First Department Affirms Finding That Plaintiff Was Not Engaged In A Labor Law § 240(1) Enumerated Activity

In Royce v. DIG EH Hotels, LLC, the plaintiff, a lighting engineer, fell from a ladder while replacing a "gel" that altered the color of light on a temporary lighting stand. Plaintiff's work involved delivering and assembling audiovisual and lighting equipment in a hotel ballroom.  Once the event for which the equipment was needed had concluded, plaintiff would then  be responsible to remove that equipment. It is notable that the fixture on which plaintiff was working was secured to the floor by sandbags.

Plaintiff commenced an action against the defendants asserting, in part, an alleged violation of Labor Law § 240(1). The Supreme Court granted the defendants' motion to dismiss that claim and plaintiff appealed. On appeal, the First Department affirmed.  The Court found that there was no evidence that any of plaintiff's work "altered" or caused a substantial physical change to the building, as required by the Labor Law. Therefore, plaintiff was not engaged in a Labor Law enumerated activity when he was injured and his section 240(1) claim against the defendants was properly dismissed.

Second Department Finds That Workers' Compensation Board Determination Could Not Be Used As Collateral Estoppel And Also Reinstates Jury's Award of Total Disability Despite Testimony From Plaintiff's Physicians That Plaintiff Was Employable

In separate decisions in Kowalsky v. County of Suffolk, the Second Department affirmed a judgment against the defendants in the principal sum of $5,387,591.36, which included $200,000 for past pain and suffering, $850,000 in future pain and suffering for 41 years and $4,038,000 in economic damages, and modified the partial granting of defendants' post trial motion regarding plaintiff's claims for economic damages, by reinstating the jury's awards.

Plaintiff was injured in an accident when he was struck by a vehicle owned by the County of Suffolk and Suffolk County Department of Parks, Recreation & Conservation.  At trial, the defendants moved to preclude plaintiff from offering evidence regarding surgery to his lumbar spine.  The defendants argued that plaintiff was collaterally estopped from offering such evidence on the basis that the Workers' Compensation Board had denied plaintiff's request for surgery on the basis of its examining physician who recommended that the plaintiff be evaluated by an independent spine surgeon or neurosurgeon before he rendered a determination as to whether the surgery was necessary.

The Supreme Court denied the motion and during trial plaintiff offered evidence that he underwent a laminectomy and spinal fusion surgery at L4-5. The plaintiff further offered evidence that he required a pain management regimen involving methadone and Flexeril. The side effects of these medications included sedation, cognitive impairment, and difficulty handling power tools. His physicians further testified that plaintiff could not return to his job as a Verizon technician and the side effects of his pain medication made it difficult for him to maintain any employment. 

By contrast, the defendants presented the testimony of a vocational expert who testified that there were jobs that the plaintiff could do with his disability, which would pay in the range of $30,000 to $40,000 per year. 

On the defendants' appeal from the judgment, the Second Department affirmed the denial the defendants' motion to preclude the plaintiff from submitting evidence regarding the surgery to his lumbar spine.  The Court observed that "[t]he quasi-judicial determinations of administrative agencies are entitled to collateral estoppel effect where the issue a party seeks to preclude in a subsequent civil action is identical to a material issue that was necessarily decided by the administrative tribunal and where there was a full and fair opportunity to litigate before that tribunal" (Auqui v Seven Thirty One Ltd. Partnership, 22 NY3d 246, 255, citing Jeffreys v Griffin, 1 NY3d 34, 39). Here, the defendants failed to establish an identity of issue. The Second Department also found that the defendants were properly precluded from introducing, at trial, the determination of the Workers' Compensation Board.

In the related decision on the separate appeals from the defendants' post-trial motion, the Second Department also found that the Supreme Court should not have reduced the jury's awards for economic damages. The Court found that the assumption by plaintiff's economist that plaintiff could no longer work in any capacity was supported by the testimony of the plaintiffs' physicians that the side effects of his pain medication limited his employment possibilities. The Court also found that although the defendants' vocational expert testified that there were jobs that the plaintiff could perform, this created an issue of fact for the jury to decide.

Recent Second Department Decision Reminds Us That the Granting of an In Limine Motion is Not Appealable, But Such Issues Can Be Raised on Appeal From A Subsequent Judgment

In Shanoff v. Golyan, on the eve of trial the Supreme Court granted the defendants' motions in limine to preclude plaintiff from offering certain evidence against the defendants regarding the post-operative care of plaintiff's decedent. Ultimately, the Supreme Court granted summary judgment to those defendants and plaintiff appealed the summary judgment order. Judgment was also entered in favor of the defendants and plaintiff appealed that as well. 

On appeal from the judgment, the Second Department considered the issues that were raised on the in limine motions. The Court specifically noted that plaintiff could not have appealed from the order granting the motions in limine because that order concerned evidentiary rulings which are not appealable, either as of right or by permission (see CPLR 5701). However, the issues raised in that order were properly brought up for review and were considered on the appeal from the judgment (see CPLR 5501[a][1]). On the merits, the Court then reversed the judgment, denied the motions and reinstated the plaintiff's complaint. 

First Department Grants Change of Venue Where Defendant Corporation Designated New York County As Its Principal Place of Business

In Crucen v. Pepsi-Cola Bottling Co. of NY, although the accident occurred in Westchester County where plaintiff resides, the plaintiff commenced his action in the Bronx. The defendant, a foreign corporation, had filed its application for authorization to do business in New York with a designation of New York County as its principal place of business. As such, the defendant sought to change venue to Westchester, but its motion was denied. On appeal, the First Department reversed and granted the motion. The Court found that, even if the defendant did not have an office in New York County, its designation of New York County in filings with the Secretary of State was controlling for venue purposes.   

Second Department Allows Amendment of Complaint to Add Spouse's Derivative Claim Despite Unexplained Delay in Seeking Amendment

In Garafola v. Wing Inc. Specialty Trades, the plaintiff was allegedly injured in an accident at a construction site. He commenced an action against the defendants and two years later sought to add a derivative claim on behalf of his wife. The Supreme Court denied plaintiff's motion, however, because he had failed to explain his two year delay in seeking amendment. On appeal, the Second Department reversed and granted the plaintiff's motion. Substituting its discretion for that of the trial court, the Appellate Division found that the defendants were not prejudiced by the amendment because the same theory of liability applied to both the plaintiff's claim and his spouse's derivative claim, and not much additional discovery was needed. Therefore, the Appellate Division held that mere lateness in seeking the amendment was not a basis to deny the plaintiff's motion.  

Second Department Affirms Finding of Question of Fact Regarding Enforceability of Release Signed by Plaintiff

In Pacheco v. 32-42 55th Street Realty, LLC, the plaintiff was allegedly injured in a fall from a scaffold at a construction site. He commenced an action against the defendants alleging violations of Labor Law §§ 200 and 240(1). The defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(5) on the basis that the action was barred by a general release. Plaintiff opposed the motion and cross-moved to preclude the defendants from asserting the general release as an affirmative defense. The Supreme Court denied both motions and the parties appealed.

On appeal, the Second Department affirmed the denial of the defendants' motion. The Court found that the defendants had submitted a general release executed by the plaintiff, which barred the action against them. The Court further found, however, that plaintiff's allegations were sufficient to support a possible finding that the defendants had procured the release through fraud or that the release was signed by plaintiff "under circumstances which indicate unfairness."  

The Second Department also affirmed the denial of plaintiff's cross motion. The Court found that the plaintiff had demonstrated that the release was unenforceable due to fraud in the procurement and on the ground that it was not fairly and knowingly made. The Court further found, however, that the defendants had submitted evidence controverting plaintiff's account of how the release came to be signed. These submissions raised a triable issue of fact as to whether the release was enforceable.

Court of Appeals Decides Issues of Allocation Over Multiple Policy Periods, Vertical Exhaustion and Antisubrogation

This week has been a busy week for the Court of Appeals regarding insurance coverage issues. The High Court decided two cases involving complex coverage claims. In the Matter of Viking Pump, the Court of Appeals clarified its position regarding allocation of coverage for asbestos exposure claims over multiple policy years involving multiple insurers, as well as whether "vertical exhaustion" is necessary to trigger next-level excess coverage -- finding that allocation is dependent upon the policy language and only "vertical exhaustion" is necessary to trigger excess coverage. In Millennium Holdings LLC v. The Glidden Company, the Court of Appeals again clarified a position, this time regarding the antisubrogation doctrine -- finding that antisubrogation does not apply when the subject parties were not both insured under the same policy.

In the Matter of Viking Pump, the Court of Appeals was asked to consider whether "all sums" or "pro rata" allocation applied to excess insurance policies that followed form over primary policies with a "non-cumulation" provision or a "non-cumulation and prior insurance" provision, i.e. "anti-stacking" provisions. The provisions at issue provided that "[if] the same occurrence gives rise to personal injury... which occurs partly before and partly within any annual period of this policy, the each occurrence limit and the applicable aggregate limit or limits of this policy shall be reduced by the amount of each payment made by [the insurer] with respect to such occurrence" and "if any loss covered hereunder is also covered in whole or in part under any other excess Policy issued to the [Insured] prior to the inception date hereof [,] the limit of liability hereon... shall be reduced by any amounts due to the [Insured] on account of such loss under such prior insurance." At issue were asbestos exposure claims spanning 13 years of insurance coverage.

The Court initially observed that "Courts across the country have grappled with so-called 'long-tail' claims - - such as those seeking to recover for personal injuries due to toxic exposure and property damage resulting from gradual or continuing environmental contaminations - - in the insurance context." The Court further observed that there are typically two methods for allocating such claims, the "all sums," i.e. joint-and-several approach or "pro rata" allocation. Under the "all sums" approach, the insured can collect its total liability, up to the policy limits, from any one policy in effect during the period that the damage occurred (Roman Catholic Diocese of Brooklyn v National Union Fire Ins. Co. of Pittsburgh, Pa., 21 NY3d at 154, quoting Consolidated Edison, 98 NY2d 208, 222 [2002]; see United States Fid. & Guar. Co. v American Re-Ins. Co., 20 NY3d 407, 426 [2013]). The burden would then shift to that insurer to seek contribution from the remaining insurers who insured the loss. Under the "pro rata" allocation method, the Court of Appeals indicated that "each insurance policy is allocated a 'pro rata' share of the total loss representing the portion of the loss that occurred during the policy period (see Roman Catholic Diocese of Brooklyn, 21 NY3d at 154; Consolidated Edison, 98 NY2d at 223). Generally, '[p]roration of liability among the insurers acknowledges the fact that there is uncertainty as to what actually transpired during any particular policy period' in claims alleging a gradual and continuing harm (Consolidated Edison, 98 NY2d at 224)."

Although the Court of Appeals had previously adopted pro rata allocation in Consolidated Edison, the Court stated that it never adopted a blanket rule that pro rata allocation was always the proper method. Instead, the Court observed in Consolidated Edison that the insurance contract at issue, when enforced as written, permitted such allocation.

Here, however, the Court found that the non-cumulation and prior insurance provisions were specifically "designed to prevent any attempt by policyholders to recover under a subsequent policy - - based on the broader definition of occurrence - - for a loss that had already been covered by the prior 'accident-based' policy." As such, the Court stated, "it would be inconsistent with the language of the non-cumulation clauses to use pro rata allocation here. Such policy provisions plainly contemplate that multiple successive insurance policies can indemnify the insured for the same loss or occurrence by acknowledging that a covered loss or occurrence may 'also [be] covered in whole or in part under any other excess [p]olicy issued to the [Insured] prior to the inception date' of the instant policy."

"By contrast, the very essence of pro rata allocation is that the insurance policy language limits indemnification to losses and occurrences during the policy period -- meaning that no two insurance policies, unless containing overlapping or concurrent policy periods, would indemnify the same loss or occurrence. Pro rata allocation is a legal fiction designed to treat continuous and indivisible injuries as distinct in each policy period as a result of the 'during the policy period' limitation, despite the fact that the injuries may not actually be capable of being confined to specific time periods. The noncumulation clause negates that premise by presupposing that two policies may be called upon to indemnify the insured for the same loss or occurrence."

With respect to "vertical exhaustion," the Court of Appeals examined the policies at issue and found that there was no language that required the horizontal exhaustion of all available primary insurance before any excess insurance could be obligated to contribute. Instead, each next-level excess insurer would be obligated to contribute once the specific policy underlying its coverage was exhausted. Therefore, under the circumstances, only "vertical exhaustion" was required.

In Millennium Holdings LLC v. The Glidden Company, after numerous mergers and buyouts, the parties, Millennium and ANP, ended up insured under different policies. After Millennium settled underlying lead paint litigation for $8.5 million, with $3 million in contribution from ANP, Millennium's insurers sought to subrogate Millennium's indemnification claim against ANP. The Supreme Court, as affirmed by the Appellate Division, held that the insurers' subrogation claim was barred by the antisubrogation doctrine. Although the lower courts recognized that Millennium and ANP were not insured under the same policies, they nevertheless found that, because the risk insured against was the same, antisubrogation applied.

In reversing the lower courts, the Court of Appeals clarified its earlier holding in Jefferson Ins. Co. v. Travelers Indem. Co. (92 NY2d 363, 373 [1998]).  In Jefferson, the Court found that antisubrogation applied despite the fact that the party against whom indemnity was sought was not expressly covered under the same policy as the party seeking indemnification. More specifically, indemnification was sought from the permissive user of a vehicle, where that user was not otherwise a named insured or additional insured under the policy. The Court of Appeals observed, however, that the permissive user qualified as an insured pursuant to the terms of the policy.

In sum, the Court stated: "The antisubrogation rule, therefore, requires a showing that the party the insurer is seeking to enforce its right of subrogation against is its insured, an additional insured, or a party who is intended to be covered by the insurance policy in some other way, such as the permissive user in Jefferson."  As such, the antisubrogation doctrine did not prohibit Millennium's insurers from pursuing Millennium's indemnity claim against ANP.