Important Change in NY Law of "Bad Faith" (March 15, 2008)

Dear Liability and Insurance Claims Professional,

Two very recent decisions by the NY Court of Appeals have altered the law of “bad faith” in New York, at least for certain first-party commercial coverage claims, but based upon principles that may not be limitable to such contexts.

Below my signature are brief synopses of these two companion cases, Bi-Economy Market, Inc. v. Harleysville Insurance Company of New York and Panasia Estates, Inc. v. Hudson Insurance Company, with hyperlinks to the full opinions both issued on February 19.

Bi-Economy and Panasia Estates hold that an insurer may be held liable for “consequential damages” caused by a bad-faith failure to promptly investigate and pay claims for business interruption coverage (Bi-Economy) and builder’s risk coverage (Panasia). ”Consequential damages” in the law of contracts are those damages not flowing directly from the breach but indirectly resulting from it. As Bi-Economy explains, to be recoverable “such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting."

The consequential damages claimed in Bi-Economy were for future profits lost due to the insured’s inability to stay in business, allegedly as a result of a “bad faith” delay in payment. The Court held such damages to be recoverable as a matter of law because prompt payment of such coverage, allowing the insured to remain in business, is the very purpose of business interruption insurance (although the two dissenters expressed a reasonable differing view).

The consequential damages claimed in Panasia are not stated in the opinion, but the insured’s appeal brief claims that the insurer’s bad-faith disclaimer of coverage for interior water damage resulting from a leaking roof forced it to incur additional interest expenses and closing costs, and that it had also lost rents. The Court held that the record was not sufficient to determine whether such losses were contemplated by the parties and so remanded for further factual development.

The Bi-Economy opinion stresses both the delay in paying the business interruption coverage and the insurer’s alleged “bad faith” in causing that delay, as justifications for the claim for consequential damages. The insured in Panasia also complained about delay, but since the claim ultimately was denied mere delay played no part in causing the alleged consequential damages. Accordingly, in Panasia the Court explained its holding in Bi-Economy without mentioning any delay component:

“As we explained in Bi-Economy Market v Harleysville Ins. Co. [decided today], consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were "'within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting.'”’ [Emphasis added.]

If a limiting principle can be deduced from these cases it may be that consequential damages for bad faith delays or disclaimers will only be awarded when the particular coverage, in the court’s view, has a clear purpose that is linked to foreseeable losses, in the event of a breach. As Bi-Economy states:

The dissent seeks to distinguish this case from the Kenford line of reasoning by grouping it with that separate class of contract actions involving pure "agreements to pay" — contracts for money only — where the only recoverable damage for breach is interest. This distinction is without basis. With agreements to pay money — for example, an agreement to pay sales commissions or a contract to pay a lender $12 tomorrow for $10 given today, the sole purpose of the contract is to pay for something given in exchange. In such cases, what the payee plans to do with the money is external and irrelevant to the contract itself. In the present case, however, the purpose of the agreement — what the insured planned to do with its payment — was at the very core of the contract itself. [Emphasis added.]

The plaintiff’s attorney in Bi-Economy had asked the court to treat insurers “like any other contracting party,” and as such liable for consequential damages when the facts support. However, although purporting to do exactly that the Court of Appeals apparently created a unique rule presumably applying only to insurers, that requires not only proof that indirect, consequential damages were contemplated by the parties, but also that the insurer acted in “bad faith” in either denying the claim; or, where the claim is ultimately paid, in failing to pay with the requisite promptness.

The dissenters point out that the majority offered no reason why “bad faith” should be required to impose consequential damages upon insurers but not upon other contracting parties. The reason would seem to be that “consequential damages” are awardable only against a breaching party, but when an insurance claim is paid there is no breach except, possibly, a breach of the implied covenant of good faith and fair dealing:

Within every contract is an implied covenant of good faith and fair dealing (see, Rowe v. Great Atlantic & Pacific Tea Co., 46 N.Y.2d 62). This covenant is breached when a party to a contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits under their agreement (see, Jaffe v. Paramount Communications, 222 A.D.2d 17, 22-23). For a complaint to state a cause of action alleging breach of an implied covenant of good faith and fair dealing, the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff (see, Dvoskin v. Prinz, 205 A.D.2d 661, 662; Holmes Protection of N.Y. v. Provident Loan Soc. of N.Y., 179 A.D.2d 400).

Aventine Invest. Mgt. v. Canadian Impl. Bank, 265 A.D.2d 513, 514[2d Dept 1999].

Thus proving “bad faith” is essential to the claim under Bi-Economy since the contract’s express terms were not breached but honored, albeit only after a delay; mere delay in paying, without more, will not support consequential damages. The decision merely allows the claim to go forward; the factual issue of whether the insurer acted in bad faith is still alive, as are such issues as causation and mitigation of damages.

In Panasia, since coverage was denied the allegations of “bad faith” would seem to be superfluous, under a conventional contract analysis, to the insured’s claim for consequential damages: if they were contemplated by the parties they are recoverable if the coverage denial was a breach of contract, regardless of “bad faith.” Nonetheless, Panasia clearly states that “bad faith” is required for the insured to recover consequential damages.

Much will surely be written about and many cases will ponder the meaning and impact of Bi-Economy and Panasia for years to come, and we will endeavor to keep you abreast of developments. If you would like copies of the appeal briefs, or have any questions about these cases as they may affect your claims, do not hesitate to call or email the undersigned.

Below the Bi-Economy and Panasia abstracts follows a roundup of significant recent decisions from New York’s appellate courts in the areas of:

Premises Liability;
Motor Vehicle and UM/SUM Liability including Serious Injury Threshold;
NY Labor Law;
Insurance Coverage;
Municipal Liability; and
Animal Liability,

all with hyperlinks to the full decisions. As always, do not hesitate to email, call or write me or my partner Phil Barth if you have a question about any case reported in this newsletter, about New York law and practice, or if we may otherwise be of assistance to you in your work.

Thank you for your continued trust and confidence in our services.

Very truly yours,

Laurence D. Behr

lbehr@barthbehr.com

Barth Sullivan Behr
“Defending Insurers, Their Insureds, and Municipalities Across Upstate NY Since 1928”
Web site: www.barthbehr.com
43 Court St., Suite 600
Buffalo NY 14202
TEL: 716-856-1300 FAX: 716-856-1494

Bi-Economy Market, Inc. v. Harleysville Insurance Company of New York - NY Court of Appeals - Decided 2/19/08.

NY COURT OF APPEALS ALLOWS CONSEQUENTIAL DAMAGES FOR BREACH OF INSURANCE CONTRACT FOR BUSINESS INTERRUPTION. The plaintiff insured, a wholesale and retail meat market, bought a “Deluxe Business Owner’s” policy from the defendant insurer that included business interruption insurance for one year. The insured suffered a major fire destroying its inventory and causing extensive damage to its building and equipment. The insurer disputed the claim and limited its advance payments. The insured eventually was awarded over $400,000 through the appraisal process, but allegedly because the insurer had paid only seven months of business interruption insurance, instead of the twelve months specified in the policy, the insured was forced out of business.

The insured then brought an action for bad faith claims handling, tortious interference with business relations and breach of contract seeking consequential damages for the loss of its business. The insurer moved for summary judgment dismissing the claim for consequential damages. Supreme Court granted the motion and the Appellate Division affirmed reasoning that because “consequential losses” were excluded from the policy, the parties did not contemplate “consequential damages” when the contract was made.

The Court of Appeals reversed (5-2) and reinstated the claim for consequential damages. The majority rejects the dissent’s argument that it had undone prior cases strictly limiting the availability of punitive damages for bad faith breaches of first-party coverages, stating that “consequential damages” are not punitive in nature. Unlike punitive damages, which are assessed as a punishment, consequential damages are measured by pecuniary loss suffered. “Here, the claim is that [defendant] failed to promptly adjust and pay the loss, resulting in the collapse of the business. When an insured in such a situation suffers additional damages as a result of an insurer’s excessive delay or improper denial, the insurance company should stand liable for these damages. This is not to punish the insurer, but to give the insured its bargained-for benefit …. We hold that [plaintiff’s] claim for consequential damages including the demise of its business, were reasonably foreseeable and contemplated by the parties, and thus cannot be dismissed on summary judgment.”

Also held, the policy exclusion for “consequential losses” is not a defense to the claim, as such exclusion clearly refers to damages from delays caused by third parties or by the “‘[s]uspension, lapse or cancellation of any license, lease or contract.’” Consequential ‘damages,’ on the other hand, refers to subsequent losses following upon a calamitous event such as a fire, and may included additional damages caused by a carrier’s injurious conduct — in this case, the insurer’s failure to timely investigate, adjust and pay the claim.”

Panasia Estates, Inc. v. Hudson Insurance Company - NY Court of Appeals - Decided 2/19/08.

NY COURT OF APPEALS ALLOWS CONSEQUENTIAL DAMAGES FOR BREACH OF INSURANCE CONTRACT FOR BUILDER’S RISK. In this companion case to Bi-Economy (supra), the insured’s policy included a “Builders Risk” endorsement covering damage to its property while undergoing renovation. During one such construction period, extensive rain damage allegedly occurred while the roof remained open. The insurer denied coverage on the grounds that the damage resulted from repeated water infiltration over time and wear and tear, rather than from the covered risk. The insured sued for breach of contract, claiming also that the defendant breached the implied covenant of good faith and fair dealing, and was thus liable for consequential damages. The insurer moved for partial summary judgment to dismiss plaintiff’s bad faith allegations and claim for consequential damages, arguing primarily that the policy excluded “[a]ny other consequential loss.” Supreme Court denied that part of defendant’s motion seeking to dismiss plaintiff’s claim for consequential damages. In affirming the denial, the Appellate Division stated that ‘[a]n insured may recover foreseeable damages, beyond the limits of its policy, for breach of a duty to investigate, bargain for and settle claims in good faith,” and also found that the exclusion for “consequential loss” did not encompass “consequential damages.”

The Court of Appeals affirms (5-2) finding, as it did in Bi-Economy, that “consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting.” However, because the record here was not developed on the issue of whether the consequential damages claimed by the insured actually were contemplated by the parties at the time of contracting it remanded the case for further factual development.

NY APPELLATE ROUNDUP

COURT OF APPEALS OF NEW YORK

INSURANCE. ADDITIONAL INSURED. DUTY TO DEFEND. TRIGGER. Fourth party plaintiff (HVAC subcontractor) brought action as an additional insured against its subcontractor’s carrier (fourth party defendant) for a declaration that it was entitled to a defense in the underlying action brought by an injured construction worker. Supreme Court granted additional insured’s motion for summary judgment declaring that it was entitled to a defense. Appellate Division (3-2) modified this decision by also finding that subcontractor’s carrier (fourth party defendant) was primary on indemnity, while fourth party plaintiff’s general liability carrier was excess. Court of Appeals reinstates order of Supreme Court. The trigger for providing a defense for an additional insured arises from the allegations in the underlying complaint, and the standard for determining whether a defense must be afforded is the same for both the insured and an additional insured. Such coverage, therefore, is not dependent on first determining the merits of a claim and whether the insured under the policy is liable. Here, a duty to defend was triggered because injured plaintiff’s amended complaint alleged that fourth party plaintiff’s subcontractor breached its duty to maintain a safe worksite and that the breach caused plaintiff’s injuries. However, because none of the parties submitted all of the policies necessary to determine primary/excess questions, Appellate Division’s order finding fourth party defendant primary was misplaced. BP Air Conditioning Corp. v. One Beacon Insurance Group.

HI-LO AGREEMENTS. NON-DISCLOSURE TO DEFENDANTS NOT PARTICIPATING IN HI-LO AGREEMENT REQUIRES REVERSAL OF JUDGMENT. Plaintiff entered into hi-lo agreement with one of two defendants. Neither the trial court nor plaintiff advised the remaining defendant about the agreement. Upon non-participating defendant learning of hi-lo agreement a few days after jury award of more than $3 million, with a finding that it was 60% at fault, defendant moved to set aside the verdict and for a new trial. Trial Court denied motion and entered judgment. Appellate Division affirmed (one dissent) because, absent evidence of collusion between plaintiff and hi-lo defendant, failure to disclose hi-lo agreement to remaining defendant was not prejudicial. Court of Appeals reverses, orders new trial, and holds that “whenever a plaintiff and a defendant enter into a high-low agreement in a multi-defendant action which requires the agreeing defendant to remain a party to the litigation, the parties must disclose the existence of that agreement and its terms to the court and the non-agreeing defendants(s).” Non-disclosure has the potential of prejudicing the non-agreeing defendant in its trial strategy, beginning with jury selection and the number of peremptory challenges to which it might be entitled, as well as the use of the hi-lo agreement in cross-examination and for other purposes, which would be the subject of evidentiary rulings. Matter of Eighth Judicial District Asbestos Litigation.

FIRST DEPARTMENT APPELLATE DIVISION

INSURANCE. LATE NOTICE TO CARRIER. GOOD FAITH BELIEF IN NONLIABILITY REJECTED. Plaintiff, a construction company, notified its liability carrier of underlying accident when it was served as a third-party defendant 5½ years after injury to plaintiff (its employee) in underlying action. Denial of plaintiff’s summary judgment motion for defense and indemnification, and granting of defendant’s summary judgment motion declaring that it was not obligated to defend or indemnify plaintiff, is affirmed. Although a good faith belief in non-liability may excuse late notice, it does not apply here because plaintiff did not conduct an investigation as to its possible liability for plaintiff’s accident. Of note also is that notice under a workers’ compensation policy is not deemed notice under a liability insurance policy. Sorbara Construction Corporation v. AIU Insurance Company.

SECURITY NEGLIGENCE. THIRD-PARTY ATTACK. Plaintiff was attacked in the lobby of his apartment building, alleging that the locks on the lobby doors were not functioning, which four tenants called by plaintiff at trial supported. In contrast, aside from the testimony of a principal of the defendant owner and the super, the court permitted the defendants to call only one tenant, who was equivocal on whether the locks were not functioning. Verdict for plaintiff reversed, new trial ordered as against corporate building owner, and complaint dismissed as against individual principals of corporate owner on ground that corporate veil had not been pierced. In view of number of witnesses plaintiff was permitted to call, Trial Court prejudicially limited the number of defense witnesses. Further, other errors, including plaintiff’s paucity of proof that it was more probable than not that the attacker was an intruder into the building, the admission of post-attack criminal activity in the building and plaintiff’s counsel’s remarks appealing to the jurors’ class bias, prejudice or passion, warrant reversal. Tehozol v. Anand Realty Corp.

SNOW AND ICE. SLIP AND FALL. GAS STATION. CONVENIENCE STORE. Plaintiff slipped and fell on a transparent, hard and dry patch of ice, six feet by three feet, located approximately six feet from the front entrance of a gas station’s convenience store. Denial of defendants’ summary judgment motion affirmed. Based upon meteorological records, the consistency of the ice, its size and proximity to the store’s entrance, and the absence of proof indicating that defendants performed any meaningful maintenance, it can reasonably be inferred that defendants should have discovered the condition and remedied it before plaintiff’s fall. Gonzalez v. American Oil Co.

ROADWAY. CRACKS. PROXIMATE CAUSE. Plaintiff allegedly fell while getting out of her car because of cracks in defendant’s private roadway. Granting of defendant’s summary judgment motion, on basis that plaintiff could not prove what caused her to fall, reversed, and complaint reinstated. Plaintiff testified at her deposition, in response to question about whether she knew what caused her to fall, that “[w]hen I stepped down, my ankle, because the blacktop was uneven where it was cracking, my ankle twisted and I fell forward and to the left.” This testimony is sufficient to establish causation. Further, because of the numerous cracks which existed in the area, plaintiff is not required to prove precisely which crack in the roadway caused her to fall. Cherry v. Daytop Village, Inc.

SLIP AND FALL. RESTAURANT. SERVICE BAR. Plaintiff slipped and fell twice near a service bar while being led to her table in defendant’s restaurant. Granting of defendant’ssummary judgment motion reversed, and complaint reinstated. Area was heavily trafficked by defendant’s employees moving between the kitchen and dining area. Plaintiff and her husband described the area as “greasy,” “wet” and “shiny.” On this evidence, an inference can be drawn that defendant’s employees created the condition. Mete v. GMRI, Inc.

INSURANCE. RESCISSION OF POLICY. MATERIAL MISREPRESENTATION. FRAUD. Plaintiff (insured) brought action on disability policy against defendant (insurer) more than two years after policy was issued. Defendant claimed that plaintiff made material misrepresentations in his application by deliberately withholding information about his preexisting conditions. Denial of each party’s summary judgment motion modified, defendant’s motion to rescind the policy granted and complaint dismissed. To rescind a policy ab initio after more than two years from its date of issuance, a carrier must prove a material misrepresentation in the application that was intended to defraud the insurer [Insurance Law §§3105(b) and 3216(d)(1)(B)(I)]. Here, defendant established fraud as a matter of law by demonstrating through the affidavit of its chief underwriter, and its policy guidelines that, had it known about plaintiff’s preexisting conditions, it would not have issued the policy, and that plaintiff knew that the answers he was providing in his application were false. Dwyer v. First Unum Life Insurance Company.

STOPPED ELEVATOR. MALFUNCTION. ESCAPE. PROXIMATE CAUSE. Plaintiff, a porter in a building, became stuck in an elevator with two other passengers. While being in radio contact with super of building and elevator mechanic, plaintiff kept getting in and out of the stuck elevator through the ceiling hatch despite being instructed to remain in the elevator until power was restored. Plaintiff was injured when the power came back on and the elevator started moving while he was on the roof of the cab. Defendants (managing agent of building and elevator company) moved for summary judgment contending that plaintiff’s conduct constituted a superseding cause of his injuries. Denial of defendants’ motion affirmed. Because defendants were aware of plaintiff’s activity in getting in and out of the elevator, questions of fact exist as to proximate cause and plaintiff’s comparative negligence. Of note also is that determination by Unemployment Insurance Appeal Board that plaintiff was not entitled to benefits because of his misconduct, which justified his discharge, does not collaterally estop his plenary action, the issues of proximate cause and assumption of risk not being issues determined by the Board. Pelzer v. Transel Elevator & Electric Inc.

LABOR LAW. LADDER. LANDLORD. ABSENCE OF CONSENT. Plaintiff, a contractor hired by a tenant, fell when a ladder supplied by the tenant slipped. Because tenant breached its lease by failing to obtain the landlord’s consent for the work, or notify the landlord that it was altering the premises, the landlord did not have any knowledge of it. Granting of defendant landlord’s summary judgment motion, including §240(1) claim, and denial of plaintiff’s cross-motion for summary judgment against landlord under §240(1), affirmed. “Because the work was performed without landlord’s knowledge, and in violation of the lease requirement that tenant obtain prior consent, the landlord cannot be held liable under Labor Law §240(1).” For liability to be imposed against an out-of-possession owner there must be some nexus between the owner and worker. Morales v. D & A Food Service.

LABOR LAW. STATIONARY HOIST. OFF-LOADING. FLATBED TRUCK. Plaintiff, while standing on the ground, was hit by cinder blocks which became loose from a 4000 lb. load as it was being hoisted off a flatbed truck by a fork boom. Among other matters decided, denial of plaintiff’s summary judgment motion on §240(1) reversed, and summary judgment granted. This type of elevation risk is within the protections afforded under §240(1). As to §241(6), 12 NYCRR §§23-8, 23-1.7(a)(1) and 23-2.1(a) are not applicable to stationary hoists. Gonzalez v. Glenwood Mason Supply Co., Inc.

INSURANCE. DISCLAIMER. NOTICE. CONTENTS. In underlying case, plaintiff claimed that she was injured when she fell on steps constructed by defendant. Three years after finding that her default judgment against defendant was uncollectible, plaintiff notified underlying defendant’s carrier [defendant here] who then timely disclaimed by sending a notice to its insured (defendant in underlying case) with a copy to plaintiff. Denial of plaintiff’s summary judgment motion, and granting of defendant’s summary judgment motion, affirmed. That denial notice did not specifically include that plaintiff, as the injured party, failed to notify defendant timely is irrelevant where, as here, notice complied with Insurance Law §3420(d). Schlott v. Transcontinental Insurance Company, Inc. NB: Conflicts with Court of Appeals, which has held that when the injured party gave first notice, a disclaimer is insufficient if it does not specifically cite the injured party’s failure to give reasonably prompt notice, GENERAL ACCIDENT INSURANCE GROUP v. CIRUCCI, 46 N.Y.2d 862 (1979)

UM. NOTICE OF CANCELLATION. FILING WITH DMV. EVIDENCE. Petitioner (UM carrier) sought permanent stay against its insured and third-party’s carrier. During framed-issue hearing, respondent carrier offered as proof that it filed notice of cancellation that it sent to its insured with the DMV within 30 days of its becoming effective by offering into evidence an “insurance activity expansion,” which it downloaded from the DMV’s website. Denial of petition reversed, and permanent stay granted. Respondent did not have the downloaded file certified, pursuant to CPLR 4518(c), or otherwise establish through its regular course of business procedures that it properly filed the cancellation. Thus, respondent failed to prove that it filed the cancellation, which then became effective only against its insured and members of insured’s household. Court notes that respondent could have simply offered into evidence its DMV receipt for the filing, which would have constituted “conclusive evidence of such filing,” [Vehicle & Traffic Law §313(3)]. Matter of Progressive Classic Insurance Company v. Kitchen, et al.

SLIP AND FALL. FLOOR. SLIPPERINESS. Plaintiff alleged that she slipped and fell on a “shiny, slippery” floor in the Port Authority Bus Terminal. Although she didn’t see any water or debris, and the accident report noted that the floor was clean and dry, she stated in her affidavit in opposition to defendant’s motion for summary judgment that she felt wax on her clothing after she fell. Plaintiff also opposed defendant’s motion with an affidavit from her expert who stated that the floor was slippery because it was made of ceramic tile covered with a polyurethane coating, which he based on an inspection done one year after the accident. Denial of defendant’s motion reversed, motion granted and complaint dismissed. “Absent proof of the negligent application of wax or polish, the fact that a floor is slippery by reason of its smoothness or having been polished does not give rise to an inference of negligence.” Kudrov v. Laro Services Systems, Inc. [Editor’s comment: read dissent.]

SLIP AND FALL. STAIRCASE. RECURRING CONDITION. Plaintiff slipped and fell on oily substance on staircase in defendant’s building. Plaintiff and non-party witnesses testified in depositions that litter, garbage and refuse was a daily problem on the staircase, resulting from tenants bringing garbage bags down for disposal. Granting of defendant’s summary judgment motion reversed, motion denied and complaint reinstated. Plaintiff raised issues of fact as to whether staircase had a dangerous and frequently unremedied recurring condition, which relieves plaintiff from proving that defendant knew, or should have known, of the existence of the particular item of debris that caused her fall. Bido v. 876-882 Realty, LLC.

SECOND DEPARTMENT APPELLATE DIVISION

PERSONAL INJURY. VILLAGE. PLAYGROUND EQUIPMENT. PRIOR WRITTEN NOTICE. Village of Hempstead Code §39-1(B) requires prior written notice of defective or out of repair playground equipment. However, this is completely negated by General Municipal Law §50-e(4), which prohibits a village from requiring prior written notice of defects at municipal locations other than streets, highways, bridges, culverts, sidewalks or crosswalks. Denial of defendant’s summary judgment motion affirmed. Plaintiff raised issues of fact as to whether village created defect. White v. Incorporated Village of Hempstead.

PERSONAL INJURY. SLIP AND FALL. BROKEN STEPS. WATER ACCUMULATION. ICE. RECURRING CONDITION. NOTICE. Plaintiff slipped and fell because of ice which accumulated in missing portions of brick and mortar on steps leading to defendant’s home, where plaintiff had an apartment. Granting of defendants’ summary judgment motion reversed, motion denied and complaint reinstated. Issues of fact exist as to whether defendant had actual knowledge of recurring condition, and whether she may be charged with constructive notice of specific recurrence of condition. Because defendant did not establish that open and obvious condition of steps was not inherently dangerous, open and obvious condition of steps only raises issues of fact as to plaintiff’s comparative negligence. Sewitch v. LaFrese.

PERSONAL INJURY. GOVERNMENTAL IMMUNITY. PROPRIETARY FUNCTION. SNOW REMOVAL. Claimant slipped and fell in snow which had not been cleared from steps of building owned by the State of New York. Judgment dismissing claim in Court of Claims, on basis of governmental function immunity defense, reversed, claim reinstated and matter remitted for decision on merits of claim. Defendant’s snow removal operations are considered proprietary in nature, such that governmental immunity defense is inapplicable. McGowan v. State of New York.

PERSONAL INJURY. ELEVATOR. RES IPSA LOQUITUR. Plaintiffs, passengers in an elevator in a residential building, were injured when it dropped from the third or fourth floor to just above the bottom of the shaft. In suit against building owner and maintenance company, Trial Court directed verdict against defendants based on res ipsa loquitur theory, although there was conflicting expert testimony as to the cause of the malfunction. Judgment reversed and new trial ordered. “Only in the rarest of cases, where the plaintiff’s circumstantial proof is so convincing and the defendant’s response so weak that the inference of defendant’s negligence is inescapable, may a plaintiff win a directed verdict by relying on the doctrine of res ipsa loquitur.” Because expert testimony raised issues on cause of accident, directed verdict on res ipsa loquitur was in error. Martinez v. Mullarkey.

PERSONAL INJURY. LABOR LAW. FLATBED TRUCK. STACKED PANELS. OFF-LOADING. In the process of getting ready to off-load stacked curtain wall panels from the bed of a flatbed truck, plaintiff slipped and fell while climbing to the top of them. Having not been given a ladder or other safety device to reach the top of the stacks, which were 10 feet above the bed of the truck, plaintiff climbed up the sides of cross bracing used to secure the stacked panels. Among other matters decided, granting of plaintiff’s summary judgment motion on §240(1) liability affirmed. Plaintiff’s activity falls within §240(1) protections. Because defendants failed to provide any safety device, liability is warranted as a matter of law. Ford v. HRH Construction Corp.

NO-FAULT. SERIOUS INJURY THRESHOLD. LIMITATIONS. CERVICAL RANGE OF MOTION. Denial of defendant’s summary judgment motion on “serious injury” threshold affirmed. Defendant failed to demonstrate prima facie entitlement to summary judgment. Affirmation of defendant’s examining neurologist indicated limitations in cervical range of motion in both plaintiffs. Tavarez v. Jackson.

PERSONAL INJURY. SERIOUS INJURY THRESHOLD. GAP IN TREATMENT. Granting of defendant’s summary judgment motion on “serious injury” threshold reversed, and complaint reinstated. Plaintiff adequately explained four year gap in treatment with her chiropractor, whose opinions otherwise established “serious injury,” by testifying at her deposition, and stating in her affidavit in opposition to defendant’s motion, that she stopped chiropractic treatment because her no-fault insurance was cut off and she could not afford to pay for the treatment herself. Francovig v. Senekis Cab Corp.

CONTRACTUAL INDEMNIFICATION. After plaintiff’s verdict in construction accident case finding defendants at fault in varying percentages, granting of defendant Brooklyn Union Gas’ [BUG] oral application for contractual indemnification against one of the defendants is reversed, and contractual indemnification denied. Broadly worded clause for full indemnification BUG had with co-defendant violated GOL §5-322.1. Kalinsky v. Square.

BICYCLE RIDING. PRIVATE URBAN DIRT TRAIL. IMMUNITY STATUTE. PRIMARY ASSUMPTION OF RISK. Plaintiff was injured when he was thrown from his bike when its front wheel went into a hole on a dirt trail in defendant’s cooperative residential community. Denial of defendant’s summary judgment motion reversed, and complaint dismissed. General Obligations Law §9-103 [Recreational Use Statute] provides that “an owner… of premises … owes no duty to keep the premises safe for [among other things] entry or use by others for … bicycle riding … or to give warning of any hazardous condition or use of or structure or activity on such premises to persons entering for such … purpose.” Statute applies when: (1) plaintiff is engaged in one of the enumerated activities; and (2) plaintiff is recreating on land suitable for the activity. Here, defendant is entitled to immunity because plaintiff was engaged in one of the enumerated activities, and the dirt trail, 500 feet long and 10 feet wide, which was located in an undeveloped wooded area not designated for any other use, was suitable for bike riding. Even if immunity statute did not apply, defendant would still be entitled to summary judgment based on plaintiff’s primary assumption of inherent risks in riding a bike outdoors, including striking a hole and being thrown from the bike. Rivera v. Glen Oaks Village Owners, Inc.

LABOR LAW. CRANE DISASSEMBLY. Plaintiff, employed by a subcontractor, was injured during the disassembly of a crane. Granting of defendant GC’s summary judgment motion dismissing §§240(1) and 241(6) claims, but denying it with respect to §200 claim, modified by granting it in its entirety. For a GC to be liable under §200 and for common law negligence arising from the manner in which work is performed, it must be shown that the GC actually supervised and controlled the work. Here, the GC did not have authority to supervise or control the manner in which plaintiff disassembled the crane. McLeod v. Corporation of Presiding Bishop of Church of Jesus Christ of Latter Day Saints

NO-FAULT. SERIOUS INJURY THRESHOLD. ROTATOR CUFF. Plaintiff, 14 years old, suffered right shoulder tear of the supraspinatus tendon, cervical radiculitis at C3-4, cervical myofascial pain syndrome and cervical sprain. Denial of defendants’ summary judgment motion on “serious injury” threshold affirmed. Affirmation of treating physician, based on recent physical examination, which noted these injuries and quantified losses of ranges of motion with normal ranges sufficiently established “serious injury.” Grullon v. Perez.

SERIOUS INJURY THRESHOLD. LUMBAR. SHOULDER. Denial of defendants’ summary judgment motion on “serious injury” threshold affirmed. Plaintiff suffered confirmed MRI lumbar disc herniation with a 30% reduction in range of motion in lumbar extension, as well as significant left shoulder residual limitations. Britt v. Goodspeed Transit.

SLIP AND FALL. LOBBY FLOOR. RAIN. Plaintiff slipped and fell on wet lobby floor, which was captured on security videotape. Tape also showed that accident occurred during a heavy rainstorm, that people with umbrellas entered the lobby area minutes before plaintiff’s fall and that defendant mopped area every seven minutes. Granting of defendants’ summary judgment motions affirmed. As a matter of law, defendants did not have a sufficient opportunity to eliminate the hazard. Plaintiff’s claim that defendants were negligent for not having adequate floor mats could not be supported by submitted expert’s report, which was not sworn or notarized. Bernhard v. Bank of Montreal.

SLIP AND FALL. LOBBY FLOOR. INHERENT SLIPPERINESS. Plaintiff slipped and fell on floor in office building’s lobby. Granting of summary judgment motion by building owner and maintenance contractor affirmed. Inherently slippery condition of floor was just as apparent to plaintiff as it was to defendants. Cause of action for slippery floor does not lie unless condition other than inherent slipperiness causes fall. DeMartini v. Trump 767 5^th Avenue, LLC.

SCHOOL. NEGLIGENT SUPERVISION. While in a hallway without any teacher or security guard present, infant plaintiff was punched in her left eye three times by a fellow seventh grader after dismissal from their last class. Infant and her mother had previously complained to school personnel about the other student, who had just completed a suspension for similar behavior before the incident with the infant plaintiff. Granting of defendant’s summary judgment motion reversed, and complaint reinstated. To establish liability against a school district for negligent supervision, it must be demonstrated that the school authorities had “sufficiently specific knowledge or notice of the dangerous conduct which caused the injury; that is, that the third-party acts could reasonably have been anticipated.” Here, there are issues of fact as to whether school district had such knowledge based on complaints by infant plaintiff and her mother, and other recent similar instances involving other student. Smith v. Poughkeepsie City School District.

ROADWAY DEFECT. BUS STOP. Plaintiff tripped and fell on a raised and mounded area of roadway which comprised a bus stop, claiming that NYCTA made a special use of the roadway by having a bus stop at the location, and that the weight of its buses traveling on the road surface created the defect. Denial of NYCTA’s summary judgment motion reversed, and complaint dismissed as to it. Bus lanes do not constitute a special use of the street. Further, the maintenance, repair and creation of City roadways is the responsibility of the City of New York. Tanzer v. City of New York, et al.

DOG BITE. EVIDENCE. VICIOUS PROPENSITIES. Granting of defendants’ summary judgment motion affirmed. Strict liability for a dog attack requires proof that the dog had vicious propensities and that the owner knew, or should have known, of them. Evidence of vicious propensities can include a prior attack, growling, snapping, baring of teeth, manner by which dog is restrained, use of dog as a guard dog and a proclivity to act in a way that puts others at risk of harm. Mere fact that dog was taken to an animal shelter because it did not get along with another dog in owner’s household does not establish vicious propensities. Galgano v. Town of North Hempstead, et al.

LABOR LAW. “FALLING WORKER” THEORY. “FALLING OBJECT” THEORY. Plaintiff and his partner were on the 20^th floor of a building during the course of their removing a horizontal 250 pound beam, just above their heads, from a temporary elevator which was being dismantled. Although losing his balance when the beam dropped onto his shoulder and arm, fracturing his elbow, plaintiff was able to keep from falling by bracing himself against a piece of metal, which caused him to strike his head against a metal column and suffer a head injury. Denial of defendants’ summary judgment motion to dismiss §240(1) claim affirmed. An issue of fact exists as to the “falling worker” theory based on plaintiff’s testimony that he was not given a safety harness, although controverted by his foreman, and because a §240(1) claim exists where a worker is injured while preventing himself from falling further. However, Motion Court properly granted summary judgment dismissing §240(1) claim on “falling object” theory because: (1) beam which plaintiff and his partner were removing fell from a miniscule height; and (2) beam did not fall because of the absence of an enumerated safety device while being hoisted or secured. Ienco v. RFD Second Avenue, LLC.

MUNICIPALITY. PRIOR WRITTEN NOTICE. EXCEPTION. Defendant municipality hired contractor for sewer installation work. Granting of defendant City’s summary judgment motion, on ground that it did not have prior written notice of claimed hazard, reversed, with complaint reinstated as to City. An exception to the prior written notice rule applies where a municipality creates a defect through an affirmative act of negligence. Here, there is an issue of fact as to whether sewer contractor, acting as City’s agent, created defect during course of sewer work. Tumminia v. Cruz Construction Corp., et al.

“SERIOUS INJURY.” TENDON TEAR. TENDONOPATHY. Denial of defendants’ summary judgment motion on “serious injury” threshold reversed, and complaint dismissed. MRI evidence of a tear of the supraspinatus tendon of the right shoulder and tendonopathy of the left shoulder does not qualifty as a “serious injury” without objective evidence of the extent and duration of physical limitations resulting from the injuries, which plaintiff failed to offer. Tobias v. Chupenko.

UM. PERMANENT STAY. COOPERATION OF INSURED. CONDITION PRECEDENT. Insureds repeatedly failed to comply with carrier’s disclosure demands, including depositions, physicals and the exchange of medical record authorizations. Granting of permanent stay of arbitration affirmed. Insureds’ unexcused and willful refusals to comply with disclosure requirements of UM policy constitute a breach of policy’s cooperation clause, a condition precedent for coverage, which precludes recovery. Matter of New York Central Mutual Fire Insurance Company v. Rafailov, et al.

MOTOCROSS. RELEASE. IMPLIED ASSUMPTION OF RISK. Plaintiff was injured during a motocross practice session on defendants’ track where, for the first time to plaintiff’s knowledge, all-terrain vehicles (ATV) were permitted to practice simultaneously with those doing motocross. Denial of defendants’ summary judgment motion, based on release and assumption of risk, affirmed. Release was unenforceable under GOL §5-326. Further, implied assumption of risk does not apply because plaintiff demonstrated, by his expert, that the inherent risks associated with motocrossing were unreasonably increased because of defendants’ negligence in permitting ATVs to practice on the same track simultaneously with those doing motocross. Sisino v. Island Motocross of N.Y., Inc., et al.

SERIOUS INJURY. NO-FAULT. Granting of defendants’ summary judgment motions reversed, and complaint reinstated. Plaintiff raised issues of fact by submitting in opposition the affirmed MRI report of a radiologist stating that plaintiff had sustained herniated cervical discs and the affidavit of his chiropractor stating that he had significant limitations in his cervical ranges of motion, as quantified in the affidavit. Paz v. Wydrzynski, et al.

SNOW AND ICE. SLIP AND FALL. SNOW REMOVAL CONTRACT. After a snowstorm and defendant snow remover’s clearing of the snow, plaintiff slipped and fell on ice on her driveway in her condominium development. Although snow removal company previously salted after clearing snow, it did not do so this time. Among other matters decided, denial of snow removal company’s summary judgment motion reversed, and complaint dismissed as to it. First, because snow removal company’s contract with condominium was not a comprehensive and exclusive property maintenance obligation intended to displace the condominium’s general duty, as the owner, to keep its property in a safe condition, snow removal company owed no duty to plaintiff based solely on the contract. Second, plaintiff did not demonstrate that she relied on snow removal company’s continued performance of its contact because she testified in her deposition that she did not have any knowledge of it. Third, no evidence was submitted indicating that the snow removal company created or exacerbated a hazardous condition. Plaintiff’s contention that defendant negligently removed the snow, as supported by her expert, failed to establish how the particular ice which caused plaintiff’s fall was created. Castro v. Maple Run Condominium Association, et al.

THIRD DEPARTMENT APPELLATE DIVISION

LABOR LAW. MODULAR HOME FALL. STAIRCASE COLLAPSE. Plaintiff, while going up a staircase during the installation/construction of a two story modular home, was injured when the staircase collapsed and he fell through an open hole in the first floor to the basement. Plaintiff brought action against owner of home, seller/broker of modular home and manufacturer of modular home. Plaintiff did not oppose owner’s motion for summary judgment. Granting of manufacturer’s summary judgment motion affirmed, there being no evidence that manufacturer was negligent. As to seller/broker, granting of its summary judgment motion on §240(1) claim, and denial of it on §241(6) claim, affirmed. First, seller/broker is considered a “contractor” because it had general responsibility for erecting the modular home, including the authority to hire subcontractors, which it did. Second, as to §240(1) claim, Motion Court correctly found invalid plaintiff’s contention that the staircase was the “functional equivalent” of a ladder. Because it was uncontested that the staircase was “permanent,” it cannot be considered a “device” for §240(1) purposes. As to §241(6) claim, although it was undisputed that defendant violated 12 NYCRR 23-1.7(b)(1)(i) [hazardous openings into which a person may step or fall shall be guarded], summary judgment was properly denied because of issues of fact on proximate cause and plaintiff’s comparative negligence. Milanese v. Kellerman, et al.

MALICIOUS PROSECUTION. PROBABLE CAUSE. Plaintiff, defendant Village’s Police Chief, was brought up on 19 administrative charges, which the Village Board dismissed on the recommendation of a Hearing Officer. Contending that there was no probable cause for the charges, plaintiff brought malicious prosecution case against the Village and a private firm that it hired to investigate the charges. Denial of defendants’ summary judgment motion reversed, and complaint dismissed. An action for malicious prosecution arises from the “wrongful initiation, procurement or continuation of a legal proceeding.” A plaintiff must prove that: (1) defendant initiated a proceeding that terminated in plaintiff’s favor; (2) “an entire lack of probable cause in the prior proceeding”; (3) malice; and (4) special injury. The Motion Court found that, because issues of fact existed as to whether there was probable cause on 3 of the 19 charges, summary judgment was not warranted. However, where probable cause exists for a prosecution as a whole, dismissal of a malicious prosecution claim on that basis should be granted. Here, the proceeding as a whole was justified because there was probable cause for 16 of the 19 charges. Perryman v. Village of Saranac Lake.

PERSONAL INJURY. SLIP AND FALL. MELTING SNOW. SCHOOL HALLWAY. Infant plaintiff, a sixth grader, slipped and fell in school hallway while returning a cart filled with sports equipment as directed by a school aide. Denial of defendant’s summary judgment motion affirmed. Plaintiff claimed that hallway where he fell became wet from melting snow on students’ boots which were lined up against the hallway walls, outside of the classrooms, as a matter of school policy. Although this proof fails to demonstrate that defendant had actual or constructive notice of the condition, it constitutes prima facie proof that school’s policy created the alleged hazardous condition when combined with infant’s testimony that he saw “a puddle of water underneath the boots and it started to come along the floor.” Gerfin v. North Colonie Central School District.

HIGHWAY DESIGN. GOVERNMENTAL QUALIFIED IMMUNITY. Plaintiff’s decedent, a passenger in a car, was killed with the driver when vehicle crashed into a b PERSONAL INJURY. STOPPED ELEVATOR. MALFUNCTION. ESCAPE. PROXIMATE CAUSE. Plaintiff, a porter in a building, became stuck in an elevator with two other passengers. While being in radio contact with super of building and elevator mechanic, plaintiff kept getting in and out of the stuck elevator through the ceiling hatch despite being instructed to remain in the elevator until power was restored. Plaintiff was injured when the power came back on and the elevator started moving while he was on the roof of the cab. Defendants (managing agent of building and elevator company) moved for summary judgment contending that plaintiff’s conduct constituted a superseding cause of his injuries. Denial of defendants’ motion affirmed. Because defendants were aware of plaintiff’s activity in getting in and out of the elevator, questions of fact exist as to proximate cause and plaintiff’s comparative negligence. Of note also is that determination by Unemployment Insurance Appeal Board that plaintiff was not entitled to benefits because of his misconduct, which justified his discharge, does not collaterally estop his plenary action, the issues of proximate cause and assumption of risk not being issues determined by the Board. Pelzer v. Transel Elevator & Electric Inc. ridge abutment after knocking down a concrete guidepost on the approach to the bridge. Plaintiff’s decedent brought action against host driver and County, claiming against the County that it negligently employed a concrete barrier system on the bridge approach. Granting of County’s summary judgment motion dismissing the complaint as to it, on the ground that County was entitled to qualified immunity as a result of its highway planning decision, is affirmed. County demonstrated that its decision to keep the concrete guidepost barrier system “was the product of a deliberative decision-making process of the type afforded immunity from judicial interference,” which included facts that approach to bridge was flat and straight, and that there had not been any reported accidents on or near the bridge. Smythe v. Woods.

ASSUMPTION OF RISK. ICE-SKATING RINK. Plaintiff was injured while ice-skating in defendant’s rink during an open skate of approximately 200 skaters when she collided with a young boy who had been intentionally tripped by another young boy, both of whom were in a group of “unruly [and] unsupervised” 6 to 10 year old boys. Denial of defendants’ summary judgment motion affirmed. Although an ice-skater assumes the risk of accidentally colliding with another skater, a skater ordinarily does not assume the risk of reckless or intentional conduct by other skaters. Here, questions of fact exist as to whether defendants were negligent in their supervision and control of the skaters, thus breaching their “duty to exercise care to make the conditions as safe as they appear to be.” Factual questions also exist as to whether plaintiff assumed the risk of injury by electing to continue skating in the presence of the unruly boys. Ballan v. Arena Management Group, LLC.

FOURTH DEPARTMENT APPELLATE DIVISION

SERIOUS INJURY THRESHOLD. Granting of plaintiff’s motion to set aside jury verdict that plaintiff did not sustain a permanent consequential loss of use of her ear, reversed, and jury verdict reinstated. Undisputed evidence that plaintiff suffers from permanent nerve damage that causes her ear to have increased sensitivity to cold, heat and pressure, which is intermittent, is not significant within the meaning of Insurance Law §5102(d). Pecora v. Lawrence.

SLIP AND FALL. ICE. PARKING LOT. CONSTRUCTIVE NOTICE. Plaintiff slipped and fell on ice in restaurant parking lot owned by one of the defendants, who salted the lot four hours before plaintiff fell. Granting of summary judgment by all defendants modified to extent of reinstating complaint against owner solely on theory of constructive notice. Defendant owner’s prima facie proof that it salted four hours before plaintiff fell and inspected lot every few hours is not sufficient to find, as a matter of law, that ice formed so close in time to plaintiff’s fall that it could not have noticed and corrected condition before plaintiff’s fall. Conklin v. Ulm.

LABOR LAW. SINGLE FAMILY HOME. OWNER LIABILITY. OWNER SOLE SHAREHOLDER OF CORPORATION DEVELOPER. Plaintiff fell off the roof of a house under construction in a subdivision. Plaintiff’s employer was hired by the intended owner of the single-family home, who was also the sole shareholder of the corporation developing the entire subdivision of 35 homes. Granting of defendants’ summary judgment motion modified by reinstating the §§240(1) and 241(6) causes of action against corporate builder, there being issues of fact as to whether it was the general contractor. Individual owner defendant was entitled to §§240(1) and 241(6) exemption for owners of one and two family dwellings because evidence established that he did not supervise the method or manner of plaintiff’s work. However, issues of fact exist as to whether corporate developer was general contractor, based on blueprints, invoices and building permits indicating that it was, and supervisory activities of individual defendant owner as sole shareholder of corporate developer. Burnett v. Waterford Custom Homes, Inc.

LABOR LAW. ELECTRICAL CONDUITS. TRIP AND FALL. Plaintiff tripped and fell over electrical conduits protruding approximately one foot from the floor of a building under construction. Denial of GC’s and electrical sub-contractor’s summary judgment motions on §§200 and 241(6) claims modified by granting GC’s motion as to §200 claim, and granting both defendants’ motion as to certain claimed violations of the industrial code. As to §200 claim against electrical sub-contractor, this defendant did not present prima facie evidence that it did not create, or have actual or constructive notice of, the conditions which caused plaintiff’s fall. As to §241(6) against both defendants, claimed violations of 12 NYCRR 23-1.7(e)(1) and (2) are inapplicable because the electrical conduits were an integral part of the work in a large open area, not a passageway, and otherwise did not constitute “dirt and debris” or “scattered tools and materials.” However, summary judgment was properly denied as to the claimed violation of 12 NYCRR 23-1.30 because, based on plaintiff’s testimony that it was so dark that a person “wouldn’t be able to read the newspaper,” issues of fact exist as to whether the lighting conditions fell below the regulatory standard of 10 foot candles of illumination required by the regulation. Verel v. Ferguson Electrical Construction Company, Inc.

LABOR LAW. CONSTRUCTION MANAGER. STATUTORY AGENT OF OWNER. Plaintiff, a plumber, fell off a ladder when pipes he was installing struck it. Plaintiff brought §§240(1), 241(6) and 200 actions against owner (school district) and “construction manager.” Granting of defendant construction manager’s summary judgment motion dismissing all Labor Law claims on the ground that it was not the statutory agent of the owner, reversed, and complaint reinstated as to it. Issues of fact exist as to whether “construction manager” was general contractor or statutory agent of owner because, pursuant to its contract with owner, it was responsible for overseeing the construction site, had full-time employees on the site, conducted bi-weekly progress meetings and had the authority to supervise the activities of the contractors and to stop unsafe work practices. Sheridan v. Albion Central School District, et al.

LABOR LAW. AERIAL BASKET. DRAINAGE DITCH. Plaintiff, a telephone field technician, was injured when he stepped out of an aerial bucket and fell into a three-foot-deep drainage ditch that was overgrown with grass and weeds. Among other matters decided, partial denial of utility pole owner’s summary motion modified by granting it in its entirety. §240(1) claim was properly dismissed because the height risk to which plaintiff was exposed in his aerial bucket related to those times when he was working above the ground while in the bucket, not when he was getting out of the bucket when he was on the ground. Plaintiff’s fall into the ditch resulted from “the usual and ordinary dangers” encountered at a work site, not from a true elevation-related risk. §241(6) claim should also have been dismissed because neither of the regulations claimed to have been violated are applicable. 12 NYCRR 23-1.7(b) [hazardous openings] does not apply to an old drainage ditch, overgrown with grass and weeds, which was wholly unrelated to the demolition project in which plaintiff was involved. 12 NYCRR 23-9.6(e) [aerial basket operations], although relevant, was not shown to be a proximate cause of the accident. Kaleta v. New York State Electric & Gas Corporation, et al.

UM/SUM. MANDATORY ARBITRATION. THIRD-PARTY BENIFICIARY OF POLICY. Plaintiff, a passenger in a car driven off the road by an unidentified vehicle, commenced plenary action against host-driver’s carrier for SUM coverage. Granting of defendant carrier’s motion to dismiss affirmed. As a third-party beneficiary of the insurance contract obtained by the host-driver, plaintiff’s rights are the same as the named insured’s, thus subjecting plaintiff to the policy’s mandatory UM/SUM arbitration provisions. Williams v. Progressive Northeastern Insurance Company.’

Barth Sullivan Behr
“Defending Insurers, Their Insureds, and Municipalities Across Upstate NY Since 1928”
Web site: www.barthbehr.com
43 Court St., Suite 600
Buffalo NY 14202
TEL: 716-856-1300 FAX: 716-856-1494

EMAIL: LBEHR@BARTHBEHR.COM

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NY Insurance & Liability Law Updates (May 29, 2007)

Dear Liability and Insurance Claims Professional,

We are pleased to provide information regarding recent dispositive motions, trials and appeals won by Barth Sullivan Behr in motor vehicle accident cases, construction accidents, premises-related accidents, general liability, and coverage disputes. We hope this may be of use to you in your work. There follows a roundup of selected recent decisions from New York Appellate Divisions.

We are pleased to take this opportunity also to announce that Douglas P. Hamberger has joined our firm as a senior trial counsel. Doug served as an assistant DA from 1982 to 1991, trying over 160 jury cases. As staff trial counsel for CGU Insurance (1991-2002), and then senior trial counsel for Zurich American Insurance (2002 to date), Doug amassed many defensive victories in over 150 jury trials. We are confident that Doug’s experience and expertise will greatly assist our providing the top quality legal services we trust you have come to expect from Barth Sullivan Behr.

Please do not hesitate to email, call or write me or my partner Phil Barth if you have a question about any case reported in this newsletter, about New York law and practice, or if we may otherwise be of assistance to you in your work.

Thank you for your continued trust and confidence in our services.

Very truly yours,

Laurence D. Behr

lbehr@barthbehr.com

RECENT DECISIONS SECURED BY

BARTH SULLIVAN BEHR

“NO CAUSE” VERDICT: CONSTRUCTION SITE ACCIDENT—LABOR LAW §§ 200, 241(6)—PERMANENTLY DISABLING SHOULDER INJURY

CASE NAME: Leigh Ames v. Norstar Bldg. Corp.

TRIAL ATTORNEY: Laurence D. Behr

COURT: Supreme Court, Erie County (Hon. Erin M. Peradotto, J.S.C.)

SUMMARY: Plaintiff Leigh Ames, a drywall scrapper, claimed to have been hurt in an unwitnessed accident attempting to enter the rear door of one of numerous low income townhouse units under construction. We had obtained summary judgment dismissing Ames’ Labor Law § 240 “scaffold law” claim because there was no “elevation related risk,” which was upheld by a divided Fourth Department (19 AD3d 1016), leaving Ames with Labor Law §§ 200 and 241(6) and common law negligence claims.

Ames claimed that to enter a unit he was to scrap out he had to climb up into the stairless rear door, which was nearly at chest height, because he found the front door locked. He alleged he slipped on packed snow on the doorsill as he tried to rise to his feet and fell back, and that his gloved left hand became lodged in the crack of the door causing him to hang briefly by his arm and injuring his shoulder. He never worked again and his condition progressively worsened; by the time of trial he had developed the neurologic complication of incurable myoclonic spasming, and displayed spasmodic shoulder and head motions throughout the trial. He claimed future medical expenses of $850,000, with past expenses of $60,000.

Ames claimed an unsafe workplace mainly because no steps were furnished to the rear entrances in violation of an OSHA regulation requiring a maximum distance of 19 inches between work areas. We disputed the violation because rear doors were not expected to be used regularly for access, and our client’s site supervisor could have been reached by cell phone to open any locked front doors. A mockup of the entrance was used to demonstrate that a man of Ames’ 6’2” height could step up easily into the entrance, even if it were 35” as Ames claimed at trial. Among many arguments, we contended that Ames was 100% negligent if he fell as claimed, because the floor inside the doorway was dry and he should have put his foot on it rather than the snow on the doorsill.

We also presented both medical evidence and the testimony of a former employer that Ames’ shoulder problem predated the alleged accident, and had bothered him since an arthroscopic surgery on it in 1990 (he claimed he was symptom-free since then). Because Ames could not recall if this were the first job he did that day, we argued that he reinjured his shoulder elsewhere and decided to take victimize our client as his best target for a lawsuit.

AMOUNT DEMANDED OF JURY: $6,900,000.00

DECISION: The jury rendered a unanimous verdict that our client was not negligent.

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“NO CAUSE” VERDICT: MOTOR VEHICLE ACCIDENT—REAR-ENDING OF PARKED MAINTENANCE VEHICLE

CASE NAME: Hokan v. Davern

COURT: Supreme Court, Erie County (Hon. Thomas Flaherty, J.S.C.)

TRIAL ATTORNEY: Philip C. Barth III

SUMMARY: Our client was driving in the left lane on a road with two lanes in his direction of travel, and a tractor-trailer was traveling in the same direction in the right lane. The tractor-trailer suddenly moved in front of our client, who reacted by moving to the right lane, where the plaintiff’s utility vehicle was partially blocking the lane. The plaintiff worked for the town water department, and was going to paint a fire hydrant. Our client did not see the plaintiff’s truck until immediately before impact. The plaintiff was outside the vehicle and jumbed over a guardrail when he saw our client’s car, sustaining serious injuries (not in evidence because the trial was bifurcated).

Plaintiff’s expert testified that our client would have had time to stop had he been traveling at a proper rate of speed, and observing the roadway ahead, but conceded that the plaintiff’s failure to put out warning signs, cones, and barricades violated several sections of the NY Uniform Traffic Control Devices Law. Our own accident reconstruction expert confirmed those violations, and gave detailed testimony regarding speeds, reaction time, and stopping distances, supporting his opinion that our client did not have time to stop his vehicle.

DECISION: The jury rendered a unanimous verdict that our client was not negligent.

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INSURANCE COVERAGE—LATE NOTICE—JURY FINDS INSUREDS DID NOT NOTIFY COMPANY BEFORE SUIT FILED THIRTY MONTHS AFTER ACCIDENT

CASE NAME: United Frontier Mut. Ins. Co. v. John J. Schultz, Scott Allen and John G. Schultz

COURT: Supreme Court, Erie County (Hon. John P. Lane, J.S.C.)

TRIAL ATTORNEY: Laurence D. Behr

SUMMARY: In February 2003 United Frontier Insurance Co. received notice of a Labor Law § 240 personal injury suit demanding $3,000,000 from its insureds, John J. Schultz and Scott Allen, partners in the insured business of rehabilitating and selling rental properties. Thirty months earlier in October 2000 Schultz's son, working for them as an independent contractor, had fallen through a second story porch deck breaking his hip.

United denied coverage for late notice, rejecting Schultz's claim that he had notified on the afternoon of the accident. Schultz claimed that he rushed from his home to the hospital to see his son, and because he either had left his cell phone home in his hurry, or its battery was dead, he called United from a payphone when he was a few blocks from the hospital. He wanted to report the accident before United’s office closed. He could not identify the payphone’s exact location, and did not know the woman who took his call at United. He said he called United directly rather than his agent because he found it easier to deal with United.

We introduced Schultz's subpoenaed cell phone records, revealing that he had made and received many calls on the afternoon and evening of the accident date. He then explained that he had to use the payphone because his cell phone’s battery had died and he knew United was about to close; he recharged the battery in his car and then continued using the cell phone. We also introduced his agent’s customer service representative’s testimony that Schultz often called her for reasons connected with the United policy. We argued that Schultz claimed to have called United only because had he called his agent he would have been connected to his CSR, and could not have claimed to have reported the accident to an unidentified individual.

DECISION: The jury rendered a unanimous verdict that Schultz had not called United as he claimed, entitling United to a declaration that coverage was forfeited for late notice.

United’s post-trial motion for financial sanctions for frivolous conduct of litigation (defending based upon a false factual assertion), pursuant to 22 N.Y.C.R.R. Part 130-1.1, is pending.

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SUMMARY JUDGMENT—DAMAGED PROPERTY NOT LISTED ON PLAINTIFF’S BANKRUPTCY PETITION, DEPRIVING HIM OF STANDING TO SUE

CASE NAME: Popadyn v. Clark Construction and Property Maintenance Services, Inc.

COURT: Supreme Court, Erie County (Hon. Christopher J. Burns, J.S.C.)

ATTORNEY: Philip C. Barth III

SUMMARY: Plaintiff claimed our client damaged his property including a boat and a luxury automobile when transporting same for storage. We determined that he had not listed the items claimed to have been damaged on his recent bankruptcy petition, and invoked the federal statute that vests the bankruptcy trustee with sole ownership of all property in a petitioner’s estate.

DECISION: The plaintiff lacked standing to sue for damage to the property; summary judgment granted dismissing the complaint.

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SUMMARY JUDGMENT: SERIOUS BURNS SUSTAINED BY BAR PATRON—PRIMARY ASSUMPTION OF RISK

CASE NAME: Szkatulski v. Thruway Inn

COURT: Supreme Court, Erie County (Hon. Erin M. Peradotto, J.S.C.)

ATTORNEY: Laurence D. Behr

SUMMARY: The plaintiff, a friend of the insured’s bartender, had performed an impressive bar trick with him on several occasions. She would take brandy into her mouth, and he would light her exhaled breath, creating a flamethrower effect. On the accident date, however, some ignited brandy escaped her mouth and dribbled onto her neck and shoulder, causing permanent and severe burn scarring.

DECISION: Complaint dismissed. The plaintiff was of sufficient age and experience to be charged with awareness that the risk of being burned was inherent in this recreational activity. As such, she fully assumed the risk of a burn injury, applying New York’s doctrine of “primary assumption of risk.” The plaintiff’s appeal is pending.

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“NO CAUSE” VERDICT: NEGLIGENCE OF LANDLORD, CONVICTED FELONY SEX OFFENDER, HELD NOT A PROXIMATE CAUSE OF FALL ON STAIRS.

CASE NAME: Amy Lebron v. Robbie Said

COURT: Supreme Court, Erie County (Hon. Paula Feroleto, J.S.C.)

TRIAL ATTORNEY: Laurence D. Behr

SUMMARY:Plaintiff 27-year-old LPN nurse living in upstairs apartment claimed a few weeks after she moved in she reported the light bulb was out in her front hall stairs. She also claimed there was a box of a previous tenant's belongings right outside her door that she had been asked not to discard because the police were going to come to look through it for some unnamed reason. Plaintiff claimed she exited from her dining room door onto the dark hallway when she tripped and fell over an object sticking out of the box of prior tenant’s belongings. She fell and broke her wrist on the landing windowsill requiring open reduction and internal fixation.

Plaintiff claimed negligence in failing to replace the light bulb in the hallway and failing to remove the box outside her front door. Her son, eight at the time, testified that the bulb was out for two months. Plaintiff admitted that the box could have been put in the attic or basement and that she chose to keep it where it was, We contended that the light bulb was never out, and in any event she was entirely responsible for it not being replaced if it was out because she socialized with defendant’s fiancé daily and never mentioned it during the two months before her fall. We also argued that she could have used the side entrance if the front hall were darkened. We argued that the box and its contents belonged to her, and that she was responsible for the box being there in any event.

Of interest, our client was brought to court from prison where he is serving 4.5 years for attempted forcible sodomy, and his conviction was used for impeachment.

AMOUNT DEMANDED OF JURY: $500,000.00

DECISION: The jury rendered a unanimous verdict that our client was negligent, reportedly concluding that the light bulb was out for two months, but that there was no proximate cause. The plaintiff’s appeal is pending.

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SUMMARY JUDGMENT AFFIRMED ON APPEAL—LANDOWNER LACKED NOTICE OF ALLEGED DEFECT

CASE NAME: Guite v. Burnison, 26 AD3d 824 (4th Dept 2006)

COURT: Appellate Division, Fourth Department

ATTORNEY: Pierre “Pete” A. Vincent

SUMMARY: While on our client’s property for a maple syrup festival, plaintiff claimed she stepped off driveway to avoid being hit by our client’s vehicle and that her foot hit a muddy sunken area causing her to fall and injure her ankle. Affirming Supreme Court, the Fourth Department held that our clients had proven they did not create or have actual or constructive notice of the condition. The plaintiff on appeal did not challenge Supreme Court’s determination, that the plaintiff was not forced to step off the driveway.

DECISION: Supreme Court affirmed; summary judgment granted dismissing the complaint.

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SUMMARY JUDGMENT GRANTED ON APPEAL—MOTOR VEHICLE—PLAINTIFF’S SURGERY SCARS NOT SHOWN TO RESULT FROM ACCIDENT

CASE NAME: Kilmer v. Strek, 35 AD3d 1282 (4th Dept. 2006)

COURT: Appellate Division, Fourth Department

SUMMARY: Supreme Court had granted partial summary judgment dismissing three categories of serious injury claimed by plaintiff, but denied judgment as to her “significant disfigurement” claim, based upon the surgical scar resulting from a cervical disc repair allegedly necessitated by the accident. Reversing Supreme Court and dismissing the complaint, the Fourth Department held that because our client had established that the plaintiff’s back problems pre-existed the accident and the surgery would have been necessary anyway, the resulting scar is not attributable to our client’s negligence. The appeals court rejected plaintiff’s orthopedic surgeon expert’s opinion, that the surgery was 10% attributable to the accident, as having “no objective medical basis.”

DECISION: Supreme Court affirmed in part and reversed in part; summary judgment granted dismissing the complaint.

* * * * * * *

SUMMARY JUDGMENT—PLAINTIFF ASSUMED RISK OF WRESTLING INJURY, AND CLAIM BARRED BY INTENTIONAL TORT LIMITATIONS STATUTE

CASE NAME: Camp v. Kent

COURT: Supreme Court, Erie County (Hon. Michael Griffith, J.S.C.)

ATTORNEY: Laurence D. Behr

SUMMARY: The plaintiff, a friend of our client, removed our client’s keys from his vehicle in an effort to prevent him from driving while intoxicated. Our client wrestled with him to try to retrieve the keys and the plaintiff fell, injuring his shoulder.

DECISION: Complaint dismissed. The plaintiff voluntarily engaged in what he himself described as a wrestling match, and thus fully assumed the risk of injury, applying New York’s doctrine of “primary assumption of risk.” Further, the plaintiff’s claim sounds in the intentional tort of battery, and was thus time-barred by the one-year statute of limitations.

* * * * * * *

SUMMARY JUDGMENT—DOG OWNER LACKED NOTICE OF VICIOUS PROPENSITY

CASE NAME: Bray v. Vanderhayden

COURT: Supreme Court, Rensselaer County (Hon. James B. Canfield, JSC)

ATTORNEY: Carol A. Farrar

SUMMARY: Plaintiff, teenage girl staying in residence for troubled youths, suffered multiple bites to her face from our client’s Akita, suffering significant scarring. The Akita had served as a therapy dog in such facilities and in hospitals and nursing homes for several years. There was no known prior vicious conduct, the plaintiff arguing unsuccessfully that the dog should have been restrained on a leash.

DECISION: Summary judgment granted dismissing the complaint.

* * * * * * *

MOTOR VEHICLE—SUMMARY JUDGMENT—PRE-EXISTING INJURIES—NO-FAULT THRESHOLD NOT SATISFIED.

CASE NAME: Oldorff v. Horning-Metz

COURT: Supreme Court, Schenectady County

ATTORNEY: Carol A. Farrar

SUMMARY: Plaintiff, a passenger injured when his vehicle was rear-ended by our client, had had major back eight surgery prior to accident. Upon our proving the pre-existence of his complaints, the burden shifted to him to prove exacerbation. We demonstrated that he claimed to have been able to engage in numerous activities that were utterly inconsistent with his prior back condition.

DECISION: Complaint dismissed. The plaintiff did not meet his burden of proving aggravation of his prior injuries.

* * * * * * *

CONTRACTUAL INDEMNIFICATION: SUBCONTRACTOR OBLIGATED TO INDEMNIFY GENERAL CONTRACTOR FOR LABOR LAW CLAIM.

CASE NAME: Newman v. Regent Contracting Corp.

COURT: Supreme Court, Erie County (Sedita, J.)

ATTORNEY: Pierre "Pete" A. Vincent

SUMMARY: An electrical subcontract's indemnification clause provided that subcontractor would defend and indemnify the general contractor for any injury or damage arising from the subcontractor's work, except as caused by the general contractors' sole negligence. Its contract also made the subcontractor responsible for safety of the workplace.

Subcontractor's employee sued the general, alleging negligence and Labor Law violations. We impleaded the subcontractor and, after the parties were deposed, moved for summary judgment for contractual indemnification. The subcontractor opposed, claiming to need more discovery to rule out the general contractor's negligence. Our response stressed the sub's contractual duty to maintain workplace safety, and the clarity of its negligence established by the party depositions.

DECISION: Summary judgment granted to the general, including attorney's fees incurred defending the action to date.

* * * * * * *

SUMMARY JUDGMENT GRANTED ON APPEAL—LANDOWNER OWED NO DUTY OF CARE TO PLAINTIFF WHO SUFFERED SERIOUS BURNS FROM EXPLOSION

CASE NAME: Riddell v. Brown, 32 AD3d 1212 (4th Dept 2006)

COURT: Appellate Division, Fourth Department

SUMMARY: Reversing Supreme Court, the Fourth Department granted summary judgment dismissing the complaint in case involving serious burns to a worker from a gas pipeline explosion during an excavation. The pipeline had been installed by our client’s deceased husband 18 years before the accident. This highly complex case involving issues including easement extinction, contractual indemnification, third party beneficiaries, and notice, was resolved based on the absence of duty, the Fourth Department stating: "Because defendant owed no duty of care to plaintiffs, she cannot be held liable for the allegedly defective condition on the property."

DECISION: Summary judgment granted and complaint dismissed.

APPELLATE DIVISION ROUNDUP

FOURTH DEPARTMENT APPELLATE DIVISION

PREMISES—SPOLIATION OF EVIDENCE. Defendant’s insurance carrier either lost or destroyed a wire flag holder of a mailbox claimed to have injured plaintiff. Plaintiff’s motion to strike defendant’s answer for spoliation of evidence was denied because striking pleading is only appropriate where evidence conclusively demonstrates that conduct is willful or contumacious. However the plaintiff was held entitled to have the jury charged under NYPJI 1:77.1, which allows them to conclude that the loss or destruction had a fraudulent purpose if there is no reasonable explanation offered. Hussain v. Nowak, March 16, 2007.

LABOR LAW - TREE REMOVAL. Plaintiff was struck by a falling tree limb. Supreme court granted defendants’ and third-party defendant’s motion to dismiss Labor Law § 200 claim (essentially, common law negligence based on unsafe workplace). The Fourth Department modified by reversing as to contractor defendants who were responsible for tree removal, fencing and clearing of the construction site. Roosa v. Cornell real Property Servicing, Inc. et al., March 16, 2007.

LABOR LAW—PLAINTIFF’S NEGLIGENCE AS SOLE CAUSE A FACT ISSUE. Supreme Court properly denied defendant’s croos motion for summary judgment dismissing Labor Law § 240 (1) claim because defendant failed to establish that plaintiffs own actions in attempting to disassemble scaffolding in dangerously wet conditions contrary to instructions were, as a matter of law, the sole proximate cause of plaintiff's injuries. Defendant failed to establish that the scaffolding was properly constructed and that, but for the wet conditions, plaintiff would not have fallen. Plaintiff moreover raised fact issues by his testimony that scaffolding was unstable. WONDERLING v. CSX TRANSP., INC., 34 A.D.3d 1244 [4th Dept 2006].

THIRD DEPARTMENT APPELLATE DIVISION

MOTOR VEHICLE - NEGLIGENCE PER SE - EXCUSE. Plaintiff’s vehicle was struck head-on by defendant’s vehicle which had crossed a double yellow line, a statutory violation constituting negligence per se. Defendant sought to excuse his conduct, claiming that he “blacked out” and so could not be found negligent. Summary judgment of liability in favor of plaintiff affirmed. Although an unforeseen and unexpected medical emergency can excuse negligence per se based upon a statutory violation, defendant did not corroborate his claim with medical proof. Hazelton v. D.A. Lajeunesse Building and Remodeling, Inc. , March 15, 2007.

MOTOR VEHICLE—AGGRAVATION AND INCREASED SUSCEPTIBILITY. CONFLICT WITH FOURTH DEPARTMENT. Plaintiff awarded $85,000 for past and future pain and suffering due to injuries sustained in motor vehicle accident based upon jury finding that she suffered a permanent consequential limitation of use of a body organ or member. During cross-examination, defense counsel brought up plaintiff’s pre-existing scoliosis in an effort to prove that the underlying condition made her susceptible to suffering the injuries claimed, which plaintiff did not plead in her complaint or bill of particulars. Judgment reversed, and matter remitted for new trial on damages. Although Fourth Department does not require such pleading where defendant “opens the door,” Third Department does not permit presentation of exacerbation or susceptibility theories to a jury unless specifically pleaded in complaint or bill of particulars. Accordingly, Trial Court’s charge to jury on exacerbation/susceptibility theories was in error. Anderson v. Dainack.

ANIMALS—DOG BITE. LIABILITY LIMITED TO STRICT LIABILITY THEORY. Defendants’ unleashed dog ran into the street and knocked into plaintiff’s bike, causing plaintiff to fall and suffer injuries. Plaintiff brought an action on two theories: negligence and strict liability. Granting of defendants’ summary judgment motion dismissing complaint affirmed. Court of Appeals limits claims against owners of domestic animals to a strict liability theory, which requires proof that an owner knew or should have known of an animal’s vicious proprensities Bard v. Jahnke, 6 NY3d 592 (2006). A dog’s habit of chasing vehicles or otherwise interfering with traffic can be considered a vicious propensity because it is an act that might endanger the safety of those affected. Here, plaintiff’s evidence that defendants’ dog occasionally was allowed to run loose and then sometimes go into the street was insufficient to raise a triable issue of fact as to defendants’ knowledge of the dog’s vicious propensities. Further, defendants’ violation of the local leash law was immaterial, as it only could serve as evidence of some negligence, which is not an actionable theory. Alia v. Fiorina.

SECOND DEPARTMENT APPELLATE DIVISION

PERSONAL INJURY—SPECULATION—FALL ON SUBWAY TRACKS. The plaintiff was struck by a subway train, apparently after falling onto the tracks. A jury found the defendant transit authority 51% negligent. The trial court’s denial of the transit authority’s motion for judgment in its favor is reversed. The mere fact that the plaintiff was struck by a train while on the tracks does not support an inference that the train’s motorman was negligent. There was no evidence how long he had been on tracks or that he was there when the subway entered the station. Castellano v. NYCTA.

SUPPLEMENTARY UNINSURED MOTORISTS INSURANCE—LATE NOTICE NOT FOUND. The insured gave his insurer prompt written notice of an accident, applied for no-fault benefits, and furnished a sworn police accident report and medical authorizations. The insurer petitioned for a permanent stay of SUM arbitration based on his failure to furnish timely notice of his SUM claim. Granting of permanent stay reversed, and petition dismissed. There has been a shift away from New York’s rule that prejudice is not required to deny coverage for late notice, in the context of such coverage where the insurer had received timely notice of the accident. The insurer was not prejudiced because it had all the information needed to investigate the SUM claim. Further, the policy’s actually specified that prejudice was required to deny for late notice, stating: “We have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us….” New York Central Mutual Fire Insurance Co. v. Ward.

INSURANCE. COVERAGE—LATE NOTICE FOUND. Defendant (carrier) denied coverage to plaintiff (insured) in two underlying personal injury cases against plaintiff. Plaintiff gave insured notice of the underlying claims six months after they occurred. Granting of plaintiff’s summary judgment motion declaring that defendant owed a duty to defend and indemnify plaintiff on underlying claims reversed, and summary judgment granted to defendant dismissing complaint. The six months delay was untimely as a matter of law, even though plaintiffs in underlying actions indicated that they would not sue. Natural Stone Industries, Inc. v. Utica National Assurance Company.

LABOR LAW—NO ELEVATION RISK. Plaintiff fell at ground level in an open area. Granting of defendant’s summary judgment motion dismissing §241(6) cause of action affirmed. Area where plaintiff fell cannot be considered a “passageway, walkway, or other elevated working surface” within the meaning of 22 NYCRR 23-1.7(d). Porazzo v. City of New York.

PREMISES FALL—DARK HALLWAY. Plaintiff, a guest at defendants’ home, fell down a flight of concrete steps leading to a basement while being led down a dark hallway by one of the defendants. Plaintiff was unfamiliar with the house, and defendants did not illuminate the hallway. Granting of defendants’ motion to dismiss at close of plaintiff’s prima facie case reversed, and complaint reinstated. Failure of defendants’ to warn plaintiff, close basement door or illuminate area raised issues of fact for the jury. Pollack v. Klein.

PREMISES—STACKING OF MERCHANDISE IN STORE. After removing the uppermost plastic bucket from a stack on top of a pallet, plaintiff was injured when three remaining buckets fell and knocked him to the floor. Denial of defendant’s summary judgment motion reversed, and complaint dismissed. Merchandise on pallets came prestacked from manufacturer, and defendant was not aware of any complaints that the conditions were hazardous, which was not demonstrated either by submitted photographs or affidavit of plaintiff’s expert, which was speculative and conclusory. Langer v. BJ’S Wholesale Club, Inc.

WORKPLACE ACCIDENT—SPECIAL EMPLOYEE. Plaintiff, a doorman, was severely injured while stripping a floor with a chemical solvent. Defendant, the building’s managing agent, moved for dismissal based on the exclusivity provisions §29(6) of the Workers’ Compensation Law arguing that plaintiff was its “special employee.” Denial of defendant’s motion affirmed. A “special employee” relationship depends upon a determination of who controls and directs the manner, details and ultimate result of the employee’s work. Because defendant failed to demonstrate by specific facts that it did so here, it failed to present a prima facie entitlement to summary judgment. Marrero v. Akam Associates LLC.

ANIMALS—DOG BITE. One of the defendants owned a German Shepard/ Husky, which bit plaintiff while she was at an outdoor barbecue at defendants’ house. In a deposition, one of the defendants admitted placing “Beware of Dog” signs on gates on both sides of the house, and acknowledged that the dog growled whenever the doorbell rang. Denial of defendants’ summary judgment motion, which was subsumed in appeal from $145,000 Nassau County jury verdict, affirmed. Evidence raised issues of fact as to whether defendants knew or should have known of dog’s vicious propensities. Miller v. Isacoff.

LABOR LAW—HOMEOWNERS EXEMPTION. Plaintiff, an independent contractor, who was hired by defendants, owners of a single family home, was injured when he fell from second floor during renovation project. Granting of defendants’ summary judgment motion to dismiss §§240(1), 241(6) and 200 affirmed. Defendants’ instructions concerning aesthetic appearance of house and inspection of work as it progressed do not rise to the level of “direction and control” necessary to overcome exemption under §§240(1) and 241(6). Further, because there was no supervision and control, and defendants did not have notice of the unsafe condition which caused plaintiff’s fall, §200 common law negligence claim was also properly dismissed. Arama v. Fruchter.

WORKERS’ COMPENSATION—REDUCTION OF LIEN—THIRD-PARTY ACTION. Carrier agreed to compromise its lien by 34.95%, representing its equitable share of the costs of litigation. Denial of plaintiff’s motion to reduce lien to $190,329.84, which would have resulted in a one-third, one-third, one-third split between the plaintiff, carrier and counsel, affirmed. Carrier properly computed its lien, pursuant to Workers’ Compensation Law § 29, in reducing it by 34.95% to $128,813.08. Hammer v. Turner Construction Corporation.

FIRST DEPARTMENT APPELLATE DIVISION

PREMISES—ABUTTING SIDEWALK OR ROADWAY—SPECIAL USE DOCTRINE. Under the special use doctrine, Columbus Centre, as owner of the premises being demolished, owed a duty to plaintiff, a pedestrian who fell in a roadway depression under a sidewalk protective shed erected at the demolition site (see Kaufman v Silver, 90 NY2d 204, 207 [1997]). Columbus Centre derived a special benefit from being able to utilize part of the roadway for the sidewalk shed and scaffolding erected in connection with the demolition of its building, and thus owed plaintiff a duty to provide a safe walkway under the shed (see Curtis v City of New York, 179 AD2d 432 [1992]), lv denied 80 NY2d 753 [1992]). Given that there are questions of fact as to who decided the specific location of the shed, whether Columbus Centre breached its duty to provide a safe walkway, and whether the shed proximately caused plaintiff's injuries by directing her toward the alleged defect, summary judgment dismissing the action as against Columbus. MCKENZIE v. COLUMBUS CTR., LLC, No. 8855. Decided May 10, 2007.

MOTOR VEHICLE—DISMISSAL BASED ON PLAINTIFF’S OPENING STATEMENT. Plaintiff failed in his opening to state facts supporting a negligence claim against driver of vehicle. Trial Court’s granting of motion to dismiss after opening as against owner of vehicle affirmed. Because owner’s liability is derivative [V&T §388(1)], complaint was properly dismissed. Granting of defendant City of New York’s motion to dismiss at close of evidence also affirmed. Plaintiff failed to establish that bump in street was hazardous at time it was created. Ortiz v. City of New York, et al.

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Insurance Law Updates (May 15, 2005)

RECENT DECISIONS SECURED BY
BARTH, SULLIVAN & BEHR

SUMMARY JUDGMENT: LABOR LAW § 240(1) CLAIM DISMISSED – NO ELEVATION-RELATED RISK INVOLVED FOR WORKER HOISTING SELF INTO GROUND FLOOR DOORWAY

ATTORNEY: Laurence D. Behr

CASE NAME: Ames v. Norstar Bldg. Corp.

COURT: Supreme Court, Niagara County (Boniello, J.)

SUMMARY: The plaintiff, assigned to "scrap out" a housing unit under construction, claims to have fallen when he tried to hoist himself several feet up into the ground floor through a doorway, for which no stairs were in place. He claims that after getting up into the door and while attempting to get to his feet, one foot slipped on a small quantity of packed snow on the edge of the doorsill, causing him to fall backwards and strain his shoulder in an attempt to prevent his fall. This alleged incident was unwitnessed, and the plaintiff claims he merely sat in his truck for an hour and went home, not reporting it to anyone until the next day.

We moved for summary judgment dismissing the "absolute liability" Labor Law § 240(1) claim, arguing that merely getting oneself up into a doorway about four feet above grade, does not present an extraordinary, elevation-related risk of the sort against which this statute was meant to protect.

DECISION: Summary judgment granted dismissing claim under Labor Law § 240(1). Matter will proceed to trial on Labor Law §§ 200 and 241(6) claims, as to both of which issues of comparative negligence, and the plaintiff's credibility, will be critical. Appeal submitted for decision by Fourth Department on April 13.

"NO CAUSE" VERDICT: MOTOR VEHICLE – THIRD CAR'S DRIVER IN THREE-CAR CHAIN COLLISION HELD NOT NEGLIGENT

ATTORNEY: Philip C. Barth, III

CASE NAME: Bishop v. Quibell and Granada

COURT: Supreme Court, Livingston County (Lunn, J.)

SUMMARY: Our client operated the third car in a three-car, chain reaction accident. The plaintiff claimed that he was suddenly forced to slow down and stop his vehicle because of an elderly pedestrian in the roadway. The plaintiff claimed that the second vehicle rear-ended his vehicle, and was in turn rear-ended by our vehicle. The plaintiff claimed that both drivers behind him were negligent for following too closely and traveling at an excessive rate of speed under the conditions.

Upon cross-examination, the plaintiff admitted that he came to a sudden stop in the middle of the roadway without any prior warning. Both following drivers testified that the plaintiff initially had entered traffic so closely in front of the second vehicle, that they both had to slow sharply to avoid an accident; and then, approximately just 2 or 300 feet down the road, the plaintiff stopped suddenly without warning. We requested and received a jury charge, for sudden stopping and emergency situation.

DECISION: The jury rendered a verdict that our client was not negligent, and that the co-defendant second driver was negligent, but his negligence was not a proximate cause of the accident.

VERDICT OF MISREPRESENTATION IN APPLICATION – POLICY RESCISSION UPHELD: CONTRACTOR'S WIFE APPLIED FOR HIM, AND HAD FALSELY ANSWERED QUESTION ABOUT ROOFING WORK

ATTORNEY: Laurence D. Behr

CASE NAME: Wafer Motor Corp. v. United Frontier Mut. Ins. Co., et al.

COURT: Supreme Court, Niagara County (Kloch, J.)

SUMMARY: Owner of hotel badly water-damaged by unprecedented wind and rain storm during a re-roofing operation sued the roofer, his liability insurer (United Frontier), and its own property insurer, which had disclaimed under a policy exclusion. United had insured the roofer under a small contractor's program for which roofers were ineligible, due to the risks of such work. United had disclaimed and rescinded based on misrepresentations in the application, which denied any roofing work. The roofer cross claimed for coverage, making the hotel owner's lack of standing a moot point (see Court of Appeals' new decision on standing, Lang v. Hanover Ins. Co., discussed below).

The owner's property insurer settled for over $800,000, and took over the prosecution as the owner's subrogee. Trial was held before a Supreme Court jury in Niagara County.

The roofer's application had been filled out by his wife, who had past experience as a life insurance agent. She admitted knowing that a roofing policy would be much more costly than United's policy, having called around for quotes. Answering a blanket question as to the applicant's involvement in a number of types of work, including roofing, she put "N/A" as to all—which she explained at trial as meaning, "No Answer," saying she assumed the company would ask her for details if they wanted an answer. Her husband admitted that he had done about 50 residential roofing jobs over the previous few years, and his wife was aware of them because she kept his accounts. The effort was made to paint the application question as confusing and ambiguous.

DECISION: Jury found the insured guilty of misrepresentation in the application, upholding the company's rescission of his policy.

SUMMARY JUDGMENT: COMPLAINT DISMISSED FOR FAILURE TO PROSECUTE – CO-DEFENDANT, A SUBROGATED INSURER, WAS NOT ENTITLED TO NOTICE OF OUR DEMAND TO RESUME PROSECUTION, NOR OF OUR SUBSEQUENT DISPOSITIVE MOTION.

ATTORNEY: Laurence D. Behr

CASE NAME: Rizek v. Nu-Era Services and Nationwide Mut. Ins. Co.

COURT: Supreme Court, Niagara County (Kloch, J.)

SUMMARY: Owner of automobile repossessed by former husband of woman who sold it to her sued the insured repossession agency (our client), and her own automobile insurer, which had denied the claim. After suit, and before answering, the insurer settled with the plaintiff, and, in a preliminary conference with the court's law clerk, expressed an intention to pursue our client via subrogation; the plaintiff maintained her uninsured claim for loss of use against our client. When the required one year passed after we had answered, we served a demand to resume prosecution on plaintiff—a "90-day demand" under CPLR 3216. When it was not satisfied, we moved to dismiss the complaint for failure to prosecute.

Nationwide was not served with either pleading because it had never answered the complaint nor otherwise appeared, but was informed by plaintiff of the dismissal motion. Nationwide opposed dismissal, arguing that it had not been noticed on the 90-day demand, that we knew of its presence in the case, and that it should thus be allowed to assert a cross claim against our client. Nationwide simultaneously served an answer with a cross claim, which we refused as untimely.

DECISION: Complaint dismissed. Nationwide had not appeared in the manner prescribed by CPLR 320(a)—by either answering, serving a notice of appearance, or making a motion which has the effect of extending its time to answer—and therefore was not entitled to receive notice of our 90-day demand to resume prosecution.

Nationwide could now commence a new subrogation action against our client—except that our dispositive motion purposely was not brought until the statute of limitations had expired on the underlying claim. A subrogee "stands in the shoes" of its subrogor, and its claim is subject to all defenses that would be available against its subrogor.

"NO CAUSE" VERDICT: INSURED FARMER BUILDING A FIELD ROLLER FOUND NOT NEGLIGENT WHEN ROLLER'S LARGE "WING" RAISED FOR TESTING FELL ON VISITOR

ATTORNEY: Laurence D. Behr

CASE NAME: Brodie v. Smith

COURT: Supreme Court, Monroe County (Polito, J.)

SUMMARY: Our client, insured under a farmowners' policy, was building his own field roller in his barn. It was to be a three-part steel assembly including a central roller, and two flanking wing rollers that folded up for transport. The plaintiff, a friend and neighbor, unemployed and on disability, visited often and frequently assisted around our client's farm. The entire huge assembly, not yet equipped with rollers, was supported by jack stands on the barn floor. On the day of the accident, plaintiff was standing beneath one of the wings that our client had raised, using a forklift, to test the hinge assembly. Plaintiff claimed our client asked him to prop up the end with a wooden beam, but our client claimed that he had attempted to do that on his own, despite being told not to do it. When the beam touched it, the wing slid off the forklift tines, the jack stands toppled, and the wing struck plaintiff's lower leg, severely fracturing his ankle and distal tibia.

The liability-only trial had several sharply disputed factual issues, including the reason the wing had been upraised, and whether our client had told the plaintiff's wife (herself a plaintiff), "It was all my fault." She testified that he said this at the hospital, and on cross-examination described the circumstances and location in detail and added that their daughter was present to hear it. When informed that a "missing witness" charge would be requested if the daughter did not testify for plaintiff, she was brought in to confirm her mother's claim. On cross, she gave a completely different description of the circumstances and location, and admitted that she felt that her father deserved to recover from our client.

DECISION: Client held not negligent. Several jurors stated afterwards that our argument, that there was no reason for our client to want the wing to be supported by a beam, when the forklift was adequate to raise it, was decisive for them.

SUMMARY JUDGMENT: MOTOR VEHICLE – 90-DAY DISABLEMENT "SERIOUS INJURY" HELD NOT PROVEN

ATTORNEY: Philip B. Abramowitz

CASE NAME: Harper v. McCray

COURT: Supreme Court, Erie County (Dillon, J.)

SUMMARY: The plaintiff, whose automobile was rear ended by our client, stayed out of work for 13 months, all the while treating with physicians and physical therapists. We moved for summary judgment based on her failure to satisfy the no-fault "serious injury" threshold. Her opposing papers included her treating physician's affidavit stating that "the accident was the competent producing cause of the bulges and herniations shown in the MRI reports . . . and the competent producing cause of plaintiff being disabled from her usual employment [for 13 months]". The doctor also noted "a significant loss of bodily function or system".

We had chosen not to conduct an IME, but relied on Appellate Division and Court of Appeals decisions to establish that neither plaintiff's medical records (all of which we included in our moving papers), nor her treating physician's affidavit, were sufficient to establish a "serious injury" as defined in the Insurance Law.

DECISION: Summary judgment granted and complaint dismissed. Justice Dillon issued an eight-page decision, in which he said that plaintiff had failed to submit "objective proof of the nature and degree of her injury," and that the treating doctor's affidavit was "conclusory in nature as to the opinions offered and those opinions are not supported by the requirements set forth in Toure v. Avis and subsequent cases."

SUMMARY JUDGMENT: SUBCONTRACTOR CONTRACTUALLY OBLIGATED TO DEFEND AND INDEMNIFY INSURED GENERAL CONTRACTOR FOR INJURY TO SUBCONTRACTOR'S EMPLOYEE.

ATTORNEY: Pierre "Pete" A. Vincent

CASE NAME: Newman v. Regent Contracting Corp.

COURT: Supreme Court, Erie County (Sedita, J.)

SUMMARY: Insured general contractor subcontracted an electrician to install wiring in a new office building. The subcontract's indemnification clause provided that subcontractor would defend and indemnify the general for any injury or damage arising from the sub-contractor's work, except as caused by the general contractors' sole negligence. The contract also provided that the subcontractor was responsible for maintaining the safety of the workplace.

Subcontractor's employee sued the general, alleging negligence and Labor Law violations. Her insured general sub-contractor then sued the sub-contractor as a third-party defendant. After the parties were deposed, we moved for summary judgment for contractual indemnification by the subcontractor. The subcontractor opposed, claiming to need more discovery to rule out the general contractor's negligence.

Our response stressed the sub's contractual duty to maintain workplace safety, and the clarity of its negligence established by the party depositions.

DECISION: Summary judgment granted to the general, including attorney's fees incurred defending the action to date.

"NO CAUSE" VERDICT: DRIVER NOT NEGLIGENT WHERE VEHICLE ENTERED ROAD FROM DRIVEWAY; PLAINTIFF'S MIGRAINES NOT A "SERIOUS INJURY"

ATTORNEY: Pierre "Pete" A. Vincent

CASE NAME: Sherwood v. Sprague, et al.

COURT: Supreme Court, Cattaraugus County (Himelein, J.)

SUMMARY: Our insured was driving approximately 10 miles per hour below the speed limit on a country road. Plaintiff was a passenger in the co-defendant's truck, approaching the road from a dirt driveway on the right side. Our driver first saw the co-defendant at 10 car lengths. At 3 to 4 car lengths, he observed the co-defendant entering the road, whereupon he sounded his horn, braked, and veered to his left.

The co-defendant and plaintiff both claimed that our driver was traveling too fast for road conditions, and failed to sound his horn early enough to avoid the collision. We argued that our driver did all that he was required to by law – under which, he was entitled to rely on the driver entering the road to yield—and also, all that he could do under the emergency circumstances.

Plaintiff claimed as her principal injury, intense, frequent migraines as a result of the accident. We argued that for the injury to qualify, it must be measured by objective evidence, not subjective complaints of pain by the plaintiff.

DECISION: Jury found our client not negligent, and also ruled that the plaintiff did not sustain serious injury, precluding any recovery against the co-defendant whom they found negligent.

SUMMARY JUDGMENT: PUNITIVE DAMAGES CLAIM NOT PERMITTED, BASED SOLELY ON DRIVER'S INTOXICATION

ATTORNEY: Pierre "Pete" A. Vincent

CASE NAME: Paul v. Ireland

COURT: Supreme Court, Erie County (Siwek, J.)

SUMMARY: Our client, defendant driver in a motor vehicle accident claim, admitted in deposition that she dropped a cigarette, and took her eyes off the road to look for it, prior to the collision. The accident occurred in the early morning hours, after our client had left a bar where she had consumed a few drinks. Plaintiff had included a punitive damages claim. We moved to dismiss such claim, arguing that intoxication by itself is insufficient to support punitive damages, and that additional evidence demonstrating egregious conduct or reckless behavior is required, for such damages to be awarded.

We had to distinguish Fourth Department authorities, holding that the level of intoxication, and also subsequent DWI proceedings, may be considered in the punitive damages analysis. We argued that these cases only considered such factors, where they were indicative of egregious conduct (e.g., where the BAC level was at twice the legal limit, or there was a prior DWI conviction).

In our case, the evidence was that our defendant driver was operating at or near the speed limit, and there were no prior DWI convictions, so that these factors were not indicative of egregiousness. In addition, no other typical factors showing egregiousness (running a stop light, speeding, operating negligently in a congested area) were present. Indeed, plaintiff had advanced no evidence of recklessness, except for the alleged alcohol consumption.

DECISION: Summary judgment granted dismissing punitive damages claim. Case settled immediately thereafter.

NEW YORK DECISION ROUNDUP

NEW YORK – LABOR LAW § 240(1) – "Recalcitrant Worker" Doctrine Finally Recognized by Court of Appeals - Jury Question Presented Whether Worker's Failure to Follow Instructions to Use Available Safety Devices Is Sole Cause of His Injury

In Cahill v. Triborough Bridge and Tunnel Authority, decided December 21, 2004, the Court of Appeals at long last recognized and applied the so-called "recalcitrant worker" doctrine, developed in many Appellate Division cases. The employer had proven that the safety devices required by Labor Law § 240(1) for his work, which involved climbing on forms, were available; and also, that the plaintiff had been instructed to use them, but failed to do so. The court rejected an argument that the instruction had been given to plaintiff too long before the accident, stating:

"The word 'recalcitrant' fits plaintiff in this case well. He received specific instructions to use a safety line while climbing, and chose to disregard those instructions. He was not the less recalcitrant because there was a lapse of weeks between the instructions and his disobedience of them. The controlling

question, however, is not whether plaintiff was "recalcitrant," but whether a jury could have found that his own conduct, rather than any violation of Labor Law § 240(1), was the sole proximate cause of his accident."

In language destined to be the official formula for the "recalcitrant worker" doctrine for years to come, the Court of Appeals stated:

" Here, a jury could have found that plaintiff had adequate safety devices available; that he knew both that they were available and that he was expected to use them; that he chose for no good reason not to do so; and that had he not made that choice he would not have been injured. Those factual findings would lead to the conclusion that defendant has no liability under Labor Law § 240(1), and therefore summary judgment should not have been granted in plaintiff's favor."

NEW YORK – Injured Party Lacks Standing to Bring Declaratory Action to Determine Coverage

The Court of Appeals has resolved a longstanding conflict among the Appellate Divisions, as to whether an injured claimant may contest an insurer's denial of coverage, prior to obtaining a judgment and thereby acquiring the right to bring an enforcement action under Insurance Law § 3420 (the so-called "direct action" statute). Siding with the Fourth Department on this issue, Lang v. Hanover Ins. Co., 3 N.Y.3d 350, holds that the claimant must first obtain a judgment and sue to collect, in order to contest the coverage disclaimer.

Of course, various factors may persuade the insurer itself to initiate a declaratory action, and obtain a stay of the injury case until coverage is determined. These include the desirability of avoiding loss of control of a serious claim, especially where the disclaimer's validity may present factual issues requiring a trial (such as the lateness of notice). Another such factor may be the novelty of the coverage issue on which the disclaimer depends.

NEW YORK – Additional Insured's Coverage Primary and Does Not Share Equally with Its Own CGL Policy; Blanket Endorsement's Clause Negating "Other Insurance" Clause of Policy Held Controlling

HRH Construction Interiors, Inc. v. Royal Surplus Lines Insurance Company, (N.Y. App., 1st Dept., March 1, 2005), held that specific and blanket Additional Insured Endorsements on the same policy should be read together. This coverage dispute arose from an underlying action alleging a fatal fall at a construction site. HRH was the general contractor; the worker was employed by a subcontractor; National was HRH's general liability insurer; and Royal was the subcontractor's general liability insurer. The contract between HRH and the subcontractor required the subcontractor to indemnify and hold HRH harmless from all losses arising out the subcontractor's work, and also required the subcontractor to procure primary insurance naming HRH as an additional insured. National's policy with HRH and Royal's policy procured by the subcontractor contain identical "Other Insurance" clauses to the effect that the policy was primary, unless there was other insurance that was also primary, in which event the insurer would share the loss equally.

Royal's policy with the subcontractor also contained a blanket additional insured endorsement including as an insured any organization for which the subcontractor was obligated to provide insurance by written contract, and providing that if such contract required such insurance to be primary, then Royal's policy "shall be primary as respects [the subcontractor's] negligence.... Other insurance does not apply, but only with respect to coverage provided by this policy."

Also part of Royal's policy was an endorsement that was labeled "Schedule of Additional Insureds," which specifically listed HRH. Thus HRH was an insured by virtue of both the blanket and scheduled additional insured endorsements. The endorsement was silent as to other insurance.

Royal argued that the specific endorsement superseded the blanket additional insured endorsement; and, that because the specific endorsement did not contain any language pertaining to other insurance, National and Royal were co-primary insurers equally responsible for HRH's defense. The court disagreed, concluding that the specific endorsement was meant to be read in addition to the blanket endorsement, and not to replace it. Accordingly, Royal was held to have the sole primary insurance position.

NEW YORK – No Fault Payments Not Required, Despite Absence of Timely Denial, Where Limits Exhausted.

Mount Sinai Hospital v. Zurich American Insurance Company (N.Y. App., 2nd Dept., Feb. 22, 2005), court held that a carrier is not required to pay a No Fault claim where the limits allegedly were exhausted. Plaintiff hospital demonstrated its entitlement to judgment as a matter of law by establishing that it had submitted the requisite documents to recover payment for medical services, but the insurer had neither paid nor denied the claims--required to occur within 30 days under the No Fault regulations. The court concluded, that the regulations do not require a carrier to pay a claim where the policy limits have been exhausted. Zurich demonstrated that there were issues of fact as to whether it had exhausted the coverage limits of the policy through making other No Fault payments, and whether such payments were in compliance with 11 NYCRR 65.15(n).

NEW YORK - Fraud and Misrepresentation

Pipo Bar and Restaurant, Inc. v. Certain Underwriters at Lloyd's at London (N.Y. App., 2nd Dept., Feb. 22, 2005), held that plaintiff's fraudulent misrepresentations regarding the total loss of two pool tables following a fire vitiated the policy in accordance with its terms, and the insurers properly disclaimed coverage. The policy is rendered void where the plaintiff has "'willfully and fraudulently placed in the proofs of loss a statement of property lost which [it] did not possess, or has placed a false and fraudulent value upon the articles which [it] did own.'"

NEW YORK – Defense Agreement Controls Over Policy

In Royal Sun Alliance Insurance Company v. Travelers Insurance Company (N.Y. App., 2nd Dept., Feb. 22, 2005), Royal Sun sought a judgment declaring that Travelers was obligated to indemnify its named insured, after the plaintiff insurer's primary policy was exhausted and before its excess policy was reached. The court held that Travelers was not so obligated until after both of the plaintiff's policies were exhausted. The plaintiff insurer had expressly agreed to "fully defend [Travelers Insurance Company's insured] and to fully indemnify [it] without any reservation, to the limit of the applicable insurance coverage" in connection with the underlying personal injury action. The plaintiff had issued a general liability policy and an umbrella policy, both of which were applicable to the underlying action. The unambiguous terms of the agreement indicated that the plaintiff intended to have its policies exhausted before resorting to the policy issued by Travelers.

OTHER JURISDICTIONS

• CALIFORNIA: Total Pollution Exclusion

In Garamendi v. Golden Eagle Ins. Co. (2005) ___ Cal.App.4th ___, 05 C.D.O.S. 2096, the California Court of Appeal for the First Appellate District affirmed the judgment of the trial court in favor of Golden Eagle concluding that its denial of coverage for claims asserted by workers for "silica-related injuries and damages" was proper based on the total pollution exclusion contained in its CGL policy.

• CALIFORNIA: Contribution / Excess Insurance / "Other Insurance" Clauses

In Carmel Development Co. v. RLI Ins. Co. ___Cal.App.4th ___, 05 C.D.O.S. 1100, the California Court of Appeal for the Sixth Appellate District reversed the trial court and held that a contribution claim did not exist between an excess and umbrella insurer for a common insured because the insurers did not provide the same level of coverage.

• CONNECTICUT: Attorney Client Privilege in Bad Faith Cases

In Marie J. Hutchinson, Administratrix et al. v. Farm Family Casualty Insurance Company, 2005 WL 418605, ___ A.2d ___ (Conn. March 1, 2005), the Connecticut Supreme Court limited the right of an insured who makes allegations of bad faith against an insurer arising from a first-party insurance claim for benefits under a policy to obtain discovery from the insurer, of materials protected by the attorney-client privilege.

• PENNSYLVANIA: Intentional Act Exclusion / Duty to Defend

In Strouss v. Fireman's Fund Ins. Co., No. 03-5718 (E.D. Pa. February 22, 2005), a federal district court held that a homeowner's insurer had a duty to defend claims involving shots fired by the insured's son who was psychotic and suffered from paranoid schizophrenia.

• TEXAS: Application of Business Pursuits Exclusion in Homeowners Policy

In Allstate Ins. Co. v. Hallman, No. 03-0957, 2005 WL 563110, 48 Tex. Sup. Ct. J. 474, (March 11, 2005), the Texas Supreme Court addressed for the first time the application of the business pursuits exclusion in a homeowners insurance policy. Held: No coverage for blasting-related damage to adjacent residences, caused by limestone mining operations on insured premises pursuant to a mining rights lease.

• TEXAS: Additional Named Insureds and the "Known Loss" Doctrine

In United States Fire Ins. Co. v. Gnade, 2005 WL 552473 (Tex.App.–Waco 2005, no pet. hist.), US Fire argued that the "known loss" or "fortuity" doctrine precluded coverage for its additional insured, because additional insured endorsement was added to the policy after all of the accidents for which coverage was sought had occurred. The trial court had found that there was no evidence of what the insured or the additional insured knew about the accidents, and no evidence that the insured or the additional insured made any misrepresentations or concealed any information from the insurers. As a result, the court of appeals found the "known loss" doctrine to be inapplicable. Such holding is of doubtful validity under New York case law applying the fundamental requirement, that casualtyt insurance be sold only to protect against fortuitous losses.

• TEXAS: Misrepresentation in Sale of Home / "Property Damage" Not Alleged / "Mental Anguish" not Covered "Bodily Injury"

In the recent case of Allstate Texas Lloyd's v. Meyers, et al, 2005 WL 33112 (N.D. Tex. 2005), a homeowners policy issued by Allstate agreed to defend and indemnify the Dubays against claims "for damages because of bodily injury or property damage caused by an occurrence to which coverage applies." In the underlying action, the Meyers, who bought the Dubays' house, alleged that the Dubays knew that their representations about its condition were false and that the Dubays knowingly concealed the true condition of the property. Alternatively, the Meyers alleged negligent misrepresentations by the Dubays.

The court held that neither the alleged conduct nor the alleged damages implicated Allstate's duty to defend and indemnify the Dubays.

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Bifurcated Trial - Always a Good Thing? (February 9, 2005)

Bifurcated Trial - Always a Good Thing?

Dear Insurance Claims Representative or Manager,

A common perception is that defendants want bifurcation—separate trials for liability and damages—in order to keep the plaintiff's injury from the jury, and thereby defuse the potential for a sympathy verdict. Plaintiffs often want bifurcation as well, primarily to save the cost of doctor witnesses, and hoping to settle if liability is found. However, bifurcation may not be the best course for a winning defense strategy, when the plaintiff's credibility is important to issues related to the defendant's negligence.

For example, when the plaintiff is exaggerating subjective complaints and there is covert video to prove it; or, falsely claiming that a pre-existing injury is accident-related, and the proof of pre-existence is persuasive, bifurcation may only benefit the plaintiff. In such cases the plaintiff's lack of credibility regarding injury, will likely impair his or her ability to prevail on negligence/liability.

The bifurcation case law is not as helpful as could be desired in such cases. The more recent appellate cases, arguably, suggest that bifurcation is only inappropriate when the nature of the injury is probative as to how the accident occurred. That argument is usually made by plaintiffs, who claim that they need to prove their injury to show that the accident happened the way they claim it did. However, New York's bifurcation court rule, 22 NYCRR 202.42(a), clearly does require that bifurcation "assist in a clarification or simplification of issues and a fair and more expeditious resolution of the action." Emphasis on fair, please note.

We succeeded recently in opposing bifurcation in Bachman v Potter, venued in Niagara County Supreme Court (Boniello, J.). We showed that the husband-wife plaintiffs' credibility, regarding their claim that they had repeatedly told our landlord clients that repairs were needed to a front porch, is THE critical issue on liability. Therefore, we argued, it would not be fair to prevent the defendants from vigorously cross-examining the plaintiff wife, who claimed she hurt her back when her foot went through a weakened floorboard, regarding her deposition perjury, that she had never treated for back problems before this accident. She did admit in her EBT to pre-accident chiropractic care, claiming it had been only for headaches.

In fact, when we got that chiropractor's records, it turned out she had had many visits with chronic LBP complaints, from 1970 to 1998 (our accident date was 7/8/00). We argued that we needed to be able to cross examine her vigorously as to her perjury—which is, after all, a "bad act" involving moral turpitude, regarding which impeachment of any witness's credibility is proper. We argued that we also needed to be able to bring in the chiropractor, because a witness can just deny any prior bad act that did not result in a conviction, and the opponent cannot offer independent proof of it. To prevent such a denial we had to be able to put the chiropractor on the stand, opening up the whole issue of her injury and damages.

Judge Boniello accepted this "fairness" argument and denied bifurcation. We are planning now to oppose an expected motion to bifurcate in another case, where we have surveillance showing that a plaintiff uses a cane and limps only when he gets near his doctor's office, but not when shopping or washing windows. That case involves an unwitnessed truck-unloading back strain injury, allegedly resulting from negligent loading of the trailer, and the plaintiff's version of how the truck was loaded is debatable.

Accordingly, it is important to weigh bifurcation decisions most carefully. Please do not hesitate to contact us with questions regarding such issues, or other questions concerning your insureds' liability for covered claims, or questions of insurance coverage.

Regards,

Laurence D. Behr, Esq.
lbehr@barthbehr.com

Barth Sullivan Behr

"Defending Insurers, Their Insureds, and Municipalities Across Upstate NY Since 1928"

Web site: www.barthbehr.com
43 Court St., Ste. 600
Buffalo NY 14202
716-856-1300
FAX 716-856-1494

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Failure to Timely or Properly Disclaim Coverage:
A Continuing Plague for NY Insurers (May 2, 2003)

NEW SUPPLEMENTAL SPOUSAL MV

SAME AS   Same as S 6581
SPONSOR   Weinstein
COSPNSR   Kaufman, Klein, Perry, Davis
Amd S3420, Ins L; amd SS345 & 388, V & T L
Requires the providing of supplemental spousal liability insurance upon written request of an insured and upon payment of a reasonable premium, in order to provide coverage against liability of an insured because of death of or injuries to his or her spouse up to the liability insurance limits provided under such policy even where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.

A10456 Memo:
TITLE OF BILL : An act to amend the insurance law and the vehicle and traffic law, in relation to requiring insurers to provide notice to married insureds of certain limitations on liability coverage for injuries caused by an insured to his or her spouse, and making available, at the request of the insured, coverage for injuries to an insured`s spouse caused by the insured PURPOSE OF BILL : This bill would require insurers to provide notice to insureds of certain statutory limitations on excess liability coverage for injuries caused by an insured to his or her spouse, and make available, at the request of the insured, supplemental liability coverage for injuries to an insured`s spouse caused by the insured. Such coverage would be referred to as "supplemental spousal liability insurance."

SUMMARY OF PROVISIONS OF BILL:

Section 1. Amends Insurance Law S 3420 (a) to introduce modifications to the spousal exception of required terms in automobile insurance liability policies set forth in Insurance Law S 3420 (g).
Section 2. Amends Insurance Law S 3420 (g) by requiring insurers to make available to an insured, upon request and payment of a premium, supplemental liability coverage in excess of no-fault coverage against injuries to the spouse of the insured caused by the insured`s negligence. Such coverage is called "supplemental spousal liability insurance." Subsection (g) is further amended to require insurers to provide notice in every motor vehicle liability insurance policy that the terms of the policy do not include coverage for injuries or death of a spouse caused by the insured spouse`s negligence and that supplemental spousal liability insurance is available to provide such coverage.
Section 3. Amends subsection (e) of section 345 of the Motor Vehicle and Traffic Law to recognize the notice and availability requirements relating to supplemental spousal liability insurance.
Section 4. Amends subsection (4) of section 388 of the Vehicle and Traffic Law to recognize the notice and availability requirements relating to supplemental spousal liability insurance.

JUSTIFICATION:

This bill has been introduced at the request of the New York Law State Law Revision Commission. After extensive study, the Commission determined that, as a matter of public policy, New York requires liability insurance coverage against injury to every person who suffers injury as a result of the insured`s culpable conduct, unless the victim is the spouse of the insured. Insurance Law S 3420 (g) specifically permits an insurer to deny, without notice, coverage against any liability of an insured "because of death of or injuries to his or her spouse where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse." In operations, subsection (g) precludes both direct actions between spouses and vicarious liability actions against owners where the culpable conduct of a spouse is a cause of the injury. The lone purpose of the provision, which was enacted in 1937, is to protect insurers from collusive and fraudulent actions between spouses. No similar exclusion exists for any other family relationship. The operation and effect of Insurance Law S 3420 (g) was recently highlighted in Black v. Allstate Ins. Co. In that case, Mrs. Powell was driving the family car, her husband was riding in the passenger seat and her young son was in the back seat. The Powells` car collided with another car that was being pursued by the police. Mr. Powell was killed, Mrs. Powell suffered severe and permanent brain damage rendering her incompetent, and their son was seriously injured. Mr. Powell`s estate sought coverage under his wife`s automobile liability policy with Allstate Insurance Company. Allstate denied coverage, claiming that it was not required to provide coverage pursuant to Insurance Law S 3420 (g). In the estate`s declaratory judgement action against Allstate, the First Department reluctantly ruled in favor of Allstate, citing Insurance Law S 3420(g). However, the court emphasized the "unlikeness of collusion between decedent husband and his widow, who was rendered incompetent as a result of injuries incurred in the same accident, and the anachronistic nature of 3420 (g)." The court explicitly called upon the Legislature to reconsider
the merits of the provision, noting that: As a result of the now 61-year old statute, literally millions of married New Yorkers are unaware that their automobile liability insurance policy, while providing coverage for every other passenger or person injured in an accident caused by the driver`s negligence, does not provide any coverage when the injured passenger is their spouse. Based on its study of Insurance Law S 3420 (g), the Commission concludes:

1. Under current law, recovery for automobile-related injuries suffered by a spouse as a result of the culpable conduct of his or her spouse is limited to mandatory No-Fault coverage.
2. Because the exclusion is statutory, insurers are not required to disclose it. Thus, the vast majority of insureds are unaware that their spouse will not be afforded coverage for injuries caused by the insured`s negligence.
3. Although the section provides that an insured may contract for spousal coverage to avoid the operation of the exclusion, no New York insurer offers this endorsement.
4. The exclusion will operate even where it is evident that no fraud or collusion exists.
5. The danger of collusion argument has been specifically rejected by the Court of Appeals in regard to the former common-law rule barring suits between other family members. All but two states, Louisiana and Georgia, have rejected the collusion argument with regard to interspousal torts.
6. New York is the only state with a specific statute authorizing insurers to deny excess liability coverage against claims by spouses of negligent insureds without notice or a written exclusion in the policy.

Based on these conclusions, the Commission recommends that the exception set forth in Insurance Law S 3420 be amended in two ways. First, the provision should be modified to include a provision requiring licensed insurers to provide supplemental liability coverage to injured spouses when it is (1) requested by the insured and (2) a premium is paid for such coverage. Second, insurers must be required to provide a notice in every motor vehicle liability policy explaining that the liability terms of the policy are not applicable to claims for bodily injury or deaths suffered by the spouse of the insured and caused by the negligence of the insured. These amendments are loosely modeled after the statutes governing supplemental uninsured and underinsured motorist insurance. This initiative would not place an unrealistic burden on the insurance industry. Although insurers would have to make the coverage available and provide notice, a premium will be required to offset the associated cost and exposure. At the same time, married persons will benefit as they will be able to choose whether the additional coverage and cost is appropriate to their individual circumstances. Moreover, this approach is completely consistent with the Legislature`s original intent to permit spouses to contract for spousal coverage. For these reasons, it is the Commission`s conclusion that mandatory optional supplemental coverage will be beneficial to the people of New York.

LEGISLATIVE HISTORY : New bill, 2002
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS : None
Effective Date: January 1, 2003

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Important New Decisions from the NY Court of Appeals (August 6, 2002)

IMPORTANT NEW DECISIONS FROM THE N.Y. COURT OF APPEALS

SUM Coverage Case Clarifies Rule: Failure to Forward Suit Papers No Defense To Coverage in Absence of Prejudice

New York is the best state in the nation, in which to defend coverage based upon late notice given by the insured to her insurer, that an accident had occurred. Relatively short periods of delay may support the defense. Most important, there is no need, as in most states, to show prejudice to the interests of the insurer; and, only a few excuses, carefully limited by case law, will operate to save coverage for the insured.

It has been less clear, however, whether the insured’s violation of the condition requiring her promptly to forward suit papers, will receive the same treatment. In Brandon v. Nationwide (April 20, 2002), the insured promptly notified his carrier of an auto accident involving another vehicle with low policy limits, so as to preserve his right to claim underinsured motorists coverage benefits, should his damages so warrant. However, the policy also required him to promptly forward the summons and complaint, in any suit the insured might bring against the other driver—which the insured failed to do.

The Court of Appeals has now ruled, that the insurer must show how the failure to forward prejudiced the insurer in its ability to prepare its case. The Court found that the early notice of accident had given the insurer sufficient information to investigate the facts and prepare its position.

Brandon involved an SUM coverage endorsement, but its reasoning is not limitable to that context. Henceforth, in all cases of failures to forward suit papers, whether under UM/SUM endorsements, or pursuant to the policy’s liability coverage conditions, the insurer must expect to make a concrete showing of resulting prejudice to its interests.

Given New York’s case law affirming the importance of early notice to insurers in the “late notice” context, in which prejudice is presumed, it may be that the Court will not require a very strong showing of prejudice in the “failure to forward” context.

CPLR Article 16 Apportionment Applies to Cases Involving
Intentional and Negligent Joint Tortfeasors

Article 16 of the NY Civil Practice Law and Rules provides for limiting a tortfeasor’s liability for non-economic damages to his equitable share, in cases where his fault is found to be 50% or less of the total fault of all responsible parties, sued or not sued; it is an affirmative defense, and defense counsel must take care to allege it, and also to identify the parties alleged to be also responsible.

Until the recent decision in Chianese v. Meier (June 13, 2002), it was unclear whether the raft of statutory exceptions to Article 16 included cases where the other tortfeasor acted intentionally—as where a rapist enters an apartment building that was negligently secured, or where a county jail returns an informant to the same cell as the “informee,” where he meets a predictable fate. The exception for “actions requiring proof of intent” has been held by some Appellate Divisions to prevent the negligent actor from claiming the Article 16 limitation in such cases.

Now, under Chianese, the negligent party can limit his damages if found to be less than 51% responsible as compared to the intentional wrongdoer, which stands a good chance in most such cases. The restriction respecting actions requiring proof of intent, the Court of Appeals holds, is meant to deprive the intentional wrongdoer of protection under the Article, not negligent parties. The inability of the more guilty party to pay is of no relevance in applying Article 16.

Barth Sullivan Behr
www.barthbehr.com

43 Court St., Ste. 600
Buffalo NY 14202
716-856-1300

FAX 716-856-1494

TOLL FREE 888-200-6877

"No Cause" Verdict Obtained in Low Impact Collision Trial--"Foreseeability" the Key
August 1, 2002

Our associate Kris E. Lawrence last week secured a "summary jury trial" verdict of "no negligence" against a duo of plaintiffs, from a Chautauqua County NY Supreme Court jury. Banks and Colston v. Mazzara, Index No. 7631/99. The two plaintiffs claimed herniated discs as a result of a low-impact auto accident.

Non-binding summary jury trials are being ordered by some judges in the 8th Judicial District and elsewhere, in an effort to compel the parties to be realistic about their cases and avoid full trial. The attorneys basically read their cases to a real jury, using EBT transcripts, doctors' reports and records, and other admissible evidence. Each side can call two witnesses; Kris called our client and one of the plaintiffs, the plaintiffs called no additional witnesses. The jury is given a full charge on the law, and returns a non-binding verdict.

Our client's foot had slipped off the brake as she attempted to stop for a red light, resulting in a minor impact with the car in front, that left no marks except a scratch on the plaintiffs' bumper. The plaintiffs are female amateur basketball players in their mid-30's, both personable and attractive, but both also with a history of back complaints which they endeavored to minimize.

We are pleased that the jury found "no negligence" under these circumstances, rather than "no proximate cause," despite the plain fault of our client in causing this collision. This bodes well for other low-impact cases, of which we have seen a rash of late. This result certainly accords with the law; the NY Pattern Jury Instruction for Negligence includes this charge on "Foreseeability":

"Negligence requires both a reasonably foreseeable danger of injury to another and conduct that is unreasonable in proportion to that danger. A person is only responsible for the results of his or her conduct if the risk of injury is reasonably foreseeable. * * * [T]here is no negligence if a reasonably prudent person could not have foreseen any injury as a result of his or her conduct[.]"

Lack of foreseeability must be stressed in summing up to the jury, in these minor impact auto cases, and may figure importantly in many other contexts, as well.

Please visit our new Web site,www.barthbehr.com, and note that, in order to serve your needs for qualified defense counsel across Upstate New York, we have formed a relationship with highly experienced and capable defense counsel based in Albany (Click Here).

This new association thus enables us to efficiently handle matters venued in the SYRACUSE, ALBANY, PLATTSBURGH, BINGHAMTON & ELMIRA areas, in addition to BUFFALO, NIAGARA FALLS, ROCHESTER, JAMESTOWN & OLEAN areas. For a complete listing of counties we cover, with county seats, Click Here.

Thank you for your continued confidence and patronage!

Laurence D. Behr, Esq.
lbehr@barthbehr.com

Barth Sullivan Behr
www.barthbehr.com

43 Court St., Ste. 600
Buffalo NY 14202
716-856-1300

FAX 716-856-1494

TOLL FREE 888-200-6877

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Important Change in NY Law of "Bad Faith" (March 15, 2008)

NY APPELLATE ROUNDUP

COURT OF APPEALS OF NEW YORK

FIRST DEPARTMENT APPELLATE DIVISION

SECOND DEPARTMENT APPELLATE DIVISION

THIRD DEPARTMENT APPELLATE DIVISION

FOURTH DEPARTMENT APPELLATE DIVISION

NY Insurance & Liability Law Updates (May 29, 2007)

BARTH SULLIVAN BEHR

THIRD DEPARTMENT APPELLATE DIVISION

SECOND DEPARTMENT APPELLATE DIVISION

FIRST DEPARTMENT APPELLATE DIVISION

Insurance Law Updates (May 15, 2005)

RECENT DECISIONS SECURED BY BARTH, SULLIVAN & BEHR

DECISION: Summary judgment granted dismissing punitive damages claim. Case settled immediately thereafter.

Bifurcated Trial - Always a Good Thing? (February 9, 2005)

Failure to Timely or Properly Disclaim Coverage:A Continuing Plague for NY Insurers (May 2, 2003)

Important New Decisions from the NY Court of Appeals (August 6, 2002)

RECENT DECISIONS SECURED BY
BARTH, SULLIVAN & BEHR

Failure to Timely or Properly Disclaim Coverage:
A Continuing Plague for NY Insurers (May 2, 2003)