Property Adjustment – Insurer Liability.  DECISION OF INTEREST.  In an action by homeowners against homeowners insurer and contractors for alleged bodily injury and property damage arising from remediation of their home following a fire loss, court denies insurer’s motion for summary judgment and rejects insurer’s argument that it cannot be held liable for damages caused by the negligent services of independent contractors.  Where evidence was submitted indicating that insurer directed contractor to bring in ozone generators, suggested a second cleaning crew, and instructed contractor to remove attic insulation and contents, issue of fact existed regarding whether insurer exercised a degree of control over the contractors that warranted the imposition of liability.  Issue of fact also existed as to whether remediation work was of an inherently dangerous nature that would give rise to another exception to the general rule that employers are not liable for negligence of independent contractors.  Court also denies motion to dismiss plaintiffs’ action for breach of the insurance policy.  O’Brien v. Citizens Ins. Co. of America, 2007 WL 2284689 (Sup. Ct. Suffolk Co. August 6, 2007).

Contractual Indemnification/General Obligations Law § 5-322.1.  In connection with a Labor Law claim, court denies employer/contractor’s motion for summary judgment dismissing contractual indemnification claims asserted by an equipment lessor.  Court finds the indemnification provision in the lease agreement may be enforceable under General Obligations Law § 5-322.1 in the event the lessor is not found negligent.  Court also rejects argument that “grave injury” requirement applies to contractual indemnification claims.  D’Allessandro v. Lucent Technologies, Inc., 2007 WL 2367778 (Sup. Ct. Richmond Co. August 21, 2007).

Late Notice – Claims-Made Policy.  In a coverage dispute under a claims-made policy procured as part of an OCIP, court grants insurer’s motion for summary judgment where insured failed to provide notice prior to expiration of the policy’s extended reporting period.  Insured provided notice to its broker, but broker’s notice to insurer was outside of the reporting period.  Court rejects argument that insurer undertook the risk of late notice because broker administered the OCIP, finding no proof that broker was insurer’s agent for notice purposes.  Southern New Jersey Rail Group, LLC v. Lumbermans Mut. Cas. Co., 2007 WL 2296506 (S.D.N.Y. August 13, 2007).

Direct Action/Waiver/Estoppel.  Excavation contractor disclaimed coverage for a third-party property damage claim based on insured’s late notice.  Insured defaulted and claimant took a default judgment.  In the ensuing direct action, court grants summary judgment to claimant.  Court finds insurer waived disclaimer for claimant’s late notice where insurer was on notice of the claim and disclaimed based only on the insured’s late notice.  Court also finds insurer waived right to raise material misrepresentation regarding the nature of its insured work since at the time of its disclaimer, insurer knew of the purported misrepresentation.  Court also finds insurer is estopped from raising its defenses.  Court also finds that insurer’s reservation of rights language in the disclaimer is insufficient to prevent waiver where none of the defenses raised by insurer were premised on information discovered subsequent to the reservation of rights.  MCI LLC v. Rutgers Cas. Ins. Co., 2007 WL 2325867 (S.D.N.Y. August 13, 2007).

General Business Law § 349.  In a case involving allegations that insurer harassed customers and a garage based on insurer’s refusal to negotiate labor rates with the garage for insured collision repairs, court denies insurer’s motion to dismiss the garage’s claims under General Business Law § 349.  Court finds that allegations of conduct relating to numerous policyholders sufficiently encompass harm to the public.  Court also finds complaint sufficiently alleges deceptive or misleading practices based on, e.g., alleged violations of claims settlement regulations (i.e., failure to negotiate labor rates in good faith), threatening customers with litigation if they used the garage, and defaming the garage.  Court, however, grants insurer’s motion to dismiss garage’s claim for relief under the federal Declaratory Judgment Act since the determination of a fair and reasonable repair rate does not present an actual case or controversy.  M.V.B. Collision, Inc. v. Allstate Ins. Co., 2007 WL 2288046 (E.D.N.Y. August 8, 2007).

Failure to Pay Premiums/Misrepresentation.  Insurer brought an action against its insured for breach of contract, and intentional and negligent misrepresentation.  Insurer issued a policy to a company that represented it provides airport transportation service out of Shrub Oak, but in actuality operates a for-hire transportation company out of the Bronx.  Insurer also alleged failure to pay premiums.  On insurer’s motion for default judgment, court finds insurer adequately states a claim for relief on all three causes of action, and grants motion.  Liberty Mut. Ins. Co. v. Palace Car Services Corp., 2007 WL 2287902 (E.D.N.Y. August 8, 2007).

UM Coverage – Cancellation/Right of Review.  In an action to permanently stay arbitration of an uninsured motorist claim, Second Department reverses order granting the petition where premium finance agency with power of attorney cancelled alleged tortfeasor’s policy due to his failure to make required payments without advising him that he had a right to have the NYAIP review the policy cancellation.  Court holds that the trial court erred in granting the petition where there was no such notice requirement imposed by statute or NYAIP rule at the time the premium finance company cancelled the policy.  Government Employees Ins. Co. v. Lopez, 2007 WL 2377005 (2d Dept. August 21, 2007).

Insurance Law § 3420(d) – Necessity of Disclaimer.  In deciding a declaratory judgment action with little analysis or factual background, First Department reverses trial court order and grants insurer’s motion to dismiss complaint where insured’s claim fell outside the scope of coverage.  Court holds that where the policy does not contemplate coverage in the first instance, a disclaimer is unnecessary under Insurance Law § 3420(d) and the timeliness of insurer’s notice is irrelevant.  Solomon v. U.S. Fidelity & Guar. Co., 2007 WL 2324250 (1st Dept. August 16, 2007).

Contractual Indemnification.  In a construction injury case, Second Department holds that municipality was not entitled to contractual indemnification from engineer where the subject indemnification provision made engineer liable to indemnify the municipality for injuries arising from the engineer’s acts and omissions in the performance of the agreement.  Where the engineer had only supervisory authority at the work site, and undertook no duty to protect workers at the site, there was no showing of a causal connection between the engineer’s activities and plaintiff’s injuries.  Murray v. City of New York, 2007 WL 2317407 (2d Dept. August 14, 2007).

Earth Movement Exclusion.  In homeowner’s action seeking a declaration that insurer is obligated to reimburse homeowner for property loss resulting from sinking foundation, Second Department reverses trial court’s order granting summary judgment in favor of homeowner on issue of liability.  Court holds that exclusion for losses due to earth movement and settling of foundation clearly and unambiguously applied to homeowner’s property loss, regardless of whether the earth movement was caused by the covered peril of “hidden decay.” Cali v. Merrimack, 2007 WL 2317457 (2d Dept. August 14, 2007).

Arbitration Clause.  In an action brought by customer against mover and insurer of shipped items, court grants insurer’s motion to compel arbitration where customer’s acts of filing a damages claim and asserting a claim for breach of contract established customer’s intent to be bound by the insurance policy containing the arbitration clause.     Sozzi v. Moishe’s Moving Systems, Inc., 2007 WL 2295401 (Sup. Ct. New York Co. August 7, 2007).

Additional Insured Status.  In painter’s bodily injury action arising from a construction accident, court grants order declaring that insurer of painter’s employer was obligated to provide site owner with additional insured coverage where owner submitted a contract between general contractor and painter’s employer that required painter’s employer to procure insurance for the benefit of the site owner.  The contract fulfilled the requirements of the blanket additional insured endorsement where it:  (1) required painter’s employer to name owner as additional insured; (2) was effective during the policy period, and; (3) was executed prior to the bodily injury.  Court rejects insurer’s argument that a contractual liability exclusion barred coverage where the exclusion was inconsistent with and would negate the blanket additional insured endorsement.  Court further rejects insurer’s argument that employee exclusion barred coverage where insurer failed to timely disclaim coverage.  Gofranullah v. 630 Realty, LLC, 2007 WL 2304746 (Sup. Ct. Kings Co. August 10, 2007).