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WHETHER THE JUDGMENT DEBTOR IS ENTITLED TO RESTITUTION AFTER REVERSAL OF A RESTRAINING NOTICE AND WHETHER PLAINTIFF IS ENTITLED TO AN INSTALLMENT PAYMENT ORDER ARE DISCRETIONARY ISSUES TO BE DECIDED UPON REMAND; CRITERIA EXPLAINED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, reversing Supreme Court and remanding the matter, determined that whether the judgment debtor was entitled to restitution based on the reversal of a restraining notice and whether the plaintiff is entitled to an installment payment order were not decided by the reversal, but  rather were discretionary issues to be resolved on remand. The facts are too complex to fairly summarize here:

… CPLR 5015(d) provides that, “[w]here a judgment or order is set aside or vacated, the court may direct and enforce restitution in like manner and subject to the same conditions as where a judgment is reversed or modified on appeal.” … Thus, “CPLR 5015[d] empowers a court that has set aside a judgment or order to restore the parties to the position they were in prior to its rendition, consistent with the court’s general equitable powers” … . The essential inquiry for a court addressing a request for the equitable remedy of restitution is whether it is against equity and good conscious to permit a party to retain the money that is sought to be recovered … . The determination whether to award restitution is committed to the trial court’s discretion … . * * *

Contrary to defendant’s contention that an installment payment order cannot be directed at funds exempt from execution under CPLR 5231 (i.e., 90% of his monthly disability insurance payments), such an order is the expedient for accessing exempt income … . As Professor Siegel stated long ago, “[o]ne of [CPLR 5226’s] prime uses is in that situation . . . where it appears that the judgment debtor can afford more than the 10% to which the income execution is limited” … . Thus, “[t]he court on the [CPLR 5226] motion can direct the debtor to make regular payments to the judgment creditor in any sum it finds the debtor able to afford, not limited by the 10% that restricts the income execution of CPLR 5231” … . Hamway v Sutton, 2025 NY Slip Op 01062, First Dept 2-25-25

Practice Point: Although this opinion is fact-specific, it includes the criteria for some fundamental debtor-creditor issues, i.e., the amount of monthly disability insurance payments which is available to a judgment debtor, the income-sources which are available to a judgment debtor, whether a plaintiff is entitled to an installment payment order, the criteria for a court’s discretionary determination of the amount a judgment debtor can afford to pay every month, etc.

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PLAINTIFF DID NOT SUFFER A “SERIOUS INJURY” WITHIN THE MEANING OF THE INSURANCE LAW IN THE UNDERLYING PEDESTRIAN-VEHICLE ACCIDENT CASE; THEREFORE PLAINTIFF COULD NOT HAVE SUCCEEDED ON THE MERITS OF THAT ACTION; DEFENDANT ATTORNEY WAS ENTITLED TO SUMMARY JUDGMENT DISMISSING THE INSTANT LEGAL MALPRACTICE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant attorney was entitled to dismissal of the legal malpractice action because plaintiff could not have succeeded in the underlying traffic accident case. Plaintiff, a pedestrian, was struck by a vehicle. The traffic-accident case was dismissed because plaintiff did not sustain a “serious injury” within the meaning of the Insurance Law:

“A plaintiff seeking to recover damages for legal malpractice must establish that (1) the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and (2) the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages” … . “Even if a plaintiff establishes the first prong of a legal malpractice cause of action, the plaintiff must still demonstrate that he or she would have succeeded on the merits of the action but for the attorney’s negligence” … . “To succeed on a motion for summary judgment dismissing a legal malpractice action, a defendant must present evidence in admissible form establishing that at least one of the essential elements of legal malpractice cannot be satisfied” … .

Here, in support of its motion, the defendant submitted evidence demonstrating that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendant thus established … that the plaintiffs would not have succeeded on the merits of the underlying personal injury action … . Dodenc v Dell & Dean, PLLC, 2025 NY Slip Op 00650, Second Dept 2-5-25

Practice Point: An essential element of a legal malpractice action is that the plaintiff would have succeeded on the merits in the underlying action. Here the attorney demonstrated plaintiff did not sustain a serous injury within the meaning of the Insurance Law and, therefore, plaintiff would not have succeeded in the underlying traffic accident case.

 

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DESPITE THE COURT OF APPEALS RULING THAT THE INSURANCE LAW PROVISION REQUIRING UNINSURED MOTORIST COVERAGE DOES NOT APPLY TO POLICE VEHICLES, PLAINTIFF POLICE OFFICER, INJURED IN AN ACCIDENT WITH AN UNINSURED MOTORIST WHILE DRIVING HIS POLICE VEHICLE, WAS ENTITLED TO UNINSURED MOTORIST COVERAGE UNDER HIS OWN PERSONAL INSURANCE POLICY (SECOND DEPT). ​

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Dowling, determined that a police officer driving a police vehicle involved in an accident with an uninsured driver can seek uninsured motorist (UM/SUM) coverage under the officer’s personal insurance policy, notwithstanding the Court of Appeals ruling that “Insurance Law § 3420(f)—providing that all ‘motor vehicle’ insurance policies must contain uninsured motorist coverage— has no application to police vehicles” … :

In Matter of State Farm Mut. Auto. Ins. Co. v Fitzgerald (25 NY3d 799), the Court of Appeals held that “a police vehicle is not a ‘motor vehicle’ covered by a [supplementary uninsured/underinsured (hereinafter SUM) motorist] endorsement under Insurance Law § 3420(f)(2)(A)” (id. at 801). This appeal requires us to address, for the first time, whether Fitzgerald and Insurance Law § 3420(f)(2)(A) preclude the principal named insured under an automobile insurance liability policy that includes a SUM endorsement from receiving SUM coverage where he or she is injured in an automobile accident with an uninsured motor vehicle while occupying a police vehicle. We conclude that the named insured is not precluded from receiving SUM coverage under those circumstances, and reverse the order appealed from. * * *

… [T]he exclusion of police vehicles from the definition of “motor vehicle” under Insurance Law § 3240(f)(1) and (2) is not determinative of this particular proceeding. Matter of Esurance Ins. Co. v Burdeynyy, 2025 NY Slip Op 00445, Second Dept 1-29-25

Practice Point: Here a police officer driving his police vehicle was involved in an accident with an uninsured motorist. Although insurers of police vehicles are not required to include uninsured motorist coverage, that did not preclude the officer from uninsured motorist coverage under his own personal policy.

 

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PUNITIVE DAMAGES IN A DECEPTIVE BUSINESS PRACTICES ACTION PURSUANT TO GENERAL BUSINESS LAW 349 (H) ARE LIMITED TO THREE TIMES ACTUAL DAMAGES (CT APP).

The Court of Appeals, affirming the Appellate Division, in a full-fledged opinion by Judge Troutman, over a two-judge concurring opinion, determined the terms of the life insurance policy, which was terminated by the defendant insurer, were unambiguous and enforceable. The General Business Law section 349 (h) cause of action alleging deceptive business practices survived but any punitive damages were limited to three times actual damages. The nature of the life insurance policy and payment scheme are too complex to fairly describe here. The $2 million life insurance policy was issued to an 82-year-old woman. With respect to the available damages in a private General Business Law 349 (h) action, the court wrote:

… [T]he legislature carefully calibrated damages at the time section 349 (h) was enacted. We decline to alter that balance by making available a remedy that goes far beyond what the legislature contemplated. As evidenced by the increased penalties on similar statutes, the legislature will act where it believes current remedies are insufficient. It has not done so here. We therefore conclude that punitive damages in addition to the treble damages delineated in section 349 (h) are unavailable. Hobish v AXA Equit. Life Ins. Co., 2025 NY Slip Op 00183, CtApp 1-14-25

Practice Point: Consult this opinion for an in-depth discussion of the damages available in a private General Business Law 349 (h) deceptive-business-practices action.

 

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PLAINTIFFS WERE PREJUDICED BY THE JURY SELECTION PROCESS WHICH DID NOT ALTERNATE THE PEREMPTORY CHALLENGES; THE FIRST QUESTION POSED TO THE JURY EFFECTIVELY PRECLUDED THE JURORS FROM CONSIDERING THE APPROPRIATE LEGAL ISSUE, I.E., WHETHER THE PLAINTIFF SUFFERED A “SERIOUS INJURY” WITHIN THE MEANING OF THE INSURANCE LAW (THIRD DEPT).

The Third Department, reversing the jury verdict and ordering a new trial in this Insurance Law 5102(d) “serious injury” case, determined the plaintiffs were prejudiced by the jury selection method used the trial judge, and the first question on the verdict sheet was improper because it effectively precluded the jury from considering the relevant question, whether plaintiff suffered a “serious injury:”

The court’s failure to alternate the peremptory challenge process … placed plaintiffs in the untenable position of having to utilize a peremptory challenge for a prospective juror that may not have been necessary had defendants been required to go first. This error compromised the fairness of the jury selection process.

Plaintiffs further contend that Supreme Court erred by including the first question on the verdict sheet — i.e., “[h]ave the plaintiffs . . . established that the incident . . . was a substantial factor in causing [Mormile’s] injuries?” We agree.  The specific issue for the jury to resolve was whether, as a result of the subject accident, Mormile sustained a “serious injury” as set forth in question 2 on the verdict sheet (did Mormile “sustain a significant limitation of use of a body function or system”); question 3 (did Mormile “sustain a permanent consequential limitation of use of a body organ or member”); question 4 (did Mormile “sustain a injury that resulted in a significant disfigurement”); and question 5 (did Mormile “suffer a medically determined injury or impairment of a non-permanent nature . . . that prevented him from performing all of the material acts that constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident?”).

The first question effectively only asks whether there was probable cause to establish that Mormile’s injuries resulted from the accident (see PJI 2:70). Having answered “No” to that global question, the jury did not answer questions 2 through 5. In effect, the jury did not resolve the appropriate legal issue, i.e., whether Mormile sustained a “serious injury” in the accident, as defined under each of the four distinct categories at issue … . Mormile v Marshall, 2024 NY Slip Op 06390, Third Dept 12-19-24

Practice Point: Failure to alternate the peremptory challenges compromised the fairness of the jury selection process.

Practice Point: The first question on the verdict sheet effectively precluded the jury from considering the appropriate legal issue, i.e., whether plaintiff suffered a “serious injury” within the meaning of the Insurance Law.

 

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THE REPRESENTATION THAT THE INSURED PROPERTY WAS A TWO-FAMILY DWELLING WHEN, IN FACT, IT WAS A THREE-FAMILY DWELLING, WAS A MATERIAL MISREPRESENTATION; COVERAGE FOR FIRE DAMAGE PROPERLY DISCLAIMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the representation that the insured property was a two-family dwelling when, in fact, it was a three-family dwelling, was a material misrepresentation and was a proper basis for denying coverage for fire damage:

“‘[T]o establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented'” … . “‘To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application'” … . “‘[E]ven innocent misrepresentations, if material, are sufficient to allow an insurer to defeat recovery under the insurance contract'” … .

Here, MIC [the insurer] demonstrated, prima facie, that the application for insurance contained a misrepresentation regarding whether the premises was a two-family dwelling and that this misrepresentation was material … . … MIC established that the material misrepresentation was attributable to her, since, even if the application for insurance had been submitted without her actual or apparent authority, she ratified the representations contained in the application by accepting the policy for a two-family dwelling … . Estiverne v MIC Gen. Ins. Corp., 2024 NY Slip Op 06327, Second Dept 12-18-24

Practice Point: Even an innocent misrepresentation supports the denial of insurance coverage if it was material.​

Practice Point: Here plaintiff alleged she was unaware of the misrepresentation. The court held she ratified the misrepresentation when she accepted the insurance policy.

 

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NYC MUST PAY CITY EMPLOYEES, RETIREES AND DEPENDENTS THE FULL COST, UP TO THE STATUTORY CAP, OF ANY HEALTH INSURANCE PLAN THE CITY OFFERS (CT APP). ​

The Court of Appeals, in a full-fledged opinion by Judge Wilson, determined NYC was required to pay city employees, retirees and dependents the full cost, up to the statutory cap, of any health insurance plan the city offers:

At issue on this appeal are the portions of Administrative Code of the City of New York § 12-126 requiring New York City (“City”) to pay, for active employees, retirees and their dependents, “the entire cost of health insurance coverage,” defined as “[a] program of hospital-surgical-medical benefits,” in an amount “not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.” The statute requires that the City’s program includes “hospital[,] surgical [and] medical benefits.” The statute also requires the City to pay the full cost of the program, so long as that cost does not exceed the comparator in the statute. The question in this case is what section 12-126 requires the City to do when it offers more than one health insurance plan to employees and retirees. Petitioners argue that section 12-126 requires the City to pay, up to the statutory cap, for any plan it offers. The City contends that its section 12-126 obligation is satisfied if it pays up to the cap for one health insurance plan providing hospital, surgical and medical benefits. It argues that it may offer additional plans but has no statutory obligation to pay any portion of their cost, and explains that when it has paid for additional plans in the past, it has done so because it agreed to in collective bargaining, not because it was statutorily required to do so. The parties also disagree as to which health insurance plan sets the statutory cap for Medicare-eligible retirees.

We hold that section 12-126 requires the City to pay up to the statutory cap for any plan it offers to employees and retirees. Matter of NYC Org. of Pub. Serv. Retirees, Inc. v Campion, 2024 NY Slip Op 06291, CtApp 12-17-24

 

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IN THIS FIRE-DAMAGE CASE, THE INSURANCE POLICY IMPOSED A TWO-YEAR LIMITATION PERIOD; THE ACTION WAS NOT BROUGHT UNTIL SIX YEARS AFTER THE FIRE; PLAINTIFF’S FAILURE TO PROVIDE ANY DETAILS DEMONSTRATING WHY THE RESTORATION COULD NOT BE COMPLETED WITHIN THE TWO-YEAR LIMITATION PERIOD REQUIRED DISMISSAL OF THE COMPLAINT; THREE-JUDGE DISSENT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Singas, over an extensive three-judge dissent, determined plaintiff’s complaint in this fire-damage case was properly dismissed because the contractual two-year limitation period was exceeded and plaintiff made only conclusory allegations that the repairs could not be made within that two-year period:

On this motion to dismiss, the Tower/AmTrust defendants met their burden of establishing, by reference to the contract’s two-year suit limitation provision, that the action was time-barred because plaintiff did not commence it within two years of the fire, utterly refuting plaintiff’s factual allegations … . Nothing in plaintiff’s response raised any issue as to whether the provision should bar her claims. Plaintiff’s allegation that “[g]iven the massive structural damage wrought by the fire, the restoration of [plaintiff’s] property would have been [a] multi-year process under even the best of circumstances” is a conclusory statement that the suit limitation provision was unreasonable and is not logically inconsistent with the replacement of the property within the two-year limitation period. Here, plaintiff failed to allege actions that she took to complete the repairs within two years; she did not provide any details regarding the extent of the damage, other than that the damage was “massive” and the fire set off four alarms, or why complete restoration within two years was an impossibility. This bare-bones allegation stands in stark contrast to the plaintiff’s factual assertions in [Executive Plaza, LLC v Peerless Ins. Co. (22 NY3d 511)]. There, the plaintiff pleaded the specific remedial actions taken to restore the property, including retaining an architect and construction company, submitting a variance application, and seeking and obtaining building permits, which were not issued until 20 months after the property damage … . Most importantly, that plaintiff provided that these remedial actions were taken within the limitation period. All of this information is notably absent from plaintiff’s pleadings and motion response here. Farage v Associated Ins. Mgt. Corp., 2024 NY Slip Op 05875, CtApp 11-26-24

Practice Point: Here the insurance contract imposed a two-year limitation on claims for the cost of fire-damage repair. Plaintiff did not bring the action until six years after the fire. The complaint was properly dismissed because it did not provide any details explaining why the repairs could not have been made during the two-year limitation period.

 

NEW YORK STATE’S SELF-FUNDED GOVERNMENT HEALTH PLAN FOR NEW YORK STATE’S PUBLIC EMPLOYEES, THE “EMPIRE PLAN,” IS SUBJECT TO THE INDEPENDENT DISPUTE RESOLUTION (IDR) PROCEDURES IN THE FEDERAL “NO SURPRISES ACT” (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Lynch, determined the state’s self-funded government health plan for New York State’s public employees (the Empire Plan) is subject to the independent dispute resolution (IDR) procedures in the federal “No Surprises Act:”

In 2014, the Legislature passed the “Surprise Bill Law” … which protects insureds from being billed directly for healthcare services they did not know were being performed by an out-of-network provider … . Under the law, the “health care plan” of an insured who receives a surprise bill is liable for the costs of the out-of-network services and may attempt to negotiate a reimbursement amount that is less than the amount billed … . “If the health care plan’s attempts to negotiate . . . do[ ] not result in a resolution of the payment dispute . . . , the health care plan shall pay the non-participating provider an amount the health care plan determines is reasonable for the health care services rendered, except for the insured’s co-payment, coinsurance or deductible” … . The law also contains an independent dispute resolution (… IDR) process to address payment disputes, which may be invoked by “[e]ither the health care plan or the non-participating provider” if certain conditions are met … . When invoked, the IDR process assigns the dispute to an independent arbitrator to determine the reasonable fees for services rendered by an out-of-network provider utilizing the factors outlined in Financial Services Law § 604 and the FAIR Health benchmarking database * * *

… [A]fter the US Congress passed the federal No Surprises Act in 2020 … — a statute substantively similar to the state’s Surprise Bill Law — the Empire Plan began using the IDR process set forth in the federal law, which uses different benchmarks to determine the reasonable fees to be paid to an out-of-network provider by an insured’s health care plan … . Joseph v Corso, 2024 NY Slip Op 05170, Third Dept 10-17-24

 

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THE SHORTER LIMITATIONS PERIOD IN THE FIRE INSURANCE POLICY WAS NOT FAIR AND REASONABLE; THE MOTION TO DISMISS IN THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court in the fire-insurance breach of contract case, determined the contractual limitations period in the insurance policy was not fair and reasonable:

“Article 2 of the CPLR (‘Limitations of Time’), provides that ‘[a]n action . . . must be commenced within the time specified in this article unless . . . a shorter time is prescribed by written agreement'” … . “‘[A]n agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable'” … . “‘[T]he period of time within which an action must be brought . . . should be fair and reasonable, in view of the circumstances of each particular case. . . . The circumstances, not the time, must be the determining factor'” … . “‘Absent proof that the contract is one of adhesion or the product of overreaching, or that [the] altered period is unreasonably short, the abbreviated period of limitation will be enforced'” … .

The Supreme Court should have denied that branch of the defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the complaint. Contrary to the defendants’ contentions, the modified limitations period in the subject insurance policy was not fair and reasonable. The insurance policy provided that “[n]o action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss” and that “[w]e will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss.” Here, the one-year limitation was unreasonable since the condition precedent, completion of actual repair or replacement, was not within the plaintiffs’ control and could not be met within that period … . “‘A “limitation period” that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim'” … . Filasky v Andover Cos., 2024 NY Slip Op 04545, Second Dept 9-25-25

Practice Point: Parties can agree on shorter limitations periods. Here the limitations period in the subject fire insurance policy expired before suit could be brought rendering it unfair, unreasonable and unenforceable.

 

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