Tuesday, June 16, 2009

Greater Explication of Late Notice to Excess Insurer

CGL – EXCESS INSURANCE – LATE NOTICE
Insurance Corp. of N.Y. v. United States Fire Ins. Co.

(1st Dept., decided 6/9/2009)


When an excess liability insurance policy requires notice of how, when and where an occurrence took place, the names and addresses of injured parties and witnesses, and the nature and location of any injuries or damage, letters, faxes or emails providing anything less will not satisfy the notice requirement.  So says the First Department in this decision.

BFC Construction Corp. has a $1M/$2M CGL policy with plaintiff, Inscorp, and an excess liability insurance policy with U.S. Fire.  For the 2001-2002 policy period, settlements and judgments had reduced the $2 million aggreggate limit to $800,000, and three claims -- Dagati, Torres and Regolodo -- remained open on the policy for that policy period.  On behalf of Inscorp., third-party claims adminstrator Ward North America notified U.S. Fire of the upcoming Dagati trial by email on March 9, 2006.  On March 16, 2006, Ward North America faxed to U.S. Fire a letter that it had sent to BFC on March 15, advising of the Torres action, notifying BFC that "based upon occurrences, offenses, claims or suits which have been reported to INSCORP and to which this insurance may apply, the General Aggregate Limit is likely to be used up in the payment of judgments or settlements", and enclosing a copy of the summons and complaint in the Regolodo action.  On April 20, 2006, Ward North America sent U.S. Fire a tender letter stating that the primary policy was likely to be exhausted and that the excess policy would then be implicated.  Eight days later, U.S. Fire disclaimed any obligation to defend or indemnify BFC in light of the late notice in the Torres and Regolodo, and rejected Ward's tender in the Torres case.

Inscorp. brought this action for a declaration that its policy had been exhausted and that U.S. Fire was required to defend and indemnify BFC in Regolodo. It also sought $375,000, the amount it had allegedly overpaid in the Torres settlement, and defense costs related to the Regolodo action.   Both parties eventually moved for summary judgment, which were denied.  While the motion court found that BFC Construction Corp., had given late notice of the Torres and Regolodo claims to U.S. Fire, the court also deemed U.S. Fire's disclaimer untimely, based on the court's determination that U.S. Fire had received notice on March 16, 2006.

In REVERSING the denial of U.S. Fire's cross motion for summary judgment, the three justice majority of the First Department held:
However, the record establishes that US Fire actually received proper notice on April 20 rather than March 16. Pursuant to the terms of its excess policy with US Fire, BFC was required to provide US Fire "prompt written notice of an occurrence, which might result in a claim." Notice was to include how, when and where the occurrence took place; the names and addresses of injured parties and witnesses; and the nature and location of any injury or damage. "An insurer's obligation to cover its insured's loss is not triggered unless the insured gives timely notice of loss in accordance with the terms of the insurance contract" (Power Auth. of State of N.Y. v Westinghouse Elec. Corp., 117 AD2d 336, 339 [1986], citing Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436 [1972]; see also Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40 [2002]). Accordingly, US Fire's disclaimers, issued eight days after receiving notice, were timely as a matter of law (see e.g. Public Serv. Mut. Ins. Co. v Harlen Hous. Assoc., 7 AD3d 421, 423 [2004]).
 In a concurring memorandum, Justices Nardelli and Catterson agreed with the appellate result, but "but wr[o]te separately because [they] believe[d] that the issue of notice obligations under the primary policy of insurance and under an excess policy of insurance requires greater explication."  Justice Catterson's concurring memorandum concludes:
The excess policy, as set forth above, plainly required that notice include far more detail about the occurrences at issue than was supplied by the primary carrier. Indeed, the record contains no evidence that the primary carrier ever complied with the bulk of the notice requirements. The March 16th fax to U.S. Fire merely attached the summons and complaint in Regolodo and a letter concerning Torres. The March 14th email asked U.S. Fire to attend the trial in Dagati. The March 9th email to U.S. Fire merely notified U.S. Fire that Dagati was scheduled for trial. None of these communications satisfied the policy provisions.

It should also be noted that none of these communications put U.S. Fire on notice that the excess policy would be implicated, or even that it was "reasonably likely" that the excess policy would be involved. See Long Is. Light. Co. v. Allianz Underwriters Ins. Co., 24 AD3d 172, 173, 805 N.Y.S.2d 74 (1st Dept. 2005), lv. dismissed, 6 NY3d 844, 814 N.Y.S.2d 77, 847 N.E.2d 374 (2006). Thus, the only possible notice to U.S. Fire was the tender letter of April 20, 2006. Given the paucity of information conveyed to U.S. Fire prior to that time as well as the age of the claims involved, U.S. Fire's disclaimer was timely.

Monday, June 15, 2009

Second Department Affirms Denial of Petition to Stay UM Arbitration -- Insurer's Late Notice & Lack of Physical Contact Grounds Rejected

UM – AUTO  LATE NOTICE – PREJUDICE – PHYSICAL CONTACT
Matter of New York Cent. Mut. Fire Ins. Co. v. Vento

(2nd Dept., decided 6/9/2009)


The insured, Ann Vento, sought to compel arbitration of her uninsured motorists (UM) coverage claim after she allegedly was struck by an unidentified vehicle while crossing a street at a crosswalk on October 14, 2006.  New York Central Mutual (NYCM) petitioned the Supreme Court to permanently stay arbitration on the ground that the insured had failed to comply with the notice provisions of the subject insurance policy and failed to demonstrate that her injuries were caused by physical contact with the hit-and-run vehicle.

The first notice provision in the supplemental uninsured/underinsured motorist endorsement required that "the insured or someone on the insured's behalf ... shall have filed with the [insurer] a statement under oath."  The second notice provision of the SUM endorsement required both a "notice of claim" and a "proof of claim." Written notice of claim was required "[a]s soon as practicable."  However, written proof of claim was required, upon forms furnished by NYCM, "[a]s soon as practicable after [the petitioner's] written request."

Suffolk Supreme conducted a non-jury framed-issue hearing on the issue of whether the insured's claimed injuries were caused by physical contact with a hit-and-run vehicle and denied NYCM's petition for a stay of the insured's UM arbitration.  NYCM appealed.

In AFFIRMING the trial court's order, the Second Department concluded that: (1) NYCM had not demonstrated prejudice from the insured's delay in providing either notice of claim or proof of claim; and (2) the trial court's non-jury determination of physical contact was supported by the record and, as such, could not be disturbed on appeal:
The insurer's own submissions in support of its petition demonstrated that the insured provided it with notice of the accident as soon as practicable (see Matter of Firemen's Ins. Co. v Clinton, 54 AD3d 759, 759). To the extent that the insurer demonstrated a delay in receiving the "Notice of Intention to Make Claim" form after it sent a written request for proof of claim, the insurer failed to demonstrate that it was prejudiced by any such delay (see Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 476; Matter of New York Cent. Mut. Fire Ins. Co. v Ward, 38 AD3d 898, 901; Matter of Nationwide Mut. Ins. Co. [Mackey], 25 AD3d 905, 906-907). 

Furthermore, the sworn, signed, and notarized "Notice of Intention to Make Claim" form received by the insurer satisfied the first notice provision of the subject policy which required that the insured file a "statement under oath" that indicated that the insured had a cause of action arising out of an accident against a person whose identity was unascertainable (cf. Matter of Allstate Ins. Co. v Estate of Aziz, 17 AD3d 460, 461; Matter of Eveready Ins. Co. v Ruiz, 208 AD2d 923, 923), and the insurer failed to demonstrate that it was prejudiced thereby (accord Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d at 476; Matter of New York Cent. Mut. Fire Ins. Co. v Ward, 38 AD3d at 901; Matter of Nationwide Mut. Ins. Co. [Mackey], 25 AD3d at 906-907).

With respect to the insurer's contention that the insured failed to demonstrate physical contact, we note that "[p]hysical contact is a condition precedent to an arbitration based upon a hit-and-run accident involving an unidentified vehicle" (Matter of Great N. Ins. Co. v Ballinger, 303 AD2d 503, 504; see Insurance Law § 5217; State Farm Mut. Auto. Ins. Co. v Johnson, 287 AD2d 640, 640-641; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d 530, 530). When there is an issue of fact as to whether physical contact occurred, a hearing on the issue must be conducted (see State Farm Mut. Auto. Ins. Co. v Johnson, 287 AD2d at 640-641; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d at 530).

Where, as here, a case is tried without a jury, this Court's power to review the evidence is as broad as that of the trial court, "taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses'" (Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499, quoting York Mortgage Corp. v Clotar Costr., 254 NY 128, 133-134). In this case, the Supreme Court's determination that the insured had been struck by an unidentified vehicle is supported by the record and will not be disturbed on appeal (see Matter of Halycon Ins. Co. v Fox, 44 AD3d 662). The insured's testimony, credited by the court, demonstrated that she had come into physical contact with the hit-and-run vehicle (see Matter of Nova Cas. Co. v Musco, 48 AD3d 572, 573; Matter of Allstate Ins. Co. v McMahon, 251 AD2d at 572; Matter of Aetna Life & Cas. v Gramazio, 242 AD2d at 530).

Question of Fact Found on Service on Insurer of Money Judgment Against Insured

AUTO – INSURANCE LAW § 3420(B)(1)– TIMELINESS OF DISCLAIMER
Liriano v. Eveready Ins. Co.

(2nd Dept., decided 6/9/2009)


Plaintiff obtained a $40,112.06 money judgment against Eveready's insured on default, and served that judgment by mail on Eveready on August 13, 2007.  Eveready claimed it did not receive that judgment in the mail, and instead first learned of it on March 13, 2008, promptly issuing a disclaimer six days later.

Plaintiff commenced this action to enforce payment of the judgment pursuant to Insurance Law §§ 3420(a)(2) and (b)(1).  Queens Supreme granted plaintiff's motion for summary judgment and Eveready appealed. 

In REVERSING the plaintiff's judgment, the Second Department held that Eveready had created a triable issue of fact on its alleged non-receipt of the money judgment by submitting "a sworn denial of receipt and an affidavit of an employee with personal knowledge regarding the defendant's regular practices and procedures in retrieving, opening, and indexing its mail and in maintaining its files on existing claims."  That employee averred that Eveready had not received the judgment in the mail.  "Under the circumstances of this case, the defendant's submissions sufficed to raise a triable issue of fact regarding the service of the judgment, and the question of whether the defendant's disclaimer of coverage was timely must await the resolution of that issue", ruled the Second  Department.

The appellate court also overruled the Supreme Court's determination that Eveready's disclaimer letter was defective and invalid as against the plaintiff:
Rather, the letter sent to the plaintiff adequately recited that the defendant was disclaiming coverage as to the plaintiff on the ground that he failed to provide the defendant with timely notice of the underlying litigation and with legal papers filed in connection therewith (see American Tr. Ins. Co. v Sartor, 3 NY3d 71; Matter of GEICO Co. v Wingo, 36 AD3d 908; cf. Shell v Fireman's Fund Ins. Co., 17 AD3d 444; Vacca v State Farm Ins. Co., 15 AD3d 473). 
For those who might wonder why the Second Department did not grant reverse summary judgment to Eveready on the timeliness of a disclaimer issued only six days after first notice, the triable issue identified by the court was not whether six days was timely, but whether Eveready would be able to convince the trier(s)-of-fact that it did not receive the judgment in the mail. 

Internet Explorer Page Display Problems -- Resolved

Last week I sent a Feedblitz email to subscribers advising them that I was aware some were receiving an "Operation Aborted" error message when trying to open individual blog posts in Internet Explorer through the "read the whole entry" link in the weekly Feedblitz emails.

It wasn't Feedblitz' email format that was the problem.  It was Microsoft's Internet Explorer.  Again.  I'm not sure what changed over the past month -- since the error was being reported from Internet Explorer versions 6 and 7 -- but I was able to resolve it by changing the comments format in the blog's settings from "Embedded below post" to "Full page".  More info on that fix for blogger.com blogs and another is here.

Microsoft also offers some suggestions for fixing page rendering problems here, the primary suggestion, of course, being to upgrade to IE8.  Thanks but no thanks.  I'll stick to Firefox.  

If any of you ever receive any error messages while on the blog, please let me know.  

Friday, June 5, 2009

New York Court of Appeals Rules that Co-Occupants of Car May Not Reduce the Liability Limits of Offending Vehicle By Payments to Other Co-Occupants to Trigger SUM Coverage

SUM – TRIGGER – INSURANCE LAW § 3420(F)(2)(A) – REGULATION 35-D
Matter of Allstate Ins. Co. v. Rivera

(Ct. Apps., decided 6/4/2009)


New York Insurance Law § 3420(f)(2)(A) provides:
Any [automobile insurance] policy shall, at the option of the insured, also provide supplementary uninsured/underinsured motorists [SUM] insurance for bodily injury, in an amount up to the bodily injury liability insurance limits of coverage provided under such policy . . . [SUM] insurance shall provide coverage . . . if the limits of liability under all . . . insurance policies of another motor vehicle liable for damages are in a lesser amount than the bodily injury liability insurance limits of coverage provided by such policy. . . . As a condition precedent to the obligation of the insurer to pay under the [SUM] insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements.
In this case, the Court of Appeals reviewed appeals regarding two losses and sets of SUM claims:
Mercado (Allstate) with $25,000/$50,000 BI & SUM coverages -- Driver and 5 passengers injured by
Rodriguez (GMAC) with $25,000/$50,000 BI coverage
GMAC paid $25,000 to Mercado and $5,000 to each of 5 passengers.
Five passengers sought SUM coverage from Allstate.
Allstate denied SUM coverage to all passengers based on lack of trigger.

Nunez (Clarendon) with $25,000/$50,000 BI & SUM coverages -- Driver, wife and 2 children injured by
Tortfeasor (Progressive) with $25,000/$50,000 BI coverage
Progressive paid $15,000, $15,000, $15,000 and $5,000 to the four claimants.
Four claimants sought SUM coverage from Clarendon.
Clarendon denied SUM coverage to all claimants based on lack of trigger.
The claimants argued that since each of their recoveries was less than $25,000, SUM coverage was triggered.  In so arguing, they relied on New York Insurance Regulation 35-D, which states that a vehicle is underinsured for purposes of triggering SUM coverage where:
... a motor vehicle ... results in bodily injury to an insured, and for which ....  (3) there is bodily injury liability insurance coverage ... applicable to such motor vehicle at the time of the accident, but ... (ii) the amount of such insurance coverage ... has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability of this policy (see 11 NYCRR § 60-2.3 [f] [I] [c] [3] [ii]). 
The SUM claimants demanded arbitration, and Allstate and Clarendon each commenced a CPLR article 75 proceeding for a permanent stay of arbitration.  In both cases, the SUM claimants argued that SUM coverage was triggered under Insurance Department regulation 11 NYCRR § 60-2.3 (f) (the prescribed New York supplementary uninsured/underinsured motorists coverage endorsement).  The Appellate Division ruled for petitioner insurers and permanently stayed arbitration in both cases. The Court of Appeals granted the SUM claimants in Matter of Allstate and Matter of Clarendon leave to appeal, and in a 5-2 decision, AFFIRMED in both cases.

In an opinion written by Judge Jones, the majority reasoned that since they were all "insureds" for SUM coverage purposes, co-occupants of a single vehicle were not "other persons" within the meaning of § 60-2.3(f)(I)(c)(3)(ii):
Each co-occupant in the covered vehicles contends that he or she should be allowed to deduct the payments made to other co-occupants, thereby reducing the tortfeasor's bodily injury liability coverage to an amount less than the coverage limits on their vehicle, triggering SUM coverage. The SUM claimants therefore argue that co-occupants constitute "other persons" under the endorsement, even though co-occupants are insureds under the policy. We are unpersuaded. 

The "payments to other persons" that may be deducted from the tortfeasor's coverage limits for purposes of rendering the tortfeasor "uninsured" under a SUM endorsement do not encompass payments made to anyone who is an insured under the endorsement. It is important to note that the phrase "other persons" is used elsewhere in the endorsement to denote persons other than those insured under the policy. The Notice and Proof of Claim condition directs that "the insured or other person making claim" shall give written notice of claim "under this SUM coverage" (11 NYCRR § 60-2.3 [f] [III] [Condition 2]). It is evident that, in the phrase "the insured or other person," the reference to "other person" means someone who is not "the insured." As each claimant here falls within the endorsement's definition of an "insured," which encompasses all passengers in the covered vehicle, claimants are not "other person[s]." Insureds are therefore able to reduce the coverage limits of the tortfeasor's policy only when payments made under the tortfeasor's policy are to individuals — such as occupants of the tortfeasor's vehicle, injured pedestrians or those operating a third vehicle — not covered under the SUM endorsement. This guarantees that those who have purchased SUM coverage will receive the same recovery they have made available to third parties they injure — but no more.

The position of the SUM claimants and the dissent notwithstanding, this is the only construction that is consistent with the plain language of Insurance Law § 3420, the enabling legislation that Regulation 35-D must conform to, and the core principle underlying SUM coverage — that insureds can never use a SUM endorsement to obtain a greater recovery for themselves than is provided under the policy to third parties injured by the insureds (see Raffellini, 9 NY3d at 203-204; Mancuso, 93 NY2d at 492; Szeli, 83 NY2d at 687). To demonstrate this principle, we need only look at what would occur in Matter of Clarendon were we to adopt the claimants' position. The four members of the Nunez family received $50,000 under the tortfeasor's policy and, by each claimant characterizing the other three family members as "other person[s]," the family now seeks to obtain an additional $50,000 under the SUM coverage provided in their own policy, for a total recovery of $100,000. Yet, if the Nunez vehicle was operated negligently, causing an accident that injured four pedestrians, the total recovery those injured parties could obtain under the Clarendon policy would be $50,000, the per accident limit.

Therefore, reading Insurance Law § 3420 (f) (2), our well-settled interpretation of this statute and Regulation 35-D together, we hold that SUM coverage is not available (that is, SUM coverage cannot be triggered) because (1) the bodily injury liability insurance coverage limits provided under the respective tortfeasors' policies were equal to the third-party bodily injury liability limits of the Allstate and Clarendon policies, (2) the payments made to the SUM claimants did not reduce the amount of the bodily injury insurance coverage provided under the tortfeasors' policies to "an amount less than the third-party bodily injury liability limit of [the Allstate and Clarendon policies]" (11 NYCRR § 60-2.3[f][I][c][3][ii]) and (3) allowing such additional coverage would provide an insured/policyholder with more coverage than that provided to an injured third party under his or her policy. 
In her two-judge dissent, Judge Ciparick asserted that Regulation 35-D's plain language, history and the basic purpose of the SUM coverage supported the alternate conclusion that co-occupants could and should be considered "other persons injured in the accident" within the meaning of 60-2.3(f)(I)(c)(3)(ii), entitled to reduce the tortfeasor's bodily injury limits by payments made to another co-occupants in order to trigger SUM coverage.

Thursday, June 4, 2009

Evidence of Interest in Evidence

My May 27th Court Denies Summary Judgment Motion Based on Insureds' Recorded Statements post generated many thoughtful comments on how an insured's recorded statement might better have been presented to avoid being characterized as inadmissible hearsay and permit its introduction and use on Metropolitan's motion as admissible evidence. In case you did not click on and read those comments, I'm reprinting that thread in this separate post.

In support of its motion for summary judgment seeking a declaration that its named insured and insured driver had breached the policy's cooperation clause by lying to Metropolitan in their recorded statements about whether the driver had the owner/named insured's permission to use the insured vehicle, Metropolitan submitted those recorded statements to prove the misrepresentations and non-cooperation. The decision does not indicate in what form Metropolitan submitted the recorded statements, although it was most likely via typed transcripts of those statements. Metropolitan argued that the statements were admissible under CPLR 4518 as business records and, thus, excepted from the hearsay rule. The court disagreed.

The commenters observed:
Larry Rogak said...
In my own commentary on this case today, I opined that an EUO would be a more effective tool than a signed statement. http://groups.yahoo.com/group/TheRogakReport/message/2046
Anonymous said...
Embarrassing. Clearly, the statement here is not hearsay because it is not being used for its truth, but to show it was made. Therefore, it is outside the definition of hearsay. This decision demonstrates that counsel, and Justice Siegel, missed the ball on this straightforward evidence issue.
Zuppa said...
Roy a little confusing. Was the lie the recorded statement or the truth the recorded statement.

The Court's decision is dead on regarding business records.

Secondly anonymous makes a technical point that at first blush might cause one to leap for it. But if the truth was the recorded statement than it was made for the truth of the matter asserted. If the lie was the recorded statement we run into the issue of what constitutes the "truth of the matter asserted." It is broader than anonymous opines. This is not a case where a prior inconsistent statement is being offered on cross to demonstrate just that -- inconsistency. And it is not a case as it would seem where we are offering a statement to show a state of mind.

The statement was a lie. It is being offered to demonstrate a lie which is non-cooperation. If the same statement were introduced in opposition to a motion for summary judgment than it would be admissible as non-hearsay because it would merely demonstrate inconsistency. Here the lie is being offered to show a lie and most courts would conclude that this is hearsay. To hold otherwise would open the door to a host of out of court statements rendering every case the equivalent of a no fault farce.

Perhaps to refine anonymous' argument it would have been better to classify the statement as a verbal act -- like saying I accept in a contract action. The statement "I don't know who was driving" was a verbal act of non-cooperation and therefore not hearsay. The equivalent of a refusal to answer.

But that brings us to hearsay layers and authentication. An admission would cure one layer. I assume that the recorded statement was transcribed. The transcript is another layer. It is another out of court statement as opposed to a person testifying IN COURT that a Party to the action said this or that. The plaintiff tried to get the transcript in as a business record. No go. If it were admitted as business record than the statement itself would have been an admission.

Hence Larry's EBT analysis. Under the CPLR if the party is given the opportunity to review his transcript the EBT can be used for almost anything.

I don't know the facts of the Tower case. Were the signed statements used to obtain summary judgment or defeat it.
Anonymous said...
To clarify my earlier comment, and respond to Zuppa, the statement here is not hearsay. Hearsay is evidence that depends for its probative value on the veracity of an out-of-court declarant. It is claimed that the declarant (Shaid) made a false statement. Therefore, the probative value does not depend on whether Shaid was lying, the only relevant fact is whether the statement was in fact made to the insurer.

Zuppa, although I understand your concern that the statement is being offered to prove a lie, that's not really correct. Presumably, the insurer has non-hearsay evidence to prove that this statement is, in fact, false. Thus, the necessity of first proving the statement was made (non-hearsay use), followed with admissible evidence proving the falsity of the statement.

An example: In a defamation case, the plaintiff offers the defamatory statement. Objection: hearsay. Response: the statement is not being offered to prove the truth of its content, but to show that it was made. Result: the statement is let in.
zuppa said...
It is a tough issue and I am tending to agree with you more. I am going to pull the case when I get time and the other cases.

I absolutely know your argument but still stand by the fact that courts define what constitutes "the truth of the matter asserted" more broadly.

Your hearsay hypo is convincing but flawed. If a witness came into court and testified Defendant said "Zuppa is a hack" than we'd have an admission which overcomes the single layer of hearsay.
zuppa said...
I've read the decision. The facts are not sufficiently described to make any judgments here visa-vi the above issues. This is a good Judge so I am giving the Judge the benefit of the doubt here. The attorneys for the insurance company certainly had to be smart enough to argue admission and nonhearsay but instead sought entry of the statement via the business records exception. That argues in favor of the multiple layer of hearsay theory.
Zuppa said...
And the Tower case doesn't address hearsay. Apparently the issue was not raised by the great attorneys for the defendants.
DLev said...
The opinion does not clearly identify the statement being considered. There are two statements: the original false statement that the insured did not know the identity of the driver, and the subsequent true statement that he did know the identify of the driver. The first statement is not hearsay. It is more likely that the opinion is about the second statement
zuppa said...
I said that in my first comment. But calling the first statement "not hearsay" is not necessarily true. Forget whether the statement is in and of itself hearsay. They manner in which the statement is introduced can be but another layer of hearsay. For example if the non-hearsay statment is being presented via the transcript of a recorded statement. The transcript is hearsay. The transcript must fall under an exception i.e. business record or statement taken under oath, etc. Than there are reams of authentication issues. How do we know it was actually John Doe that made the statement as opposed to someone else posing as John Doe. You would need some form of authentication.

I am sorry but that is evidence. I didn't show up to court with a bag full of cocaine and intro it into evidence: "Here it is your honor." I had to establish chain of custody.

More on point when I introduced taped conversations from wiretaps I had to lay out a massive authentication from the monitoring through the sealing and the unsealing. Evidence is a lost art. It mi[ght] as well be lost since many courts do not even understand it.
Post Script ~~ I'll only add my opinion that it would be inexact for a litigator to conclude or argue from this decision that all recorded statements are inadmissible hearsay. As the commenters point out, there are both non-hearsay and other exceptions to hearsay arguments that can be and perhaps should have been made.

Wednesday, June 3, 2009

Suing the Kid for Crashing the Car Into the Garage

Can an unemancipated child be held "legally responsible" to a parent for crashing mom's car into the garage?  A insurer client called and asked me that question yesterday afternoon. 

In New York, the answer is yes.  In 1969, in the case of Gelbman v. Gelbman, the New York Court of Appeals abolished the intrafamily immunity doctrine and permitted a mother to sue her unemancipated minor son for injuries she had sustained in an auto accident while riding as a passenger in a car her son was driving.  Gelbman remains “good law” in New York.

In revoking the rule against child-parent suits for nonwillful torts, first established by the Court in its 1928 decision in Sorentino v. Sorentino, Judge Burke writing for the Court reasoned:
It seems obvious that family unity can only be preserved in this case by permitting the present action.  As one commentator noted, "If the action of the parent against the child is viewed as a manifestation of the parent's right to discipline and punish his child" (Note, 33 St. John's L. Rev. 310, 319) then such an action would be a proper exercise of parental authority, which authority should not be impaired by the doctrine of intrafamily tort immunity.
I see.  As both a parent and defense attorney, I can relate to the "suits as punishment" concept, but what's the consequence for a kid's default?  Grounding?  And if the parent recovers money damages, does the kid never see his allowance again?  If I had only known this when our then 17-year-old, now 21-year-old, daughter boldly declared "watch me!" after her then 15-year-old backseat driving brother excitedly uttered "you're going to hit the garage!" as his sister swung mom's Buick into -- in the fullest and most physical sense of the word -- our garage.  There's a three-year SOL on property damage negligence claims in New York.  You can do the math.  No tolling for a parent's claim against the kid, only the other way around.  Shiznits. 

So aside from the involuntary-servitude-until-majority-if-a-money-judgment-is-obtained ramifications of a parent successfully suing her child, what's in it for the parent?  Is there insurance coverage for the kid crashing the car into the garage?  That was the real question underlying the question my insurer client first asked me yesterday.

The answer to that question is probably yes, as well, believe it or not.  There would be coverage for damage to the garage but not its contents under a homeowner's policy that affords all-risk coverage for the dwelling, such as the HO-3 form, (although there would be no liability coverage for the child under such a policy by reason of its motor vehicle exclusion [see page 16 of 22 of the HO 00 03 10 00 form]).  And, in answer to my client's question of yesterday afternoon, there would also be liability coverage favoring the child under a personal auto policy that provides coverage for "damages for ... 'property damage' for which any 'insured' becomes legally responsible because of an auto accident."  Damaged contents could ostensibly find coverage under the family's personal auto policy.

Parents -- kids not behaving?   Not cleaning their room and damaging the carpeting and walls?  Sue 'em.  Not in Family Court.  Supreme Court.   That'll get their attention.  And your insurers'.  But maybe not the attention you want.  As in the non-renewal kind of attention.

Tuesday, June 2, 2009

New York State Insurance Department's Regulatory Agenda Proposed for Second Half of 2009

The New York State Insurance Department has just released its proposed regulatory agenda for the second half of 2009. Items of potential interest to property and casualty insurers and producers doing business in New York include (numbering from original; Agency contacts omitted):

1. Adoption of a new part to 11 NYCRR to establish requirements regarding disclosure of all sources and amounts of compensation received by licensed insurance producers.

2. Amendment of 11 NYCRR 20 (Brokers and Agents-General) (Regulation 29) to permit the use of internet and out-of-state banks for producer premium accounts.

9. Amendment of 11 NYCRR 60-2 (Supplementary Uninsured/Underinsured Motorists Insurance) (Regulation 35-D) to revise all references in Sections 60-2.3 and 60-2.4 from "AAA/American Arbitration Association” to "designated organization."

11. Amendment of 11 NYCRR 65-1, 65-2, 65-3, 65-4 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) (Regulations 68-A, 68-B, 68-C & 68-D) to revise No-fault endorsements and requirements for insurer claim practices and to amend rules related to both the manner in which the organization designated by the Superintendent administers the first party motor vehicle insurance arbitration programs and assesses the costs of these programs to the insurance industry.

13. Amendment of 11 NYCRR 68 (Charges for Professional Health Services) (Regulation 83) to adopt a fee schedule for health services rendered by licensed acupuncturists.

15. Amendment of 11 NYCRR 216 (Unfair Claims Settlement Practices and Claim Cost Control Measures) (Regulation 64) to update the entire regulation to, inter alia, provide notice and time frame requirements for third party claims.

17. Amendment of 11 NYCRR 68 (Charges for Professional Health Services) (Regulation 83) to adopt the fee schedule that will be implemented by the Workers' Compensation Board for health services rendered by licensed dentists.

21. Amendment of 11 NYCRR 67 (Mandatory Underwriting Inspection Requirements for Private Passenger Automobiles) (Regulation 79) to include additional circumstances under which an insurer may voluntarily waive mandatory inspection of a motor vehicle for physical damage coverage, and to clarify that the use of digital photography and electronic access to inspection report data are permitted.

71. Adoption of a new part to 11 NYCRR to provide that cancellation notices subject to section 3425 of the Insurance Law should include the date and hour of cancellation, the date of the notice, and, for nonpayment of premium cancellations, a statement informing the consumer that cancellation will not take place if the consumer makes timely payment of the premium.

72. Adoption of a new part to 11 NYCRR to provide rules and guidelines to assure full disclosure of all relevant information within advertisements which describe or solicit the purchase of property and casualty insurance coverage that are published, issued or distributed through various advertising media.

75. Amendment of 11 NYCRR 86.6 (Fraud Prevention Plans and Special Investigations Unit) (Regulation 95) to establish a requirement that any amendment to a fraud prevention plan that the Frauds Bureau has previously approved must be submitted to the Frauds Bureau within thirty days of its implementation.

76. Adoption of a new part to 11 NYCRR to establish requirements regarding the submission of disaster preparedness related data, questionnaires and plans from property/casualty, life and health insurers.

Preparing for Trial

Posts have been lean this past week, as I prepare for the trial of a declaratory judgment action in this matter.

This morning I argue my client's motion to dismiss and for in limine relief.  Unless the court grants my motion for leave to file/serve a late jury trial demand (long story), the non-jury trial starts this Thursday.

At issue is a claim for additional insured coverage under an AI endorsement which provides, in pertinent part:
The definition of “insured” is amended to include the additional “insured” shown above, but only with respect to liability arising out of:

1. “your work” for the additional “insured” at the location shown above; or

2. acts or omissions of the additional “insured” in connection with their general supervision of “your work” at the location shown above.
The injured party in the underlying action did not work for my client's insured, but was a separate cable installation subcontractor of the AI, and there was neither any allegation nor any evidence in the underlying action that my client's insured did anything to cause the accident.

Post Script (06.02.09 9:15 PM) --  For those who may be interested, my client's motion to dismiss based on CPLR §§ 1017 and 1021 (plaintiffs' failure to substitute the NYS Insurance Superintendent as ancillary receiver for plaintiff insurer in receivership) was argued but then adjourned over my objection to June 16th to give plaintiffs' counsel an opportunity to submit something more than an attorney's affidavit in opposition.  My motions for leave to serve late jury trial demand and for in limine relief to preclude plaintiffs' affirmative use of deposition transcripts from the underlying personal injury action were also put off until the adjourned date.