The Yahoo! Groups Product Blog
- Members: 703
- Category: Lawyers
- Founded: Oct 24, 2003
- Language: English
Show Message Summaries
Sort by Date
STORE OWNER NOT LIABLE FOR INJURIES TO PATRON RESULTING FROM SUDDEN
ALTERCATION WITH SHOPLIFTER
Sorscher v. M&S Deli Grocery, NYLJ 4/02/07 (Index no. 48431/03)
(Supreme Court, Kings Co.) (Rivera, j)
Plaintiff alleged that on October 7, 2002, at around 1:45 pm, while
inside the premises of M & S Deli Grocery, located at 2013 Avenue U,
Brooklyn, New York, defendants negligently initiated a violent
confrontation using physical force against several persons which
caused plaintiff to be pushed up against a freezer and sustain
injuries. "There is no dispute," wrote the Court, "that Mun T. Oh is
the sole owner of M &S Deli Grocery and that he, his wife and the
plaintiff were present during a violent incident at the store in the
early afternoon of October 7, 2002."
Mr. Oh testified at his deposition that about five youths between the
ages of 13 and 15 years old came into his store together. He
recognized the youngsters as individuals who had been to his store on
at least two prior occasions attempting to shoplift. He did not
physically confront or orally argue with the youths in those prior
incidents. On the date in question, Mr. Oh observed one of the youths
near the cash register counter attempting to steal a carton of
cigarettes. Mr. Oh grabbed and restrained the youth. The youth
resisted and struck Mr. Oh causing his face to bleed. Mr. Oh got his
temporary worker to restrain the youth while he chased the other
youths out of the store. Mr. Oh, with the plaintiff's help, locked
the other youths out of the store. Some of the youths tried to
reenter. The youth involved in the altercation had never acted in a
physically violent manner before the incident in question.
Plaintiff testified that she frequently shopped at defendants'
grocery store and arrived there at around 1:30 on October 7, 2002.
She observed Mr. Oh and his wife behind the counter and four or five
teenagers and a five year old boy walking around inside. She saw the
five year old boy walk out with a bag of potato chips without paying
for it. She heard Mr and Mrs. Oh tell one of the teenagers to give
back what he was trying to steal. She then saw Mr. Oh orally argue
with one of the youths and then come around from behind the counter
to confront the youth. Mr. Oh started to shove the youths out the
door. Some of the youths resisted Mr. Oh's attempt to force them out
of the store. One of them shoved the plaintiff and returned to fight
Mr. Oh. At the time the plaintiff was shoved, Mr. Oh was being
pummeled by the youths. Plaintiff dialed 911 and locked the door of
the store leaving some of the youths outside. Some of those youths
tried to reenter and one of them threw a glass bottle at the store
breaking the glass on the entrance door. The youths were yelling that
they were going to come in and cut people. The police arrived
promptly and led two of the youths away in handcuffs.
After the melee, plaintiff noticed that the store displays and
products were knocked over leaving a mess. She also saw that Mr. Oh
was bleeding over his eye and his temporary worker was also bleeding.
The entire incident from the time plaintiff entered the store until
the time she was pushed into the freezer took between three and four
Concerned about the extent of Mr. Oh's injuries, the plaintiff
returned to the deli to see how Mr. Oh and Mrs. Oh were doing. She
spoke with them, asked them how they were doing, hugged them both and
On defendants' motion for summary judgment, the Court held, "While
the owner of a public establishment has the duty to control the
conduct of persons on its premises when it has the opportunity to do
so and is reasonably aware of the need for such control (Scalise v.
Kullen, 274 AD2d 426 [2nd Dept 2000] citing D'Amico v. Christie, 71
NY2d 76 , it has no duty to protect customers against an
unforeseen and unexpected assault."
"For purposes of deciding defendants' motion the court fully credits
plaintiff's description of the events leading up to her injury.
Plaintiff described a sudden and unexpected attack by the youths
participating in an attempted petty theft. There is no dispute that
the youths involved had never behaved in a physically violent manner
in defendants' establishment before the date in question. There is
also no dispute that the entire incident from the time plaintiff
entered defendants' store to the time that she was injured took no
more than five minutes."
"Although defendants had a duty to exercise reasonable care to
protect its customers, the sudden and unexpected physical attack upon
plaintiff is not a situation that the defendants could reasonably
have been expected to have anticipated or prevented (Davis v. City of
New York, 183 AD2d 683 [1st Dept. 1992]). The court finds that Mr.
Oh's conduct in attempting to restrain a youth who was attempting to
steal from him was lawful and reasonable as a matter of law."
"Plaintiff's opposition papers failed to establish the occurrence of
a prior similar incident at that store or to raise an issue of fact
regarding the forseeability of the incident in question. Thus,
viewing the proof in the light most favorable to plaintiff, the
court, nevertheless, concludes that defendants made a prima facie
showing that they breached no duty to the plaintiff. Viewing the same
proof in the light most favorable to the defendant, the court finds
that the plaintiff failed to establish a prima facie case for the
imposition of liability upon the defendants ( Jones v. Great American
Grocery Store, 234 AD2d 940 [4th Dept. 1996] citing Lacy v. Guthrie
Clinic, 184 AD2d 1057-1058 [4th Dept 1992])."
"Defendants motion for summary judgment dismissing the complaint is
granted. Plaintiff's motion for summary judgment imposing liability
on the defendants based on their negligence is denied."
ARBITRATION FORUMS MAY VOID ITS OWN AWARD AND HOLD A SECOND HEARING
DUE TO CLERICAL ERRORS
Hudson Insurance Co. a/s/o All Island Truck Leasing v. Geico
Indemnity Co. a/s/o Duncan Findlayter (Supreme Court, New York County)
(Index no. 113397/2006) (Lewis Bart Stone, j)
This was a petition to vacate an intercompany loss transfer
arbitration award dated June 2006, which was in favor of Geico. The
June 2006 award came out of the second arbitration held on the same
claim. The first arbitration resulted in an award dated October 2004.
After the 2004 award, which was also in favor of Geico, Geico moved
to confirm the award (pursuant to CPLR 7510) but that application was
denied because Arbitration Forums made a clerical error on the award
as to the names of the parties. Geico complained to Arb Forums
about the problem with the award, but AF, after finding that it no
longer had the documentation, decided to simply void the first award
and conduct a second arbitration before a different arbitrator in
Both insurers appeared at the June 2006 arbitration, Geico won again,
this time for a higher amount. Then Hudson brought this proceeding
to vacate the June 2006 award on the ground that the 2004 award was
The Court held, first, that AF had the power to void its prior award
because no prior application to the court had been made to void the
2004 award, nor to stay the 2006 arbitration, and therefore all
disputed issues of fact and law were before the arbitrator.
"The question of whether Forums could appropriately 'void' the 2004
award under the circumstances or the effect of such action is a mixed
question of law and fact itself. Such issues were known to the
parties and could have been addressed at the second arbitration.
They may only be withdrawn from the arbitrator where a party has made
a timely application to stay arbitration under CPLR 7503(c). This
rule is not only the law but sensible in the arbitration context as
it prevents a party from taking a second bite at an issue lost before
Geico's cross-motion to confirm the 2006 award was granted.
Comment: While not cited in this decision, the Court of Appeals held
a few years ago in Commerce & Industry Ins. Co. v. Nester that once
an insurer goes ahead and participates in an arbitration, it loses
almost all of its grounds to protest the award -- including
coverage. As the statute and case law on vacating arbitration awards
makes clear, only corruption or partiality of the arbitrator, an
imperfection in the award that makes it impossible to enforce,
or "manifest disregard for the law" are valid grounds for vacating an
award. Simple errors of law or fact are waived. The lesson of the
day is that insurers should bring a petition to stay an arbitration
before participating, if they have a problem that is evident before
the arbitration hearing takes place.
WHEN PEER REVIEW DOCTOR WRITES THAT HE LACKS SUFFICIENT INFORMATION,
INSURER MUST SEEK FURTHER VERIFICATION
A.B. Med. Servs., PLLC a/a/o EKATERINA ZUBRITSKAYA v. American Tr.
Ins. Co., 2007 NYSlipOp 50680(U) (App Term, 2d Dept)
In this no fault action, plaintiff moved for summary judgment and
defendant submitted opposition papers which asserted that defendant
timely denied plaintiff's claims based upon peer review reports and
because plaintiff sought fees in excess of the Workers' Compensation
fee schedule. Civil Court, Kings County, denied plaintiff's motion on
the ground that defendant's submissions demonstrated the existence of
triable issues of fact.
In opposition to plaintiff's motion, defendant's claims
representative stated that defendant never received the claim form
seeking the sum of $480. Having found that the burden shifted to
plaintiff, "the lower court erred in implicitly finding that
defendant's mere denial of receipt of said form was sufficient to
rebut the presumption of receipt, thereby raising an issue of fact
(see A.B. Med. Servs. PLLC v. Motor Veh. Acc. Indem. Corp., 6 Misc 3d
131[A], 2005 NY Slip Op 50088[U] [App Term, 2d & 11th Jud Dists]).
Accordingly, plaintiff was entitled to summary judgment upon this
claim. We note that the affidavit of plaintiff's billing manager set
forth that he personally mailed plaintiff's claim forms."
"The affidavit of defendant's claims representative established that
defendant timely denied plaintiff's claims for the sums of $1,573.24,
$1,546.20 and $604.24 on the ground of lack of medical necessity,
based on the peer review reports of Dr. Seliger, Dr. Russ and Dr. Mo,
respectively, which were attached to the denial of claim forms. Since
the affirmed peer review report of Dr. Seliger set forth a factual
basis and medical rationale for his opinion that the medical services
provided were medically unnecessary, it was sufficient to raise a
triable issue of fact as to plaintiff's $1,573.24 claim (see Amaze
Med. Supply Inc. v Travelers Prop. Cas. Corp., 7 Misc 3d 128[A], 2005
NY Slip Op 50452[U] [App Term, 2d & 11th Jud Dists]). However, the
peer review reports of Dr. Russ and Dr. Mo indicated that the claims
for $1,546.20 and $604.24, respectively, were not medically necessary
since they lacked sufficient information upon which to make such a
determination. 'The fact that the reviewer[s] lacked sufficient
information does not, in and of itself, demonstrate a triable issue
of fact, without a showing that defendant sought to obtain such
information by means of a request pursuant to the verification
procedures' (A.B. Med. Servs. PLLC v American Mfrs. Mut. Ins. Co., 6
Misc 3d 133[A], 2005 NY Slip Op 50114[U] [App Term, 2d & 11th Jud
Dists]; see also A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12
Misc 3d 8 [App Term, 2d & 11th Jud Dists 2006]). Since defendant did
not demonstrate that it sought verification to obtain the missing
information, defendant did not establish a triable issue of fact with
regard to the claims for the sums of $1,546.20 and $604.24.
Consequently, plaintiff was entitled to summary judgment upon these
two claims. With respect to the remaining claims, defendant's claims
representative asserted that they were timely denied based on the
ground that the fees charged were in excess of the Workers'
Compensation fee schedule. Said defense raised a triable issue of
fact warranting the denial of plaintiff's motion for summary judgment
as to said claims (see Triboro Chiropractic & Acupuncture P.L.L.C. v
New York Cent. Mut. Fire Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op
50856[U] [App Term, 2d & 11th Jud Dists])."
"Accordingly, partial summary judgment is granted to plaintiff in the
sum of $2,630.44, and the matter is remanded to the court below for
the calculation of statutory interest and an assessment of attorney's
fees due thereon pursuant to Insurance Law § 5106 (a) and the
regulations promulgated thereunder, and for all further proceedings
on the remaining claims."
NO AUTOMATIC DISMISSAL FOR CIVIL COURT CASES MARKED OFF CALENDAR AND
NOT RESTORED WITHIN 1 YEAR
Chavez v 407 Seventh Ave. Corp., 2007 NY Slip Op 02873 (2d Dept 2007)
The Appellate Division has identified an anomaly in New York civil
procedure by holding that in Civil Court -- unlike Supreme or County
Courts -- when a case is marked off the calendar and plaintiff does
not move to restore the case within 1 year, the case is NOT
automatically deemed dismissed.
Civil Court, Kings County (Rubin, J.) had granted the motions of the
defendants From Head to Toe of Brooklyn, Inc., Beauty Center and 407
Seventh Avenue Owners Corp., Roman Katsnelson, and Yury Leschinsky,
to dismiss the action as abandoned pursuant to CPLR 3404.
The plaintiff commenced this personal injury action in the Civil
Court of the City of New York, Kings County, in 1996. The action
appeared on the "ready" trial calendar on May 31, 2001. The plaintiff
failed to appear on that date, and the action was "marked off" the
calendar. The plaintiff never moved to restore the action to the
trial calendar, and in 2004, the defendants made separate motions to
dismiss the action pursuant to CPLR 3404 for failure to prosecute.
The Civil Court granted the defendants' motions, and the plaintiff
appealed to the Appellate Term of the Supreme Court for Second and
Eleventh Judicial Districts.
In a 2-1 decision, the Appellate Term affirmed the Civil Court's
order dismissing the action. In doing so, the Appellate Term
overruled several decisions in which that court had held that CPLR
3404 did not apply to Civil Court actions. The plaintiff, by
permission of the Appellate Term, appealed to the Appellate Division,
"CPLR 3404 provides that 'a case in the supreme court or a county
court marked 'off' or struck from the calendar or unanswered on a
clerk's calendar call, and not restored within one year thereafter,
shall be deemed abandoned and shall be dismissed without costs for
neglect to prosecute.' The Appellate Term majority acknowledged that
CPLR 3404, by its terms, applies only to actions in the Supreme Court
or the County Court, but concluded that the statute could properly be
applied to the lower courts through New York City Civil Court Act §
2102, which provides that '[t]he CPLR and other provisions of law
relating to practice and [procedure] in the supreme court,
notwithstanding reference by name or classification therein to any
other court, shall apply in this court as far as the same can be made
applicable and are not in conflict with this act.'"
"As the Appellate Term dissenting Justice correctly observed,
however, CPLR 3404 does in fact conflict with the provision of the
Uniform Rules for the New York City Civil Court governing matters
marked off the trial calendar (see 22 NYCRR 208.14[c]), which, unlike
CPLR 3404, makes no provision for the dismissal of an action that has
been marked off the trial calendar. The Civil Court's rules
previously contained a section which, in language similar to that of
CPLR 3404, provided for the automatic dismissal of actions as
abandoned if no motion to restore was made within one year after the
case was marked off the calendar (see 22 NYCRR former 2900.17). That
provision, however, was repealed, effective January 6, 1986. The
Civil Court rule which now governs actions stricken from the calendar
(see 22 NYCRR 208.14[c]) makes no provision for dismissing an action
for neglect to prosecute (see LoFredo v. CMC Occupational Health
Servs., 189 Misc 2d 781). The replacement of a provision authorizing
dismissal with a provision that does not authorize dismissal
presumably reflects a deliberate choice to omit any authorization for
such a dismissal. Applying the automatic dismissal provision of CPLR
3404 in Civil Court actions conflicts with that deliberate omission,
and, therefore, is not permitted by New York City Civil Court Act §
"Contrary to the conclusion of the Appellate Term majority, this
court's decision in Gonzalez v. First Natl. Supermarket (232 AD2d
609) should not be read as 'implicitly approv[ing] of the application
of CPLR 3404 in the Civil Court,' as the issue of the statute's
applicability was not presented in that case."
"Accordingly, CPLR 3404 does not apply to Civil Court actions, and
the Civil Court had no authority to dismiss this action as abandoned.
Therefore, the defendants' motions, inter alia, to dismiss the action
should have been denied."
Comment: This is a very significant decision, especially for the
thousands of No Fault lawsuits pending in the Civil Court. No Fault
suits get marked off the calendar all the time, and
defendants/insurers mark their diaries for one year hence, upon which
they happily note that the suit is "deemed dismissed." No more!
So what is the practical effect for attorneys on both sides? Well, a
case marked off stays alive, in some kind of legal limbo, until
either side makes a motion to restore the case to the active
calendar. I would not advise plaintiffs' attorneys to get too
relaxed and allow their cases to languish until such time as
they "get around" to restoring their cases; while there is apparently
no legal provision for dismissing Civil Court cases that get marked
off the calendar, I would advise counsel, to borrow a phrase from
Professor David Siegel, to let the law get tested on "somebody else's
But what should defense counsel do with these marked-off cases?
Insurance companies hate to have to leave claim files open
indefinitely. Well, if a plaintiff's attorney appears to be
neglecting such a file, why not move for summary judgment and take a
chance that plaintiff will default on it, or that defendant might
win? Or, defendant can move to restore the case to the calendar on
its own. Then if plaintiff doesn't show up for trial, the suit
should be dismissed.
For any attorney involved in no-fault claims, ROGAK'S NEW YORK NO-
FAULT LAW & PRACTICE is essential. Buy it at:
** WARNING: THIS BLOG EXPRESSES OPINIONS FOR WHICH THE AUTHOR MIGHT
HAVE NO INSURANCE **
The internet, which has created a quantum leap in the speed of
interpersonal communications with a level of historical significance
comparable only to the invention of the printing press and the radio
(TV does the same thing at the same speed as radio, but adds
pictures, so I don't give it equal credit in this regard), has also
created new problems. Among those problems is an apparent collision
at the intersection of "lawyer blogs" and "malpractice insurance."
[Another historical note: long before blogging was created and before
the internet became a business tool, Yours Truly published The Rogak
Report as a paper document, distributed to readers every day via
fax. I started doing this in 1994. Maybe someday my pre-Internet
Rogak Reports will show up on ebay!]
Many attorneys, particularly those at fancy law firms, can't make the
simplest decisions without lengthy committee meetings. Thus, the
following article recently appeared on the website of the
INSURANCE COMPANY REFUSES TO COVER LAW FIRM'S BLOG
By Heather Havenstein, Computerworld
A law firm in New Jersey has temporarily halted plans to launch a
blog because its insurance company would not cover the blog under an
existing malpractice insurance policy.
James Paone, a partner at Lomurro, Davison, Eastman and Munoz in
Freehold, N.J., said that the firm's insurer — The Chubb Corp. — said
several weeks ago that it would not add the blog to the existing
policy. "We were in the process of beginning to set up a blog, having
internal discussions about what areas of law would be the subjects,"
he said. "We wanted to cover the first base, which is [Chubb's]
coverage. Our insurance carrier said [a blog] is not a risk they were
interested in insuring. The entire discussion stopped."
Paone said his firm contacted Chubb to ask about insurance coverage
in case someone tried to sue it over content in the blog. Now, the
law firm is in the process of setting up a meeting with Chubb "so we
can understand what their rationale is for saying they weren't
interested in covering that kind of risk," Paone said.
Chubb did not respond to a request for comment before press time.
Legal issues associated with Web 2.0 tools are coming up more often
as companies grapple with making sure that content posted to blogs,
wikis and social networks do not run afoul of existing libel law,
copyright infringement or trademark violations.
Dennis Kennedy, a lawyer in St. Louis who specializes in IT issues,
said that this instance of a company being denied insurance coverage
for content posted in a blog "struck me as something that came
completely out of the blue that I haven't heard of before."
However, he said these types of attempts to impose new types of
restrictions on blogs likely occur "when people aren't that familiar
with the technology and think it is somehow completely new and
different. Really blogs are just a form of Web pages. What you're
doing is not different than if you are speaking in public or writing
an op-ed piece."
This issue spurred a spate of blogs among blogging lawyers. The
following one is a good example:
CHUBB INSURANCE REFUSES TO COVER LAW FIRM WITH BLOGS
March 22, 2007
Chubb Insurance has refused to cover a blog under a law firm's
Heather Havenstein of Computerworld reports on what James Paone, a
partner at Lomurro, Davison, Eastman and Munoz in Freehold, N.J.,
We were in the process of beginning to set up a blog, having internal
discussions about what areas of law would be the subjects. We wanted
to cover the first base, which is [Chubb's] coverage. Our insurance
carrier said [a blog] is not a risk they were interested in insuring.
The entire discussion stopped.
Paone also told Havenstein his law firm is setting up a meeting with
Chubb Insurance `so we can understand what their rationale is for
saying they weren't interested in covering that kind of risk.'
It'll be interesting what Chubb tells Paone. I have not heard of any
cases where a law firm has been sued or been the subject of a
malpractice claim from publishing a blog. What does Chubb know that
the rest of the world does not?
I got a call from a New Jersey reporter on Chubb's denial to cover. I
told her it sounded like a typical insurance company. 'Exclude
coverage for anything you can get away with and talk of high risks
that aren't real so as to increase premiums and/or to sell new types
Dennis Kennedy, an expert in tech law, told Haverstein that he had
not heard of anything like that before. Wonder why? Perhaps, as
Dennis says "...people aren't that familiar with the technology and
think it is somehow completely new and different. Really blogs are
just a form of Web pages. What you're doing is not different than if
you are speaking in public or writing an op-ed piece."
Gee, let's all call Chubb and ask if we can do seminars, write an op-
ed piece, or God forbid, use the telephone for business development
work. All very scary and high risk activities.
Updated discussion on Chubb denying coverage to bloggers:
Bill Gratsch: The idea that a law firm's weblog is somehow completely
different from its e-newsletter or its company website shows a lack
of understanding of web technology.
Carolyn Elefant: My concern with Chubb's suggestion that blogging may
give rise to malpractice liability is that it opens the door for the
bar associations to regulate lawyer blogging, setting standards for
disclaimers and even reviewing postings.
J. Craig Williams in comments at Carolyn Elefant's post: If
malpractice carriers regulate blogs, then they'll also have to
regulate law firm newsletters, articles that lawyers publish, radio
and TV programs where lawyers appear, lawyer quotes in newspapers,
magazines and elsewhere and, heaven forbid, law review articles.
Where will it end?
Chuck Newton: ...[I]f this is true, then why is it exactly that Chubb
is writing insurance on any lawyer that talks to the press, appears
on TV, advertises, talks shop at cocktail parties, sends out a
newsletter, or shares war stories at the courthouse? You cannot say
that these other examples are preposterous because they amount to the
Andrew Bluestone at New York Attorney Malpractice Blog: Will there be
a new question on legal malpractice insurance appllications, asking
whether you have a web site, a blog site, whether you write, whether
you lecture? Keep tuned.
Eric Turkewitz: Before You Blog, Check With Your Insurance Carrier.
Does this mean their insured won't also be able to write an article?
Put up a web site? Give a CLE lecture? If you have Chubb as your
carrier, you may want to tell them to take a powder before they tell
you. And tell them why they have lost your business.
Eric Goldman: I suspect this is one of those early overreactions to
theoretical risks by an insurance carrier, and the insurance industry
will wise up after a number of years of better understanding the
(low) malpractice risk profile of blogging.
Allison Shields: ...[L]awyers have been giving seminars, writing
articles and posting information on their websites. They've been
sending client newsletters containing 'case updates' or 'decisions of
To my knowledge, none of the above activities have been considered
inherently risky by malpractice carriers. Why single out blogging? Is
it the sheer volume of content? Blogging is no more risky than
sending a newsletter, providing seminars or writing articles.
In today's marketplace, failing to keep clients and referral sources
informed and failing to build expertise and credibility can be deadly
to a law practice. Not only that, but bloggers provide a lot of legal
information at no cost, and have greatly contributed to the education
of both the legal community and the general public. First, the
lawmakers make the rules for 'advertising' a law practice more
restrictive, ostensibly to prevent the public from being misled. Now,
the malpractice carriers are preventing lawyers from providing timely
information to the public about legal topics.
Brett Trout: Here are some other things that Chubb Insurance should
absolutely not allow their insureds to do:
No speaking at seminars;
No newsletters, either print or email;
No interviews with newspapers, magazines or other periodicals;
No Web site;
No talking with a prospective client on the telephone;
No meeting with a client before an attorney-client fee agreement is
Absolutely no podcasts;
Nothing else that clients or prospective clients may find beneficial
There is some irony here in that lawyers, who are the first to come
up with new theories for suing other folks, are doubled over with
cramps at the prospect of themselves being the target of some other
lawyer's new theory of liability arising out of a legal newsletter
and/or opinion sheet just because it is posted on the internet and
gets labeled with the neologism "blog."
I didn't research the matter in depth, but my initial efforts found
no instances of an attorney being sued for malpractice or libel based
on the content of his or her blog. And my initial reaction to any
such lawsuit, at least for malpractice, would be: how can there be
malpractice without an attorney-client relationship first? A
complete stranger to the law firm would likely have a hard time suing
for malpractice based on an allegation that the stranger read the
attorney's blog and got "bad advice."
But suppose a current client of the blogging lawyer -- including
myself -- were to read a blog, such as mine, take some action based
on what he or she read, and then, having obtained a bad result, sued
the lawyer -- me, for example -- for malpractice?
Well, for one thing, I would hope that my own clients are savvy
enough not to take some kind of action just based on what they read
here, get a bad result, and then blame me for it (especially if they
used some OTHER LAWYER to take the action on their behalf!). After
all, my reports of court decisions are not an endorsement that those
decisions are correct (if I feel they are bad law I usually say so,
but they are, after all, the law), and in any event, any court can be
overruled by a higher court (or sometimes even the same court!).
Second, I'm not afraid to say what I'm thinking, and I never have
been. Very often in my life I have ticked people off with my
opinions and viewpoints but my attitude is, if you don't like my
peaches, don't shake my tree. If some jerk wants to sue me over
something I've written, I say bring it on. I will not censor myself
solely out of the fear of control freaks who are hypersensitive to
the opinions of others. Once you let control freaks dictate your
actions, they'll back you into a corner.
Having said that, I will be forthright enough to admit that on
occasion I've said or written something that, in retrospect, I wish I
hadn't. What did I do in those cases? I apologized. Why not?
Anyone can say something they regret saying; the right thing to do is
retract it, not make it worse by being defensive about it. Hey,
we've all said things we wish we hadn't. But that's better than
never saying anything of any substance, out of fear of saying
something that might offend somebody, somewhere.
Here's a question for you: name an important person in history who
never said anything that got anybody upset. I'll wait. You can't,
can you? You know why? Because nobody worth remembering ever went
through his or her entire life without saying something that offended
In my new book, Rogak's New York No-Fault Law & Practice, I lay down
some pretty bold opinions in the "overview" section. Views that not
many lawyers would go out on a limb to express publicly. But I think
it is essential to the health of the soul to express one's true
opinions, especially at the risk of being criticized for it. Here
are some thoughts by some famous folks on that subject:
"Few people are capable of expressing with equanimity opinions which
differ from the prejudices of their social environment. Most people
are not even capable of forming such opinions." -- Albert Einstein
"I express many absurd opinions, but I am not the first man to do it;
American freedom consists largely in talking nonsense." -- Edgar
"Any clod can have the facts; having opinions is an art." -- Charles
"If you must tell me your opinions, tell me what you believe in. I
have plenty of doubts of my own." -- Johann Wolfgang von Goethe
"It is a blessed thing that in every age someone has had the
individuality enough and courage enough to stand by his own
convictions." -- Robert Green Ingersoll
So, today, those of us attorneys who care to express our views and
share our knowledge in writing have to face a test of our mettle:
shall we cringe in trepidation and censor ourselves out of fear that
we might not have insurance to give us the courage of our convictions?
HAH! Any lawyer who answers "yes" to that question should hang his
or her head in shame. If you don't have the stones to express your
opinions without a guarantee of insurance coverage, you don't deserve
to call yourself a writer. As the philosopher Kierkegaard
said, "Anxiety is the dizziness of freedom." Just admit to what you
really are: an empty suit who doesn't have the backbone to write the
content of Chinese fortune cookies without a long disclaimer. Close
down your blog and stick to something safe like negotiating parking
I guarantee my readers that THIS writer will blog what he really
thinks until they pry my cold, dead fingers from my keyboard.
DUTY TO DEFEND CAN BE TRIGGERED BY FACTS OUTSIDE OF COMPLAINT WHICH
ARE KNOWN TO INSURER
NWL Holdings Inc. v. Discover Property & Casualty Insurance Co., 05-
CV-3499, NYLJ 4/09/07 (USDC - EDNY) (Hurley, j)
Plaintiff NWL Holdings, Inc. (d/b/a National Wholesale Liquidators)
moved for an Order, pursuant to Rule 56, (1) declaring that defendant
Discover Property & Casualty Insurance Company was obligated to
defend Plaintiff with respect to claims asserted against it in a
state court action; and (2) granting judgment to Plaintiff in the sum
of $131,652.79 to reimburse it for the expenses and attorneys' fees
incurred in defending the state court action.
The material facts, said the Court, were undisputed:
Defendant issued a CGL policy to Plaintiff, effective May 11, 2003.
In the policy, Defendant agreed to indemnify and defend Plaintiff
against claims for "bodily injury" caused by an "occurrence" as
defined in the policy. Occurrence is defined as "an accident
including continuous or repeated exposure to substantially the same
general harmful conditions." The policy contained an exclusion from
coverage for "Expected or Intended Injury" which provides that
the "Bodily Injury . . . expected or intended from the standpoint of
the insured is not covered."
In or around January 2004, Nawaz Malik, a former employee of
Plaintiff, commenced an action in the New York State Supreme Court,
Queens County, against Plaintiff and its former employee Muhammad
Akram. Malik alleged that he was sexually assaulted by Akram at work
and asserted five causes of action: (1) sexual harassment under state
law; (2) retaliation based upon his complaints of sexual harassment;
(3) intentional infliction of emotional distress; (4) assault; and
(5) battery. Plaintiff notified Defendant of the state court action
and according to Defendant, it sent Plaintiff a letter, dated
February 17, 2004, disclaiming coverage under the policy. Plaintiff
denied receipt of this letter.
Thereafter, Malik, through different counsel, commenced a second
lawsuit against Plaintiff in April 2004. This action contained the
same causes of action as the first lawsuit but added claims for
negligent supervision, hiring and retention. On July 8, 2004,
Defendant's coverage counsel issued a letter to Plaintiff disclaiming
coverage for all of the claims in the second action except for the
negligent hiring, retention and supervision claim. According to
Plaintiff, on an undisclosed date, the second action was withdrawn
and voluntarily discontinued.
According to Plaintiff, the first Malik action was settled for
$299,999 and Plaintiff paid this amount to Malik. Plaintiff contended
that its expenditures and attorneys' fees with regard to the first
Malik action totalled $131,652.79.
Plaintiff now moved for an Order declaring that Defendant was
obligated to defend it in the first Malik action and sought
reimbursement for the expenses and fees it incurred in defending that
action. Plaintiff did not seek indemnification for the amount of
monies paid in settlement.
Under New York law, wrote this Court, "an insurance company's duty to
defend is very broad: The duty of an insurer to defend its insured
arises whenever the allegations within the four corners of the
underlying complaint potentially give rise to a covered claim, or
where the insurer 'has actual knowledge of Facts establishing a
reasonable possibility of coverage. An insurer is relieved of the
duty to defend only if 'there is no possible factual or legal basis
on which the insurer might eventually be held to be obligated to
indemnify the insured under any provision of the insurance policy. If
any of the claims against the insured arguably arise from the covered
events, the insurer is required to defend the entire action."
"Here, Plaintiff argues that the sexual assault alleged in the first
Malik action constitutes a covered claim based upon the New York
Court of Appeals decision in RJC Realty Holding Corp. v. Republic
Franklin Ins. Co., 2 N.Y.3d 158 (2004). Construing an insurance
policy which contained virtually identical language to the policy at
issue in this action, the RJC Realty court held that a sexual assault
committed by an employee is an 'accident' and therefore
an 'occurrence' within the meaning of the policy because (1) the
employer did not intend or expect the sexual assault; and (2) the
employee's intention in committing the act could not be attributed to
his employer under the doctrine of respondeat superior because the
employee was not acting within the scope of his employment."
"Although Plaintiff is correct that pursuant to RJC Realty, the
sexual assault alleged in the first Malik action would constitute a
covered event under the policy, that does not end the Court'
analysis. In RJC Realty, the claims asserted in the underlying
action, and the claims the insurer was held obligated to defend and
indemnify, were claims for negligent hiring, supervision and
retention. Under the present Facts, the first Malik complaint did not
assert claims for negligent hiring, supervision or retention. Instead
it sought, inter alia, to hold Plaintiff vicariously liable under the
theory of respondeat superior for assault and battery. As noted
above, however, and the parties do not dispute, an employer cannot be
held vicariously liable for the sexual assault or battery committed
by an employee. Thus, because an insurer has no obligation to defend
an insured if there is no possible legal basis upon which the insurer
might eventually be required to indemnify the insured, at first
blush, it would seem as if Defendant had no obligation to defend
Plaintiff in the first Malik action as the complaint had no legal
"In Fitzpatrick, however, the New York Court of Appeals broadened
protection for insureds by holding that courts are required to look
beyond the four corners of the complaint in determining whether there
is any potentially covered occurrence under the policy. In that case,
the question presented was whether there is a duty to defend 'where
the pleadings do not allege a covered occurrence but the insurer has
actual knowledge of Facts demonstrating that the lawsuit does involve
such an occurrence.' Fitzpatrick held that under such circumstances
there was a duty to defend."
"The court began its analysis by reviewing the well-established 'four-
corners of the complaint' rule which provides that an insurer has a
duty to defend 'whenever the allegations in a complaint state a cause
of action that gives rise to the reasonable possibility of recovery
under the policy.' The rationale underlying this rule is that the
duty to defend is broader than the duty to indemnify, so that if the
complaint alleges a covered occurrence, there is a duty to defend
even though extrinsic evidence shows that the occurrence is outside
the policy coverage. In Fitzpatrick, the insurer attempted to argue
that the converse was also true, i.e., that the complaint allegations
were the sole consideration in determining an insurer's obligation to
defend. In rejecting this position, the Court of Appeals reasoned
that where the underlying complaint fails to allege a covered
occurrence yet the insurer has actual knowledge that the action
involves a covered event, 'wooden application of the four corners of
the complaint rule would render the duty to defend narrower than the
duty to indemnify - clearly an unacceptable result.' Because an
insurer should not be permitted to 'use a third party's pleadings as
a shield to avoid its contractual duty to defend its insured,' the
Fitzpatrick court held that an insurer is required to provide a
defense whenever 'it has actual knowledge of Facts establishing a
reasonable possibility of coverage.' Moreover, the court held that
an insurer 'cannot ignore the Facts made known to it by its insured'
when assessing its duty to defend."
"Based on the court's holding in Fitzpatrick, Plaintiff presents two
arguments as to why Defendant had a duty to defend Plaintiff in the
first Malik action. First, Plaintiff asserts that a liberal
construction of the first Malik complaint reveals allegations which
support a claim of negligent supervision. Second, Plaintiff contends
that notwithstanding the complaint allegations, Defendant had
knowledge of Facts establishing a reasonable possibility of coverage.
Because the Court agrees with Plaintiff on both points, the Court
finds that Defendant had a duty to defend."
"The fourth and fifth causes of action in the first Malik complaint
allege assault and battery based upon Akram's actions and seek to
hold Plaintiff vicariously liable therefor. Plaintiff argues that the
court should not focus exclusively on the designation of the causes
of action in the underlying action but rather, should inquire into
the Facts upon which the [c]omplaint is based. Thus, although
Plaintiff concedes that the underlying complaint frames the issue as
one of respondeat superior, the Facts stated in the complaint clearly
support a claim for negligent supervision and retention. In support
of this argument, Plaintiff relies, inter alia, on paragraphs 5
through 10 of the first Malik complaint. These allegations are
"Malik alleged that after being hired by the store manager, he began
his employment with Plaintiff in April 2003. On October 4, 2003, he
was transferred to Plaintiff's store. Over the course of the next few
days, Akram made several unwanted sexual advances toward him. On
October 7, 2003, Malik complained to the store manager about Akram's
sexual harassment and the manager told Plaintiff that he would take
care of it, but he never did. A few days later, on October 11, 2003,
Malik was sexually assaulted by Akram."
"Plaintiff points out that the crux of a negligent supervision and/or
retention claim is that the employer knew or should have known of the
employee's propensity for the conduct which caused the injury.
Although the first Malik complaint does not specifically denominate
negligent supervision as a separate cause of action, Plaintiff argues
that the Facts alleged therein were sufficient to put Defendant on
notice that the complaint could potentially give rise to such a
claim. Given the broad nature of the duty to defend, the Court
agrees. Malik alleged that he complained to the store manager about
Akram's sexual harassment just four days before the alleged sexual
assault transpired and that the store manager took no action. These
allegations state a claim for negligent supervision. Accordingly,
the Court finds that the first Malik complaint contains sufficient
allegations to arguably fall within the scope of the insurance
policy. The duty to defend exists if the complaint contains any Facts
or allegations which bring the claim even potentially within the
"Plaintiff also argues that Defendant had knowledge of Facts outside
of the complaint establishing a reasonable possibility of coverage.
Once again, the Court agrees."
"Malik filed his first action in January 2004. As discussed above,
this action did not assert a claim for negligent supervision and, as
a result, Defendant thereafter disclaimed coverage. In April 2004,
through different counsel, Malik filed a second action arising from
the same set of Facts and circumstances and containing the same
causes of action as the first lawsuit, but this time also asserting
claims for negligent supervision, hiring and retention. In July 2004,
Defendant advised Plaintiff that the policy did not afford coverage
for any of the claims asserted in the second action with the
potential exception of the negligent hiring, retention and
supervision claim. As a result, Defendant indicated that it would
defend Plaintiff with regard to the entirety of the second Malik
action. This action was eventually withdrawn and voluntarily
"Although the second complaint contained a separately designated
cause of action for negligent retention and supervision, the Facts
and circumstances alleged in the first and the second complaints are
the same. Therefore, upon receipt of the complaint in the second
Malik action in April 2004, at the latest, Defendant had notice of
Facts which gave rise to a duty to defend in the first complaint.
This is especially true given, as discussed above, that the first
action contained allegations relating to a negligent supervision
claim. Moreover, once the second Malik action was withdrawn,
Defendant could have easily anticipated that Malik would amend his
complaint in the first action to add this cause of action.
Accordingly, the Court finds that Defendant had actual knowledge of
Facts establishing a reasonable possibility of coverage... and was
therefore required to defend Plaintiff in the first Malik action."
"In a last-ditch attempt to defeat summary judgment, Defendant argues
that the 'Employer's Liability' exclusion in the policy applies. This
exclusion provides that the policy does not cover bodily injury to an
employee 'arising out of and in the course of: (a) Employment by the
insured; or (b) Performing duties related to the conduct of the
insured's business.' Defendant argues that the bodily injury to
Malik occurred during the course of his employment, as opposed to
what Akram did, which was clearly outside the scope of Akram's
"Although the injury to Malik may have occurred in the course of his
employment, it cannot seriously be argued that it 'arose out of' his
employment. See Lemon v. N.Y.C. Transit Auth., 72 N.Y. 324, 326-27
(1988) ("[O]nly if an injury flows as a natural consequence of the
employee's duties can it be said to arise out of the employment.");
see also Scholtzhauer v. C.&L. Lunch Co., 233 N.Y. 12, 13 (1922)
(murder of employee by co-employee did not arise out of
employment "but because the deceased refused to accept [co-
employee's] invitation, and his anger by reason thereof").
Accordingly, the Court finds that the "Employer's Liability"
exclusion does not apply to this case."
"Plaintiff seeks an Order directing Defendant to pay it the amount of
$131,652.79 as reimbursement for the defense expenses and attorneys'
fees incurred by Plaintiff in defending the first Malik action. In
support of this application, Plaintiff has submitted copies of
invoices received by Plaintiff, together with Plaintiff's checks in
payment. Each invoice is accompanied by a statement outlining the
services rendered, the total hours expended and the hourly rates
applied. In opposing this application, Defendant argues that a
hearing is necessary to determine the reasonableness of the fees
"Pursuant to New York law, Plaintiff is entitled to recover
reasonable attorneys' fees for both defending the underlying state
court action and in bringing the instant action based on Defendant's
disclaimer. Here, Plaintiff seeks fees based upon the hours
reasonably spent multiplied by the reasonable hourly rate. However,
neither party has supplied any authority as to whether the hours
spent, or the rates charged, are reasonable.... Moreover, although
Defendant suggests that the fee application is not reasonable, it
proffers no explanation as to why this may be the case. Thus, on this
record, the Court is unable to determine the amount of reimbursement
to which Plaintiff is entitled. Accordingly, this matter is
respectfully referred to Magistrate Judge William D. Wall for a
report and recommendation as to the amount of attorneys' fees and
expenses to which Plaintiff is entitled."
"For the foregoing reasons, Plaintiff's motion for a declaratory
judgment is GRANTED and the Court finds that Defendant had a duty to
defend Plaintiff in the underlying state court action. Plaintiff's
motion for attorneys' fees is also GRANTED to the extent the Court
finds that Plaintiff is entitled to recover reasonable attorneys'
fees for both defending the underlying state court action and in
bringing the instant action. The matter is respectfully referred to
Magistrate Judge William D. Wall for a report and recommendation as
to the appropriate amount of fees to be awarded."
I have posted to my web site at
the April issue of Zalma's Insurance Fraud Letter where you can read
articles: What is Insurance Fraud? Coalition Against Insurance Fraud
Study Reveals Progress. Hidden Problems & Fraud Trends
Fraud Defeated in New York, Convictions from the Coalition Against
Insurance Fraud and the states.
If you want to subscribe to the text version please send an e-mail to me
with your full name, your title, your company, and your mailing
4441 Sepulveda Boulevard
CULVER CITY CA 90230-4847
This message was filtered through Anti-Virus software before it was sent.
Every effort was made to protect you against the inadvertent transmission
of a computer virus.
The pages comprising this e-mail message contain confidential information
from the ClaimSchool, Inc. This information is intended solely for use by
the individual or entity named as the recipient hereof. If you are not
the intended recipient, be aware that any disclosure, copying,
distribution, or use of the contents of this transmission is prohibited.
If you have received this transmission in error, please notify us by
telephone immediately so we may arrange to retrieve this transmission at
no cost to you. Please destroy all copies, whether printed, electronic or
in your computer's memory.
Here is a sampling of actual comments sent to me by readers who have purchased
Rogak's New York No-Fault Law & Practice:
"A great book."
"Very easy to read."
"I will be using your book all of the time."
"I just wish it had come out earlier -- it would have made learning this area of the law a lot easier!"
Order your copy today! Click here:
Amazon.com: Rogak's New York No Fault Law & Practice: Books: Lawrence N Rogak
MERE DENIAL OF NOTICE IS INSUFFICIENT GROUNDS TO VACATE INTERCOMPANY
Clarendon National Ins. Co. v. State of New York Workers Compensation
Board (Supreme Court, New York County) (2007 NY Slip Op 30540(U))
Clarendon brought this petition to vacate an arbitration award made
by Arbitration Forums Inc. Clarendon alleged that its first notice
of the arbitration proceeding was a "second notice" seeking to
collect on the award. Further, it alleged that it did not have
coverage on the vehicle in which the claimant, Catherine Pedersen,
was an occupant at the time of her work-related accident. Instead,
alleged Clarendon, a DMV abstract showed that Liberty Mutual insured
the subject vehicle on the date of loss.
Therefore, Clarendon alleged, the award against it should be vacated
on the grounds that it was not a proper party to the arbitration, and
further that the award should be vacated in the interests of justice
The Court held, first, that an arbitration award may be vacated only
where the rights of the complaining party were prejudiced by
corruption, fraud, or misconduct in obtaining the award; or where the
arbitrator was partial; or where the arbitrator exceeded his powers
or failed to make a final and definite award; or where the statutory
procedure was not followed.
Questions of law or fact are not reviewable by the court unless the
award is so irrational that vacatur is required.
"Although Clarendon argues it was not the insurer, respondent
[Workers Comp Board] points to the police report from the motor
vehicle accident which indicates that, as concerns the Pedersen
vehicle, the insurer was '075,' the code number assigned by the New
York State Insurance Department's website of insurance companies to
Clarendon National Insurance Company. The insurance code written on
the police report has been held to be presumptive proof of insurance
coverage. Thus, it cannot be found that the
arbitrator 'irrationally' determined that Clarendon was the insurer
and liable for coverage."
The Workers Comp Board showed that it served Clarendon with the
application for arbitration at its New York City offices, where it
was signed for by an "R. Olivier" on "12-20." "Although neither the
receipt nor the card is postmarked," the Board also submitted "copies
of the arbitration documents which include the first page of the
decision form issued by Arbitration Forums Inc. Personal Injury
Subrogation Forum, on which appears a signed certification of service
dated December 14, 2004, stating that three copies of the application
were mailed to... Clarendon, at its address in New York, notably the
same address as that on the certified mail card and receipt and that
listed with the State Insurance Department..."
"The decision, issued on March 7, 2005 on default, determined that
the Workers Compensation Board proved 100% liability against
Clarendon, as Pedersen 'lost control and struck applicant in the
"In answer to all of the above documentation, [Clarendon] asserts
only that its first notice of the arbitration was in May 2006. It
does not state that the address to which the documents were mailed
was the incorrect address, that the contact name on file with the
State Insurance Department was the wrong name, or that '075' was not
the number assigned to it by the State Insurance Department. It
merely offers a bald denial of receipt which is insufficient to rebut
the totality of respondent's proof of notice of the arbitration."
"Accordingly, the petition to vacate the arbitration award... is
denied, and the award... is confirmed."
Comment: Vacating an arbitration award solely on the grounds of lack
of notice is very difficult. Here, Clarendon must pay the award even
if, in fact, it did not cover the subject vehicle on the date of
loss. There's little that can be done in cases like this. It does
seem odd that Clarendon received neither the application for
arbitration from the Workers Comp Board, nor the notice of the
arbitration from Arbitration Forums Inc. Looks like this one just
slipped through the cracks somewhere -- to the insurer's detriment.
BUILDING CRACKS CAUSED BY EXCAVATION WORK NEXT DOOR ARE NOT EXCLUDED
BY "EARTH MOVEMENT" EXCLUSION
Pioneer Tower Owners Association v. State Farm Fire & Casualty Co.,
NYLJ 4/11/07 (Supreme Court, Nassau Co.) (Feinman, j) (Index no.
Plaintiff moved for summary judgment for an order declaring that the
damage sustained to plaintiff's premises was within the scope of
coverage of the policy issued by State Farm. State Farm cross-moved
for summary judgment.
Plaintiff's building sustained damage to its foundation, interior
walls, floors and ceilings sometime in the summer of 2004 as a result
of the excavation and construction work performed adjacent to the
The plaintiff submitted a claim to State Farm seeking coverage for
the damage and State Farm denied coverage based upon an "earth
movement" exclusion contained in the policy. The plaintiff's expert
report, by engineer Simon Weiming Wu, P.E., of Simon Hometech Inc.,
dated September 17, 2004, stated that upon inspection of the
plaintiff's building, the engineer found crackings in the walls,
ceilings, windows, foundation, open joints at the cement coping of
the rear roof, between the bearing wall and driveway, as well as
slanted doors of bathrooms and bedrooms. Mr. Wu concluded that the
cracks which occurred after the neighboring underpinning operation
was completed indicate that severe flaws must have been committed
during the underpinning operation. Mr. Wu stated that underpinning
was built to prevent the settlement and movement of the existing
The defendant's expert report, by Paul J. Angelides, P.E., dated
October 22, 2004, stated that upon inspection of the plaintiff's
building, a three story plus basement, brick masonry 21 unit
apartment building, he observed construction work-in-progress on the
property located immediately to the right of the plaintiff's
building. Mr. Angelides stated that he observed visible cracks on the
building's foundation wall, driveway, ceiling and siding, as well as
interior cracks of the building. Mr. Angelides stated that the
condition of the cracks was consistent with the recent excavation
work being performed adjacent to the plaintiff's building. Mr.
Angelides states that the absence of lateral and subjacent support
would have caused soil movement under the foundation of the
plaintiff's building, thereby creating building movement that
resulted in the development of the observed cracks. Mr. Angelides
concluded that the soil movement was the result of the failure of the
contractor to provide adequate lateral and subjacent support of
underpinning during excavation work for the foundation of a new
building being constructed on the adjoining property.
State Farm, by way of letter dated November 1, 2004, determined that
the damage sustained to plaintiff's building was not covered under
the policy and referred to the following exclusion:
LOSSES NOT INSURED
1. We do not insure under any coverage for any loss which would not
have occurred in the absence of one or more of the following excluded
events. We do not insure for such loss regardless of: (a) the cause
of the excluded event; or (b) other causes of the loss; or (c)
whether other causes acted concurrently or in any sequence with the
excluded event to produce the loss:
b. earth movement, meaning the sinking, rising, shifting, expanding
or contracting of earth, all whether combined with water or not.
Earth movement includes but is not limited to earthquake, landslide,
erosion and subsidence but does not include sinkhole collapse.
State Farm notified plaintiff that since the building being built
adjacent to plaintiff's building undermined plaintiff's property "due
to earth movement", that no payment could be made to plaintiff for
At issue, wrote the Court, "is whether the damage sustained to
plaintiff's building falls within the 'earth movement' exclusion."
"The plaintiff argues, inter alia, that during excavation, the soil
was 'removed', and therefore, the earth did not move naturally.
Rather, plaintiff sets forth that the earth moved as a result of the
intentional and negligent conduct of the neighboring contractor, a
third party. Therefore, the 'earth movement' exclusion does not
"The defendant argues that this distinction by plaintiff is without
merit because the earth did in fact move during excavation. The
defendant submits that the damages sustained to plaintiff's building
was caused by 'movement and shifting' of the earth which is clearly
excluded by the terms of the insurance policy. Additionally, the
defendant submits that the policy states that the exclusion applies
to losses involving earth movement resulting from 'man-made or
"The circumstances at bar are most exact to the circumstances before
the recent Second Department decision in Lee v. State Farm Fire &
Casualty, 32 AD3d 902. In Lee v. State Farm, the Second Department
found that the insured's loss was caused during excavation and
underpinning operations on the adjoining lot and therefore, did not
fall within policy's earth movement exclusion. Here, as in Lee, the
State Farm exclusion defined 'earth movement' as 'sinking, rising,
shifting, expanding, or contracting of earth, all whether combined
with water or not.' The Court in Lee v. State Farm distinguished the
Facts in Lee from prior precedent, to wit, Sheehan v. State Farm Fire
& Casualty Co., 239 AD2d 486, and Kula v. State Farm Fire & Casualty,
212 AD2d 16. The Court in Lee stated that in Sheehan, the same earth
movement exclusion involved a loss where the insured's house
collapsed as a result of the 'decomposing organic matter within the
ground underneath the foundation.' In Kula, the loss occurred when
a 'water pipe ruptured beneath their home.' The Court in Lee stated
that the Facts in Kula and Sheehan involved a 'sinking' of the
ground, whereby the Facts in Lee involved the physical removal of
earth by excavation from underneath the plaintiff's dwelling, and
therefore, the Court reasoned that plaintiff's loss did not fall
within the language of the exclusion which defined earth movement
as 'sinking, rising, shifting, expanding or contracting of earth.'"
"Likewise, here, the plaintiff's loss involved the physical removal
of earth from underneath the plaintiff's building during excavation
and underpinning operations on the adjoining lot, and therefore, the
plaintiff's loss does not fall within the 'earth movement' exclusion."
"In light of the foregoing, plaintiff's motion for summary judgment
against State Farm on the issue of liability for breach of contract
is granted. The defendant's cross-motion for summary judgment is
denied. The defendant's argument that the loss is excluded on the
settling and cracking exclusion, and/or the defective construction
exclusion, is unavailing."
"The parties shall proceed with discovery with respect to plaintiff's
Comment: I wrote an article on the "earth movement" exclusion which
was published in Claims magazine in April 2001. If anyone wants a
copy, write to me.
Larry Rogak's new book, Rogak's New York No-Fault Law & Practice, has made internet bookseller Amazon.com's list of "Best Selling New Releases." The book currently holds the rank of #2 (as of April 13). You can see the list at: http://www.amazon.com/gp/new-releases/books/10963
Readers have called Rogak's New York No-Fault Law & Practice "a great book," "very informative," and "very easy to read."
The book will be updated with a new edition annually. The 2008 edition will be released in January 2008.
Do you have your own copy yet?
PLAINTIFF FAILS TO ESTABLISH THAT BUS WAS DEFECTIVELY DESIGNED; NO
DUTY TO WARN OF OBVIOUS DANGERS
William R. O'Boy v. Motor Coach Industries, Inc., 2007 NY Slip Op
02912 (2d Dept 2007
In this personal injury action, plaintiff appealed from an order of
the Supreme Court, Orange County (McGuirk, J.) which granted the
motion of defendant Motor Coach Industries, Inc., for summary
judgment dismissing the complaint. The Appellate Division affirmed.
Plaintiff William R. O'Boy was injured when, during the course of his
duties as a corrections officer for the New York State Department of
Corrections, he hit his head on the rear access door of a prisoner
transportation bus as he entered the bus from outside. The bus was
manufactured by the defendant Motor Coach Industries, Inc.
"The Supreme Court properly granted that branch of Motor Coach's
motion which was for summary judgment dismissing the cause of action
alleging defective design. Motor Coach demonstrated its prima facie
entitlement to summary judgment on that cause of action by presenting
evidence that the rear guard station access system, as designed, was
"In opposition, the plaintiffs submitted the expert affidavit of a
licensed professional engineer. However, as Motor Coach correctly
argues, the plaintiffs' expert failed to establish that he was
qualified to render an opinion as to the alleged defective design of
the bus. An expert is qualified to proffer an opinion if he or she is
possessed of the requisite skill, training, education, knowledge or
experience from which it can be assumed that the information imparted
or the opinion rendered is reliable." (Matott v. Ward, 48 N.Y.2d 455,
459; Miele v. American Tobacco Co., 2 A.D.3d 799; Hoffman v. Toys "R"
Us, 272 A.D.2d 296). "Here, the expert failed to present evidence
that he had any practical experience with, or personal knowledge of,
the rear access system of a bus such as the one at issue here, nor
did the expert demonstrate such personal knowledge or experience with
bus design or manufacture in general. Accordingly, his affidavit was
insufficient to raise a triable issue of fact."
"In addition, the Supreme Court properly granted that branch of Motor
Coach's motion which was for summary judgment dismissing the cause of
action alleging failure to warn. There is no duty to warn of an open
and obvious danger of which the product user is actually aware or
should be aware as a result of ordinary observation or as a matter of
common sense. In opposition to Motor Coach's prima facie showing of
entitlement to judgment as a matter of law on this cause of action,
the plaintiff failed to raise a triable issue of fact."
Comment: I published this decision for two main reasons. First,
buses have always been a subject of great interest to me (as some of
you know, I own a retired transit bus which I use an an RV). And
second, I love this plaintiff's surname, "O'Boy."
DRIVEWAY GRAVEL IS AN OPEN AND OBVIOUS CONDITION, NOT ACTIONABLE
Espada v. Mid-Island Babe Ruth League Inc., NYLJ 4/17/07 (Index no.
102382/05) (Supreme Court, Richmond Co.) (McMahon, j)
On May 14, 2005, the plaintiff John Espada allegedly tripped on
gravel stones in the unpaved parking lot of the defendant Mid-Island
Babe Ruth League, Inc., located on Travis Avenue, between Victory
Boulevard and South Avenue, Staten Island, New York. In August, 2005,
the plaintiffs commenced this action, and issue was joined by service
of an answer by defendant. After discovery was complete, the
defendant moved for summary judgment dismissing the complaint.
The Court held, "Although a property owner has a duty to maintain its
property in a reasonably safe condition (see, Basso v. Miller, 40
N.Y.2d 233 ; Capozzi v. Huhn, 14 AD3d 474 [2d Dept. 2005]),
there is no duty to protect or warn against an open and obvious
condition which, as a matter of law, is not inherently dangerous
(Jang Hee Lee v. Sung Whun Oh, 3 A.D.3d 473 [2d Dept. 2004]; see,
Cupo v. Karfunkel, 1 A.D.3d 48 [2d Dept. 2003]). Here, the defendant
made a prima facie showing that the complained of condition, the
gravel parking lot, was not inherently dangerous and could have been
readily observed by the reasonable use of one's senses."
In opposition, the plaintiffs failed to raise a triable issue of
fact. Although the plaintiff testified at his deposition that the
slope in the parking lot leading to the baseball field caused his
fall, he also testified that he had previously observed the slope
having traversed the area without incident when he arrived to watch
his son's baseball game. Additionally, the affidavit of the expert
also failed to raise a triable issue of fact as to whether the slope
presented a dangerous condition."
The defendant's motion for summary judgment was granted and the
complaint was dismissed.
FAILURE OF PLAINTIFF'S DOCTOR TO EXPLAIN AWAY EARLIER, NEGATIVE
PHYSICAL EXAM RESULTS IN LOSS ON THRESHOLD ISSUE
Gibbs v. Rivera, 2007 NY Slip Op 50790(U) (Supreme Court, Kings
County) (Ruchelsman, J.)
This lawsuit commenced following an automobile accident which took
place on December 16, 2001 near the intersection of Boyland Street
and Lott Street in Kings County. A summons and complaint was filed
almost three years later on December 9, 2004 wherein plaintiff
alleged that he sustained various serious injuries. Defendant moved
for summary judgment based on the no-fault "serious injury"
"In this case," held the Court, "the defendant submitted objective
evidence that plaintiff did not suffer any serious injuries. On March
2, 2002 approximately three months after the accident plaintiff was
seen by a doctor at the request of defendant's No-Fault insurance
carrier. An orthopedic examination of plaintiff's cervical spine and
lumbar spine were conducted as well as an examination of plaintiff's
left knee. The doctor noted that no other medical reports were
submitted for his review. Following the examination the doctor
concluded that 'the claimant has no disability at this time. There
will be no permanence as a result of this accident. He is capable of
working and performing all of his normal activities of daily living
without any limitations.' The doctor further concluded that 'no
further orthopedic intervention is indicated, and as such any
treatment would be considered excessive.'"
"Likewise, Dr. Edward Toriello conducted an examination of the
plaintiff on July 11, 2006 a little over four and a half years after
the accident. Specifically, Dr. Toriello examined the cervical spine,
the right and left shoulder, the right and left elbow, the right and
left wrist and hand, the lumbosacral spine and the right and left
knee. Moreover, Dr. Toriello reviewed the medical reports of seven
different doctors including the doctor's report of March 2, 2002 as
well as an MRI report of the cervical spine concerning treatment of
plaintiff all conducted between December 27, 2001 and August 15,
2002. Dr. Toriello concluded that there was 'no evidence of
disability from any Orthopaedic injury sustained in the accident' and
any injuries to the back, shoulders and knees were all resolved.
Thus, those reports contain the results of numerous objective tests
performed on plaintiff with objective medical findings that plaintiff
did not suffer any physical injuries."
"In opposition the plaintiff submitted a medical report concerning an
examination conducted eleven days after the accident by Dr. William
Jen Tsai. The plaintiff also submitted reports conducted following
MRI's taken on January 7, 2002 and March 1, 2002. Based upon the
report and conclusions reached by Dr. Tsai the plaintiff began a
course of physical therapy which lasted several months. The plaintiff
could not conclusively state why he stopped receiving treatment but
intimated it was because his insurance would not longer be paying for
treatment or 'something like that'."
"The plaintiff did submit one additional report concerning a medical
examination conducted September 26, 2006. That examination was
conducted by the same doctor who had conducted the examination on
March 2, 2002 on behalf of plaintiff's No-Fault insurance carrier.
The doctor does not reference his own prior report and only mentions
the consultation conducted by Dr. Tsai on December 27, 2001, eleven
days after the accident. The report of the doctor, conducted
September 26, 2006 forms the basis of plaintiff's opposition since it
is a recent medical examination highlighting plaintiff's continual
injuries. However, such report is entirely insufficient to rase any
issue of fact. A careful examination of the two reports, conducted by
the same doctor within a span of four and one half years reveals
inconsistencies which make reliance on the reports impossible. For
example, in 2002 the doctor noted that the normal range of motion for
the flexion and extension of the cervical spine is 45 degrees which
were the ranges of motion of the plaintiff. Indeed, those ranges are
noted as reflecting the normal ranges for those tests (see, Frontera:
Essentials of Physical Medicine and Rehabilitation, 1st Edition
"However, in 2006 the same doctor indicated that the plaintiff
yielded a limited range of motion of 20 degrees concerning the
flexion of the cervical spine where the normal is 60 degrees and a
limited range of motion of extension of 20 degrees where the normal
is 50 degrees. While the plaintiff attempts to explain the
discrepancy, which will be addressed shortly, there can be no
explanation for the manipulation of the normal ranges of motion for
the bending and stretching of the human body. Indeed, the insistence
that normal ranges of motion be included within reports of doctors in
serious injury cases is precisely because otherwise the court is left
to speculate as to the meaning of the figures presented. Thus,
accurate 'comparative quantification' is vital to determine whether
the injuries are indeed 'serious' and adjusting the 'normal' range of
motion merely seeks to erode the court's function."
"To be sure, there may be differing medical opinions as to the
precise definition of 'normal' and there might exist a medical
consensus that the 'normal' range of motion is actually a fluid range
which cannot be pigeonholed to one specific degree of limitation,
however, if that were true the doctor would have been required to
mention it within his report."
"This brings the court to the next issue, namely the fact the
inconsistencies between the same doctor raise issues of fact
requiring a denial of summary judgement. The plaintiff concedes that
the doctor examined plaintiff on March 2, 2002 and found no
disability and that upon an examination on September 26, 2006 the
same doctor did find disability. The plaintiff argues that 'it is
logical that while plaintiff was still treating in 2002, that he
would be in better condition than... he would be in five years
following the accident. Once a plaintiff stops treatment and returns
to their normal life again, they are likely to experience more pain
and limitations then when they are treating and taking easy [sic]
immediately following the accident'. While that statement might be
true, as noted above, it is a medical determination which could only
be made by a medical professional. If the doctor believed that the
plaintiff's condition grew worse over the years and his conclusion in
2002 that 'the claimant has no disability at this time. There will be
no permanence as a result of this accident. He is capable of working
and performing all of his normal activities of daily living without
any limitations' was erroneous then he was obligated to explain the
change in prognosis."
"However, on September 26, 2006 the doctor does not reference his
four year old examination of plaintiff or the conclusions he reached
then. He merely references one prior examination, conducted by Dr.
Jen Tsai on December 27, 2001 and notes that based upon that
examination the plaintiff's prognosis was 'guarded' and he further
references MRI scans conducted January 7, 2002 and March 1, 2002. The
doctor nevertheless conducted examinations of the cervical and lumbar
spine and as noted above concluded that plaintiff suffered limited
ranges of motion and noted that he 'continued to experience residual
effects from the traumatic accident'. Moreover, entirely contrary to
the report four years earlier he concludes that regarding the
cervical spine 'plaintiff will continue to suffer from limitation of
range of motion and spasm of the paraspinal muscles. Physical therapy
treatment is necessary to ensure maximum health. As to the lumbar
spine, patient will continue to experience limited range of motion at
forward bending and limitation of the right lower extremity.
Intensive physical therapy treatment is essential'."
"The doctor ultimately concludes that 'it is my professional opinion
that Terrence Gibbs has suffered a permanent, significant and severe
injury to the cervical spine and lumbar spine as a result of the
motor vehicle accident of December 16, 2001'. It is obvious that this
conclusion stands in stark contrast to the conclusion reached less
than three months after the accident by the same doctor that 'there
will be no permanency as a result of the accident' and 'there is no
need for additional physical therapy, diagnostic testing, medical
supplies, household help, special transportation, acupuncture
treatment, or massage therapy'. Equally troubling is the complete
absence of any reference to the earlier examination and some medical
attempt to explain it away or at least provide some medical reason
why there exists a question of fact. The complete failure to address
the earlier report at all demonstrates the current report was merely
tailored to satisfy the statutory requirements and is entirely
insufficient to create any question of fact. Of course, both reports
of the doctor cannot be utilized by the court in any manner
whatsoever, given the inconsistencies and lack of explanation, thus,
the plaintiff has failed to adequately oppose the motion for summary
judgement. It is generally true that a defendant must present some
evidence of lack of serious injury or the motion for summary
judgement must be denied without reference to plaintiff's papers."
"In this case the defendant, as noted, has submitted the report of
Dr. Edward Toriello concerning recent medical examinations conducted
which all indicate that the plaintiff did not suffer any serious
injury. Therefore, the plaintiff has failed to raise a triable issue
of fact and consequently the motion for summary judgement seeking to
dismiss the case is granted."
Buy my new book, ROGAK'S NEW YORK NO-FAULT LAW AND PRACTICE. Listed
as a "hot new release" by Amazon.com. Click here to purchase:
IN LATE NOTICE SITUATION, INSURER GETS TIME TO CONDUCT INVESTIGATION
TO DETERMINE WHETHER LATE NOTICE IS EXCUSABLE
Ace Packing Co., Inc. v. Campbell Solberg Assoc.'s Inc. et al., (NYLJ
4/19/07) (1st Dept 2007)
This was an appeal from an order of the Supreme Court, New York
County which declared that defendant Utica First was obligated to
defend and indemnify plaintiff in the underlying action.
Defendant-insurer Utica First disclaimed coverage, claiming that
plaintiff-insured failed to satisfy the requirements of the governing
insurance policy by providing timely notice of the claim to the
insurer. Supreme Court found that the insurer's disclaimer was
untimely as a matter of law, concluding that the grounds for
disclaiming were readily apparent to the insurer based upon the
documents submitted, and thus the insurer had no need to investigate
the insured's delay in providing notice of the claim. "The court's
conclusion that there was no need for the insurer to conduct an
investigation before determining whether to disclaim, and that the 38-
day delay - which was in large measure not of the insurer's making -
was unreasonable as a matter of law, must be reversed," held the
"Without question, an insurer is obligated, under Insurance Law §3420
(d) to disclaim coverage without delay when the grounds for
disclaiming are readily apparent based upon the documents delivered
to the insurer. Citing prior cases from this Court (2833 Third Ave.
Realty Assoc. v. Marcus, 12 AD3d 329 ; West 16th St. Tenants
Corp. v. Public Serv. Mut. Ins. Co., 290 AD2d 278 , lv denied
98 NY2d 605 ), plaintiff suggests that when an insurer
disclaims solely upon an insured's failure to provide timely notice
of an underlying claim, the insurer is required to disclaim
immediately upon learning of the delay, and that any attempt by the
insurer to investigate the circumstances behind the delay is
unnecessary and unreasonable as a matter of law. In my view, such a
position carries with it draconian, and I believe unintended,
"Here, the issue could not be more clearly drawn: did the insurer
need to investigate to determine if in fact it had the right under
its policy to disclaim any liability when it first learned of the
accident and the subsequent litigation?"
"The Facts as they relate to this issue are not in dispute. The
underlying accident occurred on December 19, 2001. The first notice
plaintiff had that a lawsuit would be commenced came in the form of a
notice of claim it received from an attorney on December 6, 2002.
Another notice followed on January 24, 2003, and shortly thereafter,
plaintiff received a copy of the verified complaint filed in the
underlying personal injury action. All of these documents were
forwarded at some point to a representative of Campbell Solberg.1 The
insurer was not notified about either the accident or the underlying
claim until June 7, 2004. Upon receiving that notification, the
insurer immediately retained an adjuster to investigate the claim,
and more importantly, the issue regarding late notice. The adjuster
sought to interview plaintiff [the insured] about the circumstances
surrounding the accident and what plaintiff did when it first
received notice of the claim and the resulting lawsuit. Plaintiff
refused to cooperate with the adjuster and persisted in that refusal
for 30 days.2 Only after being reminded of its obligation under the
policy to cooperate in such an inquiry did it relent, and on July 7,
2004, for the first time, plaintiff provided crucial information to
the adjuster regarding the accident and what it did when it learned
of the lawsuit. Upon receipt of this information, the adjuster
promptly completed its investigation, and eight days later filed its
final report with the insurer with appropriate findings. On that same
date, July 15, 2004, the insurer notified plaintiff in writing that
it was disclaiming any obligation under the policy to provide
"The timeliness of an insurer's disclaimer is measured from the date
it first receives information that would disqualify the claim (Matter
of Allcity Ins. Co. v. Jimenez, 78 NY2d 1054 ). Here, the
operative date is June 7, 2004, and the questions that must be asked
are: (1) what did the insurer know on that date about the accident
and the resulting claim, and (2) did that information make it readily
apparent at that time that it had the right to disclaim coverage
under the policy?"
"On June 7, 2004, the insurer knew that an accident had occurred and
that a year later a lawsuit was commenced. It did not know on that
date when plaintiff first learned of either the accident or the
lawsuit, Facts essential to the insurer in determining whether to
disclaim. More importantly, it did not know what plaintiff did with
that information when it was received, and could not have known if
plaintiff would subsequently claim that it had ever notified the
insurer about either event. Only an investigation of the type ordered
by the insurer would yield answers to those questions, answers which
the insurer needed in order to make a good faith decision regarding
disclaimer.3 The fact that this inquiry took 38 instead of 8 days to
complete was due entirely to plaintiff's refusal to cooperate with
the adjuster in its investigation (see Farmbrew Realty Corp. v. Tower
Ins. Co. of N.Y., 289 AD2d 284 , lv denied 98 NY2d 601 ;
Norfolk & Dedham Mut. Fire Ins. Co. v. Petrizzi, 121 AD2d 276 ,
lv denied 68 NY2d 611 )."
"In short, merely because the insurer knew on June 7, 2004 that the
claim involved an accident that occurred on December 19, 2001 did not
make it 'readily apparent' that it had the right to disclaim
coverage. It needed to know more, and its investigation provided the
additional information that was required for the insurer in good
faith to disclaim coverage under this policy. Furthermore, the
insurer's decision to conduct an investigation on those Facts was
imminently reasonable, and no one involved in this litigation has
claimed that it did so to gain a tactical advantage or had in any way
acted in bad faith. In fact, if any party to this transaction was
guilty of unreasonable conduct, it was the insured; its refusal to
honor its contractual obligation and cooperate in the adjuster's
inquiry was the primary reason why it took more than a month to
complete this investigation."
"Finally, the position advocated by plaintiff would simply invite
insurers to adopt a policy to 'disclaim now and investigate later.'
Such an approach cannot be said to be in anyone's interest, and if
implemented would only serve to promote uncertainty and anxiety
Plaintiff's [insured's] motion and defendant Campbell Solberg's cross
motion for summary judgment were denied in their entirety, and the
proceeding "remanded to Supreme Court for a de novo determination of
defendant Utica's motion for summary judgment, and otherwise
affirmed, without costs."
1. Campbell Solberg is an independent broker that placed plaintiff's
liability policy with the insurer. All agree that Campbell is not the
insurer's agent (see generally Brown v. Poritzky, 30 NY2d 289
2. Plaintiff refused to sign a form agreeing that the insurer, by
conducting this investigation, was not waiving any rights it might
otherwise have with regard to its legal obligation to provide
coverage under the policy.
3. The adjuster, in its report, informed the insurer that plaintiff
knew of the accident at or about the time it happened, but did not
report it because the party involved did not appear to be injured.
Only a year later, when it received letters from the party's attorney
notifying it that a claim would be made, did plaintiff contact its
insurance broker, an employee of Campbell. Plaintiff never notified
the insurer or its designated agent about either the claim or the
Comment: For insurers concerned about timely disclaimers in late
notice situations, this is an extremely important decision. It gives
them the opportunity to investigate the circumstances of what the
insured knew, and when they knew it, rather than requiring insurers
to issue a knee-jerk disclaimer based solely on the date of the first
loss report compared to the date of accident.
COVERAGE VALIDLY EXCLUDED FOR SPOUSE'S VEHICLE WHICH HAS ITS OWN
Braun v. One Beacon Ins. Co., NYLJ 4/23/07 (Index no. 40626/04)
(Supreme Court, Kings Co.) (Schmidt, j)
Defendant One Beacon Insurance Company ("One Beacon") moved for
summary judgment dismissing plaintiffs' complaint and declaring that
Annette Braun is not entitled to coverage under the policy of
insurance issued by One Beacon to her husband Isidore Braun in
connection with an underlying action.
One Beacon issued Isidore Braun an automobile liability insurance
policy which became effective November 10, 2003. On May 28, 2004,
Joseph Perl was struck and injured by a 1987 Ford owned and driven by
Isidore's wife, Annette Braun. Perl's attorney subsequently notified
One Beacon about the accident by letter dated July 7, 2004, who
responded by letter that since its "named insured Isidore Braun was
not involved in the accident, there was no coverage for Perl's
OneBeacon also issued simultaneously a "Denial of Claim" form
indicating that Annette Braun's 1987 Ford was separately insured by
AIU Insurance Company (AIU) and providing AIU's contact information.
One Beacon also notified Isidore Braun by letter dated July 8, 2004,
stating that the Ford was "not shown as being insured" under the
policy, and it included copies of the letters sent to Perl's
In August 2004, AIU tendered its coverage limit to Perl's attorney in
connection with Perl's claims. By letter dated August 31, 2004, AIU
notified One Beacon that Perl's attorney had rejected its settlement
offer and that he was planning to seek "excess coverage" from the One
Beacon policy. By letter dated September 16, 2004, One Beacon issued
a formal disclaimer to Perl's attorney denying coverage on the ground
that Annette Braun's Ford was not a "covered auto" under Isidore
Braun's insurance policy.
In moving for summary judgment, One Beacon contended that the
policy's exclusion for the use of a car which is not a "covered auto"
is fully enforceable against the wife of the "named insured" when she
is involved in an accident while driving her own, separately insured
vehicle. It argues that she is not "covered" as an insured under the
policy since she was operating her own vehicle which was not
identified in the "declarations" of the policy, was not
a "replacement" vehicle, and was not a "temporary substitute."
In addition, One Beacon maintained that it issued two disclaimers
with this same basis for denial of coverage, and accordingly,
the "second" disclaimer is as enforceable as the first disclaimer. In
any event, One Beacon argued that Perl's potential claim against it
as an "excess" insurer was a new fact that emerged by virtue of AIU's
August 31, 2004 letter to it, and One Beacon promptly disclaimed
excess coverage after it was notified regarding the potential excess
Plaintiffs opposed defendant's motion, contending that its July 12,
2004 letter to Perl's attorney failed to raise its coverage defense
that the vehicle involved in the accident was not a covered auto
under the policy, and therefore One Beacon waived such defense.
Plaintiffs asserted that One Beacon's September 16, 2004 letter
provided an untimely and unreasonable disclaimer of coverage based
upon policy exclusions since the date was 71 days after it first
received notice of the claim. Accordingly, plaintiff asserted that
the disclaimer was ineffective and waived all the grounds contained
in the policy exclusions that it sought to raise in the letter. They
contended that One Beacon had all the information necessary to issue
a formal disclaimer as of July 12, 2004, when it issued it's denial
of claim, citing to defendant's case file containing (1) a July 8,
2004 notation referring to "the alleged driver Anette Braun," and (2)
a July 12, 2004 notation referring to Isidore Braun's phone call to
One Beacon regarding his wife Annette Braun's involvement in the
accident. Plaintiffs argue that because One Beacon had notice that
the accident involved a car driven by Annette Braun, it could infer
that she was either the spouse of Isidore Braun, its insured, or a
In reply, One Beacon argued that it preserved its coverage defense
via correspondence dated July 8, 2004, issued on the same date, and
for the same reason, as its denial of the potential no-fault claim.
It further maintains that the fact that the defense was not raised in
a letter issued four days later does not mean that such defense was
not preserved. According to defendant, its September 16th
correspondence disclaiming excess coverage confirmed that the grounds
raised on July 8 were as applicable to a denial for excess coverage
as they were to the denial for primary coverage.
The Court held, first, that "Although an insurer's duty is to defend
its insured whenever the allegations within the underlying
complaint 'potentially give rise to a covered claim' (Frontier
Insulation Contractors, Inc. v. Merchants Mutual Ins. Co., 91 NY2d
169 ), an insurer may be relieved of the duty to defend on the
basis of a policy exclusion. The insurer 'bears the heavy burden of
demonstrating that the allegations of the complaint cast the
pleadings wholly within that exclusion, that the exclusion is subject
to no other reasonable interpretation, and that there is no possible
factual or legal basis upon which the insurer may eventually be held
obligated to indemnify the insured under the policy provision.'"
"The court grants One Beacon's motion for summary judgment declaring
that Annette Braun is not entitled to coverage under the policy of
insurance issued by it. Although Annette Braun is an 'insured' under
the policy, she was operating her own vehicle, which does not qualify
for coverage, even where an insured is driving it. The policy clearly
and unambiguously excludes Annette Braun's vehicle from liability
coverage under the policy in these circumstances, and to hold
otherwise would be to create additional coverage beyond that which
was bought and paid for under the insurance policy."
"Moreover, contrary to plaintiff's contention, the court finds that
defendant's correspondence constituted a timely disclaimer of
coverage, and that defendant did not waive its coverage defense.
OneBeacon's correspondence, which included a denial of claim form,
promptly apprised the insured that there was no primary coverage
available under its policy because the car involved in the accident
was not a covered auto. Under the circumstances, the disclaimer was
given as soon as reasonably possible after 'it learned of the grounds
for disclaimer of liability or denial of coverage'. The defendant's
subsequent (formal) disclaimer of excess coverage was also given
within a reasonable time, since it was promptly given after AIU
advised it that Perl was seeking such coverage. Lastly, defendant's
disclaimer of both primary and excess coverage remained the same
grounds, that Annette Braun was operating her own vehicle which
didn't qualify for coverage. In the absence of any triable issue of
fact as to the applicability of the insurance policy exclusion,
summary judgment is awarded to One Beacon and the complaint is
"The foregoing constitutes the decision, order and judgment of the
LOSS OF TWO-THIRDS OF INDEX FINGER QUALIFIES AS "GRAVE INJURY," SAYS
Castillo v. 711 Group, Inc. et al., NYLJ 4/24/07 (2d Dept 2007)
The third-party defendant in this personal injury action -- the main
plaintiff's employer -- appealed from an order denying its motion for
summary judgment dismissing the third party complaint on the grounds
that the main plaintiff did not suffer a "grave injury" in his work-
related accident and therefore the main defendant was barred by the
Workers Compensation Law from impleading plaintiff's employer.
At issue here is whether the plaintiff's injury constituted a grave
injury as defined in Workers' Compensation Law §11 under the
category "loss of an index finger."
In August 2002, the plaintiff "sustained a traumatic amputation of
his left index finger" while using a table saw at a construction site
located at premises owned by the defendant 711 Group Inc. In this
action by the plaintiff against 711 Group to recover damages for his
personal injuries, 711 Group commenced a third-party action against
the plaintiff's employer, 3-D Laboratory, Inc., for common-law
indemnification. After issue was joined in the third-party action,
the third-party defendant moved for summary judgment alleging that
the plaintiff did not suffer a "grave injury" pursuant to Workers'
Compensation Law §11.
In support of its motion for summary judgment, the third-party
defendant submitted the plaintiff's medical records which stated that
the amputation extended "through the proximal interphalangeal joint."
The closest remaining joint is the metacarpophalangeal joint in the
hand. The wound healed, leaving a "painful amputation stump"
requiring two corrective surgeries. In the first surgery, the digital
nerve was allowed to retract into the palm of the hand and nerve
tissue was removed. The second surgery involved dissection and
transection of nerve tissue.
The plaintiff's unrefuted deposition testimony was that he asked
doctors treating his injury to reattach the finger, but the doctors
refused on the ground that where he "had been cut, there was a lot of
crossing of nerves," and if the finger was reattached "it was going
to be stiff, straight and without any feeling." In the opinion of a
physician retained by the defendant third-party plaintiff, the
plaintiff suffered "100 percent loss of function of [the plaintiff's]
left index finger."
In the order appealed from, the third-party defendant's motion for
summary judgment was "denied in all respects," citing the opinion of
711 Group's physician that the plaintiff suffered a 100 percent loss
of function of the left index finger.
The enumerated grave injury in issue is "loss of an index finger"
(Workers' Compensation Law §11). Whether the plaintiff suffered
a "loss of use" of his index finger is not one of the statutory
criteria (see Castro v. United Container Mach. Group, 96 NY2d 398,
The third-party defendant contends that since the plaintiff retains
a "painful left index finger amputation stump" which required two
surgeries to desensitize, he "sustained a partial, rather than a
full" loss of index finger, citing Castro v. United Container Mach.
The Second Department said, "We disagree."
"By chapter 635 of the Laws of 1996, Workers' Compensation Law §11
was amended to limit a tortfeasor's right to common-law indemnity or
contribution against the plaintiff's employer in a personal injury
action to cases where the the plaintiff seeks relief for a
statutorily denominated and enumerated 'grave injury' (1996 Legis Ann
460). The enumerated grave injuries were deliberately both narrowly
and completely described. The list is exhaustive, not illustrative."
"The Court of Appeals stated that that statutory language should
be 'sensibly' read 'without resort to forced or unnatural
interpretations' (Castro v. United Container Mach. Group, supra at
401). Further, in interpreting the statutory language, the 'guiding
principle is, of course, to implement the intent of the Legislature -
in this case to narrow tort exposure for employers while also
protecting the interest of injured workers - by considering both the
language used and objects to be accomplished' (Rubeis v. Aqua Club,
Inc., 3 NY3d 408, 417)."
"Unfortunately, the statutory language contains no definitional
provisions. The definitions set forth in Workers' Compensation Law
§15 are not applicable (see Castro v. United Container Mach. Group,
supra at 401, n 2)."
"The index finger consists of three phalanges: the proximal phalanx
closest to the hand and the middle and distal phalanges. The joint
between the proximal and middle phalanges is called the proximal
interphalangeal or 'PIP' joint, and the joint between the middle and
distal phalanges is called the distal interphalangeal or 'DIP' joint
(see Stedman's Medical Dictionary 1176 [25th Ed 1990])."
"Consistent with the analysis that the words should be afforded their
plain meaning, the Court of Appeals found that '[a]s a matter of
standard English usage, the word 'finger' means the whole finger, not
just its tip' (Castro v. United Container Mach. Group, supra at 401;
see Meis Trust v. ELO Org., 97 NY2d 714). However, the question here
is whether the loss of both interphalangeal joints and the PIP joint,
leaving a 'painful amputation stump' constitutes loss of the finger."
"This court has held that loss of half the index finger is
insufficient to establish 'grave injury' (see Blackburn v. Wysong &
Miles Co., 11 AD3d 421). In that case, the plaintiff's index finger
was amputated at the base of the middle phalanx, leaving him with a
proximal interphalangeal joint. Similarly, in Mentesana v. Bernard
Janowitz Constr. Corp. (36 AD3d 769), this court held that a partial
amputation of the index finger to the level of the proximal
interphalangeal joint did not constitute loss of the index finger."
"In the instant case, the plaintiff has lost both interphalangeal
joints of the index finger. In view of the foregoing, it is our
determination that the plaintiff has suffered the loss of his index
"This interpretation is consistent with definitions in other
jurisdictions which define loss of finger strictly as the loss of
more than two phalanges (see Code of Alabama §25-5-57[a];
Kansas Stat Ann §44-510d[a]; Ohio Revised Code §4123.57[B];
Louisiana Rev Stat §23:1221[l]), as distinguished from the more
liberal definition of loss of finger as loss of more than one
phalange (see e.g. 33 USC §908[c]; Workers' Compensation Law §15
[n]). The third-party defendant's contention that the 'painful
amputation stump' that remains precludes a finding that the plaintiff
has suffered a loss of his index finger constitutes a forced and
unnatural interpretation of the statutory language. The existence of
the 'painful amputation stump' underscores the seriousness of the
plaintiff's disability (see Thibldeaux v. W. Horace Williams Co., 14
So2d 320 [La][loss of index finger leaving 'painful amputation stump'
constitutes total disability])."
"Thus, the order is affirmed, and upon searching the record, the
plaintiff and 711 Group are awarded partial summary judgment on the
issue of whether the plaintiff suffered a grave injury."
Comment: Well, the plaintiff lost a finger, and the Second Department
gave the finger to the employer. In a manner of speaking.
New Book: "California Claims Regulations"
Durham, North Carolina -- April 24, 2007 -- Carolina Academic
Press, announces the publication of an essential book for insurers who do
insurance business in the state of California. California compels all who
are involved in the claims process even if only tangentially to be
trained with regard to, and comply with, the Fair Claims Practices
Regulations (Regulations) and the Integral Anti-Fraud Personnel
Regulations (SIU Regulations). The book should be used by insurers to
effect compliance with the Regulations when training or assisting claims
personnel. Those insurance people who are engaged in any way in the
presentation, processing or negotiation of insurance claims in the state
of California are required to be familiar with Regulations imposed by the
state of California.
The Appendices include an outline for an insurance company staff member,
trainer, or lawyer to use in providing a training class to all of the
insurers integral anti-fraud personnel. Zalma provides insurers, and
their staffs, the information needed to comply with the SIU Regulations
and to offer the required training.
The book was written by Barry Zalma, Esq., CFE, a California insurance
coverage attorney and an internationally recognized expert on insurance
claims handling, insurance coverage, insurance bad faith and insurance
fraud. A copy of the table of contents and introductory materials
is available at
The book is available for only $50.00 from Carolina Academic Press,
700 Kent Street,
Durham, NC 27701 or can be ordered directly from
http://www.cap-press.com/books/1689, Phone: (919) 489-7486,
Fax: (919) 493-5668 and web@....
And while you've got your credit card out, buy
ROGAK'S NEW YORK NO-FAULT LAW AND PRACTICE
Two new decisions today illustrate how a purported settlement of a
civil case can be vacated and/or declared unenforceable because they
were not done correctly.
INFORMAL EMAILS DO NOT MAKE AN ENFORCEABLE SETTLEMENT
First, we have Weldon v. 210 East 73rd Owners Corp., NYLJ 4/26/07
(Index no. 107301/06, Supreme Court, New York Co.) (Stallman, j).
The defendant cooperative corporation moved for an order confirming
and enforcing what an alleged settlement agreement.
"This motion highlights a recurrent litigation issue," wrote the
court, "What is the legal consequence of an exchange of e-mails
between litigants? Although e-mails might best be viewed simply as
correspondence in a different form, transmitted by a new medium, the
prevalent informality and brevity of e-mail style and the speed of
transmission - frequently without reflection time - can cause
ambiguity and uncertainty in the litigation context."
"Movant alleges that the attorneys' exchange of e-mails constitutes
an enforceable settlement agreement. It does not. The initiatory e-
mail contains a summary or outline of a settlement proposal and
requests 'Please confirm, without prejudice, that the following is
the settlement proposal:' The simple one-line response was 'Confirmed
without prejudice.' Thus, at most, the two parties agreed that what
was contained in the first e-mail, was the 'proposal.'"
"There is no language in either e-mail evincing an intent or mutual
understanding that the first e-mail was a final settlement offer
capable of acceptance or that the first, upon acceptance, would be
viewed as a complete, final contract. Indeed, the use of the
word 'proposal,' and the request to confirm the proposal, indicated a
prudent, lawyerly attempt on both sides to confirm the substance of
what was 'on the table' before the final stipulation or agreement
could be drafted and exchanged for the customary vetting, revision
"Moreover, the subject e-mail exchange does not conform to the
requirements of CPLR 2104, for a stipulation of settlement capable of
enforcement. It was not made in open court. Alternatively, it is not
a subscribed writing. It was not signed by the clients or the
attorneys. Under the circumstances presented, despite movants'
contention that the e-mails contained electronic signatures
(something that need not be ruled on here), the e-mail exchange
constitutes neither an enforceable contract nor a stipulation within
the requirements or contemplation of CPLR 2104. The motion is
SETTLEMENT MADE WITHOUT PLAINTIFF PRESENTED IS VACATED: PLAINTIFF
CLAIMS HE NEVER GAVE HIS ATTORNEY AUTHORITY TO SETTLE
O'Connell v. Paris Maintenance Co. Inc., NYLJ 4/26/07 (Index no.
34556/2002, Supreme Court, Kings Co.) (Kurtz, j). Plaintiff moved
for an order vacating the settlement of this action and restoring the
case to the trial calendar. Defendant cross-moved for summary
judgment on the ground that the parties entered into a binding
On September 3, 1999, plaintiff allegedly slipped and fell in a
bathroom "which defendant was responsible for cleaning and
maintaining." On November 22, 2004, plaintiff's counsel and
defendant's counsel appeared for a mediation and the attorneys
entered into a "binding agreement" whereby plaintiff purportedly
agreed to settle this matter for $150,000.00, subject to an agreement
by the Worker's Compensation carrier to reduce its lien. Thereafter,
plaintiff discharged his attorney and hired new counsel, "allegedly
because plaintiff did not authorize his attorney to attend the
mediation or settle the matter."
Shortly after being retained, plaintiff's new attorney informed
defendant's attorney that plaintiff did not intend to honor the
settlement agreement. In the meantime, defendant's pending motion for
summary judgment was adjourned several times until it was
finally "marked-off" on February 4, 2005. On or about November 28,
2005, defendant's attorney obtained an Order to Show Cause to enforce
the settlement. On December 15, 2005, the Court (Hurkin-Torres, J.)
marked the motion "off-calendar" determining that it was moot and
advising plaintiff's counsel to initiate the instant motion.
"Plaintiff argues that the settlement is not binding because
plaintiff had filed for bankruptcy prior to the mediation and a
trustee was appointed in the bankruptcy proceeding. Once the petition
was filed, only the trustee in bankruptcy had the actual authority to
settle a personal injury action and execute a release. See 11 USCA
§541(a) (1), §542(c); Jones v. Harrell 858 F2d 667 (11th Cir 1988).
Defendant does not dispute the fact that plaintiff filed for
bankruptcy. However, defendant contends that it did not know that
plaintiff filed for bankruptcy at the time of the mediation and
settlement. It first learned of the bankruptcy proceeding sometime
after February 4, 2005. Defendant argues that plaintiff's attorney
had apparent authority to settle the case. Therefore, the settlement
should not be vacated."
"An attorney derives authority to manage the conduct of litigation on
behalf of a client from the nature of the attorney-client
relationship itself. See Hallock v. State, 64 NY2d 224, 230 (1984).
However, without a grant of actual authority from the client, an
attorney cannot compromise or settle a claim and settlements
negotiated by attorneys without authority from their clients have not
been binding. See Id.; Dayho Motel v. Assessor of Town of Orangetown,
229 AD2d 435 (2d Dept 1996); Melstein v. Schmid Laboratories, Inc.,
116 AD2d 632 (2d Dept 1986). An attorney does not derive this power
by virtue of his general retainer to compromise and settle his
client's claim. See Nash v. Y and T Distributors, 207 AD2d 779, 780
(2d Dept 1994)."
"A party who relies on the authority of an attorney to settle an
action in his client's absence deals with such an attorney at his own
peril. See Slavin v. Polyak, 99 AD2d 466 (2d Dept 1984); Melstein v.
Schmid Laboratories, Inc. 116 AD2d at 634. If the settlement is
thereafter challenged, the relying party has the burden of
establishing that the attorney's actions were, in fact, authorized.
See Id.; Silver v. Parkdale Bake Shop, Inc., 8 AD2d 607 (1st Dept
1959). Essential to the creation of apparent authority are 'words or
conduct of the principal, communicated to a third party, that give
rise to the appearance and belief that the agent possesses authority
to enter into a transaction.' The existence of apparent authority
depends upon a factual showing that the third party relied upon the
misrepresentation of the agent because of some misleading conduct on
the part of the principal-not the agent. Therefore, in order for
defendant to have reasonably relied upon an appearance of plaintiff's
attorney's authority to settle this case at mediation, defendant
would need to establish that the conduct of plaintiff himself created
the apparent authority."
"Defendant claims that at the mediation, plaintiff's prior attorney
represented to Honorable Herbert J. Dillon that he was attending the
mediation with his client's knowledge and consent. Additionally,
plaintiff's attorney represented that he was authorized to enter into
a binding settlement agreement. Defendant maintains that both parties
entered into a post-mediation agreement. However, the agreement is
signed by plaintiff's attorney and not plaintiff himself. It is clear
that plaintiff's attorney cannot, by his own acts or representation
of authority 'imbue himself with apparent authority.' Moreover,
defendant never alleges any communication by the plaintiff himself
which gave rise to the appearance of authority to settle this case.
Therefore, defendant did not meet his burden. Accordingly,
plaintiff's motion is granted and this case is restored to the trial
Comment: A word to the wise, then: when settling, make sure that (a)
the parties themselves are either present, or sign off on the
settlement; and (b) make sure the settlement terms are reduced to a
signed document. Otherwise you may find yourself re-litigating a
case you thought was closed, which is as annoying as a mosquito in
your ear when you're trying to sleep.
Citing Fraud, Judge Tosses Case After Video Shows 'Paralyzed' Woman
by Daniel Ostrovsky
Daily Business Review
April 26, 2007
(reprinted from www.law.com)
Miami-Dade Circuit Judge Gisela Cardonne Ely was shocked. She had
just watched a videotape of a medical malpractice plaintiff, who
claimed in 2004 that she was permanently paralyzed, walking down the
street with the use of a cane in 2005.
"This is the worst case of misrepresentation, of outright fraud, that
I have ever had in 22 years," Cardonne Ely said during a March 15
hearing in the case of Wanda Davis-Johnson. "I'm telling you, Mrs.
Davis, I'm looking at you in the eyes. I am dismissing your case. I
have seen enough. ... I'm making a specific finding that there was a
scheme to defraud the court."
Lawyers on both sides are facing ethical questions about their own
conduct in the case, though both sides say no Florida Bar complaints
have been filed.
Davis-Johnson's lawyer, John K. Lawlor of Fort Lauderdale, Fla., had
moved last year to add an unusual punitive damages count to the
malpractice case, on the grounds that the negligent actions allegedly
committed by Mercy Hospital, its doctors and other defendants were so
He and his firm, Lawlor Winston & Justice, now say their client
deceived them. They have asked for and received an opinion from the
Bar on how to proceed. Lawlor said the opinion indicated to him he
should continue to represent his client in the case.
"She committed fraud on the court," Lawlor said in an interview. "She
committed fraud on me. She committed fraud on my firm, on the
doctors. She committed fraud on just about everybody except the
defense lawyers." His firm, he said, had spent "well into the six
figures" on the case.
Davis-Johnson declined comment.
Lawlor is also asking why the defense firm, Wolpe Leibowitz Alvarez &
Fernandez in Miami, which represented defendant Mercy Hospital in
Miami, waited until January to disclose the surveillance footage of
Davis-Johnson that it had obtained in April 2005.
"If they had shown that videotape to us, we wouldn't have spent
another 21 months of litigation time, cost, stress to the doctors
involved and waste of the court's time," Lawlor said. "I don't have
any clue what they were thinking or why anybody would go forward
other than to try to set a trap for my law firm."
Defense attorney Mark A. Leibowitz said he didn't reveal the
surveillance video sooner because he had to make sure he could prove
that Davis-Johnson was committing a fraud on the court before making
such accusations in court.
Prominent litigator Barry Richard, who is not involved in the case,
said that in most circumstances the defense lawyers do not have an
obligation to turn over the surveillance footage as soon as they
become aware of the footage.
"If they got the tapes later, then they don't have any obligation to
turn them over and it's a strategic decision," Richard
said. "Sometimes you hold something and you don't disclose it till
trial and that's part of trial strategy."
Richard, a shareholder with Greenberg Traurig, also said defense
lawyers can ask for sanctions and attorney fees if they feel that the
plaintiff lawyers continued forward with the case unnecessarily after
it was clear that their client was committing fraud.
TIP FROM SISTER-IN-LAW
In 2004, Davis-Johnson sued Mercy Hospital, its doctors and other
physicians for $3 million, alleging that an improper delay in
diagnosis and treatment of her spinal abscess led to her paralysis.
In February 2005, Davis-Johnson testified in a sworn deposition that
she was unable to walk, stand or transfer herself from a bed to a
chair. She repeated those claims in sworn deposition last September.
The defense lawyers hired a private investigator to conduct
surveillance on Davis-Johnson.
In April 2005, the investigator shot a video of Davis-Johnson walking
down the street with her husband, with the use of a cane, on two
Defense attorney Leibowitz said he decided the case was fraudulent
last September, after he deposed Davis-Johnson a second time and gave
her a chance to set a record straight about her condition. Davis-
Johnson again said she could not walk or stand at all.
Leibowitz said he became even more confident that Davis-Johnson was
committing fraud last November, when he got an unsolicited call from
Ethel Perry, Davis-Johnson's sister-in-law.
He said Perry told him that Davis-Johnson was lying about her
condition and that she could walk. It was during Perry's January 2007
deposition that Leibowitz first disclosed the surveillance footage to
According to Leibowitz, the plaintiffs lawyers were shocked when they
saw the video of Davis-Johnson walking. "I got a sense that this guy
was about to faint because this was a big case," Leibowitz said about
opposing counsel's reaction.
Leibowitz said he waited to disclose the video because the standard
for dismissing a case based on fraud is high.
If he had disclosed the existence of the video as soon as he obtained
it, he said, Davis-Johnson could have claimed that she made a mistake
in her deposition or that her condition had improved between her
February 2005 deposition and the April 2005 video.
After being shown the video, Lawlor withdrew his motion to seek
On Jan. 12, Leibowitz filed a motion to dismiss the case. He said it
was the first time in his 25 years of practice that he had asked a
court to do so based on fraud.
Lawlor and his firm hired attorney Gary Susser of Boynton Beach,
Fla., to represent them on any ethics issues arising from the case.
They also asked for an opinion from The Florida Bar about how they
But Lawlor and his law firm did not withdraw from the case or ask
that the case be dismissed. Lawlor unsuccessfully argued against the
defense motion to dismiss based on fraud. He also filed errata sheets
to Davis-Johnson's two depositions seeking to change her testimony.
At the March 15 hearing, Cardonne Ely said the tape "absolutely shows
that [David-Johnson] was walking. ... I could not believe it, not
after what I had read before and what, you know, what I know about
this case." She granted the motion to dismiss.
Susser said in an interview that Lawlor and his firm acted honorably
in choosing to stand by their client.
"Criminal defense lawyers defend guilty people all the time," Susser
said. "They don't walk out on them even if they believe they were
guilty. They made a decision as professionals to try to stand by
their client and minimized the damage that had been done."
But to Leibowitz, the actions of the plaintiffs lawyers show he made
the right decision in not disclosing the existence of the
surveillance tape right away, and waiting until he had more evidence
of Davis-Johnson's fraud.
John Matuska, Mercy's president and chief executive, said in a
written statement that the hospital was pleased with the dismissal
and that it will be seeking to recover $225,000 in legal costs from
HOMEOWNER'S POLICY VALIDLY EXCLUDES COVERAGE WHEN INSURED DOES NOT
RESIDE AT PREMISES
Tower Ins. Co. v. Amany Said an Ahmed Hassan, 2007 NY Slip Op 30724
(U),Index no. 100420/2006 (Supreme Court, New York County) (Kapnick, j)
Tower brought this DJ action seeking a judgment holding that it has no
duty to defend or indemnify the insureds in an underlying personal
injury action which arose out of a trip and fall at 35-36 9th Street,
Long Island City.
Tower contended that the claim falls within an exclusion in the policy
for claims arising out of a premises at which the insured does not
reside. The policy defined "insured location" as
(a) The "residence premises";
(b) The part of other premises, other structures and grounds used by
you as a residence and:
(1) Which is shown in the Declarations; or
(2) Which is acquired by you during the policy period for your use
as a residence;
(c) Any premises used by you in connection with a premises in 4a and 4b
(d) Any part of a premises:
(1) not owned by an "insured" and
(2) where an "insured" is temporarily residing...
"Residence Premises" is defined as:
a. The one family dwelling, other structures, and grounds; or
b. That part of any other building;
where you reside and which is shown as the "residence premises" in the
"Residence Premises" also means a two family dwelling where you reside
in at last one of the family units and which is shown as the "residence
premises" in the Declarations.
Tower's investigator took a statement from the insured, Said, in which
she said that she had lived in a different location (not the insured
premises) for the past 15 years and that the underlying plaintiff was a
tenant in the insured premises. Said also told the investigator that
she bought the insured premises as an investment property.
Tower disclaimed coverage on the grounds that "the subject premises is
not a 'residence premises' and therefore it does not qualify as
an 'insured location' with respect to the underlying claim.
Tower appointed defense counsel for the insured and also brought this
DJ action. The insured opposed this DJ action, claiming, through her
attorney, that the policy does not state in "clear English" that the
insured must reside at the premises. However, the insured did not
submit an affidavit with her papers.
The Court held that, contrary to the insured's contention, the policy
exclusion is not ambiguous, "notwithstanding the inherent inequity of
Tower's acceptance and retention of premiums paid by defendant Said on
the premises." The Court therefore declared "that Tower has no duty to
defend or indemnify defendant Amany Said in the underlying action..."
Comment: Why, I ask, is it inherently inequitable (as the Court stated)
that Tower gets to keep the premiums in a situation where a claim falls
outside of its coverage? The insured got what she paid for: coverage
for covered claims. She apparently chose to buy a policy that would
not cover her for liability claims because she did not live there --
quite possibly because the premiums would have been considerably higher
if she had disclosed that she did not live at the location.
Of course it is also possible that her broker failed to disclose to her
that she was buying the wrong kind of coverage, but that's another
lawsuit, isn't it.
NO-FAULT DENIALS BASED ON PEER REVIEWS NEED NOT CITE "MEDICAL
RATIONALE" TO BE VALID
In a set of three new decisions, the Appellate Division, Second
Department, has changed a major factor in no-fault litigation by
holding, for the first time, that an insurer's denial of benefits
(form NF-10) which is based on the findings of a peer review report,
need not cite the "medical rationale" of the peer review in the
denial. These three decisions overrule the prevailing case law which
has held that denials are not valid if they do not recite the medical
rationale stated by the peer reviewer.
The three decisions are:
(1) A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 2007 NY Slip Op
(2) New York Univ. Hosp. Rusk Inst. v Government Employees Ins. Co.
2007 NY Slip Op 03671
(3) A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 2007 NY Slip Op
In these rulings, the Second Department held that, "To the extent the
Appellate Term's order may be understood to require an insurer
denying a claim for first-party no-fault benefits on the ground of
lack of medical justification to include a medical rationale in its
denial of claim form, we agree with the defendant that the court
erred. The applicable regulations provide that if a no-fault claim is
denied in whole or in part based on a medical examination or peer
review report requested by the insurer, then the insurer shall
release a copy of that report to, among others, the applicant or its
attorney, upon written request (see 11 NYCRR 65-3.8[b]). Had it
been the intent of the Department of Insurance to require the carrier
to set forth a medical rationale in the prescribed denial of claim
Comment: The three rulings are virtually identical except for the
individual facts and names, and each decision efers to the other two
as "decided herewith."
The Appellate Division has, therefore, removed one of the most vexing
and irrational burdens on insurers which has come out of the lower
Is this ruling retroactive? I would say yes. There is no indication
in the rulings that this is "new law"; rather, it appears to be an
interpretation of the regulations which corrects the heretofore
incorrect interpretations by the lower courts.
As a result of these rulings, many extant cases which were considered
indefensible can now be defended. And some cases which were recently
lost due to the old interpretation may now be reargued upon motion.
INSURER'S "FOUNDED BELIEF" THAT CLAIM IS FRAUDULENT MAY BE BASED ON HEARSAY
Umed Med., P.C. Denise T. Reed, Alex Ponce and Jared L. Morris v.
State Farm Ins. Co., 2007 NYSlipOp 50892(U) (App Term, 2d Dept)
In the first decision of its kind, so far as I have seen, the
Appellate Term has relaxed the standard by which no-fault insurers
establish their "founded belief" that a claim is fraudulent.
In a string of earlier decisions, the Civil Courts have rejected
insurers' allegations of fraud when the investigator's testimony has
been based in part on unsworn statements from third parties (for
details, see my book, ROGAK'S NEW YORK NO-FAULT LAW & PRACTICE).
The same thing happened in the Civil Court, Queens County (Kevin
Kerrigan, J.), when that court granted summary judgment to the
plaintiff and rejected State Farm's proof of insurance fraud.
State Farm's "sole issue on this appeal is whether it raised a
triable issue of fact by proffering sufficient evidence in admissible
form to demonstrate a 'founded belief that the alleged injuries do
not arise out of an insured incident,' in that the automobile
accident at issue in said third cause of action was staged."
"Contrary to the determination of the court below," held the
Appellate Term in a 2-1 decision, "we find that defendant's
submission of a sworn affidavit of its special investigator was
sufficient to demonstrate such a 'founded belief' notwithstanding the
fact that the affidavit contained hearsay allegations."
As further detailed in the dissenting opinion, State Farm submitted
the affidavit of its investigator who asserted that the underlying
insurance policy was obtained through the unauthorized use of the
identity of Sophia Lowe-Davis. The investigator averred that Lowe-
Davis was the victim of identity theft as "confirmed by NYPD
Detective Reedy." No affidavits from either Detective Reedy or Lowe-
Davis accompanied State Farm's opposition papers, "nor is there any
explanation as to why they are not tendered."
The judgment in favor of plaintiff was reversed.
Comment: This decision finally acknowledges, as I argue in my book,
that as a practical matter it is often not possible for investigators
to document in "admissible form" the statements and evidence they
obtain during their investigations. However, the standard for
opposing summary judgment is to "raise" a triable issue of fact, not
necessarily "prove it." As the courts always say, on a summary
judgment motion "issue finding" and not "issue determination" is the
benchmark. An investigator's sworn affidavit indicating information
obtained from reasonably reliable sources (in this case, police
officers), certainly strike me as enough to "raise" an issue of fact
requiring a trial.
Buy the first complete guide to no-fault:
ROGAK'S NEW YORK NO-FAULT LAW & PRACTICE
FAILURE TO FILE TIMELY FILE NOTICE OF INTENTION TO MAKE CLAIM AGAINST MVAIC LEADS TO DISMISSAL OF NO-FAULT CLAIM
|Akita Med. Acupuncture, P.C. a/a/o Ana Rodriguez v. Motor Veh. Acc. Indem. Corp.|
|2007 NY Slip Op 50898(U)|
|Decided on May 1, 2007|
|District Court Of Nassau County, First District|
|Index no. 1754/2006|
|Edited by Lawrence N. Rogak|
The Plaintiff medical provider commenced this action for no-fault benefits in the sum of $1,080.00. MVAIC moved for summary judgment, alleging that the Plaintiff failed to file a Notice of Intention to make a claim within one hundred eighty (180) days, pursuant to Insurance Law § 5208(a)(1), resulting in a lack of coverage.
"Summary judgment is a drastic remedy, Sillman v. Twentieth Century-Fox Film Corporation, 3 NY2d 395, 165 NYS2d 498 (1957), which should not be granted where there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders, Inc. V. Ceppos, 46 NY2d 223, 413 NYS2d 141 (1978) The court's function in determining such a motion is issue finding, not issue determination. Sillman v. Twentieth Century-Fox Film Corporation, supra . To prevail, the movant must first make a showing of entitlement to judgment, as a matter of law, Bank of New York v. Granat, 197 AD2d 653, 602 NYS2d 942 (2nd Dept. 1993), tendering evidentiary proof in admissible form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065, 416 NYS2d 790 (1979). "Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers." Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985); Stephen Fogel Psychological, P.C. v. Progressive Casualty Insurance Company, 35 AD3d 720, 827 NYS2d 217 (2nd Dept. 2006) It is only thereafter incumbent upon the party opposing summary judgment to "demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action or tender an acceptable excuse for his failure so to do." Zuckerman v. City of New York, 49 NY2d 557, 427 NYS2d 595 (1980). The evidence presented must be viewed in a light most favorable to the party opposing the motion. Corvino v. Mount Pleasant Central School District, 305 AD2d 364, 757 NYS2d 896 (2nd Dept. 2003); Tassone v. Johannemann, 232 AD2d 627, 648 NYS2d 708 (2nd Dept.,1996)."
"In support of its application, the Defendant submits the affidavit of David Shnayderman, one of its Claims Examiners to whom the Plaintiff's assignor's file was assigned for handling. Mr. Shnayderman alleges that a review of this file discloses that a Notice of Intention was never filed by the Plaintiff's assignor with the Defendant. Mr. Shnayderman further alleges that, in addition to the absence of a Notice of Intention from the file, a search of the Defendant's computer records, into which the receipt of a Notice of Intention would be logged, reveals there is no computer entry of receipt of the requisite notice."
"In opposition, the Plaintiff submits the affirmation of counsel who does not deny that a Notice of Intention was not served upon the Defendant. Counsel instead alleges that the claims for medical services upon which this action is based were submitted to the Defendant on August 13, 2003 and such claims were neither denied nor paid. Counsel further argues that on October 23, 2003, with more than two (2) months left before the expiration of the time within which to file a Notice of Intention, the Defendant sent a letter to the Plaintiff's assignor informing her that she did not qualify for coverage with MVAIC. Although the Defendant acknowledges sending such a letter, neither party submits same. Moreover, Plaintiff does not indicate what action, if any, the Plaintiff or its assignor took upon receipt of this alleged letter or that, with more than two (2) months to go, any effort was made to file the Notice of Intention. Counsel for the Plaintiff merely speculates that this letter 'quite possibly caused the assignor to abandon its claim on the premise that MVAIC stated she failed to qualify.'"
"It is the opinion of this court that the Defendant has made an appropriate showing of entitlement to judgment, as a matter of law. Conversely, the Plaintiff's opposition is inadequate to defeat the Defendant's motion, being based on nothing more than Plaintiff's counsel's affirmation, which is not based upon his personal knowledge, CPLR § 3212(b); Fiore v. MTC Construction Corp., 112 AD2d 265, 491 NYS2d 713 (2nd Dept. 1985), and is without substantive merit."
"As here relevant, the purpose of Insurance Law Article 52, known as the Motor Vehicle Accident Indemnification Act, is set forth in Insurance Law § 5201(b) as follows:"
"The legislature finds and declares that the motor vehicle financial security act in the vehicle and traffic law, ... fails to accomplish its full purpose of securing to innocent victims of motor vehicle accidents recompense for the injury and financial loss inflicted upon them in that the act makes no provision for the payment of loss on account of injury to or death of persons who, through no fault of their own, were involved in motor vehicle accidents caused by:
"(2) unidentified motor vehicles which leave the scene of the accident."
"In addition, this article is intended to provide no-fault benefits for qualified persons for basic economic loss arising out of the use and operation in this state of an uninsured motor vehicle, as provided herein and in the comprehensive motor vehicle insurance reparations act. The legislature determines that it is a matter of grave concern that those persons are not recompensed for their injury and financial loss inflicted upon them and that the public interest can best be served by closing such gaps in the motor vehicle financial security act and the comprehensive motor vehicle insurance reparations act through the continued operation of the motor vehicle accident indemnification corporation. " Canty v. Motor Vehicle Accident Indemnification Corporation, 95 AD2d 509, 467 NYS2d 50 (2nd Dept. 1983); A.B. Medical Services PLLC v. Motor Vehicle Accident Indemnification Corp., 10 Misc 3d 145(A), 814 NYS2d 889 (App. Term 2nd and 11th Jud. Dists. 2006); Ocean Diagnostic Imaging v. Motor Vehicle Accident Indemnification Corp., 8 Misc 3d 137(A), 803 NYS2d 19 (App. Term 2nd and 11th Jud. Dists. 2005)
"A 'qualified person' entitled to coverage under Article 52 is defined by Insurance Law § 5202(b) as nothing more or less than:"
"(i) a resident of this state, other than an insured or the owner of an uninsured motor vehicle and his spouse when a passenger in such vehicle, or his legal representative, or (ii) a resident of another state, territory or federal district of the United States or province of the Dominion of Canada, or foreign country, in which recourse is afforded, to residents of this state, of substantially similar character to that provided for by this article, or his legal representative. It does not include any operator of or passenger on a snowmobile. In this subsection, "operator" means every person who operates or is in actual physical control of a snowmobile, whether or not it is under way." Canty v. Motor Vehicle Accident Indemnification Corporation, supra .; McNair v. Motor Vehicle Accident Indemnification Corporation, 11 NY2d 701, 225 NYS2d 767 (1962); Saunderson v. The Motor Vehicle Accident Indemnification Corporation, 54 AD2d 936, 388 NYS2d 318 (2nd Dept. 1976).
"This threshold determination that an individual is a qualified person' does not, however, end the inquiry. Canty v. Motor Vehicle Accident Indemnification Corporation, supra . Before MVAIC becomes obligated to pay no-fault first party benefits to a 'qualified person,' pursuant to the Comprehensive Motor Vehicle Reparations Act, Insurance Law Article 51, that individual must also become a 'covered person' by complying with the requirements of Insurance Law Article 52. A.B. Medical Services PLLC v. Motor Vehicle Accident Indemnification Corp., supra .; Ocean Diagnostic Imaging v. Motor Vehicle Accident Indemnification Corp., supra .; Insurance Law § 5221(b)(2) A qualified person who has complied with all the applicable requirements of this article shall be deemed to be a covered person and shall have only such rights as a covered person may have under article fifty-one of this chapter."
"Insurance Law § 5208 specifically provides, in pertinent part:"
"The protection provided by the corporation on account of motor vehicle accidents caused by financially irresponsible motorists shall be available to:"
"(1) Any qualified person having a cause of action because of death or bodily injury, arising out of a motor vehicle accident occurring within this state, who files with the corporation within one hundred eighty days of the accrual of the cause of action, as a condition precedent to the right to apply for payment from the corporation, an affidavit stating that:"
"(A) the person has a cause of action for damages arising out of the accident and setting forth the facts in support, (B) the cause of action is against the owner or operator of a designated uninsured motor vehicle, and (C) the person is making a claim for such damages. See: Hempstead General Hospital v. MVAIC, 97 AD2d 544, 468 NYS2d 48 (2nd Dept. 1983) wherein the failure to file a Notice of Intention pursuant to Insurance Law § 5208 resulted in the dismissal of the Petitioner's claim even though the Respondent's denial, based thereon, was not made in excess of two (2) years."
"Additionally, Insurance Law § 5221 provides, in pertinent part:"
"(b)(1) Notwithstanding the provisions of this article, the corporation [MVAIC] shall also provide for the payment of first party benefits to a qualified person for basic economic loss arising out of the use or operation in this state of an uninsured motor vehicle."
"(3) The corporation shall have only those rights and obligation which are applicable to an insurer subject to article fifty-one of this chapter."
"As with any other insurer, pursuant to Insurance Law, Article 51, the Defendant's 'lack of coverage' defense is not waived by Defendant's failure to issue a denial to the bills submitted by the Plaintiff, which form the basis of its claim herein. Central General Hospital v. Chubb Group of Insurance Companies, 90 NY2d 195, 659 NYS2d 246 (1997); Hospital for Joint Diseases v. Allstate Insurance Company, 21 AD2d 348, 800 NYS2d 190 (2nd Dept. 2005)"
"The Defendant has satisfactorily established that the Plaintiff's assignor failed to file a Notice of Intention. The Plaintiff, on the other hand, has failed to offer any proof that this condition precedent to coverage was met, or that Plaintiff's assignor reasonably relied upon the Defendant's alleged letter of October 23, 2003, allowing for the application of the doctrine of equitable estoppel to forgive the Plaintiff's assignor's failure to timely file a Notice of Intention. Putter v. North Shore University Hospital, 7 NY3d 548, 825 NYS2d 435 (2006); Zumpano v. Quinn, 2 NY3d 666, 816 NYS2d 703 (2006); Pahlad ex rel. Berger v. Brustman, __ NY3d __, __ NYS2d __, (2007); 2007 NY Slip Op. 02592."
"Accordingly, the Defendant's motion for summary judgment is granted; and, it is hereby ORDERED, that the Plaintiff's complaint is dismissed."
BY FAILING TO APPEAR IN PRIOR PROCEEDING TO STAY ARBITRATION, INSURER WAIVES DEFENSE TO COVERAGE AND POLICY LIMITS TOO
|Gaston v American Tr. Ins. Co.|
|2007 NY Slip Op 03878|
|Decided on May 1, 2007|
|Appellate Division, Second Department|
|Edited by Lawrence N. Rogak|
|Index no. 24443/2005|
American Transit Insurance Company failed to make an appearance in two prior petitions by another insurer to stay UM arbitration. Apparently (it is inferred but not specifically stated in this decision), because American Transit defaulted in those petitions, the Court there made a ruling that American Transit owed coverage to its insured. The plaintiff here apparently then sued American's insured and obtained a judgment on default. Plaintiff then brought this proceeding to enforce the judgment against American Transit.
In this action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment against the defendant's insureds, AmericanTransit appealed from an order of the Supreme Court, Kings County (Vaughan, J.) which granted the plaintiffs' motion for summary judgment. The Appellate Division affrmed.
"It is fundamental that . . . a default judgment bars the litigation of issues that were, or could have been, determined in the prior action". Here, orders in two prior proceedings to stay arbitration of uninsured motorist vehicle claims arising from the same accident in which the plaintiffs were injured determined that the defendant afforded insurance coverage for the offending vehicle. The defendant, who was named a party to those prior proceedings, contends that the orders determining that it afforded coverage to the offending vehicle should not be given preclusive effect because they were made upon default. However, the defendant offered no evidence that it lacked notice of the prior proceedings, or that it had taken any steps to vacate the defaults. Under these circumstances, the defendant is precluded from litigating the issue of whether it provided coverage to the offending vehicle in this action pursuant to Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment entered against the owner and operator of the offending vehicle."
"In view of the preclusive effect of the prior orders and the uncontroverted evidence of the unsatisfied judgment entered against the defendant's insureds, the Supreme Court properly granted the plaintiffs' motion for summary judgment, and denied the defendant's motion for summary judgment."
"Furthermore, since the defendant failed to offer any evidence of the limits of the subject insurance policy, the plaintiffs are entitled to recover the full amount of their unsatisfied judgment."
Comment: Notice the consequences of American Transit's failure to make an appearance in the prior petitions to stay arbitrations. Not only do they lose all defenses to coverage (because the judgments issued in the petition proceedings is res judicata), but they even lose the limitation of their policy limits. This decision doesn't say how big a judgment plaintiff got, but if he got a $1 million judgment and AT's policy limits were 25/50 -- AT must pay $1 million!
The lesson: don't be penny-wise and pound foolish by ignoring those petitions to stay arbitration!
LANDOWNER NOT LIABLE FOR VEGETATION OBSCURING VIEW AT INTERSECTION, SAYS COURT OF APPEALS
|Clementoni v Consolidated Rail Corp. et al.|
|2007 NY Slip Op 03792|
|Decided on May 3, 2007|
|Court of Appeals|
|Edited by Lawrence N. Rogak|
This appeal arose out of the collision of an automobile driven by plaintiff Craig Clementoni and a train operated by the Consolidated Rail Corporation (Conrail). The accident occurred at around 6:00 P.M. on September 27, 1994, as plaintiff was driving across a set of railroad tracks at an unmarked grade crossing intersecting a private gravel road owned by defendants Raymond and Gertrude Skowron in northeast Erie County.
Conrail owned and maintained the tracks and the 50-foot wide right-of-way in which they were centered. The right-of-way was a slightly raised pathway, with paved approaches connecting to the gravel road on either side of the tracks. Defendants Harold M. and Patricia Gardner owned property bordering the right-of-way at the crossing.
Plaintiff sued Conrail, the railroad engineer operating the train, the Skowrons and the Gardners to recover for his injuries. As relevant to this appeal, plaintiff alleged that the Skowrons negligently failed to warn him of the hazard of oncoming trains by erecting signs, gates or warning signals at the crossing; he contended that trees and other foliage on the Gardners' property obstructed his view of the oncoming train. Defendants moved for summary judgment, which Supreme Court denied without opinion. The Appellate Division, with two Justices dissenting, reversed Supreme Court's order, granted the motions, and dismissed the complaint and the cross claims against these defendants.
"As a general matter," held the Court of Appeals, "[a landowner owes no duty to warn or to protect others from a defective or dangerous condition on neighboring premises, unless the landowner has created or contributed to it" (citing Galindo v Town of Clarkstown, 2 NY3d 633, 636 ). "Here, the grade crossing had existed since at least 1939, long before the Skowrons purchased the property. In Galindo, we left open the possibility that some dangers from neighboring property might be so clearly known to the landowner, though not open or obvious to others, that a duty to warn would arise.... The Skowrons, however, had no reason to expect that plaintiff would not observe the hazard or any conceivable risk associated with it."
"Plaintiff assumed that the tracks were actively used by Conrail's trains. He testified that he stopped and looked in both directions for oncoming trains and proceeded cautiously each time he approached the tracks, which he uneventfully drove across three times on September 27, 1994 before the accident. As for the Gardners, a landowner is generally not liable for the existence of uncut vegetation obstructing the view of motorists at an intersection (see Prosser and Keaton, Torts § 57 at 390 [5th ed])."
Comment: This decision actually stands for several interesting propositions of premises liability. Notice that the Skowrons owned the gravel road which intersected with the railroad tracks, and the Gardners owned property adjacent to the grade crossing where vegetation allegedly obscured the view down the tracks. The railroad tracks themselves, however, and the right-of-way (the actual land under the tracks) were owned by Conrail.
So the Skowrons have no liability for failure to erect warnings at the grade crossing because (a) it was not actually on their property, (b) it pre-existed their purchase of the property, (c) they did not "contribute" to the condition, and (d) plaintiff admitted he was aware that trains ran on those tracks.
And the Gardners have no liability for the fact that the vegetation on their property may have obscured a motorist's view of the "intersection" (i.e., of the tracks and the road).
Overall, a very interesting and useful decision, which potentially goes way beyond grade crossing incidents!
|'Fear of AIDS' Award Vacated By Majority|
By Mark Fass
New York Law Journal
May 7, 2007
The Appellate Division, First Department's 3-2 decision to vacate a jury's $75,000 post-traumatic-stress award in a "fear of AIDS" case has drawn a scathing dissent from Justice James M. Catterson (See Profile).
Justice Catterson criticized the majority for adhering to a judicially created six-month limit for emotional damages in AIDS-phobia cases rather than allowing a jury to determine whether the plaintiff's distress was "genuine" or "substantial," as required by prior precedent.
"Traditional negligent infliction of emotional distress claims should not be limited by a judicially imposed reasonableness period that takes from the jury the determination of the extent of a plaintiff's damages," Justice Catterson wrote in his dissent in Sims v. Comprehensive Community Development Corp., 111.
"Given its departure from common-law principles of tort liability, the six-month rule should be discarded as meaningless," he said. "The 'window of anxiety' approach is nothing more than a recently contrived 'compromise between the harshness of precluding total recovery for the fear of AIDS and allowing a fearful plaintiff a windfall.'"
Justice E. Michael Kavanagh (See Profile) joined the dissent.
Justices Peter Tom (See Profile), Richard T. Andrias (See Profile) and David Friedman (See Profile) formed the majority.
Vanessa Sims was 33 when she pricked herself with a used needle in a wall-mounted disposal container while working as an extern at the Bronx's Burnside Medical Center in July 1999. The needle had been used to draw blood from an HIV-positive patient.
Although she never contracted HIV, Ms. Sims and her husband sued her nursing school, Ultrasound Diagnostic School, and the clinic's owners, Comprehensive Community Development Corp., among others, arguing that they failed to provide proper supervision. The Simses claimed that the trauma scared Ms. Sims away from the health-care profession, damaged their sexual relationship and caused her to suffer from post-traumatic stress disorder.
A Bronx jury awarded Ms. Sims $790,000, apportioning 25 percent of the responsibility to her school and 75 percent to the clinic's owners. (The school settled with Ms. Sims prior to entry of the judgment.)
The award included $650,000 for Ms. Sims' fear of contracting AIDS during the six months following the accident and $100,000 for the post-traumatic stress she suffered after that six-month period.
The clinic's owner, the Comprehensive Community Development, appealed.
On Thursday, the First Department modified the judgment, remanding the case for a new trial on damages unless Ms. Sims agreed to a reduction of the clinic's share of the damages for the stress she incurred in the first six months, to $250,000 from $487,500.
"We take this action based on our finding that, on this record, the jury's award for AIDS phobia during the six-month period at issue deviates materially from what would be reasonable compensation," the majority wrote in its unsigned, four-page decision.
The panel also vacated on legal grounds the clinic's three-fourths share of the $100,000 award for the post-traumatic stress she suffered beginning six months after the accident, citing the 2006 decision Ornstein v. New York City Health & Hosps. Corp., 27 AD3d 180.
"In Ornstein," the majority wrote, "this Court [held] that such damages are not recoverable in a case where the plaintiff has never tested positive for HIV infection."
The Ornstein panel called unreasonable an ongoing fear of contracting AIDS due to the "unchallenged scientific and statistical evidence indicating that 95 percent of HIV carriers will test positive for the virus within six months of acquiring it."
Question of Fact
In his dissent, Justice Catterson criticized the logic in Ornstein, in which he also had dissented.
"The question arises as to what authority, legal or medical, allows any court rather than a jury to determine as a matter of law, that a plaintiff's fear of belonging to that 5 percent group is not genuine, or even reasonable," he wrote.
He also called the six-month limit espoused in Ornstein, and set forth in its antecedent, the Second Department case Brown v. New York City Health and Hospitals Corp., 27 AD3d 180, "a departure from common-law principles of tort liability that is more properly left to the State Legislature."
The law controlling recovery for emotional distress in cases lacking physical injury, he wrote, was aptly reiterated in the 1977 Court of Appeals decision Howard v. Lechner, 42 NY2d 109.
In Howard, the Court stated that a plaintiff may recover for emotional harm so long as it is "genuine, substantial and proximately caused by the defendant's conduct," Justice Catterson wrote. Subsequent decisions held that a "guarantee of genuiness" could be found in the "circumstances of the case," and that the "special circumstances" of a case served a "guarantee that the claim [was] not spurious."
"Genuineness, then, is clearly and appropriately a question of fact, not a matter of law," Justice Catterson concluded. He therefore called on the court to abandon its "slavish adherence" to the "illogic" of Brown, and its adherence to a six-month "window of recovery" in "AIDS phobia" cases.
The majority made no rebuttals to Justice Catterson's 11-page dissent, other than to note in a footnote a "logical error" in his interpretation of statistics regarding the fallibility of HIV testing.
Jay L. Feigenbaum of Finz & Finz in Jericho represented Ms. Sims. Mr. Feigenbaum said his client is considering her options.
"I think what the court did is upheld a judicial interpretation of how long you can be ill or sick," Mr. Feigenbaum said.
Anthony F. DeStefano and Caryn L. Lilling of Mauro Goldberg & Lilling in Great Neck represented the defendants.
"There really hasn't been any conversation on what is an appropriate level of compensation for six months of pain and suffering for fear of AIDS," Mr. DeStefano said.
- Mark Fass can be reached at mfass@....
|Panel Considers High-Low Deals As Settlements|
By Tom Perrotta
New York Law Journal
May 7, 2007
High-low agreements in trials for civil damages constitute settlements and should be enforced as such, an appeals court in Brooklyn has ruled in a case of first impression.
A unanimous panel of the Appellate Division, Second Department, ruling in Cunha v. Shapiro, 2006-07880, further concluded that a plaintiff who wants to file a judgment in connection with a high-low agreement must first sign a general release and stipulation of discontinuance, which gives a defendant 21 days to pay an award. Justice Mark C. Dillon (See Profile) wrote the opinion.
High-low agreements set a low and high amount for damages in a civil trial. If a jury awards more than the specified amounts, the plaintiffs accept the high. If the jury awards less, the plaintiff accepts the low. If the jury finds for an in-between amount, that figure is awarded.
In Cunha, Frank Cunha sued Blanche S. Shapiro and the estate of Jesse Shapiro after allegedly sustaining injuries in a minor car accident. Mr. Cunha's attorney, Eitan A. Ogen of Ogen & Associates, said Mr. Cunha needed arthroscopic surgery on his knee as a result of the accident.
Brooklyn Supreme Court Justice Lewis Douglass (See Profile) granted Mr. Cunha's motion for summary judgment in July 2004. The case went to trial for damages in March 2006 before Justice Martin Schneier.
Before the trial, the parties agreed that regardless of the jury's verdict, Mr. Cunha would receive no less than $75,000 and no more than $325,000. The jury awarded $400,000.
The defendants then sought a general release; Mr. Ogen argued that a release was not necessary because the terms of the high-low agreement did not call for one, and one is not required after a jury verdict.
When the defendants did not pay damages by May, the plaintiff filed a judgment for $325,000 plus interest of $46,800 dating back to the summary judgment ruling, plus another $1,260 in costs and disbursements.
Justice Schneier granted a motion to vacate the judgment, finding that it was entered without the plaintiff first tendering a general release as required by CPLR 5003-a. The effect was to negate the interest on the award.
In affirming that ruling, the Second Department said high-low agreements are conditional settlements whose purpose is to simplify and expedite the resolution of disputes.
"Here, the parties reached an agreement on the minimum and maximum amount of damages that would be paid to the plaintiff, independent of the compensatory amount actually determined by the jury," Justice Dillon wrote. "The $325,000 'high' to which the parties agreed is therefore consistent with the concept of settling disputes and should be treated by the courts accordingly."
Justice Dillon said no reported cases have specifically stated that high-low agreements are settlements and require compliance with CPLR 5003-a. However, he said, "cases are legion" where courts have treated high-low agreements as settlements.
The judge added that CPLR 5003-a automatically applies unless the parties stipulate otherwise as part of their agreement.
"The plaintiff failed to abide by the requirements of CPLR 5003-a, despite the repeated requests of the defendants' counsel," Justice Dillon wrote. "The Supreme Court therefore properly vacated the judgment that had been filed by the plaintiff, including its award of interest, costs, and disbursements."
Mr. Ogen said he disagreed with the ruling and would seek leave to appeal to the Court of Appeals.
Ms. Shapiro was represented by Cynthia Dolan of Boeggeman, George, Hodges & Corde and Irwen C. Abrams.
Presiding Justice A. Gail Prudenti (See Profile) and Justices Gabriel M. Krausman (See Profile) and William E. McCarthy (See Profile) concurred on the ruling.
- Tom Perrotta can be reached at tperrotta@....
I am pleased to pass on the fact that the John Cooke Fraud Report is back
and available on line at
My friend Leslie Kim reports|
- The John Cooke Fraud Report (est 1994) is now online. You may view it
right now . (The password protection function will be going up VERY soon,
so please take a look right away if you are not yet a subscriber.)
- Note that the e-version of Johncooke.com has new issue items, a full
set of archives (being built) that goes all the way back to 1994, an
Interactive training schedule, a One-Stop-Shop investigative TOOLBOX
function that will amaze you, a C.E. credit Training Division and much
- Please contact Leslie Kim immediately if you want to reserve a space.
They will be accepted on a First Come, First Served basis.
- Leslie Kim
- Editor -- John Cooke Fraud Report
- Director -- Fight Fraud America
Barry Zalma, Esq., CFE
Barry Zalma, Inc.
4441 Sepulveda Boulevard
CULVER CITY CA 90230-4847
This message was filtered through Anti-Virus software before it was sent.
Every effort was made to protect you against the inadvertent transmission
of a computer virus.
The pages comprising this e-mail message contain confidential information
from the law office of Barry Zalma, Inc. This information is intended
solely for use by the individual or entity named as the recipient hereof.
If you are not the intended recipient, be aware that any disclosure,
copying, distribution, or use of the contents of this transmission is
prohibited. If you have received this transmission in error, please
notify us by telephone immediately so we may arrange to retrieve this
transmission at no cost to you. Please destroy all copies, whether
printed, electronic or in your computer's memory.
Just address an email to TheRogakReport@yahoogroups.com
Jump to a particular message