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QUESTION OF FACT WHETHER PLAINTIFF ACTED TO MITIGATE ITS DAMAGES FROM THE BREAKDOWN OF EQUIPMENT IN THIS BUSINESS INTERRUPTION INSURANCE CASE (THIRD DEPT).

The Third Department, reversing Supreme Court, determined there was a question of fact about whether plaintiff did enough to mitigate damages stemming from the two-day breakdown of a concrete mixer. Plaintiff manufactured and sold precast concrete products:

… [D]efendant relied upon a policy provision that required plaintiff to reduce its losses by undertaking efforts to “[m]ake up for lost business within a reasonable period of time” and “[m]ake use of every reasonable means to reduce or avert loss, including . . . [w]orking extra time or overtime.” Defendant argued that plaintiff failed to make up for the lost production by scheduling extra shifts or weekend work and, thus, failed to mitigate its losses as required by the policy.

Like any other policy provision, mitigation requirements in business interruption insurance policies must be enforced according to their terms … . Here, plaintiff’s president testified that it could not use extra shifts during the work week to make up for lost production due to the nature of its manufacturing process, and that various constraints related to that process and plaintiff’s labor force made it so difficult to schedule weekend work that plaintiff rarely did so. Plaintiff thus limited most of the weekend work that it did schedule to small projects requiring only a few employees. Viewing the evidence in the light most favorable to defendant, we find that the reasonableness of plaintiff’s decision to make up for the lost production during its normal work hours rather than by scheduling overtime shifts on subsequent weekends, as well as the effect of this decision on the amount of its damages, present factual issues that must be resolved by a factfinder … . Binghamton Precast & Supply Corp. v Liberty Mut. Fire Ins. Co., 2020 NY Slip Op 02214, Third Dept 4-9-20

 

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QUESTION OF FACT WHETHER FLOODING, AS OPPOSED TO WIND, CAUSED THE PROPERTY DAMAGE PRECLUDED SUMMARY JUDGMENT IN FAVOR OF THE INSURER BASED UPON POLICY EXCLUSIONS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there were questions of fact whether the exclusions in the homeowner’s policy applied to damage caused during Superstorm Sandy. The expert opinion evidence did not demonstrate flooding, as opposed to wind, was the predominant cause of the damage:

The Homeowners Policy contains three exclusions which Allstate has raised here: the flood exclusion, the “weather conditions” exclusion, and the “predominant cause” exclusion. The Homeowners Policy states that Allstate does not cover losses caused by “[f]lood, including, but not limited to surface water, waves, tidal water or overflow of any body of water, or spray from any of these, whether or not driven by wind.” The “weather conditions” exclusion states that Allstate does not cover losses caused by “Weather Conditions that contribute in any way with a cause of loss excluded in this section to produce a loss.” The “predominant cause” exclusion states that Allstate will not cover loss to a covered property when “there are two or more causes of loss to the covered property” and “the predominant cause(s) of loss is (are) excluded” under other provisions of the Policy. Ain v Allstate Ins. Co., 2020 NY Slip Op 02042, Second Dept 3-25-20

 

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GENERAL BUSINESS LAW CAUSES OF ACTION ALLEGING DECEPTIVE PRACTICES AND FALSE ADVERTISING WERE SUFFICIENTLY ALLEGED AGAINST AN INSURER PROVIDING HEALTH INSURANCE TO NEW YORK CITY EMPLOYEES; PLAINTIFF, A RETIRED POLICE OFFICER, ALLEGED DECEPTIVE AND FALSE MARKETING BY THE INSURER INDUCED HIM TO CHOOSE THE INSURER’S PLAN (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, determined General Business Law sections 349 and 350 applied to a health insurance plan offered to New York City employees. Plaintiff, a retired NYC police officer brought the action in federal court alleging the insurer (GHI) engaged in “deceptive practices” and “false advertising.” The Third Circuit asked the Court of Appeals to rule on whether the General Business Law causes of action were applicable to plaintiff who was a third-party beneficiary of the insurance contract which had been negotiated by sophisticated parties. The insurer argued a contract between sophisticated parties did not raise a “consumer-oriented” issue:

We have explained that, to state a claim under sections 349 or 350, “a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct, that is (2) materially misleading, and that (3) the plaintiff suffered injury as a result of the allegedly deceptive act or practice” … . Thus, a plaintiff claiming the benefit of either section 349 or 350 “must charge conduct of the defendant that is consumer-oriented” or, in other words, “demonstrate that the acts or practices have a broader impact on consumers at large” … . * * *

Here, although there was an underlying insurance contract negotiated by sophisticated entities—only one of which is a party to this action—neither plaintiff, nor any of the other hundreds of thousands of employees and retirees who participated in the GHI Plan, were participants in its negotiation and, critically, that negotiation was followed by an open enrollment period, which exposed City employees and retirees to marketing resembling a traditional consumer sales environment. During the open enrollment period, the employees and retirees could select only one of 11 previously-negotiated health insurance plans offered as part of their compensation and retirement packages from the City, and the insurers were able to market their health care plans directly to the employees and retirees. Significantly, it is the allegedly misleading summary materials that are the subject of plaintiff’s case—not the contract between the City and GHI, which purportedly was never provided to City employees and retirees. Plavin v Group Health Inc., 2020 NY Slip Op 02025, CtApp 3-24-2020

 

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RESPONDENT’S FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMS RENDERED THE NO-FAULT INSURANCE POLICY VOID AB INITIO (FIRST DEPT).

The First Department, vacating the arbitrator’s award, determined the no-fault policy was void because respondent failed to attend independent medical examinations:

The master arbitrator’s award was arbitrary in that it irrationally ignored well-established precedent that “the no-fault policy issued by petitioner was void ab initio due to respondent’s assignor’s failure to attend duly scheduled independent medical exams” … . Matter of Global Liberty Ins. Co. of N.Y. v Capital Chiropractic, P.C., 2020 NY Slip Op 01466, First Dept 3-3-20

 

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THE LANGUAGE OF THE POLICY IS NOT AMBIGUOUS AND CAN NOT BE INTERPRETED TO MEAN THE POLICY COVERED A PREMISES AT WHICH THE INSURED DID NOT RESIDE (FIRST DEPT).

The First Department, reversing Supreme Court, determined the language of the policy was not ambiguous and could not be interpreted to mean the policy covered a premises at which the insured did not reside:

Plaintiff demonstrated, via defendant’s admission in a statement to its investigator and the investigator’s inspection of the insured premises, that defendant did not reside at the premises and was therefore not covered by the policy … .

Contrary to defendant’s argument, the policy endorsement that amends the definition of “residence premises” — previously, “[t]he one-family dwelling … where you reside” — to include three- and four-family dwellings without repeating the phrase “where you reside” is not ambiguous. The endorsement also states that “[a]ll other provisions of this policy apply,” which gives effect to those portions of the policy that define “residence premises” as the place “where [the insured] reside[s]” … . MIC Gen. Ins. Corp. v Campbell, 2020 NY Slip Op 01465, First Dept 3-3-20

 

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PLAINTIFF’S CLAIM IN THIS PEDESTRIAN HIT-AND-RUN ACTION WAS NOT AUTOMATICALLY ASSIGNED TO THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION WHEN PLAINTIFF ACCEPTED A SETTLEMENT; PLAINTIFF’S ACTION AGAINST THE DEFENDANT TAXICAB COMPANY AND THE DRIVERS WHO WERE ON DUTY WHEN PLAINTIFF WAS STRUCK SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff’s acceptance of a settlement from the Motor Vehicle Accident Indemnification Corporation (MVAIC) did not automatically assign plaintiff’s claim to the MVAIC. Therefore plaintiff’s action against a taxi company and eight drivers who were on duty when plaintiff, a pedestrian, was struck by a taxicab, should not have been dismissed. It was a hit-and-run accident and plaintiff had not yet identified the driver:

Insurance Law § 5213(b) provides: “As a condition to the payment of the amount of the settlement the qualified person . . . shall assign his claim to the corporation which shall then be subrogated to all of the rights of the qualified person against the financially irresponsible motorist.” Thus, the statute provides that, upon payment of the settlement amount by MVAIC, the “qualified person,” i.e., the plaintiff, shall assign his personal injury claim to MVAIC. …”[T]he text does not say that acceptance of payment operates as an assignment by operation of law; neither does it make execution of an assignment a condition precedent to the receipt of payment. Rather, the statute obligates an individual who receives payment to assign her claim to MVAIC, giving MVAIC the enforceable right to obtain such assignment.” Thus, although the plain language of Insurance Law § 5213(b) requires the plaintiff to assign his claim to MVAIC as a condition of receiving a settlement from MVAIC, such language does not make the assignment automatic. * * *

… MVAIC … chose not to take an assignment from the plaintiff, but rather rely upon the plaintiff’s reimbursement from any damages award he receives as a result of the instant action. MVAIC’s determination as to how best to proceed to recoup the amount it paid to the plaintiff in settlement, while also being assured that the plaintiff was pursuing an action against a potential financially irresponsible driver, was within the broad powers granted to MVAIC, and was consistent with the purpose of the Motor Vehicle Accident Indemnification Corporation Act. Archer v Beach Car Serv., Inc., 2020 NY Slip Op 01138, Second Dept 2-19-20

 

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IT WAS ALLEGED ONE MAN INTENDED TO DOUSE ANOTHER WITH LIQUID IN A CUP BUT UNINTENTIONALLY THREW THE CUP ITSELF CAUSING INJURY; THERE WAS A QUESTION OF FACT WHETHER THE INJURY WAS CAUSED BY INTENTIONAL CONDUCT OR AN ACCIDENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff insurer’s (Unitrin’s) motion for summary judgment in this insurance-coverage dispute should not have been granted. Apparently Sullivan was in one car and the injured party, Ciminello, was in another car when Sullivan allegedly attempted to throw liquid that was in a cup into Ciminello’s car. It was alleged that Sullivan unintentionally threw the entire cup, not just its contents, which injured Ciminello. So there was a question of fact whether Ciminello was injured by intentional conduct (not covered by insurance) or an accident (which would be covered):

Ciminello raised a triable issue of fact as to whether the harm was inherent in the intentional act committed … . Ciminello submitted evidence that, although Sullivan and his passenger intended to douse Ciminello with the liquid contained in the cup, there was no intent to throw the cup and strike Ciminello with it. As the instant case does not fall within the narrow class of cases in which the intentional act exclusion applies regardless of the insured’s subjective intent … , there is a triable issue of fact as to whether the event qualified as an “accident,” as defined by the policy … . Unitrin Auto & Home Ins. Co. v Sullivan, 2020 NY Slip Op 00452, Second Dept 1-22-20

 

ALTHOUGH THE TRUCK DRIVER WAS STEPPING OFF A RAMP ATTACHED TO THE BACK OF HIS TRACTOR TRAILER WHEN HE WAS STRUCK BY A VAN, THE DRIVER WAS OCCUPYING THE TRUCK WITHIN THE MEANING OF THE INSURER’S UNINSURED MOTORIST COVERAGE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the insurer’s (Utica’s) petition to permanently stay arbitration in this traffic accident case should not have been granted. A truck driver, Steward, was struck by a van when he was stepping down from a ramp attached to the back of the tractor trailer. Utica argued Steward was a pedestrian, not an occupant of the truck and therefore Steward was not covered:

The minivan that hit Steward had minimal insurance coverage, and Steward filed a Request for SUM Arbitration seeking coverage under the New York Supplementary Uninsured/Underinsured Motorists (“SUM”) Endorsement of his employer’s Utica Mutual commercial automobile liability insurance policy … . …

The SUM endorsement in the petitioner’s policy, consistent with the statutory requirement, defines “occupying” as “in, upon, entering into, or exiting from a motor vehicle” (see Insurance Law § 3420[f][3]). In accordance with the liberal interpretation afforded the term “occupying” … , we find, as a matter of law, that Steward was “upon” the tractor-trailer at the time of the accident such that he was “occupying” the tractor-trailer within the meaning of the SUM endorsement. Steward’s testimony established that at the time of the accident, he had stepped upon the Moffet ramp which was attached to the tractor-trailer, and that he was struck by the minivan while his right leg was still on the ramp, and while he was stepping down with his left leg. Thus, although Steward had been away from the tractor-trailer during the work day, his testimony established that at the time of the accident, he was in physical contact with the vehicle, such that he was “occupying” it … . Matter of Utica Mut. Assur. Co. v Steward, 2020 NY Slip Op 00285, Second Dept 1-17-20

 

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DEFENDANTS’ ATTORNEYS HAD APPARENT AUTHORITY TO BIND DEFENDANTS TO THE OPEN-COURT STIPULATED SETTLEMENT OF $8,875,000; IN ADDITION, DEFENDANTS RATIFIED THE STIPULATION BY FAILING TO TIMELY OBJECT TO IT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Acosta, determined that defendants (the Infiniti defendants) were bound by an open-court stipulated settlement of $8,875,000 in this personal injury case. The attorneys had apparent authority to bind the defendants. And the defendants ratified the stipulation by failing to timely object to it:

I write to highlight the fundamental principle that parties are bound by stipulations signed in open court by their attorneys. The issue arose in the context of a negligence case, where plaintiff was seriously injured when she was struck by a motor vehicle while standing on a sidewalk median in Brooklyn. The vehicle was owned by defendant Infiniti of Manhattan, Inc. and driven by defendant Massamba Seck (the Infiniti defendants). Plaintiff suffered serious injuries and required extensive hospitalization and multiple surgeries. At issue in this case is whether the Infiniti defendants are bound by a settlement agreement entered into by their attorneys. We find that the Infiniti defendants are bound, because their attorneys had apparent authority to bind them to the $8,875,000 judgment. Significantly, there is no affidavit or testimony by Infiniti stating that Infiniti, or any of its employees, was unaware of the settlement or that Infiniti did not authorize the settlement. The only ones making this claim are the lawyers from the firm that was hired by the insurance companies to defend the Infiniti defendants. The fact that one of the insurers is now unable to pay its intended $5 million portion does not inure to the Infiniti defendants’ benefit. Rather, the Infiniti defendants are responsible for the portion of the agreed-upon amounts that the insurers do not pay. To accept their position would alter the way litigation is conducted in New York State. Courts would have to conduct colloquies in every case to make sure that the parties, notwithstanding their attorneys’ actions in appearing for them on numerous occasions and signing stipulations, acquiesced in the terms of the stipulations. That is unacceptable, especially here, where the Infiniti defendants never objected to the stipulation until the filing of the instant order to show cause more than a year and six months after the stipulation was signed in open court. Pruss v Infiniti of Manhattan, Inc., 2020 NY Slip Op 00229, First Dept 1-9-20

 

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THE CARRIER WHICH HAD ISSUED A BUSINESS AUTOMOBILE INSURANCE POLICY COVERING THE INSURED’S FLATBED TRUCK WAS OBLIGATED TO DEFEND THIS ACTION STEMMING FROM AN INJURY INCURRED WHILE UNLOADING A TRACTOR FROM THE FLATBED TRUCK; UNLOADING A TRUCK IS CONSIDERED OPERATION OF THE TRUCK UNDER VEHICLE AND TRAFFIC LAW 388 (THIRD DEPT).

The Third Department determined plaintiff-insurer was obligated to defend and the insured in this personal injury case stemming from the unloading of a tractor from a flatbed truck owned by the insured. The tractor rolled over the insured’s son as it was being unloaded. The son and his wife sued the insured and the insured’s farm. Plaintiff carrier brought this action for a declaratory judgment that it was not obligated to defend or indemnify, apparently claiming the (insured’s) truck was not being operated when the accident occurred:

If anything within the “four corners of the complaint suggest[s] . . . a reasonable possibility of coverage,” the insurer must defend, even though it may not ultimately be bound to pay because the insured may not be liable … . …

Pursuant to the Vehicle and Traffic Law, “[e]very owner of a vehicle used or operated in this state shall be liable and responsible for . . . injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner” (Vehicle and Traffic Law § 388 [1]) … . * * * “The policy of insurance issued must be as broad as the insured owner’s liability for use of the vehicle by the owner or anyone using the vehicle with his [or her] permission” … .

Loading and unloading of a covered vehicle constitute “use or operation” pursuant to Vehicle and Traffic Law § 388 (1) … , and a vehicle does not have to be in motion to be in “use or operation” … . * * *

George Henderson [the insured] loaded and secured the tractor on the flatbed truck, drove the flatbed truck to the farm, rolled the bed back and tilted it, and operated the winch that was supposed to be holding the tractor in place. He also regularly requested or allowed Charles Henderson [his son} and the other individual to unload machinery from the flatbed truck. Charles Henderson asserted that, due to George Henderson not paying attention, the winch cable went slack, causing it to release from the tractor and allow the tractor to roll. George Henderson is potentially both directly and vicariously liable for negligence in the personal injury action … , and there is prima facie “reasonable possibility of coverage” … . Thus, plaintiff is obliged to defend George Henderson and the farm in the underlying action. Farm Family Cas. Ins. Co. v Henderson, 2020 NY Slip Op 00021, Third Dept 1-2-20

 

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