Summing Up...
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December 2004
THE COURT OF
APPEALS HAS RULED THAT INSURANCE LAW ' 3420 REQUIRES ONE INJURED TO OBTAIN A
JUDGMENT AGAINST A TORTFEASOR BEFORE A DECLARATORY JUDGMENT ACTION CAN BE
COMMENCED AGAINST A LIABILITY INSURANCE CARRIER
In the recent
Court of Appeals case of David Lang v. Hanover Insurance Company, (2004
WL 2607764 (N.Y.), 2004 N.Y. Slip Op. 08259), the plaintiff, Lang was injured
while he was playing paintball at the home of John and Beth Dubin. Lang
sustained injuries when he was struck in the eye by a paintball fired by
Richard Bachman, who was a guest of the Dubins.
Coverage as to Bachman was disclaimed by
the Dubin=s homeowners
insurance carrier, defendant, Hanover Insurance Company, arguing that Bachman
was not an Ainsured@
as the term is defined within the policy. Lang thereafter filed a personal
injury action against Bachman. Before the merits of the case were
adjudicated, Bachman filed for Chapter 7 bankruptcy.
Lang subsequently filed a declaratory
judgment action against Hanover challenging its disclaimer of coverage. Lang
sought a judgment from the Court declaring Bachman an insured under the policy
and requiring Hanover to defend and indemnify Bachman. In response, Hanover
argued that Lang lacked standing to sue pursuant to Insurance Law
' 3420 and moved for
an order dismissing the complaint.
Insurance Law
' 3420 allows an
injured party to bring an action directly against an insurance carrier for the
purpose of satisfying a judgment that was obtained against the tortfeasor.
Based on this provision, Hanover argued that Lang=s
declaratory judgment action was premature due to Lang=s
failure to first obtain a judgment against Bachman. Lang responded that
because bankruptcy precludes recovery from the tortfeasor, Bachman=s
bankruptcy filing should create an equitable exception to the statutory
condition that a judgment be obtained.
The Trial Court disagreed with Hanover=s
position and denied its motion to dismiss the complaint. However, in an
unanimous decision rendered by the Appellate Division, Third Department, 309
A.D.2d 1123, 766 N.Y.S.2d 915,(3rd Dept. 2003) Lang=s
complaint against Hanover was dismissed.
Upon further appeal, the Court of Appeals
affirmed the Third Department=s
decision thereby agreeing with Hanover=s
analysis of Insurance Law '
3420. The Court ruled that Lang=s
declaratory judgment action against Hanover was premature for failure to first
obtain a judgment against Bachman. The Court disagreed with Lang=s
argument that the filing of bankruptcy by Bachman creates an exception to the
letter of Insurance Law '
3420 requiring that a judgment be obtained. In doing so, the Court noted that
federal courts permit a plaintiff in a personal injury action to obtain a
judgment against the bankrupt tortfeasor for the distinct purpose of
commencing an action against the insurance carrier in accordance with the
requirement of Insurance Law
' 3420.
The Court further commented that if an
insurance carrier disclaims liability and requires the claimant to utilize
the mechanics of Insurance Law
' 3420, the carrier
will be precluded from relitigating the issues of liability and damages that
were adjudicated in the underlying action against the tortfeasor.
Consequently, the carrier will be limited to litigating only the validity of
its disclaimer. The Court therefore suggested that a carrier initiate a
declaratory judgment action affirming its disclaimer of coverage to afford
itself an opportunity to defend its insured should the disclaimer be ruled
improper.
Michele L. Laski
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November 2004
"PRIOR
WRITTEN NOTICE"
IS
SATISFIED BY A WRITING DONE
INTERNALLY
BY A CITY AGENCY
In Bruni
v. City of New York, 2 N.Y.3d 319, 778 N.Y.S.2d 757 (2004), a road defect
was written up after an inspection by a branch of the city=s
environmental protection department. Sometime after the written report, the
plaintiff fell as a result of the defect. New York=s highest court held that this written notice
was sufficient under the so-called
Apot
hole law@
which requires such notice as a prerequisite to recovery from a municipality.
In reaching this decision, the Court of Appeals rejected the city=s argument that the prior written notice must
come from an external, not an internal, source.
WORKERS=
COMPENSATION RECOVERY
DOES NOT
BAR TORT SUIT AGAINST
FELLOW
EMPLOYEE FOR INTENTIONAL ACT
In
Hanford v. Plaza Packing Corp., 2 N.Y.3d 348, 778 N.Y.S.2d 768 (2004), the
New York Court of Appeals held that an action for an intentional tort against
a co-employee is not barred by the plaintiff=s
receipt of Workers=
Compensation benefits. In Hanford, the plaintiff alleged that the
defendant co-employee concealed a video camera in a locker room on the
premises of the employer in an unsuccessful attempt to tape the plaintiff
while she changed her clothes.
The plaintiff applied for and received Workers=
Compensation benefits arising out of the incident.
The
plaintiff then sued the employer and the co-employee individually. The claim
against the employer was dismissed on the basis of the exclusivity provisions
of the Workers=
Compensation Law
'29.
The Court of Appeals decided that the employee was not entitled to the same
protection because
Aan
employee who commits an intentional tort outside the scope of his employment
is not protected by Workers= Compensation Law
'29.@
Hanford, 778 N.Y.S.2d at 769.
NEW YORK
COURT OF APPEALS HOLDS
THAT
DISCLOSURE OF A "COPY" OF
SURVEILLANCE VIDEOTAPE IS SUFFICIENT
In
Zegarelli v. Hughes, 3 N.Y.3d 64, 781 N.Y.S.2d 488 (2004), the defendant
turned over a copy of surveillance footage on VHS format. During the trial,
the plaintiff=s
lawyer objected to the admissibility of this tape claiming that he had
not had an opportunity to see the original tape. The lower court precluded
the tape despite the testimony of the defendant=s
investigator that the tape had not been edited in the copying process. The
Court of Appeals reversed holding that the defendant=s
disclosure of a copy is sufficient so long as the original is available for
the plaintiff=s
inspection. In this case, the court noted that the plaintiff=s
lawyer did have ample opportunity to inspect the original tape but did not do
so.
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OCTOBER 2004
Well-settled principles of insurance law provide
an insurer the right to demand, within the terms of its policy, that it be
notified of any loss or accident covered under the policy and that it receive
timely notice of a claimant=s
commencement of litigation. These have long been recognized as rights which
provide an insurer the opportunity to protect itself and to appear and defend
against a claim or exercise its right to settle. Until a recent Court of
Appeals decision, it appeared as if
'370(4)
of the Vehicle and Traffic Law might limit these rights for those claims arising
out of the operation of vehicles for hire.
In American Transit Insurance Co. v. Anthony
Sartor and Utica Taxi Center, Inc. 2004 WL 1472632 (July 1, 2004), the Court
of Appeals was faced with the question of whether
'370
of the Vehicle and Traffic Law requires the insurer of a taxicab to satisfy a
default judgment entered against its=
insured where the insurer was never notified that a legal proceeding had been
commenced.
Sartor was injured in March, 2000 when the
vehicle he was driving became involved in an accident with a taxicab owned by
Utica Taxi Center, Inc., and insured by American Transit. Although, pursuant to
'370(4)
of the Vehicle and Traffic Law, a taxi operator is required to give written
notice of an accident to its insurer within five days, American Transit was not
informed of the collision until seven months after it occurred.
Sartor commenced litigation for personal
injuries against Utica Taxi Center, Inc. in Federal District Court. Utica Taxi
defaulted. Neither Utica Taxi nor Sartor provided notice of the litigation to
American Transit.
Sartor eventually obtained a default judgment
and was awarded $100,000.00. Claiming that it had not been provided timely
notice of the commencement of litigation or the application for a default
judgment, American Transit disclaimed coverage and commenced a declaratory
action seeking a judicial determination that its=
disclaimer of coverage was proper.
According to
'370(4)
of the Vehicle and Traffic Law,
A[e]very
person operating a motor vehicle...as to which a bond or policy of insurance is
required by this section, which is in any manner involved in an accident, shall
within five days give written notice of the time and place of the accident to
the surety or insurer. Failure to give notice of the accident as herein
provided shall constitute a misdemeanor, but shall not affect the liability of
the surety or insurer.@
The Appellate Division reversed the decision of
the lower court and held that Utica Taxi=s
failure to properly notify American Transit of the accident did not relieve
American Transit of its obligation to Sartor as the injured party. Relying upon
'370(4),
the Appellate Division determined that even when, as in this case, an insured
fails to properly notify its=
insurer of an accident, the insurer=s
liability to the injured party is not affected. Therefore, American Transit=s
disclaimer of coverage was deemed improper and the company was ordered to pay
the default judgment obtained by Sartor.
The Court of Appeals disagreed and concluded
that a violation of
'370(4)
does not obviate the insurer=s
right to notice. The Court noted that the claimant himself may provide notice
to the insurer so as to protect his right to recovery. Therefore, American
Transit was not obligated to satisfy the default judgment obtained by Sartor.
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SEPTEMBER 2004
A recent decision of the Court of Appeals holds that an alleged assault
committed by an employee was considered an
Aaccident@
and hence covered under the insured=s
liability policy.
In RJC Realty Holding Corp. v.
Republic Franklin Insurance Co., 2 N.Y.3d 158, 777 N.Y.S.2d 4 (April 1,
2004), a customer sued a beauty parlor (the insured) for a sexual assault
allegedly committed by one of its masseurs. The Court of Appeals, using the
reasoning from its 2000 Agoado
decision (95 N.Y.2d 141, 711 N.Y.S.2d 141), held that the assault had to be
gauged from the insured=s
standpoint and not the assailant=s.
Since the beauty parlor in RJC
Realty did not intend the assault from its own viewpoint, the assault
was an Aaccident@
and therefore was covered under its liability policy.
Eight months ago, the Court of Appeals attempted to
clarify the so called AScaffold@
Law, i.e. Labor Law '240.
The Blake v. Neighborhood Housing Services of New York City, Inc. decision (1
N.Y.3d 280, 771 N.Y.S.2d 484 [2003]), as discussed in our February 2004 issue
of ASumming Up@,
stated that while Labor Law '240
should be construed liberally, it is not a catchall for every elevation
related action. In the Blake decision, the Court of Appeals specifically
declined to expand '240
Liability to cover accidents where there are no safety violations and the
accident was purely the fault of the plaintiff. In Blake, the plaintiff
failed to secure the rungs of an extension ladder. The ladder collapsed.
In Gilbert v. Albany Medical Center, N.Y. Slip Op.
05824, 779 N.Y.S.2d 653, (3rd Dept., July 8, 2004), the plaintiff,
a worker who was standing on a ladder and removing asbestos from a pipe, was
injured when the ladder slipped and collapsed. The plaintiff moved for
partial summary judgment on his Labor Law
'240 cause of action.
The trial court denied his motion and plaintiff appealed.
The 3rd Department, in considering the
precedence established by Blake, was divided on the issue of whether the
slipperiness of the floor could appropriately be considered a factor which
compromised safety unrelated to the plaintiff=s
conduct. The majority held that while under the Blake decision, if a
plaintiff=s conduct
alone causes an accident, there is no liability under Labor Law
'240; if the accident
was attributable in any degree to a deficiency other than the neglect of the
employee, the Acomparative
negligence@ of the
employee is not a defense to Labor Law
'240.
The Gilbert Court found that evidence showed that
the ladder was placed on a slippery surface. This created a prima facie
showing of a Labor Law '240
violation. The majority concluded that this violation alone resulted in
strict liability, regardless of the plaintiff=s
actions. The 3rd Department overturned the trial court=s
order and granted the plaintiff=s
motion for partial summary judgment on his Labor Law
'240 cause of action.
Michael M. Chelus
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AUGUST 2004
STRICT LIABILITY UNDER
NEW YORK LABOR LAW APPLIED TO THE SPOUSE OF HOMEOWNER AFTER A WORKER IS
INJURED DURING CONSTRUCTION OF HOME
IN A
RECENT DECISION, THE STRICT LIABILITY OF NEW YORK LABOR LAW SECTIONS 240(1) AND
241(6) WAS HELD TO APPLY TO THE NON-TITLED SPOUSE OF A ONE-FAMILY DWELLING
OWNER.
IN
FISHER V. COGHLAN, ET AL, 2004 WL 1325775, 2004 N.Y SLIP.OP. 04890 (4TH
DEPT. 2004), THE PLAINTIFF WAS INJURED WHEN A SCAFFOLD COLLAPSED BENEATH HIM.
AT THE TIME OF HIS INJURY, THE PLAINTIFF WAS INSTALLING A ROOF ON A ONE-FAMILY
DWELLING BEING CONSTRUCTED BY THE DEFENDANTS, SANDRA AND JEFFREY COGHLAN.
JEFFREY COGHLAN, ALTHOUGH MARRIED TO THE PROPERTY OWNER, SANDRA COGHLAN, WAS NOT
NAMED ON THE DEED. THE PLAINTIFF ASSERTED CAUSES OF ACTION BASED UPON COMMON LAW
NEGLIGENCE, AS WELL AS ALLEGED VIOLATIONS OF LABOR LAW SECTIONS 200, 240(1) AND
241(6).
UNDER
NEW YORK LABOR LAW SECTIONS 240(1) AND 241(6)
ACONTRACTORS
OR OWNERS AND THEIR AGENTS@
WHO
ADIRECT
OR CONTROL THE WORK@
ARE REQUIRED TO PROVIDE CERTAIN MEASURES OF SAFETY FOR WORKERS. A VIOLATION OF
EITHER SECTION OF THE LABOR LAW THAT RESULTS IN AN INJURY TRIGGERS STRICT
LIABILITY. HOWEVER, THE STATUTES EXEMPT FROM EXPOSURE OWNERS OF ONE OR TWO
FAMILY DWELLINGS. UPON THIS EXEMPTION, THE DEFENDANTS MOVED FOR SUMMARY
JUDGMENT.
WHILE
SANDRA COGHLAN=S
SUMMARY JUDGMENT MOTION WAS GRANTED, THE COURT DENIED THE SUMMARY JUDGMENT
MOTION OF JEFFREY COGHLAN. THE COURT NOTED THAT MR. COGHLAN WAS NOT NAMED ON
THE PROPERTY DEED.
IN
AFFIRMING THE LOWER COURT=S
DECISION, THE FOURTH DEPARTMENT AGREED THAT JEFFREY COGHLAN=S
MARRIAGE TO THE PROPERTY OWNER DID NOT CHANGE THE FACT THAT HE WAS NOT AN
AOWNER@
OF THE PROPERTY. THE COURT REASONED THAT THE EXEMPTIONS PROVIDED BY LABOR LAW
SECTIONS 240(1) AND 241(6) APPLY ONLY TO TITLED PROPERTY OWNERS OF ONE OR TWO
FAMILY DWELLINGS. THE COURT REASONED THAT THE FACT THAT THE DEFENDANT IS
MARRIED TO THE PROPERTY OWNER IS IRRELEVANT. FURTHERMORE, THE COURT REFUSED TO
EXTEND THE DEFINITION OF
AOWNER@
IN ORDER TO INCLUDE NON-TITLED SPOUSES.
THE
FOURTH DEPARTMENT THEN DETERMINED THAT THERE WAS A TRIABLE ISSUE OF FACT AS TO
WHETHER JEFFERY COGHLAN WAS ACTING AS A CONTRACTOR OR AGENT OF THE OWNER WHO
EXERCISED DIRECTION OR CONTROL OVER THE PROJECT. IN SUPPORT OF THAT DECISION,
THE COURT NOTED THAT JEFFREY COGHLAN WAS ACTIVELY INVOLVED IN DESIGNING THE
PROJECT, HIRING AND PAYING VARIOUS SUBCONTRACTORS, AND FURNISHING MATERIAL AND
EQUIPMENT. THE COURT WAS NOT PERSUADED BY COGHLAN=S
ARGUMENT THAT THE SUBCONTRACTORS AND WORKERS
AKNEW
THAT HE WAS THE HOMEOWNER@
RATHER THAN A GENERAL CONTRACTOR.
IT IS
CLEAR THAT THE FOURTH DEPARTMENT REQUIRES STRICT INTERPRETATION OF THE TERM
AOWNER@
AS IT APPLIES TO LABOR LAW SECTIONS 240(1) AND 241(6). IT IS ALSO CLEAR THAT
VERY LITTLE IS REQUIRED TO CREATE A QUESTION OF FACT AS TO THE ISSUE OF
ADIRECTION
OR SUPERVISION.@
AS A RESULT, POLICY HOLDERS SHOULD BE ADVISED TO KEEP ALL NON-TITLED FAMILY
MEMBERS OUT OF THE PLANNING OR SUPERVISION OF A WORK PROJECT ON THEIR PROPERTY
IN ORDER TO PREVENT THE UNFORTUNATE TURN OF EVENTS IN FISHER.
MICHAEL J. CHMIEL
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JULY 2004
I. CONFINEMENT AND BARKING WILL
NOT SATISFY REQUIREMENT OF NOTICE OF DOG=S
VICIOUS PROPENSITY
In the matter of Collier v. Zambito, 1
N.Y.3d 444, ___N.Y.S.2d___ (2004), the Court of Appeals addressed the issue of
whether a dog=s
confinement and barking operates to satisfy the requirement that an owner have
notice of a dog=s
vicious propensity. The dog in question was kept confined in the kitchen and
was known by the owner to bark when guests were visiting.
The plaintiff, a twelve year old visiting the
defendant=s
home, had been to the defendant=s
residence in the past. At the time of the incident in question, the dog was
held by the owner on a leash. The owner then asked the plaintiff to approach
the dog so that the dog could smell the plaintiff. Upon approaching the animal,
the dog lunged and bit the plaintiff on the face.
In a 4-2 decision, the Court of Appeals held
that neither the confinement nor the barking was sufficient to satisfy the
notice requirement. The Court opined that
Abarking
and running around are what dogs do@.
The dissenters conceded that all dogs run around and bark; however, they were of
the opinion that not all dogs are kept away from visitors because they run
around and bark.
II. A SLIP ON ICE ENDING IN A FALL
INTO A TRENCH DOES NOT FALL WITHIN
'
240(1) OF THE LABOR LAW
A recent decision of the Fourth Department holds
that a plaintiff worker=s
slip on ice into a trench at the work site is not covered by
'
240 of the Labor Law. In Pursel v. Wellco, Inc. Et al., 6 A.D.2d 1096,
775 N.Y.S.2d 626 (4th Dept., 2004), the plaintiff was injured when
he slipped on snow and ice while walking along a footer and fell approximately
six feet into an excavation.
The Fourth Department, in reversing the lower
court=s
denial of the defendants=
motions for summary judgment held that
Athe
hazards contemplated by Labor Law
'
240(1) are those where safety devices are required because of a difference in
elevation levels ... A worker who falls into a trench from the side is not
covered by Labor Law '
240(1) because such an injury results from the usual and ordinary dangers of a
construction site.@
III. 31 DAY DELAY IN DISCLAIMING
COVERAGE UNDER AN EXCLUSION WAS HELD TO BE REASONABLE AND VALID
Recently, in New York Central Mutual Fire
Insurance Company v. Majid, et al., 5 A.D.3d 447, 773 N.Y.S.2d 429 (2nd
Dept. 2004), it was held that a 31 day delay in disclaiming coverage under a
policy exclusion after the insurer learned of the insured=s
use of a covered vehicle as a livery vehicle was not unreasonable.
Pursuant to Insurance Law
'
3420(d), an insurer is required to give written notice as soon as reasonably
possible when disclaiming liability or denying coverage. The timeliness of
disclaimer is measured from the point when the insurer first learns of the
grounds for disclaimer of liability or denial of coverage. In this case, the
insurer first learned of the grounds for disclaimer after a statement was taken
of the insured by an investigator. Upon receipt of the investigator=s
report, the insurer=s
casualty examiner forwarded the file to counsel for review after which point,
the disclaimer letters were issued. Thirty-one days had passed from the time
the insurer first learned of the grounds for the disclaimer.
The Second Department ruled that given the facts
before them, it was not unreasonable for the insurer to consult with counsel
regarding the livery vehicle exclusion prior to issuing its disclaimer.
Anthony B. Targia
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JUNE 2004
I. PLAINTIFFS INVOLVED IN
ACCIDENTS WITH TORTFEASORS WITH INSOLVENT INSURERS NOT ENTITLED TO
AUM@
COVERAGE
In the matter of Eagle Insurance Company vs.
Hamilton, 4 A.D.3rd 355, 773 N.Y.S.2d 68 (2nd Dept., 2004), the
Court addressed the issue of how a petitioner=s
source of recovery is affected by insolvent insurance companies. In 1998, the
petitioner Hamilton was injured in a motor vehicle accident. At the time, the
petitioner was insured by Eagle. The petitioner=s
policy contained the New York State Mandatory Uninsured Motorist=s
Coverage (UM), which provides coverage in instances when a tortfeasor=s
vehicle is uninsured. The petitioner did not possess, however, the optional
ASupplemental
Uninsured Motorist@
or ASUM@
coverage.
In Eagle the tortfeasor=s
insurer Reliance National Indemnity Company, had recently declared insolvency.
Its New York assets were in a state of receivership. As a result, the
petitioner pursued recovery from the Public Motor Vehicle Liability Security
Fund, established by New York State. In response to the
petitioner=s
request for benefits the Fund corresponded
AAt
this time, the PMV Fund is unable to provide either a defense to, or
indemnification of this claim insofar as the PMV Fund is financially strained.@
The petitioner then sought arbitration against
Eagle for UM benefits. Eagle argued that the tortfeasor=s
vehicle was not uninsured at the time of the accident but rather was insured by
Reliance. Eagle further argued that the petitioner=s
UM coverage is only triggered when a tortfeasor=s
insurer denies or disclaims coverage. The petitioner responded that Reliance=s
insolvency was the equivalent of the tortfeasor being uninsured.
The Court agreed with Eagle and ruled that the
petitioner was not entitled to UM benefits. Technically Reliance never denied
or disclaimed coverage in this accident, it just went out of business. The
petitioner could have pursued recovery through Eagle if he had purchased SUM
coverage. SUM coverage specifically allows recovery when dealing with an
insolvent insurer. As a result of the petitioner only having the mandatory UM
coverage and not SUM, he was not entitled to recover from his insurance company
and was faced with the bleak prospect of pursuing recovery through the state
fund.
II. PROPERTY OWNER=S
FAILURE TO SHOVEL SIDEWALK COULD BE A BASIS FOR LIABILITY EVEN IF INJURY OCCURS
OFF PROPERTY
A recent decision of the Fourth Department
upheld a lower Court=s
ruling that a failure to shovel one=s
sidewalk may be a basis for liability when a municipal ordinance requires it.
In Di Natale vs. State Farm, 2004 N.Y. Slip. Op. 02079, the plaintiffs
were forced to walk on Niagara Falls Boulevard, a busy
highway, as a result of the defendants=
failure to clear their respective sidewalks. Multiple plaintiffs were injured
and one plaintiff lost her life as a result of being struck by a vehicle while
on the Boulevard. The defendants moved for summary judgment arguing that no
duty existed towards the plaintiffs since the accident occurred away from the
defendants=
premises.
The Fourth Department disagreed. In its
decision, the Court pointed to a local ordinance of the town where this accident
occurred which assigned liability to property owners who fail to keep their
sidewalks clear. The defendants=
apparent violation of the ordinance, which required
Aany
owner or occupant of any premises fronting or abutting on any street or highway
to maintain any sidewalk abutting the premises by keeping it free and clear from
snow and ice@,
was enough to raise triable issues of fact as to whether the defendants breached
a duty owed towards the plaintiffs and whether that breach was a proximate cause
of the injuries and fatality.
Kevin E. Loftus
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MAY 2004
I. COURT OF APPEALS AFFIRMS
DISMISSAL OF LABOR LAW 240(1) CLAIM ON GROUNDS THAT WORKER WAS NOT
PERFORMING REPAIRS, BUT RATHER CONDUCTING ROUTINE MAINTENANCE.
The
Court of Appeals has recently held that a worker engaging in routine
maintenance at the time an injury occurred cannot recover under the scaffold
law which requires owners to make demolition, construction, and excavation
projects reasonably safe for workers. Esposito v. New York City Indus.
Dev. Agency, 1 N.Y.3d 526, 770 N.Y.S.2d 682 (2003).
In Esposito, the plaintiff-worker
was injured when he fell from a ladder while attempting to remove a cover
from an air-conditioning unit on the 22nd floor of a commercial
building in Manhattan. At the time the fall occurred, the plaintiff was
performing a monthly maintenance check of the air conditioning unit and was
in the process of fixing the worn belts of the unit when the bottom of his
ladder Akicked
out@
causing him to fall.
The primary question in this case was
whether the plaintiff was engaging in one of the covered activities as set
forth in Labor Law 240(1) at the time of his fall. This issue turned on the
fact that, although the plaintiff was performing
Arepairs@
on the unit, the repairs were needed due to normal wear and tear.
Accordingly, the Court of Appeals held that such work constituted routine
maintenance rather than the otherwise covered activity of repairing.
II.
DOCTRINE OF COLLATERAL ESTOPPEL NOT APPLICABLE TO BIND THE OWNER OF A
VEHICLE WHEN A DEFAULT JUDGMENT IS TAKEN SOLELY AGAINST THE DRIVER.
In
Chambers v. City of New York, 309 A.D.2d 81, 764 N.Y.S.2d 708 (2d
Dept. 2003), the City of New York, as owner, and its employee, as driver,
were sued for injuries the plaintiff allegedly sustained in a motor vehicle
accident. For reasons not germane to this discussion, the City declined to
defend and indemnify its employee-driver and, therefore, did not answer on
its employee=s
behalf. The plaintiff then obtained a default judgment against the driver
and sought summary judgment against the City on the issue of liability.
The plaintiff=s
motion was premised on the general rule in New York that default judgments
are entitled to collateral estoppel effect. This, coupled with the
applicability of Vehicle and Traffic Law 388, led plaintiff to argue that
liability, as established by the default judgment, could be imputed to the
City.
In affirming the denial of the plaintiff=s
motion, the Second Department applied the full and fair opportunity test to
determine whether it would be fundamentally fair to deny the City an opportunity
to litigate the issue of the driver=s
negligence. Upon applying that test, the Second Department ruled that in order
for collateral estoppel to apply, the issue must have been previously litigated
which, in this case, it was not. Moreover, the Court held that vicarious
liability imposed as a result of Vehicle and Traffic Law 388 did not provide the
necessary privity between the parties for purposes of collateral estoppel.
Although in Chambers default judgment was
obtained against the non-appearing co-defendant, the rationale of the Court
could be applicable in all instances where a purportedly vicariously liable
party was not provided an opportunity to contest the liability of the underlying
tort-feasor. Such a situation could arise from any number of procedural
scenarios and underlying circumstances. As evidenced by the Court=s
decision in Chambers, the doctrine of collateral estoppel does not in all
instances resolve the liability of those vicariously responsible.
James S. Curtis
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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 (1st Dept. 2002). This matter dealt with shorter
deadlines for filing claims under New York's no-fault law. At the time we last
examined this matter, the Supreme Court, New York County upheld the regulations.
In October 2002, the Appellate Division affirmed. We have since monitored this
matter closely.
On October 21, 2003, the Court of Appeals, in a unanimous decision, held that
the filing regulations issued as an anti-fraud measure by the New York State
Insurance Superintendent were valid. See Medical Society, __N.Y.2d__,
(2003 WL 22387581). This marks an enormous victory for the insurance industry.
The filing regulations imposed by the Superintendent reduced the time limit
within which an injured party must file a claim for no-fault benefits with an
insurer from 90 to 30 days. Additionally, the time limitation for the submission
of claims for medical expenses were decreased from 180 to 45 days.
LACK OF NOTIFICATION DID NOT RELIEVE INSURER FROM OBLIGATIONS TO
INJURED PARTY
Of course, most liability policies contain a clause conditioning coverage
upon written notice of an accident from an insured as soon as possible. Also as
to those injured, New York State Insurance Law 3420 (a) (3) requires that every
liability policy contain "...a provision that... written notice by or on behalf
of the injured party...shall be deemed notice to the insurer".
A recent decision by the Appellate Division First Department suggests that
where a claim is asserted by one injured through the operation of a motor
vehicle transporting passengers for hire, no notice at all is required.
In American Transit Insurance Company v. Sartor et al., 305 A.D.2d
205, 762 N.Y.S.2d 340 (1st Dept., 2003), Sartor, asserting a personal
injury claim, obtained default judgment against Utica Taxi. Utica's insurer,
American Transit, in a declaratory judgment action, obtained summary judgment
declaring that its disclaimer of coverage for lack of notice was proper. Upon
appeal, the Appellate Division First Department reversed holding notice
irrelevant. American Transit was directed by the Appellate Court to satisfy the
$100,000 default judgment obtained by Sartor and to also pay Sartor the
statutory 9% annual interest which accrued over the two years since the default
judgment was obtained. Although the fact was not reported within the Court's
decision, we consulted with counsel involved in the appeal and learned that
American Transit was not advised by either Utica Taxi or Sartor of the accident
or the subsequent bodily injury claim until after default judgment was granted.
In support of its ruling, the Appellate Court noted that Vehicle and Traffic Law
370 (4) which relates to private entities engaged in the business of
transporting passengers for hire, provides that an insurer's liability to an
injured party will not be affected by the insured's failure to provide notice of
an accident to the insurer. As an apparent consolation to American Transit, the
Court recognized language within the policy entitling American Transit to
reimbursement from Utica Taxi if the loss paid by American Transit was "due
directly or indirectly" to Utica Taxi's breach of policy conditions. Not
surprisingly, the Appellate Court did not attempt to resolve whether such policy
language was applicable to the facts before it.
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 (4th Dept., 2002). In Frost,
the plaintiff, a business owner, sued his insurance agent alleging that he had
relied upon the defendant’s representations that the insurance policy purchased
by the plaintiff would cover losses for damage to property under control of the
plaintiff regardless of the property ownership. In this case, the plaintiff sold
a mobile home and delivered title to and possession of the home after the buyers
obtained financing. Subsequently, after the transfer of title and possession,
plaintiff’s contractors improperly connected the utilities to the mobile home
causing substantial water damage.
The plaintiff attempted to make a claim under his insurance policy for the
damage caused to the home only to learn that because the plaintiff did not have
“Garage Keepers’ Coverage”, the plaintiff’s insurance company would not provide
coverage for this damage. The reason given was that the plaintiff was no longer
owner of the home. Through plaintiff’s deposition testimony, the agent
established that the plaintiff did not request such coverage during a meeting
with the insurance agent. The Fourth Department affirmed the trial court’s
dismissal of the case noting that absent a specific request to advise or act, an
insurance agent does not have a continuing duty to guide or direct the client to
obtain additional coverage. The agent’s duty is defined simply by the nature of
the request of the customer. Since the plaintiff in this case, made a general
request for insurance, the agent cannot be liable for not providing the specific
coverage that the insured eventually needed.
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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 (4th Dept., 2002), the Court held
that the burden of proof on "grave injury" lies with the moving party on a
summary judgment motion. In Sergeant, the Court held that the
movant/employer had to prove that the plaintiff did not suffer a "grave injury"
as defined under §11 of the Worker’s Compensation Law. The Court found that once
the employer satisfied his burden, the defendant need only come forward with
opposing proof sufficient to raise a material question of fact for denial of
employer’s summary judgment motion. Based upon this, the Court modified the
lower court’s decision which had granted summary judgment for the employer and
reinstated the third-party complaint against the employer alleging grave injury.
This holding by the Fourth Department significantly reduces
the defendant’s burden of proof, at least initially on the "grave injury" issue
which is required to be shown to retain plaintiff’s employer in the action.
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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 (1st Dept.,
2000). In Black, a wife was driving a motor vehicle she
owned when it was struck by a stolen car being pursued by the police.
The driver’s husband was killed in the motor vehicle accident and her son was
seriously injured. The wife suffered permanent brain damage
rendering her incompetent as a result of the motor vehicle accident.
After the automobile liability insurance carrier denied coverage to the wife for
claims brought against her by her deceased husband’s estate, the wife commenced
a declaratory judgment action against the liability carrier.
The Appellate Division, First Department recognized that the spousal
exclusion of Insurance Law §3420(g) was enacted to attempt to prevent collusion
between husbands and wives. The court held that although it is
clear collusion was highly unlikely in Black, due to the death of the
husband and severe injuries suffered by the wife and child, Insurance Law
§3420(g) did not exclude cases where there is proof of no collusion from the
spousal exclusion. The court suggested that the Legislature
revisit these ideas to ensure that drivers are aware that their automobile
liability insurance policy provides coverage for every other passenger in that
driver’s car, but not that driver’s spouse. The decision in
Black certainly illustrates the inequities of the prior version of Insurance
Law §3420(g). The spousal exclusion had no effect upon the claims
of the driver’s son who was injured in the motor vehicle accident, but
completely precluded the coverage for the claims of the driver’s husband who was
killed in the motor vehicle accident. Certainly, there would seem
to be as much incentive for fraudulent claims between a mother and son as there
is between a wife and husband.
Perhaps hearing the call of the Appellate Division, the New York State
Law Revision Commission studied the issue and concluded that under the law as it
existed a spouse injured by the culpable conduct of his or her spouse in a motor
vehicle accident is limited to recovering mandatory no fault benefits.
Further, because the spousal exclusion is statutory, insurers were not required
to disclose the exclusion. As such, the vast majority of insureds
were unaware that their spouse would not be provided coverage under the policy.
Also, although the predecessor to Insurance Law §3420(g) permitted insureds to
contract for spousal coverage to avoid the exclusion, no New York
insurance carriers offered the supplemental endorsement. The
commission was particularly troubled by the operation of the exclusion where it
was evident that no fraud or collusion existed; especially in light of the
rejection by the courts of common law rules barring suits between other family
members. In fact, the commission noted that New York was the only
state with a statute authorizing insurers to deny excess liability coverage
against claims by spouses without notice or a written exclusion in the policy.
Based on those conclusions, the commission recommended the amendment of
Insurance Law §3420(g).
The thrust of the amendments is not to create coverage where none
previously existed. On the contrary, as indicated by the
commission, insurance carriers were always able to provide Supplemental Spousal
Insurance Coverage, but no insurers elected to offer such coverage.
Insurers now must offer such coverage, at the option of the insured; and
must also now give notice to their insureds that absent purchasing such
coverage, no coverage is afforded to spousal claims under the policy.
Of course, there is no case law addressing the new amendments to
Insurance Law §3420(g). However, based upon general insurance
contract interpretation principles, if the statutory notice is not provided, it
is likely that the insurer will not be able to avail itself of the spousal
exclusion. Thus, effective January 1, 2003, insurers must be sure
to include to the new notice on all new policies and renewals.
Matthew A. Lenhard
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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 (4th Dept. 2002). In that case,
the plaintiff sustained a herniated disc in her lower back as a result of a
motor vehicle accident. The plaintiff alleged that the herniated
disc and consequent surgery caused the plaintiff permanent and consequential
limitations. After the trial, the jury awarded the plaintiff
damages for the injuries that she sustained in the accident.
However, the Fourth Department reversed the judgment against the defendants
holding that the plaintiff failed to prove that her back injury was permanent
and consequential even though medical proof showed that the plaintiff sustained
a herniated disc necessitating surgery. The appellate court noted
that the evidence at trial established that surgery was successful and plaintiff
received no further treatment one year after surgery. The evidence
further established that the plaintiff no longer experienced pain from the
herniated disc and resumed her normal daily activities after surgery.
As such, there was no evidence of a permanent and consequential limitation and
therefore the defendant’s motion to set aside the verdict should have been
granted.
As evidenced by this case and other recent appellate opinions, the times when
a mere finding of a herniation raised a question of fact with respect to the
serious injury threshold are seemingly over. As such, one should
not assume that a back injury necessitating surgical intervention necessarily
satisfies the serious injury threshold especially with respect to the permanent
and consequential criteria.
2. A FORMER OWNER OF A DOG
RESPONSIBLE FOR BITING THE PLAINTIFF IS NOT LIABLE FOR THE PLAINTIFF’S INJURIES.
Even though cases involving dog bites are rather common, not many plaintiffs
sue the dog’s current and past owners. Such was the
scenario in Bukhatetsky v. Vysotski, ___ A.D. 2d __, 745 N.Y.S. 2d (2nd
Dept. 2002). In this case, the plaintiff was injured when he was
bitten by a dog approximately 4 months after the dog was sold from one defendant
to another. The defendant who sold the dog failed to notify the
authorities of the change of ownership pursuant to Agriculture and Markets Law
§113. However, the Appellate Division held that despite the fact
that the former dog’s owner failed to properly notify the authorities of the
change of the dog’s ownership, the plaintiff could not assert a claim against
the dog’s former owner. The evidence in this case showed that the
dog’s current owner had sole possessory interest and control over the dog on the
date of the accident. The fact that the former owner continued to
be registered as the dog’s owner at the time of the incident did not create a
question of fact with respect to the ownership of the dog on the date of the
accident.
As such, the issue of possessory interest and control over the dog is crucial
with reference to determining who is liable for the dog’s actions.
The mere fact that the authorities were not advised of the change of ownership
is insufficient to state a viable claim against the dog’s former owner.
3. THE SNOW REMOVAL CONTRACTOR
IS GENERALLY NOT LIABLE TO THE PUBLIC IN SLIP AND FALL CASES.
The Court of Appeals has recently held that a plaintiff who slips in an icy
parking lot cannot recover for personal injuries from the snow removal company
and instead is relegated to recovery from the owner of the premises where the
accident occurred. Espinal v. Melville Snow Contractors, Inc.,
98 N.Y. 2d 136 (2002).
In Espinal, the plaintiff slipped on her employer’s parking lot and
sued the snow removal contractor. The exclusivity of the Workers’
Compensation Law precluded a lawsuit by the plaintiff against her employer.
The Court of Appeals held that a snow removal contractor’s obligation to the
general public depends on whether its contract with the owner of the premises is
of a limited nature or is of the type that would constitute a comprehensive and
exclusive property maintenance obligation. In Espinal, the
snow removal company had an obligation to remove the snow only at certain
designated times of the day and only in certain circumstances where the snow
fall exceeded 3 inches. The Court of Appeals held that such an
obligation is not of the type that would constitute a comprehensive and
exclusive property maintenance obligation. The snow removal
company did not entirely absorb the owner’s duty as a land owner to maintain the
premises safely due to the limited nature of the contract. As
such, the plaintiff’s claims against the snow removal contractor were dismissed
and she was left with no legal recourse for her injuries other than claims for
worker compensation benefits.
The crux of this decision is that snow removal contractors are generally
immune from suit directly by the plaintiff unless they undertake their snow
plowing duties as part of a comprehensive and exclusive property maintenance
agreement with the landowner. As such, the plaintiffs are
relegated to suing the landowner who then may bring a third party action for
breach of contract against the snow removal contractor.
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 (4th Dept., 2002) the Fourth Department determined that
the Supreme Court properly denied the plaintiff’s motion for partial summary
judgment on liability on a Labor Law §240(1) claim. The plaintiff
was installing duct work at a height of 18-20 feet. The plaintiff
was using a scissor lift to perform his work at an elevation, a device the
Fourth Department found “functionally similar” to a scaffold or ladder and thus
within the statutory coverage. However, immediately before the
accident, the plaintiff lowered the scissor lift to its lowest position and
maneuvered it to a spot near the swimming pool. The scissor lift
tipped and fell into the swimming pool. The Fourth Department
determined that the accident was not the result of the hazard of installing duct
work at an elevation, but rather the accident was a result of a separate and
unrelated hazard, i.e., and empty, unguarded swimming pool.
Therefore, the court determined that the accident was not the result of a type
of hazard that the use or placement of the safety device enumerated in Labor Law
§240(1) was designed to protect against.
In Silk v. Turk, 294 A.D.2d 896, 741 N.Y.S.2d 373 (4th
Dept., 2002), plaintiff commenced a Labor Law action seeking damages for
injuries he had sustained when he fell from a scaffold while reconstructing a
bridge on a Chautauqua county road. The defendant was the title
owner of the property in which the bridge was located, but exercised no control
over the reconstruction bridge. The property was subject to an
implied easement or right-of-way granted to the third party defendant,
Chautauqua County. The Fourth Department determined that the defendant, as title
owner of the property, was an owner within the meaning law of Labor Law §240(1).
The Court stated that “liability rests upon the fact of ownership and whether
[she] had contracted for the work or benefitted from it are legally irrelevant.”
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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 (2nd Dept. 2002).
The Second Department based this decision on the fact that the plaintiff
submitted no proof as to the plaintiff’s injuries. Therefore, the
plaintiff did not meet his burden of proving a “serious injury” as required by
the No Fault Law. The Appellate Division also reasoned that the
purpose of the No Fault Law was to reduce the number of law suits arising from
automobile accidents by eliminating recovery in those automobile accidents which
produced minor injuries. The Court reasoned that to hold otherwise would be not
only inconsistent with the intent of the No Fault Law, it would also be contrary
to the basic summary judgment principles.
It should be noted that our own Fourth Department has ruled contrary to this
recent Second Department decision in Simone v. City of Niagara Falls, 281
A.D. 2d 923, 721 N.Y.S. 2d 892 (4th Dept. 2001).
Simone was discussed more fully in the December 2001 newsletter.
Although there is now a split in the departments, the practitioner in the Fourth
Department still has to take steps to preserve the “serious injury” question
when the plaintiff moves for summary judgment on “liability.”
2.
II. FOURTH DEPARTMENT DISREGARDS ARGUMENTS RELATING TO
HEIGHT DIFFERENTIAL AND FINDS LIABILITY UNDER LABOR LAW §240(1) (A.K.A. THE
SCAFFOLD LAW) WHEN A WORKER FELL INTO TRENCH.
In Congi v. Niagara Frontier Transportation Auth.,
A.D. 2d , 741 N.Y.S. 2d 629 (4th
dept. 2002) the plaintiff was injured when he fell while attempting to descend
into an excavated trench to tie together a rebar rod. The
Appellate Division held that the plaintiff’s fall into the excavated trench was
“the type of elevation related risk for which Labor Law §240(1) provides
protection.” The Court further explained that whether the work
area where the plaintiff fell was 30 inches below grade, as described by the
defendant or 10 feet below grade as described by the plaintiff, was irrelevant.
Rather, the Court reasoned that the extent of the elevation differential or the
distance that the worker falls does not determine the applicability of Labor Law
§240(1).
III. NEW YORK COURT OF APPEALS HOLDS THAT LOSS OF
THUMB IS NOT A “GRAVE INJURY” UNDER THE OMNIBUS WORKER’S COMPENSATION REFORM ACT
OF 1996.
In 1996, the State Legislature amended the Workers’ Compensation Law to
provide that an employer shall not be liable for contribution or
indemnity to any third person based upon liability for injuries sustained by an
employee unless the employee’s injuries are shown to be “grave” as defined by
the statute. This amendment lists specific injuries which have
been narrowly construed by the Courts.
For example, Workers’ Compensation Law §11 lists a “permanent and total loss
of use” of the hand as a “grave injury”. The Court of Appeals has
recently held that the loss of a plaintiff’s thumb does not amount to a
permanent and total loss of use of the hand. Meis v. ELO
Organization, LLC, 97 N.Y. 2d 714, 740 N.Y.S. 2d 689 (2002).
The lower court had found that the plaintiff’s loss of a thumb created a
question of fact for the jury as to whether the plaintiff’s injury was “grave”
under the statute. The Appellate Division affirmed the lower court.
In reaching this decision, the Appellate Division looked to the plaintiff’s
occupation as a plumber. The appellate court reasoned that since
the plaintiff needed his whole hand to do his job as a plumber, a question of
fact existed as to whether the plaintiff had a “permanent and total loss of the
use” of the hand. An appeal to New York’s highest court overruled
this decision.
The New York Court of Appeals disagreed with the Appellate Division
finding that the amputation of his thumb did not amount to a permanent and total
loss of use of the plaintiff’s hand. The Court of Appeals reasoned
that since the injuries qualifying as “grave” under the statute are narrowly
defined, the words of the statute are to be given their plain reading without
resort to forced or unnatural interpretations. As a result, the
Court of Appeals rejected the argument that the loss of a thumb had rendered the
plaintiff’s hand totally useless.
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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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MARCH, 2002
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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