Duty to Defend.  DECISION OF INTEREST.  Insured sued its insurer under a CGL policy for defense costs incurred in an underlying action by an employee of the insured that was allegedly sexually assaulted by another employee while on the job.  Although the complaint did not assert a claim for negligent supervision, the court held that the duty to defend was triggered based on Fitzpatrick because the complaint contained facts sufficient to put the insurer on notice of such a claim, e.g., that the plaintiff employee had complained about sexual harassment days before the assault, and no action was taken.  Court also finds that plaintiff’s withdrawal of a second complaint containing a claim for negligent supervision, but based on the same facts as the first complaint, should have put the insurer on notice that the first complaint contained facts that might give rise to a negligent supervision claim.  Court also finds that the policy’s employer’s liability exclusion does not apply since sexual assault did not arise out of plaintiff’s employment.  NWL Holdings, Inc. v. Discover Prop. & Cas. Ins. Co., 2007 WL 949784 (E.D.N.Y. March 30, 2007).

SUM Arbitration.  DECISION OF INTEREST.  In insurer’s action to permanently stay SUM arbitration on grounds that insured breached the policy’s notice and proof of claim conditions, Second Department reverses trial court’s order granting insurer’s petition where insured failed to submit proffered proof of claim forms, but did promptly provide written notice of the accident, an application for no-fault benefits, a sworn police accident report, and authorizations to obtain medical records.  Court finds insurer demonstrated no prejudice stemming from insured’s failure to submit the proffered proof of claim form.  Second Department holds that the notice of claim exception to the no-prejudice rule should be extended to apply to the proof of claim.  Second Department holds that showing of prejudice is required where insured’s notice was sufficient to promote the policy objective of curbing fraud and collusion and insurer should not be allowed a windfall where it undertook an investigation and required insured to undergo medical examinations.  New York Cent. Mut. Ins. Co. v. Ward, 2007 WL 926473 (2d Dept. March 27, 2007).  

Fraud/First-Party Property.  First Department affirms summary judgment in favor of insurer in a restaurant’s claim for property damage coverage.  Court finds insured’s proof of loss included duplicative items, items in which it had no insurable interest, and expenses in connection with debris removal that were not incurred.  Court finds that even counting such items, value of the claim was only $275,000, and that the remaining $400,000 of the claim was unaccounted for and unexplained.  Court finds disparity between claim and actual loss so wide as to raise an unrebutted presumption of fraud.  Court also rejects insured’s attempt to blame its public adjuster, noting adjuster submitted proof of loss within the scope of agency, and that insured signed the proof of loss.  Court also finds insured breached its duty of cooperation.  Latha Restaurant Corp. v. Tower Ins. Co., 2007 WL 764486 (1st Dept. March 15, 2007).

Discovery of Claim Information.  Fourth Department affirms lower court’s order directing insurer to produce a claims representative for deposition, and to produce its claim file up until the date the insurer sent its disclaimer.  Cain v. New York Central Mut. Fire Ins. Co., 830 N.Y.S.2d 685 (March 16, 2007).

Deceptive Business Practices.  Insured under a homeowners policy with an extended replacement cost feature sued insurer and affiliated companies in a putative action for breach of contract, violation of the Insurance Law’s nonrenewal notice statute (§ 3425), deceptive business practices under General Business Law § 349, and unjust enrichment.  Insured’s claims were premised on a policy feature under which premiums and coverage increased in relation to inflation upon every renewal.  Court grants insurer’s motion in its entirety, dismissing insured’s suit.  Court finds actual language of policy was not breached, and that insured voluntarily paid his increased renewal premiums and derived the benefit therefrom.  Court finds insured failed to plead a § 349 claim since the policy feature was for his protection.  Court refers to Superintendent of Insurance advisory opinions to find the nonrenewal notice statute does not apply to policies such as the one at issue.  Spagnola v. The Chubb Corp., 2007 WL 927198 (S.D.N.Y. March 27, 2007).

Site Development Exclusion/Bad Faith.  Insured, a developer of a commercial real estate parcel in downtown Washington, D.C., sued its insurer for the costs of remediation necessitated by the discovery of numerous USTs.  Insured contended that it purchased the policy for the precise purpose of having coverage for the discovery of unknown USTs.  Insurer disclaimed based on a “Site Development Exclusion” that applied to “known” pollution conditions, which the insurer contends includes all petroleum hydrocarbons.  The insured argued that the word “known” requires that it had knowledge of the specific USTs before the policy was issued; the insurer argued that buried petroleum hydrocarbons – discovered or not – were a “known” risk that is excluded.  Insurer moved to dismiss.  The court found both interpretations reasonable, and therefore that the exclusion is ambiguous.  Court therefore denies motion to dismiss, but does not reach the question of whether the insured would prevail on a motion for summary judgment.  Court finds New York does not recognize an action for bad faith denial of coverage, and grants that part of the insurer’s motion.  D.C. USA Operating Co., LLC v. Indian Harbor Ins. Co., 2007 WL 945016 (S.D.N.Y. March 27, 2007).

Fraud/RICO.  Court adopts finding of magistrate judge denying defendants’ motion to dismiss in a fraud and RICO claim by Liberty Mutual.  Defendants were various individuals and entities that Liberty Mutual claims engaged in a fraudulent scheme to obtain insurance for an urban taxi and livery service by falsely representing that the insureds were operating a rural school bus service.  Liberty Mutual claims defendants fraudulently avoided $6 million in premiums.  Court finds Liberty Mutual adequately pled its RICO and fraud claims.  Liberty Mut. Ins. Co. v. Blessinger, 2007 WL 951905 (E.D.N.Y. March 27, 2007).

Additional Insured Status.  In an action by municipality against insurer for a defense and reimbursement of litigation costs as an additional insured under policy issued to contractor, First Department affirms order denying the renewal of insurer’s summary judgment motion and declaring that insurer was obligated to provide additional insured coverage where the stipulation discontinuing the underlying personal injury action against contractor was not dispositive of insurer’s duty to defend municipality as an additional insured because stipulation did not preclude underlying plaintiffs from bringing suit against municipality.  The City of New York v. Zurich American Ins. Co., 2007 WL 1017178 (1st Dept. April 5, 2007). 

Contractual Indemnification.  In a construction injury action, First Department affirms order granting summary judgment in favor of sub-subcontractor dismissing subcontractor’s claim for contractual indemnification.  The First Department holds that language in the purchase order between the parties requiring sub-subcontractor to receive, distribute, and install all work in accordance with the attached trade subcontract did not incorporate the indemnification provisions of the trade contract into the purchase order.  Iberico Goncalves v. 515 Park Avenue Condominium, 2007 WL 1017370 (1st Dept. April 5, 2007). 

Contractual Indemnification.  In a breach of contract and warranty action arising from allegedly defective construction, First Department reverses judgment that dismissed all of a housing complex’s claims against a plumbing subcontractor, and reinstates the claims.  Housing complex was assigned the claims by the developer as one part of a settlement with the developer.  Plumbing subcontractor failed to establish its entitlement to defeat the assignment where it could not show that complex was seeking double recovery.  Court also observes that CPLR § 4545(c) and General Obligations Law § 15-108 are inapplicable to contractual indemnification actions.  Promenade v. Schindler Elevator Corp., 2007 WL 968177 (1st Dept. April 3, 2007).

Direct Actions/Bankruptcy of Insured.  In an action for bodily injuries allegedly arising from defective athletic shoes, Second Department reverses trial court’s order dismissing the complaint against sneaker manufacturer on the ground of discharge in bankruptcy where plaintiff was pursuing the action against the manufacturer in order to obtain a judgment or settlement so as to be able to proceed directly against the manufacturer’s liability insurer under Insurance Law 3420.  Such an action is permitted even after a discharge in bankruptcy, thus the complaint against the manufacturer should not have been dismissed.  Pomerantz v. In-Stride, Inc., 2007 WL 1017016 (2d Dept. April 3, 2007). 

Resident Relative Exclusion.  In an action seeking a declaration that insured was entitled to a defense and indemnity in an underlying action for bodily injuries occurring after insured’s step-grandniece was exposed to lead paint, Second Department affirms trial court’s order denying insured’s motion for summary judgment where policy excludes from coverage “bodily injury to you, and if residents of your household, your relatives, and persons under the age of 21 in your care or in the care of your resident relative,” on grounds that insurer was entitled to conduct discovery before summary judgment could be granted to the plaintiff.  Korson v. Preferred Mutual Ins. Co., 2007 WL 1018140 (2d Dept. April 3, 2007). 

Independent Adjuster Liability.  In an action against insurer and an independent adjuster alleging fraud, negligence, and negligent misrepresentation after insured incurred expenses to replace a defective radiant heating system, Third Department affirms trial court’s refusal to dismiss negligent misrepresentation claim against adjuster where insured established the existence of a relationship between the insured and the adjuster that approached that of privity.  Insured relied upon adjuster’s expertise, insured accepted adjuster’s representation that insurer would provide coverage for all property losses, and insured followed adjuster’s instructions to replace the heating system with an equally expensive system.  Ryan v. Preferred Mutual Ins. Co., 2007 WL 1018140 (3d Dept. March 29, 2007). 

SUM Arbitration.  In insurer’s action to permanently stay arbitration of an uninsured motorist claim on grounds that the statute of limitations barred insured’s demand for arbitration made more than six years after the accident, the court denies insurer’s application where insured’s action accrued on the date when underlying defendant’s insurer successfully disclaimed coverage, not on the date of the accident, since there could be no demand for uninsured motorist benefits until after such a determination was made.  Preferred Mutual Ins. Co. v. Rand, 2007 WL 939855 (Sup. Ct. Richmond Co. March 28, 2007). 

SUM Arbitration.  In insurer’s action to permanently stay SUM arbitration on grounds that the phantom vehicle involved in subject accident was insured under rental agency’s policy, court denies insurer’s petition and directs arbitration to proceed where Pennsylvania law dictates that rental agency could not be vicariously liable where renter of phantom vehicle declined to purchase insurance coverage.  Progressive Northeastern Ins. Co. v. Ramnarain, 2007 WL 949427 (Sup. Ct. Queens Co. March 28, 2007). 

SUM Arbitration.  In insurer’s action to permanently stay SUM arbitration on grounds that accident did not involve an uninsured vehicle, court grants insurer’s petition and holds that letter from the New York State Liquidation Bureau advising that the Public Motor Vehicle Liability Security Fund is “financially strained,” without more, did not constitute a denial of coverage within the meaning of Insurance Law § 3420(f)(1) where financial documents demonstrated that, despite some delay, allowed claims were being paid.   Progressive Ins. Co. v. Elias, 2007 WL 949434 (Sup. Ct. Queens Co. March 28, 2007). 

Notice of Occurrence.  In an action seeking a declaration that insured was entitled to defense and indemnity in two underlying personal injury actions, Second Department reverses trial court’s denial of insurer’s motion for summary judgment where insurer established its prima facie entitlement by demonstrating that it did not receive timely notice of occurrence and insured failed to provide an adequate excuse for the six-month delay.  In a decision with little analysis, insured’s asserted belief that they could not be held liable was held unreasonable as a matter of law.  Natural State Industries, Inc. v. Utica Nat. Assur. Co., 2007 WL 926405 (2d Dept. March 27, 2007). 

First-Party No-Fault.  Second Department affirms denial of provider’s motion for summary judgment where, in response to provider’s prima facie showing of entitlement to summary judgment, insurer submitted hospital records and other materials that raised an issue of fact as to whether patient’s treatment was unrelated to the motor vehicle accident.   Montefiore Medical Center v. Nationwide Mut. Ins. Co., 2007 WL 926507 (2d Dept. March 27, 2007).

First-Party No-Fault.  In an action to recover assigned first-party no-fault benefits, court affirms an order denying insurer’s motion for summary judgment dismissing provider’s complaint on grounds that provider failed to show that the assignor was a “qualified person” where regulations require that insurer pay or deny a claim within thirty days of receipt of claim, regardless of whether the claimant has been deemed a “qualified person.”  GMV Medical Supplies, Inc. v. MVAIC, 2007 WL 926348 (Sup. Ct. App. Term March 26, 2007). 

First-Party No-Fault.  In an action to recover assigned first-party no-fault benefits, court affirms trial court’s order denying summary judgment in favor of provider where insurer’s affidavits submitted in opposition to provider’s motion sufficiently established the timely mailing of the verification requests and denial of claim form by describing in detail the standard office practice and procedure for ensuring proper mailing and addressing.  Fair Price Medical Supply Corp. v. Clarendon Nat. Ins. Co., 2007 WL 966754 (Sup. Ct. App. Term March 30, 2007). 

First-Party No-Fault.  In an action to recover assigned first-party no-fault benefits, court reverses trial court’s order denying summary judgment in favor of provider where insurer failed to submit affidavits in opposition to provider’s motion that were based upon personal knowledge to show the timely mailing of the verification requests.  Impulse Chiropractic, P.C. v. Kemper Ins. Co., 2007 WL 987011 (Sup. Ct. App. Term March 28, 2007).  See also Delta Diagnostic Radiology, P.C. v. Liberty Mut. Ins. Co., 2007 WL 987013 (Sup. Ct. App. Term March 28, 2007) (affirming the denial of provider’s summary judgment motion despite insurer’s conclusory affidavits where provider failed to make a prima facie showing of entitlement to summary judgment).   

First-Party No-Fault.  Summary judgment in favor of provider reversed where motion was premised on the affidavit of provider’s attorney, which was not made on personal knowledge of the facts.  Fact insurer sent denials established that insurer received claim forms, but did not concede admissibility of the forms or the facts set forth therein.  Ontario Medical, P.C. v. Sea Side Medical, P.C., 2007 WL 926349 (Sup. Ct. App. Term March 26, 2007).

First-Party No-Fault.  Court dismisses provider’s appeal of an order granting insurer’s motion to compel a deposition of a treating physician.  Court also affirms denial of provider’s motion for summary judgment where corporate officer’s affidavit was insufficient to establish personal knowledge of provider’s practices and procedures to lay a foundation for the admission of provider’s documents as business records.  Dan Medical, P.C. v. New York Central Mut. Ins. Co., 2007 WL 926352 (Sup. Ct. App. Term March 26, 2007).

First-Party No-Fault.  Court reverses summary judgment in favor of provider where corporate officer’s affidavit was insufficient to establish personal knowledge of provider’s practices and procedures to lay a foundation for the admission of provider’s documents as business records.  Capri Medical, P.C. v. Allstate Ins. Co., 2007 WL 926353 (Sup. Ct. App. Term March 26, 2007); Delta Diagnostic Radiology, P.C.  v. Allstate Ins. Co., 2007 WL 926360 (Sup. Ct. App. Term March 26, 2007) (affirming denial of summary judgment); W.H.O. Acupuncture, P.C. v. Allstate Ins. Co., 2007 WL 926361 (Sup. Ct. App. Term March 26, 2007) (affirming denial of summary judgment); Vista Surgical Supplies, Inc. v. Nationwide Mut. Ins. Co., 2007 WL 926362 (Sup. Ct. App. Term March 26, 2007) (reversing summary judgment); All Mental Care Medicine, P.C. v. Travelers Indem. Co., 2007 WL 926366 (Sup. Ct. App. Term March 26, 2007) (affirming denial of summary judgment); Fair Price Medical Supply Corp. v. Allstate Ins. Co., 2007 WL 926369 (Sup. Ct. App. Term March 26, 2007) (affirming denial of summary judgment).

First-Party No-Fault.  Court affirms insurer’s motion to dismiss after provider failed to produce an employee for deposition in compliance with a court order to do so.  IVB Medical Supply, Inc. v. New York Central Mut. Fire Ins. Co., 2007 WL 936357 (Sup. Ct. App. Term March 26, 2007).

First-Party No-Fault.  Court affirms lower court’s denial of provider’s motion for default judgment against a nonappearing insurer where corporate officer’s affidavit was insufficient to establish personal knowledge of provider’s practices and procedures to lay a foundation for the admission of provider’s documents as business records.  All Mental Care Medicine, P.C. v. Allstate Ins. Co., 2007 WL 926355 (Sup. Ct. App. Term March 26, 2007).