone v Home Ins. Co., 55 NY2d 131; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028). In this case, the modest delay from the time Lancer learned that TFD would not be pursuing an appeal with respect to the adverse determination at the traverse hearing (which meant the default judgment against it would stand) and Lancer's disclaimer - from the last week in January 1999 to early February 1999 - was reasonable, and thus Lancer's disclaimer was timely, vitiating coverage under the subject policy (see Town of Smithtown v National Union Fire Ins. Co., 191 AD2d 426; Commercial Union Ins. Co. v International Flavors & Fragrances, 822 F2d 267).
H. MILLER, J.P., LUCIANO, RIVERA and LIFSON, JJ., concur.
Walls v. Turner Construction Company,