New York Civil Law

Insurance Coverage Opinion from Appellate Division, Third Department Raises Eyebrows

Back in 2005, the Appellate Division, Third Department in Elacqua v. Physicians' Reciprocal Insurers held that an insurer has a duty to inform its insured that he or she has the right to independent counsel paid for by the insurer where a matter concerns some covered causes of action and some that are not.  The Third Department recently had a chance to address a slightly different issue in Elacqua II.  The Third Department in Elacqua II held that the insurer's failure to inform the insureds that they had a right to select independent counsel of their choosing at defendant's expense pursuant to a company policy not to inform their insureds of that right constituted a deceptive practice under General Business Law sec. 349.

New New York Insurance Coverage Blawg -- Coverage Counsel

New Yorkers represent when it comes to the legal blogosphere.  Add another N.Y. blawger to the list: Roy Mura edits Coverage Counsel.  The blawg is case law focused and Roy is an experienced attorney, who offers his expertise to each post.  Please help me welcome Roy and Coverage Counsel to the blogosphere.

Tenuous Case of Respondeat Superior?

The decision in Campbell v. Munoz concerns an interesting fact pattern on whether an employee was acting within the scope of his employment when his actions allegedly caused the injury of the plaintiff.
The facts are odd.  The plaintiff injured herself while running away from a falling tree originating in her neighbor's yard.  Her neighbor's relative, the employee, was removing a tree free-of-charge.  The defendant Reliable Tree Service, Inc. allowed the employee to use its truck and equipment to perform the work.  Reliable also encourage the employee to engage two other crew members with the tree removal.

Nassau County, Supreme Court (Feinman, J.), concluded that an issue of fact existed as to whether Reliable's employees were engaged in the business of Reliable or acting within the express or implied authority of Reliable.

Recent New York Court of Appeals' Insurance Coverage Decision

The New York Court of Appeals decided Worth Contr. Co. v. Admiral Ins. Co. last week.  The issue on appeal addresses the interpretation of an additional insured endorsement, stating:

The additional insured endorsement of the Farm Family/Pacific policy provides in relevant part as follows: "WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you." Under paragraph 21 of the policy, the term "Your work" is defined to mean "(a) Work or operations performed by you or on your behalf; and (b) Materials, parts or equipment furnished in connection with such work or operations."

The plaintiff Worth Construction was general contractor on a construction site in White Plains.  Defendant Farm Family insured subcontractor Pacific Steel, hired by Worth to build a staircase.  Farm Family's insurance policy contains the already referenced additional insured endorsement covering Worth for liability arising out of its insured's operations at the White Plains project.

An injured worker, who was employed by a sub-subcontractor brought an underlying action against Worth in Westchester County for injuries allegedly sustained when he slipped on the stairs built by Pacific. At the time of the accident, Pacific had finished installing the metal pans on the stairs and was not scheduled to come back to the site to put up handrails until other trades had filled in the metal pans with concrete.  In the underlying Westchester action, Worth formally admitted that no negligence on Pacific's part contributed to the accident, resulting in Pacific's dismissal from the underlying action.

The Court of appeals reversed the Appellate Division's Order and reinstated the order of Supreme Court granting summary judgment to Farm Family.  Notably, the Court stated:

The allegation in the complaint that the stairway was negligently constructed was the only basis for asserting any significant connection between Pacific's work and
the accident. Once Worth admitted that its claims of negligence against Pacific were without factual merit, it conceded that the staircase was merely the situs of the accident. Therefore, it could no longer be argued that there was any connection between Murphy's accident and the risk for which coverage was intended.

Quick Post About Admissibility of Accident Report

Nunez v.  Levy is an interesting Labor Law case that contains an issue regarding the admissibility of  an accident report.  The defendants attempted to preclude the admission of the post-accident report into evidence because, among other things, it addressed opinions about post remedial repairs or measures.  Supreme Court, New York County held that the report was admissible, describing it as a post-accident evaluation of what caused the accident and how it occurred.

Appellate Division, First Department Rejects Negligent Design Theory Regarding Cigarettes

The Appellate Division, First Department's recent decision in Rose v. Brown & Williamson Tobacco Corp. is an important for New York's products liability jurisprudence.  The plaintiffs' contention was that, during the years in question, the relevant tobacco companies should have sold only "light" cigarettes (which contain relatively low levels of cancer-causing tar and addictive nicotine) and should not have sold regular cigarettes of the kind Ms. Rose smoked (which contain significantly higher levels of the aforementioned harmful substances).  The plaintiff's theory was grounded on a negligent design cause of action.

The First Department analyzes the all-important feasible alternative product design prong of any design defect allegation.  Justice Nardelli and Catterson dissented and, thus, the Court of Appeals will have a crack at the case. 

NYCL will keep you informed of developments in the case.

Form for Ex Parte Interviews of Treating Physicians

The New York Court of Appeals' decision in Arons v. Jutkowitz and Kish v. Graham raised quite a stir.  In Arons and Kish, the Court held that opposing counsel may conduct an ex parte interview of the adversary's treating physician post-note of issue where that party puts his or her medical condition at issue (see prior post and comments).

Litigants are now required to provide their adversary with HIPAA compliant authorizations that permit the interview.

The Chief Administrative Judge, by order dated February 27, 2008, promulgated an official form to be used as the litigant's authorization to allow the treating physician to submit to an ex parte interview. The authorization is addressed to the physician. You can obtain this form here.

New York Court of Appeals Decides on Summary Judgment Standard Regarding Products Liability Claim

Earlier this month, the New York Court of Appeals vindicated Justice Perradotto's dissenting opinion in Ramos v. Howard Indus. Inc.  In Ramos (COA opinion), the Court of Appeals addressed the novel issue concerning the burden a manufacturer has on summary judgment to make a prima facie showing that no manufacturing defect existed where the product has been spoliated.

The plaintiff in Ramos commenced a products liability action seeking damages for injuries he allegedly sustained when a transformer designed and manufactured by the defendant exploded.   Initially, the plaintiff reported to his employer and doctors that he was injured when he reached out of an aerial bucket while installing the transformer on a utility pole.  The plaintiff later claimed that his injuries occurred as a result of the transformer explosion, but at that time the transformer could not be located for inspection or testing concerning the cause of its failure.

In support of its motion the defendant manufacturer proffered evidence that its transformers generally were designed and manufactured under state of the art conditions according to power company's specifications and complied with all applicable industry standards. The evidence also demonstrated that the transformer which allegedly exploded and injured the plaintiff would have been individually tested to ensure compliance with customer specifications and industry requirements.

The Appellate Division, Fourth Department Majority agreed with the trial court that the defendant manufacturer did not meet its burden on summary judgment because it merely pointed to gaps in the plaintiff's proof. 

Justice Perradotto dissented, offering a well-reasoned opinion on the impossible standard the Majority required of a defendant in defending a circumstantial products liability case where the product was missing.

In its decision earlier this month, the Court of Appeals explained that the defendant, without benefit of the actual transformer, met its burden on the summary judgment motion.  With respect to the plaintiff's burden, the Court concluded:

Plaintiff failed to present evidence excluding all other causes for the transformer's malfunction not attributable to defendant such that a reasonable jury could find that the transformer was defective in the absence of evidence of a specific defect.  Although a plaintiff is not required to identify a specific defect in a circumstantial case, plaintiff's theory here -- that the explosion resulted from a manufacturing defect in the form of an "internal electrical fault" -- is pure speculation.

A read of Speller v.  Sears, Roebuck & Co. nicely complements this decision

New York Court of Appeals Hears Oral Argument on Additional Insured Provision

Next week, the New York Court of Appeals will hear oral arguments in Worth Contr. Co. v. Admiral Ins. Co.  The issue on appeal addresses the interpretation of an additional insured endorsement, stating:

The additional insured endorsement of the Farm Family/Pacific policy provides in relevant part as follows: "WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you." Under paragraph 21 of the policy, the term "Your work" is defined to mean "(a) Work or operations performed by you or on your behalf; and (b) Materials, parts or equipment furnished in connection with such work or operations."

The plaintiff Worth Construction was general contractor on a construction site in White Plains.  Defendant Farm Family insured subcontractor Pacific Steel, hired by Worth to build a staircase.  Farm Family's insurance policy contains the already referenced additional insured endorsement covering Worth for liability arising out of its insured's operations at the White Plains project.

An injured worker, who was employed by a sub-subcontractor brought an underlying action against Worth in Westchester County for injuries allegedly sustained when he slipped on the stairs built by Pacific.   At the time of the accident, Pacific had finished installing the metal pans on the stairs and was not scheduled to come back to the site to put up handrails until other trades had filled in the metal pans with concrete.  In the underlying Westchester action, Worth formally admitted that no negligence on Pacific's part contributed to the accident, resulting in Pacific's dismissal from the underlying action.

The Appellate Division, First Department's Majority held that it is immaterial, for purposes of deciding additional insured coverage, whether Pacific had completed its installation of the stairs, whether Pacific's installation of the stairs was negligent, or whether Pacific or a contractor in privity with it was the injured worker's employer.  That the injury was sustained on the stairs was sufficient to determine additional insured coverage. 

Justice Nardelli, with Justice McGuire joining the dissenting opinion, opined thathe Majority's analysis is erroneous, for the reasons stated by Justice Sullivan in his dissenting opinion in Chelsea Assoc., LLC v Laquila-Pinnacle (21 AD3d 739, 741 [2005], lv denied 6 NY3d 742 [2005]).

NYCL law will keep you apprised of the decision when the Court hands it down.

New Certified Question Regarding Insurance Coverage

The United States Circuit Court of Appeals for the Second Circuit in Briggs Ave. L.L.C. v. Ins. Corp.  of Hanover recently certified the following question to the New York Court of Appeals:

When an injured party begins its suit against an insured by serving process on the Secretary of State, who, under New York corporate and limited liability company law, is the insured’s agent for such service, does this service suffice to trigger the provisions in the relevant insurance policy that require the insured to inform its insurer in a timely manner that a suit has been brought, where: (a) the insurance policy does not expressly refer to notice that a suit has been brought being given to an insured’s “representative” rather than the insured itself, and (b) the insured plausibly argues that – due to its failure to update its address with the Secretary of State – it had not received actual notice that the suit had been brought?

NYCL will keep you apprised as to whether the Court of Appeals accepts or declines the certified question.

Thank you to Sandy at Second Opinions for the head's up.