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FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMINATIONS SET UP BY NO-FAULT CARRIER IS AN ABSOLUTE DEFENSE TO COVERAGE (FIRST DEPT).

The First Department, reversing Supreme Court, determined no-fault claimants’ failure to attend independent medical examinations (IME’s) was a absolute defense to coverage:

When an individual submits a personal injury claim for motor vehicle no-fault benefits, the insurance company may request that the individual submit to an IME, and if the individual fails to appear for that IME, it “constitutes a breach of a condition precedent vitiating coverage” … . Here, plaintiff established its entitlement to judgment as a matter of law by submitting the letters sent to each claimant notifying them about the date, time, and location of the initially scheduled IME and a second scheduled IME and affidavits of service for these letters. Plaintiff also submitted affidavits from each medical professional assigned to conduct the scheduled IME, with each stating that the medical professional was in his or her office at the date and time of the scheduled IME, the respective claimant failed to appear, the appointment was kept open until the end of the day, and at the end of the day, the medical professional filled out the affidavit acknowledging the nonappearance.

Because Hereford sent the notices scheduling the IMEs prior to the receipt of each of the claims, the notification requirements for verification requests under 11 NYCRR 65-3.5 and 65-3.6 do not apply … . Furthermore, plaintiff was not required “to demonstrate that the claims were timely disclaimed since the failure to attend medical exams was an absolute coverage defense” … . Hereford Ins. Co. v Lida’s Med. Supply, Inc., 2018 NY Slip Op 03226, First Dept 5-3-18

​INSURANCE LAW (FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMINATIONS SET UP BY NO-FAULT CARRIER IS AN ABSOLUTE DEFENSE TO COVERAGE (FIRST DEPT))/NO-FAULT INSURANCE (FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMINATIONS SET UP BY NO-FAULT CARRIER IS AN ABSOLUTE DEFENSE TO COVERAGE (FIRST DEPT))/INDEPENDENT MEDICAL EXAMINATIONS (IME)  (FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMINATIONS SET UP BY NO-FAULT CARRIER IS AN ABSOLUTE DEFENSE TO COVERAGE (FIRST DEPT))/IME (FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMINATIONS SET UP BY NO-FAULT CARRIER IS AN ABSOLUTE DEFENSE TO COVERAGE (FIRST DEPT))

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BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a concurrence and a three-judge dissent, reversing the Appellate Division, determined the three-year statute of limitations applies to no-fault claims against a self-insurer. The court reasoned that the self-insurance option is a creature of statute, not a contract:

We conclude that the three-year statute of limitations as set forth in CPLR 214 (2), which governs disputes with respect to penalties created by statute, should control this case. There is no dispute “that it is the gravamen or essence of the cause of action that determines the applicable Statute of Limitations” … , or that a three-year limitations period applies to “an action to recover upon a liability. . . created or imposed by statute” … . Moreover, although the three-year period of limitation in “CPLR 214 (2) does not automatically apply to all causes of action in which a statutory remedy is sought” … , that condition does attach to instances in which “liability would not exist but for a statute” (id.).

The no-fault benefits in dispute are not provided by a contract with a private insurer. Instead defendant has met its statutory obligation by self-insuring. No-fault is a creature of statute … . Contact Chiropractic, P.C. v New York City Tr. Auth., 2018 NY Slip Op 03093, CtApp 5-1-18

​INSURANCE LAW (NO-FAULT, BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))/CIVIL PROCEDURE (INSURANCE LAW, NO-FAULT, STATUTE OF LIMITATIONS, BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))/CPLR 214 (INSURANCE LAW, NO-FAULT, STATUTE OF LIMITATIONS, BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))/NO-FAULT (BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))/STATUTE OF LIMITATIONS  (INSURANCE LAW, NO-FAULT, BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))/SELF-INSURER  (INSURANCE LAW, NO-FAULT, STATUTE OF LIMITATIONS, BECAUSE NO-FAULT BENEFITS PROVIDED BY A SELF-INSURER ARE A CREATURE STATUTE, NOT AN INSURANCE CONTRACT, THE THREE-YEAR (NOT SIX-YEAR) STATUTE OF LIMITATIONS APPLIES TO NO-FAULT CLAIMS AGAINST A SELF-INSURER (CT APP))

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ANY CONDUCT ON THE PART OF THE INSURER WAS NOT THE PROXIMATE CAUSE OF PLAINTIFF’S CLOSING OF ITS BUSINESS AFTER INCURRING WATER DAMAGE, THEREFORE THE INSURER WAS NOT LIABLE FOR THE LOSS OF BUSINESS CONSEQUENTIAL DAMAGES (SECOND DEPT).

The Second Department determined the insurer was entitled to summary judgment because, notwithstanding the way the insurer handled the water damage claim, the insurer’s actions were not the proximate cause of the plaintiff’s closing of its business:

Consequential damages are damages that do not directly flow from a breach of contract … . Proximate cause is an essential element of a breach of contract cause of action … . “[E]very contract contains an implied covenant of good faith and fair dealing” … . In an insurance contract context, consequential damages resulting from a breach of the implied covenant of good faith and fair dealing may be asserted, “so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting” … . “Consequential damages, designed to compensate a party for reasonably foreseeable damages, must be proximately caused by the breach” … Generally, it is for the trier of fact to determine the issue of proximate cause. However, the issue of proximate cause may be decided as a matter of law where only one conclusion may be drawn from the established fact … .

Here, the defendants established, prima facie, that their alleged injurious conduct in handling the plaintiff’s claim was not a proximate cause of the plaintiff’s loss of business. It was undisputed that the stop work order issued shortly after the water leak, for reasons unrelated to the defendants, prevented the plaintiff from securing the necessary work permits prior to ceasing operations permanently. Lola Roberts Beauty Salon, Inc. v Leading Ins. Group Ins. Co., Ltd., 2018 NY Slip Op 02605, Second Dept 4-18-18​

​INSURANCE LAW (ANY CONDUCT ON THE PART OF THE INSURER WAS NOT THE PROXIMATE CAUSE OF PLAINTIFF’S CLOSING OF ITS BUSINESS AFTER INCURRING WATER DAMAGE, THEREFORE THE INSURER WAS NOT LIABLE FOR THE LOSS OF BUSINESS CONSEQUENTIAL DAMAGES (SECOND DEPT))/CONTRACT LAW (INSURANCE LAW, CONSEQUENTIAL DAMAGES, ANY CONDUCT ON THE PART OF THE INSURER WAS NOT THE PROXIMATE CAUSE OF PLAINTIFF’S CLOSING OF ITS BUSINESS AFTER INCURRING WATER DAMAGE, THEREFORE THE INSURER WAS NOT LIABLE FOR THE LOSS OF BUSINESS CONSEQUENTIAL DAMAGES (SECOND DEPT))/CONSEQUENTIAL DAMAGES (INSURANCE LAW, LOSS OF BUSINESS, PROXIMATE CAUSE, ANY CONDUCT ON THE PART OF THE INSURER WAS NOT THE PROXIMATE CAUSE OF PLAINTIFF’S CLOSING OF ITS BUSINESS AFTER INCURRING WATER DAMAGE, THEREFORE THE INSURER WAS NOT LIABLE FOR THE LOSS OF BUSINESS CONSEQUENTIAL DAMAGES (SECOND DEPT))/DAMAGES (CONSEQUENTIAL DAMAGES, INSURANCE LAW, LOSS OF BUSINESS, ANY CONDUCT ON THE PART OF THE INSURER WAS NOT THE PROXIMATE CAUSE OF PLAINTIFF’S CLOSING OF ITS BUSINESS AFTER INCURRING WATER DAMAGE, THEREFORE THE INSURER WAS NOT LIABLE FOR THE LOSS OF BUSINESS CONSEQUENTIAL DAMAGES (SECOND DEPT))

WATER DAMAGE, ALLEGED TO HAVE BEEN CAUSED BY HURRICANE SANDY, WAS DEMONSTRATED TO HAVE RESULTED FROM WEAR AND TEAR AND WAS THEREFORE SUBJECT TO THE POLICY EXCLUSION (THIRD DEPT).

The Third Department determined the insurer’s motion for summary judgment in this property damage case was properly granted. Plaintiff alleged  water damage to its hotel was caused by Hurricane Sandy. There was an exclusion in the policy for “wear and tear.” The insurer’s expert presented evidence that the water damage was due, inter alia, to improper flashing and the absence of proper caulking around the windows:

The dictionary definition of “wear and tear” is “the loss, injury, or stress to which something is subjected by or in the course of use” … . Nothing in the policy language suggests that an average insured would expect the phrase to have another meaning or that the language is subject to any other reasonable interpretation.

As for the application of the exclusion in this case, defendant supported its summary judgment motion with the affidavit and report of an engineer with experience in “structural investigation[s] and failure determinations” who inspected the property several weeks after the hurricane. His examination of the hotel’s exterior walls revealed “improper flashing detail” consisting of failed caulk that had originally been installed to seal the areas where each room’s exterior walls and windows met the hotel’s concrete floors and surrounding masonry walls. According to the engineer, the caulk had separated from these surfaces as a result of age and lack of maintenance, creating spaces through which water could migrate into the walls. The engineer observed significant deterioration in the walls’ internal framing, as well as other indications that water had been seeping into the walls for a long time; in a follow-up inspection several years later, he also found evidence that water continued to enter the walls after the hurricane as a result of the failed caulk, causing new damage to surfaces that had been repaired after the storm. Superhost Hotels Inc. v Selective Ins. Co. of Am., 2018 NY Slip Op 02519, Third Dept 4-12-18

INSURANCE LAW (WATER DAMAGE, ALLEGED TO HAVE BEEN CAUSED BY HURRICANE SANDY, WAS DEMONSTRATED TO HAVE RESULTED FROM WEAR AND TEAR AND WAS THEREFORE SUBJECT TO THE POLICY EXCLUSION (THIRD DEPT))/WEAR AND TEAR (INSURANCE LAW, WATER DAMAGE, ALLEGED TO HAVE BEEN CAUSED BY HURRICANE SANDY, WAS DEMONSTRATED TO HAVE RESULTED FROM WEAR AND TEAR AND WAS THEREFORE SUBJECT TO THE POLICY EXCLUSION (THIRD DEPT))/WATER DAMAGE (INSURANCE LAW, WEAR AND TEAR, WATER DAMAGE, ALLEGED TO HAVE BEEN CAUSED BY HURRICANE SANDY, WAS DEMONSTRATED TO HAVE RESULTED FROM WEAR AND TEAR AND WAS THEREFORE SUBJECT TO THE POLICY EXCLUSION (THIRD DEPT))/EXCLUSIONS (INSURANCE LAW, WEAR AND TEAR, WATER DAMAGE, ALLEGED TO HAVE BEEN CAUSED BY HURRICANE SANDY, WAS DEMONSTRATED TO HAVE RESULTED FROM WEAR AND TEAR AND WAS THEREFORE SUBJECT TO THE POLICY EXCLUSION (THIRD DEPT))

PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT).

The First Department, reversing Supreme Court, determined coverage for a slip and fall of a security company (Protection Plus) employer was not available to the property owner (Manhattan School) as an additional insured on the security company’s policy. the security guard slipped and fell on a recently mopped floor at the school:

Plaintiff Manhattan School is an additional named insured under a policy issued by defendant to nonparty Protection Plus Security Corporation. In an additional insured endorsement, the policy provides that the Manhattan School is an additional named insured “only with respect to liability for bodily injury’. . . caused, in whole or in part, by” the acts or omissions of Protection Plus in the performance of its operations for the Manhattan School.

When “an insurance policy is restricted to liability for any bodily injury caused, in whole or in part,’ by the acts or omissions’ of the named insured, the coverage applies to injury proximately caused by the named insured” … . Such language in a policy does not equate to “but for” causation and is not the same as policies containing the phrase, “arising out of” … . Fundamentally, ” arising out of’ is not the functional equivalent of proximately caused by'”… . Thus, it is not enough to merely establish a causal link to the injury.

Notably, the language in the endorsement was “intended to provide coverage for an additional insured’s vicarious or contributory negligence, and to prevent coverage for the additional insured’s sole negligence” … .

Accordingly, when a policy limits coverage to an injury “caused, in whole or part” by the “acts or omissions” of the named insured, coverage is extended to an additional insured only when the damages are the result of the named insured’s negligence or some other act or omission … .

Here, the acts or omissions of Protection Plus were not a proximate cause of the security guard’s injury. Rather, the sole proximate cause of the injury was the additional insured, and thus coverage is not available to the Manhattan School under defendant’s policy … . Hanover Ins. Co. v Philadelphia Indem. Ins. Co., 2018 NY Slip Op 02121, First Dept 3-27-18

INSURANCE LAW (PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT))/ADDITIONAL INSURED (INSURANCE LAW, PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT))

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IN THIS LONG TERM ENVIRONMENTAL CONTAMINATION CASE, THE INSURER IS NOT LIABLE TO THE INSURED FOR LOSSES ATTRIBUTABLE TO TIME PERIODS WHEN LIABILITY INSURANCE WAS UNAVAILABLE (CT APP).

The Court of Appeals, affirming the Appellate Division, in a full-fledged opinion by Judge Stein, determined the insured, Keyspan Gas, not the insurer, Century, bore the risk of damages from environmental contamination during the years that coverage for such damage was not available:

The liability underlying this insurance dispute emanates from environmental contamination caused by manufactured gas plants (MGPs) owned and operated by KeySpan’s predecessor … .Gas production at the sites began in the late 1880s and early 1900s. After operations ceased decades later, the New York Department of Environmental Conservation (DEC) determined that there had been long-term, gradual environmental damage at both sites due to contaminants, such as tar, seeping nto the ground and leeching into groundwater. The DEC required KeySpan to undertake costly remediation efforts … . …

… [Environmental contamination] coverage was not available to utilities until approximately 1925, and … a “sudden and accidental pollution exclusion” was later generally adopted by the insurance industry sometime in or after October 1970. Thus, KeySpan argued, the allocation should not take into account any years prior to the availability, or after the unavailability, of the applicable coverage. * * *

… [T]he Appellate Division … [held] that “under the insurance policies at issue, Century does not have to indemnify KeySpan for losses that are attributable to time periods when liability insurance was otherwise unavailable in the marketplace” … . * * *

The policyholder is the one who allegedly caused the injury and, therefore, who ultimately will be financially responsible should insurance prove insufficient” … . …

… “[T]he very essence of pro rata allocation is that the insurance policy language limits indemnification to losses and occurrences during the policy period” … . Keyspan Gas E. Corp. v Munich Reins. Am., Inc., 2018 NY Slip Op 02116, CtApp 3-27-18

INSURANCE LAW (IN THIS LONG TERM ENVIRONMENTAL CONTAMINATION CASE, THE INSURER IS NOT LIABLE TO THE INSURED FOR LOSSES ATTRIBUTABLE TO TIME PERIODS WHEN LIABILITY INSURANCE WAS UNAVAILABLE (CT APP))/ENVIRONMENTAL LAW (INSURANCE LAW, IN THIS LONG TERM ENVIRONMENTAL CONTAMINATION CASE, THE INSURER IS NOT LIABLE TO THE INSURED FOR LOSSES ATTRIBUTABLE TO TIME PERIODS WHEN LIABILITY INSURANCE WAS UNAVAILABLE (CT APP))/POLLUTION (INSURANCE LAW, (IN THIS LONG TERM ENVIRONMENTAL CONTAMINATION CASE, THE INSURER IS NOT LIABLE TO THE INSURED FOR LOSSES ATTRIBUTABLE TO TIME PERIODS WHEN LIABILITY INSURANCE WAS UNAVAILABLE (CT APP))/UTILITIES (INSURANCE LAW, ENVIRONMENTAL CONTAMINATION, IN THIS LONG TERM ENVIRONMENTAL CONTAMINATION CASE, THE INSURER IS NOT LIABLE TO THE INSURED FOR LOSSES ATTRIBUTABLE TO TIME PERIODS WHEN LIABILITY INSURANCE WAS UNAVAILABLE (CT APP))

UNAMBIGUOUS POLICY LANGUAGE REQUIRED A WRITTEN CONTRACT WITH ANY ADDITIONAL INSURED, BECAUSE THERE WAS NO WRITTEN CONTRACT, THERE WAS NO COVERAGE (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive two-judge dissent, determined that the language of the policy which required a written contract with an additional insured (Gilbane JV) was unambiguous and precluded coverage:

The relevant portion of the Liberty policy is the “Additional Insured-By Written Contract” provision, which reads:

“WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract but only with respect to liability arising out of your operations or premises owned by or rented to you.”… . …

… [T]he endorsement would have the meaning Gilbane JV desires if the word “with” had been omitted. Omitting “with,” the phrase would read: “. . . any person or organization whom you have agreed by written contract to add . . .”, and Gilbane JV’s position would have merit. But [the general contractor] and Liberty included that preposition in the contract between them, and we must give it its ordinary meaning. Here, the “with” can only mean that the written contract must be “with” the additional insured. Gilbane Bldg. Co./TDX Constr. Corp. v St. Paul Fire & Mar. Ins. Co., 2018 NY Slip Op 02117, CtApp 3-27-18

INSURANCE LAW (UNAMBIGUOUS POLICY LANGUAGE REQUIRED A WRITTEN CONTRACT WITH ANY ADDITIONAL INSURED, BECAUSE THERE WAS NO WRITTEN CONTRACT, THERE WAS NO COVERAGE (CT APP))/CONTRACT LAW (INSURANCE LAW, UNAMBIGUOUS POLICY LANGUAGE REQUIRED A WRITTEN CONTRACT WITH ANY ADDITIONAL INSURED, BECAUSE THERE WAS NO WRITTEN CONTRACT, THERE WAS NO COVERAGE (CT APP))

USING THE COURT’S OWN DEFINITION OF SURFACE WATER, THE COURT DETERMINED THE SURFACE WATER DAMAGE EXCLUSION IN THE PROPERTY INSURANCE POLICY DID NOT APPLY, SUPREME COURT REVERSED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the insurer’s cross motion for summary judgment should not have been granted and the insured’s motion for summary judgment should have been granted. Plaintiffs’ home was damaged by water. The policy excluded damage from surface water and coverage was denied on that ground. Without describing the facts, the Fourth Department noted that the term “surface water” was not defined in the policy and, using the court’s own definition, held that the water which caused the damage was not surface water:

“An insurance agreement is subject to principles of contract interpretation” … , and “[a]ny . . . exclusions or exceptions from policy coverage must be specific and clear in order to be enforced. They are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction” … . Inasmuch as the term “surface water” is not defined in the policy, “we afford that term its plain and ordinary meaning’ ” … . We have previously defined surface water as ” the accumulation of natural precipitation on the land and its passage thereafter over the land until it either evaporates, is absorbed by the land or reaches stream channels’ ” … .We thus conclude that, under the clear and unambiguous terms of the policy, the water that entered the plaintiffs’ residence was not surface water, and defendant therefore erroneously denied coverage under that policy exclusion. Smith v Safeco Ins. Co. of Am., 2018 NY Slip Op 02055, Fourth Dept 3-23-18

INSURANCE LAW (USING THE COURT’S OWN DEFINITION OF SURFACE WATER, THE COURT DETERMINED THE SURFACE WATER DAMAGE EXCLUSION IN THE PROPERTY INSURANCE POLICY DID NOT APPLY, SUPREME COURT REVERSED (FOURTH DEPT))/SURFACE WATER (INSURANCE LAW, USING THE COURT’S OWN DEFINITION OF SURFACE WATER, THE COURT DETERMINED THE SURFACE WATER DAMAGE EXCLUSION IN THE PROPERTY INSURANCE POLICY DID NOT APPLY, SUPREME COURT REVERSED (FOURTH DEPT))/WATER (SURFACE WATER, INSURANCE LAW, USING THE COURT’S OWN DEFINITION OF SURFACE WATER, THE COURT DETERMINED THE SURFACE WATER DAMAGE EXCLUSION IN THE PROPERTY INSURANCE POLICY DID NOT APPLY, SUPREME COURT REVERSED (FOURTH DEPT))

INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT).

The Second Department determined the insurer (petitioner) was entitled to a framed issue hearing in this traffic accident case. The appellant was involved in a multi-vehicle accident but claimed he was cut off by a vehicle which left the scene. After a framed issue hearing was held to determine whether a hit-and-run vehicle was involved, appellant appealed arguing the insurer was not entitled to a framed issue hearing:

According to the appellant … , another vehicle, which he described as a “pick-up truck with a landscaping trailer attached,” initially struck his vehicle and then left the scene. Under a policy of insurance issued by the petitioner, the appellant demanded arbitration of his claim for uninsured motorist benefits for the injuries he allegedly sustained in the accident. The petitioner thereafter commenced this proceeding, inter alia, to permanently stay arbitration of the appellant’s claim. …

” The party seeking a stay of arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay'” …  “Thereafter, the burden shifts to the party opposing the stay to rebut the prima facie showing” … . “Where a triable issue of fact is raised, the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing, and the appropriate procedure under such circumstances is to temporarily stay arbitration pending a determination of the issue” … . “Physical contact is a condition precedent to an arbitration based upon a hit-and-run accident involving an unidentified vehicle” … . ” The insured has the burden of establishing that the loss sustained was caused by an uninsured vehicle, namely, that physical contact occurred, that the identity of the owner and operator of the offending vehicle could not be ascertained, and that the insured’s efforts to ascertain such identity were reasonable'”… .

Here, the petitioner, by submitting the police accident report containing the appellant’s statement that his vehicle was cut off by an unknown vehicle with a red trailer, raised a triable issue of fact as to whether physical contact occurred between the appellant’s vehicle and the alleged unidentified hit-and-run vehicle … . Contrary to the appellant’s contention, the Supreme Court properly directed a framed-issue hearing to determine whether a hit-and-run vehicle was involved in the accident  … . Matter of Allstate Ins. Co. v Deleon, 2018 NY Slip Op 01915, Second Dept 3-21-18

INSURANCE LAW (TRAFFIC ACCIDENTS, FRAMED ISSUE HEARING, INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT))/TRAFFIC ACCIDENTS (INSURANCE LAW, FRAMED ISSUE HEARING, INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT))/FRAMED ISSUE HEARING (INSURANCE LAW, TRAFFIC ACCIDENTS, INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT))/ARBITRATION, STAY OF (INSURANCE LAW, TRAFFIC ACCIDENTS, FRAMED ISSUE HEARING, INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT))/HIT-AND-RUN (INSURANCE LAW, TRAFFIC ACCIDENTS, FRAMED ISSUE HEARING,  INSURER WAS ENTITLED TO A FRAMED ISSUE HEARING TO DETERMINE WHETHER A HIT-AND-RUN VEHICLE WAS INVOLVED IN THE ACCIDENT (SECOND DEPT))

SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS, ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE, SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant insurance brokers’ (Praxis and HUB) motion to dismiss should not have been granted. Plaintiff settled with the insurer (Affiliated) on its breach of contract claim (which alleged the claim was wrongly denied). Plaintiff’s actions against the brokers alleged failure to procure the requested coverage:

… [T]he validity of Affiliated’s denial of the plaintiffs’ claim for property damage remains undecided, notwithstanding the fact that the plaintiffs settled this action with respect to Affiliated … . The complaint alleges that the denial was based on actions taken by Praxis and the HUB defendants. Should the plaintiffs prevail on their causes of action against Praxis and the HUB defendants, any damages they recover must necessarily be reduced by the amount of the settlement from Affiliated, in order to avoid a double recovery … . Prime Alliance Group, Ltd. v Affiliated FM Ins. Co., 2018 NY Slip Op 01630, Second Dept 3-14-18

INSURANCE LAW (SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))/BROKERS (INSURANCE) (FAILURE TO PROCURE REQUESTED COVERAGE, SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))

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