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Failure of Freezer to Properly Cool Baked Goods Was an “Occurrence” (I.e., “Accident”) within the Meaning of the Commercial General Liability Policy

Plaintiff manufactured a freezer used by a nonparty bakery.  According to the bakery, the freezer didn’t cool cakes to the proper temperature and the cakes were therefore ruined when cut, causing the bakery millions in damages.  The bakery sued plaintiff and plaintiff sought defense and indemnity from its insurer.  The insurer disclaimed coverage, arguing that the facts did not constitute a covered “occurrence” (i.e. “accident”) within the meaning of the policy.  In affirming the denial of the insurer’s motion to dismiss (there was a dissent), the First Department wrote:

Courts have held that commercial general liability (CGL) policies do not insure against faulty workmanship in the work product itself … . However, such policies do insure against property damage caused by faulty workmanship to something other than the work product … . Plaintiff does not seek coverage simply for allegedly faulty workmanship that caused the defect in the freezer. Rather, it seeks defense and indemnity for property damage that [the bakery], a third party, alleged that it suffered because of a defect in the freezer. Indeed, in George A. Fuller Co. (200 AD2d 255), on which defendant places much reliance, the damage occurred to the property upon which the contractor performed the work – that is, to the work product itself. Plaintiff, by contrast, seeks coverage for the damage to the cakes, not to the freezer. This damage is precisely the kind that plaintiff’s CGL policy contemplated, and therefore, the complaint properly alleges an “occurrence” within the meaning of the policy … . [the bakery’s]  loss of use of the facility specifically built to house the freezer is also covered under the policy, since “property damage” is defined to include “[l]oss of use of tangible property that is not physically injured.”  I.J. White Corp v Columbia Cas Co, 2013 NY Slip Op 02500, 651505/11, 8420, 1st Dept 4-16-13

 

12 to 15 Inch Drop Not a “Hazardous Opening” and Did Not Trigger Ramp or Stairway Requirement 

The First Department, in this Labor Law 241 (6) action, determined that a 12 to 15 inch drop from the work area to a subfloor did not constitute a “hazardous opening” and did not trigger the “stairways, ramps or runways” requirement (re: the Industrial Code):

Industrial Code (12 NYCRR) § 23-1.7(b)(1) is inapplicable. The record indicates that plaintiff was injured after he stepped off the edge of the work area to the subfloor 12 to 15 inches below, which is not considered a “hazardous opening” within the meaning of 12 NYCRR 23-1.7(b) … .

12 NYCRR 23-1.7(f) is also inapplicable. There is no basis in the record for any claim that the “[s]tairways, ramps or runways” identified in section 23-1.7(f) were required, given plaintiff’s testimony that the subfloor was only approximately 12 to 15 inches below the first floor from which he fell ….  Francescon v Gucci Am, Inc, 2013 NY Slip Op 02470, 9774, 114399/01 590019/02 590139/06 590372/06, 1st Dept, 4-11-13

 

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Son Entitled to Remain in Deceased Mother’s Apartment​

In annulling the ruling that petitioner (Carlos) was not entitled to “remaining family member (RFM)” status for the succession of his deceased mother’s apartment, the First Department wrote:

We annul NYCHA’s [New York Housing Authority’s] determination on the ground that it is not supported by substantial evidence. While the agency correctly asserts that Carlos’s RFM status is jeopardized by the fact that he never received written permission to be added to his mother’s lease while she was alive, the record is plain that Amparo [Carlos’ mother] took every step to have her son added to her lease, as required by 24 CFR 966.4(a)(1)(v), and it is undisputed that NYCHA violated a number of its own internal rules by determining that Carlos’s 1996 conviction precluded him from joining Amparo’s tenancy until May of 2008, without notifying Amparo or Carlos, and without giving them the opportunity to present evidence of Carlos’s rehabilitation. … .

…[W]hile estoppel is not available against a government agency engaging in the exercise of its governmental functions …, we have held that NYCHA’s knowledge that a tenant was living in an apartment for a substantial period of time can be an important component of the determination of a subsequent RFM application … . In re Gutierrez v Rhea, et al, 2013 NY Slip Op 02453, 8494 402789/10, 1st Dept, 4-11-13

 

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Attorney’s Failure to Investigate Client’s Premises Liability Claim Before Encouraging Settlement Raised Issue of Fact About Malpractice

In this legal malpractice action, the trial court ruled plaintiff had raised issues of fact concerning whether his attorney failed to adequately investigate the plaintiff’s premises liability claim before encouraging the plaintiff to settle.  In affirming the trial court, the First Department noted that the settlement agreement did not bar the legal malpractice action:

For a claim for legal malpractice to be successful, “a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff and that the plaintiff would have succeeded on the merits of the underlying action but for’ the attorney’s negligence” …. A client is not barred from a legal malpractice action where there is a signed “settlement of the underlying action, if it is alleged that the settlement of the action was effectively compelled by the mistakes of counsel” ….   *  *  *

In this specific case, given plaintiff’s lack of sophistication and his limited education, defendant’s statement that he never conducted any investigation, except for speaking to plaintiff for a very limited time, raises a question of fact as to whether defendant adequately informed himself about the facts of the case before he conveyed the settlement offer.  Angeles v Aronsky, 2013 NY Slip Op 02454, 8925, 100091/09, 1st Dept, 4-11-13

 

Policy Taken Out to Cover Original One Story Building Did Not Cover Accident on Additional Floors Under Construction

The First Department, in a full-fledged opinion by Justice Saxe, determined that an insurance police which covered the original one-story building did not cover the additional floors subsequently under construction.  In a full-fledged opinion by Justice Saxe (with a dissent), the First Department wrote:

“Coverage cannot be afforded on liability for which insurance was not purchased” …. While the obligation to defend is broader than the duty to indemnify, it “does not extend to claims not covered by the policy” …. “[I]f the allegations interposed in the underlying complaint allow for no interpretation which brings them within the policy provisions, then no duty to defend exists” … .   If a policy insures a portion of a building, it does not cover an injury occurring in another portion of the building… . Seneca Ins Co v Cimran Co, Inc, 2013 NY Slip Op 02360, 9226, 1st Dept, 4-9-13

 

Plaintiff Was Deemed Third Party Beneficiary of Contract Between Next-Door Neighbor and Chimney Repair Company— Smoke Was Entering Plaintiff’s Home

Smoke from defendant Moore’s fireplace was entering a neighbor’s (Trager’s) home.  Trager sued Moore and the defendant company (B & P) hired by Moore to fix their fireplace.  The motion court dismissed the cause of action against B & P.  The First Department reinstated the cause of action against B & P finding that Trager may have been a third-party beneficiary of the contract between Moore and B & P:

The complaint should not have been dismissed as against B & P because a question of fact exists as to whether B & P owed Linda Trager … a duty as a third-party beneficiary to B & P’s contract with the Moore defendants … . Castlepoint Ins Co v Moore, 2013 NY Slip Op 02352, 99747, 110915/09, 1st Dept, 4-9-13

 

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Question of Fact Raised by Competing Expert Affidavits Re: Proximate Cause

In reversing the trial court’s dismissal of a medical malpractice complaint, the First Department wrote:

In this medical malpractice appeal, defendants do not dispute that they departed from the accepted standard of care by incorrectly informing plaintiff that her April 9, 2007 PET scan was negative for recurrent cancer and not correcting that misinformation until November 2007. Defendants argue that the six month delay in notification did not cause plaintiff any injury. Defendants met their initial burden of establishing their entitlement to judgment as a matter of law … . However, the motion court erred in finding that plaintiff failed to raise an issue of fact requiring the denial of defendants’ motion and a trial. The issue of whether a doctor’s negligence is more “likely than not a proximate cause of [a plaintiff’s] injury” is usually for the jury to decide… . There is a substantial dissent by Justice DeGrasse.  Polanco v Reed, et al, 2013 NY Slip Op 02317, 303169/08, 8662A, 1st Dept 4-4-13

 

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Usual Criteria for Piercing the Corporate Veil Applied in Fraudulent Conveyance Action

The First Department determined the “pierce the corporate veil” causes of action should be dismissed, applying the usual “pierce the corporate veil” criteria in a “fraudulent conveyance” case:

“In order for a plaintiff to state a viable claim against a shareholder of a corporation in his or her individual capacity for actions purportedly taken on behalf of the corporation, plaintiff must allege facts that, if proved, indicate that the shareholder exercised complete domination and control over the corporation and abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice” … . “Factors to be considered in determining whether the owner has abused the privilege of doing business in the corporate form include whether there was a failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use … . In opposition to the [defendants’] motion for summary judgment, plaintiff failed to proffer any evidence of the above factors. Contrary to plaintiff’s claim, the factors mentioned [above] remain relevant even in a fraudulent conveyance case … .  D’Mel & Associates v Athco, Inc, et al, 9713, 602486/09, 1st Dept 4-4-13

 

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DeBour Criteria Met in Street Encounter Leading to Arrest; Statements Tainted by Miranda Violations Did Not Preclude Admission of Statement Made Seven Hours Later

In a full-fledged opinion by Justice Renwick, the First Department upheld the denial of defendant’s suppression motions.  After hearing gun shots police officers approached the defendant. After defendant answered a couple of questions he “began to place his hand in his back pocket.”  At that point, the officer grabbed defendant’s arm and told defendant he wanted to frisk the defendant before allowing him to reach in his pockets.  As the officer began to frisk the defendant, the defendant ran and was brought the ground.  A firearm, still warm, was taken from the defendant’s back pocket.   Written statements subsequently given by the defendant were suppressed by the trial court because of a Miranda violation.  A videotaped statement, made seven hours after the tainted written statements, was deemed admissible:

Prior to pleading guilty, defendant moved to suppress a gun, recovered from his pocket, and videotaped statements he made to the prosecution as fruits of an unlawful seizure. He also moved to suppress the statements as obtained in violation of his Miranda rights. We conclude that the facts disclosed in the record were such as to warrant a person of reasonable caution to believe that defendant was reaching for a weapon when the arresting officer grabbed his arm. We also find that defendant’s videotaped statements were not suppressible, notwithstanding the suppression of prior written statements made more than seven hours earlier to police officers, because the videotaped statements were attenuated by a “definite, pronounced break in the interrogation” … .  People v Davis, 2012 NY Slip Op 02337, 6129, 9270, 1st Dept 4-4-13

 

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Hearsay About Cause of Fall Included in Hospital Report Should Not Have Been Presented to the Jury

In reversing a jury verdict in favor of the defendant, the First Department held that a hearsay statement about the cause of the plaintiff’s fall, contained in a hospital report, should not have been presented to the jury:

Generally, admissions not germane to the treatment or diagnosis of a plaintiff’s injuries are not admissible under the business records exception to the hearsay rule … . A hearsay entry in a hospital record as to the cause of an injury may be admissible at trial even if not germane to diagnosis, if the entry is inconsistent with a position taken at trial. However, there must be evidence that connects the party to the entry … .

…[P]laintiff testified that she slipped on a metal bracket protruding from a subway step. The hospital record indicating that she slipped on wet ground should not have been presented to the jury since there was no proper foundation for its admission, inasmuch as it was unclear whether plaintiff was the source of that information … . Indeed, plaintiff testified that she did not tell the orthopedic surgeon that she slipped on a wet surface. The admission of the hospital record thus was not harmless error since it went to the crux of plaintiff’s allegations. [Defendant’s] primary defense was that plaintiff slipped on wet ground, and not from its negligence … .  Grant v New York City Tr Auth, 3013 NY Slip Op 02318, 9211, 305841/08, 1st Dept 4-4-13

SLIP AND FALL

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