Thursday, July 10, 2014

Court of Appeals Reiterates That Insurance Law Applies Only For Bodily Injury Claims Under Policies Issued In New York

In KeySpan Gas EastCorp. v. Munich Reinsurance America, Inc., the plaintiff owned and operated manufactured gas plants (MGP) and brought suit against the defendant-insurer claiming that the insurance company had a duty to indemnify and defend environmental damages claims at two of the plaintiff’s MGP sites.  The defendant issued excess liability insurance policies to the plaintiff and required prompt notice of a potential indemnity claim.  Before any regulatory agencies had commenced a lawsuit or formal investigation, the plaintiff contacted the defendant about environmental concerns at the two MGP sites.  The defendant-insurer replied in two parts: first, it reserved all rights and coverage defenses, including that of late notice, and second, the defendant requested additional information about the MGPs.  Shortly thereafter, the plaintiff sent supplemental disclosures to the defendant, to which the defendant never responded.  The plaintiff commenced this suit after the DEC conducted a formal investigation.  The defendant asserted the affirmative defense of late notice warranting denial of coverage. 

The Supreme Court found that the defendant had no duty to indemnify or defend the claim on one of the properties, but held that an issue of fact existed regarding the reasonableness of the delay for the second property.  On appeal, the First Department held that the plaintiff failed to give timely notice under its insurance policy; yet, did not grant summary judgment because an issue of fact existed as to whether the defendant waived its right to disclaim coverage based on late notice.  While the First Department did not specifically cite to Insurance Law 3420(d)(2), it used its language to find that the defendant-insurer breached its duty.  The First Department essentially recited 3420(d)(2) in stating that the defendant had an “obligation” to disclaim coverage based on late notice “as soon as reasonably possible after first learning of the … grounds for disclaimer.”  The Court of Appeals found this to be in error, holding that where the underlying claim does not arise out of an accident involving bodily injury or death, 3420(d)(2) is inapplicable.  The Court clarified that 3420(d)(2) applies only in insurance cases involving bodily injury or death claims arising out of a New York accident and brought under a New York liability policy and that any Appellate Division case holding that 3420(d)(2) applies to claims not based on bodily injuries or death was wrongly decided and should not be followed.   As a result, the case was reversed and remanded.  The Appellate Division is to consider the defendant’s delay in giving notice of disclaimer under common-law waiver and estoppel principles

Monday, June 16, 2014

First Department Finds That Notice of Fire Was Not Sufficient To Apprise Insurer That Bodily Injury Claim Was Being Made

In Hermitage Ins. Co. v. Evans floor Specialist, Inc., two Evans' employees were injured in a fire on June 27, 2008, while they were engaged in refinishing the floor of an apartment in the Bronx.  Evans promptly provided notice to its insurer, Hermitage that a fire had occurred, but in a box on the notice of occurrence form regarding the name and address of injured persons or property damage, Evans stated "unknown, sedwick ave bronx."  A year after the incident, the two employees commenced an action against Evans. Hermitage received notice of the bodily injury claim on July 2, 2009.  After conducting an investigation, Hermitage disclaimed coverage on the basis of an "employee exclusion" in its policy and commenced an action against Evans and the injured employees for a declaration that it had no duty to defend or indemnify Evans against the employees' claim.  

The First Department upheld Hermitage's disclaimer on the basis that the notice of occurrence was not sufficient to apprise Hermitage that a claim for bodily injury was being made.  In so holding, the First Department found that Hermitage did not owe an absolute duty to investigate whether anyone was injured in the fire, stating that its earlier decision in GPH Partners, LLC v. American Home Assur. Co. (87 AD3d 843 [1st Dept. 2011]), was "inapposite." Instead, the Court reiterated that "[t]he rule is applied where the claim form provides the insurer with enough information about the nature of the claim to prompt an investigation to determine whether there are grounds to claim an exclusion."    

Monday, May 12, 2014

Leave Granted to Determine Whether Catheter Was a Foreign Object or Fixation Device

The Court of Appeals has granted leave to appeal in Walton v. Strong Memorial Hospital, a case involving the applicability of the foreign object exception to the medical malpractice statute of limitations.  The plaintiff, now 25, discovered that part of a polyvinyl catheter remained in his heart after heart surgery he had when he was three years old. That polyvinyl catheter had been used to monitor atrial pressure during and after the heart surgery. Three days following that surgery, however, doctors performed a second procedure to remove the polyvinyl catheter.  A portion of the catheter broke off and was not retrieved. 

It is undisputed that the plaintiff’s action was beyond the two year, six month statute of limitations for medical malpractice actions generally, and beyond the 10-year cap for tolling an infant’s malpractice claim. Thus, the plaintiff’s action would be timely only if it satisfied the foreign objects exception to the statute of limitations. Under the foreign objects exception, the plaintiff may commence an action within one year of the date of such discovery or of the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier.” Notably, the tolling provision applies only to foreign objects and not to fixation devices or other listed exclusions.

The Appellate Division, Fourth Department, concluded that the polyvinyl catheter was a “fixation device” because it was “intentionally placed inside plaintiff’s body to monitor atrial pressure for a few days after the surgery.”

Wednesday, April 9, 2014

Leave Granted in Labor Law 240(1) Billboard Fall Claim

The Court of Appeals just granted leave to appeal in Saint v. Syracuse Supply Co., where the plaintiff was injured in a fall on an elevated billboard (he fell from one level of the billboard to a catwalk, but not completely off of the billboard). The Fourth Department dismissed the plaintiff's Labor Law § 240(1) claim, concluding that he was in the process of applying a new advertisement to the face of a billboard, and that his work was essentially cosmetic, which would not constitute a Labor Law protected activity. The plaintiff unsuccessfully asked the Fourth Department to grant leave, but the Court of Appeals has now agreed to hear the matter.

The plaintiff argued to the Court of Appeals that his job entailed changing the “structure” of the billboard by adding metal and wood extensions to the board as part of a project to attach a new vinyl advertisement. He further argued that, in light of the fact that his work constituted an “alteration” of the billboard, the Fourth Department decision appeared to impermissibly apply a ‘per se’ exclusion of billboard changing from the Labor Law. The defendant responded that the Fourth Department correctly applied the Court of Appeals’ prior precedent in Munoz v. DJZ Realty, LLC., in which the Court of Appeals concluded that pressing a pre-glued sheet to a billboard face, even to cover a billboard that was that was 12 feet by 24 feet in size, did not constitute a Labor Law protected activity. Here, the defendant alleged that application of the billboard face included the so-called “extension,” and that there was no “alteration” of the structure itself.

The New York State Trial Lawyers Association has already obtained status as amicus on the appeal.

Wednesday, March 19, 2014

Security Guard's Acts Found to Be Outside The Scope of His Employment

In Ali v. State of New York, the claimant was standing in the waiting area of the New York State Workers' Compensation Board when he overheard a nearby security guard talking on a cell phone.  The security guard apparently learned of his grandmother's death and in reaction to the news he punched a wooden bench, causing it to strike and injure the claimant for which the claimant sued the State.  After trial, the Court of Claims granted the State's application to dismiss the claim and on appeal by the claimant the Second Department affirmed.  The Court found that the security guard was acting solely for personal motives unrelated to the State's business, and therefore the State could not be held vicariously liable for the security guard's actions.  The Court further found that the claimant failed to demonstrate that the guard's conduct was reasonably foreseeable to the State.   

First Department Holds Plaintiff's Use of A-frame Ladder In Closed Position Not Sole Proximate Cause

In Fernandez v. 213 E. 63rd St. LLC, the First Department affirmed partial summary judgment on liability in favor of plaintiff pursuant to Labor Law 240(1), where plaintiff testified that the A-frame ladder he was using "kicked out," causing him to fall.  The Court further found that, even if the defendants had presented sufficient evidence to create a question of fact as to whether the plaintiff was using the ladder in a closed position, such evidence was not sufficient to defeat the plaintiff's motion.  More specifically, the Court found that the defendants had failed to demonstrate that the plaintiff was instructed to not use the ladder in that manner (which is generally only relevant to a "recalcitrant worker" defense).  

Tuesday, March 18, 2014

Court of Appeals Finds Questions of Fact Exist As to Possible "Special Relationship" Between Insurance Broker and Its Client

In Voss v. Netherlands Ins. Co., the plaintiff sued her insurance broker alleging they negligently secured inadequate levels of coverage for her businesses.

Plaintiff Voss met with defendant CHI, who calculated $75,000 per incident would be sufficient coverage for her businesses, and that the amount would be reassessed and checked each year in the event it became necessary to increase the coverage.  In 2006, plaintiff purchased a new building for her businesses that contained more space that would house two additional ventures.  Defendant renewed the $75,000 policy, even though it included more businesses and more square footage.  Roof leaks occurred in 2007 that put a stop to business operations and required contract work.  A month later the roof failed, causing extensive water damage and all of the businesses to temporarily shut down.  While these incidents were treated separately, payments were delayed and never fully paid.  Meanwhile in also in 2007, CHI proposed reducing the plaintiff's insurance from $75,000 to $30,000.  Plaintiff questioned this and the CHI representative agreed to “take a look at it.”  However, the plaintiff did not follow up and the $30,000 coverage made it into the final plan.  The roof then failed a third time in 2008, causing further damage and interruption of plaintiff’s businesses. 

CHI moved for summary judgment, which was granted by the Supreme Court, who agreed that no special relationship existed, that if such a relationship existed then any breach was not a proximate cause of the plaintiffs injuries and that a negligence claim against CHI failed because plaintiff admitted that she was aware of what policies she had throughout the process.  The Appellate Division affirmed, although disagreeing with the Supreme Court on the special relationship issue.

The Court of Appeals granted leave and reversed.  The Court explained that looking at the facts in the light most favorable to the nonmoving party, the plaintiff,  there was a significant triable issue of fact in regards to the special relationship between the parties.  This was because “there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent.”  Since the plaintiff relied on the insurance broker’s assurances that the coverage was enough and that it would be continually reviewed to determine if it was still adequate, it is possible a special relationship, although not yet proven, could be proven at trial.  

As for the other grounds that the Appellate Division found satisfactory for dismissal, the Court of Appeals found it “wholly irrelevant whether plaintiffs were aware of the limits that were actually procured” and stated that issues like proximate cause and foreseeability “should generally be resolved by the fact finder.”  As such, summary judgment was denied.

Judge Smith dissented, agreeing with the majority that the issue was about special relationships, but finding that no such relationship existed.  He found that despite the fact that the plaintiff solicited advice when she moved her business and renewed her coverage, plaintiff never actually received advice from the defendant.  Judge Smith emphasized that while the defendant did not have great client service, this was not a reason to classify the plaintiffs interaction with them as a special relationship.  Furthermore, he discussed policy reasons against blaming insurance agents, including the fact that brokers earn very "modest" commissions and should not be made to be "back-up insurers" for their clients' losses.