Summing Up...
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ADDITIONAL COVERAGE PROVISION OF UMBRELLA LIABILITY POLICY MAY PROVIDE COVERAGE FOR SUIT ALLEGING LEAD PAINT EXPOSURE DESPITE LEAD PAINT EXCLUSION IN UNDERLYING LIABILITY POLICY
In Westview Associates, et al v. Guarantee National Insurance Company, et al, 95 N.Y.2d 334, 740 N.E.2d 220 717 N.Y.S.2d 75 (2000), the Court of Appeals found that the additional coverage provision of the defendant's umbrella liability policy extended coverage to injuries sustained from lead paint exposure even though a lead paint exclusion was contained within the underlying liability policy.
The Court noted that although the umbrella policy contained specific exclusions for certain types of injuiries that included pollution, the defendant-insurer did not meet its burden of showing that lead paint was within the scope of the pollution exclusion of the umbrella policy.
INSURER MUST DEFEND AND INDEMNIFY ADDITIONAL INSURED FROM PRIMARY INSURED'S OPERATIONS
The Court of Appeals, in Regal Constr. Corp. v. Natr'l Union Fire Ins. Co. of Pittsburgh, PA, 2010 WL 219252 (June 3, 2010), considered whether URS, the entity that contracted with New York City to manage construction of the Riker's Island Renovation Project, was entitled to defense and indemnification under the terms of the additional insured provision of the CGL policy from Regal Construction Corporation, the primary contractor for the project hired by URS.
The Court found that the additional insured endorsement, which provided that URS was an additional insured of Regal Construction Corporation for liability that arose from Regal Construction Corporation's ongoing operations, required Regal Construction Corporation to defend and indemnify URS in an underlying personal injury action.
The Court interpreted the "arising out of" language in the additional insured provision to mean "originating from, incident to, or having connection with." Regal Constr. Corp., 2010 WL 2195252, at *1. Based on this interpretation, the Court found that Regal was obligated to defend and indemnify URS in the underlying personal injury action because "the injury was sustained by Regal's own employee while he supervised and gave instructions to a subcontractor regarding work to be performed," and therefore arose out of Regal's operations. Id.
Prepared by Kimberly S. Conidi
COUNSEL FOR NON-PARTIES PRECLUDED FROM OBJECTING DURING VIDEOTAPED DEPOSITIONS.
In Thompson v. Mather, (4th Dept., Feb. 11, 2010), a medical malpractice action, plaintiff's counsel, in preparation for trial, arranged for the non-party respondents (the plaintiff's treating cardiologist) to provide testimony in advance of trial that would be videotaped and presented at trial. The cardiologist appeared for the scheduled videotaping with his own counsel, who had been retained by the cardiologist's medical malpractice insurance carrier. During the testimony, counsel for the cardiologist interposed objections to both form and relevance. Plaintiff's counsel objected to the participation by counsel during the videotaped trial testimony and the parties were unable to resolve the dispute. Plaintiff's counsel took the position that the cardiologist's counsel should be precluded from objecting during the trial testimony except as to privileged matters or in the event that she were to deem questioning to be abusive or harassing.
Citing CPLR 3113(c), the Fourth Department held that counsel for a non-party witness does not have the right to object during or otherwise to participate in a pretrial deposition. The Court reasoned that CPLR 3113 does not make a distinction between trial testimony and pretrial videotaped deposition testimony presented at trial. Further, the Court noted that the efforts of the cardiologist's counsel to condition the videotaping of the deposition upon receipt of a general release is "repugnant to the fundamental obligation of every citizen to participate in our civil trial courts and to provide truthful trial testimony when called to the witness stand."
ALL SERIOUS DOUBTS ABOUT LIABILITY MUST BE REMOVED BEFORE BAD FAITH CLAIMS.
In Doherty v. Merchants Mutual Ins. Co., (4th Dept., June 11, 2010), the plaintiffs, as assignees of the defendant in the underlying personal injury action, commenced an action against the defendant's insurer for bad faith for failing to settle the underlying action and thereby exposing the insured defendant to personal liability. The plaintiffs sought to recover the difference between the jury award and the policy limits.
The court held, "a plaintiff must establish that the insured lost an actual opportunity to settle the action at the time when all serious doubts about his or her liability were removed and that defendant insurer acted with gross disregard for the insured's interests." In the underlying action, prior to the trial, the attorneys for the plaintiffs requested that defendant settle the underlying action for the policy limits of $300,000. However, "it is settled that an insurer cannot be compelled to concede liability and settle a questionable claim simply because an opportunity to do so is presented."
The defendant insurance company established that it investigated the claim in the underlying action and arranged for a physical examination of the plaintiff to determine the extent of her alleged injuries and whether they constituted a serious injury. The expert retained by the insurer and the plaintiff's treating physician had different views with respect to the extent of the plaintiff's injuries. Further, insurer's investigation included a videotape of plaintiff engaged in activities without apparent difficulty, despite her alleged injuries. Prior to trial of the underlying action, plaintiffs reduced their demand, and during the trial, the plaintiffs further reduced their demand. Insurer thereafter increased its settlement offer. Internal records of the insurer submitted in support of its motion established that a high/low offer had been made after the commencement of trial, but had not been well-received by the plaintiffs' attorney.
The Fourth Department found that the insurer-defendant, in the instant action had established that the defendant, in the underlying action, did not lose an actual opportunity to settle the claim at the time when all serious doubts about its liability were removed and when it was clear that the potential recovery far exceeded the insurance coverage. Thus, it did not act with gross disregard for the defendant's interests.
INABILITY TO PAY FOR MEDICAL TREATMENTSUFFICIENT EXPLANATION FOR A GAP IN TREATMENT.
In Garza v. Taravella, (4th Dept., June 11, 2010), the plaintiff commenced an action seeking damages for injuries she allegedly sustained when her vehicle collided with the defendant's vehicle. The defendant moved for summary judgment dismissing the complaint against him on the ground that the plaintiff did not sustain a serious injury within the meaning of the Insurance Law §5102. The defendant further contended that the plaintiff failed to explain a six month gap in treatment. However, the Court held that the plaintiff adequately explained the significant gap in her treatment history by stating in her affidavit that she stopped treatment for about six months after the subject accident because she could not afford to personally pay for further treatment. Further, there was no evidence in the record establishing that plaintiff knew that her medical bills would be paid by no-fault insurance during the six month period.
CERTIFIED MEDICAL RECORDS OF THE PLAINTIFF'S TREATING PHYSICIANS IS INSUFFICIENT TO RAISE A TRIABLE ISSUE OF FACT.
In Lauffer v. Macey, (4th Dept., June 11, 2010), the plaintiffs commenced an action seeking damages for injuries allegedly sustained in a motor vehicle accident. Defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury under the four categories alleged in the complaint and bill of particulars. Defendants met their initial burden on the motion by submitting an affirmed report of a physician who examined plaintiff at their request and concluded that there was no objective evidence that plaintiff sustained a serious injury as a result of the accident. The certified records of the plaintiff's treating physician were held insufficient to raise a question of fact where there is no objective evidence of a serious injury within the records. The Court held, "The certified medical records of one of the plaintiff's treating physicians submitted by plaintiffs in opposition to the motion were insufficient to raise a triable issue of fact. None of the findings of that physician is based on objective evidence of an injury and, in any event, to the extent that the physician concluded that plaintiff's symptoms were caused by the accident, that conclusion is conclusory."
DEFENDANT WITH ACTUAL KNOWLEDGE OF A REOCCURRING DANGEROUS CONDITION CAN BE CHARGED WITH CONSTRUCTIVE NOTICE OF EACH REOCCURRENCE.
In Anderson v. Great Eastern Mall, LP, (4th Dept., June 11, 2010), the plaintiff commenced an action seeking damages for injuries he sustained when he slipped on ice and fell in front of the entrance to a store owned by the defendants. The Supreme Court granted the defendants' motion for summary judgment dismissing the complaint and cross-claims.
The Fourth Department disagreed and held that "a plaintiff is not required to prove that the defendants knew or should have known of the existence of a particular defect where they had actual notice of a recurrent dangerous condition in that location." Further, the Fourth Department noted "a defendant who has actual knowledge of an ongoing and reoccurring dangerous condition can be charged with constructive notice of each specific reoccurrence of the condition."
In response to defendant's contention of lack of notice, the plaintiff offered evidence of the defendant having notice of the reoccurrence of the condition which lead to formation of ice. The plaintiff had testified that he fell as he was walking underneath a canopy. Witnesses testified that they believed that the ice had formed from water dripping from a nearby drain, from snow melting from the canopy, or from snow melting from a nearby snow pile. The defendants also submitted the deposition testimony of their own employees, who testified that they had observed water coming from a nearby drain and ice accumulation near that drain. The employees also testified that snow on top of the canopy would slide off onto the sidewalks and water would drip from the canopy onto the sidewalk near where the plaintiff fell.
The Fourth Department held that the defendants failed to meet their initial burden of establishing that they did not have actual notice of the ongoing and reoccurring dangerous condition. The Fourth Department reversed the decision of the Supreme Court.
Prepared by Manik J. Saini
HOMEOWNERS' INSURANCE POLICIES DESIGNED TO INDEMNIFY POLICYHOLDERS AGAINST LIABILITY FROM NON-INSUREDS.
In Cragg v. Allstate Indemnity Corporation, (4th Dept., May 7, 2010), a declaratory judgment brought forth an issue of first impression in New York as to whether an insurer is required to defend or indemnify its insureds for the wrongful death of an insured person, here, plaintiff's decedent. Plaintiff's decedent, an infant, sustained fatal injuries when she drowned in a swimming pool located at the residence of her grandparents. The plaintiff, the infant's father, did not reside there. He brought action against the mother and grandparents with whom the infant resided. The Appellate Division, Fourth Department, affirmed the summary judgment granted for the defendants by concluding that the plain language of the policy in question excluded coverage for bodily injury to an insured person when such coverage would inure to the benefit of an insured person. The Court concluded there was no coverage for the simple reason that a homeowners' insurance policy is essentially designed to indemnify the policyholders against liability for injuries sustained by non-insureds.
ALWAYS BE CAREFUL WHEN DRAINING YOUR POOL.
In Gravino v. Allstate Insurance Company, (4th Dept., May 7, 2010), the plaintiff sued his insurer seeking coverage for damage to an in-ground swimming pool pursuant to the terms of his homeowners' insurance policy. Plaintiff had drained his pool in order to paint it, but was delayed for five days due to rain. On the fifth day, the plaintiff noticed that one end of the pool had lifted out of the ground and that the concrete around the pool had been damaged. Defendant disclaimed coverage for the loss based on a provision in the policy excluding damage to a swimming pool caused by "pressure or weight of water." The trial court denied defendants' motion for summary judgment and granted plaintiff's cross-motion for partial summary judgment. The Fourth Department unanimously reversed the order appealed from concluding that the action was for breach of contract and is not a declaratory judgment action. The Appellate Division further held that the exclusion for damages caused by "pressure or weight of water" applied to plaintiff's loss, and plaintiff failed to raise a triable issue of fact in opposition. The experts for each party agreed that the pool had lifted from the ground because of the hydrostatic pressure in the soil surrounding the pool. Although the drainage of the pool may have been a pre-condition to the lifting of the pool from the ground, the defendant established that the ground water pressure was the "predominant cause of the loss, thus rendering applicable the policy exclusion for damages."
LANDOWNER MAY DELEGATE ALL RESPONSIBILITY FOR OPERATION AND MAINTENANCE OF PROPERTY BY CONTRACT.
In Gronski v. County of Monroe, (4th Dept., May 7, 2010), plaintiff commenced a negligence action seeking damages for injuries allegedly sustained when the plaintiff was struck by a bale of recycling material, weighing almost one ton, while working at a recycling facility owned by, but not operated by defendant. Pursuant to a written agreement, defendant assigned operational control over the facility to plaintiff's employer. The Appellate Division, Fourth Department, affirmed the defendant's motion for summary judgment and dismissed the plaintiff's complaint, concluding that defendant delegated all responsibility for operation and maintenance of the facility to plaintiff's employer, including responsibility for safety measures. Defendant met its initial burden of establishing that it "did not exercise control over the subject facility or assume any contractual responsibility to maintain and repair it. Rather, [plaintiff's employer] was contractually obligated … to repair and maintain" the facility. Plaintiff failed to raise a triable issue of fact sufficient to defeat the motion.
LIABILITY EXISTS AGAINST DOG OWNER WHO KNEW DOG HAD PROPENSITY TO RUSH AT CARS AND PEOPLE.
In Lewis v. Lustan, (4th Dept., April 30, 2010), plaintiff commenced an action seeking damages for injuries that she sustained while walking her dog by defendants' residence. Defendants' unleashed dog emerged from behind a car, barking. The dog ran toward plaintiff, startling her, causing her to lose her balance and fall. Defendants' motion for summary judgment dismissing the complaint was granted by the trial court. The decision of the trial court was reversed in a three-two decision from the Appellate Division, Fourth Department. The Fourth Department concluded that the deposition testimony of the defendants created a question of fact regarding the dog's known tendencies and behaviors to rush toward cars and people. The Appellate Court majority noted that an animal that behaves in a manner that would not necessarily be considered dangerous or ferocious, but nevertheless reflects a proclivity to act in a way that puts others at risk of harm, can be found to have vicious propensities.
PLAINTIFF'S COMPLAINT DISMISSED WHEN NO ACTUAL OR CONSTRUCTIVE NOTICE PROVIDED REGARDING ALLEGEDLY DEFECTIVE STAIRCASE.
In Reynolds v. Knibbs, (4th Dept., May 7, 2010), plaintiffs commenced an action seeking damages for injuries sustained when plaintiff fell while descending the basement stairs of his residence, which was rented from the defendants. According to plaintiffs, the stairs detached from the wall and collapsed. Initially, defendants' motion for summary judgment to dismiss the complaint was denied. The Appellate Division, Fourth Department reversed on the law and granted defendants' motion to dismiss the complaint. The Fourth Department concluded that defendants met their initial burden of establishing that they had no actual or constructive notice of any defective condition of the staircase, and plaintiffs failed to raise a triable issue of fact. Defendant testified that he inspected the stairs prior to plaintiff's accident and believed that the stairs were adequately secured. Defendants submitted evidence that no one previously had a problem with the stairs or complained about them prior to the plaintiff's accident. In opposition to the motion brought by defendants, the plaintiff submitted an affidavit of an expert who averred that the stairs were improperly secured to the concrete wall and that the defect "would have been clearly obvious to anyone with construction experience." Defendant had over 30 years of experience as a contractor, however, plaintiff's expert never specified the kind of construction experience needed to determine whether the defect was "obvious," nor did he state, e.g., whether the use of concrete fasteners with metal washers as opposed to concrete nails was standard in the industry or whether a building inspector would have noted the alleged defect."
Prepared by Christopher R Poole
PLAINTIFF'S NEGLIGENCE IS NOT SOLE PROXIMATE CAUSE OF INJURIES
In Chacon-Chavez v. City of Rochester (4th Dept., April 30, 2010), the plaintiff sued for injuries sustained when the ladder upon which he was standing slipped, causing him to fall. The Appellate Division, Fourth Department affirmed the Trial Court's award of summary judgment to the plaintiff with respect to his Labor Law §240(1) cause of action. In response to the plaintiff's motion, the defendant failed to establish that the ladder on which the plaintiff was working was inadequately secured and, therefore, the plaintiff's conduct could not have been the sole proximate cause of his injuries due to the plaintiff's failure to secure the ladder.
PLAINTIFF RAISES QUESTION OF FACT WITH SUBMISSION OF EXPERT'S REPORT
In Edwards v. Saint Elizabeth Medical Center (4th Dept., April 30, 2010), the plaintiff commenced an action seeking damages for injuries sustained when she tripped and fell over a metal trashcan while at the hospital owned by the defendant. The defendant moved for summary judgment and the plaintiff opposed the motion with the submission of an affidavit of an expert safety engineer. The Appellate Division, Fourth Department affirmed the Trial Court's denial of summary judgment to the defendant, contrary to the defendant's contentions that the expert's affidavit was submitted without foundation, was speculative and/or was lacking probative value. In his affidavit, the plaintiff's expert relied upon his review of the complete record, as well as his experience in training of biomechanics and human factor analysis. The expert also cited to scientific literature concerning "trip points" and perception, and he discussed the necessary "visual cues" required for an individual to avoid obstacles in his or her path.
DEFENDANT GRANTED DIRECTED VERDICT AS PLAINTIFF FAILS TO PROVE THAT DEFENDANT'S BULL HAD A VICIOUS PROPENSITY
In Farnham v. Meder (4th Dept., April 30, 2010), the plaintiff commenced a lawsuit seeking damages for injuries sustained when he was knocked down by the defendant's bull while chasing the bull from the plaintiff's property. At the conclusion of the plaintiff's proof at trial, the Trial Court granted a directed verdict in favor of the defendant stating that the plaintiffs failed to establish that the bull had a vicious propensity. The Appellate Division, Fourth Department, in affirming the Trial Court's granting the defendant's motion stated that a bull is a domesticated animal as defined by New York Law. Therefore, the owner must have notice of the animal's vicious propensities to be held liable for the harm caused by the animal. Although it was undisputed that the defendant knew his bull had a propensity to break free of its enclosure and wander on to the plaintiff's property, the plaintiff failed to establish that the bull had "a proclivity to act in the way that puts others at risk of harm" or that the defendant knew of such a proclivity.
SUMMARY JUDGMENT GRANTED TO CAR RENTAL COMPANY
In Gross v. Hertz Local Addition Corp., et al. (4th Dept., April 30, 2010), the plaintiff brought suit seeking damages for the wrongful death and conscious pain and suffering of her husband (decedent) who died as a result of a head injury he sustained in the parking lot of an automobile ownership. On the date of the accident, the decedent brought his leased vehicle to the auto dealership for repairs and arranged to rent a vehicle from the defendant, Hertz. Hertz used office space in the automobile dealership service area and parked its rental vehicles in the parking lot. The decedent slipped and fell on a patch of ice as he walked across the parking lot in the direction of his rental vehicle. Hertz brought a motion for summary judgment seeking a dismissal of the plaintiff's cause of action for negligence based on the allegedly hazardous condition of the parking lot. Hertz met its initial burden by submitting evidence that it did not own, occupy, or have a right to control or maintain the area of the parking lot where the decedent fell. In response, neither the plaintiff nor the automobile dealership raised a triable issue fact sufficient to defeat the motion and the Trial Court properly granted summary judgment to Hertz in this regard.
PLAINTIFF GRANTED SUMMARY JUDGMENT IN LABOR LAW ACTION
In Calderon v. Walgreen Company (4th Dept., April 30, 2010), the plaintiff was injured when the scaffold he was dismantling tipped backward, causing him to fall to the ground. The Trial Court granted the plaintiff's motion seeking partial summary judgment with respect to his Labor Law §240(1) claim and the Appellate Division, Fourth Department affirmed. The plaintiff had met his initial burden establishing that the statute was violated and that the violation proximately caused his injuries. Although the defendant argued that the plaintiff was negligent in moving materials to the back of the scaffold, thereby causing the scaffold to become unbalanced, the Fourth Department concluded that his actions merely rendered him contributorily negligent and were not the sole proximate cause of the incident. As such, the Trial Court properly granted the plaintiff partial summary judgment.
MUNICIPALITY GRANTED SUMMARY JUDGMENT IN SNOW PLOW ACCIDENT MATTER
In Catanzaro v. Town of Lewiston (4th Dept., May 7, 2010), the plaintiff was injured in a motor vehicle accident when his vehicle collided with a snow plow operated by the Town of Lewiston. The Appellate Division, Fourth Department upheld the Trial Court's granting of the defendant's motion for summary judgment dismissing the plaintiff's complaint. In support of its motion, the defendant submitted testimony of the snow plow driver and his "wingman" who each testified that the snow plow was stopped at an intersection and that the plaintiff's vehicle slid out of control toward the intersection. In response, the plaintiff offered his own testimony that the snow plow was traveling too fast for the conditions and that its back wheels locked, causing it to slide into the intersection. The Appellate Division, Fourth Department held that the defendant met its initial burden in establishing that the snow plow truck was engaged in work on a highway and that it did not act with "reckless disregard for the safety of others", which is the applicable standard under the circumstances pursuant the Vehicle and Traffic Law. The plaintiff failed to raise a triable question of fact with respect to the issue of reckless disregard in response. As such, the Trial Court properly granted the defendant's motion.
Prepared by Michael M. Chelus
BULLETIN REGARDING PROPOSED CHANGES TO NEW YORK STATE "SERIOUS INJURY" THRESHOLD
On April 16, 2010, a bill was introduced in the New York State Senate and Assembly to amend the definition of "serious injury" and to determine the sufficiency of evidence with respect to issues relating to serious injury. The bill would significantly change Insurance Law §5102(d) to include the following:
The definition of serious injury would retain the existing injuries such as a fracture, significant disfigurement, death, dismemberment and the "90/180 limitation".
The bill also notes that a finding of a serious injury on any of the above-enumerated categories shall be sufficient basis for an award of "past and/or future damages".
The bill also adds Insurance Law §5102(a), which mandates that questions relative to whether the plaintiff has a serious injury and whether such an injury is caused by the accident must be determined by a trier of fact. As such, the courts will no longer entertain motions for summary judgment with respect to the serious injury threshold.
- A partial or complete tear or impingement of a nerve, tendon, ligament, muscle or cartilage;
- Injury to any part of the spinal column that results in injury to an intervertebral disc;
- Impingement of the spinal cord, spinal canal, nerve, tendon or muscle;
- Permanent total or partial loss of use of a body organ, member, function or system;
- A surgical procedure to any injured part of the body;
- Any other permanent consequential limitation of use of a body organ, member, function or system.
The sponsors of this bill justified the significant changes to the serious injury threshold by stating that the dismissal of personal injury cases by the courts deprives New York's citizens of their constitutional right to a trial by jury. According to the sponsors of the bill, the judicial interpretation of this statute has produced overwhelming obstacles never intended by the Legislature and has clogged the courts with threshold motions which monopolize judicial resources. Furthermore, the sponsors noted that judiciary has seemingly usurped the authority of the Legislature by unilaterally imposing requirements for proof of serious injury including proof of contemporaneous, quantitative testing or a requirement for "non-stop medical treatment" for all victims of vehicular negligence.
If this bill is passed into law, its consequences will be significant. The definition of a "serious injury" has been broadened to the point where the "serious injury" threshold is virtually eliminated. The requirement that limitations or injuries must be consequential or significant has been virtually eliminated in favor of potential minor injuries to nerves, tendons, ligaments, muscles or cartilage and virtually any injury that results in impingement of a spinal cord, spinal canal, nerve, tendon or muscle. Furthermore, an injury that requires the most minor surgical procedure will also qualify as a "serious injury".
In conclusion, while this proposed law would eliminate "serious injury" threshold motions thereby relieving the courts of the burden relative to deciding the motions, the courts will likely see a significant increase in the number of personal injury cases that are commenced as well as a significant increase in the number of trials that may burden the courts in the future.
We will certainly track the progress of this particular bill. As of April 16, 2010, the bill has been submitted to the Insurance Committee in both the Senate and the Assembly. We will update you accordingly. If you have any questions, do not hesitate to contact me at 716-852-3600 or by email at tkawalec@cheluslaw.com.Prepared by Thomas P. Kawalec
EXCLUSION FOR WATER DAMAGE UPHELD
In Lattimore Road Surgicenter, Inc. v. Merchants Group, Inc. (4th Dept., March 19, 2010), the plaintiff-insured sought coverage for a loss caused by a ruptured water main and nearby sewer pipe. The policy at issue had an exclusion providing that the insurer – Merchants – "will not pay for loss or damage caused directly or indirectly by water that backs up or overflows from a sewer, drain or sump." The policy also contained an endorsement which amended the exclusion to provide up to $5,000.00 for property damage "by water that backs up or overflows from a sewer, drain or sump." Based on the exclusion, Merchants paid only $5,000.00 toward the extensive water damage at the insured's facility. The insured sued, claiming the exclusion was not enforceable. On Merchants' motion for summary judgment, Judge Rosenbaum ordered dismissal of the plaintiff's claim. His order was affirmed by the Fourth Department which held that the provisions of the insurance contract were clear and unambiguous and must be enforced as written.
STATUTE OF LIMITATIONS DEFENSE DEFEATS PLAINTIFF DESPITE PROCEDURAL ERROR
Nowacki v. Becker (4th Dept., March 19, 2010) involved a personal injury action sued by the plaintiff beyond the three-year statute of limitations. The defendant answered the complaint, despite its untimely nature, and then moved pursuant to CPLR §3211 to dismiss the complaint on the ground that the statute of limitations had expired. Despite the motion being untimely under the CPLR, Judge Whalen dismissed the plaintiff's complaint. On appeal, the Fourth Department affirmed that ruling, treating the motion to dismiss as a motion for summary judgment and rejecting the plaintiff's claim of equitable estoppel. However, the court did indicate that, under some circumstances, a defendant or a defendant's insurer may lose the benefit of the statute of limitations where they engage in affirmative misconduct "intended to lull the plaintiff into inactivity and to induce plaintiff to continue negotiations until after the statute of limitations had run."
SUMMARY JUDGMENT DENIED IN DOG BITE CASE
Grillo v. Williams (4th Dept., March 19, 2010) involved a personal injury action for a dog bite. Summary judgment had been granted in favor of the defendant by Judge Sconiers and the plaintiff appealed. The defendant had established that she had no knowledge of the dog previously biting anyone. Nevertheless, the Fourth Department reversed Judge Sconiers decision and reinstated the complaint. It was held that the dog growling and barking at strangers was sufficient to raise a question of fact as to knowledge of that dog's vicious propensities.
OPERATING DUMP TRUCK ON GRADED, UNPAVED ROAD NOT CONSIDERED INHERENTLY DANGEROUS ACTIVITIES FOR PURPOSES OF VICARIOUS LIABILITY
Carlineo v. Atkins (4th Dept., March 19, 2010) involved a plaintiff who suffered catastrophic injuries when the dump truck he was traveling in tipped over as it was descending a steep hill on an unpaved road. The dump truck was filled nearly to capacity with gravel and was also towing a backhoe. The plaintiff was a passenger in that vehicle. One of the defendants, Fortuna Energy, argued that the workers involved, including the driver of the dump truck, were independent contractors and that their liability could not be imposed on Fortuna. The plaintiff argued that vicarious liability may be imposed, even in an independent contractors situation, where the activity involved is inherently dangerous. The court agreed with this general principle but held that the work at issue was not inherently dangerous for purposes of triggering vicarious liability. The court indicated that examples of activity sufficiently dangerous to trigger such liability include blasting and working with high-tension electrical wires.
DIRECTED VERDICT IN SUMMARY JURY TRIAL REVERSED
Bennice v. Randall (4th Dept., March 19, 2010) involved an appeal from a summary jury trial. After the jury returned a defense verdict at the summary jury trial, the judicial hearing officer directed a verdict in favor of the plaintiff on the issue of causation of the plaintiff's injuries. The defendants had conceded that the accident resulted from the defendant's negligence and introduced evidence of an expert neurologist who concluded that the plaintiff's complaints of pain were subjective and could not be linked to the accident. The defendants also showed that at least some of the plaintiff's treating providers were unaware of the plaintiff's prior complaints of back pain. On this record, the Fourth Department reversed the hearing officer's ruling and reinstated the defense verdict rendered by the jury.
FAILURE TO WARN IN PRODUCTS LIABILITY CASE SUFFICIENT TO AVOID SUMMARY JUDGMENT
Barker v. Mobile Pallet Truck, Inc. (4th Dept., March 19, 2010) involved a personal injury action grounded in a products liability theory. The plaintiff was injured when an air compressor tipped off a pallet jack (manual forklift) manufactured by the defendant. The plaintiff admitted that he and his supervisor were transporting the air compressor directly on the pallet jack without using a pallet. There is no disagreement between the parties that using the pallet jack to transport objects without a pallet is ill advised because it results in unstable loads. Although there is a warning to "be extra careful when you handle wide or high loads", there was no specific instruction with regard to the use of a pallet. Three justices of the Fourth Department found this sufficient to reverse the trial court's order granting summary judgment to the defendant. There were, however, two dissenting justices and the case is likely to be appealed to the New York State Court of Appeals. The dissent felt that general knowledge, observation or common sense of any reasonable person would obviate the need for a more specific warning.
Prepared by Scott R. Orndoff
CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS) AGREES TO DELAY LIVE
REPORTING UNDER THE MEDICARE, MEDICAID AND SCHIP EXTENSION ACT OF 2007
As everyone should by now be aware, the Medicare, Medicaid and SCHIP Extension Act of 2007 was scheduled to begin live online reporting in the first quarter of 2010. This statute requires all responsible reporting entities (which includes insurers and self-insureds) to identify claimants who are eligible for Medicare benefits and report whenever a claim is resolved through "settlement, judgment, award or other payment". The overriding purpose of this statute is to place Medicare on notice of entities that have the primary obligation of paying a claimant's medical bills. Given that Medicare's obligation to pay claimants is secondary to all other plans (such as, for example, worker's compensation, no-fault and health insurance), the goal is to save Medicare money.
Originally, the new reporting requirements were to begin online during the first quarter of 2010. Responsible reporting entities were required to register with CMS no later than September 30, 2009. All of the reporting was to have taken place through a secure website administered by CMS. The actual online reporting was to have begun in the first quarter of 2010 after a few months of testing.
In response to numerous complaints and logistical difficulties, CMS announced on February 17, 2010 that testing will continue through December 31, 2010 and live reporting will not begin until January 1, 2011.
Hopefully, the additional nine months will allow CMS to design and construct an online reporting system that accomplishes the core goals of the new reporting statute without imposing undue burdens on the responsible reporting entities that are required to comply.
We will continue to monitor these developments and advise accordingly. If you have any questions, I can be contacted at mchmiel@cheluslaw.com.
FEDERAL GOVERNMENT SUES INSURANCE CARRIERS
AFTER CLASS ACTION LAWSUIT IS SETTLED
As we have been advising our insurance carrier clients, the Medicare Secondary Payer Act and supporting federal regulations allow the Centers for Medicare and Medicaid Services to sue in order to be compensated for payments Medicare made to beneficiaries that should have been paid by some other primary plan or source. This act mandates that Medicare is secondary to all other plans, such as health insurance, worker's compensation, liability insurance and no-fault insurance, all of which have a primary obligation to pay medical claims where appropriate before Medicare is obligated to pay anything. Whenever Medicare does make a conditional payment for a medical claim, it has a direct right of action against "any entity that has received payment or from the proceeds of a primary plan's payment to any entity." In other words, Medicare is empowered to file suit in order to recoup its expenses.
We most often confront this situation within the context of personal injury lawsuits. Where a Medicare-eligible plaintiff is injured, Medicare expects the claimant's medical bills to be covered by one or more "primary" plans, such as no-fault or health insurance. Where Medicare pays a plaintiff's medical bills, it expects to be reimbursed immediately after the plaintiff obtains a settlement or judgment. If this does not take place, Medicare can file suit against a variety of entities, including the claimant, the claimant's attorneys and even the applicable insurance carriers.
To date, there have been relatively few examples of Medicare actually filing such a lawsuit to reimburse itself for conditional payments that were made to a plaintiff. However, in U.S. v. Stricker (CV-09-PT-2423-E), the federal government has commenced litigation pursuant to the Medicare Secondary Payer Act in the Northern District of Alabama. This lawsuit names insurance carriers such as AIG and Travelers, along with corporations such as Monsanto Co., Pfizer, Inc. and Solutia, Inc.
The federal government filed this lawsuit to be reimbursed for conditional payments made to several plaintiffs who were involved in a class action lawsuit against Monsanto, Pfizer and Solutia. The original class action lawsuit was settled for $300,000,000.00. However, the government asserted in the lawsuit that insurance carriers paid this settlement without ascertaining whether any of the plaintiffs were Medicare eligible or determining what reimbursements were owed to the federal government for Medicare conditional payments.
As permitted by the Medicare Secondary Payer Act, the federal government is seeking double damages and interest for all conditional payments that were made to the plaintiffs in the class action lawsuit.
This lawsuit further underscores the obligation that all insurance carriers and self-insureds have under the Medicare Secondary Payer Act. Whenever a personal injury action is settled, the carrier must determine if the plaintiff is Medicare eligible and if any conditional payments have already been made by Medicare to the plaintiff. The carrier must then ascertain that Medicare is placed on notice of the settlement and that Medicare is fully compensated.
We have advised our clients that this obligation has actually been law for nearly 30 years. However, Medicare has always lacked the resources to track its own conditional payments and the personal injury actions that correspond to those payments. Now, with the Medicare, Medicaid and SCHIP Extension Act of 2007, the carriers are obligated to report settlements such as these. This will place the government on notice and make it a lot easier for Medicare to identify situations where it should be filing suit to recoup its expenses.
We fully expect lawsuits such as this to become commonplace. In all likelihood, it was not a coincidence that the federal government chose a large high profile class action settlement to provide the factual background for this lawsuit.
We will continue to track developments on this case and any other similar cases in the coming months. If you have any questions, please contact me at mchmiel@cheluslaw.com
Prepared by Michael J. Chmiel
COMPANY E-MAILS SUBJECT TO ATTORNEY/CLIENT PRIVILEGE EVEN THOUGH NOT PREPARED BY ATTORNEYS, SENT TO ATTORNEYS OR COPIED TO ATTORNEYS.
In Roswell Park Cancer Institute Corp. v. Sodexo America LLC, 2009 WL 5126984 (4th Dep't 2009), the Appellate Division upheld theNew lower court's decision that e-mails prepared by a facility management company were subject to the attorney/client privilege and, therefore, not discoverable, even though the e-mails were not prepared by attorneys, sent to attorneys or copied to attorneys. In reaching this decision, the Appellate Court considered evidence that in-house counsel requested high-ranking members of the company's management team to have the company's lower-level employees assemble information for use in his legal analysis concerning the company's potential liability. The Appellate Court also considered in-house counsel's own statements that his involvement constituted legal rather than business advice and the Supreme Court's broad discretion to control discovery.
FOURTH DEPARTMENT UPHOLDS SERIOUS INJURY THRESHOLD SUMMARY JUDGMENT DECISION IN FAVOR OF DEFENDANT.
In Borzilliere v. Jones, 2009 WL 5126588 (4th Dep't 2009), the Appellate Division agreed that, after defendant met its burden, plaintiff failed to raise a triable issue of fact as to whether a serious injury within the meaning of Insurance Law §5102(d) was sustained. While plaintiff submitted a CT-scan report indicating that the plaintiff suffered disc protrusions and/or herniations at multiple levels along with an affidavit and records of his chiropractor demonstrating pain, tenderness and loss of range of motion, the Appellate Court noted that the plaintiff did not begin treatment with his chiropractor until 16 months following the accident and the range of motion tests were performed approximately 19 months after the accident. Plaintiff, thus, failed to submit any evidence that his limited range of motion was contemporaneous with the accident.
GIVING A PAINT BALL GUN OR AMMUNITION FOR SAME TO AN UNDERAGE CHILD CONSTITUTES NEGLIGENCE PER SE.
In Herdzik v. Chojnacki, 2009 WL 5126349 (4th Dep't 2009), a case where Art Herdzik of our firm represented his nephew, litigation was commenced, on behalf of an underage plaintiff, against property owners who hosted a paintball game and provided ammunition for paintball guns, and parents who provided the gun that fired the injuring shot. In overturning the lower court's denial of plaintiff's motion for summary judgment on negligence, the Appellate Division held that purchasing and then giving a paint ball gun and/or ammunition to an underage child violated Penal Law §265.10(5) and constituted negligence per se. This was so, held the Court, despite the fact that several of the boys brought ammunition that was shared collectively and the parties were unable to identify who brought the paintball that ultimately struck the plaintiff in the eye.
MORE PAINT BALL AND ASSUMPTION OF RISK.
In another paint ball case, the Fourth Department, in Duquin v. Chameli, 2006 WL 5128543 (4th Dep't 2009), overturned the lower court's summary judgment finding in favor of the defendant based on the doctrine of primary assumption of risk. The Appellate Court noted that, to establish their burden, the defendants were required to establish both that the risk of eye injury in a paint ball game was: 1) inherent in the sport of paint ball; and 2) that the plaintiff was aware of that risk. Although the defendants submitted deposition testimony of the plaintiff that "back in 2002," he understood that a face mask or goggles were needed to protect paint ball participants from eye injury, the Appellate Court found that it was unclear from the record whether plaintiff's understanding of the risk pre-dated the accident date of March 8, 2002.
DUTY TO PROVIDE ADEQUATE SUPERVISON FOR UNDERAGE GUESTS AT A PARTY DOES NOT EXTEND TO AN AREA NOT WITHIN PARENTS' CONTROL.
In Aquino v. Higgins, 2009 WL 5126374 (4th Dep't 2009), the Appellate Court held that, although the defendant parents hosted a party where alcohol was consumed by minors, they were not liable to an underage plaintiff who was injured as a result of an alcohol related accident that occurred while he was being driven home by the defendants' minor son. Even though the parents admitted that, at the end of the party, they became aware that underage drinking had occurred, the parents established that they were not negligent by offering evidence that they offered the guests a ride home, did not think any of the guests was intoxicated, instructed their son to go to bed, and were unaware that their son had left the house to drive plaintiff home. The Court stated that, while the parents had a duty to provide adequate supervision for the guests at the party while the guests were under their control, that duty does not extend to an area not within the control of the defendant parents.
Prepared by Tara S. Evans
"VEHICLE AND TRAFFIC LAW §1104(e) CANNOT BE USED AS A SWORD TO WARD OFF A COMPARATIVE FAULT DEFENSE "
In Ayers v. O'Brien, 2009 W.L. 4840202 (2009), plaintiff, a Sheriff, was pursuing a speeding vehicle, when his car was struck by defendant's vehicle. Plaintiff commenced an action alleging serious injury as a result of the defendant's negligence. Plaintiff moved to strike the affirmative defense that any damages "must be diminished in the proportion which [the] culpable conduct, including contributory negligence and assumption of risk, attributed to [Ayers] bears to the culpable conduct, which caused the damages". The plaintiff's motion to strike was based on Vehicle and Traffic Law §1104 which protects operators of authorized emergency vehicles from liability unless the operator's conduct rises to the level of reckless disregard.
The Court of Appeals held that the affirmative defense should not be stricken. Further, the Court of Appeals stated that the purpose of Vehicle and Traffic Law §1104 is that it allows emergency personnel to act swiftly while, at the same time, protecting the public's safety, and can only be used when the emergency vehicle operator is sued or counter-sued.
INSTALLATION OF A SECURITY SYSTEM IS AN ALTERATION OF A BUILDING UNDER LABOR LAW §240(1)
In Andrews v. Northwest Auto Mall, 67 A.D. 3d 1466, 888 N.Y.S. 2d 451 (4th Dept., 2009), plaintiff commenced a Labor Law and common-law negligence action, seeking damages for injuries that he sustained when he fell from a ladder, while installing a security system in defendants building. Plaintiff brought a summary judgment motion on liability, based on the Labor Law §240(1) cause of action stating that the defendant violated Labor Law §240(1) by furnishing him with a defective ladder, and that violation was the proximate cause of his fall and resulting injuries. Defendant argued that Labor Law §240(1) did not apply because plaintiff was not "altering" its building within the meeting of Labor Law §240(1). The Appellate Division held that the plaintiff was engaged in "altering" a building at the time of the accident and by the defendant furnishing the plaintiff with a defective ladder the defendant violated Labor Law §240(1).
ARREST AND SUSPENSION WITHOUT PAY IS ENOUGH TO EXCUSE A LATE NOTICE OF CLAIM
In Trotman v. Rochester City School District, 67 A.D. 3d 1482, 889 N.Y.S 2d 359 (4th Dept., 2009), claimant (who was allegedly abused by a employee of the respondent) brought a motion to extend the time to file a notice of claim. Although the claimant failed to offer a reasonable excuse for the delay, the Appellate Division held that the date of the motion was inconsequential as the respondent acquired actual notice of the alleged abuse of the claimant no later than January 2007, when the employee was arrested on criminal charges and suspended without pay by the respondent. In turn, once the respondent was advised of the criminal charges asserted against its employee, it should have conducted a prompt investigation of the incidents underlying and the charges. As such, allowing the claimant to serve a late notice of claim would not prejudice respondent's preparation of a defense.
FAILURE TO REPORT DEGENERATIVE DISC DISEASE DOES NOT MEAN IT WAS NOT PRESENT
In Darien v. Meldish, 2009 WL 4911365 (1st Dept. 2009) defendants brought a motion for summary judgment to dismiss plaintiff's complaint based on plaintiff not sustaining a serious injury. Defendants met their burden by establishing that the plaintiff’s claimed disc condition was degenerative and unrelated to the accident. In opposition, the plaintiff’s family physician affirmed that had the radiologist who conducted the MRI observed degenerative disc disease, the radiologist would have stated that in his report. The Appellate Division rejected the plaintiff's opposition and held that the plaintiff's family physician's opinion was mere speculation and insufficient to rebut defendants' proof.
MAXIMUM MEDICAL IMPROVEMENT EXPLAINS TREATMENT GAP
In Eusebio v. Yannetti, 2009 WL 4856203 (2nd Dept. 2009), plaintiff defeated defendant's motion for summary judgment by submitting an affidavit of the plaintiff's treating chiropractor establishing that the plaintiff's gap in treatment was because she had reached maximum medical improvement. The chiropractor also based his affidavit on contemporaneous and recent examinations in which he noted range-of-motion limitations were significant, permanent, and causally related to the accident.
Prepared by Katy M. Hedges
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DOES THE FEDERAL LONG SHORE AND HARBOR WORKERS' COMPENSATION ACT (LHWCA) PRE-EMPT NEW YORK STATE LABOR LAW §240(1) AND §240(6)?
In Lee v. Astoria Generating Co., LP, 2009 WL 4016121 (2009), the Court of Appeals reviewed the issue of whether a barge was a vessel under the Federal Long Shore and Harbor Workers' Compensation Act (hereinafter "LHWCA") and whether the Act pre-empted the plaintiff's New York State Labor Law §240(1) and §241(6) claims. The plaintiff injured his back while performing work on a barge owned by defendant, Astoria. The barge was located on navigable waters in the Gowanus Canal in Brooklyn and had not been moved for over ten years. After being injured, the plaintiff was awarded benefits under the LHWCA, which provides benefits to maritime workers akin to workers' compensation benefits. The plaintiff also commenced a state court action asserting Labor Law §240(1) and §241(6) claims and a common law negligence claim. After plaintiff commenced the state court action, the defendant barge owner moved for summary judgment arguing that plaintiff’s exclusive remedy for injuries occurring on a “vessel” in navigable waters lied under the LHWCA and that the LHWCA pre-empted the New York State Labor Law claims. In opposition, the plaintiff argued that the claims were not pre-empted because the barge in question did not constitute a vessel and maritime jurisdiction did not apply to claims against the defendant barge owner. The Court of Appeals held that the LHWCA provides compensation to workers injured on navigable waters of the United States in the course of their employment. The Court stated that under the LHWCA, a vessel includes every description of water craft capable of being used as a means of transportation on the water. The Court of Appeals concluded that here, the barge in question was located on navigable waters in the Gowanus Bay and was a vessel within the LHWCA because it could be moved and had been moved for inspection in the past. Furthermore, the Court stated that the LHWCA pre-empted the Labor Law claims because Congress clearly intended that actions maintained against a “vessel” be brought solely within the confines of the LHWCA and nowhere in the Act did it permit strict liability claims, such as provided by Labor Law §240(1) and §241(6). Summary judgment was granted to the defendant barge owner.
LEAVE TO SERVE A LATE NOTICE OF CLAIM MUST BE GRANTED WHERE THERE IS NO SUBSTANTIAL PREJUDICE
In the Fourth Department case of Trotman v. Rochester City Sch. Dist., 2009 WL 3931509 (4th Dept. 2009), the Appellate Division held that the Supreme Court abused its discretion in denying the claimant's application for leave to serve a late notice of claim. The Court stated that even though the claimant failed to offer a reasonable excuse for delay in serving the notice of claim, that delay was not fatal because the respondent had actual notice of the facts underlying the claim and was not substantially prejudiced by the delay. The claimant was a student in the respondent school district. The claimant alleged that he was sexually abused by one of respondent's employees and the abuse occurred between February, 2006 and July, 2007. The record established that the respondent acquired actual knowledge of the abuse no later than January, 2007 when the respondent's employee was arrested on criminal charges and suspended without pay. The Court held that once respondent was advised of the criminal charges asserted against its employee, it should have conducted a prompt investigation and that respondent could not now complain that the late filing of the claim prejudiced it in its preparation of a defense.
THE LOWER COURT ERRED IN FAILING TO DISMISS A MALICIOUS PROSECUTION CLAIM
In the Fourth Department case of Passucci v. The Home Depot, Inc., 2009 WL 3931056 (4th Dept. 2009), the plaintiff commenced an action seeking damages for defendant's alleged malicious prosecution and intentional infliction of emotional distress. The Appellate Division held that the Supreme Court erred in denying the defendant's summary judgment motion. The motion sought dismissal of the plaintiff’s malicious prosecution cause of action. The Court held that the plaintiff's conviction of petit larceny in the underlying criminal proceeding created a presumption of the existence of probable cause for that criminal proceeding, despite the fact that the conviction was later reversed on appeal. The Court held that because originally there was a conviction, the defendant met its burden of establishing that there was no meritorious malicious prosecution claim. The Court noted that as part of a malicious prosecution claim, the plaintiff has to assert and prove that a criminal proceeding was commenced, that it was terminated in favor of the plaintiff, that it lacked probable cause, and that the proceeding was brought out of actual malice.
AN APPEARANCE AT A DEFAULT HEARING WILL NOT EXCUSE A DEFAULT
In the Fourth Department case of Council Financial Services, LLC v. David McQuade Leibowitz, P.C., 2009 WL 3931449 (4th Dept. 2009), defendants appealed from an order and judgment granting plaintiff's motion for summary judgment in lieu of complaint. The Supreme Court ordered defendants to pay a specified amount due on a promissory note executed by defendant, David McQuade Leibowitz, P.C., and personally guaranteed by David McQuade Leibowitz. The order and judgment was entered upon the default of the defendants. The defendants did not move to vacate the order and judgment, but they appeared in court on an adjourned return date of the motion for summary judgment and contested the entry of the default judgment. The Appellate Division affirmed the Supreme Court and held that the plaintiff met its burden for obtaining a default by submitting the promissory note, the personal guarantee, and submitting evidence of defendants' default. The record established that only plaintiff's counsel appeared in court on the initial return date of the motion, but that the court, thereafter, granted defendants additional time in which to submit papers in opposition to the motion and adjourned the matter to a date subsequent. Defendants then failed to submit opposition papers by the date specified by the court. Although defendants appeared in court on the adjourned return date to request an adjournment in which to prepare opposing papers, defendants were already in default at that time.
PLAINTIFF GRANTED PARTIAL SUMMARY JUDGMENT ON A LABOR LAW §240(1) CLAIM DUE TO DEFECTIVE LADDER
In the Fourth Department case of Andrews v. Northwest Auto Mall and Frank Santonastaso, 2009 WL 3930951 (4th Dept. 2009), the Appellate Division held that the Supreme Court properly granted plaintiff partial summary judgment with respect to plaintiff's Labor Law §240(1) cause of action. The Appellate Division held that plaintiff established that defendants violated Labor Law §240(1) by furnishing him with a defective ladder, and the plaintiff established that the violation was a proximate cause of his fall and resulting injuries.
CPLR 4545 AMENDED TO PRECLUDE PRIVATE HEALTH INSURERS FROM RECOVERING PURSUANT TO THEIR SUBROGATION RIGHTS
CPLR §4545 was amended as of November 12, 2009 to preclude private health insurers from recovering pursuant to their contractual and equitable subrogation rights. While private health insurers have not been formally barred from initiating claims against tortfeasors, they will now be blocked from asserting any claims against any "settling party." The Legislative intent of the statute is to protect the claimant, and his attorney, from subrogation claims by private health insurers after cases have been settled. General Obligations Law §5-335 provides protections to the settling defendant, even if there remains insurance coverage available. General Obligations Law §5-335 provides that upon settlement, all recovery rights against the settling parties, plaintiff and defendant are extinguished.
By: Kristen Degnan
Prepared by Kristen B. Degnan
RECREATIONAL USE STATUTE PROVIDES GROUNDS FOR DISMISSAL
In Coogan v. D'Angelo, 2009 N.Y. Slip. Op. 07038 (4th Dept., 2009), plaintiff commenced wrongful death action after his son was fatally injured while riding his all-terrain vehicle on defendant's property. The Fourth Department affirmed the lower court's ruling dismissing the complaint and cited to the recreational use statute or General Obligations Law §9-103 for support. That statute holds that an owner of a premises owes no duty to keep the premises safe from entry or use by others for a number of listed activities, one being motorized vehicle operation for recreational purposes.
UNFORESEEABLE SUPERSEDING EVENT ABSOLVES DEFENDANTS OF LIABILITY
In Rudat v. Mark Colf Excavating, 2009 N.Y. Slip. Op. 06989 (4th Dept., 2009), a plaintiff commenced action against defendants for injuries he sustained after diving head first into a pond located on the defendant's property. The Fourth Department affirmed the lower court's order which dismissed plaintiff's complaint. The Court held that the defendants met their initial burden of establishing that "the plaintiff's act of diving head first into water that he knew to be shallow was an unforeseeable superseding event absolving the defendants of any liability".
SUPREME COURT NOT PROPER FORUM TO DETERMINE WORKERS' COMPENSATION ISSUES
In McGee v. Van Erden, 2009 N.Y. Slip. Op. 06991 (4th Dept., 2009), plaintiff commenced a Labor Law action after he fell from the rafters of a barn while installing hurricane clips. It was alleged that defendant Venture Farms owned the barn. Venture Farms moved for summary judgment on the ground that workers' compensation benefits were the plaintiff's exclusive remedy. Plaintiffs argued in opposition that the plaintiff was an independent contractor and not an employee of Venture Farms and thus not subject to the exclusive remedy provisions of the Workers' Compensation Law. Supreme Court determined that there was a triable issue of fact as to whether plaintiff was an "employee" within the Workers' Compensation Law. The Fourth Department held that the Court erred in deciding that motion absent a determination by the Workers' Compensation Board whether plaintiff was an employee of Venture Farms. The Court further held that primary jurisdiction with respect to determinations as to the applicability of the Workers' Compensation Law has been vested in the Workers' Compensation Board and it is therefore inappropriate for the courts to express views with respect thereto pending determination by the Board. The matter was remitted back to the trial court to be reconsidered "after final resolution of a prompt application to the Board to determine the rights, if any, of plaintiffs to benefits under the Workers' Compensation Law".
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PURSUANT TO LABOR LAW §200 DENIED
In Crandall v. Wright Wisner Distributing Corp., 2009 N.Y. Slip Op 07289 (4th Dept., 2009), plaintiff commenced a Labor Law action seeking damages for injuries he sustained after he was struck by an overhead garage door. The Fourth Department held that the defendant property owner was not entitled to summary judgment pursuant to Labor Law §200 since the defendant "failed to establish as a matter of law it lacked the authority to control the allegedly defective condition of the work site". Furthermore, the defendant's own testimony established that it still retained control over the worksite throughout the course of the project.
DEFECTIVE LIGHTING HURTS DEFENDANT'S MOTION
In Derosia v. Gasbarre & Szatkowski Association, 2009 N.Y. Slip. Op 06987 (4th Dept., 2009), plaintiff commenced an action after she slipped and fell on ice in the defendant's parking lot. The Fourth Department agreed with the plaintiff and held that the defendants failed to meet their burden of establishing that they lacked constructive notice of the icy condition. Plaintiff testified that half of the lights in the parking lot were not functioning. Based on this testimony, an issue of fact arose whether the ice was difficult to see because of the defective lighting conditions, and not because it was simply "not visible".
FAILURE TO REMOVE SNOW CONTRIBUTED TO ICE ON PATH
In Hunt v. Ciminelli, 2009 N.Y. Slip. Op. 07283 (4th Dept., 2009), plaintiff commenced an action seeking damages for injuries he sustained when he slipped and fell on an icy unlit path at a construction site. Evidence demonstrated that the snow removal contractor co-defendant failed to remove snow from the area where the accident occurred. In denying defendant's motion for summary judgment, the Fourth Department held that the snow removal contractor's failure to remove snow from the accident area contributed, at least in part, to the melting and re-freezing of the accumulated snow.
NO-FAULT REIMBURSEMENT DENIED
In Sunshine Imaging v. GEICO, 2009 N.Y. Slip. Op. 06984 (4th Dept., 2009), plaintiff performed radiological services to 14 patients and sought reimbursement for each procedure. Plaintiff made a prima facie showing of entitlement to judgment by submitting evidence that the prescribed statutory billing forms were received by defendant and that the defendant's payment of no-fault benefits were overdue. However, GEICO raised a triable issue of fact by submitting its denial of claim forms and set forth the argument that the services for which recovery was sought were "not medically necessary".
BUS NOT ENTITLED TO RECKLESS DISREGARD STANDARD
In Christopher v. Coach Leasing, Inc., 2009 N.Y. Slip. Op. 07296 (4th Dept., 2009), the plaintiff commenced an action seeking damages for injuries he sustained when the New York State Corrections bus which he was occupying collided with a truck. The Supreme Court refused to charge the jury with a reckless disregard liability standard for the defendant bus. The Fourth Department held that because the bus was a "correction vehicle" rather than a "police vehicle", the bus was exempt from normal traffic regulations governing directions of movement. Yet the bus was subject to the reckless disregard standard of liability only if it satisfied the siren and light requirement set forth in Vehicle and Traffic Law §1104(c). The evidence presented at trial established that the bus did not satisfy those requirements and thus the reckless disregard standard was not given to the jury.
Prepared by Kevin E. LoftusDEFENDANTS NEED MORE THAN AN ATTORNEY AFFIRMATION AND SURVEILLANCE TAPE TO DEFEAT SUMMARY JUDGMENT
In McHugh v. Marfoglia, --- N.Y.S.2d ----, 2009 WL 2635483 (4th Dept. 2009), the Appellate Division unanimously reversed the order appealed from by agreeing with the plaintiff that trial court erred in denying plaintiff's motion seeking partial summary judgment on the threshold issue of serious injury from a motor vehicle accident. The Appellate Division granted summary judgment under Insurance Law § 5102(d) for permanent consequential limitation of use and significant limitation of use categories. Plaintiff met his burden with respect to those two categories by submitting objective evidence that he suffered a disc herniation at C6-C7 that required surgical intervention, and by submitting the affirmation of his treating neurosurgeon who concluded that, based upon his examination and treatment of plaintiff and his review of plaintiff's medical records, plaintiff's injuries were significant, permanent, and causally related to the accident ( see LaForte v. Tiedemann, 41 AD3d 1191, 1192; see generally Toure v. Avis Rent A Car Sys., 98 N.Y.2d 345, 353). Plaintiff also submitted the affirmed report of the neurosurgeon who examined him at defendants' request, who quantified the degree of loss of range of motion in plaintiff's cervical spine, including a 66% loss of extension and a 50% loss of right rotation, and correlated that loss to the normal range of motion in the relevant areas of plaintiff's cervical spine. Defendants failed to raise a triable issue of fact sufficient to defeat the motion with respect to the issue of serious injury or causation by only submitting an attorney's affirmation and a copy of an unauthenticated surveillance videotape.
WIDOWER PLAINTIFF ALLOWED TO MAINTAIN DRAM SHOP ACTION WHEN DECEDENT CAN NOT
In Oursler v. Brennan, et al., 884 N.Y.S.2d 534 (4th Dept. 2009), the Appellate Division reversed the trial court’s decision and determined that genuine issues of material fact precluded summary judgment on issue of whether widower was entitled to recover from seller of alcohol for alleged violations of Dram Shop Act after widower purchased decedent two alcoholic beverages at a party. There was also evidence that decedent obtained her own drinks, that the couple's friends purchased alcohol for decedent, that the bar provided Jell-O shots directly to decedent, and that plaintiff and decedent were apart for much of the party. Under the Alcoholic Beverage Control Law, it is unlawful to sell, deliver or give away alcoholic beverages to “any visibly intoxicated person” (§ 65[2]). New York's Dram Shop Act affords a person injured “by reason of the intoxication” of another person a right of action against the party that unlawfully purveyed the alcohol (General Obligations Law § 11-101[1]; see Mitchell v. The Shoals, Inc., 19 N.Y.2d 338, 340-341). An intoxicated person, or his or her estate, cannot maintain a cause of action under the Dram Shop Act for injuries sustained as a result of that person's own intoxication (see Mitchell, 19 N.Y.2d at 340-341). The trial court properly dismissed the Dram Shop Act cause of action against the seller of the alcohol on behalf of decedent's estate. The Fourth Department opined that widower, however, may maintain a cause of action in his individual capacity for loss of support as decedent's surviving spouse (see Coughlin v. Barker Ave. Assoc., 609 N.Y.S.2d 646). A plaintiff “must play a much more affirmative role than that of drinking companion to the intoxicated person before the plaintiff may be denied recovery against the establishment that served” the intoxicated person.
DEFENDANT’S EXPERT DOCTORS MUST COVER ALL SERIOUS INJURY CATEGORIES TO BE GRANTED SUMMARY JUDGMENT ON THRESHOLD ISSUE
In Colavito v. Steyer, 883 N.Y.S.2d 807 (3rd Dept. 2009), the Appellate Division affirmed the trial court’s decision to deny defendant’s motion for summary judgment under Insurance Law §5102[d] and §5104[a] in an action brought by plaintiff to recover for injuries to her right shoulder allegedly sustained in a motor vehicle accident. Defendant failed to meet his initial burden of proving, as a matter of law, that plaintiff did not sustain a serious injury. Defendant's experts, relying on an MRI taken shortly after the accident, opined that plaintiff's symptoms were related to a preexisting condition and, thus, were not causally related to the accident. Yet the experts failed to address any aggravation of the preexisting condition, which had reportedly been asymptomatic prior to the accident. Defendant’s experts did not examine the plaintiff and did not adequately address plaintiff's condition or limitations within the first 180 days following the accident, a necessity to foreclose the 90/180-day category of serious injury.
FIFTEEN MINUTE ARGUMENT AT RESTAURANT IMPOSES DUTY ON PROPERTY OWNER TO PREVENT HARM TO PATRONS
In Boyea v. Aubin, 883 N.Y.S.2d 808 (3rd Dept. 2009), a restaurant patron and her husband brought a negligence action against a restaurant's general manager and restaurant owner when the plaintiff (a patron at a restaurant owned and operated by one of the defendants) was struck in the back of the head during a melee that erupted between the restaurant's general manager, defendant Aubin, and a disgruntled customer. The altercation was preceded by a lengthy argument between the customer's female companion and restaurant staff regarding the service she was receiving. This verbal dispute, which involved yelling and cursing, escalated over a period of 15 minutes and then erupted into a physical “brawl.” Restaurant defendants argued they could not have anticipated any danger to plaintiff because the altercation between the customer and Aubin was sudden and unexpected. However, defendants’ motion for summary judgment was denied, and the Appellate Division affirmed, stating landowners have a duty to act in a reasonable manner so as to prevent harm to those on their property; specifically, they have a duty to control the conduct of third persons on their premises when they have the opportunity to control such persons and are reasonably aware of the need for such control. Fifteen minutes was enough of a warning to establish such duty.
PROPERTY OWNER CREATING HOLE IN DRIVEWAY APRON WAS NOT AN AFFIRMATIVE ACT OF NEGLIGENCE BY CITY OF SCHENECTADY
In Davis v. City of Schenectady, et al, 883 N.Y.S.2d 810 (3rd Dept. 2009), plaintiff was allegedly injured when she rode her bicycle into a hole located in a driveway apron owned by defendant Sangiovanni. Property owner had previously contacted the City to determine if City would patch up a 8-12” portion of the apron. City inspected and agreed to patch up the area, and requested the loose debris be removed from the cracked section prior to the repair. Property owner then removed almost the entire apron and the City refused to undertake such an extensive repair. Subsequently, the plaintiff had her accident. Trial court granted summary judgment for City, and the Third Department affirmed, stating that City did not create a hole where none had existed previously. This did not constitute an affirmative act of negligence on the part of the City.
Prepared by Christopher R. Poole
COURT OF APPEALS SUPPORTS BROAD NEW YORK JURISDICTION OVER DEBTOR'S PROPERTY INTERESTS.
In Koehler v. Bank of Bermuda LTD (June, 2009), the Court of Appeals, in answering a question certified by the Second Circuit, has made New York a viable enforcement venue when a judgment creditor can establish a New York presence for any entity that controls the property of a judgment debtor. In Koehler, the plaintiff had secured a $2,000,000.00 Federal judgment against the defendant from a Federal Court in Maryland. Neither party was a New Yorker and the only connection with New York was the Bank of Bermuda, which had a branch located in the State of New York. The debtor in Koehler had certificates of stock on deposit with Bank of Bermuda and the debtor pledged these certificates as collateral for an unrelated loan provided by Bank of Bermuda to the judgment debtor. This made Bank of Bermuda a garnishee, according to the Court of Appeals, thus allowing for the application of CPLR §5225(b) providing for a "turnover" order of the stock. Once properly obtained, the turnover order directed the garnishee to give the designated property (or its value in money) to the plaintiff or to the sheriff for sale and conversion into money in order to pay the plaintiff.
QUESTION OF FACT EXISTS AS TO WHETHER OMISSION OF LOCK AMOUNTED TO A DESIGN DEFECT.
In Passante v. Agway Consumer Products, Inc. (May, 2009), the Court of Appeals was faced with the issue of whether the omission of a lock on a dock leveler at the request of the purchaser amounted to a design defect as a matter of law sufficient to impose strict liability against the manufacturer. The plaintiff was injured when he fell off a dock leveler, which was bridging the gap between a loading platform and a backed-up truck. The dock leveler was purchased without a locking device at the choice of the buyer for economic reasons. The lock would have prevented a hinged "lip" on the gate from shifting and thereby precipitating the incident. The majority of the Court held that whether the lock had to be incorporated into the device as a matter of basic design rather than just offered as an option was an issue of fact properly left for a jury.
CHURCH NOT A PROPERTY "OWNER" FOR THE PURPOSES OF LABOR LAW §241(6).
In Scaparo v. Village of Ilion, et al. (4th Dept., July, 2009), the plaintiff commenced a Labor Law action seeking damages for injuries sustained by a Village employee who was injured in the course of an installation of a sewer lateral. At the time of the accident, the plaintiff was in a trench installing a sewer lateral when the trench collapsed. The property on which the lateral was being installed was owned by a county industrial development agency and not by the church which contracted for the work to be done. The Court held that the plaintiff's complaint was properly dismissed against the church as it was not an "owner" as contemplated by New York Labor Law §241(6). Since the church was not the property owner, it was immune to Labor Law liability for the accident even though it benefited by and contracted for the work.
TRADE SECRETS REGARDING MANUFACTURER OF NAIL GUN DEEMED DISCOVERABLE.
In Terwilliger v. Max Co., LTD (4th Dept., July, 2009), the plaintiff was injured when he was struck by a nail discharged from a pneumatic nail gun. The plaintiff demanded various items through discovery including trade secrets relating to the design, manufacture, testing, and inspection processes of the manufacturer. The manufacturer refused to produce these materials and the plaintiff moved to compel production. The Court held that although these materials sought were indeed trade secrets, they were discoverable in the action as the plaintiff demonstrated that the items were indispensable to their case and were otherwise unavailable if not obtained from the defendant. The Court ordered the production of the documents, but directed a Confidentiality Agreement between the parties related to the discovery.
SUMMARY JUDGMENT TO PROPERTY OWNER WITH INOPERABLE SMOKE DETECTORS ON PROPERTY.
In Strnad v. Garvin, et al. (4th Dept., July, 2009), the plaintiffs commenced two actions seeking recovery for property damage as a result of a fire that occurred on property owned by defendant Garvin. The Trial Court denied the defendant's motion for summary judgment dismissing the complaint. The Appellate Division held that the defendant met his initial burden on the motion by establishing that his acts did not cause the fire, but that the fire was caused by a tenant's careless smoking. Although the plaintiff raised an issue of fact whether the smoke detectors in the building were inoperable at the time of the fire, the Appellate Division held that summary judgment was appropriate for the defendants as the plaintiff failed to raise an issue of fact as to whether the absence of operable smoke detectors was a substantial factor in causing the fire to spread and thus did damage to the property.
REPAIR OF A BROKEN LENS ON A SIGNAL LIGHT HELD NOT ROUTINE MAINTENANCE UNDER LABOR LAW §240(1).
In Buckmann v. State of New York (4th Dept., July, 2009), the plaintiff commenced a Labor Law action seeking damages for injuries sustained when she fell from an elevated platform while repairing a non-functioning signal lamp at a lock on the Erie Canal. The Trial Court denied the plaintiff's motion for partial summary judgment with respect to Labor Law §240(1) cause of action, stating that the plaintiff was not engaged in "repair" work as contemplated by the Labor Law. The Appellate Division reversed the Trial Court on this issue, holding that the plaintiff was engaged in repair work and not routine maintenance work at the time of the accident. The plaintiff had established that the signal light was not functioning because of a broken lens and that type of lens typically did not require replacement as a result of normal wear and tear. Therefore, this work was deemed "repair" work, thus rendering Labor Law §240(1) applicable.
Prepared by Michael M. Chelus
IN TWO RECENT DECISIONS, A PROJECT COORDINATOR AND A SATELLITE TV COMPANY HELD IN FOR POTENTIAL LABOR LAW LIABILITY
Reed v. NEA Residential, Inc. (4th Dept., July 2009) involved a Labor Law action arising out of the construction of a single-family residence. The owners of the property had contracted with defendant NEA Residential, Inc. to be the project coordinator for the construction project, however the plaintiff's employer, a drywall contractor, had contracted directly with the homeowner. NEA moved for summary judgment on plaintiff's Labor Law claim under §241(6). Judge Kloch (Supreme Court, Niagara County) found a question of fact on the issue and denied the motion for summary judgment. Surprisingly and unfortunately from a defense point of view, the Fourth Department, finding a triable question of fact as to whether NEA was invested with the power to enforce safety standards and hire subcontractors, affirmed the order. This is troubling as the project coordinator was not a general contractor and did not contract with the plaintiff's employer, yet was kept in the case.
Similarly, in Mergenhagen v. Dish Network Service, LLC (4th Dept., July 2009), the plaintiff was injured in a fall from a residential roof while installing a satellite dish. The plaintiff's employer was a subcontractor of Dish Network. The plaintiff moved for summary judgment under Labor Law §240(1) which was granted by Judge Sedita. The Fourth Department affirmed, holding that the defendant Dish Network was a general contractor within the meaning of that statute. The Court held that defendant Dish Network had the power to enforce safety standards and to use responsible subcontractors, and that their right to exercise such control was sufficient to impose absolute liability whether or not they in fact exercised such control. Clearly, any expansion of Labor Law §240(1) is troubling from a defendant's perspective.
LABOR LAW CASE DISMISSED IN ITS ENTIRETY
In a decision difficult to square with those discussed above, the Fourth Department dismissed all claims of a Labor Law case against three defendants in McNabb v. Oot Bros., (4th Dept., July 2009). Plaintiff McNabb was injured while walking on stilts after he tripped over an electrical cord. The incident occurred during the construction of a house being built by defendants Mr. and Mrs. Place. The Places contracted with defendants Oot Bros., Inc. and Build Your Own Home, LLC for consulting services in connection with design and construction of the house. The plaintiff brought suit alleging violations of Labor Law §§ 200, 241(6) and 240(1) as well as common law negligence. The Fourth Department found that neither Oot nor Build Your Own Home served as general contractors or agents of the owners and were thus entitled to summary judgment. The Places were not subject to Labor Law liability as owners because of the exception for one- and two-family homes. The Court held, however, that the Places acted as their own general contractors. Nevertheless, the Fourth Department also found that the Places were entitled to summary judgment because "the Places established that they did not control or direct the manner in which the plaintiff or his employer performed the installation work in the house… even though the Places were present at the construction site from time to time and hired subcontractors to perform certain work." Here, it seems actual direction and control, not the authority to direct and control, is the standard. Again, this decision is difficult to square with others decided just a week prior.
FOURTH DEPARTMENT REVERSES TRIAL COURT AND DISMISSES LABOR LAW §240(1) CASE
In Rigby v. The Brisky Family Limited Partnership, (4th Dept., July 2009), the plaintiff commenced a Labor Law action including Labor Law §240(1) claims for injuries sustained while he was positioned on top of a pallet 16 feet above the ground. The plaintiff was guiding a truss into place as it was being lifted by a forklift. The plaintiff injured his groin while attempting to lift the truss. The Fourth Department found that this was not a case which could give rise to Labor Law §240(1) liability. The Court explained that the plaintiff was not injured in such a way that a safety device would have prevented his injury.
SNOWPLOW CONTRACTOR DENIED SUMMARY JUDGMENT IN SNOW AND ICE CASE
In the landmark case, Espinal v. Melville Snow Contractors, (98 N.Y.2d 136), a snowplow contractor was found not to have a duty to a plaintiff injured in an area where the snowplow contractor had previously plowed. This general rule was narrowed somewhat by the Fourth Department in Meyers-Kraft v. Keem (4th Dept., July 2009). Under facts rather similar to Espinal, the defendant in Meyers-Kraft was a snowplow contract who had no contractual relationship with the plaintiff. As such, the Court agreed that this was a case subject to the three exceptions to the general rule that a party to a contract is not liable in tort to third persons as spelled out in Espinal. However, in Meyers-Kraft, there was testimony of a chiropractor with an office near the accident scene that snow was spread out across the sidewalk where the plaintiff purportedly fell. The Fourth Department felt there was a question of fact as to whether the snowplow contractor, in plowing the parking lot, had knocked some snow onto the sidewalk area. This was sufficient to create a question a fact as to whether the defendant snowplow contractor had "launched the force or instrument of harm" for a potential tort liability.
MEMBER OF VOLUNTEER ORGANIZATION FOUND TO BE POSSIBLE EMPLOYEE OF DEFENDANT
Another troubling development for the defense came in Gitchell v. Corby, (4th Dept., July 2009). There, the infant plaintiff was injured when struck by a vehicle driven by defendant Corby. Corby was a member of Race Services, Inc., a volunteer organization that agreed to provide services at defendant Watkins Glen Race Track's facility. While at a training seminar on Watkins Glen premises, Corby struck the infant plaintiff with his vehicle. Despite the fact that Corby was a volunteer of another organization and driving his own vehicle, the Fourth Department found a question of fact as to whether Corby was an employee of Watkins Glen for purposes of respondeat superior liability.
NO-FAULT ARBITRATION DECISION DOES NOT HAVE RES JUDICATA EFFECT IN SUBSEQUENT SUM ARBITRATION
In the Matter of Carmen I. Falzone and New York Central Mutual Fire Insurance Company, (4th Dept., July 2009), involved a claim for SUM benefits brought to arbitration. Previously, there had been an arbitration with regard to no-fault benefits. The former arbitration had found the claimant's injuries to be related to the subject motor vehicle accident. The SUM arbitrator found that the plaintiff's injuries were not related to the subject motor vehicle accident and declined to make an award. The claimant brought an Article 75 proceeding seeking to vacate the SUM decision, arguing that the no-fault arbitration, with the same carrier, had a res judicata effect. Judge Burns agreed with the claimant and New York Central Mutual appealed. In a 3-2 decision, the Fourth Department agreed with New York Central and reinstated the SUM decision. As the dissenting justices point out in the published opinion, this is a considerable departure from prior case law. In the past, no-fault arbitration decisions have been found to have a res judicata effect in subsequent proceedings so long as the same parties are involved. It is likely that the claimant will appeal to the New York State Court of Appeals.
FOURTH DEPARTMENT SPARES PLAINTIFF FULL CONSEQUENCES OF HIS FAILURE TO PROVIDE A VERIFIED BILL OF PARTICULARS
In Perry v. Town of Geneva, (4th Dept., July 2009), the plaintiff, Clyde Perry, was injured after his ATV struck some logs that had been left on the property by defendant's employees. The plaintiff there repeatedly failed to provide a response to defendant's demand for a bill of particulars. The defendant moved to preclude plaintiffs from giving testimony as to any matters which would have been disclosed in the bill of particulars. The motion was granted and the case was effectively over for the plaintiff. On appeal however, the Fourth Department found that preclusion was too drastic a remedy and instead issued a 15-day conditional order and charged the plaintiff $1,500.00 as sanction.
Prepared by Scott R. Orndoff
APPLICATION OF ALUMINUM COATING TO ROOF IS NOT "ROUTINE MAINTENANCE"
In Cummings v. Vargo, ___ N.Y.S.2d___ (2009), 2009 WL1652272, the plaintiff fell from the metal roof of the defendant's commercial apartment building while applying fiber aluminum coating to the roof surface using a paint roller.
The plaintiff moved for partial summary judgment as to liability pursuant to New York Labor Law §240(1). The defendant contended that the plaintiff was engaged in "routine maintenance" in performing this task, and hence, not subject to the protections of the statute.
However, the Appellate Division, Fourth Department, agreed with the trial court's ruling that the application of the fiber aluminum coating was the functional equivalent of painting, which is a protected activity under §240(1).
ALLEGED OBSTRUCTION DOES NOT JUSTIFY PLAINTIFF'S ENTRY INTO INTERSECTION
In Frega v. Gallinger Real Estate, ___ N.Y.S.2d ___ (4th Dept., 2009), 2009 WL 1652462, the plaintiff commenced a personal injury action after colliding with another vehicle at an intersection. The plaintiff contended that the defendant had installed one of its real estate signs at the corner of the intersection, allegedly obstructing her view of oncoming traffic. The plaintiff further contended that the defendant's sign caused or contributed to the collision.
The defendant moved for summary judgment as to liability, which was denied by the trial court. However, the Appellate Division, Fourth Department, reversed the trial court's denial and dismissed the plaintiff's summons and complaint. The Appellate Division ruled that the plaintiff was required to stop "at the point nearest the intersecting roadway where she had a view of the approaching traffic on the intersecting roadway before entering the intersection." Furthermore, the Appellate Division took note of the defendant's expert, who established that the sign was located a sufficient distance from the intersection to enable the plaintiff to stop safely and view approaching traffic. As a result, the Appellate Division ruled that the sign was not a proximate cause of the accident and that the plaintiff failed to raise a triable issue of fact.
THE FOURTH DEPARTMENT RULES ON A "SERIOUS INJURY" MOTION
In Hartley v. White, ___ N.Y.S.2d ___ (4th Dept., 2009), 2009 WL1652838, the defendant moved for summary judgment, alleging that the plaintiff's injuries do not qualify as "serious" within the meaning of New York Insurance Law §5102(d). The trial court denied the defendant's motion in its entirety.
The Appellate Division, Fourth Department, reversed the trial court's ruling in part. With respect to the "permanent consequential limitation" and "significant limitation" prongs of "serious injury", the Appellate Division ruled that the defendant established her entitlement to judgment as a matter of law by submitting the affirmation report of a physician who stated that the plaintiff's injuries were attributable to pre-existing degenerative disc disease, and that the plaintiff merely sustained only a temporary aggravation of the condition as a result of the accident. The Appellate Division rejected the contention of the plaintiffs that they raised a triable issue of fact via the submission of a report from a chiropractor and uncertified medical records. The chiropractor's report, although affirmed, was not in admissible form as it was not sworn to before a notary or other authorized official.
However, the Appellate Division affirmed the trial court's denial of the defendant's motion with respect to the 90/180 category of "serious injury". While the defendant's physician opined that the plaintiff sustained a temporary aggravation of pre-existing degenerative changes, the plaintiff herself testified that the she was unable to engage in her typical "household stuff", such as knitting or riding her bike. The Appellate Division concluded that the plaintiff's own testimony raised a triable issue of fact with respect to this category of "serious injury".
COLLAPSING STEPS DO NOT EQUAL "RES IPSA LOQUITUR"
In Heckman v. Skelly, ____ N.Y.S.2d ___ (4th Dept., 2009), 2009 WL1652470, the defendants moved for summary judgment dismissing the plaintiff's summons and complaint. In this case, the plaintiff commenced a personal injury action after sustaining injuries to his leg when a concrete step leading to the defendant's residence collapsed. The plaintiff was leaving the premises at the time of the accident after performing an inspection for a home rehabilitation and improvement company.
The Appellate Division, Fourth Department, affirmed the trial court's holding that the doctrine of res ipsa loquitur did not apply to this case, since the injury was not "caused by the agency or instrumentality within the exclusive control of the defendant." In this case, the defendants established that the house and front steps were built nearly 100 years before they owned or occupied the residence. As a result, any negligence associated with the construction or maintenance of the front steps could have been attributable to a previous owner or builder.
The Appellate Division also affirmed the trial court's ruling that the defendants had established as a matter of law that they neither created the dangerous condition nor had actual or constructive notice of it. The defendants demonstrated that the front steps were constructed before they purchased the house and that they were unaware of any problems with the steps. Additionally, the plaintiff himself, as a part of his inspection, had indicated that he did not consider the front steps to be a safety concern prior to his own accident.
COURT OF APPEALS AFFIRMS JURY'S FINDING OF MEDICAL MALPRACTICE
In Lang v. Newman, ___ N.Y.3d ___ (2009), 2009 WL 1585827, the plaintiff awoke with numbness on the left side of her body, slurred speech and facial drooping. After arriving to the emergency room, the defendant doctors performed a routine neurological examination and gave her medicine to treat her headache. The plaintiff was subsequently discharged with a final diagnosis of a migraine headache.
Shortly thereafter, the plaintiff's primary care physician sent to her a different hospital believing that she was experiencing a stroke – which was later confirmed through MRI testing.
At trial, the plaintiff's expert testified that, had the defendant admitted the plaintiff to the hospital rather than discharging her, the stroke would have been diagnosed and she would have been given anti-coagulant medication which would have mitigated the seriousness of the injuries she sustained.
The jury found the defendants liable for failing to admit the plaintiff to the hospital and that such negligence was a substantial factor in causing her injuries. The Appellate Division affirmed the jury's verdict, and the Court of Appeals agreed with this ruling, indicating that the verdict was based on legally sufficient evidence.
COURT OF APPEALS AFFIRMS RULE OF LAW ON STRICT LIABILITY FOR INJURIES CAUSED BY DOMESTIC ANIMALS
In Petrone v. Fernandez, ___ N.Y.3d ____ (2009), 2009 WL 1585848, the plaintiff, a mail carrier, was injured while fleeing an unrestrained Rottweiler. According to the plaintiff, she was about to deliver mail to the defendant's home when she noticed that the dog was unrestrained. She turned to walk back to her vehicle. According to her deposition testimony, she then witnessed the dog approaching her. In a panic, she attempted to jump into her car window, injuring her finger in the process. It was undisputed that the dog neither bit her nor barked at her. The deposition testimony established that the dog did little more than harmlessly sit next to her while she attempted to jump through her car window.
The plaintiff sued the defendants (the dog's owner and the homeowner), alleging that the defendants knew of the dog's vicious propensities. Additionally, the plaintiff alleged a separate cause of action based upon the defendants' violation of the local leash law.
The trial court granted the defendants' motion for summary judgment after the defendants established that there was no evidence to suggest their knowledge of the dog's vicious propensities.
The Appellate Division reversed the trial court's decision, ruling that a dog owner "may be held liable to a plaintiff based upon an alleged violation of the local leash ordinance, and the dog's behavior, even though the dog has not displayed any prior vicious propensities."
The Court of Appeals reversed the Appellate Division's decision and articulated that, "(w)hen harm is caused by a domestic animal, its owner's liability is determined solely by application of the rule articulated in Collier v. Zambito, 1 N.Y.3d 444 (2004), i.e., the rule of strict liability for harm caused by a domestic animal whose owner knows or should have known of the animal's vicious propensities." The Court of Appeals found the defendants' violation of the local leash law to be "irrelevant because such a violation is only some evidence of negligence, and negligence is no longer a basis for imposing liability." In other words, no cause of action stated in negligence will be recognized for damages attributable to the conduct of domestic animals. As a result, the Court of Appeals reversed the ruling of the Appellate Division and reinstated the order of summary judgment in favor of the defendants.
Prepared by Michael J. Chmiel
Gap in Proof Insufficient to Establish Lack of Constructive Notice
In James v. Steinmiller, _____ N.Y.S.2d ______, 2009 WL 1163882 (4th Dept. 2009), the plaintiff commenced an action seeking damages for injuries she sustained when she fell on a substance on the defendant's property. The defendant moved for summary judgment arguing that he lacked constructive notice because the plaintiff could not establish how long the substance was in place on the defendant's property nor could she establish the identity of the substance. The Fourth Department upheld the trial court's denial of the defendant's motion because the defendant failed to meet his initial burden that the substance had not been on his property "for a sufficient length of time to permit him to discover and remedy the condition." Id., citing Mancini v. Quality Mkts., 256 A.D.2d 1177, 684 N.Y.S.2d 391 (4th Dept. 1988).
Operation of Police Vehicle Did Not Rise to the Level of Reckless Disregard.
In Herod v. Mele, _____ N.Y.S.2d ______, 2009 WL 1163932 (4th Dept. 2009), the plaintiff sued Orleans County and a Sheriff's Deputy for injuries sustained when she was struck by a police vehicle that was responding to an emergency call. The Fourth Department ruled that where the vehicle was enroute to an emergency operation, it was entitled to the protections of Vehicle & Traffic Law §1104(e) and should be held to the reckless disregard standard of care. The court further found that there was no evidence of reckless disregard, even where the defendant was operating his vehicle on wet roads at speeds exceeding the posted speed limit, because he was "duty-bound to use all reasonable means to arrive at the scene as soon as possible."
Insurer's Delay Insufficient to Establish a Reasonable Excuse for an Insured's Default.
In Leifer v. Pilgreen Corporation, _____ N.Y.S.2d _____, 2009 WL 350723 (2nd Dept. 2009), the plaintiff moved for a default judgment after the defendant failed to timely serve its answer and failed to seek an additional extension of time once the first expired. The court ruled that the defendant did not successfully oppose the motion because it did not demonstrate a justifiable excuse for its default and the existence of a meritorious defense. In an attempt to demonstrate a reasonable excuse for the delay, the defendant argued that it failed to answer because of its insurance carrier's long delay in defending the action. The court ruled that the insurance carrier's delay did not constitute a justifiable excuse for the defendant's default and granted the plaintiff a default judgment.
Sum Carrier Must Show It was Prejudiced by Late Notice of Sum Claim to Disclaim Coverage.
In Bhatt v. Nationwide Mutual Ins. Co., 877 N.Y.S.2d 562, 2009 N.Y. Slip Op. 03301 (4th Dept. 2009), the plaintiff provided her SUM carrier prompt notice of a motor vehicle accident and of her subsequent claim for no-fault benefits. Nearly three years after the accident, the plaintiff provided notice to her SUM carrier of her claim under the SUM endorsement. The defendant SUM carrier disclaimed coverage on the ground that the plaintiff had failed to provide timely notice of the SUM claim. The Fourth Department held that where an insured previously provided timely notice of an accident, the carrier must establish that it was prejudiced by late notice of the SUM claim before it may properly disclaim coverage. The court held that the defendant failed to establish that it was prejudiced by the plaintiff's delay in providing notice of the SUM claim and upheld the trial court's denial of the defendant's summary judgment motion.
Defense Verdict Overturned as Against the Weight of the Evidence.
The Fourth Department recently overturned a jury verdict on the issue of liability in Bailey v. Daly, 876 N.Y.S.2d 805, 2009 N.Y. Slip Op. 03217 (4th Dept. 2009). This matter arose from a slip and fall accident that occurred on a walkway at the defendant's residence. The evidence presented at trial established that the subject walkway had not been completely cleared of snow and ice and patches of ice remained. Following the completion of trial, the jury found that the defendants were negligent, but that their negligence was not a substantial factor in causing the plaintiff's injuries. The Fourth Department reversed the Supreme Court's order denying the plaintiff's motion to set aside the verdict and granted a new trial on the issue of liability. The Fourth Department held that given the facts of the case, the issues of negligence and proximate cause were "so inextricably interwoven" that it was logically impossible for a jury to find negligence without also finding proximate cause.
Mere Fact that Farm Dog is Nnrestrained Does not Establish its Propensity to Interfere with Traffic.
In Myers v. MacCrea, 61 A.D.3d 1385, 876 N.Y.S.2d 806 (4th Dept., 2009), the plaintiff sued to recover for injuries sustained when one of the defendants' dogs ran into the road and collided with his bicycle. The defendants moved for summary judgment arguing that they had no constructive notice that their dog had a propensity to interfere with traffic on the road. The plaintiff opposed this motion, arguing a question of fact exists where the defendants' dogs were allowed to run freely on a 100-acre farm. The plaintiff further argued a question of fact exists where one of the defendants admitted that the dog was "trouble." The Fourth Department affirmed the lower court's decision in favor of the defendants holding that the evidence presented by the plaintiff failed to raise a question of fact that the defendants knew, or should have known, that their dog had a propensity to interfere with traffic.
Prepared by Patrick D. Slade
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“NON-CUMULATION CLAUSES” SAVE THE DAY FOR INSURERS WHO ISSUE LIABILITY COVERAGE ON A YEARLY BASIS
In the recent Court of Appeals case of Hiraldo v. Allstate Insurance, ---N.E.2d----, 2005 WL 2759234 (N.Y.), 2005 Slip Op. 07830, the plaintiff, Alexandria Hiraldo, first obtained a judgment of $700,000 against her landlord, whereupon both parties entered into a stipulation assigning any of the landlord’s rights to Hiraldo. Then upon such stipulation, Hiraldo sued her landlord’s insurer on behalf of her infant son, Christopher, alleging that he was exposed to lead paint throughout the period of the lease. Allstate paid $300,000 into court, and asserted that the payment discharged its liability. Ms. Hiraldo disagreed and brought an action to recover the rest of the landlord’s obligation from Allstate.
Allstate Insurance Company issued a $300,000 liability policy for a term of one year beginning in February of 1991. It was subsequently extended the following two years until 1993. Each of the three annual policies provided, “This policy applies only to losses which occur during the policy period, as shown on the declarations page.” In spite of this, Ms. Hiraldo sued for the outstanding $400,000, claiming that since the loss occurred during each of the three policy periods, and each policy applies “to losses which occur during the policy period,” Allstate is liable up to its limit for each policy. Allstate countered by relying on specific policy language, which stated, “Regardless of the number of…policies involved, all bodily injury … resulting from one accident or from continuous or repeated exposure to the same general condition is considered the result of one loss. ”Based on this “non-cumulation clause” the Supreme Court granted summary judgment dismissing the plaintiff’s complaint, and the Appellate Division, 778 N.Y.S.2d 50, affirmed. The Court of Appeals granted leave to appeal, and also affirmed.
The Court recognized the inherent unfairness posed to both parties. For the defendant, the Court ceded that it did not seem right that an insurer that never issued more than $300,000 in coverage could be liable for $900,000 for a single loss. As to the plaintiff, the Court recognized that if each of the successive policies had been written by a different insurance company, presumably each insurer would be liable up to the limits of its policy. It did not seem just that the plaintiff should recover less money because one insurer wrote all the policies. Ultimately the Court gave effect to the unambiguous language of the “non-cumulation” clause and held that as the plaintiff’s continued exposure constituted one loss, Allstate can only be liable for the policy limit of one policy, or $300,000. In support of its finding, the Court cited a federal case applying New York law and interpreting identical policy language as fatal to the plaintiff’s claim (see Bahar v. Allstate Ins. Co., 2004 WL 1782552 [SD NY, Aug. 9, 2004] ).
In stressing the importance of including such “non-cumulation clauses” in policies where insurers underwrite for successive years or terms, the Court of Appeals cited Natl. Union Fire Ins. Co. v. Farmington Cas. Co., 1 Misc.3d 671, 765 N.Y.S.2d 763. In Natl. Union Fire Ins. Co., it was found that successive policy limits may be cumulatively applied to a single loss where the policies do not clearly provide otherwise.
In contemplating the potential impact of the Natl. Union Fire Ins. Co. decision, one can imagine the staggering losses insurance companies may face when dealing with “continuous exposure” cases if policies were issued to a particular insured for a consecutive number of years. Hiraldo points to one unconditional truth: the careful insurer will include “non-cumulation clauses” to any policy where the insured may renew for successive years or terms.
NICHOLAS L. MINEO
Recent Construction of the Pommells Decision
In April, 2005 the Court of Appeals issued the Pommells v. Perez, decision 4. N.Y.3d 566, 797 N.Y.S.2d 380 (2005) (see also ‘Summing Up’ dated June 13, 2005) which imposed upon plaintiffs a more exacting interpretation of the 'serious injury' threshold. Subsequent appellate decisions indicate the appellate courts intend to conform to this strict interpretation.
In Clark v. Perry, 801 N.Y.S.2d 645 (4th Dept. 2005) the Fourth Department upheld the dismissal of a plaintiff’s case after the defense offered evidence of a pre-existing injury. The Court held that the plaintiff’s evidence in response to defendant’s motion to dismiss failed to properly address the issue of causation. Further, the Court stated that, "in the absence of objective evidence establishing the aggravation [of the pre-existing injury] as opposed to [continuing symptoms from] the underlying condition" the plaintiffs action should be dismissed.
In Agramonte v. Marvin, ---N.Y.S.2d---, ---A.D.3d--- WL2561465 (1st Dept. 2005) the First Department affirmed the dismissal of the plaintiff’s action alleging a serious injury when the plaintiff failed to explain a significant gap in treatment. The Court noted that the plaintiff had treated for three months after the accident but then stopped for two years. The Court held that, "the unexplained gap in treatment is fatal to plaintiff's claims for serious injury."
In, Montomgery v. Pena, 798 N.Y.S.2d 17, 19 A.D.3d 288 (1st Dept. 2005) the First Department held that it was reversible error to deny defendant’s motion to dismiss where the defense provided evidence of a pre-existing injury. In response to the defendant’s motion, the plaintiff offered a physician’s affidavit noting physical limitations in the right knee and shoulder. The Court stated that the plaintiff did not meet his burden of proof because his doctor failed to provide any objective basis for concluding the plaintiff’s symptoms were the result of the accident and not the pre-existing injury.
In Farozes v. Kamran, ---N.Y.S.2d ---, ---A.D.3d.--- WL 2438929 (2nd Dept. 2005) the Second Department affirmed the dismissal of the plaintiff's action alleging a cervical injury where the plaintiff failed to adequately explain a four year gap in medical treatment following the accident at issue.
In Maye v. Stearns, 798 N.Y.S.2d 152, 19 A.D.3d 902 (3rd Dept. 2005) the Third Department upheld the dismissal of the plaintiff's claim where the defense provided evidence of pre-existing injuries not known to the plaintiff's chiropractor. The Court held that because the chiropractor failed to address the plaintiffs' pre-existing symptoms there was an inadequate foundation to support his conclusions on causation.
The cited cases suggest that the appellate courts are interpreting Pommells as placing two additional prerequisites on plaintiffs alleging soft tissue injuries. First, a plaintiff has the burden to explain a gap in treatment following a soft tissue injury. Second, a plaintiff’s physician must provide an objective basis for concluding that a plaintiff’s symptoms are not solely the result of a pre-existing condition. Further, it is not enough for a medical provider to summarily state that an accident is the cause of a plaintiff’s injury when the defense can provide evidence of a pre-existing condition. This requirement could provide a strong argument in defense to a negligence action where the plaintiff presents pre-existing physical complaints.
THE FEDERAL GOVERNMENT STRIKES OUT AGAINST STATE VICARIOUS LIABILITY LAWS
Until recently, §388 of the New York State Vehicle and Traffic Law permitted long term leasing companies to be held liable for the negligent acts of those driving their leased vehicles. Section 388 of the VTL provides that "[e]very owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle…".
For some time leasing companies have challenged the constitutionality of this provision of the VTL. In that regard, they have argued that holding long term lessors vicariously liable for the acts of their lessees bears no rational basis for achieving any governmental purpose and is therefore a violation of the equal protection and due process clauses of both the United States and New York State constitutions.
In 2004, Ford Motor Credit Company and Ford Credit Titling Trust Company made such a challenge before the Appellate Division, Fourth Department. See Chilberg v. Chilberg, 13 A.D.3d 1089, 788 N.Y.S.2d 533 (4th Dept., 2004).
In Chilberg, Id., the then fifteen year old plaintiff was accidentally run over by the pick-up truck being driven by her father as she lay in the driveway of her family's home sunbathing. The vehicle driven by the plaintiff's father was, at the time of the accident, leased from Ford Motor Credit Company and Ford Credit Titling Trust Company.
Refusing to agree with Ford's arguments, the Fourth Department held that "[o]ne legislative purpose in enacting the statute was to ensure that persons injured by the negligent operation of a motor vehicle would have recourse to a financially responsible person...". Id. at p. 1092.
Section 388 of the VTL was the reigning law until very recently when, on August 10, 2005, President Bush signed the Transportation Equity Act. This massive transportation bill contains a provision prohibiting states from holding long term leasing companies, or car rental companies, vicariously liable.
At first glance, in light of the general rule that state law is preempted to the extent that it conflicts with federal law, it appears that this new law brings an end to New York State's practice of holding leasing companies vicariously liable. However, some have questioned the constitutionality of this new law given the application of the McCarran-Ferguson Act and the limitations imposed on Congress' ability to control interstate commerce.
The McCarran-Ferguson Act, enacted in response to the Supreme Court's decision in U.S. v. South-Eastern Underwriters Assn., 322 U.S. 533, 64 S.Ct. 1162 (1944), provides that "[n]o Act of Congress shall be construed to invalidate, impair, or supercede any law enacted by any State for the purpose of regulating the business of insurance…unless such Act specifically relates to the business of insurance…" See 15 U.S.C.A. §1012(b).
In addition to the above, some also question whether this new law represents a constitutional exercise of Congress' authority under the Commerce Clause of the United States Constitution.
It is well settled that, under authority granted to it by the Commerce Clause of the United States Constitution, Congress may regulate the use of the channels of interstate commerce, the instrumentalities of interstate commerce and those activities having a substantial relation to interstate commerce. See U.S. v. Lopez, 514 U.S. 549, 115 S.Ct. 1624 (1995). However, the Supreme Court has also determined that Congress' authority, under the Commerce Clause, is not without bounds. As such, in order for this new law to withstand constitutional scrutiny, it must be shown that vicarious liability substantially affects interstate commerce.
The Transportation Equity Act became effective on August 10, 2005. Although it is likely that the constitutionality of this new federal law will be challenged given the issues addressed above, for the interim, §388 of New York's Vehicle and Traffic Law has been preempted. As such, neither long term leasing companies nor rental companies may be held vicariously liable for the acts of those driving their leased or rented vehicles. Whether this will remain the law of the land remains to be seen at this time.
THE COURT OF APPEALS CONSIDERS THE ISSUE OF
SHARING DEFENSE COSTS BETWEEN TWO PRIMARY INSURANCE POLICIES
The Court of Appeals recently dealt with the topic of sharing defense costs by primary insurance carriers in the case of General Motors Acceptance Corporation, et al v. Nationwide Insurance Company, 4 N.Y.3d 451, 796 N.Y.S.2d 2 (2005). In the General Motors case, the Court of Appeals held that where two primary insurance policies covering the same accident have the same limits, the insurance carriers must share the defense costs equally.
In General Motors, a lessor leased an SUV from the plaintiff, General Motors Acceptance Corporation (GMAC). The lease required the lessor to obtain an automobile insurance policy and include GMAC as an additional insured under the policy. The lessor procured a suitable primary insurance policy through the defendant, Nationwide Insurance Company. The policy provided liability coverage in the amount of $100,000 per person and $300,000 per occurrence. In addition to the aforementioned policy, and as additional security, GMAC independently secured two policies from Fireman's Fund Insurance Company. The first, a primary policy, provided the same coverage as the policy procured by the lessor from Nationwide. The second was an umbrella policy providing $9,000,000 in coverage.
The lessor was subsequently involved in a motor vehicle accident that produced multiple lawsuits and threatened the limits of all the policies. Because of the greater exposure imposed on Fireman's, Nationwide tendered the right to conduct and control the defense to Fireman's. Fireman's accepted tender of the defense pursuant to a reservation of rights to pursue collection of all defense costs from Nationwide. The parties settled, completely exhausting the Nationwide policy and coming close to exhausting the Fireman's policies as well. The legal fees incurred by Fireman's in defending the action exceeded $200,000. Due to the clause in the Fireman's policy reciting that its primary coverage was deemed to be "excess" to any other applicable insurance, Fireman's sought full reimbursement from Nationwide for the defense costs. Nationwide argued that the defense costs should be shared according to the relative exposure of both carriers. The instant action ensued. The trial court awarded Fireman's full reimbursement of defense costs and the Appellate Division affirmed.
The Court of Appeals reversed the decisions of the lower courts, holding that the defense costs should be based on the limits of both primary policies regardless of the provision in Fireman's primary policy that stated it should be deemed "excess" to the other. The Court reasoned that since the limits of the two primary policies were identical, each must bear 50% of the defense costs. The Court further held that the $9,000,000 "excess" policy procured by GMAC from Fireman's did not give Fireman's a higher obligation with respect to the obligation to defend. The Court cited the well-known rule that "an insurer's duty to defend is broader than its duty to indemnify." The Court reasoned that the provision in the Fireman's policy making its coverage "excess" to the other policies is only applicable to the obligation to indemnify and not to its duty to defend.
This decision begs the question whether the outcome would be different if the limits of the multiple primary policies were unequal. In cases where the limits are unequal, the General Motors decision suggests that the defense costs would be divided in the same proportions as the limits.
THE COURT OF APPEALS AGAIN CONSIDERS AN INSURER’S RIGHT TO DISCLAIM UPON LATE NOTICE
Under the “no-prejudice” rule, an insured's failure to provide timely notice of an accident relieves the carrier of its obligation to perform regardless of whether the carrier can demonstrate prejudice. The "no-prejudice" rule is actually a limited exception to traditional contract law, which requires demonstration of a material breach or prejudice before one can escape his duty to perform under the contract. Previously, in the case of In re Brandon (Nationwide Mut. Ins. Co.), 97 N.Y.2d 491, 743 N.Y.S.2d 53 (2002), the Court of Appeals declined to apply the "no-prejudice" rule where the insured failed to give her own insurer timely notice of her commencement of litigation against an alleged tort-feasor. Such notice is necessary to trigger entitlement to SUM benefits. In Brandon, the Court of Appeals found that the insured had violated the terms of the insurance policy by providing late notice of her SUM claim to the insurer. However, the insured timely applied for no-fault benefits. Since the insurer had timely notice of the actual accident and resulting injuries, the Court of Appeals ruled that the insurer would have to demonstrate prejudice in order to properly disclaim coverage.
The Court of Appeals has recently revisited the application of the "no-prejudice" rule in the context of a liability insurance policy, and this time reached a different result. In the recent case of Argo Corp. v. Greater New York Mut. Ins. Co., 4 N.Y.3d 332, 827 N.E.2d 762, 794 N.Y.S.2d 704 (2005), the injured claimant in the underlying action, Igo Maidanek, slipped and fell on a sidewalk adjacent to an apartment complex managed by Argo Corporation. In February of 2000, Maidanek commenced suit against Argo by serving a summons and complaint on the Secretary of State. Argo did not notify its insurer, Greater New York Mutual Insurance Company (GNY), of the lawsuit until May 2, 2001, which was about three months after Argo received a notice of entry of the default judgment. GNY then disclaimed coverage on June 4, 2001 on the basis that the notice of the lawsuit and incident was late and that such notice was a “condition precedent” to coverage under the policy. Argo, in turn, brought a declaratory action against GNY in an effort to secure coverage under its policy.
Argo asked the Court of Appeals to apply the rationale of Brandon to the facts of this case. However, the Court of Appeals distinguished this case from Brandon in light of the fact that the insurer did not receive timely notice of either the lawsuit or the actual accident. The first notice of either did not occur until some 16 months after service of a summons and complaint upon the insured. “The rationale of the no-prejudice rule is clearly applicable to a late notice of lawsuit under a liability insurance policy. A liability insurer, which has a duty to indemnify and often also to defend, requires timely notice of lawsuit in order to be able to take an active, early role in the litigation process and in any settlement discussions and to set adequate reserves. Late notice of lawsuit in the liability insurance context is so likely to be prejudicial to these concerns as to justify the application of the no-prejudice rule. Argo's delay was unreasonable as a matter of law and thus, its failure to timely notify GNY vitiates the contract. GNY was not required to show prejudice before declining coverage for late notice of lawsuit.”
In an interesting postscript, New York State Senator John Bonacic recently introduced a bill, which, if passed, would prevent an insurer from disclaiming on the basis of late notice unless it could prove “substantial prejudice” as a result of the late notice. This bill is known as “S1770” and has not yet reached a vote. We will keep a close eye on this matter and report any movement on the bill.
THE COURT OF APPEALS ATTEMPTS TO CURTAIL NO-FAULT ABUSE
In Pommells v. Perez, 2005 WL 975859 (N.Y., April 28, 2005), the Court of Appeals attempts to clarify the issues surrounding the question of serious injury. The Pommells decision consolidates three separate cases, all dealing with plaintiffs claiming to have suffered soft tissue injuries in car accidents.
In Pommells, following the accident, the plaintiff remained out of work for six months while he attended a course of physical therapy. The plaintiff then sought no further medical treatment for more than three years. However, two years after the accident, the plaintiff developed a kidney condition resulting in surgery after which the plaintiff was again out of work for six months. In opposition to the defendants= motion for summary judgment, the plaintiff submitted unsworn treating doctors= reports indicating a herniated disc and the need for further treatment. The plaintiff also submitted the report of an orthopedist who concluded that the plaintiff=s symptoms were Acausally related to the history as stated@. The history included both the car accident and the plaintiff=s kidney problems.
The Court of Appeals noted that mere proof of a herniated disc, without additional objective medical evidence establishing causal significant physical limitations, is not sufficient. A cessation of treatment is not dispositive as the law Asurely does not require a record of needless treatment in order to survive summary judgment.@ However, a plaintiff who terminates therapeutic measures following the accident, while claiming a serious injury, must offer some reasonable explanation for having done so. The plaintiff provided no explanation for the cessation of treatment. Nor did his doctors explain whether the claimed symptoms were caused by the accident or the plaintiff=s intervening kidney problem. As such, the Court of Appeals concluded that the defendants= motion for summary judgment was correctly granted.
In Carrasco v. Mendez, discussed within Pommells, the plaintiff=s initial treating physician, Dr. Vadim Miloradovich noted that the plaintiff had traumatic herniations in the cervical and lumbar spine as a Adirect result of the car accident@. Another treating physician, Dr. Emmanuel Lambrakis, noted deficiencies in range of motion and causally related a permanent severe partial disability. However, the IME physician concluded that the plaintiff=s current symptoms were caused by degenerative disc disease. The defendant also submitted two reports from Dr. Miloradovich, noting that following the motor vehicle accident the plaintiff=s symptoms had returned to a baseline of symptoms, which were the product of a pre-existing degenerative condition. The Court of Appeals, in affirming the dismissal of the case, noted that the defendant=s submissions shifted the burden to the plaintiff to come forward with evidence indicating that the plaintiff sustained a serious injury causally related to the accident. The defendant presented evidence of a pre-existing condition causing the plaintiff=s symptoms and the plaintiff ultimately failed to rebut that evidence sufficiently to raise an issue of fact. The Court of Appeals held that the affidavit of Dr. Lambakis submitted by the plaintiff, which causally related the plaintiff=s symptoms to the accident, did not sufficiently refute the defendant=s evidence of a pre-existing degenerative condition. In fact, the Lambrakis affidavit established that the plaintiff=s pain and specific losses in range of motion were consistent with the degenerative condition identified by MRI.
Brown v. Dunlap, also discussed within the Pommells opinion, dealt with the issue of a gap in treatment and its bearing on the plaintiff=s ability to satisfy the serious injury threshold. In Brown, the plaintiff was diagnosed with bulges and a herniation in the lumbar spine with limitation of movement, constituting a permanent injury. Once the plaintiff=s treating physician concluded that any further treatment would only be palliative in nature, treatment ceased for two and a half years. The Court of Appeals concluded that the defendants= submissions, consisting of the sworn reports of a radiologist, an orthopedist, a neurosurgeon, a neurologist, and an orthopedic surgeon, were sufficient to meet their initial burden arguing that although causally related, the plaintiff=s injuries were minor at best. However, the Court noted that the plaintiff=s submissions in opposition, raised material issues of fact as to whether the plaintiff sustained a permanent or significant injury. The Court of Appeals excused the gap in treatment noting that Aa plaintiff need not incur the additional expense of consultation, treatment or therapy, merely to establish the seriousness or causal relation of his injury@. As such, the Court of Appeals reversed the dismissal of the plaintiff=s case and reinstated the complaint.
In its treatment of these decisions, the Court of Appeals generally comments that dismissal is particularly appropriate where there is a gap in treatment or a pre-existing condition.
THE COURT OF APPEALS RELAXES THE "NO PREJUDICE" RULE
IN SUM CASES WHERE INSUREDS GIVE TIMELY NOTICE OF ACCIDENT
New York State=s "no prejudice" rule allows an insurance company to disclaim coverage for late notice regardless of whether it suffered prejudice or harm. In Rekemeyer v. State Farm Mutual Automobile Insurance Company, 2005 W.L. 756620 (2005), the Court of Appeals relaxed this rule by holding that it did not apply in a supplementary uninsured/under-insured motorist (SUM) dispute where the insurance company was timely notified of the accident.
The plaintiff, in Rekemeyer, was injured in a motor vehicle accident on May 8, 1998. She immediately notified her insurance company, State Farm, of the accident and made a claim for no-fault benefits. At the time of the accident, the plaintiff had been off work for eighteen years due to a pre-existing back problem. One year later, on April 27, 1999, the plaintiff sued the other driver. On July 21, 1999, the plaintiff notified State Farm of the suit. In September of 1999, the plaintiff discovered that the tort-feasor=s liability coverage was limited to $50,000.00.
In October, 1999, the plaintiff underwent surgery on her back which she alleged was a direct result of the May, 1998 accident. On March 12,2000, the defendant driver offered $45,000.00 to settle the case. Believing that her injuries were worth more than $50,000.00, the plaintiff notified State Farm on March 31,2000, almost two years following the accident, that she would be making a claim for SUM benefits under her policy. While preserving her rights to pursue SUM benefits, the plaintiff, on April 10, 2000, settled with the tort-feasor for $50,000.00. State Farm disclaimed on April 25, 2000 based upon plaintiff=s failure to notify it of the SUM claim "as soon as practicable."
The plaintiff filed a declaratory judgment action against State Farm alleging that she was entitled to SUM benefits under her policy. State Farm immediately moved for summary judgment citing plaintiff=s failure to comply with the notification requirement in her contract.
In a case of first impression, the Court of Appeals, in its opinion, noted, "where an insured previously gives timely notice of the accident, the carrier must establish that it is prejudiced by a late notice of a SUM claim before it may properly disclaim coverage.@ The Court took into account the plaintiff=s pre-existing injuries , intervening surgeries and the tort-feasor=s affirmative defenses regarding liability and concluded that the plaintiff could not have known the tort-feasor was "underinsured" until the settlement was reached. The Court of Appeals held that the phrase "as soon as practicable" in SUM cases meant the insured must give notice to it=s carrier with "reasonable promptness@ once that insured knew or reasonably knew the tort-feasor was underinsured. According to the Court of Appeals, this test should be done on a case by case basis.
The Court reasoned that the "no prejudice" rule was created to protect insurance carriers from fraud and collusion. The rule provides insurance companies time to investigate claims. In this matter, the plaintiff gave immediate notice of the accident and State Farm actually performed an investigation. The Court reasoned that to allow State Farm to deny coverage in this matter without demonstrating prejudice would not serve the rule=s intent. The Court would be providing a windfall to State Farm if it denied coverage. The case was remanded back to the trial court to provide State Farm a chance to demonstrate prejudice.
AN EMPLOYER THAT FAILS TO SECURE
WORKERS COMPENSATION INSURANCE FOR ITS EMPLOYEES
IS NOT PROTECTED FROM THIRD-PARTY LIABILITY PURSUANT TO WORKERS COMPENSATION LAW § 11
The Court of Appeals has recently held that an employer cannot benefit from Workers' Compensation Law § 11 protections against third-party liability unless it first obtains workers' compensation insurance for its employees. Boles v. Dormer Giant, Inc., 2005 WL 405355 (N.Y., February 22, 2005).
In Boles, the plaintiff-worker was injured while installing siding on a two-story one-family house when his scaffold collapsed thereby causing him to fall eight feet to the ground below. In that case, the homeowners had contracted with Dormer Giant, Inc. to remodel their home which, in turn, subcontracted with the plaintiff's employer, Personal Touch Home Improvements, Inc., for the siding installation. As a result of the fall and injuries sustained, the plaintiff sued Dormer Giant which, subsequently, initiated a third-party action against Personal Touch. By virtue of the third-party complaint, Dormer Giant was seeking indemnification and contribution from Personal Touch for the plaintiff's damages.
At Special Term, the plaintiff moved for summary judgment under Labor Law § 240(1) against Dormer Giant. At the same time, Personal Touch cross-moved for summary judgment on the third-party complaint. In doing so, Personal Touch claimed that Dormer Giant's indemnification and contribution claim was barred by Workers' Compensation Law § 11. Dormer Giant opposed on the basis that the protections provided by Workers' Compensation Law § 11 were inapplicable to Personal Touch as it had failed to secure workers' compensation for its employees.
Pursuant to Workers' Compensation Law § 11, an employer cannot be held liable for contribution and indemnification to any third party for injuries sustained by an employee while working. One exception to this rule arises when the employee has suffered a "grave injury" as that term is defined by the statute. Based on this, the Supreme Court granted Personal Touch's cross-motion thereby dismissing the third-party complaint against it. Subsequently, the Second Department agreed with the lower court thereby affirming the Supreme Court's decision. Leave was granted to appeal to the Court of Appeals.
The Court of Appeals reversed. In doing so, the Court analyzed the legislative history of Workers' Compensation Law § 11 and determined that the protections afforded an employer under that section against third-party liability were part of an underlying bargain between business and labor. By virtue of this bargain, workers were to obtain necessary medical benefits and compensation for work related injuries while employers would be shielded from tort liability, except in the case of a "grave injury". However, in this case, as Personal Touch did not hold up its end of the bargain by failing to secure workers' compensation for its employees, the Court ruled that it cannot now benefit from the § 11 protection. The Court noted that to rule otherwise would discourage other employers from providing the necessary benefits to their employees as provided by workers' compensation.
James S. Curtis
FOURTH
DEPARTMENT WEIGHS IN ON DUTY
OWED TO THOSE WHO ARE NOT PARTIES TO A
SERVICE CONTRACT
Generally in New York, where there is no legally recognized duty, one is not liable to an injured person, however careless one's conduct or foreseeable the harm. For example, in Pulka v. Edelman, 40 N.Y.2d 781, 390 N.Y.S.2d 393 (1976), the court held that a garage operator had no duty to protect pedestrians from the negligent conduct of its patrons. However, in Espinal v. Melville Snow Contractors, Inc., 98 N.Y.2d 136, 746 N.Y.S.2d 120 (2002), three exceptions are described by which a party entering into a contract to render services may be said to have assumed a duty of care to third-parties and thus be potentially liable in tort. The exceptions are as follows:
1. Where a contracting party, in failing to exercise reasonable care in the performance of his contractual duties 'launches a force or instrument of harm';
2. Where the plaintiff detrimentally relies on the continued performance of the contracting party's duties;
3. Where the contracting party has entirely displaced another party's duty to safely maintain the premises.
Despite the broad language of these exceptions, the courts have been reluctant to impose liability in favor of a plaintiff who is not a party to a contract purportedly breached by the defendant. In Church v. Callahan Industries, 99 N.Y.2d 104, 752 N.Y.S.2d 254 (2002), the plaintiff suffered catastrophic spinal injuries at the age of nine when the vehicle in which he was a passenger veered off the New York State Thruway and crashed into a ditch. The defendant had contracted with the Thruway Authority to replace and extend the guardrail system in the area where the accident occurred. Despite evidence that the guardrail, if completed pursuant to the contract, may have prevented the vehicle from crashing into the ditch, the Court found that the defendant owed no duty to the plaintiff because the defendant had not entirely displaced the Thruway Authority's duty to maintain a safe premises.
In December of 2004, the Fourth Department had occasion to apply Church, in the case Gerbino v. Tinseltown USA, 2004 WL 3019093, 2004 N.Y. Slip Op 09789 (4th Dept., 2004). Plaintiff, Gerbino, was an independent contractor hired by defendant Tinseltown as a security guard at its movie theater. Co-defendant John Stewart d/b/a Protect Security had contracted with defendant Tinseltown to provide overall security for the premises. The plaintiff was injured while attempting to break up a fight between moviegoers and brought his action against both Stewart and Tinseltown. The Fourth Department held that Stewart did not owe a duty to protect the plaintiff. Citing Church, the Court noted that defendant Stewart did not have a contractual relationship with the plaintiff and did not acquire a duty to the plaintiff pursuant to exceptions described in Espinal.
Given the language of the exceptions in Espinal, discussed above, an argument could be made that the facts in Gerbino satisfy at least the second or third exceptions. However, the Fourth Department declined to impose liability, showing an inclination to construe the exceptions in a narrow fashion.
THE WORKER WHO DECIDES TO FOREGO THE
PROTECTION OF SAFETY DEVICES IS NOT ENTITLED TO THE
PROTECTION OF LABOR LAW §240.
The Court of Appeals recently narrowed the scope of Labor Law §240 by holding that a worker who is provided adequate safety devices and trained with respect to their use is not entitled to the protections afforded by Labor Law §240(1). Cahill v. Triborough Bridge & Tunnel Authority, 2004 WL 2941213 (N.Y., Dec. 21, 2004).
The ruling, one of a long series of cases attempting to interpret the strict liability provisions of Labor Law §240, provides an implicit extension of the "recalcitrant worker" defense.
The plaintiff in Cahill, a worker at a construction project at the Triborough Bridge, attended frequent safety meetings prior to the accident at issue. The meetings included instruction in the use of safety lines that were supplied for the use of the workers. Additionally, several weeks before the accident, a supervisor saw the plaintiff climbing a structure without using a safety line. Subsequently, the supervisor admonished the plaintiff to use the safety line while climbing and working at a height. The plaintiff, for the time being, complied. However, three weeks later, the plaintiff failed to use the safety line while climbing at a height of approximately ten to fifteen feet. He fell and was injured.
The plaintiff sued the owner of the Triborough Bridge on several theories including an alleged violation of Labor Law §240(1). Subsequently, the Supreme Court granted the plaintiff's motion for summary judgment on the issue of liability rejecting the defendant's argument that the plaintiff was a "recalcitrant worker" who was, consequently, not entitled to the protections normally afforded by the law. The Appellate Division, First Department, affirmed but granted leave to appeal to the Court of Appeals.
The Court of Appeals reversed. The Court held that the jury may conclude that the plaintiff had adequate safety devices available at the job site and he was expected to use such safety devices while climbing. Since the plaintiff chose not to use the safety devices without a "good reason", the jury could have determined that the plaintiff's decision not to use the safety line, rather than the violations of the Labor Law, was the "sole proximate cause" of the accident. In finding a question of fact, the Court rejected the plaintiff's argument that the "recalcitrant worker" defense was inapplicable because the safety instructions took place approximately three weeks before the accident.
This Court of Appeals decision is instructive in the way that claims should be initially investigated. The carrier should undertake a thorough early investigation regarding the defendant's safety practices and meetings as well as the availability of safety devices and the training of employees in the proper use of such devices. Evidence of the plaintiff being reprimanded for failing to properly use safety devices should be collected. The manner in which the plaintiff used safety devices at the time of the accident should also be documented. If possible, the carriers should proactively encourage their insureds to document the instances where their employees were trained and possibly admonished with respect to the proper use of available safety devices.
JANUARY 2005
A MULTIPLE FAMILY DWELLING THAT IS BEING CONVERTED
INTO A SINGLE FAMILY DWELLING QUALIFIES FOR
LABOR LAW '240(1) AND 241 HOMEOWNER=S EXEMPTION.
In the recent Court of Appeals case of Ivo
Stejskal, et al v. Albert Simmons, III, et al,
3 N.Y.3rd 628, 728 N.Y.S.2d 397 (2004), the plaintiff, Stejskal, was
injured while standing on an A-frame ladder during the course of
performing construction work at a townhouse in Manhattan. Stejskal was
injured when the ladder he was using collapsed.
When the defendants purchased the property in September of 1998, it was their intent to convert the townhouse back to its original function as a single family house. When they purchased the house, it consisted of 13 separate dwelling units. On the date of the accident, the building was registered as a multiple dwelling and, in fact, at least two tenants remained in the building.
Labor Law '240(1) and '241(6) requires that all contractors and owners and their agents Aexcept owners of one and two family dwellings who contract for but do not direct or control the work@ comply with certain safety standards when constructing or renovating buildings. At issue in the Stejskal case was whether or not the defendants were entitled to the benefit of the homeowner=s exemption in accordance with Labor Law '240(1) and '241(6).
The trial court agreed with the defendants that they were entitled to the one and two family exemption in accordance with Labor Law '240(1) and '241(6) and the plaintiff appealed. The Appellate Division, Second Department, 309 A.D.2d 853, 765 N.Y.S.2d 886 (2nd Dept., 2003), affirmed the trial court=s decision finding that the owner defendants were entitled to a statutory homeowner=s exemption.
The Second Department relied primarily on the case of Khela v. Neiger, 85 N.Y.2d 333, 624 N.Y.S.2d 566 wherein the Court of Appeals held that an owner who was renovating a multiple dwelling into a two family dwelling when the plaintiff construction worker was injured was entitled to the homeowner=s exemption. In Khela, the Court of Appeals determined that the owner was entitled to the homeowner=s exemption since the purpose of the construction was solely connected with remodeling the building into a residential and single tenant space, not creating or enhancing commercial usage. Thus, the owner was entitled to the benefit of the exemption, although at the time of the accident the building was still a three family dwelling.
In Stejskal, the Court of Appeals affirmed the Second Department=s decision holding that the evidence unequivocally demonstrated that the sole purpose of the construction work was to convert what was a multiple dwelling into a one family dwelling for the owner=s usage. Thus, the defendant owners were entitled to avail themselves of the one or two family homeowner=s exemption provided in Labor Law '240(1) and '241.
Jennifer A. Hemming
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December |
December 2004
THE COURT OF APPEALS HAS RULED THAT INSURANCE LAW ' 3420 REQUIRES ONE INJURED TO OBTAIN A JUDGMENT AGAINST A TORTFEASOR BEFORE A DECLARATORY JUDGMENT ACTION CAN BE COMMENCED AGAINST A LIABILITY INSURANCE CARRIER
In the recent Court of Appeals case of David Lang v. Hanover Insurance Company, (2004 WL 2607764 (N.Y.), 2004 N.Y. Slip Op. 08259), the plaintiff, Lang was injured while he was playing paintball at the home of John and Beth Dubin. Lang sustained injuries when he was struck in the eye by a paintball fired by Richard Bachman, who was a guest of the Dubins.
Coverage as to Bachman was disclaimed by the Dubin=s homeowners insurance carrier, defendant, Hanover Insurance Company, arguing that Bachman was not an Ainsured@ as the term is defined within the policy. Lang thereafter filed a personal injury action against Bachman. Before the merits of the case were adjudicated, Bachman filed for Chapter 7 bankruptcy.
Lang subsequently filed a declaratory judgment action against Hanover challenging its disclaimer of coverage. Lang sought a judgment from the Court declaring Bachman an insured under the policy and requiring Hanover to defend and indemnify Bachman. In response, Hanover argued that Lang lacked standing to sue pursuant to Insurance Law ' 3420 and moved for an order dismissing the complaint.
Insurance Law ' 3420 allows an injured party to bring an action directly against an insurance carrier for the purpose of satisfying a judgment that was obtained against the tortfeasor. Based on this provision, Hanover argued that Lang=s declaratory judgment action was premature due to Lang=s failure to first obtain a judgment against Bachman. Lang responded that because bankruptcy precludes recovery from the tortfeasor, Bachman=s bankruptcy filing should create an equitable exception to the statutory condition that a judgment be obtained.
The Trial Court disagreed with Hanover=s position and denied its motion to dismiss the complaint. However, in an unanimous decision rendered by the Appellate Division, Third Department, 309 A.D.2d 1123, 766 N.Y.S.2d 915,(3rd Dept. 2003) Lang=s complaint against Hanover was dismissed.
Upon further appeal, the Court of Appeals affirmed the Third Department=s decision thereby agreeing with Hanover=s analysis of Insurance Law ' 3420. The Court ruled that Lang=s declaratory judgment action against Hanover was premature for failure to first obtain a judgment against Bachman. The Court disagreed with Lang=s argument that the filing of bankruptcy by Bachman creates an exception to the letter of Insurance Law ' 3420 requiring that a judgment be obtained. In doing so, the Court noted that federal courts permit a plaintiff in a personal injury action to obtain a judgment against the bankrupt tortfeasor for the distinct purpose of commencing an action against the insurance carrier in accordance with the requirement of Insurance Law ' 3420.
The Court further commented that if an insurance carrier disclaims liability and requires the claimant to utilize the mechanics of Insurance Law ' 3420, the carrier will be precluded from relitigating the issues of liability and damages that were adjudicated in the underlying action against the tortfeasor. Consequently, the carrier will be limited to litigating only the validity of its disclaimer. The Court therefore suggested that a carrier initiate a declaratory judgment action affirming its disclaimer of coverage to afford itself an opportunity to defend its insured should the disclaimer be ruled improper.
Michele L. Laski
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November 2004
"PRIOR WRITTEN NOTICE"
IS SATISFIED BY A WRITING DONE
INTERNALLY BY A CITY AGENCY
In Bruni v. City of New York, 2 N.Y.3d 319, 778 N.Y.S.2d 757 (2004), a road defect was written up after an inspection by a branch of the city=s environmental protection department. Sometime after the written report, the plaintiff fell as a result of the defect. New York=s highest court held that this written notice was sufficient under the so-called Apot hole law@ which requires such notice as a prerequisite to recovery from a municipality. In reaching this decision, the Court of Appeals rejected the city=s argument that the prior written notice must come from an external, not an internal, source.
WORKERS= COMPENSATION RECOVERY
DOES NOT BAR TORT SUIT AGAINST
FELLOW EMPLOYEE FOR INTENTIONAL ACT
In Hanford v. Plaza Packing Corp., 2 N.Y.3d 348, 778 N.Y.S.2d 768 (2004), the New York Court of Appeals held that an action for an intentional tort against a co-employee is not barred by the plaintiff=s receipt of Workers= Compensation benefits. In Hanford, the plaintiff alleged that the defendant co-employee concealed a video camera in a locker room on the premises of the employer in an unsuccessful attempt to tape the plaintiff while she changed her clothes. The plaintiff applied for and received Workers= Compensation benefits arising out of the incident.
The plaintiff then sued the employer and the co-employee individually. The claim against the employer was dismissed on the basis of the exclusivity provisions of the Workers= Compensation Law '29. The Court of Appeals decided that the employee was not entitled to the same protection because Aan employee who commits an intentional tort outside the scope of his employment is not protected by Workers= Compensation Law '29.@ Hanford, 778 N.Y.S.2d at 769.
NEW YORK COURT OF APPEALS HOLDS
THAT DISCLOSURE OF A "COPY" OF
SURVEILLANCE VIDEOTAPE IS SUFFICIENT
In Zegarelli v. Hughes, 3 N.Y.3d 64, 781 N.Y.S.2d 488 (2004), the defendant turned over a copy of surveillance footage on VHS format. During the trial, the plaintiff=s lawyer objected to the admissibility of this tape claiming that he had not had an opportunity to see the original tape. The lower court precluded the tape despite the testimony of the defendant=s investigator that the tape had not been edited in the copying process. The Court of Appeals reversed holding that the defendant=s disclosure of a copy is sufficient so long as the original is available for the plaintiff=s inspection. In this case, the court noted that the plaintiff=s lawyer did have ample opportunity to inspect the original tape but did not do so.
John N. Philipps, Jr.
OCTOBER 2004
COURT OF APPEALS UPHOLDS INSURER=S NOTICE REQUIREMENTS NOTWITHSTANDING CLAIMANT=S RELIANCE ON STRICT TIME LIMITS IMPOSED UPON INSUREDS BY THE VEHICLE AND TRAFFIC LAW
Well-settled principles of insurance law provide an insurer the right to demand, within the terms of its policy, that it be notified of any loss or accident covered under the policy and that it receive timely notice of a claimant=s commencement of litigation. These have long been recognized as rights which provide an insurer the opportunity to protect itself and to appear and defend against a claim or exercise its right to settle. Until a recent Court of Appeals decision, it appeared as if '370(4) of the Vehicle and Traffic Law might limit these rights for those claims arising out of the operation of vehicles for hire.
In American Transit Insurance Co. v. Anthony Sartor and Utica Taxi Center, Inc. 2004 WL 1472632 (July 1, 2004), the Court of Appeals was faced with the question of whether '370 of the Vehicle and Traffic Law requires the insurer of a taxicab to satisfy a default judgment entered against its= insured where the insurer was never notified that a legal proceeding had been commenced.
Sartor was injured in March, 2000 when the vehicle he was driving became involved in an accident with a taxicab owned by Utica Taxi Center, Inc., and insured by American Transit. Although, pursuant to'370(4) of the Vehicle and Traffic Law, a taxi operator is required to give written notice of an accident to its insurer within five days, American Transit was not informed of the collision until seven months after it occurred.
Sartor commenced litigation for personal injuries against Utica Taxi Center, Inc. in Federal District Court. Utica Taxi defaulted. Neither Utica Taxi nor Sartor provided notice of the litigation to American Transit.
Sartor eventually obtained a default judgment and was awarded $100,000.00. Claiming that it had not been provided timely notice of the commencement of litigation or the application for a default judgment, American Transit disclaimed coverage and commenced a declaratory action seeking a judicial determination that its= disclaimer of coverage was proper.
According to '370(4) of the Vehicle and Traffic Law, A[e]very person operating a motor vehicle...as to which a bond or policy of insurance is required by this section, which is in any manner involved in an accident, shall within five days give written notice of the time and place of the accident to the surety or insurer. Failure to give notice of the accident as herein provided shall constitute a misdemeanor, but shall not affect the liability of the surety or insurer.@
The Appellate Division reversed the decision of the lower court and held that Utica Taxi=s failure to properly notify American Transit of the accident did not relieve American Transit of its obligation to Sartor as the injured party. Relying upon '370(4), the Appellate Division determined that even when, as in this case, an insured fails to properly notify its= insurer of an accident, the insurer=s liability to the injured party is not affected. Therefore, American Transit=s disclaimer of coverage was deemed improper and the company was ordered to pay the default judgment obtained by Sartor.
The Court of Appeals disagreed and concluded that a violation of '370(4) does not obviate the insurer=s right to notice. The Court noted that the claimant himself may provide notice to the insurer so as to protect his right to recovery. Therefore, American Transit was not obligated to satisfy the default judgment obtained by Sartor.
SEPTEMBER 2004
EMPLOYEE=S SEXUAL ASSAULT ON CUSTOMER WAS AACCIDENT@ AND THEREFORE COVERED BY INSURANCE POLICY
A recent decision of the Court of Appeals holds that an alleged assault committed by an employee was considered an Aaccident@ and hence covered under the insured=s liability policy.
In RJC Realty Holding Corp. v. Republic Franklin Insurance Co., 2 N.Y.3d 158, 777 N.Y.S.2d 4 (April 1, 2004), a customer sued a beauty parlor (the insured) for a sexual assault allegedly committed by one of its masseurs. The Court of Appeals, using the reasoning from its 2000 Agoado decision (95 N.Y.2d 141, 711 N.Y.S.2d 141), held that the assault had to be gauged from the insured=s standpoint and not the assailant=s. Since the beauty parlor in RJC Realty did not intend the assault from its own viewpoint, the assault was an Aaccident@ and therefore was covered under its liability policy.
THIRD DEPARTMENT DISTINGUISHES BLAKE FROM CIRCUMSTANCES WHERE SAFETY IS COMPROMISED BY FACTORS UNRELATED TO PLAINTIFF=S CONDUCT
Eight months ago, the Court of Appeals attempted to clarify the so called AScaffold@ Law, i.e. Labor Law '240. The Blake v. Neighborhood Housing Services of New York City, Inc. decision (1 N.Y.3d 280, 771 N.Y.S.2d 484 [2003]), as discussed in our February 2004 issue of ASumming Up@, stated that while Labor Law '240 should be construed liberally, it is not a catchall for every elevation related action. In the Blake decision, the Court of Appeals specifically declined to expand '240 Liability to cover accidents where there are no safety violations and the accident was purely the fault of the plaintiff. In Blake, the plaintiff failed to secure the rungs of an extension ladder. The ladder collapsed.
In Gilbert v. Albany Medical Center, N.Y. Slip Op. 05824, 779 N.Y.S.2d 653, (3rd Dept., July 8, 2004), the plaintiff, a worker who was standing on a ladder and removing asbestos from a pipe, was injured when the ladder slipped and collapsed. The plaintiff moved for partial summary judgment on his Labor Law '240 cause of action. The trial court denied his motion and plaintiff appealed.
The 3rd Department, in considering the precedence established by Blake, was divided on the issue of whether the slipperiness of the floor could appropriately be considered a factor which compromised safety unrelated to the plaintiff=s conduct. The majority held that while under the Blake decision, if a plaintiff=s conduct alone causes an accident, there is no liability under Labor Law '240; if the accident was attributable in any degree to a deficiency other than the neglect of the employee, the Acomparative negligence@ of the employee is not a defense to Labor Law '240.
The Gilbert Court found that evidence showed that the ladder was placed on a slippery surface. This created a prima facie showing of a Labor Law '240 violation. The majority concluded that this violation alone resulted in strict liability, regardless of the plaintiff=s actions. The 3rd Department overturned the trial court=s order and granted the plaintiff=s motion for partial summary judgment on his Labor Law '240 cause of action.
AUGUST 2004
STRICT LIABILITY UNDER NEW YORK LABOR LAW APPLIED TO THE SPOUSE OF HOMEOWNER AFTER A WORKER IS INJURED DURING CONSTRUCTION OF HOME
IN A RECENT DECISION, THE STRICT LIABILITY OF NEW YORK LABOR LAW SECTIONS 240(1) AND 241(6) WAS HELD TO APPLY TO THE NON-TITLED SPOUSE OF A ONE-FAMILY DWELLING OWNER.
IN FISHER V. COGHLAN, ET AL, 2004 WL 1325775, 2004 N.Y SLIP.OP. 04890 (4TH DEPT. 2004), THE PLAINTIFF WAS INJURED WHEN A SCAFFOLD COLLAPSED BENEATH HIM. AT THE TIME OF HIS INJURY, THE PLAINTIFF WAS INSTALLING A ROOF ON A ONE-FAMILY DWELLING BEING CONSTRUCTED BY THE DEFENDANTS, SANDRA AND JEFFREY COGHLAN. JEFFREY COGHLAN, ALTHOUGH MARRIED TO THE PROPERTY OWNER, SANDRA COGHLAN, WAS NOT NAMED ON THE DEED. THE PLAINTIFF ASSERTED CAUSES OF ACTION BASED UPON COMMON LAW NEGLIGENCE, AS WELL AS ALLEGED VIOLATIONS OF LABOR LAW SECTIONS 200, 240(1) AND 241(6).
UNDER NEW YORK LABOR LAW SECTIONS 240(1) AND 241(6) ACONTRACTORS OR OWNERS AND THEIR AGENTS@ WHO ADIRECT OR CONTROL THE WORK@ ARE REQUIRED TO PROVIDE CERTAIN MEASURES OF SAFETY FOR WORKERS. A VIOLATION OF EITHER SECTION OF THE LABOR LAW THAT RESULTS IN AN INJURY TRIGGERS STRICT LIABILITY. HOWEVER, THE STATUTES EXEMPT FROM EXPOSURE OWNERS OF ONE OR TWO FAMILY DWELLINGS. UPON THIS EXEMPTION, THE DEFENDANTS MOVED FOR SUMMARY JUDGMENT.
WHILE SANDRA COGHLAN=S SUMMARY JUDGMENT MOTION WAS GRANTED, THE COURT DENIED THE SUMMARY JUDGMENT MOTION OF JEFFREY COGHLAN. THE COURT NOTED THAT MR. COGHLAN WAS NOT NAMED ON THE PROPERTY DEED.
IN AFFIRMING THE LOWER COURT=S DECISION, THE FOURTH DEPARTMENT AGREED THAT JEFFREY COGHLAN=S MARRIAGE TO THE PROPERTY OWNER DID NOT CHANGE THE FACT THAT HE WAS NOT AN AOWNER@ OF THE PROPERTY. THE COURT REASONED THAT THE EXEMPTIONS PROVIDED BY LABOR LAW SECTIONS 240(1) AND 241(6) APPLY ONLY TO TITLED PROPERTY OWNERS OF ONE OR TWO FAMILY DWELLINGS. THE COURT REASONED THAT THE FACT THAT THE DEFENDANT IS MARRIED TO THE PROPERTY OWNER IS IRRELEVANT. FURTHERMORE, THE COURT REFUSED TO EXTEND THE DEFINITION OF AOWNER@ IN ORDER TO INCLUDE NON-TITLED SPOUSES.
THE FOURTH DEPARTMENT THEN DETERMINED THAT THERE WAS A TRIABLE ISSUE OF FACT AS TO WHETHER JEFFERY COGHLAN WAS ACTING AS A CONTRACTOR OR AGENT OF THE OWNER WHO EXERCISED DIRECTION OR CONTROL OVER THE PROJECT. IN SUPPORT OF THAT DECISION, THE COURT NOTED THAT JEFFREY COGHLAN WAS ACTIVELY INVOLVED IN DESIGNING THE PROJECT, HIRING AND PAYING VARIOUS SUBCONTRACTORS, AND FURNISHING MATERIAL AND EQUIPMENT. THE COURT WAS NOT PERSUADED BY COGHLAN=S ARGUMENT THAT THE SUBCONTRACTORS AND WORKERS AKNEW THAT HE WAS THE HOMEOWNER@ RATHER THAN A GENERAL CONTRACTOR.
IT IS CLEAR THAT THE FOURTH DEPARTMENT REQUIRES STRICT INTERPRETATION OF THE TERM AOWNER@ AS IT APPLIES TO LABOR LAW SECTIONS 240(1) AND 241(6). IT IS ALSO CLEAR THAT VERY LITTLE IS REQUIRED TO CREATE A QUESTION OF FACT AS TO THE ISSUE OF ADIRECTION OR SUPERVISION.@ AS A RESULT, POLICY HOLDERS SHOULD BE ADVISED TO KEEP ALL NON-TITLED FAMILY MEMBERS OUT OF THE PLANNING OR SUPERVISION OF A WORK PROJECT ON THEIR PROPERTY IN ORDER TO PREVENT THE UNFORTUNATE TURN OF EVENTS IN FISHER.
JULY 2004
I. CONFINEMENT AND BARKING WILL NOT SATISFY REQUIREMENT OF NOTICE OF DOG=S VICIOUS PROPENSITY
In the matter of Collier v. Zambito, 1 N.Y.3d 444, ___N.Y.S.2d___ (2004), the Court of Appeals addressed the issue of whether a dog=s confinement and barking operates to satisfy the requirement that an owner have notice of a dog=s vicious propensity. The dog in question was kept confined in the kitchen and was known by the owner to bark when guests were visiting.
The plaintiff, a twelve year old visiting the defendant=s home, had been to the defendant=s residence in the past. At the time of the incident in question, the dog was held by the owner on a leash. The owner then asked the plaintiff to approach the dog so that the dog could smell the plaintiff. Upon approaching the animal, the dog lunged and bit the plaintiff on the face.
In a 4-2 decision, the Court of Appeals held that neither the confinement nor the barking was sufficient to satisfy the notice requirement. The Court opined that Abarking and running around are what dogs do@. The dissenters conceded that all dogs run around and bark; however, they were of the opinion that not all dogs are kept away from visitors because they run around and bark.
II. A SLIP ON ICE ENDING IN A FALL INTO A TRENCH DOES NOT FALL WITHIN ' 240(1) OF THE LABOR LAW
A recent decision of the Fourth Department holds that a plaintiff worker=s slip on ice into a trench at the work site is not covered by ' 240 of the Labor Law. In Pursel v. Wellco, Inc. Et al., 6 A.D.2d 1096, 775 N.Y.S.2d 626 (4th Dept., 2004), the plaintiff was injured when he slipped on snow and ice while walking along a footer and fell approximately six feet into an excavation.
The Fourth Department, in reversing the lower court=s denial of the defendants= motions for summary judgment held that Athe hazards contemplated by Labor Law ' 240(1) are those where safety devices are required because of a difference in elevation levels ... A worker who falls into a trench from the side is not covered by Labor Law ' 240(1) because such an injury results from the usual and ordinary dangers of a construction site.@
III. 31 DAY DELAY IN DISCLAIMING COVERAGE UNDER AN EXCLUSION WAS HELD TO BE REASONABLE AND VALID
Recently, in New York Central Mutual Fire Insurance Company v. Majid, et al., 5 A.D.3d 447, 773 N.Y.S.2d 429 (2nd Dept. 2004), it was held that a 31 day delay in disclaiming coverage under a policy exclusion after the insurer learned of the insured=s use of a covered vehicle as a livery vehicle was not unreasonable.
Pursuant to Insurance Law ' 3420(d), an insurer is required to give written notice as soon as reasonably possible when disclaiming liability or denying coverage. The timeliness of disclaimer is measured from the point when the insurer first learns of the grounds for disclaimer of liability or denial of coverage. In this case, the insurer first learned of the grounds for disclaimer after a statement was taken of the insured by an investigator. Upon receipt of the investigator=s report, the insurer=s casualty examiner forwarded the file to counsel for review after which point, the disclaimer letters were issued. Thirty-one days had passed from the time the insurer first learned of the grounds for the disclaimer.
The Second Department ruled that given the facts before them, it was not unreasonable for the insurer to consult with counsel regarding the livery vehicle exclusion prior to issuing its disclaimer.
JUNE 2004
I. PLAINTIFFS INVOLVED IN ACCIDENTS WITH TORTFEASORS WITH INSOLVENT INSURERS NOT ENTITLED TO AUM@ COVERAGE
In the matter of Eagle Insurance Company vs. Hamilton, 4 A.D.3rd 355, 773 N.Y.S.2d 68 (2nd Dept., 2004), the Court addressed the issue of how a petitioner=s source of recovery is affected by insolvent insurance companies. In 1998, the petitioner Hamilton was injured in a motor vehicle accident. At the time, the petitioner was insured by Eagle. The petitioner=s policy contained the New York State Mandatory Uninsured Motorist=s Coverage (UM), which provides coverage in instances when a tortfeasor=s vehicle is uninsured. The petitioner did not possess, however, the optional ASupplemental Uninsured Motorist@ or ASUM@ coverage.
In Eagle the tortfeasor=s insurer Reliance National Indemnity Company, had recently declared insolvency. Its New York assets were in a state of receivership. As a result, the petitioner pursued recovery from the Public Motor Vehicle Liability Security Fund, established by New York State. In response to the petitioner=s request for benefits the Fund corresponded AAt this time, the PMV Fund is unable to provide either a defense to, or indemnification of this claim insofar as the PMV Fund is financially strained.@
The petitioner then sought arbitration against Eagle for UM benefits. Eagle argued that the tortfeasor=s vehicle was not uninsured at the time of the accident but rather was insured by Reliance. Eagle further argued that the petitioner=s UM coverage is only triggered when a tortfeasor=s insurer denies or disclaims coverage. The petitioner responded that Reliance=s insolvency was the equivalent of the tortfeasor being uninsured.
The Court agreed with Eagle and ruled that the petitioner was not entitled to UM benefits. Technically Reliance never denied or disclaimed coverage in this accident, it just went out of business. The petitioner could have pursued recovery through Eagle if he had purchased SUM coverage. SUM coverage specifically allows recovery when dealing with an insolvent insurer. As a result of the petitioner only having the mandatory UM coverage and not SUM, he was not entitled to recover from his insurance company and was faced with the bleak prospect of pursuing recovery through the state fund.
II. PROPERTY OWNER=S FAILURE TO SHOVEL SIDEWALK COULD BE A BASIS FOR LIABILITY EVEN IF INJURY OCCURS OFF PROPERTY
A recent decision of the Fourth Department upheld a lower Court=s ruling that a failure to shovel one=s sidewalk may be a basis for liability when a municipal ordinance requires it. In Di Natale vs. State Farm, 2004 N.Y. Slip. Op. 02079, the plaintiffs were forced to walk on Niagara Falls Boulevard, a busy highway, as a result of the defendants= failure to clear their respective sidewalks. Multiple plaintiffs were injured and one plaintiff lost her life as a result of being struck by a vehicle while on the Boulevard. The defendants moved for summary judgment arguing that no duty existed towards the plaintiffs since the accident occurred away from the defendants= premises.
The Fourth Department disagreed. In its decision, the Court pointed to a local ordinance of the town where this accident occurred which assigned liability to property owners who fail to keep their sidewalks clear. The defendants= apparent violation of the ordinance, which required Aany owner or occupant of any premises fronting or abutting on any street or highway to maintain any sidewalk abutting the premises by keeping it free and clear from snow and ice@, was enough to raise triable issues of fact as to whether the defendants breached a duty owed towards the plaintiffs and whether that breach was a proximate cause of the injuries and fatality.
MAY 2004
I. COURT OF APPEALS AFFIRMS DISMISSAL OF LABOR LAW 240(1) CLAIM ON GROUNDS THAT WORKER WAS NOT PERFORMING REPAIRS, BUT RATHER CONDUCTING ROUTINE MAINTENANCE.
The Court of Appeals has recently held that a worker engaging in routine maintenance at the time an injury occurred cannot recover under the scaffold law which requires owners to make demolition, construction, and excavation projects reasonably safe for workers. Esposito v. New York City Indus. Dev. Agency, 1 N.Y.3d 526, 770 N.Y.S.2d 682 (2003).
In Esposito, the plaintiff-worker was injured when he fell from a ladder while attempting to remove a cover from an air-conditioning unit on the 22nd floor of a commercial building in Manhattan. At the time the fall occurred, the plaintiff was performing a monthly maintenance check of the air conditioning unit and was in the process of fixing the worn belts of the unit when the bottom of his ladder Akicked out@ causing him to fall.
The primary question in this case was whether the plaintiff was engaging in one of the covered activities as set forth in Labor Law 240(1) at the time of his fall. This issue turned on the fact that, although the plaintiff was performing Arepairs@ on the unit, the repairs were needed due to normal wear and tear. Accordingly, the Court of Appeals held that such work constituted routine maintenance rather than the otherwise covered activity of repairing.
II. DOCTRINE OF COLLATERAL ESTOPPEL NOT APPLICABLE TO BIND THE OWNER OF A VEHICLE WHEN A DEFAULT JUDGMENT IS TAKEN SOLELY AGAINST THE DRIVER.
In Chambers v. City of New York, 309 A.D.2d 81, 764 N.Y.S.2d 708 (2d Dept. 2003), the City of New York, as owner, and its employee, as driver, were sued for injuries the plaintiff allegedly sustained in a motor vehicle accident. For reasons not germane to this discussion, the City declined to defend and indemnify its employee-driver and, therefore, did not answer on its employee=s behalf. The plaintiff then obtained a default judgment against the driver and sought summary judgment against the City on the issue of liability.
The plaintiff=s motion was premised on the general rule in New York that default judgments are entitled to collateral estoppel effect. This, coupled with the applicability of Vehicle and Traffic Law 388, led plaintiff to argue that liability, as established by the default judgment, could be imputed to the City.
In affirming the denial of the plaintiff=s motion, the Second Department applied the full and fair opportunity test to determine whether it would be fundamentally fair to deny the City an opportunity to litigate the issue of the driver=s negligence. Upon applying that test, the Second Department ruled that in order for collateral estoppel to apply, the issue must have been previously litigated which, in this case, it was not. Moreover, the Court held that vicarious liability imposed as a result of Vehicle and Traffic Law 388 did not provide the necessary privity between the parties for purposes of collateral estoppel.
Although in Chambers default judgment was obtained against the non-appearing co-defendant, the rationale of the Court could be applicable in all instances where a purportedly vicariously liable party was not provided an opportunity to contest the liability of the underlying tort-feasor. Such a situation could arise from any number of procedural scenarios and underlying circumstances. As evidenced by the Court=s decision in Chambers, the doctrine of collateral estoppel does not in all instances resolve the liability of those vicariously responsible.
James S. Curtis
APRIL 2004
CONCLUSORY ASSERTIONS BY PLAINTIFF=S PHYSICIAN THAT PRE-EXISTING CONDITION HAD RESOLVED IS INSUFFICIENT TO DEFEAT SUMMARY JUDGMENT MOTION ON "SERIOUS INJURY."
In Franchini v. Palmieri, 1 N.Y. 3d 536 (2003), the Court of Appeals recently upheld a Third Department decision dismissing plaintiff=s complaint on the "serious injury" threshold. The Court based its decision upon plaintiff=s chiropractor=s failure to identify any medical foundation or objective basis that plaintiff=s pre-existing conditions had resolved and that plaintiff=s alleged injuries were causally related to the subject motor vehicle accident. Although the Court of Appeals decision is not very informative, review of the lower court=s ruling is very instructive on this issue.
The facts as set out in Franchini v. Palmieri, 307 A.D.2d 1056, 763 N.Y.S.2d 381 (3rd Dept., 2003), are as follows: The defendant brought a summary judgment motion on the threshold issue of "serious injury." In support of her motion, the defendant submitted plaintiff=s medical records which showed numerous pre-existing conditions and injuries that caused and would be expected to cause the types of symptoms which the plaintiff was attributing to the subject motor vehicle accident. Significantly, the records reflected that the plaintiff had been treated for cervical spine arthritis, degenerative disc disease, headaches, spinal tenderness, muscle spasms and lower back pain for the seven years preceding the accident in question. Additionally, only seven months prior to the accident plaintiff presented with headaches, swelling over her spine and limited range of motion in her neck as the result of an assault by her husband. Finally, the defendant presented the reports of two physicians who opined that plaintiff=s symptoms had causes other than the subject accident, as well as an MRI report taken after the accident which was normal except for confirming plaintiff=s pre-existing degenerative disc disease.
In response to this evidence, plaintiff produced an affidavit of plaintiff=s treating chiropractor, wherein he diagnosed the plaintiff with "cervicocranial syndrome," "cervical intervertebral disc syndrome," "lumbar intervertebral disc syndrome" and "low back syndrome." He also opined that the plaintiff sustained limitations in her neck and lower back of 100 percent and that plaintiff=s injuries were separate and distinct from any pre-existing injuries.
Based upon this evidence, the Third Department found that the plaintiff failed to raise a question of fact to defeat the motion, explaining that the chiropractor failed to support his opinion upon any objective evidence that plaintiff=s pre-existing condition had resolved or explain the reasoning behind his causal relationship between plaintiff=s injuries and the subject motor vehicle accident. The Court stated that objective evidence is required to distinguish the aggravation of a pre-existing condition from the pre-existing condition itself, Franchini citing Lorthe v. Adeyeye, 306 A.D.2d 252, 760 N.Y.S.2d 530 (2003), and held that under these circumstances the plaintiff=s chiropractor=s opinion that her injuries were causally related to the accident was both speculative and conclusory.
James S. Curtis
March 2004
DISCLAIMER OF INSURANCE COVERAGE MUST BE COMMUNICATED TO THE POLICYHOLDER IN WRITING AS SOON AS REASONABLY POSSIBLE.
The Court of Appeals has recently held that an insurer's 48-day delay in notifying a policy holder of denial of coverage is unreasonable as a matter of law under Insurance Law §3420(d). First Financial Insurance Company v. Jetco Contracting Corp., 1 N.Y.3d 64, 769 N.Y.S.2d 459 (2003).
In First Financial, the insurer's disclaimer of coverage, based on the timely notice exclusion, was made 48 days after receiving notice of the claim. The insurer attempted to excuse the late disclaimer by stating that it needed time to investigate whether the insured had additional insurance coverage. Since the insurer's eventual disclaimer was based on receiving late notice from its insured, the question of whether additional insurance coverage may be available for the claim had no bearing on the question of late notice.
As Insurance Law §3420(d) states that a disclaimer must being made in writing As soon as is reasonably possible@, the Court of Appeals held that the circumstances of each case must be analyzed individually with no arbitrary and universal time limitation. However, after ascertaining the facts in First Financial and reviewing other cases involving delays, the Court of Appeals held that 48 days was unreasonable as a matter of law since the insurer's excuse for the untimely disclaimer could not be a factor in the insurer's ultimate decision to deny coverage.
Keeping in mind that the letter of disclaimer must include all bases for denial of coverage, there is a lesson to be learned from First Financial. After quickly ascertaining all bases for a viable disclaimer, it is crucial for the insurer to communicate the disclaimer to the policyholder as soon as possible.
NOTICE TO THE TENANT MAY BE IMPUTED TO THE LANDLORD.
In Wilson v. Livingston; 305 A.D.2d 585, 762 N.Y.S.2d 408 (2nd Dept., 2003); a mother and infant commenced an action against the defendant landlord to recover for personal injuries sustained as the result of being bitten by a tenant's dog. It was undisputed that the tenant had prior knowledge of the dog's vicious propensities, as, on a prior occasion, the dog in question attacked the tenant's daughter.
The question in this case was whether the landlord knew or should have known of the dog's vicious propensities. This issue turned on the fact that the tenant maintained the landlord's property in exchange for a reduced rent. As such, it was held that the tenant was an agent of the landlord. The Court held that the tenant's knowledge of vicious propensities was therefore imputed to the landlord through the notion of agency. Accordingly, the landlord was vicariously liable for the tenant's negligence.
February 2004
IN AN ACTION WITHIN WHICH WE REPRESENTED THE VILLAGE OF AKRON, THE APPELLATE DIVISION, FOURTH DEPARTMENT HELD THAT GENERAL OBLIGATIONS LAW §9-103 EXTENDS IMMUNITY TO THE MUNICIPAL MAINTENANCE OF SNOWMOBILE TRAILS.
In Blair, et al v. The Village of Akron, et al, 2003 WL 23097049, decided December 31, 2003, our office represented the Village of Akron. The plaintiffs in Blair initiated action against the Village of Akron as a result of injuries which were sustained in a snowmobile accident. On January 10, 1997, three individuals, while riding along a bike path located in the Village of Akron, collided with a guardrail adjacent to a bridge crossing. As a result, two of the snowmobilers died and one sustained serious injuries.
The Village of Akron, represented by Arthur A. Herdzik, of our office, moved for summary judgment on the applicability of General Obligations Law §9-103. The statute creates immunity for a landowner shielding him from liability for injuries occurring from the recreational use of undeveloped land. The statute was enacted to encourage property owners to permit persons to come on their property to engage in specified recreational activities without fear of liability for injuries suffered by the recreationists.
The plaintiffs opposed the motion arguing that the statute does not provide protection to municipalities which maintain and supervise parks and recreational facilities. Additionally, plaintiffs argued that the statute did not apply because the bike/jogging path located in the Village was not physically conducive to the activity of snowmobiling. The lower court denied the Village of Akron's motion for summary judgment on the basis that the statute does not provide immunity to the Village since the path which was open to the public could be deemed a public park.
First, the Fourth Department stated that the path was physically conducive for snowmobiling since the path had been used for years as a snowmobile trail. Second, the Fourth Department held that the plaintiff failed to raise a material issue of fact that the Village had supervised, maintained or controlled the path during the wintertime or that the bike/path located in the Village was a supervised park.
A RECENT COURT OF APPEALS DECISION NARROWS THE APPLICABILITY OF NEW YORK STATE LABOR LAW §240(1).
In Blake v. Neighborhood Housing Services of New York City, Inc., ____ N.Y.2d ____, 2003 WL 22998497, decided December 23, 2003, the Court of Appeals commented on two issues involving Labor Law §240(1). First, the Court addressed whether the plaintiff could recover under §240(1) when the underlying evidence established that he was the sole proximate cause of his injuries. Additionally, the Court analyzed whether the statute applied to a financial institution which provided funding for the homeowner's repairs.
In Blake, the plaintiff brought action under §240(1) for injuries he sustained when a ladder he was using retracted, causing injury to his ankle. Among the defendants was Neighborhood Housing Services. Plaintiff's theory was that as the underlying financial institution, it had control over the project. The statute imposes liability on an owner, contractor or agent who had “authority to direct, supervise and control,” the work.
On the first issue the Court affirmed dismissal of the plaintiff's claim noting that the jury concluded that the plaintiff's injuries were the result solely of his own negligence in failing to properly use the ladder. Furthermore, the Court held that the level of involvement and control held by Neighborhood Housing Services was minimal and did not rise to the statutory criteria necessary to impose liability.
Jennifer A. Hemming
January 2004
IN APIP CLAIM, COURT APPLIES PENALTY
INTEREST BEFORE APPLYING SETOFF
The no-fault insurance law is designed to provide claimants prompt reimbursement for claims. Insurance Law § 5106 demands that payments of first party benefits and additional first party benefits shall be made as the loss is incurred. If payments are not made within thirty days after the claimant supplies proof of loss, the benefits are considered overdue. All overdue payments are subject to an interest rate of 2% per month. In addition, the plaintiff is entitled to recover fees, such as attorneys fees, for services performed in connection with securing payment of an overdue claim.
In Cardinell v. Allstate Insurance Co., 302 A.D. 2d 772, 754 N.Y.S.2d 777 (3rd Dept., 2003), an award of $41,150 grew to $389,434 after the application of interest. The plaintiff was injured in an automobile accident in April, 1989. In February, 1992, the plaintiff sought to recover lost wage benefits under an additional personal injury protection provision of his automobile policy with the defendant. The defendant disclaimed based on issues of notice, proof of disability and that the full extent of plaintiff's claim for lost wages was included within basic economic loss. The plaintiff brought suit.
The Supreme Court, St. Lawrence County, after a non-jury trial, ultimately determined that the plaintiff was entitled to $41,150 in additional personal injury protection benefits. Further, the plaintiff was entitled to interest at a compounded monthly rate of 2%.
During the pendency of this action, the plaintiff settled the underlying personal injury action for $50,000. The plaintiff did not preserve the defendant's subrogation rights. As such, the Court ruled that the defendant was entitled to a $50,000 setoff. After applying the setoff to the amount owed to the plaintiff, the Court determined that the plaintiff was entitled to a net recovery of $389,434.
The defendant appealed, arguing that the setoff should have been applied to the lost wage award of $41,150 before the calculation of interest. The Appellate Division, Third Department, affirmed the lower court's ruling. The Court stated that the plain language of Insurance Law § 5106 (a) and its underlying rationale clearly require the insurance company to pay benefits within 30 days or incur interest at the rate of 2% per month. Further, and, as the court states, more importantly, "the objective of the statute...is to assure prompt and full payment of economic claims." The interest rate is designed to serve as a penalty to insurers who do not pay claims promptly. The court reasons that applying a setoff before calculating interest would frustrate the purpose of the statute.
It is important to note that interest assessed on personal injury protection claims is no longer compounded. 11 NYCRR 65-3.9(a) has been revised since Cardinell to calculate interest pursuant to Insurance Law § 5106 at simple interest. The revision of the regulation was upheld in Medical Society of the State of New York v. Serio, 2003 WL 22387581 (N.Y.). The court determined that because Insurance Law § 5106 (a) is silent as to whether interest is simple or compounded, the revised regulation does not conflict with the statute. Even so, calculating simple interest on the award of $41,150 in Cardinell would have resulted in an award of around $140,000, prior to the setoff.
The lesson to be learned from Cardinell is to be diligent in a challenge to the denial of personal injury protection benefits. Be certain to deny claims promptly and according to the statute. This forces the claimant to take affirmative action to challenge the denial. Interest will not accrue if the claimant delays more than 30 days in challenging a proper denial. 11 NYCRR 65-3.9(c). If a claimant does challenge a denial, efforts should be made to ensure that the matter does not languish. For example, if appropriate, serve claimant with a 90 day demand to resume prosecution. Because 2% interest per month is a steep price to pay, prompt resolution of disputes is imperative.
Scott W. Kroll
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December |
APPELLATE DIVISION LIMITS DISCOVERY OF NO-FAULT FILES
In Primeau v. Town of Amherst, 303 A.D.2d 1035, 757 N.Y.S.2d 201 (4th Dept. 2003), the Appellate Division held that the defendant is not entitled to the plaintiff's entire no-fault claim file. Rather, the Court decided that the plaintiff only had to disclose medical and wage records contained in the no-fault file to the defendants.
RECENT SCAFFOLD LAW DECISIONS
In Bennett v. SDS Holdings, _____ A.D.2d _____, 764 N.Y.S.2d 763 (4th Dept. 2003), the Appellate Division, Fourth Department, dismissed the plaintiff's Labor Law §240(1) cause of action where the plaintiff was hit by a piece of a wall that he was demolishing. The court reasoned that Labor Law §240(1) did not apply because the object that hit the plaintiff was part of a wall which was at the same elevation as the plaintiff.
In Eberhard v. Alexander Cent. Sch. Dist., _____ A.D.2d _____, 765 N.Y.S.2d 289 (4th Dept. 2003), the plaintiff was hit by a brick which was used as a weight holding down a tarp. Although the plaintiff was hit by a falling object, the Fourth Department decided that Labor Law §240(1) did not apply because these facts did not present a situation where a hoisting or securing device of the kind enumerated in the statute would have been necessary or even expected.
In Striegel v. Hillcrest Heights Development Corp., 2003 W L 22387625, 2003 N.Y. Slip. Op. 17548 (Oct. 21, 2003), the Court of Appeals held that a worker tumbling down a slanted roof onto an adjacent eave was covered by Labor Law §240(1).
In Hanzilian v. Bob Evans Farms, Inc., (01-CV-22S, 9/30/03), the United States District Court, Western District, granted the defendant's motion for summary judgment dismissing the plaintiff's claims under New York Labor Law §240(1) on the grounds that the plaintiff was performing maintenance work while he was replacing a transformer in a sign. New York Labor Law §240(1) does not cover routine maintenance done outside the context of construction work.
The Court of Appeals has held that a plaintiff's fall from a ladder while conducting an inspection of alteration work fell within the purview of New York Labor Law §240(1). Prats v. Port Authority of New York and New Jersey, 2003 W L 22387602, 2003 N.Y. Slip. Op. 17547 (Oct. 21, 2003). In reaching this decision, the Court of Appeals concluded that the inspection in this case was part of the alteration work and, therefore, covered by Labor Law §240(1).
COURT OF APPEALS UPHOLDS SHORTER NO-FAULT FILING DEADLINES
In the March 2002 edition of our newsletter, we reported on the matter of Medical Society of the State of New York v. Serio, 298 A.D.2d 255, 749 N.Y.S.2d 227 (1st Dept. 2002). This matter dealt with shorter deadlines for filing claims under New York's no-fault law. At the time we last examined this matter, the Supreme Court, New York County upheld the regulations. In October 2002, the Appellate Division affirmed. We have since monitored this matter closely.
On October 21, 2003, the Court of Appeals, in a unanimous decision, held that the filing regulations issued as an anti-fraud measure by the New York State Insurance Superintendent were valid. See Medical Society, __N.Y.2d__, (2003 WL 22387581). This marks an enormous victory for the insurance industry.
The filing regulations imposed by the Superintendent reduced the time limit within which an injured party must file a claim for no-fault benefits with an insurer from 90 to 30 days. Additionally, the time limitation for the submission of claims for medical expenses were decreased from 180 to 45 days.
LACK OF NOTIFICATION DID NOT RELIEVE INSURER FROM OBLIGATIONS TO INJURED PARTY
Of course, most liability policies contain a clause conditioning coverage upon written notice of an accident from an insured as soon as possible. Also as to those injured, New York State Insurance Law 3420 (a) (3) requires that every liability policy contain "...a provision that... written notice by or on behalf of the injured party...shall be deemed notice to the insurer".
A recent decision by the Appellate Division First Department suggests that where a claim is asserted by one injured through the operation of a motor vehicle transporting passengers for hire, no notice at all is required.
In American Transit Insurance Company v. Sartor et al., 305 A.D.2d 205, 762 N.Y.S.2d 340 (1st Dept., 2003), Sartor, asserting a personal injury claim, obtained default judgment against Utica Taxi. Utica's insurer, American Transit, in a declaratory judgment action, obtained summary judgment declaring that its disclaimer of coverage for lack of notice was proper. Upon appeal, the Appellate Division First Department reversed holding notice irrelevant. American Transit was directed by the Appellate Court to satisfy the $100,000 default judgment obtained by Sartor and to also pay Sartor the statutory 9% annual interest which accrued over the two years since the default judgment was obtained. Although the fact was not reported within the Court's decision, we consulted with counsel involved in the appeal and learned that American Transit was not advised by either Utica Taxi or Sartor of the accident or the subsequent bodily injury claim until after default judgment was granted. In support of its ruling, the Appellate Court noted that Vehicle and Traffic Law 370 (4) which relates to private entities engaged in the business of transporting passengers for hire, provides that an insurer's liability to an injured party will not be affected by the insured's failure to provide notice of an accident to the insurer. As an apparent consolation to American Transit, the Court recognized language within the policy entitling American Transit to reimbursement from Utica Taxi if the loss paid by American Transit was "due directly or indirectly" to Utica Taxi's breach of policy conditions. Not surprisingly, the Appellate Court did not attempt to resolve whether such policy language was applicable to the facts before it.
September, 2003
1. OBTAINING COMPLETE MEDICAL RECORDS BECOMES MUCH MORE DIFFICULT ON SEPTEMBER 1, 2003, THE EFFECTIVE DATE OF CPLR 3122(a)
On September 1, 2003, an amendment to CPLR 3122(a) will become effective in relation to the production of non-party business records. The purpose of this amendment is to simplify methods for obtaining discovery of documents from non-party witnesses and procuring their admission into evidence. According to the state legislature, by doing so it should alleviate burdens upon the litigants, non-party witnesses and the courts.
What this new amendment does, however, is significantly restrict an attorney’s power to obtain, by means of trial subpoenas, complete medical records of a plaintiff. As amended, CPLR 3122(a) will provide, in pertinent part, as follows:
3122. Objection to disclosure, inspection or examination; compliance.
(1) . . . A medical provider served with a subpoena duces tecum requesting the production of a patient’s medical records pursuant to this rule need not respond or object to the subpoena if the subpoena is not accompanied by a written authorization by the patient. Any subpoena served upon a medical provider requesting the medical records of a patient shall state in conspicuous bold-faced type that the records shall not be provided unless the subpoena is accompanied by a written authorization by the patient . . . [emphasis added].
The amendment to CPLR 3122(a) is the second recent statutory enactment restricting the opportunities of defense counsel to obtain pertinent medical records. As we had informed you in our May, 2003 edition of Summing Up, the requirements of HIPAA (Health Insurance Portability and Accountability Act), enacted by Congress, permits plaintiff’s counsel to impose severe restrictions within medical authorizations. Prior to the amendment to CPLR 3122, restrictive authorizations from plaintiff’s counsel limiting the scope of medical records available to the defendant were, in some instances, tolerable. This was true given the fact that, ultimately, a complete set of medical records could be subpoenaed to court at the time of trial. Now, with the amendment of CPLR 3122(a), subpoenaing a complete set of a plaintiff’s medical records to court at the time of trial becomes more difficult as well.
Although even before the amendment to CPLR 3122(a) one would be ill-advised to overlook restrictive authorizations, it has now become more important than ever to ensure that a complete set of medical records be obtained. This effort should be undertaken early in the litigation process during the discovery phase rather than at the time of trial. If court intervention is necessary, it should be immediately pursued. Also, when court intervention is sought, care should be taken to create an appropriate record for appellate review.
James S. Curtis
I. REMOVING AIR UNITS FROM A BUILDING QUALIFIES AS “ALTERING” UNDER SECTION 240(1) OF THE LABOR LAW.
The Court of Appeals has recently held in Panek v. County of Albany, 99 N.Y.2d 452, 758 N.Y.S.2d 267 (2003) that removing air units from a building slated for demolition, while not in and of itself a “demolition” under §240(1) of the Labor Law, does qualify as “altering” a building and covers workers for injuries arising out of such activity. In Panek, the plaintiff was on a ladder removing two large air units from the old traffic control tower at Albany Airport when he fell and was injured. The tower had been slated for demolition, but the demolition project had not yet begun. For this reason, the Court held that the plaintiff’s activity did not qualify under the demolition category in the Labor Law. Nonetheless, the Court found that such activity qualified as the process of “altering” a building and since it occurred while the plaintiff was working on a ladder, it qualified as an elevation related risk and successfully invoked §240(1). In their decision, the Court stated that the plaintiff’s work constituted modification of the building and whether the building was scheduled for demolition or slated for continued use does not change the nature of the work project at the time of the accident.
II.AN INSURANCE AGENT DOES NOT HAVE A CONTINUING DUTY TO ADVISE OR DIRECT A CLIENT TO OBTAIN ADDITIONAL COVERAGE ABSENT SUCH SPECIFIC REQUEST.
The Fourth Department has recently held that a general request for insurance does not impose upon the insurance agent a duty to recommend coverage for every possible scenario nor does it require the agent to advise, guide or direct a client to obtain certain insurance coverage. Frost v. Mayville Tremaine, Inc., 299 A.D. 2d 839, 750 N.Y.S.2d 398 (4th Dept., 2002). In Frost, the plaintiff, a business owner, sued his insurance agent alleging that he had relied upon the defendant’s representations that the insurance policy purchased by the plaintiff would cover losses for damage to property under control of the plaintiff regardless of the property ownership. In this case, the plaintiff sold a mobile home and delivered title to and possession of the home after the buyers obtained financing. Subsequently, after the transfer of title and possession, plaintiff’s contractors improperly connected the utilities to the mobile home causing substantial water damage.
The plaintiff attempted to make a claim under his insurance policy for the damage caused to the home only to learn that because the plaintiff did not have “Garage Keepers’ Coverage”, the plaintiff’s insurance company would not provide coverage for this damage. The reason given was that the plaintiff was no longer owner of the home. Through plaintiff’s deposition testimony, the agent established that the plaintiff did not request such coverage during a meeting with the insurance agent. The Fourth Department affirmed the trial court’s dismissal of the case noting that absent a specific request to advise or act, an insurance agent does not have a continuing duty to guide or direct the client to obtain additional coverage. The agent’s duty is defined simply by the nature of the request of the customer. Since the plaintiff in this case, made a general request for insurance, the agent cannot be liable for not providing the specific coverage that the insured eventually needed.
AN EMPLOYER/OWNER OF A VEHICLE MAY AVOID LIABILITY THROUGH THE USE OF RESTRICTIONS WHEN ALLOWING AN EMPLOYEE TO OPERATE THE VEHICLE.
In New York, a driver's negligence in the operation of the motor vehicle is imputed to the owner thus making the owner liable for injuries inflicted by the driver's fault. In many cases, this allows the injured plaintiff to have a solvent source to look to if a personal injury action arises. However, in Murdza v. Zimmerman, 99 N.Y.2d 375, 756 N.Y.S.2d 505 (2003), the Court of Appeals has recently narrowed this long standing policy.
In Murdza, the employer allowed one of its employees to drive the employer's leased vehicle with instructions that only the employee or the employee's spouse could drive the vehicle. However, in violation of that instruction, the employee allowed her boyfriend to operate the vehicle. The operator of the vehicle was then involved in an accident injuring the plaintiff. Predictably, the plaintiff sued the driver, employer and the rental agency that owned the vehicle and leased it to the employer. Under Vehicle and Traffic Law 388, the vicarious liability statute that imputes the driver's negligence to the owner, the plaintiff argued that the employer and leasing company where liable due to the driver's negligence. Not so holds the Court.
In an unanimous decision, the Court of Appeals held that while the rental agency that leased the vehicle to the employer can certainly be vicariously liable to the plaintiff, the employer is not. This is as a result of the Court of Appeals' construction of "permission" as defined under Vehicle and Traffic Law 388. The liability of a rental agency is treated differently than the employer's potential liability as the rental agency must be constructively deemed to have given permission to a third-party's use of the car even if a lease provision restricts the use of the vehicle to the lessee and his immediate family. This was a holding, largely made on public policy grounds, in Motor Vehicle Acc. Ind. Court v. Continental Net. Amer. Group Co., 35 N.Y.2d 260, 360 N.Y.S.2d 859 (1974). However, the same broad notion does not apply to the employers who, as the Court perceives it, are in a better position to expect an employee to comply with the restrictions of use of the vehicle. As such, if the driver of the employer's vehicle is operating it outside of the restrictions imposed by the employer, the employer can now be free from any vicarious liability which otherwise would attach.
Since this holding drastically changes the scope of vicarious liability as it impacts employers, it is time to consider summary judgment motions in appropriate cases. Likewise, for employers, it may be time to place express restrictions on its employees with reference to the operation of the employer's vehicles to attempt to lessen the potential vicarious liability.
I. IN AN APIP SUBROGATION ACTION, THE STATUTE OF LIMITATIONS BEGINS TO RUN FROM THE DATE OF THE ACCIDENT.
In Walker v. Stein, __ A.D.2d ___, 2003 WL 2008172 (N.Y.A.D. 4th Dept.), a case wherein Gregory Pajak from our office represented the insurer, the issue presented to the Appellate Division, Fourth Department, was whether the APIP subrogation action of the no-fault carrier was barred by a three-year statute of limitations applicable to recovery for damages arising from a bodily injury negligence claim. Significantly, in Walker, the insurer did not begin making APIP payments to the plaintiff's subrogee until more than three years following the accident.
The lower court denied the motion of the tort-feasor to dismiss the subrogation action as time barred.
On appeal, the Appellate Division, Fourth Department, by a 3-2 majority, reversed, dismissing the claim. The Appellate Division majority relied upon precedent that an insurance carrier, i.e. subrogee, possesses only such rights as are possessed by the insurer, i.e. subrogor. The majority concluded that since the rights of the subrogor are limited by a three-year statute of limitations the rights of a subrogee should be similarly limited. The majority held the APIP subrogation action of the insurer must be dismissed as time barred by a three-year statute of limitations.
In Walker, the majority opinion, in response to the fact that APIP payments did not begin until more than three years following the accident, rationalized that the insurer could have insisted that its subrogation rights be resolved against the tort-feasor as part of a global settlement of the personal injury claims. Yet, the majority in Walker does not address the dilemma which would occur if the insured did not commence a personal injury action prior to the expiration of a three-year statute of limitations.
Since the Appellate Division Decision in Walker was 3-2, the appellant-insurer is entitled to appeal as a matter of right to the New York State Court of Appeals. We, on behalf of the appellant-insurer, will pursue an appeal of the Walker decision to the New York State Court of Appeals. Of course we will advise of the outcome of the appeal to the Court of Appeals.
II. A CAUSE OF ACTION ASSERTED IN "INDEMNIFICATION" WILL NOT CIRCUMVENT THE THREE-YEAR STATUTE OF LIMITATIONS APPLIED IN WALKER V. STEIN.
In Liberty Mutual Insurance Company v. Clark, 296 A.D.2d 442, 745 N.Y.S.2d 64 (2nd Dept. 2001), a Liberty Mutual insured was injured as a result of a motor vehicle accident. Liberty's insured never sued the tort-feasor. Instead, she sought arbitration against Liberty seeking uninsured motorist benefits. Although Liberty was aware of the identity of the tort-feasor and the tort-feasor's insurance carrier, Liberty never petitioned to stay arbitration. As against Liberty, the Liberty insured received an arbitration award in the amount of $35,000.00. The arbitration award came six years after the accident.
In an attempt to recoup the award Liberty's insured received, Liberty brought action against the tort-feasor. Liberty styled its cause of action as one of indemnity rather than subrogation to avoid the applicable three-year statute of limitations applied in negligence actions. (See above comment.) The lower court granted the tort-feasor's motion to dismiss. The Appellate Division affirmed holding that no express or implied duty to indemnify extended from the tort-feasor to Liberty and that indemnification was not an appropriate cause of action.
In short, the Liberty case confirms that an "indemnification" cause of action which is founded in contract and which is subject to a six-year statute of limitations cannot be utilized to circumvent the three-year tort statute of limitations applicable to negligence actions. The potential dilemma raised in the Walker decision discussed above remains unresolved.
Jennifer A. Hemming
AUTHORIZATIONS FOR MEDICAL RECORDS MUST NOW COMPLY WITH THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT
In 1996, Congress passed the Health Insurance Portability and Accountability Act (AHIPAA). One function of HIPAA is to protect a patient's private medical information from being utilized against his or her will. While HIPAA's impact is mostly felt by healthcare and patient information providers, its effect is also felt in the insurance defense community. Covered entities, which include doctors, hospitals and other providers of patient medical information, were required to comply with HIPAA privacy regulations by April 14, 2003.
Of course, a critical aspect in successfully responding to a bodily injury claim is securing a complete set of medical records directly from healthcare providers. The increased privacy regulations will require that authorizations utilized by insurers and defense counsel be HIPAA compliant.
At a minimum, a HIPAA compliant authorization must include:
- A description of the information to be disclosed;
- The name of the person to whom the covered entity may make the disclosure;
- The name of the individual authorized to request the disclosure;
- An expiration date of the authorization;
- A statement of the patient's right to revoke the authorization and how the individual may revoke the authorization;
- a statement that information disclosed pursuant to the authorization may be subject to re-disclosure by the recipient and no long protected by HIPAA; and
- The signature of the patient and date.
Authorizations received from plaintiffs should be examined for these minimum requirements. Authorizations not meeting these minimum requirements should be returned and exchanged for authorizations which do meet these requirements. Submitting a non-compliant authorization to a provider of medical records will only delay the discovery process.
In addition to the minimum criteria specified above, authorizations which permit the disclosure of certain more sensitive information, such as records of alcohol and/or drug abuse, sexually transmitted disease information, psychiatric records or HIV/AIDS information, should specifically state that the authorization applies to this information. Further, references within authorizations to this more sensitive information should be initialed by the plaintiff so that the plaintiff clearly understands and requests that this information be released.
Chelus, Herdzik, Speyer, Monte & Pajak, P.C., has updated its authorizations to be HIPAA compliant. The attorneys review all incoming authorizations from plaintiffs to ensure HIPAA compliance.
Scott W. Kroll
FOURTH DEPARTMENT HOLDS THAT COLLATERAL SOURCE OFFSET PURSUANT TO CPLR 4545 MUST BE PLED AS AN AFFIRMATIVE DEFENSE.
CPLR 4545 provides that an award for damages for past or future economic cost or expense (like medical bills or lost wages) may be reduced by the amount of any collateral source (like insurance). This statute abrogated the common law rule which precluded the reduction of a personal injury award by payments received by a claimant from other sources. The purpose of the statutory change was to eliminate "double recoveries."
A timely application for a collateral source offset is made after damages are awarded but before a judgment has been entered.
The Fourth Department recently held that an application for collateral source offset pursuant to CPLR 4545 is an affirmative defense which must be pled pursuant to CPLR 3018(b). Wooten v. State of New York, 2002 WL 31888141 (4th Dept. December 30, 2002). Wooten involved a wrongful death action where the plaintiff brought an action against the State of New York for negligence and medical malpractice. Following a bench trial, the Court of Claims found the State liable and awarded the plaintiff damages. The State applied for an application for a collateral source offset pursuant to CPLR 4545 for an offset of social security benefits. The defendant did not raise collateral sources as an affirmative defense in their answer. The Wooten Court decided that the collateral source offset is an affirmative defense which must be pled.
The Court reasoned that CPLR 3018(b) requires that "[a] party shall plead all matters which, if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading." Id. The Court further pointed out that under this section of the CPLR, Courts have held that partial defenses and matters that tend to mitigate damages must also be plead affirmatively. The Wooten Court further reasoned that the collateral source offset is similar to the settlement offsets found in General Obligations Law 15-108 because both invoked a statute-based reduction in the verdict and both are presented to and determined by the Court after the verdict is rendered rather than during trial. Since the offset for General Obligation Law 15-108 has been previously held to be an affirmative defense which must be pled, the Court concluded that the collateral source offset must also be pled as an affirmative defense.
Although the defendant in Wooten did not plead collateral sources as an affirmative defense, the Court did allow the defendant to amend its answer to assert this defense citing authority which have allowed courts to sua sponte amend answers to conform to the evidence at trial.
Two of the five justices dissented in part stating that they did not believe that CPLR 3018(b) required collateral sources to be pled as an affirmative defense. The dissenters reasoned that the purpose of pleading affirmative defenses is to "eliminate surprise and prevent the [claimant] to know (sic) what contentions will be interjected by way of defense to his claim." Id. The dissenters in Wooten, reasoned that the collateral source defense was no surprise to the plaintiff because the defendant had served discovery demands regarding the payment of collateral sources and had adduced evidence at trial relating to the plaintiff's receipt of social security payments.
This Appellate Division makes clear that in order for a defendant to reserve his rights for a collateral source offset, it must be pled as an affirmative defense. No longer is a request for collateral source information and an application after judgment sufficient to reserve a defendant's right for these collateral source offsets. Fortunately, the Wooten court has also provided authority which allows defendants to amend their answers to assert this defense.
I. APPELLATE DIVISION AFFIRMS ORDER GRANTING SUMMARY JUDGMENT BASED UPON DOCTRINE OF PRIMARY ASSUMPTION OF RISK.
Recently, Gregory V. Pajak of our office represented the defendants in Cook v. Komorowski, 752 N.Y.S.2d 475 (App.Div. 4th Dept., 2002). In Cook, the plaintiff sought damages for an eye injury sustained during a game of splatball. The plaintiff was injured by a paint pellet fired by our client, Jeffrey Komorowski.
The lower court granted our motion for summary judgment which was based on the doctrine of primary assumption of risk. This doctrine essentially holds that when an individual engages in a sport or other recreational activity, that individual thereby consents to the commonly appreciated risks which are associated with and arise from the activity in question. The lower court in granting our motion for summary judgment, ruled that we had met our burden in establishing that the activity of splatball inherently involves the risk of eye injury and that the plaintiff was aware of that risk.
On appeal, the Appellate Division, Fourth Department adopted our argument. The plaintiff contended that the assumption of risk defense did not apply since being shot by a splatball in the eye was not a commonly appreciated risk. The Appellate Court dismissed the plaintiff's contention holding that a jury could not reasonably accept the plaintiff's argument. The Appellate Division opined that it is not necessary for the defendants to establish that the plaintiff foresaw the precise manner in which the injury occurred.
Furthermore, the Appellate Division held that nothing in the record demonstrated that the defendant's conduct was reckless, which would have rendered the doctrine of assumption of risk inapplicable.
II. COVERAGE FOR AN ADDITIONAL INSURED IS PRIMARY UNLESS UNAMBIGUOUSLY STATED OTHERWISE.
Pecker Iron Works of New York, Inc. v. Traveler's Insurance Company, ___ N.Y.2d ___ [2003], decided by the Court of Appeals of New York on February 13, 2003, establishes the basis upon which an additional insured's coverage is primary or excess insurance coverage.
Pecker Iron Works, a subcontractor, retained the services of Upfront Enterprises as a sub-subcontractor to provide labor, materials and equipment. Upfront provided Pecker Iron Works with certificates of insurance for liability and workers' compensation coverage, naming Pecker Iron Works as an additional insured. The defendant, Travelers Indemnity Co., was the carrier for Upfront and provided coverage for Upfront and any additional insureds designated by Upfront. The Traveler's policy indicated that coverage for additional insureds would be excess unless Upfront provided for the coverage to be primary in a written contract between Upfront and the additional insured.
An injured Upfront worker brought suit against the property owner and general contractor. These individuals then commenced a third party action against Pecker Iron Works, as the general contractor for Upfront. Pecker Iron Works made a claim with Traveler's Indemnity Co. based upon its status as an additional insured under Upfront's policy. Traveler's disclaimed coverage, taking the position that the coverage provided to Pecker Iron Works as an additional insured was excess. Pecker Iron Works then commenced a declaratory judgment action against Traveler's Indemnity Co.
Initially, the Supreme Court granted Traveler's motion to dismiss on the theory that the policy provided only excess coverage and that the contract between Pecker Iron Works and Upfront did not specifically designate the coverage to Pecker Iron Works as primary.
The Appellate Division reversed, holding that the designation of Pecker Iron Works as an additional insured in the contract with Upfront did not indicate that Pecker Iron Works would receive only excess coverage.
The Court of Appeals in affirming the decision of the Appellate Division held that coverage for additional insureds is primary coverage unless it is unambiguously stated otherwise. The Court of Appeals reasoned that an additional insured is an entity afforded the same coverage as the named insured.
I. RECENT DEVELOPMENTS IN CPLR 4545 - THE COLLATERAL SOURCE RULE.
New Legislative Amendment
On December 9, 2002, a new subdivision was added to New York CPLR 4545 also known as the collateral source rule. The rule has always required that whenever an injured plaintiff received compensation from an outside source (usually insurance) those proceeds would be offset against future losses and would apply to personal injury, property damage and wrongful death claims. The legislative intent behind this statute was basically to eliminate windfalls and double recoveries for the same loss. The new subdivision - CPLR 4545(d), which took effect immediately, states "voluntary charitable contributions received by an injured party shall not be considered to be a collateral source of payment that is admissible in evidence to reduce the amount of any award, judgment or settlement."
Now, if an injured plaintiff receives compensation from a charitable source, the defendant cannot try to show that this contribution was intended and, in some cases, actually went towards covering the plaintiff's losses. This new law will undoubtedly bring more scrutiny and raise the question "what is considered a voluntary charitable contribution?"
II. RECENT DEVELOPMENTS IN THE FOURTH DEPARTMENT WITH LABOR LAW 240.
In the case of Ciesielski v. Buffalo Industrial Park, Inc., 750 N.Y.2d 246, 2002 Slip Op. 08270 (4th Dept. 2002), the plaintiff commenced an action seeking damages for injuries as a result of a fall from a ladder. More specifically, the plaintiff in this case was injured while taking measurements for a proposed installation of a racking system in a warehouse leased by his employer from defendant. Evidence showed that the racking system was installed several months later by a company other than the plaintiff's employer. As a result, the Appellate Division held that the plaintiff was not present and, thus, not injured "during the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure." Consequently, Labor Law 240(1) did not apply. The plaintiff tried to contend that Labor Law 240(1) applied because the measurements which were taken by him were "an essential part of the construction process." The Fourth Department though disagreed. Allowing the taking of measurements to be covered under Labor Law 240(1) would "improperly enlarge the reach of the statute beyond its clear terms." The defendant's summary judgment motion dismissing Labor Law 241 cause of action was granted and the plaintiff's complaint was dismissed.
Another Fourth Department case dealing with Labor Law 240(1) is Boncore v. Temple Beth Zion, 751 NYS 2d 337, 2002 WL 31531973 (4th Dept. 2002). In Boncore, an electrician was injured in a fall when the ladder on which he was standing slid. The main issue the court faced in this case was whether the plaintiff was "employed" within the meaning of Labor Law 2(7). The definition of "employed" under the Labor Law is "permitted or suffered to work". The defendants argued that the plaintiff, who was hired by a subcontractor, was not an "employee" for purposes of the scaffold law. In opposition to the plaintiff's motion for summary judgment, the defendant submitted an affidavit of plaintiff's supervisor who stated that he had specifically directed plaintiff not to cover a certain hole in the wall. As a result of the plaintiff not following his duties, the defendants contended that he fell outside the umbrella of Labor Law 240. The court disagreed. In its opinion, the court stated that to be considered within the special class of persons entitled to protection of Labor Law 240(1), a plaintiff "must demonstrate that he was both permitted or suffered to work on a building or structure and that he was hired by someone, be it an owner, contractor or their agent." The court stated regardless of his voluntarily performed task, the plaintiff was still an employee working for his employer rather than just a mere volunteer and, thus, held that 240 covered the plaintiff's fall. The court went onto explain that it is not necessary for an employee to be working on his exact assigned duties in order to fall under the protection of 240.
I. EASTERN DISTRICT REJECTS INSURERS FRAUD AND UNJUST ENRICHMENT CLAIMS AGAINST MEDICAL PROVIDERS UNDER CURRENT NO-FAULT REGULATIONS
In the State of New York, it is a violation of New York’s Business Corporation Law for a non-licensed "physician" or lay person to own or control a professional health service corporation. As such, arbitrators across New York State have routinely held that insurers may deny, or at the very least, seek verification on the issue of a medical practice’s corporate structure when the practice is seeking payment of no-fault benefits. Several state courts have also recently upheld an insurer’s right to investigate a medical provider’s corporate structure to determine eligibility to bill and receive payment for no-fault benefits.
However, late last year, in a ruling that directly contradicted those state court decisions and the decisions of the arbitrators in New York, the U.S. District Court, Eastern District of New York (Hon. Charles P. Sifton) ruled that an insurer could not lawfully deny or seek reimbursement for no-fault benefits based solely upon a medical provider’s alleged unlawful corporate structure.
In State Farm Mut. Auto Ins. Co. v. Mallela, 175 F. Supp2d 401 (E.D.N.Y., 2001), State Farm sued some 36 different medical practices alleging, inter alia, fraud and unjust enrichment relating to no-fault payments made by State Farm to the medical practices. The allegations raised by State Farm were that the medical practices were illegally structured under New York’s Business Corporation Law in that each was actually owned and controlled by a non-licensed physician or lay person. State Farm further alleged that the actual ownership of each of the medical practices had been deliberately concealed in a scheme whereby a licensed physician would receive compensation from the practice in exchange for permitting the practice to use his or her name for corporate record purposes, when in fact, the practice would be owned and controlled by a non-physician or lay person. In that case, in dismissing State Farm’s claims, Judge Sifton specifically ruled that under the current law, State Farm was not absolved from its duty to pay claims for services that were actually rendered, nor did State Farm have a right to challenge a medical practice based upon the provisions of the Business Corporation Law.
Since the decision in Mallela, revisions to New York’s no-fault regulations have been made and implemented. Unlike the prior regulations, the current regulations specifically provide that in order to be eligible for reimbursement, medical providers must meet any applicable New York State or local licensing requirement necessary to perform such service in New York. 11 N.Y.C.R.R. 65-3.16(a)(12). As a result, State Farm amended its complaint against the defendant medical providers prompting the Eastern District to review State Farm’s claims under the newly implemented no-fault regulations.
In State Farm Mut. Auto. Ins. Co. v. Mallela, N.Y.L.J. (Dec. 11, 2002), the Eastern District, in affirming its prior order, has now found that current no-fault regulations, and more specifically, the provision of the regulations relating to the proper licensing of a medical provider to be ambiguous. In doing so, Judge Sifton opined that should the current regulations be interpreted as State Farm suggests, they would essentially allow an insurer to delve into all aspects of a medical providers license, including whether the provider has met all preconditions to licensing. This would delay payment for first-party benefits and, according to the court, would go directly against the purpose of New York’s no-fault law in the first instance, namely to provide immediate compensation for basic economic loss, including lost wages and medical expenses, to persons injured in automobile accidents.
It remains to be seen what, if any, impact Mallela will have on the apparent uniformity which existed amongst arbitrators and lower courts throughout New York State.
II. COURT OF APPEALS AFFIRMS FORESEEABILITY REQUIREMENT IN PREMISES LIABILITY ACTION
In Pinero v. Rite Aid of New York, Inc., 2002 N.Y. Slip Op. 04297 (May 28, 2002), the plaintiff, a customer, was injured while attempting to retrieve boxes of macaroni and cheese that were being handed to her by an assistant manager of the store. While handing plaintiff the merchandise she requested, the assistant manager dropped the boxes thereby causing the plaintiff to grab at the boxes as they were falling. In doing so, plaintiff leaned against a wheeled wagon holding merchandise causing it to move. Plaintiff lost her balance and fell, striking her head on some shelving and sustaining injury. Plaintiff then commenced a negligence action against the store to recover for the injuries she sustained. The gravamen of the plaintiff’s complaint was based on the existence of an unsafe condition. The Supreme Court, New York County granted the defendant store’s motion for summary judgment, thereby dismissing the complaint.
On appeal, plaintiff contended that her injuries were caused by the negligent actions of the assistant manager. The Appellate Division, First Department, in affirming the Order of the lower court, ruled that the assistant manager’s act of passing the merchandise over the wagon presented a minimal risk of danger and that the danger was unforeseeable as a matter of law. The Court of Appeals has now affirmed the decision of the First Department holding the plaintiff’s accident was not within the reasonably foreseeable risks of the defendant’s alleged negligence. Pinero v. Rite Aid of New York, Inc., 2002 WL 31770463 (Dec. 12, 2002). As such, foreseeability of risk remains an essential element of a negligence cause of action as one can only be considered to have been negligent when the event causing the injury could have been reasonably anticipated.
James S. Curtis
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December |
I. INSURER OBLIGATED TO DEFEND ENTIRE ACTION IN DEFAMATION CLAIM WHERE ANY OF THE CLAIMS INVOLVED "COVERED" EVENTS.
In a federal action arising from a defamation claim, the plaintiff, a physician, had publicly advocated that the Massena Memorial Hospital provide nurse-midwifery services not previously provided. He claimed that as a result of his activities, the defendant, Massena Memorial Hospital, engaged in a campaign of harassment including overt and malicious acts to excommunicate him from and ruin him in the Massena medical community. The hospital’s insurer, Healthcare Underwriters Mutual, disclaimed coverage based upon the exclusion in its policy for defamatory statements made with knowledge of their falsity and refused to defend in that action. The insurer also denied coverage for the reason that the allegations of malice in the plaintiff’s complaint were equivalent to intentional wrongdoing. (It is well settled that as a matter of public policy conduct intended to cause injury is not covered by insurance. See Public Service Mutual v. Goldfarb, 53 N.Y.2d 392, 399-400 (1981).) A declaratory judgment action ensued to determine whether the denial of coverage was appropriate.
The Court of Appeals held in the declaratory judgment action, Town of Massena v. Healthcare Underwriters Mutual, 98 N.Y.2d 435 (2002), that the insurer has a duty to defend a defamation action where any of the claims "arguably" arise from covered events.
In a defamation action, the plaintiff must allege that a false statement was made which exposes him to public contempt, ridicule, aversion or disgrace. In addition to this, in a defamatory action involving a public figure, the plaintiff must allege that the statement was made with actual "malice", defined as either knowledge of the falsehood or recklessness as to the falsehood. (See New York Times v. Sullivan, 376 U.S. 254, 279-280 (1964).)
In the federal action, the Court found that the plaintiff was a limited public figure. Therefore, to succeed on his defamation action, the plaintiff had to allege that the hospital had knowledge of the falsehood or that the statement was made with recklessness as to the falsehood. This would seemingly fall within Healthcare Underwriters’ exclusion in its policy for defamatory statements made with knowledge of their falsity, however the Court of Appeals found it did not and that the insurer was obligated to defend.
In Town of Massena, the Court found that the defendant, Healthcare Underwriters Mutual, was obligated to defend under its personal injury liability policy which covered all personal injury damages arising from "the publication or utterance of a libel or slander" or of other defamatory or disparaging material. The Court, in its decision, cited precedent in Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 65 (1991), which states that, "an insurer’s duty to defend arises whenever the allegations in a complaint state a cause of action that gives rise to a reasonable possibility of recovery under the policy." [Emphasis added.] Likewise, citing Frontier Insulation Contractors v. Merchants Mutual Insurance, 91 N.Y.2d 169 (1997), the Court noted that "if any of the claims against [an] insured arguably arise from covered events, the insurer is required to defend the entire action." [Emphasis added.]
In Town v. Massena, the Court found that because of the plaintiff’s status as a limited public figure, he could recover on his defamation claim if he merely established that the defendants’ statements were made with reckless disregard of their truth. The Court found that such a statement did not fall under the insurer’s exclusion for defamatory statements made with knowledge of their falsity nor was coverage excluded under public policy for intentional wrongdoing. The Court thus held that because under this theory of recovery plaintiff’s claim for defamation could be covered under the policy, the defendant, Healthcare Underwriters Mutual, had a duty to defend the entire action.
II. DEFENDANT NEED NOT PROVE "GRAVE INJURY" TO DEFEAT EMPLOYER’S SUMMARY JUDGMENT MOTION.
In accordance with §11 of the Worker’s Compensation Law, a defendant must show that the plaintiff entitled to workers’ compensation benefits suffered a "grave injury" in order to assert a claim against the plaintiff’s employer for contribution and indemnification. There is conflict among the Courts however as to the burden of proof between the defendant and employer on the "grave injury" issue in the context of a summary judgment motion.
In a recent Fourth Department decision, Sergeant v. Murphy Family Trust, 292 A.D.2d 761 (4th Dept., 2002), the Court held that the burden of proof on "grave injury" lies with the moving party on a summary judgment motion. In Sergeant, the Court held that the movant/employer had to prove that the plaintiff did not suffer a "grave injury" as defined under §11 of the Worker’s Compensation Law. The Court found that once the employer satisfied his burden, the defendant need only come forward with opposing proof sufficient to raise a material question of fact for denial of employer’s summary judgment motion. Based upon this, the Court modified the lower court’s decision which had granted summary judgment for the employer and reinstated the third-party complaint against the employer alleging grave injury.
This holding by the Fourth Department significantly reduces the defendant’s burden of proof, at least initially on the "grave injury" issue which is required to be shown to retain plaintiff’s employer in the action.
I. NEW LEGISLATION SUBSTANTIALLY ALTERS DUTIES OF LIABILITY INSURERS WITH RESPECT TO CLAIMS BETWEEN HUSBANDS AND WIVES.
In 1937, General Obligations Law section §3-313 was enacted to eliminate married women’s disability at common law to bring lawsuits against their husbands for injury. The same year, the Legislature enacted Insurance Law §3420(g), which provided that no insurance contract would provide coverage to one spouse sued by another spouse for injury caused by the culpable conduct of the insured spouse unless such coverage was specifically provided for in the insurance contract. Therefore, while personal injury suits were permitted under the law, there was no insurance coverage for such claims unless the relevant insurance policy expressly provided such coverage.
On September 24, 2002, Governor Pataki signed new legislation to amend Insurance Law §3420(g) and Vehicle and Traffic Law §§345 and 388 to substantially alter the duties of liability insurers as to spousal claims.
That legislation, effective January 1, 2003 amends Insurance Law §3420(g) to require liability insurers to offer “Supplemental Spousal Liability Insurance” upon written request of an insured, and upon payment of a reasonable premium. Such supplemental insurance shall provide coverage to a spouse for injury to person or property as a result of the culpable conduct of the insured spouse. In addition, Insurance Law §3420(g) now requires all liability policies to provide written notice in bold face type on the front of the premium notice that supplementary spousal coverage is available. Such notice must offer an explanation of that coverage, and identify the insurer’s premium for such coverage. The notice must be provided to the named insured at least once a year. Similarly, Vehicle and Traffic Law §345(e) has been amended to include the notice provisions and requirement to offer Supplemental Spousal Liability Insurance on all motor vehicle liability policies.
Vehicle and Traffic Law §388 has also been amended to reference the new requirement to offer spousal indemnification coverage. Vehicle and Traffic Law §388(4) previously required all liability insurance policies issued to owners of motor vehicles to contain a provision expressly recognizing the vicarious liability of motor vehicle owners for the negligent acts of their permissive users, but excluded coverage for claims by an injured person injured through the use or operation of a vehicle owned by his or her spouse. Vehicle and Traffic Law §388(4) has now been amended to reference the amendments to Insurance Law §3420(g) concerning the notice provisions and the availability of Supplemental Spousal Insurance Coverage.
The recent amendments to Insurance Law §3420(g) recognize the great number of inequities perceived by the prior exclusion in coverage for spousal claims. Those inequities are discussed in Black vs. Allstate Insurance Company, 274 A.D. 2d 346, 711 N.Y.S. 2d 15 (1st Dept., 2000). In Black, a wife was driving a motor vehicle she owned when it was struck by a stolen car being pursued by the police. The driver’s husband was killed in the motor vehicle accident and her son was seriously injured. The wife suffered permanent brain damage rendering her incompetent as a result of the motor vehicle accident. After the automobile liability insurance carrier denied coverage to the wife for claims brought against her by her deceased husband’s estate, the wife commenced a declaratory judgment action against the liability carrier.
The Appellate Division, First Department recognized that the spousal exclusion of Insurance Law §3420(g) was enacted to attempt to prevent collusion between husbands and wives. The court held that although it is clear collusion was highly unlikely in Black, due to the death of the husband and severe injuries suffered by the wife and child, Insurance Law §3420(g) did not exclude cases where there is proof of no collusion from the spousal exclusion. The court suggested that the Legislature revisit these ideas to ensure that drivers are aware that their automobile liability insurance policy provides coverage for every other passenger in that driver’s car, but not that driver’s spouse. The decision in Black certainly illustrates the inequities of the prior version of Insurance Law §3420(g). The spousal exclusion had no effect upon the claims of the driver’s son who was injured in the motor vehicle accident, but completely precluded the coverage for the claims of the driver’s husband who was killed in the motor vehicle accident. Certainly, there would seem to be as much incentive for fraudulent claims between a mother and son as there is between a wife and husband.
Perhaps hearing the call of the Appellate Division, the New York State Law Revision Commission studied the issue and concluded that under the law as it existed a spouse injured by the culpable conduct of his or her spouse in a motor vehicle accident is limited to recovering mandatory no fault benefits. Further, because the spousal exclusion is statutory, insurers were not required to disclose the exclusion. As such, the vast majority of insureds were unaware that their spouse would not be provided coverage under the policy. Also, although the predecessor to Insurance Law §3420(g) permitted insureds to contract for spousal coverage to avoid the exclusion, no New York insurance carriers offered the supplemental endorsement. The commission was particularly troubled by the operation of the exclusion where it was evident that no fraud or collusion existed; especially in light of the rejection by the courts of common law rules barring suits between other family members. In fact, the commission noted that New York was the only state with a statute authorizing insurers to deny excess liability coverage against claims by spouses without notice or a written exclusion in the policy. Based on those conclusions, the commission recommended the amendment of Insurance Law §3420(g).
The thrust of the amendments is not to create coverage where none previously existed. On the contrary, as indicated by the commission, insurance carriers were always able to provide Supplemental Spousal Insurance Coverage, but no insurers elected to offer such coverage. Insurers now must offer such coverage, at the option of the insured; and must also now give notice to their insureds that absent purchasing such coverage, no coverage is afforded to spousal claims under the policy.
Of course, there is no case law addressing the new amendments to Insurance Law §3420(g). However, based upon general insurance contract interpretation principles, if the statutory notice is not provided, it is likely that the insurer will not be able to avail itself of the spousal exclusion. Thus, effective January 1, 2003, insurers must be sure to include to the new notice on all new policies and renewals.
Matthew A. Lenhard
October, 2002
1. PLAINTIFF FAILED TO ESTABLISH THAT SHE SUSTAINED A SERIOUS INJURY EVEN THOUGH THE EVIDENCE SHOWED THAT SHE SUFFERED A HERNIATED DISC AND UNDERWENT SURGERY.
It appears that the tide with respect to the issue of serious injury in motor vehicle cases is slowly beginning to turn in the defendants’ favor. The latest example of a dismissal based on the lack of evidence of a serious injury is Lindquist v. Knowledge Systems and Research, Inc., 295 A.D. 2d 889, 744 N.Y.S. 2d 103 (4th Dept. 2002). In that case, the plaintiff sustained a herniated disc in her lower back as a result of a motor vehicle accident. The plaintiff alleged that the herniated disc and consequent surgery caused the plaintiff permanent and consequential limitations. After the trial, the jury awarded the plaintiff damages for the injuries that she sustained in the accident. However, the Fourth Department reversed the judgment against the defendants holding that the plaintiff failed to prove that her back injury was permanent and consequential even though medical proof showed that the plaintiff sustained a herniated disc necessitating surgery. The appellate court noted that the evidence at trial established that surgery was successful and plaintiff received no further treatment one year after surgery. The evidence further established that the plaintiff no longer experienced pain from the herniated disc and resumed her normal daily activities after surgery. As such, there was no evidence of a permanent and consequential limitation and therefore the defendant’s motion to set aside the verdict should have been granted.
As evidenced by this case and other recent appellate opinions, the times when a mere finding of a herniation raised a question of fact with respect to the serious injury threshold are seemingly over. As such, one should not assume that a back injury necessitating surgical intervention necessarily satisfies the serious injury threshold especially with respect to the permanent and consequential criteria.
2. A FORMER OWNER OF A DOG RESPONSIBLE FOR BITING THE PLAINTIFF IS NOT LIABLE FOR THE PLAINTIFF’S INJURIES.
Even though cases involving dog bites are rather common, not many plaintiffs sue the dog’s current and past owners. Such was the scenario in Bukhatetsky v. Vysotski, ___ A.D. 2d __, 745 N.Y.S. 2d (2nd Dept. 2002). In this case, the plaintiff was injured when he was bitten by a dog approximately 4 months after the dog was sold from one defendant to another. The defendant who sold the dog failed to notify the authorities of the change of ownership pursuant to Agriculture and Markets Law §113. However, the Appellate Division held that despite the fact that the former dog’s owner failed to properly notify the authorities of the change of the dog’s ownership, the plaintiff could not assert a claim against the dog’s former owner. The evidence in this case showed that the dog’s current owner had sole possessory interest and control over the dog on the date of the accident. The fact that the former owner continued to be registered as the dog’s owner at the time of the incident did not create a question of fact with respect to the ownership of the dog on the date of the accident.
As such, the issue of possessory interest and control over the dog is crucial with reference to determining who is liable for the dog’s actions. The mere fact that the authorities were not advised of the change of ownership is insufficient to state a viable claim against the dog’s former owner.
3. THE SNOW REMOVAL CONTRACTOR IS GENERALLY NOT LIABLE TO THE PUBLIC IN SLIP AND FALL CASES.
The Court of Appeals has recently held that a plaintiff who slips in an icy parking lot cannot recover for personal injuries from the snow removal company and instead is relegated to recovery from the owner of the premises where the accident occurred. Espinal v. Melville Snow Contractors, Inc., 98 N.Y. 2d 136 (2002).
In Espinal, the plaintiff slipped on her employer’s parking lot and sued the snow removal contractor. The exclusivity of the Workers’ Compensation Law precluded a lawsuit by the plaintiff against her employer. The Court of Appeals held that a snow removal contractor’s obligation to the general public depends on whether its contract with the owner of the premises is of a limited nature or is of the type that would constitute a comprehensive and exclusive property maintenance obligation. In Espinal, the snow removal company had an obligation to remove the snow only at certain designated times of the day and only in certain circumstances where the snow fall exceeded 3 inches. The Court of Appeals held that such an obligation is not of the type that would constitute a comprehensive and exclusive property maintenance obligation. The snow removal company did not entirely absorb the owner’s duty as a land owner to maintain the premises safely due to the limited nature of the contract. As such, the plaintiff’s claims against the snow removal contractor were dismissed and she was left with no legal recourse for her injuries other than claims for worker compensation benefits.
The crux of this decision is that snow removal contractors are generally immune from suit directly by the plaintiff unless they undertake their snow plowing duties as part of a comprehensive and exclusive property maintenance agreement with the landowner. As such, the plaintiffs are relegated to suing the landowner who then may bring a third party action for breach of contract against the snow removal contractor.
September 2002
I. PROCRASTINATION NOT FATAL FOR CLAIM FOR SUPPLEMENTARY UNINSURED MOTORIST COVERAGE
In Matter of Brandon v. Nationwide Mutual Insurance Company, 97 N.Y.2d 491, 743 N.Y.S.2d 53 (2002) the Court of Appeals recently held that unless the insurer shows that it was prejudiced by the delay, an insured’s failure to timely submit a personal injury action summons and complaint to his insurer did not permit the insurer to disclaim supplementary uninsured motorist’s (SUM) coverage.
On March 1, 1997, a vehicle driven by Griselda Cancel collided with a parked vehicle in which the petitioner Brandon was a passenger. The parked vehicle was owned by petitioner’s son. Nine days later, petitioner forwarded a sworn “Notice of Intention to Make Claim” to his own insurer, Nationwide Mutual Insurance Company. The notice indicated that Cancel negligently drove an uninsured car and that the petitioner was making his claim for personal injuries under his policy’s Uninsured Automobile Endorsement. The notice of claim was sent to the petitioner’s local Nationwide agent. An employee of the agency acknowledged the receipt of the claim, but did not forward it to Nationwide’s claims department.
Thereafter, petitioner underwent a series of medical procedures including surgery and sought no-fault benefits from Nationwide. Nationwide contended that petitioner’s notice to it of the accident was “over 90 days” and that petitioner forfeited no-fault coverage. Nationwide therefore made no payment on the no-fault claim and eventually closed the no-fault file.
On September 19, 1997, some 6 months after the accident, petitioner brought a personal injury action against Cancel, but, notwithstanding the requirements of the uninsured automobile endorsement, did not forward the summons and complaint to Nationwide. It was not until over a year later that Nationwide learned of the personal injury action from petitioner’s attorney. Nationwide sent petitioner’s attorney a reservation of rights letter alleging that petitioner was not entitled to SUM coverage because he had failed to send a timely notice of claim and that he had not properly forwarded the personal injury summons and complaint. Within the following weeks, the papers were forwarded to Nationwide. Nationwide, after internal inquiries, learned of the notice the petitioner initially provided it’s local agent. Nevertheless, in a letter dated December 17, 1998, Nationwide denied coverage solely on the basis of petitioner’s failure to forward the personal injury summons and complaint.
The issue before the Court of Appeals was whether the late notice of legal action should be given preclusive effect. The Court, citing Unigard Sec. Ins. Co. v. North Riv. Ins. Co. 79 N.Y.2d 576, 584 N.Y.S.2d 290 (1992) stated that generally, “one seeking to escape the obligation to perform under a contract must demonstrate a material breach or prejudice”. Nationwide, in its argument to the Court of Appeals, relied on the cases holding that an insured’s failure to provide a timely notice of claim relieves the insurer of its obligation to perform, whether or not it can show prejudice. Security Mutual Insurance Company v. Acker-Fitzsimons Corporation, 31 N.Y.2d 436, 340 N.Y.S.2d 902 (1972).
However, the Court of Appeals in Matter of Brandon declined to extend the Security Mutual no prejudice exception to the circumstances before it. The Court of Appeals stated that “under the circumstances of this case, and giving the protection some insurers already enjoy by virtue of the notice of claim requirement, insurers relying on the late notice of claim of legal action defense should be required to demonstrate prejudice.” The Court of Appeals placed the burden of proving prejudice on the insurer because it is the insurer who has the relevant information about its own claims-handling procedures and because the alternative approach would burden the policy holder with the task of proving a negative.
II. RECENT HOLDINGS BY THE FOURTH DEPARTMENT IN LABOR LAW §240 CASES
In Primavera v. Benderson Family 1968 Trust, 294 A.D.2d 923, 741 N.Y.S.2d 816 (4th Dept., 2002) the Fourth Department determined that the Supreme Court properly denied the plaintiff’s motion for partial summary judgment on liability on a Labor Law §240(1) claim. The plaintiff was installing duct work at a height of 18-20 feet. The plaintiff was using a scissor lift to perform his work at an elevation, a device the Fourth Department found “functionally similar” to a scaffold or ladder and thus within the statutory coverage. However, immediately before the accident, the plaintiff lowered the scissor lift to its lowest position and maneuvered it to a spot near the swimming pool. The scissor lift tipped and fell into the swimming pool. The Fourth Department determined that the accident was not the result of the hazard of installing duct work at an elevation, but rather the accident was a result of a separate and unrelated hazard, i.e., and empty, unguarded swimming pool. Therefore, the court determined that the accident was not the result of a type of hazard that the use or placement of the safety device enumerated in Labor Law §240(1) was designed to protect against.
In Silk v. Turk, 294 A.D.2d 896, 741 N.Y.S.2d 373 (4th Dept., 2002), plaintiff commenced a Labor Law action seeking damages for injuries he had sustained when he fell from a scaffold while reconstructing a bridge on a Chautauqua county road. The defendant was the title owner of the property in which the bridge was located, but exercised no control over the reconstruction bridge. The property was subject to an implied easement or right-of-way granted to the third party defendant, Chautauqua County. The Fourth Department determined that the defendant, as title owner of the property, was an owner within the meaning law of Labor Law §240(1). The Court stated that “liability rests upon the fact of ownership and whether [she] had contracted for the work or benefitted from it are legally irrelevant.”
August, 2002
1. COURT OF APPEALS UPHOLDS CRIMINAL ACTIVITY EXCLUSION.
The courts have traditionally viewed exclusion clauses in insurance polices with great care. The courts frequently find that an insurance exclusion does not apply to a particular situation. Courts will often find that accident victims should, as a matter of public policy, have recourse to financially responsible defendants.
The type of policy at issue in the present case, Slayko v. Security Mutual Insurance Company, 2002 WL 1419127(N.Y.), was a homeowner’s policy. The plaintiff and defendant in this case were using alcohol and marijuana at a cabin owned by the defendant’s grandmother. The defendant picked up a shotgun, believing the gun to be unloaded, pointed it at his friend and pulled the trigger. The gun did not discharge. The plaintiff said with a laugh, “Never point a gun around somebody and pull the trigger.” The defendant then pumped the gun and pulled the trigger again. This time, the gun discharged. The defendant immediately took measures to aid the now injured plaintiff. The defendant pled guilty to second degree felony assault, admitting to recklessly causing serious physical injury by means of a deadly weapon. The plaintiff eventually sued the defendant for negligence. The insurer disclaimed coverage.
The insurance policy contained intentional act and criminal act exclusions. The intentional act exclusion denied coverage to liability “caused intentionally by or at the direction of any insured.” The criminal activity exclusion denied coverage to liability “arising directly or indirectly out of instances, occurrences or allegations of criminal activity by the insured.”
The Supreme Court granted plaintiff’s motion for summary judgment. The Appellate Division affirmed, holding that the intentional act exclusion did not apply and that the criminal activity exclusion was unenforceable as a matter of public policy, because it “clearly defies the reasonable expectations of the insured.”
The Court of Appeals affirmed the Appellate Division ruling that the intentional act exclusion did not apply. Because the defendant did not intend to injure the plaintiff, the intentional act exclusion would apply only if the injury were “inherent in the nature” of the wrongful act. The Court reasoned that because the gun could have been empty, the defendant’s conduct was not inherently harmful.
The plaintiff argued that the criminal activity exclusion was void as against public policy, because it was too broad and “defies the reasonable expectations of the insured.” The plaintiff relied on Allstate Insurance Co. v. Zuk, 78 N.Y.2d 141 (1991). In that case, the policy excluded “bodily injury ... which may reasonably be expected to result from the intentional or criminal acts of an insured person.” In Zuk, the insured fatally shot a friend while cleaning a shotgun. The Court found that the defendant in Zuk did not “reasonably expect” to cause bodily injury while cleaning his gun. The exclusion in the policy at issue in the present matter did not contain the phrase “reasonably expected”. On that basis, the Court of Appeals in the present matter found the exclusions to be distinguishable.
The Court did not find the present exclusion to be overly broad. Rather, the Court found the exclusion supported the public policy of removing convicted felons from the homeowner’s risk pool. The Court did take pains to distinguish felonious activity from minor offenses. While not commenting on the validity of the criminal activity exclusion in the present matter for minor violations, the Court stated that in the present situation the acts were serious enough to trigger the exclusion. The Court did not consider denying coverage to a convicted felon as unreasonable or unfair.
Although the applicability of criminal act exclusions remains cloudy as to a variety of violations and misdemeanors, it seems that the Court of Appeals has decided that upholding criminal activity exclusion policies is fair where the insured engages in felonious activity.
2. COURT OF APPEALS CLARIFIES “OBJECTIVE BASIS” TEST FOR SERIOUS INJURY THRESHOLD.
The legislative intent of the No-Fault Law was, in part, to eliminate statutorily-insignificant injuries and frivolous claims. In an effort to achieve this goal, a plaintiff must demonstrate an objective basis of his injury. An expert’s opinion unsupported by an objective finding would be considered speculative and not supportive of the plaintiff’s claim. In the case of neck and back injuries, objective tests which measured a numeric percentage decrease in a plaintiff’s range of motion were permissible in substantiating a claim of serious injury. If the plaintiff is complaining of a loss of range of motion, the Fourth Department has held that, at very least, the plaintiff must present proof of an objective test demonstrating loss of range of motion.
In Toure v. Avis Rent-a-Car Systems, Inc., 2002 WL 1461317 (N.Y.), the Court of Appeals permits an expert’s qualitative assessment of a plaintiff’s condition, without a numeric percentage of a plaintiff’s loss of range of motion. The Court of Appeals decision examines three separate cases on appeal. All of the cases present similar fact patterns. In the first two cases, the examining physician, although not determining a specific percentage loss in range of motion, describes the “qualitative nature” of the plaintiff’s limitations. This means that the doctor compared the plaintiff’s loss of range of motion with the normal function, purpose and use of the plaintiff’s spine. The doctor supported his observations with objective medical evidence, including an MRI and CT scan. The Court felt that the doctor’s expert opinion was sufficient to defeat the defendant’s motion for summary judgment based on the serious injury threshold.
It is encouraging to note that in the third case considered, the Court would not accept a doctor’s observations of limited range of motion where the observations were based on the plaintiff’s complaints of pain. Further, the doctor in that case did not indicate what objective tests, if any, that he performed. That doctor also failed to introduce any MRI films that he may have reviewed.
Although the Court of Appeal’s ruling does make a defendant’s summary judgment motion less likely to succeed, the defendant will still succeed in a case where there is absolutely no objective proof of serious injury.
Scott W. Kroll
July 2002
1. THE SECOND DEPARTMENT REJECTS NOTION THAT FINDING OF “LIABILITY” BASED SOLELY UPON EVIDENCE OF NEGLIGENCE IS ALSO DISPOSITIVE OF “SERIOUS INJURY” ISSUE.
Pursuant to Insurance Law §5104, a plaintiff claiming injury as a result of a motor vehicle accident must establish a “serious injury” in order to recover for non-economic losses such as “pain and suffering.” Therefore, a plaintiff in an automobile accident lawsuit, must plead and prove that he or she sustained a “serious injury” as defined by Insurance Law §5102(d). In the context of the aforementioned law, it was somewhat puzzling that courts have recently held that the granting of summary judgment on the issue of “liability” based upon evidence of the defendant’s negligence also resolves as a matter of law, the plaintiffs serious injury claim. This recent case law was discussed in our December, 2001 newsletter.
One of the cases discussed in that newsletter was a lower court decision Zecca v. Riccardelli, 2001 WL 2001 WL 856, 399(N.Y. sup.), 2001 N.Y. Slip Op. 40032(U). In Zecca the plaintiff moved for summary judgment on “liability” by submitting deposition testimony of the defendant which indicated that the defendant was responsible for the happening of the accident. The plaintiff did not submit any evidence demonstrating that he sustained a “serious injury”. Despite the lack of evidence on this issue, the lower court ruled that a determination in favor of the plaintiff as to “liability” also included the determination that the plaintiff sustained a “serious injury”. This egregious decision was recently overruled on appeal.
The Appellate Division, Second Department reversed the holding of the lower court. The Appellate Division held that the granting of an unopposed summary judgment motion in favor of the plaintiff in an automobile accident case does not resolve whether there is a “serious injury” under the No Fault Law. Zecca v. Riccardelli, A.D. 2d , 742 N.Y.S. 2d 76 (2nd Dept. 2002). The Second Department based this decision on the fact that the plaintiff submitted no proof as to the plaintiff’s injuries. Therefore, the plaintiff did not meet his burden of proving a “serious injury” as required by the No Fault Law. The Appellate Division also reasoned that the purpose of the No Fault Law was to reduce the number of law suits arising from automobile accidents by eliminating recovery in those automobile accidents which produced minor injuries. The Court reasoned that to hold otherwise would be not only inconsistent with the intent of the No Fault Law, it would also be contrary to the basic summary judgment principles.
It should be noted that our own Fourth Department has ruled contrary to this recent Second Department decision in Simone v. City of Niagara Falls, 281 A.D. 2d 923, 721 N.Y.S. 2d 892 (4th Dept. 2001). Simone was discussed more fully in the December 2001 newsletter. Although there is now a split in the departments, the practitioner in the Fourth Department still has to take steps to preserve the “serious injury” question when the plaintiff moves for summary judgment on “liability.”
2. II. FOURTH DEPARTMENT DISREGARDS ARGUMENTS RELATING TO HEIGHT DIFFERENTIAL AND FINDS LIABILITY UNDER LABOR LAW §240(1) (A.K.A. THE SCAFFOLD LAW) WHEN A WORKER FELL INTO TRENCH.
In Congi v. Niagara Frontier Transportation Auth., A.D. 2d , 741 N.Y.S. 2d 629 (4th dept. 2002) the plaintiff was injured when he fell while attempting to descend into an excavated trench to tie together a rebar rod. The Appellate Division held that the plaintiff’s fall into the excavated trench was “the type of elevation related risk for which Labor Law §240(1) provides protection.” The Court further explained that whether the work area where the plaintiff fell was 30 inches below grade, as described by the defendant or 10 feet below grade as described by the plaintiff, was irrelevant. Rather, the Court reasoned that the extent of the elevation differential or the distance that the worker falls does not determine the applicability of Labor Law §240(1).
III. NEW YORK COURT OF APPEALS HOLDS THAT LOSS OF THUMB IS NOT A “GRAVE INJURY” UNDER THE OMNIBUS WORKER’S COMPENSATION REFORM ACT OF 1996.
In 1996, the State Legislature amended the Workers’ Compensation Law to provide that an employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee unless the employee’s injuries are shown to be “grave” as defined by the statute. This amendment lists specific injuries which have been narrowly construed by the Courts.
For example, Workers’ Compensation Law §11 lists a “permanent and total loss of use” of the hand as a “grave injury”. The Court of Appeals has recently held that the loss of a plaintiff’s thumb does not amount to a permanent and total loss of use of the hand. Meis v. ELO Organization, LLC, 97 N.Y. 2d 714, 740 N.Y.S. 2d 689 (2002).
The lower court had found that the plaintiff’s loss of a thumb created a question of fact for the jury as to whether the plaintiff’s injury was “grave” under the statute. The Appellate Division affirmed the lower court. In reaching this decision, the Appellate Division looked to the plaintiff’s occupation as a plumber. The appellate court reasoned that since the plaintiff needed his whole hand to do his job as a plumber, a question of fact existed as to whether the plaintiff had a “permanent and total loss of the use” of the hand. An appeal to New York’s highest court overruled this decision.
The New York Court of Appeals disagreed with the Appellate Division finding that the amputation of his thumb did not amount to a permanent and total loss of use of the plaintiff’s hand. The Court of Appeals reasoned that since the injuries qualifying as “grave” under the statute are narrowly defined, the words of the statute are to be given their plain reading without resort to forced or unnatural interpretations. As a result, the Court of Appeals rejected the argument that the loss of a thumb had rendered the plaintiff’s hand totally useless.
JUNE 2002
I. COURT OF APPEALS REVERSES LOSS OF THUMB AS CONSTITUTING GRAVE INJURY UNDER WCL §11
In the July 2001 issue of this newsletter, we reported that the Appellate Division, First Department, had held that the loss of a thumb constituted a grave injury under Workers Compensation Law §11, and therefore an injured plumbers employer was permitted to be impleaded in the workers claim for his injuries. Meis v. ELO Organization, LLC, 97 N.Y.2d 714, 740 N.Y.S.2d 689 (2002). The Court of Appeals has now reversed that decision, holding that Workers Compensation Law §11 is to be given its plain meaning without resort to forced or unnatural interpretations.
Thus the amputation of a thumb is not to be considered a permanent and total loss of use of the hand as required by the statute. Therefore, the exclusivity provision of the Workers Compensation Law was held to apply, and the injured worker was not entitled to commence a direct action against his employer, and the third-party actions for indemnification and contribution of the property owner and general contractor against the plaintiffs employer were dismissed.
II. AUTOMOBILE LIABILITY CARRIERS DISCLAIMER FOR FRAUD NOT APPLICABLE TO INNOCENT THIRD PARTIES INJURED IN THE ACCIDENT
In Avonmark Insurance Company v. Allstate Insurance, ___ A.D.2d ___, 741 N.Y.S.2d 640 (4th Dept. 2002), the Allstate Insurance Company disclaimed against its insured for the insureds intentional concealment and misrepresentation of material facts concerning the accident. It was held that the insureds conduct breached the covenant of cooperation in the automobile liability policy as a matter of law.
Nonetheless, the Appellate Division, Fourth Department, held that the provision of the Allstate policy stating that Allstate, will provide coverage to such insured for damages sustained by any person who has not made fraudulent statements or engaged in fraudulent conduct if such damage is the result from an accident which is otherwise covered under the policy precluded Allstate from denying coverage for injury to a third person. Allstate had further argued that its disclaimer was based upon the failure of the insured to cooperate, rather than any actual fraud. The court looked beyond Allstates characterization of its disclaimer, stating that the true basis of the disclaimer was fraudulent conduct and that such conduct was insufficient to vitiate coverage to injured third parties. Thus, the fact that it was determined that Allstates insured failed to cooperate with Allstate as a matter of law was insufficient to terminate coverage as to injured third parties due to Allstates specific agreement to provide coverage to such injured third parties.
III. LABOR LAW ROUND-UP
The Appellate Division, Fourth Department, continues to muddy the water pertaining to the application of Labor Law §240(1). In Congi v. Niagara Frontier Transportation Authority, ___ A.D.2d ___, 741 N.Y.S.2d 629 (4th Dept. 2002), summary judgment on liability was granted to the plaintiff on his Labor Law §240(1) cause of action when falling while attempting to descend into an excavated trench to tie together rebar rod.
There was a dispute as to whether the excavation into which the plaintiff fell was thirty inches below grade or ten feet below grade. Nevertheless, the court held that the absence of a safety device was the proximate cause of the plaintiffs injury and that the plaintiff was injured in a elevation-related risk for which Labor Law §240(1) was intended to provide protection.
The court states that the elevation differential or distance that a worker falls does not determine the application of Labor Law §240(1).
Contrast Congi with Primavera v. Benderson Family 1968 Trust, ___ A.D.2d ___, 2002 W.L. 844960 (4th Dept. 2002) in which the plaintiff was injured when falling from scaffolding into an empty unguarded swimming pool.
Immediately before the plaintiffs fall, he had lowered the scissor lift he was using to install duct work to its lowest position and maneuvered it to a spot near a swimming pool. The scissor lift subsequently rolled into the pool, causing the plaintiff to fall. The court held that the plaintiff was not injured through an elevation-related risk, but through an empty, unguarded swimming pool. Thus, the plaintiffs motion for summary judgment on his Labor Law §240(1) cause of action was denied. Thus, the Fourth Department continued its failure to define what qualifies for treatment under Labor Law §240(1).
Matthew A. Lenhard
MAY 2002
A PEER REVIEW DELAY DOES NOT EXTEND THE THIRTY DAY PERIOD TO PAY OR DENY A CLAIM.
A recent Nassau County Supreme Court decision in Atlantis Medical, P.C. v. Liberty Mutual Insurance Company, April, 2002, cautions insurance companies that a peer review delay will not operate to extend the 30 day period to respond to a claim pursuant to Insurance Law §5106. This matter involved an action for first-party benefits brought pursuant to the no-fault law by a health service provider who rendered health services to the patient in exchange for an assignment to directly pursue the patients no-fault benefits. Atlantis Medical, P.C. submitted a claim for no-fault benefits along with the required no-fault verification forms. Liberty Mutual responded by sending a letter to Atlantis Medical indicating that Liberty Mutual was in the process of conducting an investigation in order to confirm a causal relationship between the insureds injuries and the automobile accident.
Well after the 30 day period imposed by Insurance Law §5106, Liberty Mutual denied the claims submitted by Atlantis Medical.
This case highlights a conflict between the Appellate Division, Third Department and the Appellate Division, Second Department.
In LaHendro v. Travelers Insurance Company, 220 A.D.2d 971, 972 (3rd Dept. 1995), the Appellate Division, Third Department held that any time spent by an insurer in investigating a claim must be time counted against the insurer.
Consequently, referring a claim to a third-party for investigation will not halt the running of the 30 day period imposed by Insurance Law §5106.
Meanwhile, the Appellate Division, Second Department in Mirza v. Allstate Insurance Company, 185 A.D.2d 303 (2nd Dept. 1992), found that the insurers delay in responding to a claim was excused due to the delay being attributable to an independent reviewing agency. Thus, in Mirza, a delay of 34 days in responding to a claim was excused as reasonable due to the delay being attributed to a third-party investigator.
In Atlantis, the Court granted the plaintiffs summary judgment motion, relying upon the Third Department decision in LaHendro, reasoning that an insurers submission of a claim for peer review does not constitute a proper request for verification and cannot exceed the 30 days within which to respond to a claim pursuant to Insurance Law §5106. It should also be noted that, pursuant to 11 NYCRR §65.15(d)(1), the 30 day period may be delayed pursuant to a request by the insurer for additional verification from the claimant.
LABOR LAW 240 APPLIES TO A WORKERS SLIP ON ICE FOLLOWED BY A FALL INTO A 15 FOOT EXCAVATION.
The First Department case of Jiminez v. Nidus Corporation, 288 A.D.2d 123, 733 N.Y.S.2d 43, involved an injured construction worker who brought a negligence action against the property owner. In Jiminez, the plaintiff, a construction worker, was injured when he slipped on ice and fell headfirst into a 15 foot deep excavation. The plaintiff had not been provided with any safety devices to prevent or break his fall. This qualified as an elevation related hazard pursuant to Labor Law §240(1).
The grant of the plaintiffs motion for partial summary judgment on liability was affirmed by the Appellate Division due to the defendants failure to submit any evidence in admissible form raising a triable issue as to whether the defendant provided any safety devices or whether their failure to provide such devices was the proximate cause of the plaintiffs injuries.
A DISC BULGE ALONE WILL NOT SATISFY THE SERIOUS INJURY THRESHOLD.
The recent case of Collazo v. Jun Yong Kim, 288 A.D.2d 173, 733 N.Y.S.2d 93 (2nd Dept. 2001) involved a negligence action arising out of an automobile accident. In affirming the lower Courts grant of the defendants motion for summary judgment, the defendant had demonstrated prima facie that the plaintiff did not sustain a serious injury within the meaning of Insurance Law §5102(d), and further that the plaintiff failed to raise a triable issue of fact on this issue. In opposition to the defendants motion for summary judgment, the plaintiff submitted a physicians affirmation which indicated that the plaintiff had sustained several bulging cervical discs. However, the physicians affirmation failed to provide any objective evidence as to the extent or degree of the alleged physical limitations resulting from the disc injuries and their duration.
Additionally, the same shortcomings in the physicians affirmation prevented the plaintiff from demonstrating a triable issue of fact as to whether the plaintiff had sustained a medically determined injury or impairment of a non-permanent nature which prevented him from performing substantially all of the material acts constituting his usual and customary daily activities for not less than 90 days during the 180 days immediately following the subject accident.
APRIL 2002
I. THE TIDE WITH RESPECT TO THE SERIOUS INJURY THRESHOLD MAY BE TURNING IN THE FOURTH DEPARTMENT.
A question whether numerous objective tests supported a jury determination of a serious injury forms the basis for a decision of a divided Fourth Department panel.
In Nitti v. Clerrico, ____ A.D.2d. ____, 737 N.Y.S.2d 210 (4th Dept.
2002), the jury found that the plaintiff sustained a serious injury based on the 90/180 limitation. At trial, the plaintiff merely presented the testimony of a chiropractor who examined her on behalf of the no-fault carrier on two occasions. He performed a variety of tests including measuring the range of motion and performing straight-leg raising tests.
Both tests induced subjective complaints of pain. The limitation in the range of lumbar flexion was limited by the plaintiffs subjective complaints of pain. The chiropractor initially diagnosed the plaintiff with a sprain/strain and eventually, upon a review of an MRI, diagnosed the plaintiff with a disc disorder at L4-5. The chiropractor, who also noted back spasms, testified that all of the tests given to the plaintiff had a subjective component.
A majority of the Appellate bench concluded that quantified limitations with a subjective component are sufficient to establish a serious injury. The medically recognized tests, which required the plaintiff to participate in the diagnosis by telling the physician when pain is experienced, are sufficient to establish a medically determined injury necessary for a 90/180 limitation. The jury verdict was affirmed.
However, the dissenters voted to reverse as the various limitations noted on the tests were not objectively quantified and therefore insufficient to establish a serious injury. The dissenters noted that the chiropractors opinion was based solely upon the plaintiffs subjective complaints of pain and therefore were not objectively quantified. Even though a spasm may constitute objective evidence of a serious injury, the chiropractors failure to testify what tests he performed to detect the spasm or lack of evidence regarding the precise location and size of the spasm rendered the chiropractors opinion insufficient to establish a serious injury. In conclusion, the dissenters strongly urged that the Fourth Department join the Second and Third Departments in holding that proof of a spasm or limited range of motion that is not objectively established and quantified does not constitute the requisite objective evidence to support a finding of a serious injury.
This decision bears watching since the defendants may appeal to the Court of Appeals as of right. The Court of Appeals may render a decision on this increasingly litigated topic within the next eight to ten months.
II. A CLAIMANT STRUCK BY AN OBJECT THAT FELL INTO AN EXCAVATION PIT IS NOT PROTECTED BY LABOR LAW § 240 (1).
In Fischer v. State of New York, ___A.D.2d ____, 737 N.Y.S.2d 204 (4th Dept. 2002), the Fourth Department concluded that a piece of concrete which fell into an excavation pit injuring the claimant does not trigger the protections of Labor Law § 240 (1). In cases involving falling objects, in order to trigger Labor Law § 240 (1), a claimant must show that the object fell while being hoisted or secured because of the absence or inadequacy of a safety device. In this case, the piece of concrete was dislodged from the ground above the excavation pit by a backhoe that was being used to clear the area of debris. Since the concrete did not fall while being hoisted or secured, the claims pursuant to Labor Law § 240 (1) were dismissed.
III THE FACT THAT A DEFECT MAY BE READILY OBSERVABLE DOES NOT NEGATE THE DUTY OF DEFENDANTS TO KEEP THEIR PREMISES REASONABLY SAFE.
In Donohue v.
Seven Seventeen HB Buffalo Corp., A.D.2d , N.Y.S.2d , 2002 WL 398630 (4th Dept. 2002), the plaintiff sustained injuries when he tripped and fell over a roll of fencing which was lying across the sidewalk on the grounds of Adams Mark Hotel. In moving for summary judgment, the defendants argued that the fence was open and obvious and therefore the defendants could not be liable for the plaintiffs injuries.
However, the Court concluded that the fact that the roll of fencing was readily observable goes to the issue of comparative negligence and does not negate the duty of the defendants to keep their premises reasonably safe.
The Court, however, drew a distinction with reference to the defendants potential liability where the open and obvious condition is natural and not man-made.
In cases involving a natural condition which may be dangerous but is open and obvious, the claims may be dismissed as a matter of law as the defendant does not have the same duty to keep premises safe of natural but potentially dangerous conditions. In cases where the defect is a man-made hazard, which may be eliminated through the exercise of reasonable care, the plaintiffs inability to avoid the open and obvious condition goes to the issue of comparative negligence, which is a question to be decided by a jury.
The Fourth Department, as with respect to the serious injury threshold discussed above, again diverges from its downstate counterparts on the issue of open and obvious defect. An open and obvious man-made hazard which caused an injury will likely not prompt a dismissal as a matter of law within the Fourth Department as would likely be the case in the downstate departments.
This topic also bears watching as the question may eventually be decided by the Court of Appeals.
MARCH, 2002I. REGULATIONS IMPOSING SHORTER TIME TO FILE NO-FAULT CLAIMS UPHELD IN LOWER COURT DECISION.
With the overwhelming rise in insurance fraud, from 489 reported cases in 1992 to 12,372 in 2000, the New York Supreme Court in The Matter of Medical Society of the State of New York v. Serio (New York Law Journal), dismissed a suit to defeat new rules which give accident victims and doctors less time to file no-fault insurance claims. Regulation 68 reduces from 90 days to 30 days the time injured motorists have to file claims and from 180 days to 45 days the time doctors have to submit compensation claims. In an Article 78 proceeding, Justice Wetzel determined that the Court must give considerable deference to the Superintendent of Insurance and the Court could intervene only if the rules were unreasonable as a matter of law.
The questions raised in an Article 78 proceeding are limited to whether respondents failed to perform a duty imposed upon them by law and whether the respondent (Superintendent) acted in excess of their jurisdiction. The Superintendent is charged with implementing and interpreting legislative policy with regards to regulating insurance policy forms for no fault coverage. Relying on the Court of Appeals decision in Ostrer v. Schenck, 41 NY2d 782, 785, 396 N.Y.S.2d 335 (1977), Judge Wetzel noted that the Superintendent of Insurance is vested with broad power to interpret, clarify and implement the States legislative policy. Accordingly, the Court gave deference and found that the revisions comply with the legislative purpose and are therefore within the bounds of the Superintendents discretion.
Although not an appellate level decision, this is a great victory for insurance carriers after having lost a prior case brought against the Superintendent when an earlier version of the rules was struck down. Medical Society v. Levin, 185 Misc.2d 536, 712 N.Y.S.2d 745 (Sup. Ct. N.Y.
County 2000), affd 280 A.D.2d 309, 723 N.Y.S.2d 133 (1st Dept. 2001).
II. THE PRESENT STATE OF THE LAW ON INDEMNITY SHOWS THAT A PROPERLY DRAFTED INDEMNITY AGREEMENT CAN SHIFT THE ENTIRE BURDEN FOR AN INJURY ONTO THE SUBCONTRACTOR AND ITS CARRIER.
In Santamaria v. 1125 Park Avenue, 238 A.D.2d 259, 657 N.Y.S.2d 20 (1st Dept. 1997), the Court found that parties dealing at arms length were free to allocate the risk of liability to third parties through the use of insurance and such agreements were valid and enforceable. In Santamaria, the building owner and subcontractor had entered into an indemnification agreement that provided for the procurement of insurance by the contractor naming the owner as an additional insured. The Court stated that the provisions of the contract did not violate §§5-321, 5-322, 5-322.1, 5-323 and 5-325 of the General Obligations Law even if there had been a showing of negligence on the building owners part. The Court thus upheld the indemnification provision based on the fact that the indemnification provision was coupled with a provision allocating the risk of liability through the use of insurance.
It was unclear as to whether or not the subcontractor had procured the requisite insurance called for in the contract, which would have named the owner as an additional insured. The Court stated, however, that even if the subcontractor had failed to procure the insurance then that breach would obligate the subcontractor to indemnify the owner.
Any confusion left by the decision in Santamaria was cleared up in the subsequent decision of Juliano v. Prudential, 287 A.D.2d 260, 262, 731 N.Y.S.2d 142 (1st Dept. 2001). Juliano makes it clear that a contractor or owner may not pass on liability to a third party in a construction contract through a contractual agreement for indemnification where that party has been found partially responsible for the injury as General Obligations Law §5-322.1 bars same. The Court, in rendering its decision, made a clear distinction between indemnification agreements and insurance procurement agreements which are enforceable. Parties are, therefore, free to assign liability through insurance procurement agreements, but not through simple indemnification agreements if the party has been found to be actively negligent.
February, 2002
I. ISSUE OF FACT FOUND AS WHETHER A TEACHER
RESPONDED PROPERLY IN FIGHT BETWEEN TWO STUDENTS
In Wojtowicz v. Dexter Terrace Elementary Schools (BOCES), ___ A.D.2d ___, 732 N.Y.S.2d 527 (4th Dept. 2001), a parent, individually and on behalf of his son, brought action against the school seeking damages for injuries sustained when his son was assaulted by another student in class. The teacher was present in the classroom during the altercation and the events leading up to it. The court found that there was an issue of fact as to whether the teacher was presented with a potentially dangerous situation and failed to take energetic steps to intervene in time to prevent one student from injuring another. In essence, the Fourth Department is saying that potentially a timid teacher, in such a situation, could be held liable for the acts of the student.
As a side note, the defendant, in the appeal, also claimed it was entitled to summary judgment because the plaintiff voluntarily entered into the altercation. However, the Appellate Court determined that such issue was not properly before them as it was raised the first time on appeal.
II. ASSUMPTION OF RISK AND HORSEBACK RIDING
The Fourth Department has once again addressed the issue of assumption of risk in horseback riding cases. In Wendt v. Jacus, ___ A.D.2d ___, 732 N.Y.S.2d 770 (4th Dept.
2001), the plaintiff was injured when a horse fell backwards on her.
She thereafter filed a lawsuit against the stable owners. The plaintiff, at her deposition, claimed that the horse either reared up due to the presence of nearby foals or the horse fell into a hole. However, the plaintiffs only allegation in the lawsuit was that the defendants were negligent based on the presence of nearby foals. The court found that the defendants established that plaintiff assumed the risk of her injuries based upon her riding experience, her admitted familiarity with the horse and the terrain, and her knowledge that, on the day of the accident, the horse was excited.
III. STATE NOT LIABLE FOR FAILING TO REMOVE DEER CARCASS FROM ROADWAY
In Rogers v.
State, ___ A.D.2d ___, 732 N.Y.S.2d 805 (4th Dept. 2001), the plaintiffs sought to recover damages for personal injuries as a result of a motor vehicle accident. The accident occurred as the driver of a second vehicle swerved to avoid a deer carcass in the roadway, crossing into the plaintiffs lane of travel, and colliding head-on with the plaintiffs vehicle. The plaintiffs attempted to allege that the State was negligent in failing to remove the deer carcass from the roadway after a 911 call from another motorist had been received. Apparently, a state trooper had been dispatched to the scene after the 911 call was received regarding the carcass. To prevail, the plaintiffs were required to show a special relationship with the state. A special relationship requires the plaintiff to have direct contact with the state and a justified reliance upon a representation of state action. The court, in finding the state not liable, concluded that the plaintiffs failed to allege any facts that they had a special relationship with the state.
The plaintiffs also alleged the defendant was negligent in that it breached its duty in failing to remove the deer carcass from the roadway. The court determined that the states alleged breach of duty in failing to remove a deer carcass did not involve a proprietary function for the purpose of a negligence action. (The Court of Appeals in Balsam v. Delma Engineering Corp., 90 N.Y.2d 966, 665 N.Y.S.2d 613 (1997) characterized acts of municipalities two different ways: proprietary and governmental. A proprietary function will subject a municipality to ordinary tort liability. The court in Balsam stated that traffic regulation is a classic example of governmental function, falling within the immunized governmental realm of municipal responsibility.) The court in Rogers determined that the conduct of the state was not proprietary in nature since it involved a traffic regulation.
JANUARY 2002
I. THE STANDARD APPLIED TO LANDLORDS IN UPSTATE LEAD PAINT LIABILITY CASES IS CONSTRUCTIVE NOTICE.
New York Citys Local Law 1 (§27-2013 of the Administrative Code) imposed a constructive notice of lead paint hazards on landlords of any pre-1960 dwelling occupied by children under th,e age of 7. Juarez v. Wavecrest Management, 88 N.Y.2d 628 established that Local Law 1 contained a presumption of notice which required landlords to address lead based paint hazards in their leased premises. This created a rather large obstacle to overcome for landlords defending themselves against a lead based paint damages claim. Of course, New York Citys Local Law 1 does not apply to all of New York State.
The trend in the rest of the state was to require plaintiffs to show that the landlord had actual notice of a lead based paint safety hazard. In order to do this, a tenant would quite often have to produce the results of a toxicology test done on paint samples from the leased premises. In order to avoid liability, landlords were encouraged to not perform inspections and tests at the premises or inquire about the demographic makeup of the tenants of the premises. Without actual notice of a specific hazard to a specific tenant, landlords would not be held liable in lead based paint lawsuits. The Court of Appeals recently took steps to force landlords to take a more proactive approach toward abating lead based paint hazards.
The Court of Appeals decided Chapman v. Silber and Stover v. Robilotto in a combined opinion. In Chapman, the plaintiff moved into an apartment with her three year old son in August of 1994. Approximately nine months later, the plaintiff complained of peeling paint on the front porch. The landlord had the porch painted at the plaintiffs request. Several months later, the plaintiffs childs blood test revealed that the child had dangerously high blood-lead levels that required the childs hospitalization.
In reversing the Appellate Division, Third Department, the Court of Appeals found that where the landlord knew of a small child living on the premises, and saw that paint was peeling, the landlord had the responsibility to test the paint chips to see if they contained lead. The Court of Appeals would not tolerate the refusal of a landlord to test paint chips on his premises where the landlord knew of an individual, i.e., a child, who would be susceptible to lead paint poisoning. In short, a landlord can be charged with constructive notice when factors exist to alert the landlord that an individual may be susceptible to lead paint poisoning and the landlord is aware of conditions which may contribute to that poisoning.
In Stover, the plaintiff moved into an apartment while she was pregnant. When the plaintiffs child was six months old, the child was hospitalized for lead paint poisoning. The Court of Appeals upheld the Third Department dismissal of the Stover action. Apparently, dispositive factors that existed in Chapman were not present in Stover, such as a three year old child vs. pregnancy.
The Court of Appeals ruling does not demand that a landlord be hyper-vigilant in the inspection of his premises or in determining that an individual tenant is at risk for lead based paint poisoning. Rather, if the landlord receives a complaint of chipping or peeling paint, the landlord should investigate. If the landlord is aware that indi,viduals possibly at risk for lead based paint poisoning reside on the premises, the landlord should have the paint chips tested to determine if a lead based paint hazard exists. The Courts will not find constructive notice without the landlord being made aware of conditions which should reasonably induce a landlord to perform tests for lead based paint.
II. AN INSURER MAY BE HELD LIABLE TO INSURED FOR DESTROYING EVIDENCE.
An insured had a hot water heater which apparently had a leak. A neighbor of the insured sued the insured for damages allegedly caused by this leaky hot water heater. The insurer investigated the hot water heater.
The insurers investigation resulted in the negligent destruction of the hot water heater. As such, the hot water heater was not available to the insured for further investigation and the insured was precluded from bringing crossclaims against individuals such as the manufacturer of the hot water heater or other potential co-defendants. This scenario is what is commonly known as spoliation of evidence. Typically, remedies for spoliation of evidence include CPLR 3103 (protective orders) and CPLR 3126 (preclusion or dismissal).
In Fada Industries, Inc. v. Falchi Building Co., 189 Misc.2d 1, 730 N.Y.S.2d 827 (Sup. Ct., Queens County; June 22, 2001), the Court finds that spoliation of evidence may create a distinct tort claim for the insured. Under the circumstances discussed, the insurer had a duty to preserve the water heater so that it would be available for the defense of the action.
It is not unreasonable to hold the insurer responsible for the destruction of the water heater. As such, the insured may bring a third-party claim for indemnification against its own insurer.
The applications of this ruling may not be readily apparent.
In typical cases, the insurer will defend the insured and pay out any resulting losses with the policy. However, by subjecting itself to indemnification, the insurer may now be held liable for any deductibles or damages in excess of a policy limit. As such, an insurer should be careful to preserve any evidence for trial during the course of investigation. Not only is this simply good practice, it preserves the opportunity to join co-defendants, which could possibly reduce an insurers loss on a policy.
Scott W. Kroll
2001
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December |
DECEMBER 2001
I. SUMMARY JUDGMENT ON LIABILITY DEEMED TO BE DISPOSITIVE OF THE ISSUE OF SERIOUS INJURY.
It is well settled that pursuant to Insurance Law § 5104, a plaintiff claiming injury as a result of a motor vehicle accident must establish a serious injury as defined by Insurance Law § 5102(d) to recover for noneconomic losses.
Plaintiffs have achieved a significant victory in recent decisions holding that a determination on liability as a matter of law necessarily includes a determination that the plaintiff has sustained a serious injury.
Therefore, a plaintiff who is granted summary judgment on liability, a common occurrence in rear-end and cross over cases, need not offer proof of serious injury to prevail at the damages trial.
The Appellate Division, Fourth Department has recently applied this principle in Simone v. City of Niagara Falls, 281 A.D.2d 923, 721 N.Y.S.2d 892 (2001).
In that case, the defendant conceded liability and stipulated that the trial would proceed on damages only. After the trial court refused to charge the jury on the issue of serious injury, The defendant moved to set aside the jury verdict. The Appellate Division refused to order a new trial, finding that the defendants had conceded the issue of serious injury as a matter of law upon stipulating to liability.
Logically, it would seem that a determination as to negligence issues would not be dispositive regarding claims of serious injury. Certainly, a defendants liability for rear-ending another vehicle is not dispositive of whether the plaintiff has fractured a bone, or otherwise qualifies as having sustained a serious injury. As such, the Appellate Division, Fourth Departments decision does not seem proper. This view is shared by the Supreme Court of the County of Richmond in Zecca v. Riccardelli, ___ A.D.2d ___, 2001 N.Y.Slip.Op. 40032(U) (May 14, 2001). In that case, the court opined that the serious injury issue is a question of damages, rather than liability, Thus, a determination as to liability need not necessarily establish that the plaintiff has sustained a serious injury. Nevertheless, the Supreme Court of Richmond County, an inferior court, felt compelled to follow precedent, and held that a grant of partial summary judgment on the issue of liability to the plaintiff necessarily determines that the plaintiff has sustained a serious injury.
Hopefully, this issue will be properly preserved and litigated before the Appellate Division, Fourth Department, resulting in a determination that grant of partial summary judgment still requires that the finder of fact determine that the plaintiff has sustained a serious injury. Until that time, defense counsel should be careful that plaintiffs motions for summary judgment seek to only determine the defendants negligence, rather than the serious injury question.
II. BIFURCATED TRIALS IN NEGLIGENCE ACTION FALLING OUT OF FAVOR.
The Uniform Trial Court Rules plainly state that the bifurcation of negligence actions is favored under the law, (22 NYCRR § 202.42). As has been the subject of a number of prior newsletters, the Courts have adhered to that rule, and routinely ordered bifurcated trials in all negligence actions other than those in which injury issues had an important bearing on liability issues. See for example, Loncz v. Blagrove, 254 A.D.2d 735, 678 N.Y.S.2d 560 (4th Dept. 1998) in which the Court held that it was an abuse of the trial courts discretion to refuse to bifurcate a trial. It has long been thought that bifurcated trials are more favorable for defendants as they aid in excluding sympathy for the injured plaintiff when determining the liability of the defendants.
The preference for bifurcated trials now appears to be in jeopardy. In Mazur v. Mazur, ___ A.D.2d ___, 2001 N.Y.Slip.Op. 08798 (November 9, 2001), the Appellate Division, Fourth Department acknowledged that the plaintiff failed to establish that the plaintiffs injuries were probative of the defendants negligence. Nevertheless, the Court held that the liability issue in the case was uncomplicated, and that a unified trial would be brief, and refused to bifurcate the trial. Such a holding is a significant departure from the Fourth Departments prior decisions enforcing the uniform trial court rule favoring bifurcation.
III. DOG BITE ROUNDUP
On the same day, the Appellate Division, Fourth Department reversed a denial of summary judgment to the defendant in one dog bite case, while affirming the denial of summary judgment to a defendant in another. In Elmore v. Wukovits, ___ A.D.2d ___, 2001 N.Y.Slip.Op. 08652 (4th Dept.
2001), the court stated, the fact that the dog would occasionally bark at people approaching defendants property is insufficient to raise a question of fact [as to] whether the dog had vicious propensities. Furthermore, a violation of the local leash law, standing alone, was insufficient to raise a question of fact as to the dogs vicious propensities. Thus, summary judgment was granted to the defendant.
In Marquadt v. Milewski, ___ A.D.2d ___, 2001 N.Y.Slip.Op 0872 (4th Dept. 2001), the very same appellate court panel held, a vicious propensity is not limited to a bite or other attack but includes a propensity to act in a manner that may endanger the safety of another, whether playful or not. As such, the court found a question of fact as to whether the defendant had knowledge of the subject dogs vicious propensities, and denied summary judgment.
In light of the foregoing, it would seem that an allegedly vicious dog need not bite to give notice of vicious propensity, but must do more than bark.
Certainly, these decisions do little to establish a bright line rule for dog bite cases.
Matthew A. Lenhard
November 2001
COURT OF APPEALS HOLDS THAT V & T LAW DOES NOT
PROHIBIT CAR RENTAL COMPANY FROM PURSUING
INDEMNIFICATION ACTION WITH RESPECT TO PROPERTY DAMAGE.
In the case of Elrac, Inc. v. Masara, et al, 96 N.Y. 2d 847 (June 14, 2001), the Court of Appeals was asked to decide whether a car rental company may maintain an action for indemnification with respect to property damage.
Vehicle and Traffic Law §370 requires car rental companies to maintain a minimum amount of insurance coverage for their vehicles. This coverage protects and extends to any permissive users, i.e. customers.
In Elrac, the defendant rented a vehicle and signed a standard clause in Elracs rental agreement promising to indemnify Elrac for any damage caused by her use of the vehicle. The defendant declined to purchase insurance from Elrac at the time of the rental. The rental agreement did not permit the defendant to allow anyone else to drive the vehicle.
While being operated by the defendants father, the rental vehicle was involved in a collision causing property damage to three other vehicles.
After settling the property damage claims, Elrac commenced an action seeking indemnification against the defendants pursuant to the rental agreement.
Initially, the Supreme Court granted summary judgment to the plaintiff, awarding indemnification, and the Appellate Division affirmed.
The Court of Appeals previously held in Elrac, Inc. v. Ward, 724 N.Y.S.2d 692 (April 3, 2001), that a rental company may not enforce an indemnification agreement for amounts up to the minimum insurance coverage requirements under §370 of the Vehicle and Traffic Law; however, an indemnification clause, if otherwise valid, is enforceable for amounts exceeding the statutory minimum liability requirements. [For a detailed summary of Elrac, Inc.
v. Ward, please see the May 2001 installment of this newsletter authored by Matthew A. Lenhard, which can be found on our firms website at www.cheluslaw.com.] The Court of Appeals confirmed Elracs right to proceed with its indemnification action for property damage against the defendant reasoning that, while §370 of the Vehicle and Traffic Law requires that rental car companies obtain a minimum amount of coverage for bodily injury and death, it requires only a maximum coverage of $10,000.00 for property damage. Since §370 specifies no minimum insurance requirement for property damage, Elrac may seek indemnification from its renters for property damage awards to the extent otherwise legally permissible.
THE APPELLATE DIVISION, FIRST DEPARTMENT HOLDS THAT,
WITH RESPECT TO LABOR LAW §240(1), ALTHOUGH INSTRUCTIONS FROM A SUPERVISOR WERE EXCEEDED, THE EMPLOYEE WAS STILL WITHIN THE SCOPE OF HIS EMPLOYMENT.
In the case of Calaway v. Metro Roofing and Sheet Metal Works, Inc., 727 N.Y.S.2d 426 (June 28, 2001), the plaintiff sustained personal injuries as a result of a fall from a roof of a building leased by his employer.
On the date of the accident, the plaintiff was instructed by his employer to check the roof for leaks and to speak to day laborers that his employer had hired for an ice removal project. Once on the rooftop, the plaintiff commenced throwing chunks of ice off the roof at which point he fell.
In affirming the Supreme Court, the Appellate Division, First Department reasoned that, because knowledge of the ice removal project was common to both the plaintiffs and the defendants and further that the plaintiff, himself, had spent several hours clearing ice from the roof just two days prior to the subject accident, even if on the particular occasion of the accident, the plaintiff had been sent to the roof with specific instructions only to check it for leaks and to advise day laborers accordingly, it did not follow that the plaintiff was acting outside the scope of his employment by throwing chunks of ice off the roof.
FOURTH DEPARTMENT REASSERTS THAT ENTITLEMENT TO A CHARGE OF RES IPSA LOQUITOR DOES NOT REQUIRE A PLAINTIFF TO ELIMINATE THE POSSIBILITY OF ALL OTHER CAUSES.
The Appellate Division, Fourth Department in Johnson v. LCA Vision, Inc., 727 N.Y.S.2d 674 (July 3, 2001), affirmed the Honorable James B. Kane, J.S.C.s decision to allow a charge of res ipsa loquitor even where the plaintiff had not conclusively eliminated the possibility of all other causes for the eye injury which was the subject of the plaintiffs personal injury action.
The Fourth Department held that it was enough that the evidence afforded a rational basis for concluding that it was more likely than not that the injury was caused by the negligence of those defendants.
October 2001
I. COURT OF APPEALS HOLDS THAT LOSS OF MULTIPLE FINGERTIPS
DOES NOT CONSTITUTE GRAVE INJURY UNDER STATUTE.
In the case of Castro v. United Container Machinery Group, Inc., 96 N.Y.2d 398 (June 28, 2001), the Court of Appeals was asked to decide whether the loss of multiple fingertips constitutes a "grave injury" for purposes of Workers' Compensation Law §11. In 1996, the State Legislature amended the Workers' Compensation Law to provide that an employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee unless the employee's injuries are shown to be "grave". In determining whether the loss of multiple fingertips constituted a grave injury, the Court of Appeals indicated that injuries qualifying as grave are to be narrowly defined such that the only determination to be made is whether the injury falls within the statute's objective requirements. In Castro, Plaintiff lost five fingertips (two from his right hand, three from his left hand) in an accident involving a die cutting machine. Plaintiff sued the manufacturer of the machine who in turn brought a third-party action against Plaintiff's employer, Southern Container Corp., seeking common law contribution and indemnification.
Southern moved to dismiss the third-party complaint against it on the ground that Workers' Compensation Law §11 barred recovery. The Trial Court denied the motion finding questions of fact regarding the extent and nature of Plaintiff's "grave injury". The Appellate Division reversed and held that Southern was entitled to summary judgment because Plaintiff's injuries di,,d not,,,, c,onstitute a loss of multiple f,ingers as defined in the statute. The Court of Appeals affirmed the Appellate Di,,,vision's ruling. In interpreting the Legislature's intent in amending the Workers' Compensation Law, the Court of Appeals held that words in a statute are to be given their plain meaning without resort to forced or unnatural interpretations. Indeed, as a matter of standard English usage, the word "finger" means the whole finger, not just the tip. Accordingly, the Court of Appeals held that the "loss of multiple fingers" requirement in Workers' Compensation Law §11 must be construed as loss of the total finger and not just the tip.
II. FOURTH DEPARTMENT HOLDS THAT ROOFER'S INTOXICATION DOES
NOT BAR PARTIAL SUMMARY JUDGMENT ON LIABILITY UNDER
LABOR LAW §240(1).
In the case of Sergeant v. Murphy Family Trust, 726 N.Y.S.2d 537 (4th Dept. June 8, 2001), the Plaintiff was employed as a roofer by the third-party Defendant.
On the date of the accident, Plaintiff was told to report to the foreman on the roof for his work assignment. Apparently, Plaintiff stepped onto the roof and, while walking toward the foreman, stepped onto yellow insulation where a roof panel had been removed. The insulation had no underlying support and Plaintiff fell at least 21 feet to the floor below. Upon presentation to the emergency room, a blood test revealed that Plaintiff's blood alcohol level was .27 mg/dl. In holding that Plaintiff was entitled to judgment on liability as a matter of law under Labor Law §240(1), the Fourth Department relied upon the fact that no safety devices were in place to prevent employees from falling through or off of the roof. While the Fourth Department did acknowledge that Defendant raised an issue of fact as to whether Plaintiff was intoxicated, the Court went on to hold that the intoxication issue was not sufficient to defeat Plaintiff's entitlement to partial summary judgment. The Fourth Department reasoned "because there is no dispute that there were no safety devices provided, this is not a case where a reasonable jury could conclude that Plaintiff's actions were the sole proximate cause of his injuries".
III. FOURTH DEPARTMENT HOLDS DEFENDANT NOT ENTITLED TO
SUMMARY JUDGMENT IN SNOW AND ICE FALL CASE.
In the case of Stalker v. Crestview Cadillac Corp., 726 N.Y.S.2d 533 (4th Dept. June 8, 2001), Plaintiffs commenced an action seeking damages for personal injury sustained by a 15 year old individual when she slipped and fell on ice in a parking lot owned by Defendants. In support of their motion for summary judgment, Defendant submitted evidence that it was snowing at the time of Plaintiff's fall and that 5 to 7 inches of snow had fallen that day. However, Defendants also submitted the deposition testimony of Plaintiff in which she testified that she fell on ice under an accumulation of approximately 2 feet of snow. The Fourth Department held that there was an issue of fact as to whether Plaintiff's fall was caused by snow and ice that was present prior to the date on which Plaintiff fell.
Additionally, the Fourth Department held that the Defendants failed to meet their initial and primary burden of establishing that they lacked constructive notice of the conditions that caused Plaintiff to fall.
The Court noted that Defendants "failed to prove that the ice formed so close in time to the accident that they could not reasonably have been expected to notice and remedy the condition".
John R. Condren
September 2001
I. NO LIABILITY UNDER LABOR LAW §240(1) WHEN PLAINTIFF WORKER IS NOT INVOLVED IN A FALL AND WHEN FALLING OBJECT DOES NOT COME ABOVE WORKER
The Court of Appeals has previously held that Labor Law §240(1) does not apply when the injury to the worker is not caused by the worker's fall from an elevation or by the falling of an object from above the worker. In two recent cases, plaintiff workers' Labor Law §240(1) causes of action were dismissed as neither occurrence was an "elevation related risk that the statute contemplated". Narducci v. Manhasset Bay Assocs.; Capparelli v. Zausmer Frisch Assocs., Inc., 96 N.Y.2d 259, 727 N.Y.S.2d 37 (May 10, 2001).
The plaintiff in Narducci was attempting to remove a window frame from a third floor exterior of a building while standing on a ladder. While on the ladder, the plaintiff was severely cut on his right arm from glass that fell from a neighboring window. Since the plaintiff himself did not fall, and the object did not fall from a point above him, the Court found that §240(1) liability did not apply.
In Capparelli, the plaintiff was on a stepladder installing a ceiling fixture. He rested the fixture on the ceiling grid by its edges and attempted to reposition himself on the ladder. As he did so, the fixture began to fall.
The plaintiff reached out to prevent the fixture from hitting him and was cut on the hand and wrist. Like the plaintiff in Narducci, he did not fall from the ladder. The Court found that §240(1) liability did not attach under the facts as the plaintiff was at the same level as the fixture and not below it. The Court reasoned that when a worker himself does not fall, but is hit by a falling object, the absolute liability imposed by §240(1) will arise "only when there is a failure to use necessary and adequate hoisting or securing devices". The Court found that in both cases, the absence of such devices did not cause the accident.
The Court reasoned that each plaintiff worker was confronted with a "general hazard of the workplace, not one contemplated by the subject to Labor Law §240(1)".
These cases provide further examples of what I have perceived to be a trend in which Courts are more closely evaluating §240(1) liability claims.
Perhaps, we are moving out of the era in which Courts find §240(1) liability merely because the plaintiff worker was fortuitous enough to have been injured while standing on a ladder or struck by an object.
II. NEW YORK'S HIGHEST COURT FINDS HANDGUN MANUFACTURERS DO NOT HAVE A DUTY TO THE PUBLIC AT LARGE TO PROTECT THEM FROM THE CONDUCT OF THIRD PARTIES
New York's highest court has recently held that handgun manufacturers do not owe a duty of reasonable care in the marketing and distribution of their products to persons injured or killed through the use of illegally obtained handguns.
Hamilton V. Beretta, U.S.A. Corp., 96 N.Y.2d 222, 727 N.Y.S.2d 7 (2001).
This appeal arises from the United States District Court case in which an award of $4,000,000 was made in favor of the plaintiffs and an apportionment of damages was made among three defendants based upon their shares of the national handgun market. This decision was overturned by the New York Court of Appeals following certification of questions by the United States Court of Appeals for the Second Circuit pursuant to 22 NYCRR 500.17.
In reaching this decision, the Court reasoned that foreseeability of harm may be present to handgun victims in general, but foreseeability alone does not bring liability. The Court correctly concluded that the plaintiff "must show that a defendant owed not merely a duty to society in general but a specific duty to [the plaintiff]". As this element was lacking, the Court found that the defendant handgun makers did not owe a duty to the plaintiffs.
Likewise, the Court of Appeals rejected an apportionment of liability on a market share basis. The Court reasoned that the "market share" theory of liability was not applicable in this case as handguns are not "fungible".
The Court noted that it is often possible to identify the caliber and manufacturer of a handgun which caused injury to a particular plaintiff. This distinguishes the present case from previous cases (most notably the DES cases) in which identification of the actual manufacturer that caused injury to the particular plaintiff was impossible.
In reaching this decision, the Court of Appeals not only thwarted handgun control advocates' attempt to legislate through the Court System, but also stemmed a flood of litigation that may have arose in its wake involving other products.
AUGUST 2001
POINT I
A DISC HERNIATION DOES NOT NECESSARILY EQUATE TO A "SERIOUS INJURY".
The Fourth Department finally appears to be in step with the rest of the State as it holds that evidence of a herniated disc, without more, does not necessarily amount to a "serious injury". Manzano v. O'Neil, ____ A.D.2d ____, ____ N.Y.S.2d _____, 2001 ____ WL ___ 742880 (4th Dept. 2001). The plaintiff in that case allegedly sustained two herniated discs in her neck in a motor vehicle accident. An MRI revealed two herniated discs for which the plaintiff saw a physician on four separate occasions. After a verdict in favor of the plaintiff, the trial court denied defendant's motion to set aside the verdict on the ground that plaintiff failed to establish a "serious injury" as a matter of law. The Fourth Department reversed holding that although plaintiff established that she sustained two herniated discs, she failed to meet a further burden of presenting "objective evidence of the extent or degree of the alleged physical limitations" resulting from the disc injury.
This decision appears seminal, at least in the Fourth Department, as the plaintiffs are now required to do more than merely point to an MRI report indicating disc herniations or bulges in order to satisfy the threshold. If the plaintiffs do not show objective evidence of the extent and degree of alleged physical limitations, proof of a herniated disc, without more, is insufficient to prove a "serious injury".
This decision, along with the Court of Appeals holding in Bangs Ambulance (discussed in prior newsletters) vastly expands the number of cases that may be dismissed on the threshold as a matter of law as herniations and minor but permanent limitations are now insufficient, without more, to meet the threshold.
POINT II
A SUBCONTRACTOR THAT LEFT 100 FEET OF GUARDRAIL UNBUILT MAY NOT BE SUED FOR NEGLIGENCE BY A QUADRIPLEGIC PLAINTIFF WHO WAS INJURED IN AN AUTO ACCIDENT.
A subcontractor owes no duty of care to injured motorists even though it negligently failed to build 100 feet of guardrail along the New York State Thruway. Church v. Callanan Industries, ___ A.D.2d ____, ____ N.Y.S.2d ____, 2001 WL 747676 (3rd Dept. 2001). A subcontractor in that case was to build 312.5 feet of new guardrail along the Thruway. Despite the subcontractor negligently installing only 212.5 feet of guardrail, the engineering inspector, contractor, and the State approved the project and made final payment to the subcontractor. Subsequently, plaintiffs lost control of their vehicle rendering one of the plaintiffs a quadriplegic. The plaintiffs allege that their injuries would have been substantially diminished if the subcontractor had installed the full length of the guardrail as required under the contract.
The Third Department, however, dismissed the plaintiffs' claims on the question of duty holding that the subcontractor should not be exposed to liability in this case for public policy reasons. The court also noted that "the class of potential plaintiffs is virtually limitless as it would consist of all motorists traveling on the subject portion of the thruway in perpetuity" or at least until the problem was fixed by the State Thruway Authority.
A rather strong dissent noted that the subcontractor did, as a matter of law, owe a duty of care to the plaintiffs and other motorists who encountered the guardrail that it deficiently built. The dissent pointed to prevailing case law holding that when one undertakes work on a public highway which may create conditions which are dangerous to the members of the public, one is under a nondelegable duty to use requisite care.
This case may be used by the defendants who are being sued for work performed on public premises that may be used by a virtually limitless class of potential plaintiffs.
In such scenarios, the defendants may not owe a duty to the plaintiffs as such would expose them to virtually "limitless liability". This case bears watching as it may be appealed as of right to the Court of Appeals.
Stay tuned.
POINT III
A BLANKET EXCLUSION FOR CRIMINAL CONDUCT IS OVER BROAD VIOLATING PUBLIC POLICY.
An insurance company has a duty to defend and indemnify a man who negligently shot another and pled guilty to reckless assault, even though the policy excludes coverage for injuries arising from criminal activity and intentional acts. Slayko v. Security Mutual Insurance Company, ____ A.D.2d ____, ____ N.Y.S.2d ____, 2001 WL 812631 (3rd Dept. 2001). In this case, the plaintiff was shot as Joseph France picked up a 20 gauge shotgun, cocked it, aimed it in the plaintiff's vicinity and pulled the trigger resulting in apparently serious injuries. France insisted that he was apparently unaware that the gun was loaded and that the shooting was accidental. However, he pled guilty to assault in the second degree admitting that he recklessly caused serious physical injury to the plaintiff by means of a deadly weapon.
Defendant Security Mutual Insurance Company subsequently disclaimed coverage citing an exclusion in the insurance contract for "intentional acts".
It argued that since France intended to pull the trigger, the incident was not an accident or an "occurrence" under the contract. Additionally, the insurance company disclaimed based on the "criminal activity" exclusion within the policy which read that the policy does not apply to liability arising "out of instances, occurrences or allegations of criminal activity by the insured" regardless of whether the claims are advanced "sounding in negligence or breach of contract".
The Third Department ruled in favor of the insured holding that the "criminal activity"exclusion was against public policy and, if literally construed, would "reduce indemnity to a mere facade". As such, the blanket activity exclusion clearly defies the reasonable expectations of the insured and was rendered as unenforceable by the court.
Despite policy language to the contrary, this case reaffirms prior holdings stating that one whose intentional act causes an unintended injury may be defended and indemnified under the policy. If the policy at issue is as broad as the one found in the Slayko case, it may be held as unenforceable as a matter of law.
July 2001
POINT I
LOSS OF A THUMB IS HELD TO MEAN LOSS OF USE OF HAND SUPPORTING IMPLEADER OF EMPLOYER UNDER THE WORKERS COMPENSATION REFORM ACT
The Appellate Division, First Department, in Meis v. ELO Organization, L.L.C., __ A.D.2d ___, 723 N.Y.S.2d 170 (April 10, 2001), involved a plaintiff who was a 30-year-old plumber who lost his thumb when a pipe fell on it.
Unable to sue his employer, he instead sued the owner and lessee of the premises on which he was working. They, in course, inpleaded the plaintiffs employer for contribution. Four of the five members of the First Department panel held that where a court is faced with a plaintiff whose injury is serious enough to be considered one of the contemplated grave injuries under the statute, the third-party suit should be allowed to proceed notwithstanding that the injury did not take one of the more specific forms listed in the statute.
The court discussed the plaintiffs occupation as a plumber and the demands that the job makes on the hand, that he can no longer do plumbing work, or that he must in any event be given a chance to convince the jury of that. The court further discussed a public policy argument in that courts favor liberal construction of the provisions of Workers Compensation Law to accomplish the economic and humanitarian objects of the act. Regardless of fault, the court notes, the general intent of the statute is to provide injured employees compensation and medical expenses for job-related accident. The court then adds that [a]lthough the legislative goal of the 1996 amendments to Workers Compensation Law §11 was to restrict third-party suits in cases involving a uniform subset of the most severely injured employees, the amendment has not changed the overall remedial nature of the statute.
Justice Thom, in his dissent, stresses the permanence and totality of loss of use of the hand as required, and that however disabling the thumbs loss may be, some use of the hand remains without it and is therefore no grave injury under the statute. It may be interesting to note the Court of Appeals decision of Oberly v. Banks Ambulance, Inc., ___ A.D.2d ___ (May 3, 2001), which was discussed in our June 2001 newsletter.
POINT II
A DRIVER IS NOT ENTITLED TO THE EMERGENCY INSTRUCTION IF THE DRIVER KNEW OF THE BAD CONDITIONS.
The Court of Appeals, in Rivera v. New York City Transit Authority, 77 N.Y.2d 322 (1991), defined the common law emergency doctrine which recognizes that when an actor is faced with a sudden and unexpected circumstance which leaves little or no time for thought, deliberation or consideration, or causes the actor to be reasonably so disturbed that the actor must make a speedy decision without weighing alternative courses of conduct, the actor may not be negligent if the actions taken are reasonable and prudent in the emergency context (provided the actor has not created the emergency).
Recently, the Court of Appeals, in Caristo v. Sanzone, ___ N.Y.S.2d ___ (April 3, 2001), in a five-to-two decision, determined that a defendant was not entitled to the charge of the emergency doctrine.
The defendant was driving toward an intersection when, on the downhill leg of an incline, he suddenly hit a sheet of ice on which he slid about 200 feet. Unable to stop, he slid past the stop sign and onto the intersecting road, where he collided with the plaintiffs car, injuring her. The defendant admitted that the weather had been bad for several hours before the accident, below-freezing temperatures, snow, rain, and freezing rain, and, eventually, more like frozen rain and hail as he neared the accident site. Even though the defendant did not encounter patches of ice on the roadways before losing control of his vehicle, the court held that there was no reasonable view of the evidence which could lead to the conclusion that the ice and slippery road conditions on the road were sudden and unforeseen.
Judge Graffeo, in the opinion for the court, stated, We hold as a matter of law that there was no qualifying event which justified issuance of the emergency instruction.
In writing for the dissent, Judge Rosenblatt would allow the charge and leave the matter to the jury. He drew a parallel to the course of the 1982 Ferrer case which the majority distinguished but which the dissenters found to be on point. The Ferrer case involved a defendant who was driving his car down a block with many children in the area when the plaintiff, a young girl, suddenly darted in front of his car. Even though he admitted seeing plaintiff step between two parked cars seconds before she darted, an analog to the defendants knowledge of the bad road conditions of Caristo, the court held that the emergency charge was required.
POINT III
JURY VERDICT IN DEFENDANTS FAVOR IN REAR-END ACCIDENT UPHELD AT THE APPELLATE DIVISION
The Appellate Division, Fourth Department, in Cardin v. Christie, ___ A.D.2d ___, 723 N.Y.S.2d 912 (May 2, 2001), found it was not utterly irrational for a jury to find that the defendant was not negligent in a case where the plaintiff was struck from behind by the vehicle driven by the defendant.
The evidence showed that plaintiff stopped suddenly without giving appropriate signal, and the defendants expert (which the court found was not an abuse of discretion for the court to permit the expert to testify) testified that the impact of the collision was insufficient to cause the alleged injury to the plaintiff.
The plaintiffs moved for judgment as a matter of law and to set aside the verdict as contrary to the weight of the evidence. The Fourth Department stated that the lower court properly denied both motions, and that a fair interpretation of the evidence supports the jurys finding that defendant was not negligent.
June 2001
I
TO QUALIFY AS A SERIOUS INJURY WITHIN THE MEANING OF THE NO-FAULT STATUTE, PERMANENT LOSS OF USE MUST BE TOTAL
Hot off the Court of Appeals press is the case of Oberly v. Bangs Ambulance, Inc., N.Y.2d , N.Y.S.2d , (May 3, 2001). In Oberly, the plaintiff, a dentist, was injured while being transported in an ambulance owned by the defendant. The plaintiffs injuries occurred when the defendants ambulance struck a curb which caused a five pound I.V.
pump to topple from the top shelf of the ambulance and land on the plaintiffs right forearm. The plaintiff and his wife commenced a personal injury action for negligence, alleging that the plaintiff sustained a serious injury under the No-Fault Law, Insurance Law §5102(d). The plaintiff claimed to suffer from bruising on his right forearm, as well as constant pain and cramping in the forearm which he alleged limits his ability to practice as a dentist.
In the plaintiffs bill of particulars, the plaintiffs alleged that Dr. Oberlys injuries fall into the significant disfigurement, permanent loss of use of a body organ, member, function or system, permanent consequential limitation of use of a body organ or member or significant limitation of use of a body function or system categories set forth in Insurance Law §5102(d). Subsequent to receiving the plaintiffs bill of particulars, the defendant moved for summary judgment. In opposing defendants summary judgment motion, the plaintiffs abandoned all of the cited serious injury standards except for the permanent loss of use of a body organ, member, function, of system standard.
The Supreme Court dismissed plaintiffs action for lack of evidence that he had suffered a serious injury. The Appellate Division affirmed. On appeal to the Court of Appeals, the plaintiffs argued that the statute does not require proof that a permanent loss of use of a body member is significant even if the loss is only partial. They also contend that the limitation of the plaintiffs arm itself qualifies as permanent loss of use of a body member, body function and body system.
The Court of Appeals disagreed with plaintiffs argument, and affirmed the lower Courts decisions.
The Court of Appeals held that to qualify as a serious injury within the meaning of the No-Fault statute, a permanent loss of use must be total.
The Court opined that their holding is the only logical interpretation of the No-Fault statute because of the 1977 amendment to the statute which added the categories of permanent consequential limitation of use of a body organ or member and significant limitation of use of a body function or system. The Court explains that had the New York State Legislature considered partial losses already covered under the permanent loss of use category (as was argued by the plaintiffs) there would have been no need to enact the two new provisions in 1977. Therefore, the only logical conclusion is that a permanent loss of use must be a total loss in order to qualify under that provision of the No-Fault law.
II
EXAMINATION OF A PERSONAL INJURY PLAINTIFF BY A ON-PHYSICIAN VOCATIONAL REHABILITATION SPECIALIST IS MATERIAL AND NECESSARY FOR PURPOSES OF REBUTTAL
In the Fourth Department case of Smith v. Manning, 277 A.D.2d 1004, 716 N.Y.S.2d 844, (Fourth Dept., 2000), the Court ruled that the defendants motion seeking to compel the plaintiff to submit to an examination by a non-physician Vocational Rehabilitation Specialist must be granted.
In Smith, the plaintiff alleged that she suffered from serious injuries as defined by the New York State Insurance Law §5102, and that her alleged serious injuries prevented her from being able to perform in the work force. The plaintiff intended to introduce these allegations at trial as part of her damages representing permanent lost wages. Based upon plaintiffs allegations, the defendant requested that the plaintiff submit to an examination by a Vocational Rehabilitation Specialist.
The plaintiff refused the defendants demand on two grounds, first, that the plaintiff had not obtained a Vocational Rehabilitation Specialist therefore the defendant was not entitled to an independent exam by a similar expert, and secondly, the Vocational Rehabilitation Specialist chosen by the defendant was not a physician and CPLR §3121(a) authorizes physical or mental examinations by a designated physician only.
Based on the plaintiffs refusal to submit to the examination by the Vocational Rehabilitation Specialist of the defendants choosing, the defendant made a motion to compel the plaintiff to submit to the exam. The Supreme Court, Erie County granted the defendants motion to compel, and the plaintiff appealed.
The Fourth Department held that although the discovery statute authorizes physical or mental examinations by a designated physician, the statute does not limit the scope of general discovery, and does not detract from a trial judges authority to act pursuant to the more general provisions which may render information discoverable.
The Fourth Department further opined that in ordering the plaintiff to submit to an examination by a non-physician Vocational Rehabilitation Specialist, the Supreme Court properly balanced the need for the examination against the fact that the plaintiff intended to establish damages based upon her inability to work.
By the plaintiffs own assertions, she made the vocational rehabilitation assessment material and necessary in the defense for the purposes of rebuttal.
Finally, the Fourth Department held that contrary to plaintiffs contention, the defendants right to have a plaintiff examined by a Vocational Rehabilitation Specialist is not limited to cases where the plaintiff has retained a Vocational Rehabilitation Specialist of its own.
Thomas A. Nyitrai
May 2001
I
COURT OF APPEALS REVERSES LOWER COURT RULINGS PERMITTING RENTAL CAR COMPANIES TO RECOVER IN INDEMNIFICATION AGAINST THEIR RENTERS FOR PAYMENTS MADE TO INJURED THIRD PARTIES PURSUANT TO V&T §388.
In a unanimous decision written by the Chief Judge, the highest court in the state reversed four Appellate Division decisions which permitted rental car companies to recover against the renters of their cars for amounts paid to persons injured through the use of rental cars. Elrac, Inc. v. Ward, 2001 WL 316 139 (April 3, 2001). The ruling arose out of four very similar cases in which Elrac, Inc., d/b/a Enterprise Rent-A-Car, rented passenger vehicles to four individuals who were later involved in motor vehicle accidents in which third parties were injured. Elrac was named as a party in the resultant lawsuits pursuant to the provisions of V&T §388 as the owner of the motor vehicles. Elrac, which is self-insured, subsequently commenced or was named a defendant in collateral lawsuits in which Elrac sought indemnification against the operators of the rental cars for sums paid to the injured party in settlement of the bodily injury actions.
V&T §370 requires common carriers, including those renting motor vehicles, to procure insurance or provide proof of self-insurance at the minimum liability limits for the benefit of any person legally operating the rental vehicles.
In electing to proceed as self-insured, rather than procuring the insurance required by V&T §370 from a third party, Elrac agreed to maintain a self-insurance program that would provide primary coverage on its motor vehicles at all times. Elracs standard rental agreement, executed by anyone renting a car from Enterprise, contains a provision which requires the renter to defend and indemnify Elrac for any claims arising out of the use and operation of the rented vehicle. Thus, Elrac sought to avoid its statutory liability pursuant to V&T §388 through a written agreement for indemnification despite affirmatively holding out to the regulatory authorities that it maintained insurance that was primary.
The Court of Appeals held that Elrac could not succeed on its indemnification claims for the first $25,000.00 paid for bodily injury (the statutory liability insurance minimum) despite the terms of the rental agreement. V&T §370 does not permit a rental car company to escape liability for the first $25,000.00 simply because it elects to proceed self-insured. Liability for the statutory minimum cannot be contracted away.
Significantly, the Court held that the indemnification provision of the rental agreement is not void with respect to amounts paid by the rental company over the statutory minimum liability limits. In other words, if the rental car company elects to provide insurance that exceeds the statutory minimums, an indemnification action may lie for amounts paid in excess of $25,000.00 for bodily injury or $50,000.00 for death. Also, as there are no statutory minimum limits for property damage, a rental car company may prosecute a claim for indemnification for sums paid out for property damage.
II
DEFAULT BY PERMISSIVE USER OF MOTOR VEHICLE PREJUDICES RIGHTS OF APPEARING VEHICLE OWNER.
In an interesting lower court decision, the owner of a motor vehicle appeared and contested liability for a motor vehicle accident while for some strange reason the permissive driver of that motor vehicle failed to do so. After a default was taken against the permissive user, the plaintiff moved for partial summary judgment on liability against the owner of the vehicle and the motion was granted. See H.A. v. T.W. Smith Corp., 185 Misc.2d 895, 714 N.Y.S.2d 873 (Sup.Ct., Kings Co., 2000). Thus, the owner of the vehicle who had appeared in the action was held bound by the default judgment against the driver and was faced with a damages only inquest.
Clearly, insurance carriers must be careful to ensure an appearance is made on behalf of not only the owner of a motor vehicle, but its permissive users. Disclaimers against a permissive user on other grounds should be carefully considered as leaving the permissive user in a position where a default judgment is likely may preclude a defense on behalf of the vicariously liable owner.
III
ATTEMPT BY DEPARTMENT OF INSURANCE TO SHORTEN THE TIME PERIODS IN RELEVANT NO-FAULT REGULATIONS REJECTED BY THE APPELLATE DIVISION, FIRST DEPARTMENT.
In The Medical Society of the State of New York, Inc. v. Levin, 2001 WL 103579 (1st Dept., 2001), the Appellate Division affirmed the lower courts declaration that Regulation 68, which abbreviated the time to file an application for no-fault benefits from 90 to 45 days and the time for medical providers to submit medical bills from 180 to 90 days, was null and void. The court did not address the merits of the regulation, but rather found fault in the manner in which the regulation was enacted. Regardless, the prior regulations calling for submission by the insured of an application for no-fault benefits within 90 days of the date of accident, and submission by health care providers within 180 days of the date of service of medical bills remain in effect.
Matthew A. Lenhard
April, 2001
I
PARENT HELD LIABLE TO PLAINTIFF INJURED BY SONS FRIENDS USE OF ATV
The recent Court of Appeals case of Rios v. Smith, N.Y.2d , N.Y.S.2d (Feb.13, 2001) involved a plaintiff injured while riding an ATV. The two ATVs were operated by the defendants son and his friend.
Each of the two teenaged drivers had a female passenger, one of which was the plaintiff. As the ATVs sped along the defendants farmland, the ATV operated by the defendants sons friend struck a tree, sending both the ATV and the plaintiff flying through the air. The ATV landed on the plaintiffs back.
Even after the verdict was reduced by both the lower court and the Appellate Division, the verdict totaled three million dollars. The defendant appealed, and in citing Holodook v. Spencer, 36 N.Y.2d 35, 364 N.Y.S.2d 859 (1974), argued that liability against him was barred in that this case was a case of non-supervision for which there could be no liability either to a child or third person.
The Court of Appeals rejected the defendants argument and held that Although a child has no cause of action against his parent for negligent supervision in general, or for negligently entrusting him with a dangerous instrument in particular, there is a duty by a parent to protect third parties from harm resulting from an infant childs improvident use of a dangerous instrument, at least, and perhaps especially, when the parent is aware of and capable of controlling its use. It was well within the jurys province to find that the ATVs were within the defendants control and that it was foreseeable by the defendant owner that the ATVs could become a dangerous instrument in the hands of a teenager.
II
IN PERSONAL INJURY ACTION INSURED PLAINTIFF IS NOT ENTITLED TO A REDUCTION IN APIP LIEN (SUBROGATION)
Recently, the Appellate Division, 4th Department, decided the matter of Allstate Insurance Company v. Denbleyker, N.Y.2d , N.Y.S.2d (March 21, 2001). The facts of the underlying bodily injury action were not in dispute. On November 5, 1996, Debra Denbleyker was involved in a motor vehicle accident and sustained serious personal injuries. She carried a policy of automobile liability insurance with Allstate Insurance Company. Allstate, as her no-fault insurance carrier, paid out $50,000.00 in personal injury protection (PIP) benefits, and $26,000.00 in APIP benefits. The underlying bodily injury action was settled for $1,150,000.00.
Following the settlement, the plaintiffs attorneys contacted Allstate to inform that it was their position that they were entitled to 1/3 of Allstates lien for APIP benefits as their attorneys fees pursuant to the Matter of Kelly v. State Insurance Fund, (60 N.Y.2d 131). Allstate responded by advising Denbleykers attorneys that there are no Kelly Rights in automobile insurance subrogation matters.
Subsequently, Denbleykers attorneys made a motion to reduce the amount of Allstates lien for APIP benefits by 1/3 as contribution toward their attorneys fees. Allstate opposed the motion and cross-moved to enforce its lien for the APIP benefits in the amount of $26,000.00. The lower Court granted the motion of Denbleykers attorneys, reasoning that through their efforts they created a fund that would benefit Allstate and thus should be compensated from that fund.
The Fourth Department reversed the lower Courts decision stating that the Matter of Kelly v.
State Insurance Fund and the other authority cited by Denbleykers attorneys were inapplicable. The Kelly case was decided under Section 29 of the Workers Compensation Law and addressed specific statutory rights and obligations of employees and Compensation Carriers regarding actions arising out of injuries caused by third party tortfeasors.
In reversing the lower Courts denial of Allstates motion, the Fourth Department cited Breier v. Government EMPLS. INS. Co., (79 A.D.2d 967) and reasoned that while the services of counsel led to the availability of the fund against which the insurer placed its lien, the contingency fee arrangement between the insured and her counsel could not be enforced against the lienor.
III
PLAINTIFF COLLATERALLY ESTOPPED ON ISSUE OF HIS CONDUCT ONCE FULLY LITIGATED UPON BEING ADJUDICATED A JUVENILE DELINQUENT
Recently, the Court of Appeals decided the matter of Green v. Montgomery, et al., N.Y.2d , N.Y.S.2d (February 13, 2001). The Court of Appeals has determined that a childs juvenile delinquency adjudication may be used for collateral estoppel purposes in a subsequent civil suit. In this case, the plaintiff attempted to use the confidentiality provisions associated with his delinquency adjudication as a sword to obtain a favorable result in a subsequent civil suit arising out of the same occurrence.
Generally, §381.2 (1) of the Family Court Act provides that a juvenile delinquency adjudication cannot be used against the juvenile in any other court for any other purpose.
However, in this case, the Court concluded that under the circumstances, the plaintiffs delinquency adjudication could be used for collateral estoppel purposes given that the plaintiff affirmatively placed his conduct at issue by bringing the damages action and could therefore not use the confidentiality provisions of the Family Court Act to an unfair advantage. The Court of Appeals ruling reinforced the purpose of collateral estoppel which is to preserve fundamental fairness by preventing a party from litigating an issue that has already been decided against it.
March, 2001
I
FEDERAL APPEALS COURT HOLDS THAT THE ISSUE OF INSURERS BAD FAITH MUST BE DETERMINED BY JURY.
In the matter of Pinto v. Allstate Insurance Company, 221 F.3d 394 (2nd Circuit, July 26, 2000), the Federal Appeals Court for the Second Circuit discussed the numerous factors to be considered in determining whether an Insurer acted in bad faith in unreasonably failing to settle a claim within the policy limit.
In Pinto, a personal injury action was commenced in New York State Court in which the Insurer admitted liability as its insured was going the wrong way on a one way street. Notwithstanding, the Insurer refused to settle the damages element for the $100,000.00 maximum of its policy even though the plaintiff was at all times prepared to accept it. The insured was insolvent.
The matter proceeded to trial where a Jury rendered a verdict of $350,000.00.
Thereafter, the Plaintiff released the Defendant and received an assignment for whatever claim the Defendant had against his Insurer for bad faith in failing to settle within the policy limits. Plaintiff thereafter commenced an action in Federal Court on the assigned excess claim.
In the bad faith action, it became apparent that the Insurer had a number of opportunities to settle within the policy limits and had been made aware by the Defendants Attorney that the trial was proceeding in Plaintiffs favor as well that a potential verdict in excess of the policy limit was likely. However, the Insurer did not offer the whole policy until after the verdict was rendered. The Federal District Court, holding that there was an insufficient showing to warrant submission of the bad faith question to a Jury, granted summary judgment to the Insurer.
The Second Circuit reversed this decision and remanded the case to the District Court to allow the Jury to decide the question of bad faith.
The Second Circuit cited several New York Court of Appeals decisions on bad faith suits (i.e., Pavia and Smith) and concluded that an Insurer "acts in good faith when it gives equal consideration to its insureds interests in avoiding liability in excess of the policy limit as it does to its own interests when considering Plaintiffs demand to settle a lawsuit". The Second Circuit found that whether the Insurer acted in that manner was a question for the Jury and should not have been decided as a matter of summary judgment.
II
FOURTH DEPARTMENT HOLDS PLAINTIFF IS BARRED FROM ASSERTING UNDERINSURANCE CLAIM DUE TO BREACH OF POLICY CONDITION.
In the matter of Allstate Insurance Company v. Liberati (4th Dept. CA 00-01890, February 7, 2001), the Fourth Department addressed the rights of the Underinsurer where Plaintiff settles with the underlying Tortfeasor. In Liberati, Plaintiff was injured while a passenger in a vehicle owned by her and driven by her husband.
Plaintiffs commenced an action against the underlying Tortfeasor.
By letter of October 6, 1999, the Insurer for the Tortfeasor offered to settle the action for its policy limits of $25,000.00. By letter dated October 7, 1999, Plaintiffs Attorney wrote to Allstate, which insured Plaintiffs vehicle, requesting its consent to settle the action.
However, before obtaining Allstates consent and before the expiration of the 30 day period within which Allstate had the right to consent or advance such settlement to the insured, Plaintiffs executed a general release.
By letter of October 27, 1999, Allstate disclaimed underinsurance coverage on the ground that Plaintiffs had settled the action without Allstates consent. Plaintiffs demanded arbitration and Allstate commenced an action seeking a permanent stay of the arbitration. The Court below denied Allstates petition, holding that Allstate had failed to establish its subrogation rights were prejudiced by the settlement.
The Fourth Department held that the Court below erred and found that "by settling the action and tendering a general release without obtaining the consent of Allstate, Plaintiff breached a condition of the policy". As such, she was disqualified from availing herself of the underinsurance provisions of the policy in the absence of Allstates waiver of the requirement of consent or acquiescence in the settlement. Accordingly, the Fourth Department reversed the Trial Court and granted a permanent stay of the underinsurance arbitration.
III
FOURTH DEPARTMENT HOLDS THAT A CROSSOVER ESTABLISHES A COMPLETE DEFENSE TO PLAINTIFFS ACTION.
In Fiore v. Mitrowitz, et al (4th Dept. CA 00-02098, February 7, 2001), the Fourth Department held that a crossover accident establishes a complete defense to Plaintiffs action. In Fiore, Plaintiffs commenced a negligence and wrongful death action after a motor vehicle accident resulted in the death of Plaintiffs decedent, Lisa Marie Fiore. Fiore was the passenger in a car driven by Defendant, Carrie Mitrowitz. Mitrowitz was driving westbound on a two lane road and lost control of her vehicle as she rounded a curve.
Her vehicle crossed over into the eastbound lane and collided with a truck driven by Defendant, Blohm. In holding that the Trial Court erred in denying the motion of Blohm for summary judgment, the Fourth Department held that "the head-on collision was caused by the conduct of Mitrowitz in crossing over into Blohms lane of travel, thereby establishing a complete defense to Plaintiffs action". In opposition to the motion, Plaintiffs failed to raise a triable issue of fact as to whether Blohm was negligent.
The Fourth Department cited the proposition that "a driver in her proper lane of travel is not required to anticipate that a car going in the opposite direction will crossover into that lane.
John R. Condren
February, 2001
I
ROAD WORK VEHICLES, LIKE EMERGENCY VEHICLES, ARE NOT SUBJECT TO THE USUAL RULES OF THE ROAD AND ARE LIABLE ONLY FOR RECKLESS DISREGARD FOR THE SAFETY OF OTHERS.
Two cases before New Yorks highest court held that the legislature intended to confer on vehicles engaged in road work the same limited liability that governs emergency vehicles. Riley v. County of Broome and Wilson v. State, 95 N.Y.2d 455 (November 21, 2000).
In these cases, the plaintiffs contended that Vehicle and Traffic Law §1103(b) does not exempt "hazard vehicles" (like snow plows and street sweepers) from the rules of the road. Rather, the plaintiffs claimed that §1103(b) exempts such vehicles only from the stopping, standing, and parking regulations of Vehicle and Traffic Law §1202(a).
The Court of Appeals disagreed and held that Vehicle and Traffic Law §1103(b) "was intended to subject vehicles engaged in road work to the same recklessness standard as applicable to emergency vehicles under §1104(e)." As such, the plaintiff in such cases must show that the actor has intentionally done an act of an unreasonable character and disregard of a known or obvious risk that was so great as to make it probable that harm would follow and has done so with a conscious indifference to the outcome. Obviously, such a standard is higher than the usual showing of a lack of due care.
In neither case was the higher standard met. In Riley, the defendant county street sweeper was operating at only 2-3 miles an hour kicking up dust. The plaintiff following behind the street sweeper collided with it as a result of impeded visibility. In Wilson, the defendant states snow plow, going east, turned north at an intersection and collided with the plaintiffs car going west. Perhaps an ordinary negligence standard would have supported a liability finding in one or both cases, but due to the application of the recklessness standard, the plaintiffs causes of action were dismissed.
II
THE COURT OF APPEALS HOLDS THAT NOTICE OF CLAIM THAT LOCATES THE SITE OF THE ACCIDENT WELL ENOUGH TO ENABLE THE MUNICIPALITY TO INVESTIGATE IS SUFFICIENT DESPITE A WRONG DETAIL.
§50-e of the General Municipal Law requires that within 90 days after the happening of an accident involving a municipality (among other governmental units), any person injured in the accident in claiming the fault of the municipality must serve a "notice of claim" on the municipality.
The notice of claim is a sworn-to writing naming the claimant and attorney, describing the nature of the claim, stating the when, where, and how of its arising, and describing the injuries claimed, insofar as to they are now determinable. The New York Court of Appeals has recently decided a case which focuses on the requirement that the notice of claim described the "place where...the claim arose." Brown v. City of New York, 95 N.Y.2d 389, 718 N.Y.S.2d 4 (N.Y. 2000).
In Brown, the plaintiff claimed to have fallen on a defective portion of a "sidewalk and curb" in Brooklyn. The plaintiffs notice of claim named the intersection involved, located the exact spot in feet and inches from fixed points, and even had several photographs of the location attached as an appendix. However, in the photographs, the plaintiff circled the curb, but apparently not the sidewalk itself. In moving to dismiss the complaint, the City contended that examination of the curb would not have necessarily revealed the sidewalk condition. The lower court agreed and dismissed the plaintiffs claim. The Appellate Division upheld the decision holding that the notice was deficient. New Yorks highest court reversed the decision holding that the description of the site was adequate.
In holding that the notice was sufficient, the court stated that the statute does not require the notice to be stated with literal nicety or exactness. Rather, the test of the sufficiency of a notice of claim is merely "whether it includes information sufficient to enable the city to investigate." Further, the court stated that in determining compliance with requirements of General Municipal Law §50-e, a court should focus on the purpose served by the notice of claim, namely that based on the claimants description, municipal authorities can locate the place, fix the time, and understand the nature of the accident. It is noteworthy that in the plaintiffs notice of claim, the narrative statement described the site of the accident as the "sidewalk and curb" at least four times. The court reasoned that the plaintiffs notice plainly satisfied the purpose of the statute - enabling authorities to promptly investigate the site of an alleged accident and assess municipal exposure to liability.
III
AFFIRMATIONS OF THE PLAINTIFFS CHIROPRACTOR WHICH WERE NOT SUBSCRIBED BY A NOTARY OR OTHER AUTHORIZED OFFICIAL WERE HELD NOT ENTITLED TO JUDICIAL COGNIZANCE.
CPLR §2106 authorizes persons who are not parties to the action to make a statement which, when subscribed and affirmed to be true under the penalties of perjury, may be served and filed in an action in lieu of and with the same force and effect as an affidavit. This statute permits attorneys permitted to practice in the courts of New York State, physicians, osteopaths, or dentists authorized to practice in New York State to make these statements. The statute does not afford chiropractors the privilege.
In Doumanis v. Conzo, 265 A.D.2d 296, 696 N.Y.S.2d 201 (2nd Dept.
1999), the plaintiffs counsel attempted to defeat defendants motion for summary judgment based upon the serious injury threshold with the affirmation of a chiropractor. As the affirmation was unsworn, it was not proof in admissible form and could not be considered. As a result, the defendants motion for summary judgment was granted by the lower court and affirmed by the Appellate Division.
January, 2001
I
THE LOWER COURTS SANCTION OF ALLSTATE INSURANCE COMPANY FOR ALLEGEDLY MAINTAINING A FRIVOLOUS DEFENSE IS REVERSED.
In Saastomoinen v. Pagano, _____ N.Y.S.2d ______, 200 WL 178303 (2nd Dept. 2000), the Appellate Division reversed an order of the Nassau County Supreme Court that sanctioned Allstate in the amount of $5,000 and $6,700 in attorneys fees and costs. The lower court purportedly punished Allstate, which it viewed as the real party in interest, for rejecting an offer to settle upon a liability allocation where its insured driver was clearly responsible for injuries to the plaintiff.
The Appellate Division concluded that the lower court had no authority to impose a sanction and costs against Allstate as it was not a real party in interest or a party to the lawsuit. Sanction powers given to trial courts do not include the power to punish a nonparty.
The Appeals Court pointed out that if the lower courts believe that an insurers settlement practices are improper, the correct course would be to refer the matter to the Superintendent of Insurance pursuant to Insurance Law §2601.
This is the first Appellate Division opinion which clearly disallows sanctioning an insurance company, who is not a party to the lawsuit, for perceived unfair settlement practices. The lower courts now are relegated to referring the matter to the Superintendent of Insurance and merely voicing their displeasure when faced with such practices by insurance companies.
Fines, costs and sanctions are clearly no longer an option.
II
GENERAL BUSINESS LAW §396-z(2) LIMITS AUTOMOBILE RENTERS LIABILITY EVEN WHEN DAMAGE OCCURS WHILE ANOTHER IS DRIVING.
General Business Law §396-z(2) relates to the liability of an authorized driver of the rented vehicle. If the vehicle is damaged when operated by the authorized driver, a maximum liability of $100 is imposed on the driver. The Court of Appeals expanded this notion to situations where the renter of the vehicle is not the party who was operating the vehicle when it was damaged. Master Cars, Inc. v. Walters, 2000 WL 1710561 (2000).
This decision especially affects situations where the authorized driver, the person who rented the vehicle, allows another driver to use the vehicle or simply has the vehicle stolen while it is being rented.
In these situations it is now clear that the authorized driver would not be liable for more than $100 pursuant to General Business Law §396-z(2) even if the vehicle is totaled while being operated by a person other than the authorized driver.
The Court points out that the statute sets forth six exceptions under which the authorized driver will not be entitled to rely on the $100 limit. These exceptions include intentional wrong doing, intoxication, speed racing, using the car for hire, committing a criminal act or failing to report an accident. If none of the six exceptions are present, the authorized driver of the vehicle cannot be liable for more than the $100 maximum liability pursuant to General Business Law §396-z(2).
The Court refers at several key points to the $100 limit being applicable to the authorized driver irrespective if the vehicle is stolen or lent to another. This decision clearly precludes a rental company from suing the people to whom it has rented vehicle, which subsequently has been damaged when operated by unauthorized drivers under the rental agreement.
III
PLAINTIFFS PAST PSYCHOLOGICAL PROBLEMS ADMISSIBLE AT TRIAL ON THE ISSUE OF CAUSATION AND DAMAGES.
In Schmitt v. Werner Enterprises, Inc., 200 WL 17 10417 (4th Dept.
2000), the Fourth Department affirmed the lower courts decision to admit into evidence the plaintiffs past psychological problems. That evidence was held to be relevant on the issue of causation with respect to the defendants theory that plaintiffs psychological injuries pre-existed the accident.
As such, the evidence of plaintiffs past psychological problems is admissible as it ultimately relates to the issue of damages.
This decision underlines the important of gathering all of the potentially relevant medical records, including records of psychological treatment rendered prior to the accident, in instances where the plaintiffs make broad allegations such as loss of enjoyment of life, post traumatic stress, or other psychological maladies. Since oftentimes the plaintiffs counsel will not easily part with such potentially damaging records, a motion to compel and preclude should be considered very early in the discovery process.
2000
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December |
December, 2000
I
COURT EXAMINES PLAINTIFFS BURDEN IN MEETING SERIOUS INJURY THRESHOLD
Insurance Law §5102 (d) has made the courts determine what qualifies as a serious injury; and thereby define the plaintiffs burden.
Of course failing to meet this burden bars a plaintiffs case and restricts a plaintiffs remedy to no fault benefits.
Grossman v. Wright, 268 A.D.2d 79, 707 N.Y.S.2d 233 (2nd Dept., 2000), involved a three car chain reaction collision. In Grossman, the defendant moved for summary judgment on the basis that the plaintiff had not sustained a serious injury. The lower court denied the defendants motion, and the defendant appealed.
The Appellate Division Second Department reversed the lower courts decision and dismissed the plaintiffs complaint, finding that the proof submitted by the plaintiff to counter the defendants motion was insufficient.
In evaluating the competency of the plaintiffs proof, the Appellate Division stated that physical examinations personally conducted by the person making the affidavit or affirmation are sufficient...However, an affidavit or affirmation simply setting forth the observations of the affiant are not sufficient unless supported by objective proof such as x-rays, MRIs, straight leg or Laseque Tests and any other similarly recognized tests or quantitative results based on a neurological examination (Grossman at p. 84, 237) The plaintiffs proof consisted solely of the plaintiffs own affidavit, the affirmation of a chiropractor, and other medical records which were not in admissible form. The Appellate Division held the proof insufficient even to raise an issue of fact. The chiropractors affirmation failed to set forth any objective basis for his findings.
The Appellate Division in Grossman has helped further gauge the competency of plaintiffs proof in opposition to a summary judgment motion based upon the serious injury threshold and has clarified the plaintiffs burden.
II
FACIAL SCARS DID NOT QUALIFY AS DISFIGUREMENT NECESSARY TO ESTABLISH GRAVE INJURY FOR IMPLEADING EMPLOYER
In Barbieri v. Mount Sinai Hospital 246 AD2d 1, 706 N.Y.S.2d 8 (1st Dept., 2000) the plaintiff, a carpenter, was injured when he fell through an unmarked and unguarded ceiling access panel underneath old insulation and debris. The plaintiff fell approximately 30 feet onto the floor below.
The plaintiff then brought suit against the defendant, Mount Sinai Hospital, under Labor Law §200, 240(1) and 241(6) alleging several severe and permanently disabling injuries including fractures, nerve damage, tendon damage, neurological injuries and scarring.
The defendant commenced a third party action against the employer, seeking contribution and indemnification. However, by application of statute, it is only after a showing that the plaintiff has suffered a grave injury, that a defendant may implead an employer.
The defendant, Mount Sinai Hospital, appealed the grant of the employers motion for summary judgment. The Appellate Division First Department affirmed holding that the plaintiffs facial scarring did not amount to a permanent and severe facial disfigurement, necessary to establish a grave injury
.
Where a plaintiffs injuries do not rise to the level of a grave injury, a plaintiffs only recourse against an employer is to file a claim for Workers Compensation benefits. Likewise, a defendant cannot implead an employer unless the plaintiff has sustained a grave injury.
November, 2000
I
COURT OF APPEALS UPHOLDS SUMMARY JUDGMENT MOTION INITIATED MORE THAN 120 DAYS AFTER THE FILING OF THE NOTE OF ISSUE.
Section 3212 (a) of the CPLR was amended in 1996 to provide that except with leave of Court for good cause shown a motion for summary judgment may not be brought more than 120 days after the plaintiff has filed a note of issue and statement of readiness.
In the case of Gonzalez v. 98 Mag Leasing Corp., 95 N.Y.2d 124, 711 N.Y.S.2d 131 (2000), the Court of Appeals held that the trial court did not abuse its discretion in concluding that there was good cause to entertain the defendants motion for summary judgment. The subject accident involved the plaintiff, a pedestrian, who was struck by a truck owned by the defendant. On December 13, 1996, the plaintiff filed a note of issue and statement of readiness. It was not until November 18, 1997, that the defendant served a motion for summary judgment.
The plaintiff opposed the defendants motion stating that the motion was untimely under CPLR 3212 (a) because it was made more than 120 days after the filing of the note of issue, and further, that the defendants did not obtain "leave of court on good cause shown" to bring the motion.
The lower court granted the defendants motion and dismissed the plaintiffs complaint. Depositions taken by the defendant of independent witnesses following the filing of the note of issue established that the plaintiff darted out between parked vehicles. The plaintiff appealed.
The Appellate Division unanimously affirmed the lower courts decision.
The plaintiff then appealed to the Court of Appeals.
The Court of Appeals held that the trial court did not abuse its discretion in concluding that there was good cause to entertain the defendants motion for summary judgment in this case. At the time the plaintiff filed the note of issue and certificate of readiness, an outstanding notice existed to produce certain witnesses for depositions. The defendants made a timely motion to vacate the note of issue based on this outstanding discovery. The Court of Appeals opined that the lower court could have properly vacated the plaintiffs note of issue based on the outstanding discovery. Therefore, the defendants would have had an additional 120 days after the re-filing of the note of issue and statement of readiness to bring their motion. Based on this reasoning, the Court of Appeals opined that there was in fact good cause shown by the defendants for bringing their summary judgment motion more than 120 days after the filing of the note of issue and, as such, there was no abuse of discretion by the lower courts and the defendants were entitled to summary judgment.
II
PROMPT DISCLAIMER IS REQUIRED IF INSURER RELIES ON "EXCLUSION" TO THE "COVERAGE."
In the case of Worcester Insurance Company v. Bettenhauser, 95 N.Y.2d 185, 712 N.Y.S.2d 433 (2000), Bettenhauser, while driving his own automobile on November 22, 1995, was seriously injured in a two-car accident.
The other drivers insurance policy had a $10,000.00 limit. Bettenhausers policy did not include underinsurance coverage. On February 1, 1996, Bettenhauser, who lived with his parents at the time of the accident, filed an underinsurance claim pursuant to their policy with Worcester Insurance Company. Over the next several months, Bettenhauser responded to Worcesters demands for discovery and complied with a demand for a medical examination. In December 1996, with Worcesters consent, Bettenhauser settled his negligence action against the other driver for the policy limit of $10,000.00.
After settlement negotiations on the underinsurance claim stalled, Bettenhauser served Worcester with a demand for arbitration. Worcester then commenced a special proceeding to permanently stay arbitration.
In seeking the permanent stay, Worcester relied upon a policy exclusion which would have eliminated UIM benefits because Bettenhauser was operating his own vehicle at the time of the accident and was not operating a vehicle owned by his parents, the Worcester policyholders.
Insurance Law §3420(d) provides that If an insurer shall deny coverage for bodily injury arising out of a motor vehicle accident, it shall give written notice of denial of coverage to the insured and the injured person or any other claimant, as soon as is reasonably possible.
Bettenhauser argued that Worcester waived its right to invoke a policy exclusion by failing to timely deny coverage pursuant to Insurance Law §3420(d).
The Court of Appeals opined that as a family member, Bettenhausers claim for UIM benefits would have been covered under his parents insurance policy if it did not contain the provision which expressly excluded UIM coverage to a person occupying a motor vehicle owned by a family member which was not covered under the policy. The Court further held that the purpose of §3420(d) is to avoid prejudice to an injured claimant who could be harmed by delay in learning the insurers position. In reversing the lower courts decision, and dismissing Worcesters petition to permanently stay the arbitration, the Court of Appeals held that the insurer, having failed to comply with Insurance Law §3420(d), cannot now rely on the policy exclusion to escape liability.
Thomas A. Nyitrai
October, 2000
I
SECOND DEPARTMENT HOLDS DELAY IN PROVIDING NOTICE OF TWO YEARS AND SEVEN MONTHS WAS UNTIMELY AS A MATTER OF LAW.
In the case of Centrone v. State Farm Fire and Casualty (2nd Dept., September 18, 2000), the Appellate Division, Second Department held that the Insureds delay of two years and seven months in providing notice to the Insurer nullified coverage for the loss. The subject accident involved an incident which occurred on September 24, 1990 in which the plaintiff was injured while riding an all-terrain vehicle purchased by defendant, Montero. At the time of the loss, the Monteros were insured under a homeowners policy issued by State Farm which required the Insured to provide written notice of an accident or occurrence "as soon as practicable" and to "immediately" forward any legal process related to the accident or occurrence. State Farm first received notice of the accident on April 20, 1993, when it received a summons and complaint from the Monteros in an action brought by the plaintiff. State Farm promptly sent notices of disclaimer to each of the Monteros disclaiming coverage on the grounds that they had failed to provide written notice of the occurrence as soon as practicable. After a judgment was entered in that action against the Monteros upon their failure to appear or answer the complaint, the plaintiffs commenced an action pursuant to Insurance Law §3420(b) to recover the amount of the judgment from State Farm. In holding that the notice was untimely, the Second Department noted that "while there may be circumstances, such as lack of knowledge that an accident has occurred or a good faith belief in non-liability, that will excuse a delay in giving notice, the plaintiff failed to come forward with any evidence demonstrating the reasonableness of delay in this case". As such, the Second Department affirmed Special Terms grant of State Farms cross-motion for summary judgment dismissing the plaintiffs complaint. In Centrone, the Insurer, having promptly sent notices of disclaimer was correct in its decision of disclaiming coverage based upon the "as soon as practicable" language contained within the policy. The record did not demonstrate any evidence on the part of the Insured tending to excuse the delay in providing notice to State Farm.
II
FOURTH DEPARTMENT DISMISSES PLAINTIFFS LABOR LAW §200 AND §240(1) CLAIMS ARISING OUT OF A SLIP AND FALL AT A CONSTRUCTION SITE.
In Matthewson v. County of Erie, et al, (4th Dept., July 7, 2000), the Fourth Department held that Labor Law §240(1) did not apply to plaintiffs claimed personal injuries sustained in a slip and fall at a construction site. In holding that Labor Law §240(1) was inapplicable, the Fourth Department noted that the claimed injuries did not result from a fall from an elevated work site or other elevation-related risk.
Rather, the risk that plaintiff would slip, lose his balance, and slide down the natural slope of the ground was one of the "usual and ordinary dangers at a construction site", not the "type of extraordinary peril §240(1) was designed to prevent". The Fourth Department further dismissed plaintiffs Labor Law §200 and common-law negligence claims against the defendants inasmuch as the defendants established that they had no authority to supervise or control plaintiffs work or the alleged defective condition of the work site. In a dissent, Justice Hayes took issue with the majoritys characterization of the accident as a "slip and fall".
Justice Hayes pointed out that the evidence established that plaintiff fell as he descended into an excavation by means of a makeshift staircase consisting of large wooden pallets stacked on a rock. Justice Hayes felt that such excavation posed a sufficient elevation-related risk for which Labor Law §240(1) provides protection.
III
COURT OF APPEALS AFFIRMS DISMISSAL OF PLAINTIFFS LABOR LAW §240(1) CLAIM.
In Bond v. York Hunter Construction, Inc., (September 19, 2000), the Court of Appeals addressed the issue of whether the risk of alighting from a construction vehicle was an elevated-related risk under Labor Law §240(1). In Bond, plaintiff, a demolition worker employed by third-party defendant, began to alight from his demolition vehicle.
The vehicle was equipped with a track system on each side to maneuver it through the construction site. The vehicle was not equipped with a step to assist operators in their entry or exit from the vehicle.
Plaintiff stepped down from the cab of the vehicle and placed his foot onto the vehicles track using it like a step. Plaintiff alleged that his foot slipped off the track because grease had previously leaked onto the tracks surface. Plaintiff fell approximately three feet to the ground and suffered injury. The Court held that, as a matter of law, the risk of alighting from a construction vehicle was not an elevation-risk which calls for any of the protective devices of the types listed in Labor Law §240(1).
John R. Condren
September, 2000
I
CITY AVOIDS LIABILITY AND SAVES TREE IN "ROOT SUIT"
In Agro v. City of Buffalo, ___ Misc.2d ____, ____ N.Y.S.2d ____ (Supr. Ct. Erie Cty. 2000), the plaintiff brought suit for injuries alleged to have been sustained when he tripped over some tree roots. Apparently, the tree roots in question caused severe sidewalk lifting. Rather than cut the tree roots and possibly kill the tree, the City decided to route a new sidewalk around the roots. Supreme Court Justice Eugene Fahey dismissed the suit against the defendant city even though the new sidewalk around the roots was more narrow. Judge Fahey reasoned that the sidewalk was passable and the City had acted within its discretion in seeking to preserve the tree.
II
SEVEN MONTH DELAY IN NOTIFYING INSURANCE CARRIER OF A CLAIM NOT FATAL TO DUTY TO DEFEND AND INDEMNIFY
In Merrimack Mutual Fire Ins. Co. v. Orsaeo, ___ A.D.2d ___, ___ N.Y.S.2d ___ (4th Dept. 2000) (4th Dept. July 7, 2000), the defendant property owner did not inform the plaintiff insurance carrier of an accident that occurred on his premises until approximately seven months after he received a letter from the attorney for the claimant advising him of the occurrence.
The defendant property owner contended that the letter did not notify him that a lawsuit would be commenced and that, as an absentee landlord, he did not believe that he could be held liable for the accident. In overturning a lower courts decision which granted judgment declaring that the insurance company had a duty to defend and indemnify the homeowner, the court held that there was an issue of fact whether the defendant had a reasonable belief of non-liability to support his seven month delay in notifying the insurance company. Also noteworthy in this decision is that the Appellate Division denied the insurance companys motion for summary judgment as they found there was an issue of fact as to whether the insurance company disclaimed liability "as soon as reasonably possible" under Insurance Law §3420(d).
III
FOURTH DEPARTMENT FINDS THAT THE DEFENDANTS FAILED TO MEET THEIR INITIAL BURDEN ESTABLISHING THEY WERE ENTITLED TO SUMMARY JUDGMENT IN AN ICE/SNOW SLIP AND FALL ACCIDENT
In Mikolajczyk v. M.C. Morgan Contractors, Inc., ___ A.D.2d ___, 709 N.Y.S.2d 283 (4th Dept. 2000), the Fourth Department found that the defendants were not entitled to summary judgment as they failed to meet their initial burden establishing that the defense did not maintain the property and did not have constructive notice of the ice and snow in question.
In this case, the plaintiff alleged personal injuries when he slipped and fell on an ice- and snow-covered walkway located on the property owned by the defendant. The defendant owner leased the premises to others. The defendant owners claimed that they had no duty to maintain the property and relied on the well-established principle that an out-of-possession landlord is generally not liable for injuries resulting from the defect on a leased premises as the one who retains control of the premises may be liable for the defects. The record in this case showed the defendant was at the premises often and would occasionally remove snow or use salt on the premises. As such, the Court found that the defendants failed to meet their initial burden of establishing that they did not control the walkway.
The defendants also sought summary judgment based upon lack of actual and constructive notice. The Court found that, even assuming the defendants did not have actual notice of the dangerous condition, they failed to meet their burden of establishing that they had no constructive notice of it. In reaching this decision, the Court looked to the plaintiffs deposition testimony in which he stated that the snow drifts in the walkway area were mid-calf deep and the ice beneath the snow was thick. The Court also stated that the record also established that the walkway had not been cleared of snow or ice for at least a couple of weeks prior to the accident. Indeed, the defendant admitted that the walkway in question was not kept clear of snow and ice. Based upon this record, the Court concluded that the defendants had failed to meet their initial burden of showing that they had no constructive notice of the defect in question. As a result, the Appellate Division reversed the lower court which had granted the defendant summary judgment.
IV
PLAINTIFFS CONDUCT PRECLUDES SUMMARY JUDGMENT IN LABOR LAW §240(1) SUIT
In Procel v. Blumenfeld, ___ Misc.2d ___, ___ N.Y.S.2d ___, (Supr.
Ct. Queens Cty. 2000), the plaintiff brought suit under Labor Law §§240(1), 241(6), 200 and common law negligence against the defendant property owner for injuries he alleged to have sustained as a result of a fall from a ladder. The evidence in this case showed that the plaintiff fell when the ladder he was on allegedly slid out from under him while he was painting the premises owned by the defendant. However, the plaintiff admitted that he had separated two parts of an extension ladder which was provided by his employer and was using the top half of the ladder which lacked rubber safety feet. The Court concluded that these circumstances raised a question of fact as to whether the injured plaintiffs conduct constituted an unforeseeable, independent, intervening act which was a superceding cause of the accident. In reaching this decision, the Court relied heavily on Vouzianas v. Bonasera, 262 A.D.2d 553, 693 N.Y.S.2d 59 (2nd Dept. 1999) which reached the same result under similar facts.
This case joins the growing body of case law which has made it more difficult for plaintiffs to obtain summary judgment under Labor Law §240(1) in cases where there are issues regarding proximate cause and intervening acts.
August, 2000
I
THE FOURTH DEPARTMENT, IN NO UNCERTAIN TERMS, MANDATES A BIFURCATION OF NEGLIGENCE TRIALS UNLESS AN EXCEPTION IS PROVED.
In Guizzotti v. English, _____ A.D.2d _____, _____ N.Y.S.2d _____, 2000 WL 773284 (4th Dept., 2000), a case handled by this office, four plaintiffs sued for wrongful death and various personal injuries allegedly resulting from a boating accident. Our office represented defendant James Coyle who was boating in the vicinity of defendant Daniel English, another boater, who struck a stationary fishing vessel on the Niagara River. The boating accident allegedly resulted in two deaths and injuries to two other plaintiffs. At the time of the accident, defendant Coyle was approximately 100 yards away from the point of impact. The plaintiffs allege that the defendants engaged in a speed contest and were guilty of negligence and recklessness. Due to the severity of the plaintiffs injuries, we moved for a bifurcated trial requesting separate trials on liability and damages. The lower court denied the motion for bifurcation.
The Appellate Division unanimously reversed holding that the general rule in negligence cases mandates that the issues of liability and damages are distinct and severable and should be tried and determined separately.
An exception to the general rule arises when the injuries sustained by the plaintiffs have an important bearing on the issues of liability and are probative in determining how the accident occurred. The court held that the plaintiffs failed to establish the applicability of that exception even though the plaintiffs submitted an affidavit from the County Coroners Office stating that the injuries to the decedents resulted from "high speed blunt force trauma". As the accident was witnessed by a number of eyewitnesses, who certainly could testify with regards to how the accident occurred, the plaintiffs medical proof was insufficient to warrant a departure from the general rule requiring bifurcated trials.
The court also dismissed the plaintiffs arguments that the general rule does not apply to wrongful death actions but instead is only applicable to negligence actions. As such, the lower courts denial of bifurcation constituted an "abuse of discretion".
This opinion is perhaps the strongest in a growing line of Fourth Department holdings reversing the lower courts on the basis that they abused their discretion in denying motions for a bifurcated trial. Consequently, a motion for bifurcated trial may be advisable especially in instances where the liability is tenuous but injuries severe. No defendant, in such a scenario, would want the jury to be affected by the considerable evidence of the plaintiffs serious injuries when attempting to decide the liability issues on the cold facts. A bifurcated trial isolates the liability issues thereby increasing the fairness and efficiency of the process. It ,is also helpful for a plaintiff who does not need to commit substantial funds for medical experts in a questionable liability case.
II
SEMINAL CHANGE IN THE "SERIOUS INJURY" THRESHOLD ANNOUNCED BY THE THIRD DEPARTMENT.
In Oberly v. Bangs Ambulance, Inc., ____ A.D.2d _____, ____ N.Y.S.2d _____, 2000 WL 893301 (3rd Dept., 2000) the Third Department held that an allegation of a serious injury through the permanent loss of use of a body member must be supported by evidence that the limitation is "consequential" or "significant". This is a sharp departure from a widely accepted rule that allegations of permanent loss of use of a body member can be supported merely with evidence of permanency and a mild objectively measured limitation. In at least the Third Department, that is no longer the case.
In Oberly, the plaintiff, in opposition to defendants motion for summary judgment on the threshold, submitted an affidavit from his treating physician indicating that the plaintiff sustained a chronic neuropathy resulting in a loss of nerve fibers in his right hand and forearm resulting in a permanent partial loss of use of his right arm. Ordinarily, this would suffice to defeat the defendants motion for summary judgment as evidence of at least a mild limitation and permanency was presented.
The Third Department disagreed holding that proof of significant injury was necessary to prove a partial loss of use of a body organ or member.
This case in some ways signifies the growing trend toward dismissing claims of soft tissue injuries which may present chronic although mild limitations. A summary judgment motion on the threshold may be advisable in such situations to shift the burden to the plaintiff to present objective evidence of permanent and now, in some cases, significant injuries.
If the plaintiff does not satisfy this burden, the case must be dismissed.
III
INTEREST ON VERDICT IS STOPPED WHERE AN INSURER IS ALLOWED TO PAY INTO COURT ITS POLICY MAXIMUM EVEN THOUGH IT IS INSUFFICIENT TO COVER THE ENTIRE VERDICT.
In Hiraldo v. Kahn, 263 A.D.2d 607, 693 N.Y.S.2d 612 (2nd Dept., 1999), the plaintiff received a $1.3 million verdict in a personal injury action where the defendant was insured for $300,000. In that case, interest ran on the verdict sum at a statutory rate of 9% per year as of the date of the verdict. The liability insurer, in this scenario, is responsible for payment of its $300,000 policy and any interest accruing on the policy amount.
In Hiraldo, the court allowed the insurer, with the insureds acquiescence, to deposit $300,000 into the court thereby stopping the running of interest on the sum deposited pursuant to CPLR §2601(a).
The plaintiff objected to the deposit contending the insurer may face greater future liability, perhaps through a "bad faith" claim by the insured, made directly by the insured or through the plaintiffs after an assignment of the bad faith claims. The court disagreed holding that the deposit does not bar the plaintiffs from pursuing whatever additional sums they deem themselves entitled to in the case.
This case is illustrative of a scenario where the insurer can take steps to limit its liability after a verdict or a successful plaintiffs motion for summary judgment on liability. It should be noted that a tender of the policy under CPLR §2601(a) must be unconditional.
The tender cannot be held in escrow and appellate rights cannot be reserved.
In any event, such tender is a viable way to limit liability in excess of the policy amounts.
July, 2000
I
THE FOURTH DEPARTMENT BARS A SELF-INSURED RENTAL CAR COMPANY FROM OBTAINING INDEMNIFICATION FOR THE SETTLEMENT OF A THIRD PARTY CLAIM LESS THAN THE REQUIRED STATUTORY COVERAGE
In Snorac, Inc., d/b/a Enterprise Rent-A-Car v. Skura, _____ A.D.2d ___, ___ N.Y.S.2d ____ (4th Dept. June 16, 2000), a case handled by this office, the plaintiff, Snorac, Inc., rented a motor vehicle to the defendant, Thomas Skura, who hit a pedestrian. Snorac settled with the pedestrian in the amount of $8,250.00. Snorac then commenced an action against Skura for contractual indemnification. Our office represented Skura through his carrier, Allstate. Skura moved for summary judgment.
Snorac cross moved. The Buffalo City Court denied Skuras motion and granted Snoracs. We appealed to the Erie County Court.
It affirmed the City Courts decision.
We then appealed to the Appellate Division. It unanimously reversed the lower courts decision on the law with costs. The Fourth Department held that Snoracs attempt to recover the entire amount paid to the pedestrian as a result of the settlement from Skura pursuant to the lease agreement was in violation of Vehicle and Traffic Law §388 and, thus, contrary to public policy despite the fact that Snorac was self-insured.
The Court reasoned that because the settlement amount was less than the amount of insurance coverage required of motor vehicle owners ($25,000), Snorac could not disclaim complete liability. Therefore, Snorac was barred from obtaining indemnification from the defendant.
The Court went further and stated that although an owner cannot disclaim complete liability, an owner is not prohibited by Vehicle and Traffic Law §388 or public policy from disclaiming a portion of his liability that exceeds the amount for which motor vehicle owners are required to be insured. It is under this scenario alone for which an owner is permitted to seek indemnification for such sums pursuant to the parties agreement.
This case from the Fourth Department is in direct contradiction with a host of cases from the Second Department. In contrast to the Fourth Department, the Second Department has decided that a self-insured car rental company can obtain contractual indemnification for any amount regardless of the minimum mandatory liability limits imposed by the State of New York. Indeed, the Second Department has concluded that a self-insured rental company has no obligation to provide any insurance at all.
Recently, the Attorney General of the State of New York filed a special proceeding against Enterprise Rent-A-Car in the Supreme Court in Manhattan requesting that Enterprise be prohibited from charging renters $6.95 a day in order to provide insurance coverage to the renter.
The Attorney Generals argument, which is now backed up by the Fourth Department, is essentially that Enterprise is required to provide minimum mandatory liability coverage even though it is self-insured.
Enterprises position has consistently been that as a self-insured rental company, it has no obligation to follow the statutory requirements imposed on insurers. The Fourth Departments decision now makes no distinction between a self-insured rental company and one which has a policy of liability insurance.
Given the state-wide importance of this decision from the Fourth Department and its conflict with the Second Department, Enterprise may seek leave to appeal to the Court of Appeals. There is also a pending application to the Court of Appeals from a case in the Second Department.
Any case law updates will be discussed in future newsletters.
If you have any specific questions regarding this case or automobile rental company liability, please contact Gregory V. Pajak, Esq. at our office.
Bethany A. Rubin
June, 2000
I
FOURTH DEPARTMENT UPHOLDS LIABILITY OF GENERAL CONTRACTOR FOR MOTOR VEHICLE ACCIDENT OCCURRING IN FRONT OF CONSTRUCTION PROJECT.
In Fonzi v. Beishline, __ A.D.2d __, 705 N.Y.S.2d 470 (4th Dept.
2000), a general contractor was issued a permit to barricade a sidewalk adjacent to a building undergoing renovation. As a condition to that permit, the general contractor was required to construct a covered walkway for pedestrians in front of the building. The general contractor barricaded the sidewalk, but failed to construct the covered walkway as required. The plaintiffs, a husband and wife, attempted to traverse the roadway in front of the construction project. When reaching the barricaded sidewalk, they elected to cross the roadway, rather than walking in the street or turning back. In doing so, the wife was struck by a motorcycle and was killed.
The general contractor moved for summary judgment seeking the dismissal of the plaintiffs complaint. The Special Term Judges denial of summary judgment to the defendant was affirmed by the Appellate Division, Fourth Department. The Court stated that there was a question of fact with respect to whether the contractor had breached a duty of care to the plaintiff, and whether such breach was a proximate cause of the accident. It does not appear from the opinion, however, that the negligence of the motorcycle striking the plaintiff was considered an intervening or superceding cause of the accident. Interestingly, the Fourth Department did uphold a grant of summary judgment to the contractor on the plaintiffs Labor Law causes of action pursuant to Labor Law §§ 200 and 241(6).
II
A VEHICLE DOES NOT NEED TO BE PROPELLED BY A "MOTOR" TO BE CONSIDERED A MOTOR VEHICLE AS DEFINED BY THE VEHICLE AND TRAFFIC LAW AND THE MANDATORY UNINSURED MOTORIST ENDORSEMENT.
In Dupra v. Benoit, __ A.D.2d __, 705 N.Y.S.2d 781 (4th Dept. 2000), the Appellate Division, Fourth Department, held that a motor vehicle that was incapable of being operated by mechanical means, and was instead pushed by manpower, could still be considered a "motor vehicle" such that a plaintiff struck by that motor vehicle could make a claim for uninsured benefits. In Dupra, the plaintiffs four-year-old son was injured when he was pinned between a pick-up truck, and an automobile that was being manually pushed towards the truck. At the time, that vehicle was unregistered, uninsured, and inoperable. Despite the definition of Vehicle and Traffic Law §125 of a motor vehicle as "every vehicle operated or driven upon a public highway which is propelled by any power other than muscular power," the Court held that a vehicle that is equipped with an engine is a motor vehicle, even though that engine is temporarily disabled or inoperable. Thus, the claim for uninsured benefits was viable.
III
"GENERAL AWARENESS" OF A DANGEROUS CONDITION DOES NOT CONSTITUTE CONSTRUCTIVE NOTICE OF THAT CONDITION, GIVING RISE TO LIABILITY.
In Smith v. May Department Stores, __ A.D.2d __, 705 N.Y.S.2d 153, (4th Dept. 2000), the Court struck a blow helpful for business owners subject to premises liability claims. It has long been argued by plaintiffs in upstate New York that knowledge that it tends to snow in the winter months should give business owners constructive notice that the premises are liable to accumulate snow, water and ice. In Smith, however, knowledge that it had been raining was not sufficient to give a property owner constructive notice of a dangerous condition when a plaintiff fell on moisture on the floor. The defendant had submitted deposition testimony and an affidavit of the store manager that established that upon inspection of the area in which the accident occurred prior to the accident, no moisture was noted on the floor. No one had complained regarding moisture on the floor prior to the plaintiffs fall, and after the accident, only a "few drops" of water were seen on the floor.
The plaintiff admitted that she did not notice any water on the floor until after she had fallen. Finding that knowledge that it was raining, creating at best a general awareness that a dangerous condition may be present, was insufficient to constitute notice of the particular condition causing the plaintiffs fall, the court affirmed summary judgment in favor of the store owner. This is a significant victory for the defense, and has obvious applications to snow and ice claims for parking lot slips and falls when it is generally known that Buffalo, New York occasionally has snow from November to March (and sometimes April).
IV
PLAINTIFFS ARE HELD TO THEIR BURDEN OF PROOF IN OPPOSING A MOTION FOR SUMMARY JUDGMENT ON THE SERIOUS INJURY THRESHOLD.
The Second Department case of Grossman v. Wright, decided on November 17, 1999, has held the plaintiffs bar to its burden of proof in proving a question of fact with respect to serious injury, requiring an offer of sworn medical reports establishing objective medical proof of injury.
In that case, the defendant had offered the affidavit of the defense IME doctor establishing that the plaintiff did not sustain a "significant limitation of use of body function of system." In opposition to the motion for summary judgment, the plaintiff offered numerous unsworn medical records, and the affirmation of a chiropractor which alleged that the plaintiff suffered from daily headaches, constant pain in the neck and back, and reduced range of motion in the lumbar and cervical spine ranging from 10 to 30 degrees in diminution. The chiropractor further alleged a causal relationship between the accident and the plaintiffs alleged injuries, as well as the opinion that those injuries were chronic and permanent.
Holding that a plaintiff opposing a motion for summary judgment on the serious injury threshold must submit objective findings based upon physical examinations personally conducted by the physician making the affidavit or affirmation, the court granted the defense motion.
Thus, even though the chiropractor quantified the plaintiffs restricted range of motion, the fact that his affirmation was not sworn before a notary public, and did not state the objective tests on which those observations were based, left the affirmation insufficient to defeat the defense motion.
Matthew A. Lenhard
May, 2000
I
A STATEN ISLAND JUDGE HAS RULED THAT A CHIROPRACTOR MAY NOT MAKE A MEDICAL DETERMINATION THAT A PERSON HAS SUFFERED A SERIOUS INJURY UNDER THE NEW YORK STATE INSURANCE LAW.
In the case of Jackson vs. Willis, Misc , N.Y.S.2d (2nd Dept. 2000), Judge Philip S. Straniere of the New York City Civil Court in Richmond County has ruled that pursuant to New York State Education Law, a chiropractor is not qualified to offer testimony with respect to the diagnosis and treatment of injuries and disease.
The plaintiff, Cassandra Jackson, commenced her action in personal injury alleging that as a result of the defendants negligent operation of their motor vehicles, she suffered serious personal injuries.
At the bifurcated trial, evidence was introduced that the plaintiff had been a passenger in the motor vehicle owned and, ,,o,p,e,rated, by the defendant Willis.
After the liability phase of the bifurcated trial, the jury returned a li,a,b,ility verdict finding the defendant, Tirado, 100% at fault for causing the accident.
Upon commencement of the damage portion of the trial, the plaintiff sought to establish that she had suffered a serious personal injury as defined by Insurance Law §5102(d). The plaintiff contended that as a result of the automobile accident, she suffered a medically determined injury or impairment that prevented her from performing her usual and customary daily activities for 90 days out of the 180 days immediately after the accident.
The plaintiff testified that she was a seat-belted passenger in the front right seat and that at the time of impact she hit her head first on the dashboard and then on the seat-back. The plaintiff was taken by ambulance to a nearby hospital where she was examined in the emergency room and released. Shortly after the date of the accident the plaintiff began a course of treatment with a licensed chiropractor and continued treatment at a frequency of three visits per week for four months.
It was the chiropractors opinion that the plaintiff was totally disabled for four months after the accident and had functional limitations that prevented her from doing her activities of daily living.
The chiropractor testified in general terms with respect to his chiropractic treatments and tests conducted on the plaintiff which enabled him to reach his diagnosis and conclusion. The chiropractor failed to describe any of the tests, their purpose, and whether the tests were accepted by physicians or only chiropractors as diagnostic tools.
Nor did the chiropractor testify with respect to how the plaintiffs results differed from what is considered the norm for such tests.
On cross-examination the chiropractor was specifically questioned whether there was a difference between a medically determined subluxation and one that is found by a chiropractor. The chiropractor conceded that there was a difference in the definitions.
At the close of plaintiffs proof on damages, the defendants moved to have the action dismissed on the grounds that there was no medically determined injury that would permit the jury to consider if the plaintiff had been prevented from performing her usual and customary daily activities for 90 out of the 180 days immediately after the accident. The plaintiffs attempt to overcome the serious injury threshold consisted solely of evidence related to a medically determined injury or impairment of a non-permanent nature. Given that the only witness to testify on behalf of the plaintiff with respect to her alleged injuries was a chiropractor, the court was compelled to determine if a chiropractor can make a medical determination.
The insurance law does not specify who may offer an opinion on whether a plaintiff has suffered a serious injury but does call for a medically determined injury or impairment. To resolve this issue the court closely examined the New York Education Law which delineates the differing professional qualifications of chiropractors and medical doctors.
From a cursory reading of the New York Education Law it is clear that the legislature has differentiated between what a medical doctor and a doctor of chiropractic can do. A comparison of the two definitional paragraphs is that a doctor of medicine can diagnose and treat while a doctor of chiropractic is permitted to detect and correct. On this basis, the court concluded that a chiropractor cannot make a medical determination of an injury or impairment and can only make a chiropractic finding in that regard. As a result, there was no issue of a medically determined injury or impairment that could be presented to the jury. Essentially, the plaintiff failed to prove her prima facie case and therefore the defendants motion to dismiss plaintiffs action was granted. In its conclusion, the court reasoned that the issue of whether or not the plaintiff suffered a serious injury could not be presented to the jury as there was no objective evidence to support that contention.
April, 2000
I
FOURTH DEPT. STATES VOLUNTARILY UNDERTAKEN DUTY NOT CREATED IF PLAINTIFF IS NOT PLACED IN A MORE VULNERABLE POSITION.
In the case of Barnes v. Sanders, __ A.D.2d ___, 703 N.Y.S.2d 420 (4th Dept. 2000), the Fourth Department visited the issue of negligently performing a voluntarily undertaken duty. In Barnes, plaintiff, a friend of defendant, volunteered to reconnect a cable to defendants house.
When plaintiff first climbed an extension ladder in order to perform that task, defendant stood on the bottom rung of the ladder. After plaintiff returned to the ground and again climbed to the porch roof, defendant stopped holding the ladder and sat on the porch talking with a friend as plaintiff again descended, moved the ladder, and then again climbed the ladder to the top of the porch roof. Plaintiff completed the reconnection and had climbed halfway down the ladder when it slid out from under him causing him to fall five or six feet to the ground. Plaintiff commenced an action asserting that defendant was negligent in failing to hold the ladder after he had held it previously. Justice Koshian of Niagara County granted defendants motion for summary judgment. The Fourth Department affirmed and held that Justice Koshian was correct in granting the motion for summary judgment dismissing the compliant. The Fourth Department noted that "plaintiff does not contend either that the ladder was defective or that the defendant owed him a duty to hold the ladder. Rather, plaintiff urges that defendant negligently performed a voluntarily undertaken duty by failing to hold the ladder for plaintiff after she had first done so".
The Court further held that "defendants conduct did not place plaintiff in a more vulnerable position then he would have been had [defendant] never taken any action at all". This concept is a prerequisite to the imposition of liability for breach of an assumed duty under the circumstances presented.
II
COURT OF APPEALS FINDS PLAINTIFFS RECKLESS ACTIONS WERE A SUPERCEDING CAUSE TERMINATING DEFENDANTS LIABILITY.
In Egan v. A.J. Construction Court (1999 W.L. 1202226, Court of Appeals, 1999), plaintiff, a carpenter working on the construction of a Manhattan office building, entered one of the buildings freight elevators along with 25 to 30 other construction workers. After the elevator ascended six feet above the lobby, it came to a smooth stop and stalled.
The elevator operator immediately telephoned the lobby and requested assistance.
After stalling, the elevator remained lit, did not move or make any noise.
Approximately 10 to 15 minutes later, two workers standing toward the front of the elevator manually opened the cars inner and outer doors and jumped to the lobby floor. Only when plaintiff and the operator remained, plaintiff jumped, landing on his heels. As a result of the impact, plaintiff claimed he felt a shock in his spine and later began to experience intermittent pain in his back, neck and right foot. Plaintiff brought a negligence and labor law action against the property owner, the general contractor, the contractor that hired plaintiffs company and the elevator manufacturer.
In dismissing all claims against all defendants, the Court of Appeals held that, as a matter of law, plaintiffs act of jumping out of a stalled elevator six feet above the lobby floor after the elevator doors had been opened manually was not foreseeable in the normal course of events resulting from defendants alleged negligence. The Court of Appeals relied on the fact that plaintiff, an experienced worker, was not threatened by injury while in the stalled elevator. Additionally, he was aware that the elevator operator had telephoned for assistance. The Court held that "although plaintiff was inconvenienced, he had only been on the elevator for 10 to 15 minutes when he decided to put his safety at risk by jumping, and there was no indication that the subsequent delay would be inordinately long. Thus, plaintiffs jump superceded defendants conduct and terminated the defendants liability for his injuries." In so holding, the Court of Appeals cited a number of cases involving accidents resulting from dives into swimming pools. As such, the Egan case indicates a willingness by the Court of Appeals to closely examine the conduct of a plaintiff to determine whether it was so reckless so as to terminate defendants liability for their negligence.
John R. Condren
MARCH, 2000
I
A NON-PARTY INSURER IS SANCTIONED FOR ALLEGED BASELESS DEFENSE TACTICS.
In the case of Saastomoinen vs. Pagano, __ N.Y.S.2d __ (Sup.Ct. 1999), the Supreme Court, Nassau County, imposed a $5,000.00 sanction against Allstate Insurance Company and required it to pay more than $3,500.00 in costs to the court and $2,900.00 to the plaintiff for attorneys fees even though Allstate was not a party to the lawsuit before the court.
Allstate hired counsel to defend its insured in the action and during the handling of the defense, Allstates positions regarding settlement were communicated to the court. Apparently, Allstate refused to settle the case. Defense counsel, through Allstate, took the position that the case was defensible. According to the judge, the plaintiff engaged in meaningful settlement negotiations while the carrier did not.
The matter proceeded to trial and the jury awarded the plaintiff $55,000.00.
Following the verdict, the judge issued the sanctions, costs and fees indicated above.
The court felt that it had the authority to levy sanctions directly against the insurance carrier since it was the "real party in interest" and had control of the course of the litigation for two years. This is a case of first impression in New York and Allstate has indicated that it plans to appeal.
In this writers opinion, the trial court should be reversed on appeal.
The trial justice clearly was not happy with the position Allstate took in defending the lawsuit on behalf of its insured. However, the trial judge appears to have overlooked the fact that within every automobile insurance policy in the State of New York, and as permitted by the New York State Insurance Department regulations, an insurance carrier is allowed to control the defense of a lawsuit. It is also worth commenting that the trial judge apparently sanctioned Allstate since a trial had to take place. However, isnt it the judges job to preside over trials in the first place? The court also overlooked the remedy that an insured and a plaintiff has directly against a carrier and that is under either Insurance Law §3420 or the bad faith caselaw in New York. If a carrier does not act in good faith and a judgment is rendered in excess of policy limit, then either the insured or the plaintiff, upon receiving an assignment of the insureds rights, can proceed directly against the carrier. In this way, a carrier certainly would pay for its refusal to settle a case when it should have done so.
New York does not recognize direct actions against insurance companies since they are not one of the parties to the lawsuit and are not the tortfeasors in the case. The trial judge clearly went out on a legal limb in making its decision which seems to stem from frustration on the courts part in having to preside over a trial.
This case will be tracked and when an Appellate level decision is issued, that decision will be reported in this newsletter as well.
II
HOMEOWNERS ARE GRANTED SUMMARY JUDGMENT IN A LABOR LAW CASE BASED ON THE ONE AND TWO FAMILY DWELLING EXEMPTION.
The plaintiff was injured at a home under construction and commenced an action against the homeowners and the builder. The lower court granted summary judgment to the homeowners but denied the builders motion for summary judgment. The homeowners moved for summary judgment based on the one and two family dwelling exemption. The builder moved for summary judgment arguing that Labor Law §240(1) did not apply because the plaintiff was not employed in connection with the home construction project and because this was not the requisite elevated work site.
The Appellate Division affirmed the lower court, two judges dissenting, and concluded that the homeowners did not direct or control the work and, therefore, were exempt from the Labor Law. As for the builders motion, the Appellate Division agreed with the lower court that a triable issue of fact was raised as to whether or not the plaintiff was employed.
Additionally, the plaintiff was injured when he fell approximately eight feet after stepping on and dislodging a sheet of particle board which had been placed over the concrete foundation excavation near the porch but was not attached to the foundation. The Court held that the porch was part of the structure and the particle board was a platform or the functional equivalent of a scaffold within the meaning of Labor Law §240(1).
The two judge dissent would have reversed the builders motion for summary judgment based on the fact that the plaintiff was not working in an elevated work site and was not exposed to the type of hazard contemplated within the Labor Law since, upon exiting the house, the plaintiff walked across a particle board placed over an area where excavation work had been performed and, as he was walking across the board, it shifted and collapsed causing him to fall eight feet. Tomlins vs. Silton Building Company, Inc., 699 N.Y.2d 854 (4th Dept. 1999).
Gregory V. PajakFebruary, 2000
I
"MAXIMUM MEDICAL IMPROVEMENT" HELD NOT BASIS TO DENY NO-FAULT BENEFITS UNDER INSURANCE LAW §5102(a)(1).
In Hobby v. CNA Ins. Co., CA 993090 (4th Dept. December 30, 1999), the Fourth Department unanimously affirmed a Supreme Court decision which granted plaintiffs motion for summary judgment compelling the defendant insurance company to pay outstanding medical bills pursuant to the no-fault provisions contained in the plaintiffs insurance policy. The defendant insurance company sought to discontinue the plaintiffs insurance benefits on the grounds that the plaintiff had reached "maximum medical improvement." In upholding the lower courts decision, the Fourth Department pointed out that there is no authority under Insurance Law §5102(a)(1) to deny no-fault benefits on the grounds that the plaintiff had reached "maximum medical improvement." The Court reasoned that since §5102(a)(1) provides up to $50,000 for "all necessary medical expenses" for medical treatment, the plaintiff was entitled to receive benefits even if the plaintiff had reached maximum medical improvement.
The Court also discarded the defendant insurance companys argument that "maximum medical improvement" has been accepted for several years as a basis for denial of no-fault benefits by arbitrators as the Courts are not bound by arbitrators decisions.
The question now becomes what medical finding is necessary to deny no-fault benefits. Query: Would a medical determination that further medical treatments are "no longer necessary" serve as a sufficient basis for a denial of no-fault benefits? Would a health care provider give such an opinion?
II
THE COURT OF APPEALS REVERSES HENRY CASE AND RESTORES TOLL FOR INFANCY.
In Henry v. City of New York, 244 A.D.2d 93, 676 N.Y.S.2d 616 (2nd Dept. 1998), the Appellate Division, Second Department, held that a toll for infancy under CPLR §208 stops when an attorney has been retained by the infants parents. The Second Department reasoned that the retention of counsel in a timely fashion effectively cancelled infancy as a disabling factor and, therefore, there was no "disability because of infancy" in order to trigger the tolling provision of CPLR §208.
Under the Second Departments decision, the statute of limitations would therefore be measured from the time the disability ceased which was when counsel was retained.
Since this decision was handed down by the Second Department in 1998, several other departments have addressed the same issue and none agreed with the Second Department.
The Court of Appeals of New York have on December 20, 1999 reversed the Second Departments decision in Henry v. City of New York, 1999 ___ W.L. 1215140 (New York 1999). In overruling the Second Department, the Court of Appeals held that the special status accorded an infant plaintiff by virtue of the plaintiffs age is not altered by the action or inaction of the infants parent or guardian. The Court reasoned that it is the age and capacity of the infant rather than the conduct of the infants parents or guardians which control.
The Court of Appeals decision restored the infancy toll to where it was prior to the Second Departments decision.
III
FALL FROM TRUCK NOT WITHIN THE PURVIEW OF LABOR LAW §240.
In Spears v. State of New York, ___ A.D.2d ___, 698 N.Y.S.2d 135 (4th Dept. 1999), the Appellate Division, Fourth Department, upheld a decision from the Court of Claims which denied plaintiffs motion for partial summary judgment under the "scaffold law" (Labor Law §240) and dismissed that cause of action sua sponte.
The plaintiff in Spears was employed as a dump truck driver for an entity which contracted with the State to renovate a highway.
The plaintiff was preparing to unload asphalt at the site when he climbed to the top of the dump truck to repair a tarpaulin and fell approximately 15 feet.
In upholding the Court of Claims dismissal of the plaintiffs Labor Law cause of action, the Appellate Division held that the highway grade is not a "building or structure" under the "scaffold law" and the owner of the highway owed no duty to the driver under the "scaffold law" with respect to the truck. The plaintiff contended that the plaintiffs employers dump truck may be considered a structure within the meaning of §240(1). The Appellate Division did not dispute this point, but still found that the "scaffold law" did not apply because the defendant State of New York neither owned nor contracted for the repair of the dump truck.
John N. Philipps, Jr.