New York Civil Law

Posts Resume Next Week

I've got some great cases to write about, but work and other obligations prevent me from doing so this week.  Posts will resume next week.  Have a Happy Halloween and a great week.  Below I provide some ideas for a great Halloween in lieu of reading my blawg.

Top 5 New York Civil Law Halloween costumes:

5. Eric Dinallo -- Superintendent of the New York Department of Insurance;

4. an apple muffin - New York's Official State Muffin (we have an official state muffin?);

3. Helen Palsgraf -- the unsuccessful plaintiff in one of New York's most famous tort cases;

2. a No-Fault fraud perpetrator -- drive around with 6 of your friends and stage accidents throughout your neighborhood (Tip: don't trick or treat with anyone who is wearing an Eric Dinallo, Howard Mills or Greg Serio costume); and

1.  the ghost of Lochner -- United States Supreme Court decision Lochner v. New York by our very own Rufus Wheeler Peckham.

Since they'll be a mad rush at New York costume stores for these costumes, please feel free to post some of your own New York Civil Law ideas in the comments section below.

 

Notes from Oral Argument for Raffellini v. State Farm Mut. Auto. Ins. Co.

As New York Civil Law wrote in a prior post, the New York Court of Appeals heard oral arguments earlier this month in Raffellini v. State Farm Mut. Auto. Ins. Co.  The issue on the appeal is: Does an injured plaintiff have to establish he or she sustained a "serious injury" under Insurance Law sec. 5102 to recover supplementary underinsurance motorist coverage (SUM) from his or her insurance carrier?

I attended the oral argument and was impressed by both the appellant's and respondent's counsel.  For those of you who missed the oral argument, the following is a summary of my notes:

Appellant’s counsel began his argument on behalf of State Farm by stating that the statutory framework of Insurance Law § 3420(f)(1) and (2)(A) demonstrate the “serious injury” requirement in both the uninsured motorist coverage and  supplementary underinsured motorist contexts.  Chief Judge Kaye asked counsel to explain his position given section 3420(f)(1) explicitly required a “serious injury” showing where section 3420(f)(2)(A) did not.  Counsel explained that section 3420(f)(2)(A) was not written in a vacuum.  Counsel also pointed out that section 3420(f)(2)(A) incorporated the language of section 3420(f)(1) because section 3420(f)(2)(A) language began with the phrase, “[a]ny such policy.”  Judge Ciparick seemed to reject that interpretation, observing that such general language is always contained in statutes.  Judge Ciparick also seemed to question the fairness aspect of requiring the plaintiff/insured to demonstrate a “serious injury,” commenting that SUM benefits are purchased for an additional premium, the coverage is optional, and the benefits act as excess coverage.

Judge Read asked appellant’s counsel whether there was any logic for the Court to require a “serious injury” showing for section 3420(f)(1) and not for section 3420(f)(2)(A).  Counsel stated that there was no logic supporting such divergent treatment.  Judge Read followed up her question, asking about State Farm’s position regarding the plaintiff/insured’s settlement with the underinsured tortfeasor (State Farm did not respond to its insured’s request for authorization to accept the settlement and, thus, it was deemed that State Farm authorized the settlement).  Judge Read then asked whether State Farm would protest settlements with underinsured tortfeasors in future cases if the Court decided against State Farm.  Counsel answered that he most likely would advise State Farm to respond to its insureds’ request for authorization.  Judge Smith then asked rhetorically, “What would you do?  Tell the [insured] not to settle?” 

Judge Smith then asked about the res judicata impact of a “serious injury” finding in the underinsured motorist part of the case.  Appellant’s counsel stated that it was State Farm’s position that the SUM insurer would not be bound under the doctrine of res judicata by the finding of “serious injury” and that the plaintiff/insured would have to demonstrate “serious injury” in seeking SUM benefits.  Judge Ciparick then replied, “Would you be forcing a trial on the serious injury [issue]?”

Prior to respondent’s counsel setting out his argument on behalf of Mr. Raffellini, Chief Judge Kaye asked him to explain the logic for section 3420(f)(1) including the “serious injury” requirement but section 3420(f)(2)(A) not doing containing such language.  Counsel argued that the two sections were completely separate.  The crux of counsel’s argument was that a “serious injury” finding was implicit where the underinsured tortfeasor’s carrier paid the plaintiff/insured the policy limits.  He reasoned that the plaintiff/insured had to convince the underinsured tortfeasor’s carrier that the plaintiff sustained a “serious injury” to justify the carrier paying the policy limits.  As such, a settlement demonstrated a “serious injury” finding and the plaintiff did not have to demonstrate for a second time to the SUM insurer that he or she sustained a “serious injury” to receive SUM benefits.  Chief Judge Kaye noted that if the “serious injury” finding was implicit when a settlement with the underinsured tortfeasor’s carrier was reached, what was the harm with just making a “serious injury” showing explicit in a SUM endorsement.  Counsel answered that doing so would require two showings of serious injury, and he argued that such a requirement was an unnecessary obstacle to the plaintiff/insured receiving SUM benefits.

Judge Graffeo struggled with respondent’s counsel’s argument, asking “At some point, don’t you have to demonstrate a serious injury?”  Judge Pigott followed up by explaining that the significance of a settlement can have different interpretations depending on the type of injury.  He gave the example of a broken pinky versus a herniated disc.  In the case of a broken pinky, Judge Pigott explained that there was no doubt that the plaintiff sustained a “serious injury” as explained in Insurance Law § 5102(d).  Judge Read also appeared skeptical of counsel’s “implicit showing” argument, asking “Aren’t there many reasons for settlement?”

Chief Judge Kaye asked respondent’s counsel whether the Fourth Department’s decision in Meegan was distinguishable.  Counsel stated that the Fourth Department was mistaken in its holding, and that the statute had to explicitly state that a “serious injury” showing was necessary to require such a showing.

Perhaps the most telling question came from Judge Graffeo, who asked “In order to find in your [Mr. Raffellini’s] favor, the Court must make a determination about settlement?”  The implication of Judge Graffeo’s question is that the Court would have to hold that a settlement with the underinsured tortfeasor’s carrier equated to an finding of “serious injury.”  Respondent’s counsel stated that in the case before the Court, a “serious injury” was implicit because of the settlement with underinsured tortfeasor’s carrier.

New York Civil Law will report on the Decision, which is expected be handed down in November.

The State Commission on Judicial Nomination Offers 5 Choices for Next Year's Open Slot on New York Court of Appeals

Last week, the state Commission on Judicial Nomination offered 5 recommendations for the seat on the New York Court of Appeals that will be open on January 1, 2008 -- when Judge Ciparick's 14-year term expires.

The choices are:

Judge Carmen Ciparick, who currently sits on the New York Court of Appeals;

George F. Carpinello, a partner in the Boies, Schiller & Flexner;

Jeremy G. Epstein, a partner in the Shearman & Sterling;

Helen E. Freedman, currently a state Supreme Court justice for New York County, Commercial Division; and

Steven C. Krane, partner in the Proskauer Rose law firm.

New York Court of Appeals Examines Pattern Jury Instructions in Common Carrier Context

In Boyd v. Manhattan & Bronx Surface Transit Operating Auth., the New York Court of Appeals last week determined that the jury charge -- especially the first sentence of Pattern Jury Instruction 2:164 -- might have been misconstrued as placing a higher duty of care on a defendant than is now warranted under New York tort jurisprudence.  In Boyd, the plaintiff was injured on a city bus when she attempted to hold onto a strap that slipped out of its holder.   At trial, the defendants asked the court to charge the jury on actual and constructive notice.   The court was asked to charge that, even if the strap was defective, defendants were not negligent if they did not know, and would not by the use of reasonable care have known, of the defect.

Instead, the trial court charged the jury pursuant to PJI 2:164, which began:

A common carrier such as a bus company is required to know, and is charged with knowing the danger of its passengers from faulty maintenance of its vehicle and equipment, and is also charged with knowing how to avoid
such dangers.

The Court of Appeals observed that the charge the trial court gave was not incorrect, but the statement that "a bus company is required to know, and is charged with knowing the danger of its passengers from faulty maintenance of its vehicle and equipment" is open to misinterpretation.  The Court held that in cases like Boyd courts should give an instruction on actual and constructive notice.

A read of the decision in Bethel v New York City Tr. Auth. is good background for a common carrier's duty of care in New York.

New York Court of Appeals Does Not Recognize A New Tort for a Third-Party's Negligent Spoliation of Evidence

Just yesterday, the New York Court of Appeals in Ortega v. City of New York refused to expand MetLife
Auto & Home v Joe Basil Chevrolet and determined that a cause of action for a third party's negligent spoliation of evidence is not cognizable in this State.  As New York Civil Law wrote in prior posts, this case was riddled with unexplained issues. 

The plaintiffs were severely burned when one of the plaintiffs' automobiles caught fire for an unexplained reason.  One of the plaintiffs obtained a pre-action order for the City of New York (a third-party not responsible for the automobile fire) to preserve the subject automobile for inspection; however, the automobile was destroyed.  The plaintiffs commenced an action against the City based on spoliation and contempt of court.

Supreme Court, Kings County in its decision recognized the viability of an independent cause of action for spoliation.  The Appellate Division, Second Department rejected in their opinion the plaintiffs' contention that they could recover damages for spoliation of evidence against the third party.

The Court of Appeals agreed, carefully analyzing why recognizing such a tort was not viable and would lead to too much speculation for the jury.  Perhaps the most interesting part of the decision was the Court's observation that not every wrong can have a remedy.

Nominations for Best New York Blawg and Blawger

Nikki at Sui Generis is hosting a contest for Best New York Blawg and Best New York Blawger (see post here).  It's great to see that we now have so many blawgs and blawgers to choose from. 

Go visit Sui Generis and rock the vote.

Article on No-Fault and Notice to Admit

One of the most under-utilized discovery devices is the notice to admit.  During this past summer David Barshay and Dave Gottlieb (of No-Fault Paradise) wrote this excellent article (Download notice_to_admit.doc)  on the Notice to Admit in the No-Fault context.

New York Court of Appeals Agrees with Third Department in Burns v. Varriale

Agreeing with the Appellate Division, Third Department, the New York Court of Appeals last week in Burns v. Varriale held that the value of future workers'compensation benefits for a claimant with a nonschedule permanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time claimant recovers damages in a third-party action, and that claimant is not entitled to an apportionment of attorney's fees based on such future benefits.  Here is the Third Department's decision below.

New York Court of Appeals Will Hear Duty of Care Oral Argument

Can a mechanic that performed a negligent inspection on an automobile be liable to a third-party who gets into an accident with the automobile that the mechanic inspected?  The New York Court of Appeals will address this duty of care issue this Thursday in an appeal entitled Stivers v. Good & Fair Carting & Moving,  Inc.

In Stivers, a mechanic employed by the defendant performed a New York State motor vehicle inspection of an automobile owned by Stephen Corbett, the defendant in a related action, and the vehicle passed the Inspection.   A vehicle driven by  Stiver (the plaintiff) struck Corbett's vehicle from behind when Corbett's vehicle abruptly stopped in the middle of a highway, causing the plaintiff to sustain personal injuries. The plaintiffs alleged that transmission components in Corbett's vehicle malfunctioned, rendering the vehicle inoperable and causing the collision.  The plaintiffs commenced this negligence action alleging that the defendant failed to use reasonable care when performing the inspection of Corbett's vehicle.   The Appellate Division, Fourth Department held that the defendant owed no duty of care to the plaintiffs.

Excess Insurer's Disclaimer 42 Days After Notice Deemed Reasonable

The Appellate Division, Second Department's recent decision in Tully Constr., Co. v. TIG Ins. Co. demonstrates the importance of an insurer documenting its investigation of a claim to guard against allegations of late disclaimer under Insurance Law sec. 3420(d).  The underlying claim concerned a fatal accident involving an automobile and a backhoe parked on the shoulder of a Staten Island highway. 

A dispute arose over when the backhoe's owner gave notice of the accident to its excess carrier.  The excess insurer demonstrated to the Court that once it learned of the accident and underlying lawsuit, it investigated the applicable facts in preparation to denial coverage based on the insured's late notice of the claim.   The Court concluded:

Under the particular circumstances of this case, [the excess insurer] met its burden of demonstrating that its investigation was reasonably related to its completion of a thorough and diligent investigation into whether it had grounds for a disclaimer based on late notice.  Therefore, its [42-day] delay in disclaiming coverage was not unreasonable for purposes of Insurance Law § 3420(d)