Court Opinion

ID: 4084112
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:51:18.371765+00
Date Added: 2024-06-11T12:47:34.231811
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

857
CA 13-00319
PRESENT: SCUDDER, P.J., PERADOTTO, CARNI, VALENTINO, AND WHALEN, JJ.

PREFERRED MUTUAL INSURANCE COMPANY,
PLAINTIFF-RESPONDENT,

                    V                             MEMORANDUM AND ORDER

JOHN DONNELLY, ET AL., DEFENDANTS,
AND ROBERT JACKSON, DEFENDANT-APPELLANT.

ATHARI & ASSOCIATES, LLC, UTICA (MO ATHARI OF COUNSEL), FOR
DEFENDANT-APPELLANT.

BROWN & KELLY, LLP, BUFFALO (JOSEPH M. SCHNITTER OF COUNSEL), FOR
PLAINTIFF-RESPONDENT.

     Appeal from a judgment (denominated order and judgment) of the
Supreme Court, Oneida County (Samuel D. Hester, J.), entered November
14, 2012. The judgment, inter alia, granted the motion of plaintiff
insofar as it sought summary judgment declaring that plaintiff has no
duty to defend or indemnify its insured, defendant John Donnelly, in a
personal injury action commenced by defendant Robert Jackson against
Donnelly and others.

     It is hereby ORDERED that the judgment so appealed from is
affirmed without costs.

     Memorandum: Contrary to the contention of defendant Robert
Jackson, Supreme Court properly granted plaintiff’s motion insofar as
it sought summary judgment declaring that plaintiff has no duty to
defend or indemnify its insured, defendant John Donnelly, in a
personal injury action brought by Jackson against, inter alia,
Donnelly. From June 1995 until December 1995, Jackson lived in a home
owned by Donnelly, who had obtained a landlord’s insurance policy from
plaintiff. The policy was renewable each year during the three-year
period from June 1993 through June 1996. It is undisputed that, when
the policy was initially written, it did not contain any exclusion of
coverage for bodily injury sustained as a result of lead poisoning.
That exclusion was added to the policy when it was renewed in June
1994. The exclusion provided, in relevant part, that plaintiff would
“not pay for loss resulting directly or indirectly from bodily injury
. . . resulting from inhalation or ingestion of dust, chips or other
residues of lead or lead based materials adorning the interior or
exterior of the covered building(s).”

     We conclude that plaintiff met its initial burden of establishing
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                                                         CA 13-00319

that the lead exclusion was properly added to the policy and that
notice of the lead exclusion amendment was provided to Donnelly.
Contrary to Jackson’s contention, plaintiff submitted evidence in
admissible form to support its motion. Although many of the documents
appended to the attorney affirmation were not in admissible form (see
KOI Med. Acupuncture v State Farm Ins. Co., 16 Misc 3d 1135[A], 2007
NY Slip Op 51705[U], *2; see generally CPLR 4518 [a]), we conclude
that the affidavit from plaintiff’s Office Services Supervisor was
sufficient to lay a proper foundation for the business records
attached thereto (see CPLR 4518 [a]; cf. Unifund CCR Partners v
Youngman, 89 AD3d 1377, 1378, lv denied 19 NY3d 803; Palisades
Collection, LLC v Kedik, 67 AD3d 1329, 1330-1331; see generally People
v Kennedy, 68 NY2d 569, 579-580).

     With respect to the substance of the attachments, we conclude
that the documents established as a matter of law that the lead
exclusion was properly added to Donnelly’s insurance policy and that
Donnelly was notified of that amendment. Although plaintiff did not
submit evidence that the notice of the amendment was mailed to
Donnelly and Donnelly could not recall receiving the notice, plaintiff
submitted evidence in admissible form “of a standard office practice
or procedure designed to ensure that items are properly addressed and
mailed,” thereby giving rise to a presumption that Donnelly received
the notice (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d
679, 680; see Nocella v Fort Dearborn Life Ins. Co. of N.Y., 99 AD3d
877, 878). Contrary to the contention of Jackson, the evidence
submitted by plaintiff established that the “office practice [was]
geared so as to ensure the likelihood that [the] notice[s of
amendment] . . . [were] always properly addressed and mailed” (Nassau
Ins. Co. v Murray, 46 NY2d 828, 830; see Badio v Liberty Mut. Fire
Ins. Co., 12 AD3d 229, 229-230; cf. Hospital for Joint Diseases v
Nationwide Mut. Ins. Co., 284 AD2d 374, 375). Specifically, the
evidence established the procedure used by plaintiff for generating
notices whenever an insurance policy was amended, and the documentary
evidence established that a notice was generated for Donnelly’s policy
during the year in which the lead exclusion was added to the policy.
In addition, plaintiff submitted evidence that it placed the notices
in envelopes with windows so that the address on the notice was the
one used for mailing. The envelopes were then delivered to the mail
room, where they were sealed and the appropriate postage was added.
Thereafter, the mail was hand delivered to the post office that was
located adjacent to plaintiff’s parking lot.

     While we agree with the dissent that there was no evidence
submitted of a practice to ensure that the number of envelopes
delivered to the mail room corresponded to the number of envelopes
delivered to the post office (see Clark v Columbian Mut. Life Ins.
Co., 221 AD2d 227, 228-229; Matter of Lumbermens Mut. Cas. Co.
[Collins], 135 AD2d 373, 375; cf. Matter of State-Wide Ins. Co. v
Simmons, 201 AD2d 655, 656), we do not deem the absence of such
evidence fatal to plaintiff’s motion in light of the detailed
description of all of the other office practices geared toward
ensuring the likelihood that the notices were always properly
addressed and mailed (cf. Hospital for Joint Diseases, 284 AD2d at
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                                                         CA 13-00319

375; L.Z.R. Raphaely Galleries v Lumbermens Mut. Cas. Co., 191 AD2d
680, 681-682; Lumbermens Mut. Cas. Co., 135 AD2d at 374-375).
Additionally, “[a]s long as there is adequate [evidence from] one with
personal knowledge of the regular course of business, it is not
necessary to solicit testimony from the actual employee in charge of
the mailing” (Lumbermens Mut. Cas. Co., 135 AD2d at 375). Here,
plaintiff submitted evidence from someone with personal knowledge
concerning the specific procedures used by plaintiff to ensure that
the addresses on the envelopes were accurate and concerning the
“office procedures relating to the delivery of mail to the post
office” (id.). In opposition to the motion, Jackson failed to raise a
triable issue of fact “that [the] routine office practice was not
followed or was so careless that it would be unreasonable to assume
that the notice was mailed” (Nassau Ins. Co., 46 NY2d at 830).

     Contrary to Jackson’s further contention, the lead exclusion does
not violate public policy. As noted by both this Court and the Court
of Appeals, “[t]here is no statutory requirement for the full panoply
of coverages known as homeowner’s insurance and hence ‘no prohibition
against such insurers limiting their contractual liability’ ” (Slayko
v Security Mut. Ins. Co., 98 NY2d 289, 295, quoting Suba v State Farm
Fire & Cas. Co., 114 AD2d 280, 284, lv denied 67 NY2d 610, appeal
dismissed 68 NY2d 665). Thus, the mere fact that a landlord is
required to keep his or her property in a habitable condition pursuant
to Real Property Law § 235-b “ ‘cannot be construed as a holding that
public policy requires the responsible party to be covered by
insurance or that an insurance company cannot exclude liability for
that particular [condition]’ ” (Suba, 114 AD2d at 284). We further
conclude that the lead exclusion is not inconsistent with state and
local building code provisions or with other provisions of the
insurance policy, each of which requires landlords to use a protective
coating of paint to guard against deterioration (see e.g. State
Uniform Fire Prevention and Building Code §§ 1242.5, 1242.7; City of
Utica Code § 210). While such provisions require the use of paint,
they do not require the use of lead-based paint, and thus they are not
inconsistent with the policy’s lead exclusion.

     Contrary to the contention of Jackson, the terms of the lead
exclusion are not ambiguous and should be enforced. Generally,
“[i]nsurance contracts must be interpreted according to common speech
and consistent with the reasonable expectations of the average
insured” (Cragg v Allstate Indem. Corp., 17 NY3d 118, 122; see Dean v
Tower Ins. Co. of N.Y., 19 NY3d 704, 708). “To negate coverage by
virtue of an exclusion, an insurer must establish that the exclusion
is stated in clear and unmistakable language, is subject to no other
reasonable interpretation, and applies in the particular case”
(Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652). We
agree with plaintiff that the lead exclusion is stated in clear and
unmistakable language and is not subject to any other reasonable
interpretation. While Jackson contends that the use of the word
“adorn” in the lead exclusion limits its application to decorative
paint such as murals and frescos, we reject that contention.
According to the clear and unmistakable language of the insurance
policy, the lead-based paint at issue adorned the interior of the
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                                                         CA 13-00319

residence.

     Finally, we conclude that plaintiff neither waived its right to
assert the lead exclusion nor is estopped from asserting that
exclusion. “Waiver is an intentional relinquishment of a known right
and should not be lightly presumed” (Gilbert Frank Corp. v Federal
Ins. Co., 70 NY2d 966, 968). Although plaintiff settled a prior
lawsuit involving Jackson’s sibling, that settlement was executed
before this action was commenced and involved a child who lived at the
residence on different dates. We thus conclude that there is “no
evidence from which a clear manifestation of intent by [plaintiff] to
relinquish the protection of the contractual [exclusion] could be
reasonably inferred” (id.; see Matter of Progressive Northeastern Ins.
Co. [Heath], 41 AD3d 1321, 1322). We have reviewed Jackson’s
remaining contentions concerning estoppel and conclude that they are
without merit.

     All concur except CARNI and WHALEN, JJ., who dissent and vote to
modify in accordance with the following Memorandum: Defendant Robert
Jackson appeals from a judgment that granted plaintiff’s motion for,
inter alia, summary judgment declaring that plaintiff had no duty to
defend or indemnify its insured, defendant John Donnelly, in a
personal injury action brought by Jackson against Donnelly and others.
As relevant to this appeal, the judgment also denied Jackson’s cross
motion for, inter alia, summary judgment declaring that plaintiff is
obligated to defend and indemnify Donnelly in the underlying action.

     We respectfully disagree with the majority’s conclusion that
Supreme Court properly granted plaintiff’s motion insofar as it sought
summary judgment because plaintiff met its burden of establishing as a
matter of law that Donnelly was notified that a lead exclusion was
added to his insurance policy. As the majority notes, a presumption
that Donnelly received notice of the lead exclusion is created if
plaintiff presents evidence that its “office practice [was] geared so
as to ensure the likelihood that [the] notice[s] . . . [were] always
properly addressed and mailed” (Nassau Ins. Co. v Murray, 46 NY2d 828,
830; see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d
679, 680; Abuhamra v New York Mut. Underwriters, 170 AD2d 1003, 1003).
Although we agree with the majority that plaintiff presented evidence
of its procedure to ensure that notices were properly compiled and
addressed, we disagree that the evidence submitted by plaintiff
established that it had a standard office procedure to ensure that
notices were always properly mailed. Plaintiff submitted the
affidavit of its former Office Services Supervisor, in which the
supervisor stated that, after the disclosure notices and policy
amendments were compiled, the documents were inserted into a “window
envelope” that was to be mailed to the insured and the insured’s
agent. The next business day, the envelopes would be taken to the
mail room, after which a mail room employee would add postage, seal
the envelopes, and take them to the post office.

     Plaintiff offered no evidence regarding how it ensured that all
of the envelopes that should have been mailed were delivered to the
mail room or how it ensured that all of the envelopes that were
                                 -5-                           857
                                                         CA 13-00319

delivered to the mail room were, in fact, mailed. There was no
showing, for example, that mail room employees checked the number of
envelopes to be mailed against a mailing list or internal report to
ensure “that the total number of envelopes matched the number of names
on the mailing list” (Clark v Columbian Mut. Life Ins. Co., 221 AD2d
227, 229 [internal quotation marks omitted]; see L.Z.R. Raphaely
Galleries v Lumbermens Mut. Cas. Co., 191 AD2d 680, 681-682; Matter of
Lumbermens Mut. Cas. Co. [Collins], 135 AD2d 373, 375; cf. Badio v
Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230; Matter of State-Wide
Ins. Co. v Simmons, 201 AD2d 655, 656). Without evidence that
plaintiff took any measures to ensure that all of the notices were in
fact mailed, we conclude that plaintiff’s submissions were
insufficient to establish as a matter of law that its standard office
procedures were “geared so as to ensure the likelihood that a notice
of [amendment] is always properly . . . mailed” (Nassau Ins. Co., 46
NY2d at 830). We respectfully disagree with the majority’s conclusion
that the absence of evidence of such internal verification procedures
is not fatal to plaintiff’s motion insofar as it sought summary
judgment. The presumption of receipt arises only if plaintiff’s
office practice ensured that the notices were “always properly
addressed and mailed” (id. [emphasis added]). Thus, we conclude that
plaintiff’s evidence was insufficient to give rise to the presumption
of receipt and that the court therefore erred in granting plaintiff’s
motion insofar as it sought summary judgment. Consequently, we would
modify the judgment by denying plaintiff’s motion insofar as it sought
summary judgment declaring that plaintiff had no duty to defend or
indemnify Donnelly in the underlying action.

     We otherwise agree with the analysis of the majority, and we
further conclude that Jackson failed to meet his initial burden on
that part of his cross motion seeking summary judgment declaring that
plaintiff is obligated to defend and indemnify Donnelly in the
underlying action. We thus conclude that the court properly denied
that part of the cross motion.

Entered:   November 8, 2013                     Frances E. Cafarell
                                                Clerk of the Court