Summing Up...

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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

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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

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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.

Thomas P. Kawalec

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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

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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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2003

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December 2003

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).

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November 2003

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 (1^st 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 (1^st 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.

Anthony B. Targia

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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

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August, 2003

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 (4^th 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.

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July 2003

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.

Thomas P. Kawalec

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June 2003

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

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May 2003

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

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April 2003

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.

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March 2003

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.

Anthony B. Targia

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February 2003

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.

Kevin E. Loftus

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January 2003

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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2002

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December, 2002

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 (4^th 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.

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     November, 2002

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 (1^st 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

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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 (4^th 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 (2^nd 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. 

Thomas P. Kawalec

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    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 (4^th 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 (4^th 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.”

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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

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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 (2^nd 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 (4^th 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 (4^th 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. 

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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

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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.

Anthony B. Targia

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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.

Thomas P. Kawalec

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I. 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.

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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.

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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

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2001

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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

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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.

Anthony B. Targia

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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

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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.

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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.

Thomas P. Kawalec

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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.

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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

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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

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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.

Anthony B. Targia

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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

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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.

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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.

Thomas P. Kawalec

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2000

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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.

Anthony B. Targia

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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

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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

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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.

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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.

Thomas P. Kawalec

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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

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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

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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.

Anthony B. Targia, Esq.

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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

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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).

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February, 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.

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