Court of Appeals Supports Renewal of Annual Aggregate Limits Under Excess Policies

In Union Carbide Corp. v. Affiliated FM Ins. Co., Union Carbide had purchased primary and excess insurance involving multiple layers of coverage spread across multiple insurers up to at least $100 million in coverage. The primary policy covered UCC up to $5 million, with the policy aggregate limit being applicable to a 12 month policy period despite the fact that the policy was written for a three year period. UCC, an asbestos producer, was compelled to pay over $1.5 billion in defense, settlement and judgment costs for claims asserted over the applicable policy period.

At issue on this appeal was the fifth layer of excess, between $70 and $100 million, which was insured by six carriers at $5 million each. The fifth layer excess carriers insured UCC on a "follow-the-form" basis subject to the Declarations of the primary policy. In holding that the annual aggregate for each insurer, $5 million, renewed annually as did the primary insurer's aggregate limit, the Court found that the "follow-the-form" clause "serve[s] the important purpose of allowing an insured, like UCC, that deals with many insurers for the same risk to obtain uniform coverage, and to know, without a minute policy-by-policy analysis, the nature and extent of that coverage."

The Court declined to find as a matter of law, however, that, with respect to one of the excess carriers, a two-month extension of its policy period exposed the carrier to a fourth annual aggregate, thus leaving the issue open to be decided on motion or at trial.

Additional Insured Endorsement Covering Work Performed By Named Insured For Additional Insured Does Not Insure Lessor Under Lessee's Policy

In Admiral Ins. Co. v. Joy Contractors, Inc., a tower crane operated by Joy Contractors Inc. that had been leased from New York Crane, collapsed during the construction of a high-rise condominium project, resulting in the deaths of seven people. Joy was insured for the project under a Commercial General Liability (CGL) policy issued by Lincoln General Ins. Co. and an excess liability policy issued by Admiral Ins. Co.

New York Crane sought additional insured coverage from Lincoln and Admiral under an additional insured endorsement which provided that "all insureds shown in a written contract, or agreement. . ." are additional insureds, "but only with respect to liability . . . caused . . . by [Joy's] acts or omissions; or . . . [t]he acts or omissions of those acting on [Joy's] behalf; in the performance of [Joy's] ongoing operations for the additional insured(s)" (emphasis added).

In affirming the denial of coverage to New York Crane, the First Department rejected the contention that "Joy's contractual obligation to follow industry standards in its operation of the crane leased to it by New York Crane transformed Joy into a party working 'for' or 'on behalf' of New York Crane. Plainly, the parties had a lessor/lessee relationship, which could have been insured by an appropriate endorsement, such as one for leased equipment (see e.g. Westchester Fire Ins. Co. v Continental Cas. Co., 2006 WL 786866, 2006 Minn App Unpub LEXIS 274 [Minn App 2006])."

Fall From A Height Held Not to Be Labor Law 240(1) Related Because Plaintiff Was Not Hired To Perform Elevation-Related Tasks

In Simoes v. City of New York, the plaintiff was working as a flagman directing traffic at a renovation project. A manlift being used in the course of the renovations malfunctioned. As such, it was driven to a nearby vacant lot. Significantly, however, the manlift was unable to ascend the curb next to the lot, so "plaintiff climbed up the boom and into the aerial basket in an attempt to use the controls in the basket to negotiate the manlift over the curb. Moments later, a foreman drove another vehicle toward the manlift in an attempt to push it into the lot. When that vehicle made contact with the manlift, the manlift fell over with plaintiff still within the aerial basket."

In a unanimous opinion, the First Department affirmed the dismissal of plaintiff's Labor Law § 240(1) claim, holding that plaintiff "was not protected by the statute since his duties as a flagman did not entail elevation-related risks"(citing Rocovich v Consolidated Edison Co., 78 NY2d 509, 514 [1991]; Modeste v Mega Constr. Inc., 40 AD3d 255 [2007]; Jamison v County of Onondaga, 17 AD3d 1142, 1143 [2005]).

Managing Agent Exposed to Potential Liability For Lead Paint Condition

In Ortiz v. Gun Hill Mgt., Inc., the First Department affirmed a finding of questions of fact with respect to the scope and extent of a managing agent's control over the property, which if "complete and exclusive" could render the agent liable for failing to abate a lead-based paint condition that allegedly injured the infant plaintiff. More specifically, the Court found that contract language giving the agent "complete and unfettered authority to undertake all repairs costing less than" $2,000, as well as the repair of any condition it deemed an emergency, could give rise to a finding of control.

The Court also found that issues of fact existed as to whether the agent could be held liable to plaintiffs for its alleged affirmative acts of negligence (again, assuming a finding of exclusive control). The Court observed that the agent purportedly failed to timely or adequately remedy the condition despite plaintiff's repeated complaints for several years. In addition, the agent did not move the infant plaintiff into another apartment until two months after the Department of Health and Mental Hygiene had found 10 lead-based paint violations.

Helpful Practice Tip: Remember to Object to Jury Verdict Sheet When Necessary

Also in Aguilar v. New York City Transit Authority, the trial court took into consideration the extensive proof of plaintiff's psychological trauma, to recommend that the jury verdict sheet include an itemization of damages for past and future mental pain and suffering as well as past and future physical pain and suffering. The defendant failed to object, but apparently raised the novelty of this practice as an issue on appeal. In declining to consider the issue, the First Department held that "[b]ecause defendants failed to object to the errors in the verdict sheet, the charge became the law applicable to the determination of the case." Moreover, the Court also observed that the error in the charge was not so fundamental as to prevent the jury from fairly considering the issues at trial.

Recent Pain and Suffering and Loss of Consortium Awards For Leg Amputation

In Aguilar v. New York City Transit Authority, the First Department described the accident and injuries involving the plaintiff as follows: "Plaintiff, a 45-year-old married mother of three, was hit by a bus, dragged along the street and remained under the bus for some time while rescuers attempted to free her. As a result of the accident, her left leg was amputated above the knee and her right leg was rendered, essentially, useless. Plaintiff underwent 10 surgeries, had numerous setbacks and suffers from post-traumatic stress disorder and severe depression. She depends on others for the most basic of care, and because of complications from her prosthesis and residual pain from the accident, she has been unable to engage in relations with her husband."

The jury awarded the plaintiff $8 million for 3.7 years of past pain and suffering and $8 million for 32.6 years of future pain and suffering. The jury awarded the husband $1 million each for past lost services and future loss of services. On appeal, the First Department conditionally reduced the awards to $5 million for past pain and suffering, $5 million for future pain and suffering, and $500,000 for past loss of services, thereby affirming the future loss of services award of $1 million.

Missing Drain Cover Not A Structural Defect

In Harris v. Trustees of Columbia University, the First Department held that a missing drain cover is not a structural defect for purposes of imposing liability upon an out-of-possession landowner who retains the right of re-entry to its premises. The Court also held that Building Code provisions pertaining to load-bearing floors were inapplicable to plaintiff's claim, since the provisions were intended to protect against a harm not suffered by plaintiff.