Coverage Pointers - Volume VIII, No. 17

Dear Coverage Pointers Subscribers:

We welcome over 20 new subscribers this week to the Coverage Pointers family.

It's 10:30 p.m. in Scottsdale, AZ, where I'm preparing for the Federation of Defense & Corporate Counsel winter meeting.  That means it's tomorrow back east.  Defense counsel, corporate counsel and insurance claims professionals from around the country will start to pour into this lovely facility for a week of education and fellowship. But nothing will happen -- there's simply no fellowship permitted -- until Coverage Pointers is put to bed and you get your bi-weekly (is bi-weekly every two weeks or twice a week?) serving of delicious coverage decisions, served piping hot and ready to devour.  
 
There's a great collection in the attached edition, including a Court of Appeals decision reviewing the aggregation of asbestos claims for the purpose of determining whether an excess layer is reached. You'll also find two terrorism cases, one arising out of a 9/11 business interruption claim, a pollution exclusion case or two, an assault case and more late notice cases (our reader's favorites) along with an eclectic array of others.  You'll find Mark's Serious Injury column.  
 
From Audrey Seeley, the Queen of No Fault, I bring you her tidings:
 
You know how we love trends!  In this edition, a trend found in both the arbitration and litigation world is the intense scrutiny given to peer review reports.  The message is clear, if insurers are going to rely upon these reports to deny a claim they had better contain more than just a synopsis of the records reviewed and brief discussion that the
test recommended does not appear to alter the course of treatment for the patient.  The fact finder wants to see something that demonstrates that the test recommended deviates from the generally accepted medical/professional practice. While I have an idea of what could satisfy that requirement, what actually does satisfy that requirement I still have yet to see.
 
Enjoy this issue and again let us know if you need training!  I am living vicariously through Dan on what temperatures above 10 degrees
feel like. 
 
Audrey
 
 
You'll forgive us, I hope for our trespasses.  They're not really ours. We are not reporting on three or four Second Department cases released today because the Second Department website was simply not cooperating
tonight.  We'll pick them up in the next issue.
  
In the meanwhile, we offer you these cases in the attached issue:
 
 * Multiple Occurrences in Asbestos Cases: Following "Unfortunate Event" Approach, New York High Court Refuses to Aggregate Individual Asbestos Claims to Determine Exhaustion of Primary Coverage to Reach Excess Layers 
* Issue Remains Whether Carrier Sent Cancellation Notice to Proper Address 
* When Insured's Employee is Arrested for Assault, Duty to Give Notice of Incident Arises. Carriers Sustained on Late Notice Disclaimer 
* Class Action Certification Denied in "Medical Necessity" Claim 
* Injuries from Fumes from Nail Salon Not Excluded Under Pollution Exclusion 
* When Coverage Maxed Out Under Pollution Clean Up Policy, Discovery of Further Contamination Not Covered by Different Policy Because of Exclusion 
* Rust is Rust 
* Blanket Additional Insured Endorsement:  Cover Afforded Only Where Named Insured is "Solely" Responsible.  "Solely" Deemed Ambiguous and Found to Reference Named Insured and Additional Insured, Not Others 
* Clear Provisions in Life Insurance Policy Enforced as Written 
* Undertaking Defense Without Reservation Leads to Estoppel 
* "Some Notice" of No Fault Claim is NOT Notice of Uninsured Motorist Claim 
* Application to Stay Uninsured Motorist Claim Denied. Finding that Insured Vehicle was Did Not Collide with a Particular Car in Alleged Hit-and-Run Accident Does Not Necessarily Mean that Insured Vehicle Did Not Collide with a Different Car 
* Untimely Disclaimer in Injury Claim Leads in Ineffective Disclaimer 
* When Complaint Amended to Allege Covered Claim, Insured Entitled to Defense Costs Going Forward 
* 9/11 Business Interruption Claim:  Recovery Available for Time Reasonably Taken to Resume Operations, Not for Period Until Reconstruction of World Trade Center 
* Lease Did Not Require Tenant to Purchase and Maintain Insurance Coverage for Terrorism
 
STarosieleC'S serious (Injury) Side of New York No-FaulT
Mark Starosielec
[email protected]  
 
* Timing is Everything: Plaintiff's Chiropractor's Report Failed to Explain Four-Year Gap in Treatment 
* Parties Must Provide Reasonable Justification for Examinations Made Post-Motion 
* Medical Reports Must Be Recent to Raise Triable Issue of Fact 
* Reversal of Fortune: Prima Facie Case Not Made as Defendants Rely on Their Same Evidentiary Submission to Their Detriment 
* Explain Yourself: Defendant's Doctor Must Be Precise When Drawing Conclusions 
 
Audrey's Angle on No-Fault
Audrey Seeley
 [email protected]
 
 * CityWide Shut Down of Using Peer Review Report As No Showing Of Inconsistency With Generally Accepted Medical Practices 
* Left Shoulder Treatment Not Ascertainable Within One Year Despite Contention That It Was Injured From Overuse Due To Right Shoulder Injury As A Result Of The Accident 
* Yet Another Peer Review Report Struck Down As Inadequate
 
Keep that feedback coming.
 
Dan
 
Dan D. Kohane
[email protected] 
 

 Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.

Newsletter Editor

Dan D. Kohane
[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Audrey A. Seeley
Vivian Perry Roché

Steven E. Peiper

Fire, First-Party and Subrogation Team
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Philip M. Gulisano

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader
[email protected]
Vivian Perry Roché
Mark Starosielec

APPELLATE TEAM
Dan D. Kohane
Scott M. Duquin

 

2/15/07            Appalachian Insurance Company v. General Electric Company

Court of Appeals
Multiple Occurrences in Asbestos Cases: Following "Unfortunate Event" Approach, New York High Court Refuses to Aggregate Individual Asbestos Claims to Determine Exhaustion of Primary Coverage to Reach Excess Layers

In a good discussion surrounding the issue of aggregation of individual asbestos exposure for the purposes of exhausting primary coverage, Court sides with excess carriers. Individual asbestos claims cannot, under the terms of this CGL policy, be combined for the purpose or reaching the excess policies.  Court considers several factors as relevant to distinguishing injuries or losses that arise from a single occurrence as opposed to those that constitute multiple occurrences: whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors.

 

2/22/07            Thiebault v. Travelers Insurance
Appellate Division, Third Department

Issue Remains Whether Carrier Sent Cancellation Notice to Proper Address
While it appears that the error in the cancellation notice address was caused by the insured, which left out information about the address in the application, carrier’s failure to send out the notice to the correct address resulted in issue of fact as to whether fire policy was properly canceled. 

Editors Note:  Odd result, certainly.  Should an insured purposely complete the application with the wrong address so that it cannot receive a cancellation notice?  It’s sort of like a person who murders his parents and then complains he or she is an orphan.

 

2/22/07            RMD Produce Corp. v. Hartford Casualty Insurance Company
Appellate Division, First Department
When Insured’s Employee is Arrested for Assault, Duty to Give Notice of Incident
Arises.  Carrier Sustained on Late Notice Disclaimer
RMD is operates its business at the New York City Terminal Market.  A commercial general liability policy of insurance issued by Hartford to RMD was in effect at the time in question, as was a commercial catastrophe liability policy issued by Lumbermens to Hunt's Point Cooperative Risk, under which RMD was a named insured. The underlying action arises out of an incident which occurred on May 13, 2003, in which Michael Ward, a fire inspector for the City of New York, claims he was assaulted by Keith Freeman, an employee of RMD, as Ward was attempting to perform a fire inspection of the premises occupied by RMD.

RMD learned of the incident about a year later, April 2004 and notified Hartford and Lumbermens shortly thereafter.  Both carriers denied coverage based on late notice. RMD argued that the incident involved the justifiable use of reasonable force and therefore it had not duty to notify the carriers until it was sued.  RMD also argued that the loss was unexpected from the standpoint of the corporate insured, even if expected by Freeman.

The court rejected the excuses offered by the insured.  While the Court of Appeals has recognized that circumstances may exist that excuse a failure to give timely notice, such as a "good faith belief of non-liability," that belief must be reasonable "under all circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence." The court held that notice one year after the incident was untimely as a matter of law. Ward attempted to gain entry to plaintiff's premises to conduct a fire inspection, but was refused by defendant's employee, Freeman. Ward left, and returned with two New York City Police Officers and a New York City Fire Department Chief. At that juncture, Freeman allegedly continued to refuse access to Ward and an altercation broke out between Ward and Freeman, during which Freeman also attacked one of the police officers. As a result, Freeman was arrested on a variety of charges, including assault and obstruction of governmental administration.

In sum, given all of the circumstances, including the injuries sustained by Freeman, the fact that he was arrested, and that the other participants in the incident were New York City officials, we conclude that there is no view of the circumstances which would warrant a finding that plaintiff's failure to give timely notice of the occurrence was reasonable.

2/22/07            Batas v. The Prudential Insurance Company of America

Appellate Division, First Department
Class Action Certification Denied in “Medical Necessity” Claim
Court refuses to allow certification of class action against Prudential where claims that review of medical necessity by lay people required individual determinations.

2/20/07            Tower Insurance Company of New York v. Breyter
Appellate Division, Second Department
Injuries from Fumes from Nail Salon Not Excluded Under Pollution Exclusion
Court noted that the plaintiff in the underlying action did not allege that the fumes from the nail salon of defendant insureds' tenant actually resulted in pollution. However, it appears claims were that the injuries resulted from inhalation of fumes at nail salon.  Court holds that the pollution exclusion relied upon by plaintiff insurer is inapplicable It is at best ambiguous whether the subject exclusion was intended to encompass claims such as those made in the underlying action, alleging that "solvent fumes . . . drifted a short distance from the area of . . . intended use and . . . caused inhalation injuries" and construed the ambiguity against the insurer.

Editors Note:  This is another in a growing number of cases both in New York and nationally that have refused to apply the pollution exclusion  to deny coverage in cases other than traditional environmental contamination situations.  Insurers who wish to exclude these kinds of claims have been drafting artful endorsements.

2/20/07            Denihan Ownership Co. LLC v. Commerce and Industry Insurance Co.
Appellate Division, First Department
When Coverage Maxed Out Under Pollution Clean Up Policy, Discovery of Further Contamination Not Covered by Different Policy Because of Exclusion
Plaintiff owned commercial property on which several businesses were located.  Planning to sell the property, plaintiff hires AKRF, an environmental consulting firm to analyze property contamination and then had AKRF undertake clean-up and remediation.  Plaintiff purchased  cleanup cost cap insurance coverage (CCC) from the insurer for protection.

The carrier paid out the maximum amount under the policy but plaintiff claims further compensation under a supplemental Pollution Legal Liability Select (PLLS) policy it had also purchased from defendant. Specifically, AKRF completed its remediation work in May 2001, but in January 2002 the general contractor retained by the purchaser of the property discovered previously unknown and unidentified contamination, plus several underground storage tanks that had also been overlooked by AKRF. Plaintiff disputes defendant's reliance on a contractual exclusion in the PLLS policy with regard to remediation for this additional pollution. Under this exclusion, "no coverage will be provided for Cleanup Costs, Claims or Loss arising from the Pollution Conditions associated with" the documents prepared by AKRF

Court agrees that there is no coverage available under the PLLS policy.  Here, the exclusion was clearly intended to ensure no overlap between the underlying CCC policy, which provided coverage for petroleum contamination on the site, and any new and different pollution conditions covered by the PLLS policy. The clause precludes coverage for any cleanup costs or claims that arise out of or are related to the pollution conditions discussed in the documents drawn up by AKRF.

2/13/07            Catucci v. Greenwich Insurance Company
Appellate Division, Second Department

Rust is Rust
The defendant issued a commercial property insurance policy which contained exclusions for loss caused by rust, corrosion, and deterioration of covered property.  A portion of concrete located on the southwest end of the deck collapsed, creating a large hole. Court found that "rust and deterioration" exclusions were unambiguous and that the carrier demonstrated their applicability in this case.  Moreover, there was not proof that loss took place during applicable policy period.

 

2/13/07            City of New York v. Evanston Insurance Company

Appellate Division, Second Department
Blanket Additional Insured Endorsement:  Cover Afforded Only Where Named Insured is "Solely" Responsible.  "Solely" Deemed Ambiguous and Found to Reference Named Insured and Additional Insured, Not Others.

Scala Contracting Co., Inc. (hereinafter Scala), entered into an agreement with the City of New York to perform certain construction work on a sidewalk in Brooklyn.  Scala was to provide CGL coverage naming City as an additional insured and obtained a policy through Evanston.  That policy contained a blanket additional insured provision that made City as an additional insured "only with respect to liability arising out of [Scala's] ongoing operations performed for [the City] and then only as respects any claim, loss or liability arising out of [Scala's] operations . . . and only if such claim, loss or liability is determined to be solely the negligence or responsibility of [Scala]." (emphasis added)

 

Lamb, a Scala employee was injured and sued the drivers of the car who allegedly caused the accident..  The defendants commenced a third party action against the City and Scala, alleging that each and both failed to provide Lamb with a safe workplace. The City tendered to Evanston.

Evanston argued that the phrase "solely the negligence or responsibility of [Scala]" meant that there was no coverage established until there was a determination made that Scala was 100% at fault for Lamb's injuries. Evanston argues that such a determination could never be made here inasmuch as the third-party complaint against Scala seeks only contribution and not common-law indemnification, and that therefore the defendant has, in effect, conceded that his own negligence was a proximate cause of the accident.

The City, on the other hand, would read the word "solely" to refer only to an apportionment of fault as between Scala and itself, without regard to the potential liability of third parties. Thus, the City maintains that it would be an additional insured under the policy if Scala bore some responsibility for the accident and the City itself bore none.

The Appellate Division agreed with the City.  The term "solely" is determined to be ambiguous. In the court's view City's interpretation best comports with such reasonable expectations and purposes here because it would exclude coverage only in those cases in which the putative additional insured is found to be partially at fault for the happening of the accident. By contrast, Evanston's interpretation would indiscriminately exclude coverage in every case in which any person or entity other than the named insured is in any degree at fault for the happening of the accident.

Editors Note:  Since the allegations in complaint presented the possibility that City was not negligent and Scala was, carrier must defend City.  Evanston cannot wait until there is a determination of responsibility before it undertakes the defense.

2/13/07            Gassman v. Metropolitan Life Insurance Company
Appellate Division, Second Department
Clear Provisions in Life Insurance Policy Enforced as Written
It's unclear what the insurer's argument was here.  Life insurance policy provided that four owners and beneficiaries of policy would get proceeds upon death of business partner.  He died and Metropolitan resisted paying each 25%

2/13/07            Fireman's Fund Insurance Co. v. Zurich American Insurance Co.
Appellate Division, Second Department
Undertaking Defense Without Reservation Leads to Estoppel
Having accepted tender of the defense, without reserving its right to disclaim coverage, estoppel barred Fireman's Fund's subsequent request for contribution. Carrier's may not remain silent of coverage issues are present.  Note, this was not a determination that the insurer failed to raise exclusions and therefore cannot raise them later.  In this case, by its conduct in undertaking the defense without the insured knowing that the carrier may change its mind, the insured is considered prejudiced and the carrier cannot alter its position. 

Editors Note:  We can understand the position the court takes with respect to the insured but one carrier has not duty to another who may also provide coverage.  We'd suggest that estoppel should not preclude Fireman's Fund from seeking the contribution of other carriers, unless the other carriers can establish prejudice.

2/13/07            In the Matter of Eveready Insurance Company v. Mesic
Appellate Division, Second Department
"Some Notice" of No Fault Claim is NOT Notice of Uninsured Motorist Claim
 Failure to file a sworn statement after alleged hit-and-run accident is a breach of SUM endorsement and leads to loss of uninsured motorists coverage. The fact that the petitioner received some notice of the accident by way of an application for no-fault benefits did not negate the breach of the policy.

 

2/13/07            Matter of One Beacon Ins. Co. v Espinoza
Appellate Division, Second Department
Application to Stay Uninsured Motorist Claim Denied. Finding that Insured Vehicle was Did Not Collide with a Particular Car in Alleged Hit-and-Run Accident Does Not Necessarily Mean that Insured Vehicle Did Not Collide with a Different Car
Espinoza, was a passenger in a car owned and operated by Garcia when it was allegedly involved in an accident with a vehicle owned by Luongo Trucking, Inc. (hereinafter Luongo). The Garcia vehicle was insured under a One Beacon policy.  Espinoza sues Luongo and the matter proceeds to verdict.  At trial, the jury is asked whether the Luongo vehicle came into contact with the Garcia car and the jury answered "no" to the question. A month later, Espinoza files a demand for uninsured motorists benefits against One Beacon claiming that the Luongo vehicle has been "misidentified" and that he had a valid UM claim as a result of a "hit and run" accident.  One Beacon sought to stay arbitration.

The court held that there was a six year statute of limitation for the filing of UM benefits (since it was a contractual claim) so the demand was not barred by the statute of limitations.  The court recognized that in a claim for UM benefits involving a hit-and-run, there must be physical contact between the insured's vehicle and the other car in order to make a valid claim.  The fact that the jury found that the Garcia car and the Luongo car did not collide, does not mean that the Garcia car didn't collide with ANOTHER car. Nor was the court concerned that in the lawsuit Espinoza claimed that the Luongo vehicle was the hit-and-run car and in the UM proceeding was now claiming that the Luongo car was NOT the hit-and-run car.

If there were a hit-and-run accident with another car, then Espinoza would have a valid UM claim. Court sent the matter back to the trial court for a hearing on that issue.

2/13/07            Preserver Insurance Company v. Ryba
Appellate Division, Second Department
Untimely Disclaimer in Injury Claim Leads in Ineffective Disclaimer
Insurer's disclaimer was untimely and since it was based on a policy exclusion, it was ineffective. In addition, since the injured party in the underlying action was subject to the Workers Compensation law, the policy's $100,000 limit of liability was not applicable.  The insurer had made an argument that the provisions of Insurance Law 3420(d) which, in effective, provide the basis for untimely disclaimers to be ineffective, were inapplicable to this kind of policy and claim.  That section of the Insurance Law applies to bodily injury and wrongful death claims.  The court rejected that argument, since the underlying claim involved a bodily injury.

2/13/07            Rotunno v. Hamilton William Stiles, Jr
Appellate Division, Second Department
When Complaint Amended to Allege Covered Claim, Insured Entitled to Defense Costs Going Forward
Hanover issues a homeowners policy to Stiles for period October 10, 1998 - October 10, 1999.  In September 1999, Stiles sold the house to Rotunno.  After the sale, Rotunno discovered that there had been a oil leak which had contaminated the foundation of the house and the ground beneath it and Rotunno sued Stiles alleging seven causes of action. 

In a confusing array of motions, Rotunno moved to amend his complaint to add another cause of action, the Eighth, which was a claim under the Navigation Law and then moved for judgment on that cause of action at the same time.  Stiles sought a declaration that Hanover had an obligation to defend him for that new cause of action.

The court held that Stiles can recover costs, expenses and attorneys fees incurred since the date of the entry of the Order first allowing the Navigation Law claim to be interposed against Stiles, the only claim that was covered.

2/13/07            The Children's Place Retail Stores, Inc. v. Federal Insurance Company
Appellate Division, First Department
9/11 Business Interruption Claim:  Recovery Available for Time Reasonably Taken to Resume Operations, Not for Period Until Reconstruction of World Trade Center.
The insured’s business was destroyed on 9/11/01 in the World Trade Center collapse.  The plaintiff decided not to relocate.  The court determines that having made the election not to reopen its business, the insured is entitled to recover business interruption coverage benefits for the “period of time it would have reasonably taken to resume operation at a different location.”  The insured argued that it would be entitled to coverage from the date of destruction until the date the World Trade Center was rebuilt.  Te policy does not specifically identify the World Trade Center location where the business must be situated.

2/13/07            TAG 380, LLC, v. ComMet 380, Inc.
Appellate Division, First Department
Lease Did Not Require Tenant to Purchase and Maintain Insurance Coverage for Terrorism
In effect, landlord sought to evict tenant for not providing terrorism insurance.  At the time the lease took effect, it tied insurance requirements to the 1989 Extended Coverage Endorsement.  That endorsement included causes of loss resulting from hazards in addition to fire, such as smoke, explosion, riot and civil commotion and "actual physical contact of an aircraft or vehicle with the property." Specifically excluded were such hazards as nuclear reaction and radioactive contamination, war (including insurrection or civil war) and "hostile and warlike action" undertaken "by any government or sovereign power (de jure or de facto) or by any authority maintaining or using military, naval or air forces," including action "by an agent of any such government, power, authority or forces." Terrorism is neither included as a covered peril, nor excluded (the exclusion applying only to acts of governments or sovereign powers).   Since terrorism coverage was not required, tenant’s failure to procure it was not a breach of the lease.

 

 

STarosieleC’S serious (Injury) Side of New York No-FaulT
Mark Starosielec
[email protected]

 

 

2/15/07            Gonzalez v. Beale
Appellate Division, First Department
Timing is Everything: Plaintiff’s Chiropractor’s Report Failed to Explain Four-Year Gap in Treatment

Order granting defendants’ cross motion for summary judgment is unanimously affirmed. Here, plaintiff’s evidence in response to defendants’ prima facie showing included his chiropractor’s affidavit and report. While the chiropractor, who opines that plaintiff suffers from permanent and partially disabling limitations to his lumbar and cervical spine attributable to multiple disc herniations with stenosis, as well as numbness in his hand attributable to carpal tunnel syndrome, states that he had released plaintiff from active chiropractic care because he believed his conditions were permanent and that any further treatment would be palliative only. Further, plaintiff has since been suffering and self-treating with various medications, mostly Motrin, the report does not satisfactorily explain the four-year gap in treatment for purportedly painful conditions.

 

2/13/07            Beyl v. Franchini
Appellate Division, Second Department
Parties Must Provide Reasonable Justification for Examinations Made Post-Motion

Plaintiffs appealed lower court’s order denying their motion for leave to renew their opposition to defendants’ motion for summary judgment. Defendants’ motion had been granted on the ground that plaintiff’s treating physician’s affidavit was not based on a timely examination (six months after the accident and more than a year before motion was made).

 

Thereafter, plaintiffs sought to include more recent examinations, including one made after the motion was submitted and another made after the motion was decided. The plaintiffs alleged that the injured plaintiff’s treating physician was unable to schedule these examinations earlier. However, plaintiffs did not explain why the treating physician had sufficient time to prepare an affidavit, but did not have sufficient time to conduct an examination before defendants’ summary judgment motion was submitted. Additionally, there was no explanation as to why the plaintiffs did not seek an adjournment of the defendants’ motion until an examination could be scheduled. Therefore, the plaintiffs failed to provide a reasonable justification for the failure to present such facts in opposition to the defendants’ initial motion.

 

2/13/07            Earl v. Chapple
Appellate Division, Second Department

Medical Reports Must Be Recent to Raise Triable Issue of Fact

Plaintiffs appealed lower court’s order granting defendants’ motion for summary judgment. Appellate Division affirmed the order. The Court held: defendants satisfied their burden of demonstrating that the plaintiff did not sustain a serious injury. In opposition, the report of the plaintiff’s treating chiropractor was insufficient to raise a triable issue of fact as it was not based upon a recent examination of the plaintiff. Additionally, the affirmed report of the plaintiff’s treating neurologist was also insufficient as it failed to demonstrate that limitations in the plaintiff’s ranges of motion were contemporaneous with the accident. In any event, the neurologist’s report relied upon unsworn reports of other physicians.

 

2/13/07            Gerson v. C.L.S. Transp., Inc.
Appellate Division, Second Department
Reversal of Fortune: Prima Facie Case Not Made as Defendants Rely on Their Same Evidentiary Submission to Their Detriment

Plaintiffs appeal lower court’s order granting defendants’ motion for summary judgment on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Appellate Davison reversed order, holding: defendants, who relied on the same evidentiary submissions on their respective motions, failed to make a prima facie showing.

 

All of the defendants relied upon, inter alia, the report of an orthopedic surgeon who examined the injured plaintiff. The report set forth range of motion findings concerning the injured plaintiff’s cervical spine; however, the orthopedic surgeon failed to compare the range of motion findings with what is deemed normal. Moreover, the orthopedic surgeon admitted in his report the existence of limitations in various aspects of the injured plaintiff’s lumbar spine range of motion that were not adequately quantified or qualified so as to establish the absence of a significant limitation of motion.

 

 

2/13/07            Harman v. Busch
Appellate Division, Second Department
Explain Yourself: Defendant’s Doctor Must Be Precise When Drawing Conclusions

Appellate Division affirmed lower court’s order denying defendant’s motion for summary judgment. While the order was affirmed, it was done so on grounds other than those relied upon by the lower court. In his affirmed medical report, the orthopedic surgeon who examined the injured plaintiff set forth range of motion findings concerning the injured plaintiff’s cervical and lumbar spine, as well as her wrists. He failed, however, to compare those findings to what are considered normal ranges of motion for those regions of her body.

Moreover, this orthopedic surgeon noted in his report that the prior MRI reports of the plaintiff showed degenerative processes in her lumbar spine and cervical spine, and he stated that the herniations were caused by those pre-existing conditions. Despite so finding, he still concluded that the plaintiff sustained traumatic aggravation of those prior conditions and noted unquantified or unqualified limitations in the range of motion of the plaintiff’s cervical spine based on his examination of her. While he did opine that a contributing factor in those range of motion limitations was likely due to thyroid surgery and radiation unrelated to the accident, these unrelated events were listed only as a contributing factor and not the sole cause of the limitations noted. Thus, the orthopedic surgeon’s report suggests that the traumatic aggravation to those pre-existing conditions caused by the accident was also a contributory factor in the limitations in cervical spine range of motion observed by him and noted in his report. However, the Court held: absent a comparative quantification of those limitations to what is normal, it cannot be concluded that the decreased range of motion in the injured plaintiff’s cervical spine, as conceded by this orthopedic surgeon, is mild, minor, or slight so as to be considered insignificant within the meaning of the no-fault statute.

 

Audrey’s Angle on No-Fault

Audrey Seeley

[email protected]

 

The reporting of No-Fault arbitration awards is not at the same level of reported case law, meaning there is no one source to turn to for comprehensive research of arbitration awards.  We encourage you to submit to us, in a PDF format, at [email protected], any recent no-fault arbitration awards, especially Master Arbitration awards, that address interesting no-fault issues. 

 

2/20/07            In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Veronica K. O’Connor, Esq. (Erie County)                   

CityWide Shut Down of Using Peer Review Report As No Showing Of Inconsistency With Generally Accepted Medical Practices

Here is the Angle:  CityWide strikes again!  Here, the insurer had a nice peer review that indicates that there is no indication as to how a digital motion x-ray will alter the course of the patient’s treatment or assist the treating chiropractor with the patient’s care.  While it sounds great one little issue was missed – how does this test deviate from the generally accepted medical/professional practice.  I note that there are articles out there on digital motion x-rays that should address this issue which some peer reviewers have reviewed and relied upon.

 

The Analysis:  The Applicant sought reimbursement of a cervical digital motion x-ray in the amount of $750.00 from Eastern Niagara Radiology.  It is noted that the Applicant, eligible injured person, had standing to proceed with this arbitration as there was no assignment of benefits to the provider, rather there was only an authorization for direct pay to the provider.

 

The insurer denied the digital motion x-ray based upon the peer review of Fred B. Rudin, DC.  The substance of Mr. Rudin’s report is of import in this arbitration:

 

In order to be performed, any medical diagnostic services must be established to be medically necessary.  To be so distinguished, it must be expected to provide meaningful information which would aid the practitioner in care or care planning for a patient.  In this case, there are no case history forms or pain diagrams from the claimant, [the Applicant].  There are no examination notes from Dr. Ward.  There is a periodic evaluation performed on 11/1/04 which may have been from Dr. Ward.  This document notes severe cervical spine pain and active trigger points.  There is no indication of the performance of a range of motion evaluation or of a neurological evaluation at that time.  Prior to the performance of this test, [the Applicant] underwent cervical spine x-rays which revealed no fracture and cervical spine MRI which revealed (by report) a 2 millimeter central subligamentous disc herniation at C4/5 minimally impinging on the anterior aspect of the theca.  In both cases, paravertebral soft tissues were not reported to be abnormal.  No disruption is reported to any cervical spine supportive ligament.  Based upon the records provided, medical necessity is not established for the performance of the dynamic cervical spine x-rays, because, based upon the available medical records, potential information obtainable from this testing would not be expected to alter the treating chiropractor’s interventional approach in any way.  Accordingly, based upon the records provided, I can not recommend reimbursement for this test.

 

            Interestingly, there is no indication in the award as to whether the Applicant submitted any medical records from the treating chiropractor who referred the Applicant for the digital motion x-ray. 

 

            Arbitrator O’Connor awarded the Applicant reimbursement for the digital motion x-ray, as the peer review report failed to demonstrate how the treatment deviated from generally accepted medical/professional practices in accordance with CityWide Social Work & Psych. Serv. v. Travelers Indem. Co., 3 Misc3d 608 (Civ. Ct. Kings Cty. 2004), Alliance Med. Office, P.C. v. Allstate Ins. Co., 196 Misc2d 268 (Civ. Ct. Kings Cty. 2005), and Nir v. Allstate Ins. Co., 7 Misc3d 544 (Civ. Ct. Kings Cty. 2005).

 

2/12/07            In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator MaryAnne Theiss, Esq. (Onondaga County)

Left Shoulder Treatment Not Ascertainable Within One Year Despite Contention That It Was Injured From Overuse Due To Right Shoulder Injury As A Result Of The Accident

Here is the Angle:  One year rule cases are difficult to prevail on but a close review of the medical records submitted here did not indicate that treatment of left shoulder would be required.

 

The Analysis:  The issue in this arbitration was whether the Applicant’s, eligible injured person, left shoulder treatment was ascertainable within one year from the date of her June 27, 2001, motor vehicle accident.

 

The 72 year old Applicant sustained a right shoulder injury as a result of the accident.  Over three years later, she claimed that her left shoulder first began bothering her due to overuse because of the right shoulder injury.  The Applicant had a clear disability with respect to both shoulders.  The insurer continued to pay medical expenses related to the right shoulder, but denied the left shoulder treatment due to the one year rule.

 

Arbitrator Theiss notes that the one year rule has been the subject of great debate in the arbitration world as arbitrators have had widely different conclusions on what is ascertainable within one year.

 

2/12/07           East Coast Acupuncture Services, P.C. a/a/o Ali Ahmed v. American Transit Ins. Co.
2007 NYSlipOp 50213(U) (App. Term 1^st Dept February 8, 2007)

 Yet Another Peer Review Report Struck Down As Inadequate

Here is the Angle:  Another peer review is deemed inadequate for failure to set forth a sufficient medical rationale for the determinations.

 

The Analysis:  Plaintiff’s summary judgment motion was partially granted on issue of an insurer’s denial based upon a peer review.  The Court held that the peer review was insufficient to deny the claims as the review did not set forth an adequate factual basis and medical rationale for the physician’s determinations.

 

 

Across Borders

 

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org ranked among the top five legal research websites in an article published in Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor Emeritus.

 

2/20/2007        Strahin v. Sullivan and Farmers & Mechanics Mutual Ins. Co.
West Virginia Supreme Court

Insurer Not Required to Pay Excess Verdict Where Insured Not Exposed to Personal Liability

This case was before the West Virginia Supreme Court for a second time. The initial complaint was filed in February 1999 after Daniel R. Strahin was shot in the arm by Robert Cleavenger in 1998 while he was a guest on property owned by Earl Sullivan. In Strahin v. Cleavenger, 216 W.Va. 175, 603 S.E.2d 197 (2004), this Court upheld a jury verdict in favor of Mr. Strahin against Mr. Cleavenger and Mr. Sullivan in the amount of $1,060,556.00. Following the jury verdict but prior to the issuance of this Court's opinion in Strahin I, Mr. Strahin amended his complaint to assert, inter alia, a claim against Farmers & Mechanics Mutual Insurance Company, pursuant to this Court's decision in Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990), which had been assigned to him by Mr. Sullivan before trial. At the time of the incident, Mr. Sullivan had a homeowners' policy issued by Farmers & Mechanics with liability limits of $100,000.00. Farmers & Mechanics answered the amended complaint and moved for summary judgment with regard to the Shamblin claim. The circuit court granted the motion for summary judgment by order dated June 17, 2005, which Strahin appealed. The assignment of a Shamblin claim is clearly permissible. However, the mere assignment of rights does not translate into automatic recovery. Rather, the assignee must still satisfy all of the essential elements of the cause of action. By coupling the assignment in this case with a covenant not to execute prior to trial and thus prior to an excess verdict, the Shamblin claim was automatically extinguished. Strahin contends that by precluding the assignment of Shamblin claims prior to trial, insureds will be deprived of the ability to protect their assets. However, the Court believes that holding an insurer liable for a judgment even when the insured is not legally liable for the same only encourages collusion between the insured and the plaintiff to raid the insurance proceeds. Obviously, an insured who is protected by a covenant not to execute loses the incentive to contest his or her liability. While there was no allegation of collusion between Mr. Strahin and Mr. Sullivan, public policy as well as case law dictate that when an insured's personal assets are not at stake at the time a verdict in excess of the applicable insurance policy limits is rendered, there is no cause of action pursuant to Shamblin. Accordingly, the Court held that in order for an insured or an assignee of an insured to recover the amount of a verdict in excess of the applicable insurance policy limits from an insurer pursuant to this Court's decision in Shamblin, the insured must be actually exposed to personal liability in excess of the policy limits at the time the excess verdict is rendered.

Submitted by: Debra Herron (McNeer Highland McMunn and Varner, L.C.)

 

2/16/2007        Beverly Hills Unified Sch. Dist. v. Gulf Underwriters Ins. Co.
California Court of Appeal, Second District

Pollution Exclusion Broadly Applied to Deny Coverage for Third-Party Personal Injury Lawsuits

Multiple personal injury lawsuits were brought against a School District for injuries and deaths allegedly caused during oil and gas exploration at the school, wherein toxic chemicals were “generated, spilled, emitted, released, discharged, stored, processed and vented” that contaminated the area, including the air, soil, water, and environment. Gulf Underwriters Insurance Company (“Gulf”) denied the School District coverage based on the policy’s Seepage, Pollution and Contamination Exclusion. This exclusion precluded coverage for “Liability for any bodily injury and/or personal injury to or illness or death … directly or indirectly causes by or arising out of seepage into or onto and/or pollution and/or contamination of air, land, water … irrespective of the cause of the seepage and/or pollution and/or contamination, and whenever occurring.” The School District argued that the exclusion did not apply because the third parties’ lawsuits did not involve classic environmental pollutants but, rather, ordinary acts of negligence and/or exposure to toxic chemicals. The trial court granted Gulf’s motion for summary judgment, finding that Gulf had no duty to defend or indemnify the School District on the underlying actions, on the grounds coverage was excluded by the Seepage, Pollution and Contamination exclusion. The Court of Appeal affirmed. The School District argued that three of the listed toxic substances – zinc, copper and nickel – were not commonly thought of as pollutants, and, following the California Supreme Court’s decision in MacKinnon Truck Ins. Exch., (2003) 31 Cal.4th 635, argued those substances were not “pollutants.” This argument was rejected because the court noted that, unlike the policy in Mackinnon, the exclusion in the Gulf policy was not dependent on the involvement of a designated pollutant or contaminant. Accordingly, because the School District sought defense for injuries caused either directly or indirectly by seepage, pollution, or contamination of air, land, water or other property, coverage was unambiguously excluded under the policy.

Submitted by: Bruce D. Celebrezze and Erin A. Cornell [Sedgwick, Detert, Moran & Arnold LLP]

 

 

 

 

CASES IN FULL TEXT

 

Matter of One Beacon Insurance Co. v. Espinoza

Bruce A. Lawrence, Brooklyn, N.Y. (Christine L. Fontaine of counsel), for respondent.
Greenberg & Stein, New York, N.Y. (Ian Asch of counsel), for appellant.

 

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a demand for uninsured motorist benefits, Klever Espinoza appeals from an order of the Supreme Court, Kings County (Bayne, J.), dated November 14, 2005, which granted the petition.

ORDERED that the order is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Kings County, for further proceedings consistent herewith.

On December 9, 1999, the appellant, Klever Espinoza, was a passenger in a car owned and operated by Rosa Garcia when it was allegedly involved in an accident with a vehicle owned by Luongo Trucking, Inc. (hereinafter Luongo). At that time, the Garcia vehicle was insured under a policy of insurance issued by One Beacon Insurance Company (hereinafter One Beacon). Espinoza commenced a lawsuit against, among others, Luongo, which proceeded to trial. After the trial, the jury responded "No" to the one question posed to it in the specific verdict sheet: "[d]id the [Luongo vehicle] come into contact with and strike the vehicle driven by the defendant Rosa Garcia?" In May 2005, approximately one month after the jury rendered its verdict, Espinoza served a demand for uninsured motorist benefits upon One Beacon claiming that the Luongo vehicle had been misidentified and thus he had "a valid Uninsured Motorists' claim as a result of a hit and run' accident." One Beacon then commenced this proceeding to permanently stay arbitration. Without explanation, the Supreme Court granted the petition and stayed the arbitration. We reverse.

Initially, we note that the demand for arbitration was not barred by the statute of limitations since it was made within six years after the accident took place (see Jenkins v State Farm Ins. Co., 21 AD3d 529, 530; Matter of DeLuca [Motor Veh. Acc. Indem. Corp.], 17 NY2d 76, 81; see also Matter of Allstate Ins. Co. v Morrison, 267 AD2d 381; Matter of Allstate Ins. Co. v Torrales, 186 AD2d 647, 648).

We further note that Espinoza is not precluded by the verdict after trial from claiming that the vehicle which struck the Garcia vehicle was unidentified. The jury in the Espinoza negligence lawsuit only concluded that there was no contact between Garcia and the Luongo vehicle. The jury never determined that there had not been an accident or that there was a lack of physical contact between Garcia and an unidentified vehicle. Accordingly, contrary to One Beacon's position, Espinoza did not fail to establish a condition precedent to his demand for uninsured motorist benefits (see Matter of Great N. Ins. Co. v Ballinger, 303 AD2d 503).

In addition, although "the doctrine of judicial estoppel precludes a party from framing his [or her] pleadings in a manner inconsistent with a position taken in a prior judicial proceeding . . . the doctrine will be applied only 'where a party to an action has secured a judgment in his or her favor by adopting a certain position and then has sought to assume a contrary position in another action simply because his [or her] interests have changed'" (Bono v Cucinella, 298 AD2d 483, 484, quoting Kimco of N.Y. v Devon, 163 AD2d 573, 574). Inasmuch as Espinoza did not obtain a favorable judgment as a result of his "contrary position" in the personal injury action, the doctrine of judicial estoppel does not apply. Therefore, the petition to permanently stay the appellant's demand for arbitration should not have been granted prior to a determination of whether in fact, there was a "hit and run" accident (see Matter of State Farm Mut. Auto Ins. Co. v Allston, 300 AD2d 669, 670; Matter of State Farm Mut. Auto. Ins. Co. v Johnson, 287 AD2d 640; Matter of Government Empls. Ins. Co. v Depietto, 226 AD2d 723). Accordingly, we remit the matter to the Supreme Court, Kings County, for determination of that issue and thereafter, for a new determination of the petition.
RIVERA, J.P., SANTUCCI, SKELOS and McCARTHY, JJ., concur.

Preserver Insurance Company v. Ryba

Lustig & Brown, LLP, New York, N.Y. (Sherri N. Pavloff,
Randolph E. Sarnacki, and Russell N. Brown of counsel), for appellant.
Goldberg & Segalla, LLP, Buffalo, N.Y. (Richard J. Cohen of  counsel), for respondent.

 

DECISION & ORDER

In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendant East Coast Stucco & Construction, Inc., in an underlying personal injury action entitled Ryba v Almeida, pending in the Supreme Court, Rockland County, under Index No. 5926/03, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Rockland County (Smith, J.), entered October 27, 2005, as denied its motion for summary judgment declaring that it is not obligated to defend and indemnify the defendant East Coast Stucco & Construction, Inc., in the underlying action, and granted the cross motion of Northern Assurance Company of America, s/h/a One Beacon Insurance Company, for summary judgment declaring that the plaintiff is obligated to defend and indemnify the defendant East Coast Stucco & Construction, Inc., in the underlying action.

ORDERED that the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Rockland County, for the entry of an appropriate judgment.

The Supreme Court properly denied the plaintiff's motion for summary judgment declaring that it is not obligated to defend and indemnify the defendant East Coast Stucco & Construction, Inc. (hereinafter East Coast), in an underlying personal injury action, and properly granted the cross motion of Northern Assurance Company of America, s/h/a One Beacon Insurance Company (hereinafter Northern), for summary judgment declaring that the plaintiff is obligated under the subject insurance policy to defend and indemnify the defendant East Coast in that action. The plaintiff failed to raise a triable issue of fact in response to Northern's prima facie showing of entitlement to judgment as a matter of law that Insurance Law § 3420(d) applies to the subject policy (see Columbia Cas. Co. v National Emergency Servs., 282 AD2d 346, 347; American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau, 265 AD2d 49; see also Atlantic Gen. Contr., Inc. v United States Liab. Ins. Group, 24 AD3d 480), and renders the plaintiff's disclaimer, on the ground of a policy exclusion, untimely as a matter of law (see Markevics v Liberty Mutual Insurance Co., 97 NY2d 646; Campos v Sarro, 309 AD2d 888). Accordingly, the plaintiff may not disclaim coverage.

Northern also made a prima facie showing that the injured party in the underlying action is subject to the Workers' Compensation Law, thus precluding, under the express terms of the liability insurance policy issued by the plaintiff, application of the policy's $100,000 limit of liability (see Matter of Rutledge v Kelly & Miller Bros. Circus, 18 NY2d 464, 474; cf. Chase Manhattan Bank v Travelers Group, 269 AD2d 107). Northern thus established its entitlement to judgment as a matter of law in this regard as well, and the plaintiff failed to raise a triable issue of fact in opposition as to whether the limit of liability is applicable.

Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Rockland County, for the entry of a judgment declaring that the plaintiff is obligated to defend and indemnify East Coast in the underlying action entitled Ryba v Almeida, pending in the Supreme Court, Rockland County, under Index No. 5926/03 (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
MASTRO, J.P., KRAUSMAN, FISHER and LIFSON, JJ., concur.

Rotunno v. Hamilton William Stiles, Jr.

Huenke & Rodriguez (Anita Nissan Yehuda, P.C., Roslyn Heights, N.Y., of counsel), for appellant.
Corleto & Associates, P.C., White Plains, N.Y. (Anthony B. Corleto of counsel), for plaintiffs-
respondents.
Siben & Ferber, Hauppauge, N.Y. (Kenneth Ording of counsel), for defendant-respondent.

 

DECISION & ORDER

In an action, inter alia, to recover damages for fraud, the defendant Hanover Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), entered March 30, 2005, as granted the motion of the defendant Hamilton William Stiles, Jr., for a judgment declaring that it has a duty to defend and indemnify him in this action and to pay his reasonable costs, expenses, and attorneys' fees, and denied its cross motion for a judgment declaring that it has no duty to defend and indemnify the defendant Hamilton William Stiles, Jr., in this action.

ORDERED that the order is modified, on the law, by (1) deleting the provision thereof granting the motion of the defendant Hamilton William Stiles, Jr., and substituting therefor a provision granting the motion only to the extent that it sought a judgment declaring that the defendant Hanover Insurance Company has a duty to defend and indemnify the defendant Hamilton William Stiles, Jr., with respect to the eighth cause of action asserted in the amended complaint and that the recovery of costs, expenses, and attorneys' fees incurred by the defendant Hamilton William Stiles, Jr., is limited to those incurred subsequent to March 30, 2005, in defending against the eighth cause of action asserted in the amended complaint and otherwise denying the motion, and (2) deleting the provision thereof denying that branch of the cross motion of the defendant Hanover Insurance Company which was for a judgment declaring that it has no duty to defend and indemnify the defendant Hamilton William Stiles, Jr., with respect to the first through seventh causes of action and substituting a provision therefor granting those branches of the cross motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of an appropriate interlocutory judgment declaring that the defendant Hanover Insurance Company has a duty to defend and indemnify the defendant Hamilton William Stiles, Jr., with respect to the eighth cause of action asserted in the amended complaint and that the recovery of costs, expenses, and attorneys fees incurred by the defendant Hamilton William Stiles, Jr., is limited to those incurred subsequent to March 30, 2005, in defending against the eighth cause of action asserted in the amended complaint.

The defendant Hanover Insurance Company (hereinafter Hanover) insured a home owned by the defendant Hamilton William Stiles, Jr., under a standard homeowners policy (hereinafter the policy) for the period October 10, 1998, through October 10, 1999. On September 9, 1999, Stiles sold the house to the plaintiffs.

Sometime after the sale, the plaintiffs discovered that there had been an oil leak which had contaminated the home's foundation as well as the land under it. They commenced an action asserting seven causes of action. The second cause of action was asserted directly against Hanover and sought damages under the Navigation Law.

By notice of motion dated July 31, 2003, Stiles moved, inter alia, for a judgment declaring that Hanover has a duty to defend and indemnify him in this action. Hanover cross-moved for a judgment declaring that it has no duty to defend and indemnify Stiles in this action. The plaintiffs cross-moved for leave to amend their complaint to correct a typographical error as to the section of the Navigation Law relied upon in their second cause of action against Hanover, and for summary judgment on that cause of action. In support of their cross motion, the plaintiffs attached a proposed amended complaint asserting an eighth cause of action against Stiles to recover damages under the Navigation Law. The affirmation in support of the plaintiffs' cross motion sought summary judgment against both Hanover and Stiles on that cause of action.

In the order appealed from, the Supreme Court, inter alia, granted Stiles's motion and denied Hanover's cross motion. It also granted the plaintiff's cross motion for leave to amend its complaint and for summary judgment against Hanover. The order is silent on the issue of service of the proposed amended complaint containing an eighth cause of action against Stiles and on the issue of summary judgment in favor of the plaintiffs on the eighth cause of action.

Hanover does not challenge on appeal the granting of the plaintiffs' cross motion. Indeed, Hanover concedes that summary judgment was properly granted directly against it on the issue of liability under Navigation Law § 190 as pleaded in the second cause of action of the amended complaint.

We take judicial notice of a subsequent order, dated April 4, 2006, inter alia, in effect, granting Hanover's motion for "reargument/renewal" and clarifying that the original order granted the plaintiffs leave to amend their complaint to assert their eighth cause of action against Stiles (see CPLR 5517[b]; Prince, Richardson on Evidence § 2-209 [11th ed Farrell]). Inasmuch as Hanover owes Stiles a duty to defend and indemnify him (see e.g. Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175-177; Garcia v Utica First Ins. Co., 7 AD3d 665, 666), against the plaintiffs' Navigation Law claim as pleaded in the eighth cause of action of the amended complaint, the Supreme Court correctly granted Stiles's motion for summary judgment in his favor on this cause of action. The remaining causes of action the plaintiffs alleged against Stiles are beyond the coverage afforded by Hanover's policy.

We limit Stiles' recovery of costs, expenses, and attorneys' fees to those incurred since the date of entry of the order appealed from, which first allowed the Navigation Law claim to be interposed against Stiles in the eighth cause of action.

Finally, we remit this matter to the Supreme Court, Suffolk County, for entry of an appropriate interlocutory judgment (see Lanza v Wagner, 11 NY2d 317, 334, cert denied 371 US 901; 210-220-230 Owners Corp. v DeRaffele, 33 AD3d 788, 789).
MILLER, J.P., CRANE, LIFSON and DILLON, JJ., concur.

 

 

The Children's Place Retail Stores, Inc. v. Federal Insurance Company

Kelley Drye & Warren LLP, New York (Jonathan K.
Cooperman of counsel), for appellant.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York
(Jonathan H. Hurwitz of counsel), for respondent.

Order, Supreme Court, New York County (Ira Gammerman, J.H.O.), entered October 11, 2006, which, inter alia, granted defendant's motion for partial summary judgment, declaring that the subject business interruption policy provides coverage for the period it would have taken plaintiff insured to resume at a different location with all reasonable speed the business formerly conducted at its World Trade Center store, unanimously affirmed, with costs.

Plaintiff insured, having elected not to relocate after its World Trade Center location was destroyed on September 11, 2001, is entitled to business interruption coverage for the period of time it would have reasonably taken to resume operation at a different location. It is not entitled under the policy to coverage from the date of the store's destruction until the date it would have been able to achieve its pre-9/11 income, nor does the policy, reasonably construed, entitle it to coverage until the World Trade Center is rebuilt. Contrary to plaintiff's contention, the policy does not specifically identify the World Trade Center location and no request was made by plaintiff to afford that location heightened coverage, tied in duration to the restoration of the store's original location (see e.g. 9174 Royal Indemnity Co. v Retail Brand Alliance, Inc., 33 AD3d 392 [2006]; Duane Reade, Inc. v St. Paul Fire & Marine Ins. Co., 411 F3d 384, 391-398 [2005]; Lava Trading Inc. v Hartford Fire Ins. Co., 365 F Supp 2d 434 [SD NY 2005]; Streamline Capital v Hartford Cas. Ins. Co., 2003 US Dist LEXIS 14677 [SD NY 2003]).

TAG 380, LLC, v. ComMet 380, Inc.

Cross appeals from a judgment, denominated order and judgment (one paper), of the Supreme Court, New York County (Marcy S. Friedman, J.), entered June 22, 2005, which, to the extent appealed from as limited by the briefs, declared that plaintiff TAG 380, LLC has a duty to obtain insurance that does not exclude coverage for terrorism; awarded defendant ComMet 380, Inc. damages for the premiums paid to obtain terrorism coverage; awarded defendant reasonable attorney's fees in connection with the declaratory judgment action; denied defendant recovery of expenses, including reasonable attorney's fees, incurred in connection with the third-party action; denied defendant recovery of disbursements and expenses in connection with the award of attorney's fees incurred in the declaratory judgment action; and dismissed defendant's counterclaims for, inter alia, negligent misrepresentation and breach of the implied covenant of good faith and fair dealing.

 

Rosenberg & Estis, P.C., New York (Michael E. Feinstein and Warren A. Estis of counsel), for appellant-respondent.

Seward & Kissel LLP, New York (Bruce G. Paulsen, Jeffrey M. Dine and Daniel S. Marvin of counsel), for respondent-appellant.

Cadwalader, Wickersham & Taft LLP, New York (Jason M. Halper and Gregory A. Markel of counsel), for GMAC, respondent.


TOM, J.P.

Plaintiff TAG 380, LLC (tenant) seeks a declaration of its rights and obligations as assignee of a 1989 ground lease to the premises known as 380 Madison Avenue in New York County. Defendant ComMet 380, Inc. (landlord), a real estate investment trust, currently owns the property, and nonparty RREEF America LLC, a national real estate asset management company, is ComMet's asset manager for the building. Specifically, the parties dispute the extent of tenant's duty under the terms of the lease to obtain insurance coverage for the premises, particularly for damages resulting from acts of terrorism. This action was precipitated by landlord's August 5, 2002 notice of lease default stating that coverage obtained for the property by tenant failed to comply with the insurance covenant of the lease "in that said insurance does not contain adequate insurance against losses resulting from terrorism" and demanding that tenant "cure such default immediately." The notice contained a reminder that the lease affords landlord the right to remedy any default in tenant's performance at tenant's expense.

Upon commencement of its declaratory judgment action in mid-August 2002, tenant sought and obtained a Yellowstone injunction (First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630 [1968]) restraining landlord, pending decision of this action, from terminating the lease based upon the notice of default. In late September, landlord answered and counterclaimed for a declaration that tenant is required to obtain insurance coverage that does not exclude acts of terrorism and is therefore in breach of the lease. The counterclaim further seeks compensatory damages together with attorney's fees incurred in defending the declaratory judgment action. Landlord was subsequently granted leave to amend the answer and counterclaim to assert causes of action seeking damages for sums expended to obtain terrorism coverage for the premises, as required by the terms of its mortgage with third-party defendant GMAC Commercial Mortgage Corp.

This matter is before us on appeal from the disposition of landlord's motion and tenant's cross motion for summary judgment (CPLR 3212) seeking, respectively, dismissal of the complaint and dismissal of the counterclaims. In contention is the interpretation of article 6 of the lease, which requires tenant to maintain "insurance on the building against loss or damage by fire and against loss or damage by other risks included under the standard Extended Coverage Endorsement as presently adopted for use with the New York Standard Fire Insurance Policy in an amount not less than the then full insurable value of the Building, with a deductible of not more than $50,000."

At the time the lease took effect in 1989, the Extended Coverage Endorsement included causes of loss resulting from hazards in addition to fire, such as smoke, explosion, riot and civil commotion and "actual physical contact of an aircraft or vehicle with the property." Specifically excluded were such hazards as nuclear reaction and radioactive contamination, war (including insurrection or civil war) and "hostile and warlike action" undertaken "by any government or sovereign power (de jure or de facto) or by any authority maintaining or using military, naval or air forces," including action "by an agent of any such government, power, authority or forces." Terrorism is neither included as a covered peril, nor excluded (the exclusion applying only to acts of governments or sovereign powers).

Supreme Court resolved the issue of insurance coverage in favor of landlord, rejecting tenant's argument that because terrorism is not specifically enumerated as a covered cause of loss in the Extended Coverage Endorsement, it is not a peril against which coverage must be maintained pursuant to the lease. The court reasoned that "unless specifically enumerated in the exclusions section of the policy," a fire insurance policy must cover all losses that result from fire, "even if such losses are caused by terrorism." Thus, the court concluded that acts of terrorism must be deemed to be within the ambit of the endorsement. We disagree.

The endorsement is silent as to acts of terrorism, neither including nor excluding terrorist acts from the scope of the protection afforded. In concluding that the Extended Coverage Endorsement protects against terrorism, the court failed to distinguish between a cause of damage and its resulting effect. "Fire" is an enumerated "cause" of loss under the standard fire insurance policy, and a covered "peril" denotes a cause, not the ensuing effect on the covered property (see Catalanotto v Commercial Mut. Ins. Co., 256 AD2d 883, 884 [1998]). Clearly, a fire resulting from physical contact between an aircraft and the building (an enumerated cause) is a covered loss under the endorsement, while a fire resulting from a warlike act (a specified exclusion) is not. As the court correctly perceived, the endorsement in effect at the time the lease commenced required the premises to be covered only against the causes of loss provided therein, such as physical contact with an aircraft, irrespective of whether such cause might be attributable to a terrorist act or not.

The excluded risk under the endorsement concerning acts of war, including warlike action, contemplates acts by a hostile nation or by a standing military force; it does not address ad hoc paramilitary action by agents who are neither identified with any particular sovereign power nor affiliated with any organized military force. The language does not embrace the concept of a terrorist organization, loosely structured into autonomous cells, supported by funding from disparate sources and promoting an uncertain political or, ostensibly, religious agenda. The endorsement simply does not deal with the subject of terrorism.

A policy of insurance should not be extended beyond its plain meaning to include perils not specifically covered by its provisions (see e.g. Harrigan v Liberty Mut. Fire Ins. Co., 170 AD2d 930 [1991]). Simply because the subject endorsement affords coverage for a particular loss attributable to an act of terrorism (such as an aircraft striking the building) does not dictate the conclusion that the endorsement affords coverage for all terrorist acts, irrespective of the precipitating cause of loss. To construe the endorsement so broadly would violate the venerable principle that the parties to an agreement will not be required to assume any obligation not reasonably within their contemplation at the time of contract (Hadley v Baxendale, 9 Exch 341, 156 Eng Rep 145 [1854]).

BFP 245 Park Co., LLC v GMAC Commercial Mtge. Corp. (12 AD3d 330 [2004]), relied on by landlord, does not support its position. The agreement at issue in that case (a mortgage) required insurance coverage against any peril included within the "all risk" or "special perils" classification; it did not involve enumerated perils as contained in the Extended Coverage Endorsement referenced by the subject lease. Furthermore, the mortgage in BFP "contemplated a flexible obligation subject to change as the marketplace recognized new insurable risks" (id. at 331), reflected by the provision for coverage against "'any peril now or hereafter included" in the all risk or special perils classification (id.), not, as here, a specific and static obligation based upon the Extended Coverage Endorsement "as presently adopted for use with the New York Standard Fire Insurance Policy" in 1989. Thus, we conclude that the parties' lease does not require tenant to maintain terrorism insurance on the premises.

Landlord's alternative theory is that it should be reimbursed for the cost of obtaining terrorism coverage because tenant failed to provide proof that it had, in fact, obtained such coverage. In August 2002, after this action had been commenced, landlord was informed that tenant had obtained partial terrorism coverage for the subject premises in July 2002 in the amount of $100 million. In May 2003, in the course of discovery, landlord received proof that, in October 2002, an affiliated entity had obtained blanket terrorism insurance providing an additional $300 million in coverage for the premises, sufficient to fully insure the property against damages due to terrorist acts. Landlord then amended its counterclaim to assert additional causes of action for negligent misrepresentation and breach of the implied duty of good faith and fair dealing. Consideration of landlord's additional bases for recovery warrants a more detailed exposition of the facts.

The insurance policy in existence before this controversy arose was scheduled to expire on June 30, 2002. There is no dispute that this policy provided the coverage required by the lease. On May 31, RREEF, the asset manager for the building, sent tenant a reminder that the lease requires proof of new insurance coverage to be provided at least 30 days prior to expiration of the current policy. The letter asserts that, "to be in compliance with the terms of the lease, the Property is to be insured against terrorist acts. It is our understanding that your prior policy covered such acts and we request that you continue to maintain such coverage." In response, RREEF received a letter dated June 18, 2002 from tenant's Chief Executive Officer, Steven M. Cherniak, noncommittally stating that TAG 380, LLC would place insurance "of the type required pursuant to the lease," and would provide proof of such coverage, "all as required pursuant to the lease."

Mr. Cherniak's affidavit submitted in opposition to landlord's summary judgment motion explains that TAG 380, LLC, the sole share owner of which is Sheldon Solow, had previously "maintained 'all-risk' property insurance coverage as part of a 'blanket' policy covering, in addition to 380 Madison, multiple other buildings owned by TAG's affiliated companies." The affidavit asserts that such all-risk coverage was obtained despite the lease provision that tenant need maintain only the more limited named-perils coverage, as described in the Extended Coverage Endorsement. Thus, the policy due to expire in June 2002 contained no exclusion for acts or terrorism.

After the attack on the World Trade Center on September 11, 2001, issuers of property damage coverage on New York City office buildings began to exclude terrorism from their all-risk policies as they came up for renewal. As a result, the binder received by tenant (which was provided to landlord) for the policy effective during the following year contains the notation "TERRORISM IS EXCLUDED."

Correspondence between the parties indicates that landlord was advised, in an August 5, 2002 telephone call (the same day landlord issued its notice of lease default), that "Solow had purchased $100 million of terrorism coverage that will cover the property at 380 Madison Ave., New York City." However, no proof of such coverage was received by landlord until February 2003, after landlord moved to compel disclosure in response to its demand for document production in this action. Mr. Cherniak's affidavit in opposition to the motion discloses that the insurance was obtained in connection with the refinancing of the mortgage for an office tower located at 9 West 57th Street in Manhattan. During summer-fall 2002, when Solow was negotiating a mortgage refinancing for this high-profile building, the lender imposed the condition that it be covered by terrorism insurance. Solow Management Corporation then obtained blanket terrorism coverage for 16 properties owned by Solow-related entities, including the subject premises. The first policy, in the amount of $100 million, was effective for the period from July 2002 through July 2003, and the second, in the amount of $300 million, for the period from October 2002 through October 2003.

Throughout this dispute, tenant has taken the position that it was not obligated to notify landlord that terrorism coverage had been obtained. As expressed by Mr. Cherniak, "Because TAG was not required by the terms of the Lease to provide terrorism coverage on the Building, TAG had no obligation, under Articles 6.03 and 6.05 of the Lease, . . . to provide evidence of this insurance to ComMet."

Tenant's position is fully supported by the terms of the lease. Article 6.03 requires that tenant supply to landlord, "not less than thirty (30) days prior to the expiration date of any policy theretofore furnished pursuant to this Article and then required hereunder, a certificate or duplicate original of such policy." Tenant duly provided the binder for the new policy containing the notation that "TERRORISM IS EXCLUDED." Article 6.05 of the lease requires only that tenant notify landlord if it obtains "separate insurance concurrent in form or contributing in the event of loss with that required in this Article to be furnished by Tenant." As decided, the terrorism insurance taken out by tenant is not required by the lease. Nor, in the event of a loss, would it contribute proceeds supplementing insurance coverage required to be maintained under the lease. The terrorism policy is mutually exclusive to coverage provided by other policies, reciting that it "does not cover any loss or damage which . . . is insured by . . . any other insurance policy or policies either primary or excess." Thus, the terrorism insurance obtained by Solow Management Corporation extending coverage to the subject premises does not implicate the notification provisions of the lease. Consequently, tenant's omission to notify landlord that it had obtained such coverage is not a breach of the lease and provides no basis for landlord's recovery of the amount expended to secure its own terrorism insurance. Since there was no default of the lease by tenant, attorney's fees are not recoverable by landlord under its provisions.

Landlord's counterclaims for negligent misrepresentation and breach of the implied covenant of good faith and fair dealing were properly dismissed as redundant. It is well settled that a party to a contract may not interpose a tort claim unless a legal duty independent of the contract has been breached (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 [1987]). The misrepresentation claim is duplicative of the breach of contract cause of action because they seek identical recovery (see Rockefeller Univ. v Tishman Constr. Corp., 240 AD2d 341, 342 [1997], lv denied 91 NY2d 803 [1997]) and because the question of whether tenant had any duty to inform landlord of separate insurance coverage is intrinsically related to the performance of the contract (see McMahan & Co. v Bass, 250 AD2d 460, 462 [1998], lv denied, lv dismissed 92 NY2d 1013 [1998]). The good faith claim is redundant since, where appropriate, an obligation of good faith and fair dealing will be implied and enforced (see id.), and breach of such implied duty is intrinsically related to damages attributable to breach of the lease (see Canstar v Jones Constr. Co., 212 AD2d 452, 453 [1995]). Moreover, an implicit obligation will not be imposed if it is inconsistent with the terms of the governing contract (Murphy v American Home Prods. Corp., 58 NY2d 293, 304 [1983]). Because the scope of tenant's duty to inform landlord is explicitly limited by lease provisions, a more expansive reporting duty may not be imposed by implication.

We reject tenant's contention that its procurement of terrorism insurance rendered landlord's counterclaim moot, requiring its dismissal. Merely because tenant voluntarily obtained coverage, thereby protecting its valuable right to the leasehold, fails to obviate either the question of whether such coverage was required by the lease or whether sums expended by landlord to secure its own terrorism insurance might be recoverable from tenant. It is apparent that, by the time the Yellowstone injunction was imposed at the end of October 2002, tenant had obtained sufficient terrorism insurance coverage to presumably cure its default, thereby rendering moot the need for injunctive relief. Tenant's failure to disclose the existence of this coverage is, at best, a discourtesy to the court entertaining the motion. Moreover, having prevailed on its application for a Yellowstone injunction on the ground that it was necessary to protect against the consequences of a default under the lease, tenant will not be heard to assert that no such default was extant. Having persisted in litigating the question of whether it was required to procure the disputed insurance coverage without disclosing that the premises were protected by blanket terrorism insurance, tenant may not adopt the inconsistent position on appeal that its undisclosed procurement of such coverage thereby rendered the issue moot.

Similarly, we decline to accord any significance to landlord's attempt to exploit the semantical difference between the language contained in the judgment appealed from and the primary issue asserted by tenant on appeal. That the court adjudged the lease to require tenant "to obtain insurance coverage which does not exclude terrorism" does not preclude tenant's assertion, on appeal, of the issue of whether "Tenant had a duty under the lease to procure terrorism insurance." As landlord conceded in support of its motion to enjoin third-party defendant from exercising its remedies under the mortgage agreement, "In this case, the Tenant has requested that the Court determine, in essence, what terrorism insurance, if any, it is required to carry under the lease." Thus, landlord cannot contend that this issue has not been preserved for appellate review.

Finally, we note that GMAC Commercial Mortgage Corp. is not a party to the lease and its lending agreement with landlord is not at issue. Because Supreme Court rendered a wholly favorable declaration that landlord is required to maintain terrorism coverage under the mortgage agreement, GMAC is not aggrieved by the judgment and lacks standing on this appeal (CPLR 5511).

Accordingly, the judgment, denominated order and judgment (one paper), of the Supreme Court, New York County (Marcy S. Friedman, J.), entered June 22, 2005, which, to the extent appealed from as limited by the briefs, declared that plaintiff TAG 380, LLC has a duty to obtain insurance that does not exclude coverage for terrorism; awarded defendant ComMet 380, Inc. damages for the premiums paid to obtain terrorism coverage; awarded defendant reasonable attorney's fees in connection with the declaratory judgment action; denied defendant recovery of expenses, including reasonable attorney's fees, incurred in connection with the third-party action; denied defendant recovery of disbursements and expenses in connection with the award of attorney's fees incurred in the declaratory judgment action; and dismissed defendant's counterclaims for, inter alia, negligent misrepresentation and breach of the implied covenant of good faith and fair dealing, should be modified, on the law, to the extent of declaring that plaintiff has no duty under the lease to maintain terrorism coverage on the leased premises and vacating the award of damages and attorney's fees to defendant. The Clerk is directed to enter judgment in favor of plaintiff dismissing the counterclaims.

Gonzalez v. Beale

The Pagan Law Firm, P.C., New York (Priyanka G. Menon of counsel), for appellant.
Reardon & Sclafani, P.C., Tarrytown (Michael V. Sclafani of counsel), for respondents.

Judgment, Supreme Court, New York County (Milton A. Tingling, J.), entered December 28, 2005, dismissing the complaint pursuant to an order, same court and Justice, entered November 7, 2005, which, inter alia, granted defendants' cross motion for summary judgment dismissing the complaint, unanimously affirmed, without costs.

Plaintiff's evidence in response to defendants' prima facie showing that the subject February 2001 accident did not cause a serious injury within the meaning of Insurance Law § 5102(d) consisted mainly of his chiropractor's June 2005 affidavit and accompanying report of a May 2005 examination, both prepared after defendants had cross-moved for summary judgment. The chiropractor had last seen plaintiff approximately seven months after the accident, and was the only health care professional to see plaintiff after he had completed a three-month course of physical therapy, chiropractic manipulation and acupuncture. While the chiropractor, who opines that plaintiff suffers from permanent and partially disabling limitations to his lumbar and cervical spine attributable to multiple disc herniations with stenosis, as well numbness in his hand attributable to carpal tunnel syndrome, states that he had released plaintiff from active chiropractic care because he believed his conditions were permanent and that any further treatment would be palliative only, and that plaintiff has since been suffering and self-treating with various medications, mostly Motrin, he does not satisfactorily explain the four-year gap in treatment for purportedly painful conditions (see Pommells v Perez, 4 NY3d 566, 574 2005]; Navedo v Jaime, 32 AD3d 788, 790 [2006]).

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

 

Beyl v. Franchini

Greenberg & Massarelli, LLP, Purchase, N.Y. (Crystal Massarelli  of counsel), for appellants.
Corleto & Associates, P.C., White Plains, N.Y. (Anthony B. Corleto and Anupam R. Pertab of
counsel), for respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Westchester County (Colabella, J.), entered September 16, 2005, which denied their motion for leave to renew their opposition to the defendants' prior motion for summary judgment dismissing the complaint on the ground that the plaintiff Greg Beyl did not sustain a serious injury within the meaning of Insurance Law § 5102(d), which had been granted in an order of the same court dated December 14, 2004.

ORDERED that the order dated September 16, 2005, is affirmed, with costs.

The plaintiffs' opposition to the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff Greg Beyl did not sustain a serious injury within the meaning of Insurance Law § 5102(d) was based upon an affidavit of the injured plaintiff's treating physician relating the results of an examination of the injured plaintiff performed nearly six months after the accident and nearly one year and four months before the motion was made. The defendants' motion was granted on the ground that the affidavit was not based upon a recent examination.

Thereafter, the plaintiffs moved for leave to renew based upon more recent examinations, including an examination made after the motion was submitted and an examination made after the motion was decided. The plaintiffs alleged that the injured plaintiff's treating physician was unable to schedule these examinations earlier. However, there was no explanation as to why the treating physician had sufficient time to prepare an affidavit, but did not have sufficient time to conduct an examination before the submission of the defendants' motion for summary judgment, nor was there an explanation as to why the plaintiffs did not seek an adjournment of the defendants' motion until an examination could be scheduled. Therefore, the plaintiffs failed to provide a reasonable justification for the failure to present such facts in opposition to the defendants' initial motion (see CPLR 2221[e][2], [3]; O'Connell v Post, 27 AD3d 631; Renna v Gullo, 19 AD3d 472). Further, the plaintiffs never submitted the results of an examination contemporaneous to the accident (see Ramirez v Parache, 31 AD3d 415; Bell v Rameau, 29 AD3d 839). Accordingly, there was no basis for renewal.
SCHMIDT, J.P., KRAUSMAN, GOLDSTEIN, COVELLO and ANGIOLILLO, JJ., concur.

 

 

Earl  v. Chapple

Friedman, Khafif & Sanchez, LLP, Brooklyn, N.Y. (Andrew M. Friedman of counsel), for appellant.
Picciano & Scahill, P.C., Westbury, N.Y. (Gilbert J. Hardy and Francis J. Scahill of counsel), for
respondent Francina Chapple.
Nicolini, Paradise, Ferretti & Sabella, Mineola, N.Y. (Anthony Devito of counsel), for respondent LaShawn Hector.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Grays, J.), dated November 21, 2005, which granted the defendants' separate motions for summary judgment dismissing the complaint insofar as asserted against them on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with one bill of costs.

The defendants satisfied their respective prima facie burdens of demonstrating that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-57). In opposition, the plaintiff failed to raise a triable issue of fact warranting a denial of summary judgment (see Franchini v Palmieri, 1 NY3d 536; Marietta v Scelzo, 29 AD3d 539). The report of the plaintiff's treating chiropractor was insufficient to raise a triable issue of fact as it was not based upon a recent examination of the plaintiff (see D'Alba v Yong-Ae Choi, 33 AD3d 650; Gomez v Epstein, 29 AD3d 950, 951; Legendre v Bao, 29 AD3d 645, 646; Cerisier v Thibiu, 29 AD3d 507). The affirmed report of the plaintiff's treating neurologist, Dr. Hausknecht, was also insufficient as it failed to demonstrate that limitations in the plaintiff's ranges of motion, observed in July 2005, were contemporaneous with the accident (see Felix v New York City Tr. Auth., 32 AD3d 527, 528; Ramirez v Parache, 31 AD3d 415, 416; Bell v Rameau, 29 AD3d 839; Ranzie v Abdul-Massih, 28 AD3d 447, 448). In any event, Dr. Hausknecht's report relied upon unsworn reports of other physicians (see Magarin v Kropf, 24 AD3d 733, 734; Friedman v U-Haul Truck Rental, 216 AD2d 266, 267). The affirmed report of the plaintiff's radiologist, Dr. Shapiro, was insufficient as it did not demonstrate that the physical limitations alleged by the plaintiff resulted from the disc injury observed or establish the duration of the injury (see Yakubov v CG Trans. Corp., 30 AD3d 509, 510; Kearse v New York City Tr. Auth., 16 AD3d 45, 49; Diaz v Turner, 306 AD2d 241, 242).

The plaintiff's remaining contentions are without merit.
MILLER, J.P., SPOLZINO, KRAUSMAN, FISHER and DILLON, JJ., concur.

Gerson v. C.L.S. Transp., Inc.

Rubenstein & Rynecki (Pollack, Pollack, Isaac & De Cicco, New York, N.Y. [Brian J. Isaac] of counsel), for appellants.
Peter T. Connor, Rockville Centre, N.Y., for respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Kings County (Johnson, J.), entered October 13, 2005, which granted the motion of the defendants C.L.S. Transportation, Inc., and Joseph W. Diorio, and the separate motion of the defendants Iry, Inc., and Makoto Hikawa, for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff Allan Gerson did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendants C.L.S. Transportation, Inc., and Joseph W. Diorio, and the separate motion of the defendants Iry, Inc., and Makoto Hikawa for summary judgment dismissing the complaint insofar as asserted against them on the ground that the plaintiff Allan Gerson did not sustain a serious injury within the meaning of Insurance Law § 5102(d) are denied.

The defendants, who relied on the same evidentiary submissions on their respective motions, failed to make a prima facie showing that the plaintiff Allan Gerson (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). All of the defendants relied upon, inter alia, the report of an orthopedic surgeon who examined the injured plaintiff on February 24, 2005. The report set forth range of motion findings concerning the injured plaintiff's cervical spine; however, the orthopedic surgeon failed to compare the range of motion findings with what is deemed normal (see Iles v Jonat, 35 AD3d 537; Mirochnik v Ostrovskiy, 35 AD3d 413; Kavanagh v Kuldip Singh, 34 AD3d 744; Caracci v Miller, 34 AD3d 515; Agathe v Tun Chen Wang, 33 AD3d 737; Mondi v Keahon, 32 AD3d 506; Benitez v Mileski, 31 AD3d 473; Abraham v Bello, 29 AD3d 497; Yashayev v Rodriguez, 28 AD3d 651; Sullivan v Dawes, 28 AD3d 472). Moreover, the orthopedic surgeon admitted in his report the existence of limitations in various aspects of the injured plaintiff's lumbar spine range of motion that were not adequately quantified or qualified so as to establish the absence of a significant limitation of motion (see Iles v Jonat, supra; McCrary v Street, 34 AD3d 768; Whittaker v Webster Trucking Corp., 33 AD3d 613; Kaminsky v Waldner, 19 AD3d 370; see also Yashayev v Rodriguez, 28 AD3d 651). Furthermore, neither expert relied upon by the defendants addressed in their separate reports the injured plaintiff's other claim of injury as a result of the subject accident (see Villavicencio v Mieles, 7 AD3d 517; Morales v New York City Tr. Auth., 287 AD2d 604).

Under these circumstances, it is not necessary to consider whether the plaintiffs' papers in opposition to the defendants' respective motions were sufficient to raise a triable issue of fact (see Iles v Jonat, supra; Villavicencio v Mieles, supra; Coscia v 938 Trading Corp., supra).
SCHMIDT, J.P., KRAUSMAN, GOLDSTEIN, COVELLO and ANGIOLILLO, JJ., concur.

Harman v. Busch

Zaklukiewicz, Puzo & Morrissey, LLP, Islip Terrace, N.Y. (Aileen R. Kavanagh of counsel), for appellant.
Carsey & Hibner, P.C. (O'Connor, O'Connor, Hintz & Deveney, LLP, Melville, N.Y. [Eileen M.
Baumgartner] of counsel), for plaintiffs-respondents.

 

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendant Robert M. Schank appeals, as limited by his brief, from so much of an order of the Supreme Court, Suffolk County (Costello, J.), dated November 18, 2005, as denied his motion for summary judgment dismissing the complaint insofar as asserted against him and the cross claim asserted against him by the defendant Arthur Busch on the ground that the plaintiff Gayle Harman did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed insofar as appealed from, with costs.

While we affirm the order insofar as appealed from we do so on grounds other than those relied upon by the Supreme Court. The defendant Robert M. Schank failed to establish prima facie that the plaintiff Gayle Harman (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In his affirmed medical report, the orthopedic surgeon who examined the injured plaintiff on September 3, 2004, set forth range of motion findings concerning the injured plaintiff's cervical and lumbar spine, as well as her wrists. He failed, however, to compare those findings to what are considered normal ranges of motion for those regions of her body (see Iles v Jonat, 35 AD3d 537; Mirochnik v Ostrovskiy, 35 AD3d 413; Kavanagh v Kuldip Singh, 34 AD3d 744; Caracci v Miller, 34 AD3d 515; Agathe v Tun Chen Wang, 33 AD3d 737; Mondi v Keahon, 32 AD3d 506; Benitez v Mileski, 31 AD3d 473; Abraham v Bello, 29 AD3d 497; Yashayev v Rodriguez, 28 AD3d 651; Sullivan v Dawes, 28 AD3d 472).

This orthopedic surgeon noted in his report that the prior magnetic resonance imaging reports of the injured plaintiff showed degenerative processes in her lumbar spine and cervical spine, and he stated that the herniations noted therein were caused by those pre-existing conditions. Despite so finding, he still concluded that the injured plaintiff sustained traumatic aggravation of those prior conditions and noted unquantified or unqualified limitations in the range of motion of the injured plaintiff's cervical spine based on his examination of her. While he did opine that a contributing factor in those range of motion limitations was likely due to thyroid surgery and radiation unrelated to the subject accident, these unrelated events were listed only as a contributing factor and not the sole cause of the limitations noted. Thus, the orthopedic surgeon's report suggests that the traumatic aggravation to those pre-existing conditions caused by the subject accident was also a contributory factor in the limitations in cervical spine range of motion observed by him and noted in his report. Absent a comparative quantification of those limitations to what is normal, it cannot be concluded that the decreased range of motion in the injured plaintiff's cervical spine, as conceded by this orthopedic surgeon, is mild, minor, or slight so as to be considered insignificant within the meaning of the no-fault statute (see Iles v Jonat, supra; McCary v Street, 34 AD3d 768; Whittaker v Webster Trucking Corp., 33 AD3d 613; Yashayev v Rodriguez, supra; Kaminsky v Waldner, 19 AD3d 370; see also Gaddy v Eyler, supra at 957; Licari v Elliott, 57 NY2d 230, 236).

Since Schank failed to satisfy his prima facie burden, it is unnecessary to consider whether the plaintiffs' papers in opposition were sufficient to raise a triable issue of fact (see Iles v Jonat, supra; Coscia v 938 Trading Corp., 283 AD2d 538).
MASTRO, J.P., RITTER, SKELOS, CARNI and McCARTHY, JJ., concur.

 

 

Denihan Ownership Company, LLC v. Commerce and Industry Insurance Company

Katsky Korins LLP, New York (David L. Katsky of counsel),
for appellant.
Cozen O'Connor, Newark, NJ (Kevin M. Hass, of the New
Jersey Bar, admitted pro hac vice, of counsel), for respondent.

Order, Supreme Court, New York County (Herman Cahn, J.), entered October 3, 2005, which granted defendant's motion for partial summary judgment dismissing the first cause of action, and denied plaintiff's cross motion for partial summary judgment on that cause of action, unanimously affirmed, with costs.

Plaintiff is the former owner of several parcels of low-rise commercial property housing such businesses as a parking garage, an automobile repair shop and a dry cleaner. Aware that before these properties could be sold to a developer, a cleanup of soil contamination, underground tanks and asbestos would have to be undertaken, plaintiff retained AKRF, an environmental consulting firm, to perform assessments in order to identify potential hazards. AKRF conducted environmental studies, prepared reports reflecting its findings, and provided plaintiff with cost estimates for the remediation. After deciding to proceed with sale of the properties, plaintiff retained AKRF to carry out the necessary remediation. To protect itself during the remediation process, plaintiff purchased cleanup cost cap insurance coverage (CCC) from defendant insurer.

It is undisputed that defendant has paid out the maximum sum to plaintiff in connection with the necessary remediation work. Plaintiff maintains, however, that it is entitled to further compensation under a supplemental Pollution Legal Liability Select (PLLS) policy it had also purchased from defendant. Specifically, AKRF completed its remediation work in May 2001, but in January 2002 the general contractor retained by the purchaser of the property discovered previously unknown and unidentified contamination, plus several underground storage tanks that had also been overlooked by AKRF. Plaintiff disputes defendant's reliance on a contractual exclusion in the PLLS policy with regard to remediation for this additional pollution. Under this exclusion, "no coverage will be provided for Cleanup Costs, Claims or Loss arising from the Pollution Conditions associated with" the documents prepared by AKRF. The IAS court accepted defendant's argument that under this exclusion, it was not contractually obligated to pay plaintiff for the extra cleanup costs.

We agree. While it is true that "[e]xclusions must be specific and cannot be extended by mere interpretation or implication" (Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 339 [2000]), plaintiff has not offered a reasonable interpretation of the exclusion in question so as to create an ambiguity. Words like "arising from," when used in exclusion clauses, are generally taken as a broad and comprehensive reference to events originating from, incident to, or having connection with the subject of the exclusion — in this instance, the pollution conditions referred to in the documents produced by AKRF (see United States Fire Ins. Co. v New York Mar. & Gen. Ins. Co., 268 AD2d 19, 21-22 [2000]; Aetna Cas. & Sur. Co. v Liberty Mut. Ins. Co., 91 AD2d 317, 320-321 [1983]). Here, the exclusion was clearly intended to ensure no overlap between the underlying CCC policy, which provided coverage for petroleum contamination on the site, and any new and different pollution conditions covered by the PLLS policy. Certainly, nothing in the exclusion renders coverage under the PLLS policy dependent on any lack of knowledge of a pollution condition on the part of AKRF. Rather, the clause precludes coverage for any cleanup costs or claims that arise out of or are related to the pollution conditions discussed in the documents drawn up by AKRF. The discovery by the purchaser's contractor of additional contamination and underground storage tanks was certainly connected with the prior known condition. AKRF's documents even contemplated such future discovery.

 

Appalachian Insurance Company v. General Electric Company

 

Herbert M. Wachtell, for respondents.
Certain Underwriters at Lloyd's, London, amici curiae.


GRAFFEO, J.:

In this declaratory judgment action, we must determine whether, for purposes of exceeding annual "per occurrence" primary insurance policy limits to access excess insurance proceeds, defendant General Electric Company (GE) can group together as a single occurrence numerous personal injury claims arising from the exposure of individuals to asbestos insulation in GE turbines at work sites across the country. We agree with the courts below that, under the terms of the GE primary insurance policies, the claims present multiple occurrences.

In this case, GE seeks to obtain excess insurance coverage for asbestos-related personal injury claims brought by individuals who, between 1966 and 1986, were exposed to asbestos-containing insulation used in steam turbines manufactured by GE and installed at more than 22,000 sites throughout the United States. Although GE did not produce the asbestos-related products, for decades it designed, manufactured and, in some cases, installed custom turbines that were insulated with asbestos-containing products manufactured by others. In the typical personal injury case, a plaintiff sued GE on the theory that, with knowledge of the dangers of exposure to asbestos-containing products, it designed, manufactured, sold, installed and/or serviced turbines insulated with asbestos, without warning individuals working near its turbines of those dangers. Of all the asbestos exposure claims filed against GE, 95% arose from GE's turbine business.

Ordinarily, GE is only one of many defendants sued in an asbestos exposure case, with the manufacturers of the asbestos-containing insulation products, installation contractors and others also joined on various theories. As a result, GE's portion of a settlement or verdict in individual cases has been relatively small: as of 2002, over 400,000 asbestos-related claims had been filed against GE, with GE's share of each judgment averaging $1,500. In the early 1990s, an escalation in the number of asbestos-related personal injury claims filed against GE led to this dispute between GE and its excess insurers over the treatment of asbestos-related personal injury claims under GE's primary general liability insurance policies in effect between 1966 and 1986.

From the 1950s to the 1990s, GE maintained general liability insurance with Electric Mutual Liability Insurance Company (EMLICO), an entity partially owned by GE and its employees. Annual premiums under the policies were calculated through a complicated formula that provided for retrospective payment by GE of a sum that was largely based on prior years' losses. Thus, the premium structure functioned much like a self-insurance retention or a deductible, with GE reimbursing EMLICO for claims EMLICO paid on GE's behalf.

Before 1966, the EMLICO policies contained a $5 million per occurrence liability limit and a $10 million aggregate liability limit. From 1966 through 1986, the EMLICO policies retained a $5 million per-occurrence limit (with the exception of the 1986 policy year, which had a $25 million per-occurrence limit) but did not incorporate an aggregate liability limit. Under the retrospective premium formula, GE was generally required to compensate EMLICO for the payout related to each occurrence under $5 million, regardless of the annual number or combined dollar value of the claims.

During the 1966-1986 time frame, GE also maintained excess liability insurance that supplied additional layers of coverage beyond the EMLICO limits. Most of GE's first and second layer general liability excess coverage policies were through Certain Underwriters at Lloyd's London or the London Market Insurer (London). The excess insurers involved in this litigation subscribed to manuscript policies for the excess coverage over EMLICO and, in most cases, the London policies. In this 20-year period, none of these excess insurance policies covered any claim that was less than the $5 million per occurrence coverage supplied by EMLICO. All of the excess insurance policies contained the following loss payable provision: "[l]iability under this policy with respect to any occurrence shall not attach unless and until the Insured, or the Insured's underlying insurer, shall have paid the amount of the underlying limits on account of such occurrence." As such, excess coverage for a claim was triggered only when the claim exceeded the $5 million per-occurrence limit in the underlying EMLICO primary general liability policy.

The EMLICO policies define an occurrence as "an accident, event, happening or continuous or repeated exposure to conditions which unintentionally results in injury or damage during the policy period." Until 1992, EMLICO treated each asbestos-related personal injury claim brought by an injured individual who alleged exposure during the relevant 20-year time frame as a separate "occurrence." Because of the retrospective premium structure, the fact that none of the claims exceeded $5 million and the absence of aggregate liability limits, the full cost of each claim was ultimately borne by GE.

The number of asbestos-related claims substantially increased in 1991, causing GE to object to EMLICO's practice of treating each individual claim as a distinct "occurrence." After negotiation, and without the participation of any of GE's excess insurers, GE and EMLICO entered into a "Claims Handling Agreement" that required EMLICO to group asbestos-related personal injury claims by product type, meaning that all claims associated with a single product - here, turbines - would constitute a single occurrence with a $5 million annual coverage limit. The agreement therefore allowed GE to combine claims to reach the $5 million per-occurrence general liability policy ceiling, triggering access to GE's excess insurance coverage.

GE's resolution of its dispute with EMLICO created controversy between GE and its excess insurers because, by reducing the number of occurrences under the primary EMLICO policies, the agreement increased the number of instances when the $5 million per-occurrence threshold would be exceeded, significantly expanding the exposure of GE's excess carriers. This litigation was commenced in 1996 when Allstate Insurance Company sued GE, EMLICO and numerous GE excess insurers, including Appalachian Insurance Company, seeking a declaration of the parties' rights and responsibilities relating to GE asbestos claims. Although other concerns were raised, the main issue was the propriety of GE's and EMLICO's construction of the term "occurrence" in the EMLICO general liability policies. Appalachian answered the complaint, pursuing counterclaims against Allstate and cross claims against GE and EMLICO. Other excess insurers similarly joined the action. When Allstate settled with GE and EMLICO, Supreme Court substituted Appalachian for Allstate as the lead plaintiff.

After extensive discovery, Appalachian and other excess insurers moved for summary judgment requesting a declaration that GE's primary policies had not been exhausted by the payment of the asbestos claims because each claim by an injured plaintiff represented a separate occurrence for purposes of the EMLICO policies and none of the claims came close to reaching the $5 million per-occurrence limit. GE opposed the motion and cross-moved for summary judgment and a judicial declaration that the asbestos litigation arising from GE's turbine business was a single occurrence under each policy because all the claims could be traced to a single act of negligence - GE's failure to warn of the dangers of exposure to asbestos insulation in its turbines. Because the excess insurers were not parties to the "Claims Handling Agreement," GE acknowledged that they were not bound by the retroactive construction of the term "occurrence" in that agreement. The issue therefore distilled to one of contract interpretation: how the term "occurrence" in the 1966-1986 EMLICO policies should be interpreted in the asbestos exposure context.

Supreme Court granted the excess insurers' motion and denied GE's cross motion. Relying on our decision in Arthur A. Johnson Corp. v Indemnity Ins. Co. of N. Am. (7 NY2d 222 [1959]), the court held that the focus should be on the event for which the insured is being held liable, not a point further back in the causal chain. Applying the "unfortunate event" test to the asbestos exposure claims, the court noted that the turbines were custom-designed based on the specific needs of GE customers, with little or no uniformity in the amounts or types of asbestos insulation incorporated in the design. Moreover, the exposure of the individual plaintiffs varied in duration and intensity and occurred over decades at more than 22,000 work sites throughout the nation. In sum, there was insufficient temporal and spatial proximity among the claims to unify them as one occurrence. The court concluded that the exposure of each plaintiff to asbestos-containing insulation was the unfortunate event for which GE was being held liable. It therefore declared that the excess insurers were not obligated to provide excess coverage for individual claims that did not exceed the annual $5 million per-occurrence limit in the EMLICO primary general liability policies.

The Appellate Division affirmed, reasoning that the operative occurrence under the definition in the EMLICO policies was the "last link in the causal chain leading to liability, i.e., the exposure of each individual claimant to asbestos contained in the turbines manufactured by the insured, rather than earlier events creating the potential for future injury."

This Court granted GE leave to appeal ^[FN1].

Under the excess insurance policies at issue here, GE is entitled to coverage only if the $5 million per-occurrence policy limit in the underlying EMLICO general liability policies is exceeded. The rights and liabilities of the excess insurers turn on the meaning of the term "occurrence" in the EMLICO policies.

Our Court has previously addressed the standard to be applied in resolving whether a set of circumstances amounts to one accident or occurrence, or multiple accidents or occurrences, for purposes of resolving how much coverage is available under a third-party liability insurance policy. In Arthur A. Johnson Corp. v Indemnity Ins. Co. of N. Am. (7 NY2d at 227-229), we described the three approaches used by courts to resolve the question: the sole-proximate-cause approach, which focuses on whether the injuries or losses can be traced to a single, originating cause; the one-accident-per-person approach, which depends on the number of individual claimants seeking recovery; and the unfortunate-event approach, which is based not solely on the cause but on the nature of the incident giving rise to damages.

In Johnson, the issue was whether the collapse of two independent walls of adjoining buildings during an intense rainfall constituted one or two "accidents" for the purpose of determining whether the insured was entitled to coverage up to the "per-accident" liability limit for the breach of each wall. The Court adopted the unfortunate-event test and determined that there were two accidents, explaining:

"[W]e need only point out that it is agreed that, during a heavy rainfall, a protecting wall collapsed under the water pressure and destruction poured into a building. Almost an hour later, another wall gave way and water flooded another building. There is no suggestion that the collapse of the first wall caused the failure of the second . . . In addition, the catastrophe was not the rain - that, in itself, did not harm. It was the breach of the wall letting the rain water in. Furthermore, if the walls were located blocks away from each other on different job sites but subject to the same rainfall, no one could contest that there were two accidents" (id. at 230).

In Hartford Acc. & Indem. Co. v Wesolowski (33 NY2d 169 [1973]), the Court found no significant difference between the meaning of "accident" in the Johnson policy and the meaning of "occurrence" in resolving the extent of coverage under a policy with a "per occurrence" limit. The issue in Wesolowski was described as follows:

"Where the insured's automobile struck one oncoming vehicle, ricocheted off and struck a second more than 100 feet away, was there more than one 'occurrence' within the meaning of the provision fixing limits of liability in an automobile insurance policy?" (id. at 170).

Applying the Johnson unfortunate-event test, we held that the three-car collision amounted to a single occurrence because "the two collisions here occurred but an instant apart" and "[t]he continuum between the two impacts was unbroken, with no intervening agent or operative factor" (33 NY2d at 174).

From our decisions in Johnson and Wesolowski several factors emerge as relevant to distinguishing injuries or losses that arise from a single occurrence as opposed to those that constitute multiple occurrences: whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors. Common causation is pertinent once the incident - the fulcrum of our analysis - is identified, but the cause should not be conflated with the incident ^[FN2]. In Johnson, we concluded that there had been multiple accidents, noting that 50 minutes elapsed between the wall collapses and there was an insufficient causal nexus between the two incidents since there was "no suggestion that the collapse of the first wall caused the failure of the second" or that the walls shared similar deficiencies traced to a common cause as it was not even clear that the two walls had been built at the same time by the same workers (7 NY2d at 230). But in Wesolowski an analysis of all three factors persuaded us that there had been a single occurrence - the three cars collided seconds apart, in close spatial proximity and without disruption by intervening causes or other factors.

The insurance policies we interpreted in Johnson and Wesolowski did not specifically define the terms "accident" and "occurrence" and parties to an insurance contract remain free to include language articulating a different approach. The question we face here is whether GE and EMLICO did so in the EMLICO policies. Those policies defined an occurrence as "an accident, event, happening or continuous or repeated exposure to conditions which unintentionally results in injury or damage during the policy period."

As GE points out, the policies under review were drafted after we decided Johnson, at a time when general liability policies were shifting from "accident" to "occurrence" based. "The insurance industry changed to occurrence-based coverage in 1966 to make clear that gradually occurring losses would be covered so long as they were not intentional" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]). By encompassing "continuous or repeated exposure to conditions," as well as the sudden events traditionally associated with an accident, the occurrence model more readily embraced a wider range of liabilities - such as liability arising from asbestos exposure or contamination.

But as is evident from our decision in Wesolowski, the transition from accident to occurrence coverage had no impact on the process of determining whether injuries or losses could be grouped for purposes of per-occurrence liability limits. With regard to this issue, the term occurrence is synonymous with accident unless the parties include language in the policy indicating otherwise. We see nothing in the definition of occurrence in the EMLICO policies that suggests that GE and EMLICO had any such intent. The Johnson unfortunate-event standard, set forth in 1959, predated the first of the series of policies in this case by more than five years. Certainly, these sophisticated parties could have chosen to define occurrence in a manner that grouped incidents based on the approaches rejected in Johnson (such as the sole-proximate-cause model or the single- occurrence-per-claimant model) or adopted yet another approach not envisioned by the Johnson Court ^[FN8]. But they did not do so. We therefore conclude that the unfortunate-event standard governs the outcome of this appeal.

Applying that standard, the asbestos exposure claims GE seeks to join as one occurrence (per policy period) represent multiple occurrences. Using the language adopted by the parties in the EMLICO policies, the incident that gave rise to liability was each individual plaintiff's "repeated or continuous exposure" to asbestos. Before the exposures occurred, there was only the potential that some unidentified claimant would someday be harmed by GE's alleged failure to warn. To be sure, the exposure to asbestos was not sudden - it was gradual and, for many plaintiffs, continued over a number of years. But that does not make it any less the operative incident or occasion giving rise to liability in this factual context.

Having determined that there were numerous exposure incidents, we must analyze the temporal and spatial relationships between the incidents and the extent to which they were part of an undisrupted continuum to determine whether they can, nonetheless, be viewed as a single unfortunate event - a single occurrence. Even if we were to assume that the continuum element was met here because the exposures share a common cause (as GE urges), the scenarios presented would fail the Johnson test because of the lack of any spatial or temporal relationship. On this record, it appears that the incidents share few, if any, commonalities, differing in terms of when and where exposure occurred, whether the exposure was prolonged and for how long, and whether one or more GE turbine sites was involved. Under the circumstances, there were unquestionably multiple occurrences and the excess insurers were entitled to a declaration to that effect.^[FN9]

In reaching this conclusion we emphasize that the Johnson standard is not, as GE suggests, the equivalent of a one-occurrence-per-injured-party approach. Although there may be instances when application of the rule will result in each individual claimant representing a single occurrence, the standard can lead to the grouping of claims as occurred in Wesolowski. Nor does the rule necessarily bar excess coverage in multi-plaintiff mass tort contexts. Each mass tort scenario must be examined separately under the Johnson rule. There will undoubtedly be unfortunate occasions, such as a series of explosions, the accidental release of a hazardous substance or some other calamity, that will result in numerous injuries or losses. In those situations, the Johnson test may well allow the grouping of some or all of the claims for purposes of satisfying the per-occurrence limit, thereby triggering excess coverage.

Accordingly, the order of the Appellate Division should be affirmed, with costs.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Graffeo. Chief Judge Kaye and Judges Ciparick, Smith and Pigott concur. Judges Read and Jones took no part.
Decided February 15, 2007

Footnotes

Footnote 1: Due to constitutional limitations on this Court's jurisdiction over appeals from nonfinal orders, GE was granted leave to appeal only insofar as it sought relief against nine excess insurers for whom party-finality principles rendered the judgment final: Birmingham Fire Insurance Company of Pennsylvania, China America Insurance Company, Fremont Industrial Indemnity Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania, North River Insurance Company, Rampart Insurance Company, Riunione Adriatic Di Sicurata and Starnet Insurance Company. GE was denied permission to appeal with respect to the claims involving Appalachian and 30 other excess insurers. As the lead plaintiff, Appalachian was permitted to brief and argue the appeal.

Footnote 2: For example, with respect to the automobile accident at issue in Wesolowski, the cause of the accident (whether it was speeding, reckless driving or the like), though active at the moment of the collisions, is distinct from the incident itself, and it is the incident, not the cause, that is subjected to the Johnson standard (indeed, causation is a factor in the Johnson test). In this case, assuming the cause of plaintiffs' injuries was a failure to warn as GE contends, that does not transform the cause into the event giving rise to liability for purposes of the per-occurrence limit. If we were to focus only on discerning the common originating cause of multiple events as GE urges, we would not be applying the unfortunate-event test but rather the sole-proximate-cause test that we explicitly rejected in Johnson.

Footnote 8: There are many ways that parties to an insurance contract can provide for the grouping of claims. Some liability policies, including the excess insurance policies interpreted by the Connecticut Supreme Court in Metropolitan Life Ins. Co. v Aetna Cas. and Sur. Co. (255 Conn. 295, 309 [2001]), contain expanded definitions of occurrence that, for example, allow "continuous or repeated exposure to substantially the same general conditions [to] be considered as arising out of one occurrence" (see also, Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208 [2002]), indicating an intent that certain types of similar claims be combined. In Travelers Cas. and Sur. Co. v Certain Underwriters at Lloyd's of London (96 NY2d 583 [2001]), we interpreted language in reinsurance treaties that allowed aggregation of claims in some circumstances, provided temporal and spatial relationships were present. What these cases demonstrate is that the parties to an insurance policy, like the parties to any contract, are free to determine the terms of their arrangement. If they intend to allow grouping of claims, they need only include language expressing that intent. There is no such language in the EMLICO policies.

Footnote 9: We note that our conclusion is consistent with the results reached by the United States Court of Appeals for the Second Circuit when applying New York law to claims arising from asbestos exposure or contamination (see Prudential Lines v American Steamship Owners Mutual Protection and Indem. Assoc., 158 F3d 65 [2d Cir 1998]; Stonewall Ins. Co. v Asbestos Claims Management Corp., 73 F3d 1178 [2d Cir 1995], mod on other grounds 85 F3d 49 [1996]).

Catucci v. Greenwich Insurance Company

Gennet Kallmann Antin & Robinson, P.C., New York, N.Y.
(Michael S. Leavy of counsel), for appellant.
Weg and Myers, P.C., New York, N.Y. (Dennis T. D'Antonio,
Joshua L. Mallin, and Jeffrey L. Schulman of counsel), for respondents.


 

DECISION & ORDER

In an action to recover damages for breach of an insurance contract, the defendant appeals from so much of an order of the Supreme Court, Kings County (Schneier, J.), dated November 22, 2005, as denied its motion for summary judgment dismissing the complaint.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the defendant's motion for summary judgment dismissing the complaint is granted.

The defendant issued a commercial property insurance policy to the plaintiff Sabato Catucci, which contained exclusions for loss caused by rust, corrosion, and deterioration of covered property. The property, located at 744 Clinton Street in Brooklyn, consisted of two separate buildings that fronted Clinton Street to the east, and abutted the waterway known as the Henry Street Basin to the west. Along the westerly portion of the property line, abutting the waterway, there was an outdoor concrete deck. The plaintiff American Stevedoring, Inc., of which Catucci was a principal, occupied and used the property to load, unload, and store shipping containers. A portion of concrete located on the southwest end of the deck collapsed, creating a large hole. Thereafter, the plaintiffs sought reimbursement from the defendant under the insurance policy to repair the damage. The defendant denied coverage pursuant to the policy provisions excluding loss caused by rust, corrosion, and deterioration, and faulty, inadequate, or defective workmanship or construction. In addition, the defendant denied coverage under section 2 of the policy, entitled "Property Not Covered", which excludes "[b]ulkheads, pilings, piers, wharves or docks," and on the ground that the plaintiffs failed to prove that the loss occurred during the effective dates of the policy period. The plaintiffs commenced this action to recover damages for breach of the insurance policy. The defendant moved for summary judgment dismissing the complaint, and the plaintiffs cross-moved for partial summary judgment on the issue of liability, claiming that coverage is afforded under section D, entitled "Additional Coverage - Collapse," which provides that the defendant, "will pay for direct loss or damage to Covered Property, caused by collapse of a building or any part of a building insured under this Coverage Form, if the collapse is caused by one or more of the following," listing, as one of the covered causes, "hidden decay." The Supreme Court found that triable issues of fact existed precluding summary judgment as to both parties. We reverse.

An exclusion from coverage "must be specific and clear in order to be enforced" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311), and an ambiguity in an exclusionary clause must be construed most strongly against the insurer (see Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Thomas J. Lipton, Inc. v Liberty Mut. Ins. Co., 34 NY2d 356, 361). However, an unambiguous policy provision must be accorded its plain and ordinary meaning (see Sanabria v American Home Assur. Co., 68 NY2d 866, 868), and the plain meaning of the policy's language may not be disregarded in order to find an ambiguity where none exists (see Garson Mgt. Co. v Travelers Indem. Co. of Ill, 300 AD2d 538, 539; Acorn Ponds v Hartford Ins. Co., 105 AD2d 723, 724). "[P]olicy exclusions are to be read seriatim and, if any one exclusion applies, there is no coverage since no one exclusion can be regarded as inconsistent with another" (Sampson v Johnston, 272 AD2d 956, 956; see Hartford Acc. & Indem. Co. v Reale & Sons, 228 AD2d 935, 936).

The Supreme Court erred in denying the defendant's motion for summary judgment dismissing the complaint. The plain meaning of the exclusion was to relieve the defendant of liability for loss or damage to covered property caused by rust, corrosion, and deterioration. The defendant met its initial burden of establishing its entitlement to judgment as a matter of law by demonstrating that the exclusion applied to the loss in this case, and, in any event, that the plaintiffs failed to sustain their burden of proving that the loss occurred during the policy period (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Duratech Indus., Inc. v Continental Ins. Co., 21 AD3d 342, 344-345; Travelers Indem. Co. of Ill. v Related Cos., L.P., 9 AD3d 325; Garson Mgt. Co. v Travelers Indem. Co., supra; Sheehan v State Farm Fire & Cas. Co., 239 AD2d 486, 487). In opposition, the plaintiffs failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562; Gongolewski v Travelers Ins. Co., 252 AD2d 569; Nowacki v United Servs. Auto. Assn. Prop. & Cas. Ins. Co., 186 AD2d 1038). Photographs of the concrete deck show cracking, vegetation growth, erosion, a powdery condition, and other signs of decay that were plainly visible without impairment or hindrance of visibility. There is no proof in the record that the collapse was caused solely by "hidden decay," but rather, that it was precipitated by conditions and occurrences specifically excluded from coverage (see Weaver v Hanover Ins. Co., 206 AD2d 910, 911; Nowacki v United Servs. Auto. Assn. Prop. & Cas. Ins. Co., supra). Accordingly, the defendant's motion for summary judgment dismissing the complaint should have been granted.

City of New York v. Evanston Insurance Company

 

APPEAL by the plaintiff in an action, inter alia, for a judgment declaring that the defendant is obligated to defend and indemnify it in an underlying action entitled Boynton v Scala Contracting Co., pending in the Supreme Court, Kings County, under Index No. 22766/99, from so much of an order of the Supreme Court (Lawrence Knipel, J.), dated August 17, 2004, and entered in Kings County, as, in effect, granted the defendant's cross motion for summary judgment declaring that it is not obligated to defend and indemnify the plaintiff in the underlying action to the extent of declaring, in effect, that the defendant is not obligated to defend or indemnify the plaintiff unless it is determined in the underlying action that the named insured, Scala Contracting Co., Inc., was 100% at fault in the happening of the accident and, in effect, denied its motion for summary judgment, inter alia, declaring that the defendant is obligated to defend the plaintiff in the underlying action to the extent of declaring, in effect, that the defendant is not obligated to defend the plaintiff or reimburse the plaintiff's defense costs incurred to date unless it is determined in the underlying action that Scala Contracting Co, Inc., was 100% at fault in the happening of the accident. Justice Miller has been substituted for former Justice Adams (see 22 NYCRR 670.1[c]).


Michael A. Cardozo, Corporation Counsel, New York, N.Y.
(Francis F. Caputo, Dona B. Morris, Brad M. Snyder, and Eric
Proshansky of counsel), for appellant.
Lester Schwab Katz & Dwyer, LLP, New York, N.Y. (Eric A.
Portuguese and Lisa Fleischmann of counsel), for respondent.

OPINION & ORDER


FISHER, J.This appeal turns principally on the meaning of a single word in the blanket additional-insured endorsement of a commercial general liability insurance policy.

In April 1999, Scala Contracting Co., Inc. (hereinafter Scala), entered into an agreement with the City of New York to perform certain construction work on a sidewalk at Linden Boulevard and Malta Street in Brooklyn. The agreement, inter alia, required Scala to procure and maintain comprehensive general liability insurance that included an endorsement naming the City as an additional insured. Scala obtained a policy from the Evanston Insurance Company (hereinafter Evanston) containing a blanket provision that made the City an additional insured "only with respect to liability arising out of [Scala's] ongoing operations performed for [the City] and then only as respects any claim, loss or liability arising out of [Scala's] operations . . . and only if such claim, loss or liability is determined to be solely the negligence or responsibility of [Scala]."

On or about June 17, 1999, Oliver Lamb, an employee of Scala, allegedly was injured while working at the site when he was struck by two vehicles owned, leased, or operated by James Boynton and Iasia Bradley. Lamb commenced an action against both Boynton and Bradley, and Boynton, in turn, commenced a third-party action against Scala and the City, claiming, inter alia, that they had failed to provide Lamb with a safe workplace. Insofar as relevant to this appeal, the third-party complaint alleged that Scala's actions or omissions "caused and/or contributed" to "the injuries and damages sustained by [Lamb]," and that Lamb "was caused to sustain serious and severe personal injuries as a result of the negligence of [Scala], its agents, servants and/or employees."

The City tendered the claim to Evanston for defense and indemnification, but the carrier denied coverage on two grounds. First, it asserted that the City had failed to provide it with timely notice of the claim and, second, it maintained that it had no duty, under the terms of the policy, to defend or indemnify the City unless and until a determination was made that Scala was 100% at fault for Lamb's injuries. The City thereupon commenced this action for a judgment declaring that Evanston was obligated to defend and indemnify it in the underlying action under the additional-insured endorsement. The City moved, and Evanston cross-moved, for summary judgment.

The Supreme Court determined that triable issues of fact existed as to whether the City's notice of claim was timely. That portion of the order is not at issue on this appeal inasmuch as the City concedes that there are triable issues of fact as to the timeliness of the notice of claim, and does not dispute that Evanston would have no duty to defend or indemnify should it ultimately be determined that the notice of claim was untimely (see e.g. Brennan Bros. Co. v Lumbermens Mut. Cas. Co., 14 AD3d 525, 526).

The court went on to find, however, that, under the terms of the additional-insured endorsement, Evanston's duty to defend and indemnify the City would be triggered only if Scala were shown, in the underlying action, to be 100% at fault for the happening of the accident. Thus, the court resolved the motion and cross motion for summary judgment by declaring, inter alia, that, unless it were determined in the underlying action that Lamb's injuries were 100% attributable to Scala's negligence, the City would not be entitled to coverage under the Evanston policy, regardless of whether it provided timely notice of the claim. The City appeals from that portion of the order.

It is undisputed that Lamb's claim arose out of Scala's ongoing operations performed for the City at the site. The point of contention is the meaning of the language in the policy that makes the City an additional insured only if Lamb's "claim, loss or liability is determined to be solely the negligence or responsibility of [Scala]" (emphasis supplied).

Evanston would read the word "solely" to mean, as the Supreme Court found, that the City would be an additional insured, entitled to defense and indemnification, only if Scala's negligence alone, and that of no other person or entity, were determined to be responsible for the accident. Evanston argues that such a determination could never be made here inasmuch as Boynton's third-party complaint against Scala seeks only contribution and not common-law indemnification, and that therefore Boynton has, in effect, conceded that his own negligence was a proximate cause of the accident.

The City, on the other hand, would read the word "solely" to refer only to an apportionment of fault as between Scala and itself, without regard to the potential liability of third parties. Thus, the City maintains that it would be an additional insured under the policy if Scala bore some responsibility for the accident and the City itself bore none. We agree with the City.

Where the language of a policy of insurance is ambiguous and susceptible of more than one reasonable interpretation, the parties may submit extrinsic evidence as an aid in construction; but when extrinsic evidence "will not resolve the equivocality of the language of the contract, the issue remains a question of law for the court" (State of New York v Home Indem. Co., 66 NY2d 669, 671). Here, we find that, as used in the policy's blanket additional-insured endorsement, the word "solely" is ambiguous, and neither party suggests that extrinsic evidence will aid in ascertaining its intended meaning. Thus, the question is one of law for the court to determine. Under such circumstances, "[c]ourts have consistently construed ambiguous policy provisions in favor of coverage and against the insurer who drafted the policy" (Primavera v Rose & Kiernan, 248 AD2d 842, 843; see MDW Enters. v CNA Ins. Co., 4 AD3d 338, 340-341; Scalia v Equitable Life Assur. Soc. of U.S., 263 AD2d 537). Indeed, "[i]n order for the insurer to prevail, it must demonstrate not only that its interpretation is reasonable but that it is the only fair interpretation" (Primavera v Rose & Kiernan, supra at 843).

Although, arguably, both of the proposed interpretations of the word "solely" are reasonable, Evanston's interpretation is hardly the only fair one. Insurance contracts are to be interpreted according to the reasonable expectations and purposes of ordinary businesspeople when making ordinary business contracts (see General Motors Acceptance Corp. v Nationwide Ins. Co., 4 NY3d 451, 457; Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383). In our view, the City's interpretation best comports with such reasonable expectations and purposes here because it would exclude coverage only in those cases in which the putative additional insured is found to be partially at fault for the happening of the accident. By contrast, Evanston's interpretation would indiscriminately exclude coverage in every case in which any person or entity other than the named insured is in any degree at fault for the accident, irrespective of whether the putative additional insured bears any responsibility for it at all. Such extremely narrow coverage would be, at best, of minimal value to the reasonable businessperson (cf. Belt Painting Corp. v TIG Ins. Co., supra at 387; Pepsico, Inc. v Winterthur Intl. Am., Ins. Co., 13 AD3d 599).

Under these circumstances, therefore, the endorsement must be construed in favor of the City. Accordingly, we find that the City would be an "additional insured" under the policy if it is determined, in the underlying action, that Scala bears some responsibility for the happening of the accident and the City bears none.

This brings us, then, to the central question of Evanston's duty to defend the City in the underlying action. "It is well settled that an insurance company's duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is exceedingly broad' and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage' . . . If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be'" (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [citations omitted]; see Seabord Sur. Co. v Gillette Co., 64 NY2d 304, 310; New York City Hous. Auth. v Commercial Union Ins. Co., 289 AD2d 311, 312; 79th Realty Co. v X.L.O. Concrete Corp., 247 AD2d 256; Zurich-American Ins. Cos. v Atlantic Mut. Ins. Co., 139 AD2d 379, 384, affd 74 NY2d 621).

In this case, Evanston would have the duty to defend the City in the underlying action if, liberally read, the allegations in the third-party complaint "give[] rise to the reasonable possibility of recovery under the policy" (Belt Painting Corp. v TIG Ins. Co., supra at 383). Conversely, a declaration that the carrier has no duty even to defend could be made "only if it could be concluded as a matter of law that there is no possible factual or legal basis on which [Evanston] might eventually be held to be obligated to indemnify [the City] under any provision of the insurance policy" (Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875, 876).

Here, the third-party complaint plainly alleges that Scala's negligence caused or contributed to Lamb's accident. Thus, there is at least a reasonable possibility that Scala, in the underlying action, will be found wholly or partially at fault in the happening of the accident, and that the City will be found to bear no responsibility for it, triggering Evanston's obligation to indemnify the City under the policy. Accordingly, subject to the Supreme Court's resolution of the outstanding issue of fact concerning the timeliness of the City's notice of claim, we find that Evanston has a duty to defend the City in the underlying action.

Evanston's remaining contentions are without merit.

Accordingly, the order is reversed insofar as appealed from, on the law, that branch of Evanston's cross motion which was for summary judgment is denied, and the City's motion is granted to the extent of declaring, subject only to the resolution of outstanding issues of fact concerning the timeliness of the City's notice of claim, that Evanston is obligated to defend the City in the underlying action, and the matter is remitted to the Supreme Court, Kings County, for a hearing to determine the issues of fact concerning the timeless of the City's notice of claim, and for entry, at the appropriate time, of a judgment making the appropriate declaration.
\

MILLER, J.P., KRAUSMAN and DILLON, JJ., concur.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the defendant's cross motion for summary judgment is denied, and the plaintiff's motion is granted to the extent of declaring, subject only to the resolution of outstanding issues of fact concerning the timeliness of the plaintiff's notice of claim, that the defendant is obligated to defend the plaintiff in the underlying action and the matter is remitted to the Supreme Court, Kings County, for a hearing to determine the issues of fact concerning the timeliness of the plaintiff's notice of claim, and for entry, at the appropriate time, of a judgment making the appropriate declaration.

Fireman's Fund Insurance Company v. Zurich American Insurance Company

Caron, Constants & Wilson, New York, N.Y. (Alfred C. Constants III of counsel), for appellant.
Melito & Adolfsen, P.C., New York, N.Y. (Ignatius John Melito
and S. Dwight Stephens of counsel), for respondent.


 

DECISION & ORDER

In an action for a judgment declaring that the defendant is obligated to pay for the defense and indemnification of the Zimberg Trust in an underlying action entitled Gjoka v Namdor, Inc., pending in the Supreme Court, Queens County, under Index No. 25307-01, and that the defendant is obligated to reimburse the plaintiff for any amounts or costs incurred by or on behalf of the Zimberg Trust in that action, the plaintiff appeals from an order and judgment (one paper) of the Supreme Court, Westchester County (Murphy, J.), entered September 29, 2005, which granted the defendant's motion for summary judgment, denied its cross motion for summary judgment declaring that the defendant is obligated to pay for the defense and indemnification of the Zimberg Trust in the underlying action, and that the defendant is obligated to reimburse the plaintiff for any amounts or costs incurred by or on behalf of the Zimberg Trust in that action, and declared that the plaintiff is estopped from denying that it has a duty to defend and indemnify the Zimberg Trust in the underlying action and that the defendant has no duty to contribute pro rata with the plaintiff in the defense and indemnification of the Zimberg Trust.

ORDERED that the order and judgment is affirmed, with costs.

The Supreme Court properly granted the defendant's motion for summary judgment. The defendant established a prima facie case that the plaintiff was estopped from denying insurance coverage (see Utica Mut. Ins. Co. v 215 W. 91st St. Corp., 283 AD2d 421; Brooklyn Hosp. Ctr. v Centennial Ins. Co., 258 AD2d 491). Having accepted tender of the defense, without reserving its right to disclaim coverage, estoppel barred the plaintiff's subsequent request for contribution (see Donato v City of New York, 156 AD2d 505; cf. Hanover Ins. Co. v Inter-Reco, Inc., 15 AD3d 443). In opposition, the plaintiff failed to raise a triable issue of fact.

Gassman v. Metropolitan Life Insurance Company

Hyman Clurfeld, P.C., Garden City, N.Y., for appellants-respondents.
Lowell Jacobs (Alvin Pasternak, Long Island City, N.Y., of
counsel), for respondent-appellant.
Piken & Piken, New York, N.Y., for defendants Arthur Rothlein and Arthur Rothlein Agency, Inc.


 

DECISION & ORDER

In an action, inter alia, to recover damages for breach of an insurance contract, (1) the plaintiffs appeal from so much of an order of the Supreme Court, Nassau County (Woodward, J.), entered December 7, 2004, as denied those branches of their motion which were for summary judgment on the first and second causes of action against the defendant Metropolitan Life Insurance Company and to strike the answer and affirmative defenses of the defendant Metropolitan Life Insurance Company, and the defendant Metropolitan Life Insurance Company cross-appeals from so much of the same order as denied its cross motion for summary judgment dismissing the complaint insofar as asserted against it and pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it, and (2) the plaintiffs appeal from stated portions of an order of the same court dated August 25, 2005, which, inter alia, in effect, upon reargument, adhered to its original determination denying those branches of their prior motion which were for summary judgment on the first and second causes of action against the defendant Metropolitan Life Insurance Company.

ORDERED that the appeal from so much of the order entered December 7, 2004, as denied those branches of the plaintiffs' motion which were for summary judgment on the first and second causes of action against the defendant Metropolitan Life Insurance Company is dismissed, as that portion of the order was superseded by the order dated August 25, 2005, in effect, made upon reargument; and it is further,

ORDERED that the order entered December 7, 2004, is affirmed insofar as reviewed; and it is further,

ORDERED that the order dated August 25, 2005, is modified, on the law, by deleting the provision thereof which, upon reargument, adhered to the original determination denying that branch of the plaintiffs' motion which was for summary judgment on the first cause of action against the defendant Metropolitan Life Insurance Company and substituting therefor a provision, upon reargument, vacating so much of the order entered December 7, 2004, as denied that branch of the motion, and granting that branch of the motion; as so modified, the order dated August 25, 2005, is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the plaintiffs.

The plaintiffs are executors of the estate of Stanley Silver. Stanley Silver was an owner of and beneficiary under a life insurance policy insuring the life of Gian Carlo Santini, who was his business partner. There were three other owners and beneficiaries under the policy.

Stanley Silver predeceased the insured. Paragraph 6 of the subject insurance policy dealing with an ownership interest in the policy provided that "[i]f an Owner other than the Insured dies while the Insured is living, all rights and options of that Owner shall belong to the Owner's executors or administrators unless otherwise provided." Paragraph 8 of the same policy referring to beneficiaries provided in relevant part that "[u]nless otherwise provided, the interest of any Beneficiary, including any irrevocable Beneficiary, who dies before the Insured shall belong to the Owner."

When Santini died, the plaintiffs did not receive one-fourth of the proceeds of the policy. Rather, they received only a small interest as an owner.

The plaintiffs commenced the instant action against, among others, the Metropolitan Life Insurance Company (hereinafter Met Life). As relevant herein, in the first cause of action, the plaintiffs alleged that they were entitled to receive one-fourth of the policy proceeds from Met Life. The plaintiffs moved, among other things, for summary judgment with regard to the first cause of action. Met Life cross-moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against it. The Supreme Court denied both the motion and the cross motion. Thereafter, among other things, in effect, upon reargument, the Supreme Court adhered to its original determination denying that branch of the plaintiff's motion which was for summary judgment on the first cause of action against Met Life.

The Supreme Court improperly denied that branch of the plaintiffs' motion which was for summary judgment on the first cause of action against Met Life. The plaintiffs made a prima facie showing of entitlement to judgment as a matter of law with regard to the first cause of action against Met Life (see generally Alvarez v Prospect Hosp., 68 NY2d 320). Where the provisions of an insurance contract are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement (see Government Empls. Ins. Co. v Kligler, 42 NY2d 863, 864; Hiraldo v Allstate Ins. Co., 8 AD3d 230, 231 affd 5 NY3d 508). Pursuant to the plain language of the applicable policy, the plaintiffs were entitled to receive one-fourth of the proceeds. In opposition to that branch of the plaintiffs' motion, Met Life failed to raise a triable issue of fact. Thus, the proceeds were improperly distributed by Met Life.

The parties' remaining contentions are without merit or need not be reached in light of our determination.

In the Matter of Eveready Insurance Company v. Mesic

Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP, New York, N.Y.

(Roy J. Karlin of counsel), for appellant.
Shestack & Young, LLP, New York, N.Y. (Jamie B. Levy of counsel), for respondent.


 

DECISION & ORDER

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for uninsured motorist benefits, the petitioner appeals from a judgment of the Supreme Court, Queens County (Rios, J.), entered July 20, 2006, which denied the petition and dismissed the proceeding.

ORDERED that the judgment is reversed, on the law, with costs, and the petition to permanently stay arbitration is granted.

The respondent's failure to file a sworn statement with the petitioner after the alleged hit-and-run accident in accordance with the condition precedent of the supplemental uninsured motorist endorsement of his insurance policy, vitiated coverage (see Matter of Empire Ins. Co. v Dorsainvil, 5 AD3d 480, 481; Matter of Legion Ins. Co. v Estevez, 281 AD2d 420; Matter of Aetna Life & Cas. v Ocasio, 232 AD2d 409; Matter of State Farm Ins. Co. v Velasquez, 211 AD2d 636, 637). Contrary to the respondent's contentions, the policy language which mirrors the prescribed endorsement of 11 NYCRR 60-2.3(f) is not ambiguous. Moreover, the fact that the petitioner received some notice of the accident by way of an application for no-fault benefits did not negate the breach of the policy requirement (see Matter of Allstate Ins. Co. v Estate of Aziz, 17 AD3d 460, 461; Matter of American Home Assur. Co. v Joseph, 213 AD2d 633).  

 

Tower Insurance Company of New York v. Breyter

Max W. Gershweir, New York, for appellant.
Resnick & Binder, P.C., Brooklyn (Serge Y. Binder of
counsel), for Polina Breyter and Lana Kagan, respondents.
Grey & Grey, L.L.P., Farmingdale (Sherman B. Kerner of
counsel), for Maria Tiben, respondent.

Order, Supreme Court, New York County (Ira Gammerman, J.H.O.), entered May 9, 2006, which, to the extent appealed from as limited by the brief, denied plaintiff insurer's motion for summary judgment insofar as it was premised on the governing policy's pollution exclusion, and granted defendant insureds Breyter and Kagan partial summary judgment, declaring that they are entitled to a defense from plaintiff in the underlying action, subject to the determination of the validity of that portion of plaintiff's disclaimer predicated on late notice, unanimously affirmed, with costs.

Plaintiff in the underlying action does not allege that the fumes from the nail salon of defendant insureds' tenant actually resulted in pollution. The pollution exclusion relied upon by plaintiff insurer is inapplicable (Incorporated Vil. of Cedarhurst v Hanover Ins. Co., 89 NY2d 293, 299 [1996]). It is at best ambiguous whether the subject exclusion was intended to encompass claims such as those made in the underlying action, alleging that "solvent fumes . . . drifted a short distance from the area of . . . intended use and . . . caused inhalation injuries" (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 388 [2003]). Ambiguity in an insurance policy, particularly as to the scope of an exclusion, must be construed against the insurer (see id.; Vigilant Ins. Co. v V.I. Techs., 253 AD2d 401 [1998], lv dismissed 93 NY2d 999 [1999]).

 

Batas v. The Prudential Insurance Company of America

Pomerantz Haudek Block Grossman & Gross LLP, New York
(D. Brian Hufford of counsel), for appellants-respondents.
Epstein Becker & Green, P.C., New York (Kenneth J. Kelly of
counsel), for respondents-appellants.

Order, Supreme Court, New York County (Herman Cahn, J.), entered June 13, 2005, which, insofar as appealed or cross-appealed from, granted plaintiffs' motion for class certification solely to the extent of certifying a subclass to be represented by plaintiff Vogel on her cause of action for tortious interference with contract, and otherwise denied the motion, unanimously modified, on the law, to vacate the certification of the aforesaid subclass, the motion denied to the extent it sought certification of a subclass on the cause of action for tortious interference with contract, and otherwise affirmed, without costs.

The named plaintiffs in this putative class action are participants in health care plans offered or administered by defendant Prudential Insurance Company of America or its wholly owned subsidiary, defendant Prudential Health Care Plan of New York, Inc. (collectively, Prudential). In their complaint, plaintiffs allege that the contracts governing their respective plans provide that the plan will provide "all care - including hospitalization - that is deemed to be medically necessary in accordance with the prevailing medical opinion within the appropriate specialty of the United States medical profession" (internal quotation marks omitted). Plaintiffs further allege that, contrary to the alleged requirements of the plan documents, it is Prudential's practice to have unqualified lay personnel (rather than physicians) determine what care is medically necessary in a given situation, and to require such employees to make such determinations based on actuarial utilization review guidelines that allegedly conflict with generally accepted medical standards. Each named plaintiff alleges that Prudential has improperly denied her medical care based on such inappropriate review procedures, although neither plaintiff claims to have sustained any physical injury or out-of-pocket expense as a result of such denial.

On a prior appeal in this action (281 AD2d 260 [2001]), we upheld the legal sufficiency of plaintiffs' causes of action for breach of contract and deceptive business practices (id. at 261), and the legal sufficiency of plaintiff Vogel's cause of action for tortious interference with her contractual rights under the self-funded benefit plan provided by her employer (id. at 266). Presently before us is Supreme Court's order denying plaintiffs class certification on their causes of action for breach of contract and deceptive business practices, and granting plaintiff Vogel certification of a limited subclass on her tortious interference cause of action. For the reasons discussed below, we modify to deny the motion for class certification in its entirety. The named plaintiffs remain free, of course, to pursue these claims - as well as their common-law fraud cause of action, which is not at issue on this appeal - on an individual basis.^[FN1]

On the cause of action for breach of contract, plaintiffs seek certification of a class defined as follows:

"All individuals who at any time [during the relevant period] . . . were subscribers to healthcare plans insured or administered by [Prudential] . . . to the extent such healthcare plans are exempt from the Employee Retirement Income Security Act of 1974 (ERISA)."

We agree with Supreme Court that this class definition is "overbroad" insofar as it "includes all participants in, or subscribers to, Prudential's healthcare plans, regardless of whether these individuals were ever denied promised care or treatment based on the allegedly improper procedures and guidelines." That is to say, an individual who has not been denied promised, medically necessary care does not have a viable cause of action for breach of contract against Prudential, even if Prudential used an inappropriate process to review the claim, since only the denial of a promised benefit would constitute a breach of contract (see Maio v Aetna, Inc., 221 F3d 472 [3d Cir 2000]; Doe v Blue Cross Blue Shield of Maryland, Inc., 173 F Supp 2d 398 [D Md 2001]; In re Managed Care Litig., 150 F Supp 2d 1330 [SD Fla 2001]; Eisen v Independence Blue Cross, 2002 WL 1803721, 2002 Pa Dist & Cnty Dec LEXIS 162 [Pa Com Pl July 26, 2002], affd 839 A2d 369 [Pa Super 2003], appeal denied 579 Pa 703, 857 A2d 679 [2004]). We are not persuaded by plaintiffs' argument that Prudential's use of an improper process to review claims should be deemed to constitute an actionable breach even in cases where that process did not result in the denial of promised care.

Plaintiffs' alternative suggestion that the class be limited to plan participants who have been denied care through an improper review process is unavailing. If the class were so defined, each class member's recovery against Prudential for breach of contract would depend on a determination that the care denied to him or her was medically necessary. Thus, if the action were adjudicated on a class basis, the medical necessity issue - unique and complex in each class member's particular case - would predominate over the questions of law or fact common to the class as a whole (see Doe, 173 F Supp 2d at 406; Pecere v Empire Blue Cross & Blue Shield, 194 FRD 66, 71 [ED NY 2000]; Paciello v UNUM Life Ins. Co. of Am., 188 FRD 201, 204 [SD NY 1999], affd mem 213 F3d 626 [table] [2d Cir 2000]; Tinman v Blue Cross & Blue [*3]Shield of Michigan, 264 Mich App 546, 563-566, 692 NW2d 58, 67-68 [2004]). Since class litigation is appropriate only where issues common to the class "predominate over any questions affecting only individual members" (CPLR 901[a][2]), Supreme Court properly denied class certification as to the breach of contract claim.

The predominance of individual issues over class issues would not be obviated by accepting plaintiffs' suggestion to deem each person denied care through an improper review process, regardless of medical necessity, to be entitled to an order of specific performance directing Prudential to reevaluate the claim using appropriate procedures. The difficulty of this approach is that reprocessing the claims would be only the first step; every new claim review by Prudential that resulted in a new denial of care would then require individualized scrutiny of the medical necessity issue by the court (see Paciello, 188 FRD at 205 [class certification denied because, even if insurer were required to reconsider claims, the "real relief sought by the putative members of the class - money - can only be obtained in individual actions following inquiries into the individual situations of the allegedly disabled insureds"]). Thus, individual issues of medical necessity would predominate over class issues, whether the burden of proof as to medical necessity was borne by Prudential (as plaintiffs contend) or by the claimant.

Class certification was also properly denied on plaintiffs' cause of action for deceptive business practices, whether that claim is asserted under the New Jersey Consumer Fraud Act (NJCFA) (NJ Stat Ann § 56:8-1 et seq.) (New Jersey being the state where Prudential is headquartered) or sections 349 and 350 of Article 22-A of the New York General Business Law (GBL) (New York being the state where both named plaintiffs reside and allegedly were injured)^[FN2]. To state a claim under either the NJCFA or GBL article 22-A, a plaintiff must allege and prove that he or she has suffered an actual injury (see Gross v Johnson & Johnson-Merck Consumer Pharm. Co., 303 NJ Super 336, 344-345, 696 A2d 793, 797 [1997] [a claim under the NJCFA requires an "ascertainable loss . . . as a result of the unlawful conduct"]; Stutman v Chemical Bank, 95 NY2d 24, 29 [2000] [to recover under GBL § 349, "a plaintiff must prove actual' injury"]). Thus, a putative class member will be entitled to recover for deceptive business practices under the statutory scheme of either New Jersey or New York only to the extent it is determined that he or she was denied medically necessary care as a result of Prudential's allegedly improper claim review procedures. As previously discussed, class certification is rendered inappropriate by the predominance the individualized inquiries into issues of medical necessity would have over the consideration of issues that can be resolved on a classwide basis.

Finally, the branch of the motion seeking to certify a subclass to be represented by plaintiff Vogel on her cause of action for tortious interference with contract should have been denied, as well. Supreme Court certified a subclass comprising all individuals who, during the relevant period, subscribed to the Concordia Health Plan (CHP), the self-funded plan offered by Vogel's employer and administered by Prudential, and "who sought care or treatment through an in-network primary care physician, but were denied care or treatment solely as a result of the pre-authorization or concurrent review procedures conducted by Prudential." Supreme Court certified this subclass based on its view that Vogel had raised an issue as to whether Prudential had caused a violation of her contractual rights under the CHP merely by requiring pre-authorization or concurrent review of care ordered by an in-network primary care physician, whether or not such care was objectively medically necessary. Stated otherwise, Supreme Court believed it would be possible for Vogel to prove that, under the CHP, the determination of an in-network primary care physician as to the medical necessity of care the physician had ordered was final, and could not be overridden by Prudential, the plan administrator. The contractual document that governs the CHP does not, however, support this rather generous view of the subscriber's rights.

The CHP contract provides that "[e]ligible charges" must be "ordered by a physician" and - as a separate requirement - be "medically or psychologically necessary." Further, the term "medically or psychologically necessary" is defined, in pertinent part, to mean services or supplies that "are adequate and essential for the evaluation and/or treatment of a disease, condition or illness," "can reasonably be expected to improve an individual's condition or level of functioning," and "are provided at the most cost-effective level of care." Thus, whether a subscriber is entitled to a given increment of care under the CHP contract depends, in substance, on whether such care is medically necessary. Neither Vogel nor Supreme Court identifies any provision of the CHP contract under which an in-network physician's order for a certain level of care would constitute a determination of the medical necessity for that care binding on Vogel's employer and on Prudential, as plan administrator. Accordingly, as with the breach of contract claim, the ability of a CHP subscriber to prevail against Prudential on the tortious interference claim depends on a determination that the subscriber was denied care that was medically necessary. Since, as previously discussed, the individualized inquiries into medical necessity would predominate over the consideration of any classwide issues, certification of the CHP subclass - either under the definition used by Supreme Court or under the broader definition proposed by Vogel - was inappropriate.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: FEBRUARY 22, 2007

CLERK

Footnotes

Footnote 1:Since plaintiffs' appellate briefs do not address Supreme Court's denial of class certification as to their cause of action for common-law fraud, plaintiffs are deemed to have abandoned their challenge to that aspect of the order under review. We also note that it is not entirely clear whether the claims for breach of contract and deceptive business practices are asserted by both named plaintiffs (as indicated by the complaint) or by plaintiff Batas alone (as plaintiffs' briefs seem to indicate). In either event, class certification was properly denied as to these claims.

Footnote 2:In the complaint, the deceptive business practices cause of action is pleaded under GBL article 22-A. In moving for class certification, plaintiffs, apparently recognizing that GBL article 22-A does not apply to transactions with consumers outside of New York (see Goshen v Mut. Life Ins. Co. of N.Y., 98 NY2d 314, 324-325 [2002]), requested that a nationwide class be certified with regard to alleged violations of the NJCFA. In the alternative, plaintiffs request that a class of New York residents be certified for purposes of the claim under GBL article 22-A.

RMD Produce Corp. v. Hartford Casualty Insurance Company

Russo, Keane & Toner, LLP, New York (Thomas F. Keane of
counsel), for appellant.
Sholes & Miller LLP, Poughkeepsie (Sarah E. Sholes of
counsel), for RMD Produce Corp., respondent.
Melito & Adolfsen, P.C., New York (John H. Somoza of
counsel), for Lumbermens Casualty Company, respondent.
Tarshis & Hammerman LLP, Forest Hills (Stuart M. Tarshis of
counsel), for Keith Freeman, respondent.

Order and judgment (one paper), Supreme Court, Bronx County (Yvonne Gonzalez, J.), entered January 26, 2006, which, inter alia, granted defendant Lumbermens Casualty Company's motion to stay the indemnity portion of this declaratory judgment action pending resolution of the underlying personal injury action, and granted plaintiff RMD Produce Corp.'s cross motion for summary judgment to the extent it declared that defendant Hartford Casualty Insurance Company was obligated to defend RMD in the underlying personal injury action, and that Hartford was obligated to reimburse RMD for reasonable defense costs incurred thus far in that action, unanimously reversed, on the law, without costs, Lumbermens' motion and RMD's cross motion denied and, upon a search of the record, summary judgment granted to Hartford and Lumbermens and it is declared that Hartford and Lumbermens have no duty to defend or indemnify RMD or defendant Keith Freeman in connection with the underlying personal injury action.

RMD is a New York corporation which operates its business at the New York City Terminal Market, Bronx, New York. A commercial general liability policy of insurance issued by Hartford to RMD was in effect at the time in question, as was a commercial catastrophe liability policy issued to Hunt's Point Cooperative Risk, under which RMD was a named insured. The underlying action arises out of an incident which occurred on May 13, 2003, in which Michael Ward, a fire inspector for the City of New York, claims he was assaulted by Keith Freeman, an employee of RMD, as Ward was attempting to perform a fire inspection of the premises occupied by RMD.

RMD maintains that it first learned of the underlying action in April 2004, and that it notified Hartford and Lumbermens in April or May of 2004. Hartford and Lumbermens both denied any duty to defend or indemnify RMD on the ground, inter alia, that it failed to provide timely notice of the incident.

RMD subsequently commenced the within declaratory judgment action asserting that the incident involved the use of reasonable force by Freeman to protect persons and/or property, and that because justification was available as a defense to the assault claim, its duty to notify the insurers was not triggered until it received process in the underlying action. RMD also asserted that Freeman was acting within the scope of his employment and even if that were not the case, the alleged loss was not intended or expected by RMD, and therefore was a covered occurrence.

Lumbermens thereafter moved for an order staying this action pending the resolution of the underlying action, and RMD cross-moved for summary judgment declaring, inter alia, that Hartford is obligated to defend and indemnify RMD and Freeman against any judgment recovered against them in the underlying action. The motion court granted Lumbermens' motion to the extent of staying the indemnity portion of this action, finding that a clear conflict of interest existed between Hartford, Lumbermens and the insured concerning the facts in the underlying action. The trial court further granted RMD's cross motion to the extent it declared Hartford was obligated to defend RMD and Freeman in the underlying action, and that Hartford was obligated to reimburse RMD and Freeman for reasonable defense costs already incurred. The court found that because a possible basis existed upon which the insurer could be held obligated to indemnify the insured, that being the availability of justification as a defense to the assault claim, then plaintiff's belief that a lawsuit would not be brought was reasonable and its duty to notify defendant of the incident was not triggered until receipt of the complaint. We disagree and reverse.

The purpose behind New York's requirement of strict compliance with the notice provisions of an insurance contract is that it protects the carrier against fraud or collusion; gives the insurer an opportunity to investigate claims while the evidence is still fresh; affords the carrier time to make an early estimate of potential exposure and establish adequate reserves; and provides the insurer the chance to exercise early control of claims in the aid of potential settlement (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]; Unigard Sec. Ins. Co. v North Riv. Ins. Co., 79 NY2d 576, 582 [1992]).

It is established that where, as here, the contract of insurance requires the insured to notify its liability carrier of a potential claim "as soon as practicable," such requirement acts as a condition precedent to coverage (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743 [2005]; White v City of New York, 81 NY2d 955, 957 [1993]), and the insured's failure to provide timely notice of an occurrence vitiates the contract as a
matter of law (Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d at 339; Modern Cont. Constr. Co. v Giarola, 27 AD3d 431, 432-433 [2006]). While the Court of Appeals has recognized that circumstances may exist that excuse a failure to give timely notice, such as a "good faith belief of non-liability," that belief must be reasonable "under all circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence" (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972], see also White v City of New York, 81 NY2d at 958 ["where a reasonable person could envision liability, that person has a duty to make some inquiry"]). Moreover, the insured must shoulder the burden of demonstrating the reasonableness of the proffered excuse (Great Canal Rlty. Corp. v Seneca Ins. Co., Inc., 5 NY3d at 744; White v City of New York, 81 NY2d at 957), and the courts have found even relatively short periods of unexcused delay in giving notice to be unreasonable as a matter of law (The Doe Fund, Inc. v Royal Indem. Co., 34 AD3d 399, 400 [2006]). We further note that an appellate court may search the record and grant summary judgment to eligible parties (Hughes v Solovieff Realty Co., L.L.C., 19 AD3d 142, 143 [2005]; CPLR 3212[b]).

In the matter before us, we find that plaintiff's notice to its carriers, made nearly one year after the occurrence in question, was untimely as a matter of law. The record herein reveals that Ward attempted to gain entry to plaintiff's premises to conduct a fire inspection, but was refused by defendant's employee, Keith Freeman, the brother of plaintiff's owner and sole officer, Randall Freeman. Ward left, and subsequently returned with two New York City Police Officers and a New York City Fire Department Chief. At that juncture, Freeman allegedly continued to refuse access to Ward and an altercation broke out between Ward and Freeman, during which Freeman also attacked one of the police officers. As a result, Freeman was arrested on a variety of charges, including assault and obstruction of governmental administration.^[FN1]

Plaintiff now maintains that its failure to give timely notice was reasonable because there was a large amount of cash in the premises and Freeman, therefore, was justified in using force to protect persons or property. Plaintiff's principal, Randall Freeman, also stated in an affidavit in support of plaintiff's cross motion that it was his "understanding that the incident involved, at most, shoving ..." an assertion directly contradicted by his brother, who averred in an affidavit that "I was assaulted and sustained significant injury to my face and body with extensive bleeding."

In sum, given all of the circumstances, including the injuries sustained by Freeman, the fact that he was arrested, and that the other participants in the incident were New York City officials, we conclude that there is no view of the circumstances which would warrant a finding that plaintiff's failure to give timely notice of the occurrence was reasonable. We, therefore, award summary judgment to Hartford, the primary carrier, and Lumbermens, the excess carrier (see Long Is. Lighting Co. v Allianz Underwriters Ins. Co., 24 AD3d 172, 173 [2005], appeal dismissed 6 NY3d 844 [2006]; City of N.Y. v St. Paul Fire & Marine Ins. Co., 21 AD3d 978, 981-982 [2005]).

Thiebault v. Travelers Insurance

Calendar Date: January 16, 2007
Before: Mercure, J.P., Peters, Carpinello, Rose and Lahtinen, JJ.


Martin, Shudt, Wallace, DiLorenzo & Johnson, Troy
(David T. Garvey of counsel), for appellants.
Costello, Cooney & Fearon, P.L.L.C., Syracuse
(Jenika Conboy of counsel), for respondent.

MEMORANDUM AND ORDER



Rose, J.

Appeals (1) from an order of the Supreme Court (Nolan Jr., J.), entered November 21, 2005 in Saratoga County, which, inter alia, granted the motion of defendant Travelers Insurance Company for summary judgment dismissing the complaint against it, and (2) from that part of an order of said court, entered July 24, 2006 in Saratoga County, which denied plaintiffs' motion to renew.

Plaintiffs Deborah L. Thibeault and Thomas T. Thibeault Sr. (hereinafter collectively referred to as the Thibeaults) filed a fire loss claim under a homeowner's policy issued by defendant Travelers Insurance Company (hereinafter defendant). Defendant denied the claim on the ground that the policy had been canceled before the fire for nonpayment of the premium. When plaintiffs commenced this action seeking payment for their fire loss, defendant moved for summary judgment dismissing the complaint against it. Supreme Court granted the motion, finding that the Thibeaults abandoned their claim of payment of the premium and failed to refute the presumption of receipt that arose from defendant's mailing of a notice of cancellation. Plaintiffs' motion for reargument or renewal was denied and they now appeal both orders.

While the record confirms the Thibeaults' contention that they did not abandon their claim of payment of the policy premium, nevertheless their evidence fails to establish payment. Rather, the Thibeaults' submissions tend to prove only mailing of a check that was intended to pay the premium, and not that the check was cashed and honored (see e.g. Meiselman v McDonalds Rests., 305 AD2d 382, 383 [2003], appeal dismissed, lv denied 100 NY2d 637 [2003]; Matter of Demerritt v Levitt, 71 AD2d 757, 758 [1979], lv denied 48 NY2d 607 [1979]).

As for the issue of whether defendant's notice of cancellation was effective, we agree with Supreme Court that defendant met its burden of proving that the policy had been canceled by describing the office practice it used to ensure that notices of cancellation are properly mailed (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829 [1978]; Pardo v Central Coop. Ins. Co., 223 AD2d 832, 833 [1996]). A presumption then arose that the Thibeaults had received the notice, and the burden shifted to plaintiffs to rebut the presumption (see Nassau Ins. Co. v Murray, supra at 830).

While it is true that an insured's denial of receipt, standing alone, is insufficient to rebut the presumption (see id. at 829-830), here there is additional evidence that an omission in the address as stated on the Thibeaults' policy application and used by defendant prevented delivery of the notice. There is no dispute that the address was incomplete, inasmuch as it left out the name of the Thibeaults' business under which the post office box was registered. Because the Thibeaults submitted evidence that a mailing addressed solely to them, without the name of the business, would not be delivered to the post office box due to US Postal Service practices, they succeeded in rebutting the presumption and raising a question of fact as to delivery of the notice (see Matter of Holland v New York City, 271 AD2d 609, 610 [2000]; compare Pardo v Central Coop. Ins. Co., supra at 833 [where there was no evidence that the address error would thwart delivery]). Thus, Supreme Court erred in granting defendant's motion. Given this determination, the issue of whether the court should have granted plaintiffs' motion to renew is academic.

Mercure, J.P., Peters, Carpinello and Lahtinen, JJ., concur.

ORDERED that the order entered November 21, 2005 is modified, on the law, with costs to plaintiffs, by reversing so much thereof as granted the motion of defendant Travelers Insurance Company; motion denied; and, as so modified, affirmed.