The issue of late notice has plagued both insurers and policy holders for time immemorial. Historically, in most contexts, New York law did not require insurers to demonstrate prejudice before disclaiming coverage based on late notice of an occurrence or suit. New York joined the majority of jurisdictions when it enacted new legislation compelling an insurer to demonstrate prejudice for policies issued on or after January 17, 2009.

With this background in mind, we examine the tragic case of a 22 year old woman who sustained seemingly catastrophic injuries as a result of a motorcycle accident where the adverse vehicle was uninsured. [i]Waldron v. New York Central Mutual Life, et al[/i]. The policyholder – the father of the injured woman – first provided notice of the accident two months later to an agent of the insurer but indicated that he did not want to file a formal SUM claim at that time. Five months after the accident, he changed his mind and advised the agent to file a claim with his auto insurer that denied it based upon, among other reasons, late notice of the claim.

The old saying, “bad cases make bad law” was never truer than in a claim where a father excuses his delayed reporting because he was distraught over his daughter’s condition who was being cared for out of state. In W[i]aldron[/i], the Appellate Division, the Third Department throws the plaintiff a lifeline, finding an issue of fact on the timeliness of the notice to the insurer. We caution insurers that even when mathematical calculations support a strong late notice defense, the merits of an underlying claim may exert subtle pressure on a court to arrive at a “preferred” result.

http://decisions.courts.state.ny.us/ad3/Decisions/2011/510970.pdf

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In an effort to reduce the potential for bogus claims, in order to sustain a claim for uninsured motorist coverage in New York for accidents involving “hit-and-run” vehicles, the claimant must establish that there was “physical contact” with the hit-and-run vehicle.

In State Farm v. Beddini, the claimants were on a Vespa, when a large, cardboard box flew off of the back of an unidentified pick-up truck. The box became lodged in the front wheel of the Vespa, causing the claimants to be ejected and sustain injuries.

A similar situation occurred in [i]Allstate v. Killkaney[/i], where a tire and rim from an unidentified vehicle caused the claimant’s vehicle to crash. However, in rendering its decision, the Court of Appeals held that physical contact occurs “when the accident originates in collision with an unidentified vehicle, or an integral part of an unidentified vehicle.”

As such, the [i]Beddini [/i]Court found that, while a tire and rim were clearly an integral part of a vehicle, a cardboard box was not, and therefore, there was no coverage for the claim.

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An insurer’s settlement of litigation is binding on its insured even where there is a substantial self – insured retention. During mediation of a claim by two boilermakers injured in a refinery explosion, the plaintiffs were offered $1.6 million. The parties agreed that a settlement would resolve all claims and cross claims pending in the litigation. However, the plaintiffs did not outright agree to the amount of the offer and continued to negotiate with the insurance adjuster – finally accepting $1.65 million.

At that point, the settlement of the cross claims began to unravel. The defendants in the case included the owner of the refinery and the company it contracted to provide maintenance services along with two of its subcontractors. The maintenance contractor assumed the defense of the refinery owner and then sought defense and indemnification from its two subcontractors. Despite contractual provisions requiring the subcontractors to name the owner and contractor as additional insureds on their CGL policies, both insurers denied that such coverage had been secured. While one of the insurers participated in the settlement, the other chose not to contribute.

The mediated settlement agreement included dismissal of all cross-claims including claims against both subcontractors for breach of contract. However, the contractor retained the right to pursue the non-participating subcontractor’s insurer in a separate declaratory judgment action.

On second thought, the contractor, who had a substantial self insured retention, became concerned that, in the event the declaratory judgment failed, it would have no recourse for breach of contract against its subcontractor once the cross-claim was extinguished. A fight to enforce the term of the settlement agreement requiring dismissal of the cross-claim ensued.

Even though the subcontractor had not contributed towards the settlement, the Appellate Division enforced the terms of the agreement requiring dismissal of the breach of contract cross-claim. In fact, the court considered this a non-factor in its decision.

Instead, the court focused on the right of the contractor’s insurer to settle the case. Absent express language in the insurance policy requiring the insured’s consent to settle, an insurer has the right to control the terms of the settlement so long as it proceeds in good faith. Thus, notwithstanding the contractor’s self insured retention, its right to pursue the cross-claim against its subcontractor was extinguished by its insurance adjuster’s settlement agreement.

See [i]Davis v. Valero Refining Co[/i], at http://www.judiciary.state.nj.us/opinions/a1337-10.pdf

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In [i]Sclafani v Brother Jimmy’s BBQ, Inc., [/i]the plaintiff was a patron at the defendant’s bar when the bartender, in a pyrotechnic display, poured Bacardi 151 rum onto the surface of the bar and ignited it. The flame spread to the bottle and flames shot out of the mouth of the bottle and burned the plaintiff. She brought a strict products liability action against Bacardi based on a defective design claim. Bacardi moved to dismiss the claim because the bottle included warning labels and a removable flame arrester. The Appellate Division denied the motion, noting that Bacardi failed to submit any evidence substantively contradicting the complaint or the conclusions of the plaintiff’s experts. Interestingly, the court noted that Bacardi actively promoted “the very pyrotechnic uses that caused plaintiff’s injuries” and declined to dismiss the plaintiff’s claim for punitive damages.

Thanks to Bill Kirrane for his contribution to this post.

http://www.nycourts.gov/reporter/3dseries/2011/2011_07184.htm

Generally, whether a dangerous or defective condition exists on the property of another so as to create liability depends on the facts of each case and is generally a question of fact for the jury. However, it is well established that a trivial defect that does not constitute a trap or nuisance that would cause someone to trip is not actionable. Despite this established standard, New York’s lower courts’ decisions on the issue of trivial defects have been inconsistent. In fact, some judges believe that by raising the trivial defect argument a defendant creates a question of fact for a jury. [i]Kehoe v. The City of New York[/i], is the latest example of a court’s failure to adhere to the established standard. In [i]Kehoe[/i], the plaintiff tripped and fell in front of defendant Avitable’s property, resulting in her death. The defendant moved for summary judgment on the grounds that the defect was trivial as a matter of law and not actionable. The Supreme Court, Kings county denied the defendant’s motion, but the Appellate Division, Second Department reversed finding that the defendant established that the defect was trivial and did not possess the characteristics of a trap or nuisance.

Thanks to Ed Lomena for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_07006.htm

The way in which Pennsylvania courts, attorneys and medical providers deal with medical record subpoenas never ceases to surprise. Take, for example, the fact that many PA medical providers provide records (in response to a subpoena) without ever seeing a HIPAA compliant authorization. And it is ever difficult to get HIPAA complaint authorizations from plaintiffs since, unlike in many jurisdictions, the authorizations are not provided with the initial discovery response. But in the rare cases where the plaintiff is not providing the authorization and the medical provider is, in fact, complying with federal law, what’s a defense attorney to do? The usual answer is provide the plaintiff with blank authorizations and ask him to fill them out. This practice has been called into question in the case of [i]Beaston v. Benaknin[/i], a Lebanon County trial court decision. In its decision, the court wrote that “plaintiff should be able to maintain confidentiality regarding medical records irrelevant to the current litigation” but added that the “plaintiff must identify all withheld documents along with a reason for why he or she is withholding those documents.” In other words , plaintiffs do not have to supply a blanket authorization, but they do have to supply a medical record privilege log. Good luck getting that from a typical plaintiff’s attorney.

For more information about this post or WCM’s PA practice, please contact Bob Cosgrove at .

In [i]Fragale v. City of N.Y.[/i], a case involving an alleged slip and fall, the First Department reversed the trial court’s decision that granted the defendant’s motion for summary judgment. The First Department held that issues of fact existed with respect to whether the defendant had constructive notice of the claimed condition. The lower court ignored the statements and testimony of the defendant’s employees as to whether there was an ongoing and recurring dangerous oil condition in the area where the plaintiff fell and that was routinely left undressed. Indeed, the defendant’s superintendent conceded that the floor was oily “for weeks and months.” Additional evidence was submitted that one of the defendant’s supervisors routinely performed maintenance on vehicles in the area where the plaintiff’s accident occurred, potentially creating the hazardous condition by causing oil to spill on the floor. For these reasons, questions of fact precluded summary judgment.

Thanks to Lora Gleicher for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_07138.htm

In [i]Vazquez v. Genovese Drugs, Inc[/i]., the plaintiff sustained injuries after tripping and falling over a raised portion of a rug at the entrance to the defendants’ drugstore. However, at her deposition, the plaintiff testified that everything looked “normal” and that she did not notice anything until [i]after[/i] she fell. The defendants moved for and were granted summary judgment. On appeal, the Appellate Division, First Department affirmed holding that the plaintiff failed to offer any evidence as to actual or constructive notice and that all observations as to the rug were made after she fell. Furthermore, without evidence of a defect, the drug store did not have to demonstrate when it last inspected the rug.

Thanks to Alex Niederman for his contribution to this post.

http://www.courts.state.ny.us/REPORTER/3dseries/2011/2011_06982.htm

In [i]Larson v. Cooper Square Comm. Develop. Committee & Bus. Assoc., Inc.[/i], 11243/11, NYLJ 1202517524591 (Sup. Qu. Sept. 26, 2011), plaintiff claimed that she was sexually assaulted by a tenant advocate for Cooper Square Development Committee and Businessman’s Association. Specifically, the plaintiff claimed that she had nonconsensual sex with the advocate on 12 occasions when he made home visits to her apartment in Cooper Square. Plaintiff asserted that Cooper Square was liable under the respondeat superior theory. The court found that the advocate’s actions were outside the scope of his employment. The fact that it was part of the advocate’s employment to make home visits did not bring the acts of the sexual assaults or sexual relationship into the scope of the employment. The acts were not done in furtherance of Cooper Square’s business and were a departure from the acts of a tenant advocate and, thus, outside the scope of his employment. The court dismissed the negligent hiring, retention and supervision claims against Cooper Square because plaintiff could not establish that Cooper Square knew or should have known about the advocate’s alleged tortious propensities.

Special thanks to Cheryl Fuchs for her contributions to this post. For more information, please contact Nicole Brown at .

In Schulman v. 34th Street Partnership, Inc., the First Department unanimously affirmed the trial court’s denial of defendant’s summary judgment motion where plaintiff claimed personal injuries as a result of sidewalk defects in defendant’s property. Defendant, citing that it had made improvements to the sidewalk as part of a business improvement district project was unable to establish entitlement to judgment as a matter of law.

The First Department stated that the evidence of improvements presented was insufficient to show that defendant did not create or cause the dangerous defective condition.

Thanks to Alison Weintraub for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_06944.htm