Homeowner’s policies contain a business exclusion. So when an insurer believes that a claim arises out of a homeowner’s business activity, it is likely to decline coverage. This scenario presented itself recently in Bay State Insurance Companyv. Jennings. The claim arose when a child was injured while under the care of the homeowner. While shopping, the caretaker fell causing a shopping cart to topple with the toddler inside. The toddler was injured and a claim presented.
During the course of discovery, the insurer learned that the homeowner was caring for the child while her parents worked. The insured testified that she was not engaged in a child care business but rather was simply helping her best friend. The child’s mother testified that she only gave her friend $35 per day to cover costs associated with food, diapers, etc.
After a hearing, the judge found that the homeowner was in fact not motivated for financial gain but rather by her love for her friend and the child. She held that the business exclusion was inapplicable. The appellate division affirmed and noted that receiving money for childcare does not establish a profit motive and that the insurer bore the burden to prove this motivation.
For more information contact Denise Fontana Ricci at .
In Malupa v. Oppong et al, the First Department unanimously affirmed the dismissal of the plaintiff’s complaint on threshold grounds. The plaintiff alleged injuries stemming from a motor vehicle accident, and the defendants moved to dismiss because plaintiff had not sustained a “serious injury,” under NY Ins. Law Section 5102. The defendants cited reports from their orthopedist and neurologist, who, after examining plaintiff, found full range of motion and no residuals, along with a radiological report noting only pre-existing degenerative conditions.
Plaintiff failed to raise a triable issue of fact, despite his doctor’s affidavit noting range of motion restrictions, albeit minor ones. Moreover, the plaintiff’s physician does not address causation or the degenerative conditions noted by defendants.
Conversely, last year in Njie v. Thompson, 2012 NY Slip Op 06564 the First Department denied a threshold motion because plaintiff’s initial treating physician diagnosed a shoulder tear, and plaintiff’s trial expert found some limitation in ROM.
These two decisions hardly provide a roadmap on how to [prevail on a threshold motion, especially in light of similar present ROM findings in each case. We surmise that, had the plaintiff’s doctor in Malupa simply addressed the causation and degenerative issues referenced by the defendant’s doctors, the Court would have been forced to follow Njie and deny the Oppongs motion, based upon a triable issue of fact between the doctors.
Going forward, if a defendant’s doctors can identify pre-existing degenerative conditions, these should obviously be cited to disrupt the causal link between the accident and the alleged injury. However, the ball then seems to be in the plaintiff’s court. If the plaintiff’s doctor addresses and rejects the defendant’s reports, a denied threshold motion will likely follow.
Special thanks to Brian Gibbons for his contribution.
For more information, contact Denise Fontana Ricci at .
A hit and run twenty-year old driver severely injured a pedestrian while operating his vehicle with a blood alcohol level of 0.192 percent. The driver had consumed alcohol at an unauthorized after hours pool party at an apartment complex. The apartment’s night time front desk concierge facilitated the party by letting the party-goers into the pool – all against the complex’s policy and training. With only one potential deep pocket, the plaintiff’s attorney got creative with multiple theories of liability against the complex, i.e. social host liability, negligent hiring, and respondeat superior.
The result was a $7.4 million judgment in the case of Lau v. Seabring Associates. However, the appellate division found that the blend of theories and resulting jury charge fused disparate theories of liability to the extent that it had no confidence that the jury properly evaluated the various claims. While it did not disturb the damages awarded, it did reverse with instructions for a new trial on liability.
On the day of the accident, defendant’s youthful front-desk concierge allowed unauthorized individuals into the building, provided unfettered access to the pool area, and allowed alcohol to be consumed in the pool area, while guarding the closed circuit television surveillance system so that he alone could monitor the pool activities. The complex contended its employee’s actions were violations of its policies and his duties.
The trial judge instructed the jury on respondeat superior, social host liability, and negligent hiring. On the issue of respondeat superior, the Appellate Court reasoned that no reasonable juror, when properly instructed could dispute that the defendant’s employee acted outside of the scope of his employment, thereby relieving defendant of liability for the unauthorized actions of its employee. As for social host liability, the Appellate Court noted that the social host liability statute applies only to service of alcohol to adults. Service of alcohol to a minor is governed by common law negligence principles. However, the record was devoid of evidence to impose liability on the complex since it could only be liable through the actions of its employee under respondeat superior, a theory for which the Court had already found no evidential support. Yet, the Court found that there was sufficient evidence to support a negligent hiring claim. It noted that the concierge had recently been promoted from lifeguard and was the youngest person to be hired for that job. The Court reasoned that there was sufficient evidence based upon his inexperience, youth, and lack of training to support a negligent hiring claim.
Thus, the court remanded the case for a second trial on liability issues only. Ultimately, the second trial did not go forward due to a high-low settlement agreement entered into between plaintiff and defendant.
Special thanks to Emily Kidder for her contribution.
For more information, contact Denise Fontana Ricci at .
Partner Bob Cosgrove and associate Remy Cahn obtained a defense verdict in the case of Anthony Tosco, et al. v. Helen Kohler, et al., PA Court of Common Pleas, Lehigh County. In the case, Tosco, a real estate developer, alleged that the historical farming practices employed by Kohler and her farming tenant Houstin Lichtenwalner had unreasonably and unnaturally diverted and increased the flow of water onto Tosco’s commercial property and thereby caused almost $300,000 in property damage. At trial, we challenged the plaintiffs’ contentions and argued that the employed farming practices had not, in fact, changed the natural water patterns. In a 10-2 decision, the jury agreed with our version of events and found in favor of our client.
A lack of an icy condition does not require a person to remove “ice melt” from their property.
In Rivers v. Villford Realty Corporation, the Appellate Division, First Department, affirmed summary judgment where the plaintiff alleged that she slipped on calcium chloride — a substance used to treat and prevent icy conditions, while exiting her apartment building.
The defendant’s expert established that the use of calcium chloride in an effort to ward off snow and ice conditions was a good, accepted, and safe practice, consistent with industry standards. Further, there were no standards that required removing ‘ice melt’ when ice was not present. Most importantly, the expert opined that the calcium chloride would not have been slippery at the time of the accident. In affirming summary judgment, the Appellate Division found that plaintiff failed to raise a triable issue of fact as to the existence of a dangerous condition.
Special thanks to Johan Obregon for his contribution.
For more information contact Denise Fontana Ricci at .
22 NYCRR 2.1.1(a) provides that courts shall not seal court records except upon a written finding of good cause. The rule also requires courts to consider the interest of the public as well as the parties in determination whether good cause has been shown. In this regard, the presumption of public access to court proceedings takes precedence, and the sealing of court papers is permitted only to serve compelling objectives.
In Matter of East 51st Street Crane Collapse Litig., the Supreme Court sealed a settlement in one of many wrongful death actions arising out of a crane collapse until all of the wrongful death actions were settled. With one wrongful death action still pending, the Supreme Court sealed the documents.
On appeal, the defendants argued that sealing the records prevents the risk that the parties will attempt to use prior settlement information as an artificial threshold in valuing their own cases. In response, the plaintiffs contended that unsealing the settlement documents were necessary to enable them to ascertain the available insurance coverage and thus make informed decisions as to the benefits and drawbacks of settling their own claims. The First Department agreed with the plaintiffs and affirmed.
Special thanks to Gabriel Darwick for his contribution.
For more information, contact Denise Fontana Ricci at
Although a school acts in loco parentis, it – like parents – cannot protect every child against every injury. In Donnelly v. St. Agnes Cathedral School , the parents of an eleven year old student brought an action against his school alleging premises liability and negligent supervision after a fire door closed on his fingertips.
The undisputed facts of the case showed that the plaintiff had approached the door walking forward but turned around when he heard someone call him. He extended his hand to hold the door open. Unfortunately, his fingers were pinched within the hinged side of the door and the doorjamb when the door closed. Based upon these facts the Second Department reversed the lower court’s denial of summary judgment.
Although the plaintiff alleged that the school failed to regularly inspect the door, this was disproven by the school citing a State mandated fire safety inspection one month prior. Additionally, the plaintiff’s engineer provided only a conclusory and speculative opinion that the door closed too quickly. Finally, there was no factual basis for a finding that the school had either actual or constructive notice of any defect with the door.
The Court also summarily dismissed the negligent supervision claim recognizing that the school could not reasonably be expected to continuously supervise and control all of the student’s movements and activities. A school can only be expected to provide supervision to guard against foreseeable injuries. In the instant matter, the plaintiff failed to raise a triable issue of fact as to the foreseeability of the plaintiff’s injury.
Special thanks to Georgia Stagias for her contribution.
For more information, contact Denise Fontana Ricci at .
The New Jersey Appellate Division in Essex v. Pine Towers Group, recently analyzed whether a CGL policy of insurance issued to a general contractor provided coverage for an action seeking damages for bodily injuries to an employee of a subcontractor.
Pine Towers (“Pine”) was the general contractor for a construction project in Newark and was issued a policy of general liability insurance underwritten by Essex Insurance Company (“Essex”). Pine hired FM Home Improvement, Inc. (“FM”) who, in turn, hired Brothers Home Construction (“Brothers”) to install siding. One of Brothers’ employees was injured when he fell through an opening in a scaffold, which he alleged was hazardous and dangerous. Pine sought coverage for these claims from Essex. Essex denied the claim for coverage.
The trial court found that Pine was entitled to coverage as an additional insured under the policy of insurance issued to FM. However, it also found that the Essex policy excluded coverage because of an endorsement barred coverage for bodily injury sustained by any contractor, subcontractor or their employees.
The Appellate Division upheld the trial court’s denial of coverage under the Essex policy. The Essex policy contained an “Additional Conditions Endorsement,” which required Pine’s contractors and subcontractors to maintain minimum commercial general liability coverage. While failure to comply with this provision would not void coverage, it did reduce the limits of liability. These two paragraphs were interpreted by the Court to apply to contractors that were in privity with Pine. The third paragraph of the endorsement stated that there would be no coverage for “bodily injury” sustained by any contractor, subcontractor or their employees.
Pine argued that the subject provision was ambiguous, and should only apply to exclude coverage for claims of bodily injury by contractors that were in privity with Pine, that is, those that Pine contracted with as opposed to the subcontractors of Pine’s subcontractors. Pine also argued that the condition barring coverage for subcontractors did not apply as it was intended only to protect Essex from covering workers compensation claims. The Appellate Division disagreed finding that the clear intent of the third-paragraph was to limit the insurer’s exposure to all claims for “bodily injury” asserted by any contractors and subcontractors. Therefore, the lower court properly denied coverage under the Essex policy.
Thanks to Andrew Marra for his contribution to this post. If you have any questions or comments, please email Paul at
In Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Company of Pittsburg, PA, the New York Court of Appeals decided an insurance coverage dispute arising out of a civil action charging a priest with the sexual molestation of a minor female. The issue was whether the molestation of a minor, which took place in multiple locations over a six year period, was a single occurrence. Its resolution had significant financial consequences for the Diocese because there was a self-insured retention for each occurrence for each policy period spanning from August 31, 1995 to August 31, 1998.
After a $2 million settlement in the civil action, the Diocese argued that the alleged molestation constituted a single occurrence and its contribution limited to a single self-insured retention of $250,000 (“SIR”). Not surprisingly, the insurer argued that the molestation involved multiple occurrences such that the self-insured retention of $250,000 would have to be exhausted for each separate occurrence. New York’s highest court found that the molestation constituted multiple occurrences, thus requiring liability to be apportioned under all the insurance policies, pro rata, with the Diocese paying its SIR for each occurrence.
The Court of Appeals applied the “unfortunate event” test articulated previously in Appalachian Ins. Co. v. General Elec. Co., 8 N.Y.3d 162 (2007), to determine whether the incidents constituted one or multiple occurrences. The “unfortunate event” test considers the temporal and spatial relationship between the incidents giving rise to the injury or loss. It specifically rejects any analysis of the term “occurrence” based on either the “sole proximate cause” or the number of person damaged. The court cautioned that the “unfortunate event” test should be used only where the policy language itself fails to indicate an intent to aggregate separate incidents into a single occurrence.
In considering the molestation here, which occurred over a span of time at various locations, the court found that the incidents lacked such a temporal and spatial closeness that they constituted one occurrence. (“It cannot be said that an instance of sexual abuse in the rectory of a church in 1995 shares the same temporal and spatial characteristics as one that occurred in 2002 in, for example the priest’s automobile [despite the unity of actors.]”)
This decision provides valuable guidance on the interpretation of the term “occurrence” with the context of sexual abuse. Where self-insured retentions exist “per occurrence”, insurers can demand that an insured contribute its self-insured retention/deductible for every policy year in which the abuse allegedly took place.
Thanks to Alison Weintraub for her contribution to this post. If you have any questions or comments, please email Paul at
On May 7, 2013, New York’s highest court refused leave to appeal from the decision of the Appellate Division, First Department, unanimously affirming the trial court’s ruling that AXA Art Insurance Corporation was not obligated to indemnify Renaissance Art Investors LLC (RAI) for the loss arising out of the fraud of Larry Salander. Wade Clark Mulcahy persuaded the First Department to uphold the trial court’s decision that AXA’s policy exclusion for dishonest acts of the insured barred recovery.
RAI consigned its artwork to the infamous art dealer Larry Salander, a principal of RAI, and the Salander O’Reilly Galleries. Salander and the Gallery ultimately betrayed RAI, stealing millions of dollars in artwork. Salander pleaded guilty to a $120 million fraud scheme, admitting to stealing numerous works of art.
In its unanimous decision, the First Department ruled that AXA’s dishonesty exclusion was unambiguous. The exclusion precluded coverage for losses arising from the dishonest acts of an insured, anyone with an interest in the property, or anyone to whom the covered property was entrusted. The Court held that this policy exclusion applied to both Salander and the Gallery, who were entrusted with the artwork.
The First Department also ruled, as a matter of law, that insurance coverage only extends to fortuitous losses, even under all-risk policies. The Court ruled that fortuity is a legal question to be resolved by a court. Applying this standard, the Court held that the fraud perpetrated by Salander and the Gallery was not fortuitous.
Apart from upholding the so-called dishonesty exclusion in the inland marine policies, the ruling breathes new life into the doctrine of fortuity.
