Firm News 9/29/2006

UM Coverage.  Fourth Department affirms trial court’s order granting insurer a permanent stay of arbitration on grounds that claim arising from injuries sustained on an ATV is not within uninsured motorist coverage.  Court observes that ATVs are specifically excluded from the definition of motor vehicles set forth in Vehicle and Traffic Law § 125.  Liberty Mutual Fire Ins. Co. v. Rondina, 2006 WL 2713786 (4th Dept. September 22, 2006).

Notice of Cancellation/SUM.  Fourth Department reverses trial court, and holds that insurer entitled to permanent stay of arbitration of SUM claim.  Court holds that on date of cancellation, platonic roommate resided in insured’s home, had intention to stay indefinitely, and shared cost of vehicle maintenance and insurance.  Policy was therefore not in effect at time of accident pursuant to Vehicle and Traffic Law § 313(3).  Arbitration Between Erie Ins. Co. and Williams, 2006 WL 2713781 (4th Dept. September 22, 2006).

Common Law Indemnification.  Where jury found third-party defendant to be less than 50% at fault, First Department reduces trial court’s award of common law indemnification in favor of owner and general contractor for Labor Law liability to third-party defendant’s 35% share of fault, applying Frank v. Meadowlakes Dev. Corp., 6 N.Y.3d 687 (2006).  McCarthy v. 390 Tower Assocs., LLC, 2006 WL 2691452 (1st Dept. September 21, 2006).

First-Party No-Fault.  Court reduces trial court’s award of no-fault coverage, finding issues of fact regarding insurer’s verification requests, medical necessity defense, and defense of failure to appear for IMEs.  Court sustains that part of award for claims not timely denied and for which insurer failed to submit admissible proof of lack of medical necessity.  Response Medical Equipment v. Gen. Assur. Co., 2006 WL 2707113 (1st Dept. September 20, 2006).

Contractual Indemnification.  First Department affirms trial court’s denial of subcontractor’s motion for summary judgment where subcontractor’s employee sued contractor and contractor sought contractual indemnification from subcontractor.  Where contractor and subcontractor entered into two purchase orders, and only one contained an indemnification clause, an issue of fact existed as to which purchase order applied to the work at issue.  McDonald v. 450 West Side Partners, LLC, 2006 WL 2671341 (1st Dept. September 19, 2006).

Direct Action.  Second Department affirms trial court’s dismissal of underlying plaintiffs’ declaratory judgment action against defendant’s insurer where plaintiffs did not obtain a judgment against the insured which remained unsatisfied for thirty days.  Selchick v. Automobile Ins. Co. of Hartford, 2006 WL 2690305 (2d Dept. September 19, 2006).

Common Law/Contractual Indemnification.  Second Department affirms trial court’s dismissal of plaintiff’s employer’s common law indemnification claim against third-party defendant where any liability on the part of plaintiff’s employer could not be purely vicarious.  Court affirms trial court’s denial of third-party defendant’s motion for summary judgment on contractual indemnification claims against it where issues of fact existed regarding third-party defendant’s negligence.  Kelly v. City of New York, 2006 WL 2691751 (2d Dept. September 19, 2006).

Earth Movement Exclusion.  Second Department reverses summary judgment in favor of insurer and grants summary judgment in favor of insured in action for  coverage for damages to insured’s home resulting from neighbor’s soil excavation.  Court holds that excavation of earth underneath plaintiff’s dwelling does not clearly and unambiguously fall within exclusion where “earth movement” is defined as “sinking, rising, shifting, expanding, or contracting of earth.”  Lee v. State Farm Fire & Cas. Co., 2006 WL 2691749 (2d Dept. September 19, 2006).

Notice of Claim/Notice of Suit.  Second Department reverses trial court’s order staying arbitration of insured’s SUM claim on grounds of late notice of claim and suit where insured provided timely notice of accident and where the trial court did not hold a hearing on the issue of whether the insurer was prejudiced by any delay in notice.  Nationwide Mutual Ins. Co. v. Perlmutter, 2006 WL 2691450 (2d Dept. September 19, 2006).

3420(d)/SUM.  Second Department affirms trial court’s order denying insurer’s motion for summary judgment in a claim for SUM coverage where court finds triable issue of fact as to the timeliness of disclaimer under an exclusion.  Court finds conflicting evidence as to when insurer first received notice of the accident and when it first became aware that insured was subject to the exclusion.  Ciasullo v. Nationwide Ins. Co., 2006 WL 2692467 (2d Dept. September 19, 2006).

Common Law Indemnification.  In Labor Law case, Second Department reverses granting of owner’s summary judgment motion on common law indemnification claim against contractor.  Second Department finds the motion premature in the absence of evidence of contractor’s negligence or contractor’s authority to control the work giving rise to the injury.  Benedetto v. Carrera Realty Corp., 2006 WL 2692495 (2d Dept. September 19, 2006).

Business Property.  In coverage dispute over fire loss to a commercial property, court denies cross-motions for summary judgment and directs case into mediation.  Court finds issues of fact regarding:  whether insureds materially misrepresentend value of building in application; whether insurer would have issued policy with knowledge of value of property or condition of alarm/sprinkler systems; whether insureds materially misrepresented that caretaker was on premises; and the parties’ intentions regarding alarm/sprinkler warranties in a binder.  Court also finds question of fact with respect to insurer’s defense of civil arson in light of open status of criminal investigation and allegation that insureds increased limits in anticipation of arson.  Ocean Walk, Ltd. v. Those Certain Underwriters at Lloyd’s of London, 2006 WL 2689626 (E.D.N.Y. September 19, 2006).

“Grave Injury.”  Trial court erred by not granting summary judgment dismissing affirmative defense of lack of a “grave injury” where plaintiff-employee indisputably lost total use of his feet.  Employer’s expert’s opinion that plaintiff-employee will be able to ambulate in the future did not dispute plaintiff-employee’s total loss of use of his feet.  Benedetto v. Carrera Realty Corp., 2006 WL 2692495 (2d Dept. September 19, 2006).

Common Law Indemnification/Contribution.  Motion to dismiss common law indemnification claims of construction manager against architect and contractor granted where construction manager would have necessarily also been negligent in connection with alleged errors of architect and contractor.  Construction manager’s contribution claim against architect and contractor also dismissed where only liability at issue is contractual in nature.  Park East Construction Corp. v. East Meadow Union Free School Dist., 2006 WL 2707356 (Sup. Ct. Nassau Co. September 18, 2006).

Business Property/Maritime.  Second Circuit Court of Appeals affirms summary judgment in favor of insurer on claim for coverage of sunken vessel.  Court affirms conclusion that insured failed to meet its burden of proving covered cause of loss under a “named peril” policy.  Court rejects insured’s principal’s conclusory affidavit that vessel sunk due to crew negligence.  Court also rejects insured’s expert’s affidavit, which contained improper legal conclusion and no expert testimony regarding the actual cause of the sinking.  Miller Marine Services, Inc. v. Travelers Prop. Cas. Ins. Co., 2006 WL 2672083 (2d Cir. September 18, 2006).

First-Party No-Fault.  Trial court’s denial of summary judgment in favor of assignee’s claim for first-party no-fault benefits reversed.  Insurer failed to oppose motion with admissible proof of mailing of letters requesting attendance at IMEs.  Insurer also failed to create presumption of mailing through affidavit describing insurer’s standard procedure for properly mailing requests.  Triboro Chiropractic and Acupuncture P.L.L.C. v. Allstate Ins. Co., 2006 WL 2670380 (Sup. Ct. App. Term September 14, 2006).