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WHERE THERE ARE MULTIPLE EXCESS COVERAGE POLICIES COVERING THE SAME RISK, THE EXCESS COVERAGE CLAUSES CANCEL EACH OTHER OUT (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, explained how multiple “excess coverage” insurance policies should be applied:

“[W]here there are multiple policies covering the same risk, and each generally purports to be excess to the other, the excess coverage clauses are held to cancel out each other and each insurer contributes in proportion to its [policy] limit,” unless to do so would distort the plain meaning of the policies … . By contrast, “if one party’s policy is primary with respect to the other policy, then the party issuing the primary policy must pay up to the limits of its policy before the excess coverage becomes effective”  … . Kolli v Kaleida Health, 2024 NY Slip Op 03998, Fourth Dept 7-26-24

Practice Point: The excess coverage clauses in multiple excess coverage policies covering the same risk cancel each other out.

 

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ALTHOUGH SUCCESSIVE SUMMARY JUDGMENT MOTIONS ARE DISFAVORED; HERE THE ISSUES IN EACH MOTION DID NOT OVERLAP AND APPELLANTS OFFERED A SUFFICIENT REASON. I.E. THE FIRST MOTION PRECEDED DEFENDANT’S DEPOSITION IN WHICH HE ADMITTED SWERVING INTO APPELLANTS’ VEHICLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined appellants’ second summary judgment motion in this traffic accident case did not violate the prohibition of successive motions. The first motion dealt with whether plaintiff suffered a serious injury within the meaning of the Insurance Law. The second motion addressed defendant’s liability. Appellants demonstrated a sufficient reason for the failure to include both issues in a single motion, i.e., the first motion was made before defendant was deposed and admitted swerving into appellants’ vehicle:

… [A]ppellants’ first motion for summary judgment was on the issue of serious injury. Their second motion was on the issue of liability. The issue of whether plaintiff sustained a serious injury within the meaning of the Insurance Law, “is a threshold matter separate from the issue of fault” and which must, therefore, be determined separately … . “[S]erious injury is quintessentially an issue of damages, not liability” … . Under the facts presented, appellants’ failure to raise the issue of liability in their first motion for summary judgment does not run afoul of the general disfavor of successive motions since the issue of serious injury was not germane to the issue of liability … .

Appellants have also established the existence of sufficient cause … . Here, the record indicates that the first motion for summary judgment was filed prior to the deposition testimony of defendant-respondent Phanor. In his testimony Phanor admitted that he swerved into appellant’s vehicle in order to avoid another unidentified vehicle. Priester v Phanor, 2024 NY Slip Op 03554, First Dept 6-27-24

Practice Point: Here the fact that successive summary judgment motions are generally prohibited was overlooked. The issues in the two motions did not overlap (one dealt with plaintiff’s damages, the other with defendant’s liability). And the first motion was brought before the deposition in which defendant admitted swerving into appellants’ vehicle.

 

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IN THIS GROUNDWATER POLLUTION CASE, THE POLLUTION EXCLUSION IN THE INSURERS’ POLICIES APPLIED AND THE INSURERS ARE NOT OBLIGATED TO DEFEND AND INDEMNIFY THE INSURED OIL COMPANY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the pollution exclusion in the plaintiffs’ insurance policies applied and plaintiffs were not required to defend and indemnify the defendant, which allegedly caused a gasoline additive (MTBE) to pollute groundwater. The fact that the additive was a legal substance required by the EPA did not matter:

… [I]t is clear that even if MTBE was not a pollutant in the context of its use as a gasoline additive, it was a pollutant in the context of its release into groundwater … . * * *

Qualified pollution exclusions are characterized by an exception for pollution where the discharge or release of the pollutant is “sudden and accidental” … . The terms “sudden” and “accidental” each “have separate meanings, [both] of which must be established for the exception to nullify the pollution coverage exclusion” … .. “[T]he meaning of sudden in the pollution exclusion exception” has a “temporal quality” (id. [emphasis omitted]), which is only met where the discharge occurs “abruptly or within a short timespan, of a significant quantity of the pollutant sufficient to have some potentially damaging environmental effect” … .

Here, with respect to the plaintiffs’ … policies that contained qualified pollution exclusions, the defendant failed to meet its burden to “demonstrate a reasonable interpretation of the underlying complaint[s] potentially bringing the claims within the sudden and accidental discharge exception to exclusion of pollution coverage, or to show that extrinsic evidence exists that the discharge was in fact sudden and accidental” … . In other words, the type of pollution alleged, which occurred undetected over many years, was not sudden within the meaning of the applicable law … . St. Paul Fire & Mar. Ins. Co. v Getty Props. Corp., 2024 NY Slip Op 03510, Second Dept 6-26-24

Practice Point: A “pollution exclusion” in an insurance policy applies where, as here, the pollution occurs over years, as opposed to occurring suddenly and unexpectedly.

Practice Point: A substance can be legal and approved for use in gasoline by the EPA but constitute a “pollutant” when found in groundwater.

 

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AVILA WAS INJURED WHEN HER SPOUSE LOST CONTROL OF THE CAR AND STRUCK A PARKED CAR; THE POLICY EXPRESSLY STATED COVERAGE DID NOT EXTEND TO THE INSURED’S SPOUSE; IN THE ABSENCE OF AN EXPRESS PROVISION THE INSURER IS NOT REQUIRED TO COVER THE INSURED’S SPOUSE (SECOND DEPT).

he Second Department, reversing Supreme Court, determined the uninsured motorist claim by the driver’s spouse was precluded based on the policy. Avila was a passenger in a vehicle driven by her spouse who lost control of the car:

Pursuant to Insurance Law § 3420(g)(1), “no policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse or because of injury to, or destruction of property of his or her spouse unless express provision relating specifically thereto is included in the policy.” “‘[I]n the absence of an express provision in an insured’s policy, a carrier is not required to provide insurance coverage for injuries sustained by an insured’s spouse'” … . This provision creates “a statutory presumption that interspousal liability is excluded from coverage unless an express provision relating specifically thereto is included in the policy” … . Moreover, here, the language of GEICO’s policy provides that its liability coverage does not apply “[t]o any insured for bodily injury to the spouse of that insured.” Thus, Avila’s uninsured motorist claim was precluded … . Matter of Government Employees Ins. Co. v Avila, 2024 NY Slip Op 03481, Second Dept 6-26-24

Practice Point: Here the insured, Avila’s spouse, lost control of the car and hit a parked car. Avila was a passenger and was injured. The policy did not include a provision expressly covering the insured’s spouse. In addition, the policy expressly stated the insured’s spouse was not covered. Avila’s uninsured motorist claim was precluded.

 

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STATEMENTS DEFENDANT MADE TO HIS INSURANCE CARRIER IN THIS TRAFFIC ACCIDENT CASE ARE NOT DISCOVERABLE (FOURTH DEPT). ​

The Fourth Department, reversing (modifying) Supreme Court in this traffic-accident case, determined plaintiff’s request for discovery of statements made by defendant to his insurance carrier should have been denied:

The statements sought in plaintiff’s cross-motion constitute materials “produced solely in connection with the report of an accident to a liability insurance carrier . . . with respect to plaintiff’s claim [that] are not discoverable under CPLR 3101 (g), but rather are conditionally immunized from discovery under CPLR 3101 (d) (2)” … . Plaintiff failed to establish either that he has a “substantial need of the materials” or that he is “unable without undue hardship to obtain the substantial equivalent of the materials by other means” (CPLR 3101 [d] [2] …). Fusco v Hansen, 2024 NY Slip Op 03262, Fourth Dept 6-14-24

Practice Point; Here in this traffic-accident case, plaintiff did not demonstrate a need for discovery of statements made by defendant to his insurance carrier (CPLR 3101(d)(2)).

 

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THERE IS A QUESTION OF FACT WHETHER PLAINTIFF’S SLIP AND FALL ON ICE AND SNOW AFTER GETTING OUT OF A VEHICLE RESULTED FROM OPERATION OF THE VEHICLE SUCH THAT THE INSURER IS OBLIGATED TO DEFEND THE OWNER OF THE VEHICLE (SECOND DEPT). ​

The Second Department, reversing Supreme Court, over a partial dissent, determined the insurer, Progressive, was obligated to defend the owner of a vehicle for injuries suffered by a passenger (Malone) who slipped and fell on ice and snow after getting out of the car. The question was whether the injury resulted from “operation” of the vehicle:

“Use of an automobile encompasses more than simply driving it, and includes all necessary incidental activities such as entering and leaving its confines” … . While a claim that an accident occurred during unloading “does not require a showing that the vehicle itself produced the injury . . . , it is insufficient to show merely that the accident occurred during the period of loading or unloading. Rather, the accident must be the result of some act or omission related to the use of the vehicle” … .

… Malone specifically alleged in the underlying action that Anthony (the vehicle-owner’s son) parked his vehicle in a negligent manner on a slippery surface and that such negligence was a proximate cause of her accident. Progressive submitted an affidavit from Malone … in which she stated, “I slipped on the snowy and icy condition as I was taking my first steps toward the house. I dropped my child and my legs slid, along the gradient, underneath the CAPERNA Vehicle.” Progressive further submitted Malone’s deposition testimony in the underlying action, which demonstrated that the door of the vehicle was open and that she had only taken two steps away from the vehicle when she slipped and fell on snow and ice located on the lawn. As such, Progressive failed to establish its prima facie entitlement to judgment as a matter of law declaring that the accident was not a covered event, as there is a triable issue of fact as to whether Malone had completed unloading the vehicle. As there are allegations that the vehicle was used negligently and that such negligence contributed to the accident, Progressive was not entitled to summary judgment declaring that it is not obligated to defend or indemnify Arthur (the vehicle owner) in the underlying action … . Matter of Progressive Dr. Ins. v Malone, 2024 NY Slip Op 03178, Second Dept 6-12-24

Practice Point: “Operation” of a vehicle may include parking the vehicle in a manner which makes getting out of it dangerous. Here a passenger slipped and fell on ice and snow after getting out of the parked vehicle and the insurer was obligated to defend the owner of the vehicle.

 

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THE INSURER’S OBLIGATION TO INDEMNIFY SHOULD NOT HAVE BEEN DETERMINED BASED UPON THE ALLEGATIONS IN THE PLEADINGS (FIRST DEPT).

The First Department, reversing Supreme Court, determined that although the insurer (Everest) was required to defend the plaintiff (CCM) in the underlying action, the ruling that Everest must indemnify CCM was premature:

Supreme Court should not have found that Everest was required to indemnify CCM. Although Everest concedes that it must defend CCM, “the duty to defend is broader than the duty to indemnify,” because only the latter “is determined by the actual basis for the insured’s liability to a third person and is not measured by the allegations of the pleadings” … . In the underlying action, there has been no determination whether the plaintiff’s injury was “caused, in whole or in part, by” the acts or omissions of the named insured or of those acting on its behalf … . Therefore, any declaration of the duty to indemnify was premature ( … see … Axis Surplus Ins. Co. v GTJ Co., Inc., 139 AD3d 604, 605 [1st Dept 2016] [“It is after the resolution of that action where the extent of plaintiff’s indemnification obligations can be fully determined”]). Harleysville Ins. Co. v United Fire Protection, Inc., 2024 NY Slip Op 02663, First Dept 5-14-24

Practice Point: An insurer’s obligation to indemnify cannot be determined based on the allegations in the pleadings.

 

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THE DEFENDANT INSURANCE COMPANY IS OBLIGATED TO DEFEND PLAINTIFF PEDIATRICIAN IN THE UNDERLYING ACTION BY A FORMER PATIENT ALLEGING SEXUAL ABUSE DURING A PHYSICAL EXAM (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined defendant insurance company was obligated to defend plaintiff pediatrician who stands accused of the sexual abuse of a former patient:

Supreme Court denied plaintiff’s [summary judgment] motion and granted defendant’s cross-motion [for summary judgment] on the grounds that the complaint in the underlying action did not assert claims arising from a “medical incident” or “professional services,” as those terms are defined in the subject insurance policy, and in any event that the policy’s exclusion for sexual assault precluded coverage. * * *

… [A]lthough the complaint in the underlying action primarily alleges that plaintiff sexually abused his former patient during a medical examination, it also contains “facts or allegations” that bring the claim “potentially within the protection purchased” for claims arising from professional services rendered by plaintiff, thus triggering the duty to defend … . For instance, the underlying complaint alleges that plaintiff improperly diagnosed, cared for and treated the former patient in question, and failed to provide her with “proper and appropriate pediatric care.” The underlying complaint further alleges that plaintiff inserted his finger into the former patient’s vagina “without gloves,” suggesting that perhaps such action would have been medically proper had plaintiff been wearing gloves. Without any context or details regarding the nature of the medical treatment being provided by plaintiff at the time of the alleged improper touching of the former patient, we cannot categorically conclude that the underlying complaint is devoid of facts or allegations that potentially bring the former patient’s claims within the protection purchased by plaintiff in the subject liability policy. Mscichowski v MLMIC Ins. Co., 2024 NY Slip Op 02391, Fourth Dept 5-3-24

Practice Point: As long as some of the allegations in a complaint arguably fall within the protection of the insurance policy, the insurer is obligated to defend the insured.

 

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A FORUM SELECTION CLAUSE IN AN INSURANCE POLICY WHICH VIOLATES NEW YORK LAW IS NOT ENFORCEABLE (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Miller, determined that the forum selection clause in an insurance policy which violates New York law is not enforceable. The opinion is comprehensive and discusses several substantive civil procedure, contract law, corporation law, insurance law, workers’ compensation law and public policy issues which cannot fairly be summarized here:

This action is just one of many such actions commenced across the country alleging that the defendant Applied Underwriters, Inc. (hereinafter Applied Underwriters), and affiliated entities, all subsidiaries of Berkshire Hathaway, Inc., deceptively circumvented state laws and regulations in the marketing and sale of an unlawful workers’ compensation insurance program. Here, the defendants seek to enforce a forum selection clause, in favor of Nebraska, contained in an insurance policy that New York State regulators have found violates New York law. While parties are generally free to select a forum in which to resolve their contractual disputes, here, where it is alleged by the plaintiff, and found by New York State regulators, that New York law has been violated, a foreign corporation may not profit from such violation to the detriment of New York employers and workers. The forum selection clause contained in an illegal insurance policy is not enforceable. As a matter of public policy, New York companies shall not be compelled to litigate in Nebraska to vindicate their rights. Air-Sea Packing Group, Inc. v Applied Underwriters, Inc., 2024 NY Slip Op 02032, Second Dept 4-17-24

Practice Point: A forum selection clause (designating Nebraska as the forum) in an insurance policy which violates New York law is not enforceable.

 

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QUESTIONS OF FACT ABOUT WHETHER THE INSURER WAS TIMELY NOTIFIED OF THE ASBESTOS-EXPOSURE CLAIM AND WHEN THE INJURY-IN-FACT OCCURRED PRECLUDED SUMMARY JUDGMENT (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined there are questions of fact whether the defendant insurer was timely notified of the claim in this asbestos-exposure case, and there are questions of fact, raised by conflicting expert evidence, about when the injury-in-fact occurred:

Defendant contends that the Meissners’ [plaintiffs’] delay of 68 days—from when they were first informed that Ridge Construction [defendant] had excess insurance policies issued by defendant to the date that the Meissners’ counsel wrote to provide defendant notice of the claim—was unreasonable as a matter of law. In response, plaintiff asserts that the delay was reasonable because the Meissners were not aware for the first 63 of those days that Ridge Construction had failed to provide defendant with notice. “The reasonableness of the delay in giving notice is ordinarily a question for the fact-finder” … .

* * * The parties … “dispute when an asbestos-related injury actually begins: plaintiff[ ] assert[s] that injury-in-fact occurs upon first exposure to asbestos, while defendant denies that assertion and instead maintains that injury-in-fact occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body’s defense mechanisms” … . Inasmuch as the parties here submitted conflicting expert opinions as to when the injury-in-fact occurs in an asbestos-related injury, summary judgment on that basis was not proper … . Meissner v Ridge Constr. Corp., 2024 NY Slip Op 01445, Fourth Dept 3-15-24

Practice Point: Whether the insurer was timely notified of the asbestos-exposure claim is a question of fact which should not have been determined as a matter of law at the summary judgment stage.

Practice Point: Here conflicting expert evidence was presented about when the injury-in-fact occurs in an asbestos-exposure case. The issue should not have been determined as a matter of law at the summary judgment stage.

 

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