New York Civil Law

New York Court of Appeals Straightens Out Interplay Between Art. 16 and Indemnification

I don't know about you, but when I read CPLR article 16 I'm consistently reminded of Otto von Bismark's comment about sausages and law.

Today, the New York Court of Appeals in Frank v. Meadowlakes Dev. Corp. addressed whether a tortfeasor whose liability is determined to be 50% or less can be found responsible for total indemnification of non-economic loss despite CPLR article 16.  The plaintiff was injured on a worksite at a building owned by Meadowlakes.  He commenced a personal-injury action grounded on Labor Law sec. 240(1) against Meadowlakes and the general contractor.  In turn, Meadowlakes commenced a third-party action based on contribution and indemnification against Frank's employer (Note: As the Court observes in a footnote, this action was commenced prior to 1996 Omnibus Workers Compensation Reform Act).  A jury ultimately apportioned fault against Frank for 10%, the plaintiff's employer for 10%, and the general contractor for 80%.  The court also directed judgment against Meadowlakes and the general contractor on the sec. 240(1) claim.

Meadowlakes settled with Frank and, thereafter, the trial awarded Meadowlakes' motion for common-law indemnification against the employer for close to $1.5 million.  On appeal, the employer argued that it could only be held liable for its proportionate share of negligence and not complete indemnification of Meadowlakes.  Analyzing the legislative intent of CPLR article 16, the Court agreed with the employer and held that Meadowlakes could not short-circuit Art. 16 by passing through 100% of its liability in the indemnification action given the assessment of the employer being 10% at fault.

For a clear understanding of this decision, I suggest re-reading CPLR article 16 and having it close by when reading the decision.

Nationwide Insurance Law Summaries and Legislative Updates -- New Addition to NYCL

I am very proud to announce that New York Civil Law will now post editions of CaseWatch, my firm's bi-monthly insurance newsletter, as part of its content.  CaseWatch is a free publication that offers brief summaries of insurance law cases from all 50 states.  The summaries provide a brief overview of the issues involved, with hyperlinks to the specific case (when available).  Additionally, CaseWatch contains summaries of legislation from all 50 states regarding insurance matters.

CaseWatch typically is published every other Tuesday and can be sent directly to your email inbox.  The benefit of doing so is that you will receive the publication on the day it is published and will also periodically receive summaries of breaking insurance news.  To receive the benefit of this timely information straight to your email inbox, contact CaseWatch's editor, Kevin Merriman.

If  you opt just to read the publication at New York Civil Law, I will typically post the latest edition on the Friday after it is published.

I am a contributor to CaseWatch, writing the legislative updates in the publication.  I have yet to find any other free insurance law resource on the Internet of this caliber.

Here is the most recent issue of CaseWatch (Download CaseWatchVol2_No17.DOC ).

I hope you enjoy it as much as we enjoy writing the content!

New York Court of Appeals Case Addressing Superceding Cause and Evidentiary Issue

The New York Court of Appeals' decision in Soto v. New York City Trans. Auth. involves a terrible accident where four youths were running on a catwalk next to a subway platform and one of the youths was hit by the train.  The New York City Transit Authority was appealing the denial of its motion to set aside the verdict in favor of the plaintiff, where the jury assessed 25% of liability against the Authority and the rest against the plaintiff.   The Court rejected the Authority's argument that the plaintiff's own reckless conduct was the sole proximate cause of the accident, noting that there was sufficient evidence to support the jury verdict given the jury instructions (the Court noted that the Authority failed to ask for a sole proximate cause jury instruction or a superceding or intervening cause instruction).  The case provides a good reiteration of the Court's standard of review on whether a jury verdict rest on legally sufficient evidence.

The Court addressed a separate, evidentiary issue determining whether the trial court erred by allowing the plaintiff to testify as to his running speed just before the accident.  It concluded that the trial court did not err,  observing that the plaintiff established a sufficient foundation demonstrating the basis of his knowledge of how fast he was running -- i.e.,  two years experience running on a treadmill calibrated to measure miles per hour.

Inaugural Lecture in New York Court of Appeals Lecture Series

The New York Court of Appeals is holding its inaugural lecture tomorrow in its lecture series (see invitation here).  The President of the State University of Albany, Kermit Hall, will be presenting the lecture entitled "NY Times v. Sullivan and its Times: The Press and the Community."  The coolest thing is that the Court is offering the lecture through live Webcast if you can't make it to the Courthouse!

Here is the Supreme Court of the United States' decision in N.Y. Times v. Sullivan for background.

Glib Title of Article, But Truth About Creativity At Work

In browsing CNN.com this morning, I came across this article: "Be smarter at work, slack off."  The glib article is deceptive because the point of the article is an astute one.

I've noticed that in the past couple of years that more and more businesses are making mistakes or, even worse, overlooking issues.  I attribute it to the proliferation of technology that makes workers always "at work," whether at home or actually at the desk in the office.  The article discusses a lack of perspective about work and work tasks caused by your mind constantly focused on work.

I have found that most of my best arguments and thoughts about briefs or motions come when I step back from my work and take a break.   I think the point of this article is especially important in the context of law firms, where the billable hour generally reigns supreme.

Plaintiff Survives Motion to Dismiss Regarding General Business Law sec. 349 Claim Against Insurer

As those in insurance coverage know, a cause of action pursuant to General Business Law sec. 349 within an insurance context is a difficult claim for a plaintiff to establish.  Most plaintiffs put in a sec. 349 claim, but cannot get over the obstacle that most circumstances involve disputes over a private contract and do not impact the public at large (see New York Univ. v. Cont'l Ins. Co.).

In the recent case of Wendol v. Guardian Life Ins., I was surprised to see that Justice Madden denied the insurer's motion to dismiss the plaintiff's cause of action alleging deceptive business practices under sec. 349.  In Wendol, the insurer issued the plaintiff a disability income insurance policy.  The plaintiff/insured alleged that he purchased the insurance with this particular insurer because (1) its reputation; and (2) the affirmative representation of its agent that the insurer administers its own claims.  Notably, there is no provision in the subject insurance policy permitting the insurer to transfer administration of policyholders' claims to any third party.

Based on a dispute about the receipt of benefits under the policy, the plaintiff alleged, among other things, that the insurer engaged in deceptive business practices by representing to the plaintiff and its other policyholders that it would administer its own claims when, in fact, the claims were administered by another entity and that fact was not disclosed.  Although Justice Madden held that the plaintiff failed to plead an actual injury from the misrepresentation, she did not dismiss the cause of action.  Justice Madden concluded that the following remaining allegations were sufficient to survive a dismissal motion: that the insurer (i) wrongfully conspired to misinterpret Policy terms to avoid or minimize payment of Total Disability and Residual Disability benefits, (ii) wrongfully conspired to claim a delayed disability onset date, (iii) wrongfully conspired to deny and refuse to pay disability income insurance policy claims and waiver of premium claims under disability policies, and (iv) wrongfully advise[d] their customers that benefits have been approved under reservation of rights, even though the policies issued by the insurer did not contain any provisions allowing such reservation.

New York Court of Appeals To Hear Arguments on Insurance Coverage Issue Concerning Excess Insurance Coverage

The New York Court of Appeals will address an insurance coverage question in Appalachian Ins. Co. v. General Elec. Co., regarding the meaning of the term "occurrence" in excess coverage insurance policies.  The Appellate Division, First Department stated the following regarding the trigger for the excess insurers regarding the claimant's allegation of asbestos exposure:

For the purpose of determining the attachment point of the excess coverage, the motion court correctly held that such clause is not ambiguous; that the operative "occurrence" is the last link in the causal chain leading to liability, i.e., the exposure of each individual claimant to asbestos contained in the turbines manufactured by the insured, rather than earlier events creating the potential  for future injury, i.e., the insured's design, manufacture and sale of the turbines without warnings about asbestos; and that, accordingly, individual claims could not be aggregated.

The Court of Appeals will examine the First Department's affirmance of a declaration that certain of the excess insurers are not obligated to defend or indemnify the insured with respect to any single claim that does not exceed $5 million.

New York Court of Appeals Will Hear Oral Arguments Concerning Odd Premises Liability Rule

New York Civil Law wrote about Rugieri v. Bannister, a weird premises liability case, awhile back (see prior post).  This post is augmented by the poignant comment of Bill Altreutur of Outside the Law. 

The appeal to the New York Court of Appeals comes from the Appellate Division, First Department and involves bizarre facts and issues of premises liability.  In Rugieri, the plaintiff was seriously injured when he was attempting to find the bathroom in a residential home and, accidentally, chose a door that led to the cellar.  One of the defendants, Leann Cheek, had borrowed the home from the defendant owner, and Cheek invited Rugieri and his companion over for dinner on the night of the accident.  During dinner, Rugieri apparently excused himself from dinner to use the bathroom, and Cheek called out to Rugieri that he was attempting to open the incorrect door for the bathroom and instead was opening the cellar door.

The First Department held that summary dismissal in Cheek's favor was unwarranted given the record demonstrated factual issues on whether Cheek's guidance to Rugieri was sufficiently specific to lead him to the bathroom in light of the proximity of a similar doorway that posed a danger.  The Court of Appeals will likely examine the following discreet rule of premises liability:

An . . . occupant of premises, who undertakes to direct a person unfamiliar with the surroundings to a particular part thereof, may be liable for active negligence in failing to give specific instructions, where the physical arrangement is such that a misunderstanding of the directions given would cause such person to enter a dangerous place."

New York Civil Law will keep you apprised of the appeal.

New York Court of Appeals Will Address Important Conflicts-Of-Law Issue

The Appellate Division, Second Department in Welsbach Elec. Corp. v. MasTec N. Am. Inc., 23 A.D.3d 639 (2d Dep't 2005), recently granted MasTec's motion for leave to appeal to the Court of Appeals regarding a contract and conflicts-of-law question. The open issue involves the applicability of a "pay-if-paid" provision in a subcontract that is controlled by Florida law. A "pay-if-paid" or "pay-when-paid" provision generally involves a contract provision in which the general contractor's obligation to pay the subcontractor is contingent on and subject to the general contractor's receipt of payment from the owner of the project.

Welsbach involved a subcontract controlled by Florida law between the plaintiff and defendant, and that subcontract had a provision making the defendant's payment contingent and subject to its receipt of payment regarding the primary contract with nonparty Telergy Metro LLC. In sharp contrast to the Appellate Division, First Department's recent decision in Hugh O'Kane Elec. Co., LLC v. MasTec N. Am. Inc., 19 A.D.3d 126 (1st Dep't 2005) on an extremely similar issue, the Second Department held that under New York's contract conflicts-of-law rules it could not enforce the foreign contract containing the pay-if-paid provision because it violated a public policy of New York. Because the Second Department failed to expressly state whether the enforcement would violate a "fundamental" public policy of this State, the correct standard under this State's conflict-of-law rules, the Court of Appeals will likely address that exact issue and resolve the conflict between the Appellate Division Departments.

You might be sitting there scratching your head and saying to yourself, "Matt, what's the deal with this arcane contract issue and doesn't the General Obligations Law render this issue academic."  If you are thinking that, I recommend reading the Second Department decision carefully and paying close attention to the omission of the word "fundamental" in the Court's choice-of-law analysis.  In my view, this matter involves important issues concerning the Court's application of New York's contract choice-of-law rules.

Disclaimer:  Because I wrote the motion for leave to appeal to the Court of Appeals and will help write the appeal to the Court, this post will the only one until after the matter is resolved.

Substantive Posts to Continue Next Tuesday

I will be attending the Defense Research Institute's Appellate Advocacy Seminar from Wednesday to this Friday (see prior post).  I am not sure how the Internet connections are at my hotel, so I'll just say that substantive posts will start up again next Tuesday (maybe I'll get lucky and score free Wi-Fi access so I can post during the week).

Have a great week!