Rottie Bite Out Car Window Not Ownership, Maintenance or Use of Motor Vehicle

UNDERINSURED MOTORISTS COVERAGE – OWNERSHIP, MAINTENANCE OR USE OF UNDERINSURED VEHICLE – STAY ARBITRATION
Matter of Allstate v. Reyes
(2nd Dept., decided 8/7/2013)

Deborah Reyes was walking past a parked car at a Sunoco Mart in Poughkeepsie, New York, when a rottweiler dog extended its head from inside the vehicle and bit her right breast. Reyes sued  the vehicle's owner, Michael Kazimer, which GEICO, the insurer of Kazimer's vehicle, later settled for $25,000, the limits of the policy. Reyes then sought SUM coverage from her own auto insurer, Allstate. Allstate denied SUM coverage, concluding that the incident did not arise "out of the ownership, maintenance, or use of an underinsured vehicle." Reyes demanded arbitration of her SUM claim, and Allstate commenced this special proceeding to permanently stay arbitration. Supreme Court, Dutchess County (Pagone, J.) denied the petition, concluding that the incident had arisen "out of the ownership, maintenance, or use of an underinsured vehicle."  Allstate appealed.

In REVERSING Supreme Court's order and granting the petition to stay arbitration, the Appellate Division, Second Department, held:

Underinsured endorsements, such as the one at issue in this case, provide coverage only when the injuries are the result of an accident "arising out of such [underinsured's] motor vehicle's ownership, maintenance or use" (11 NYCRR 60-2.3[2][e][2]; see Matter of Liberty Mut. Fire Ins. Co. [Malatino], 75 AD3d 967, 968). Use of an automobile encompasses more than simply driving it, and includes all necessary incidental activities such as entering and leaving its confines (see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 638). To satisfy the requirement that it arose out of the "ownership, maintenance or use of" a motor vehicle, the accident must have arisen out of the inherent nature of the automobile and, as such, inter alia, the automobile must not merely contribute to the condition which produces the injury, but must, itself, produce the injury (see Zaccari v Progressive Northwestern Ins. Co., 35 AD3d 597, 599; Eagle Ins. Co. v Butts, 269 AD2d 558, 559-560; U.S. Oil Ref. & Mktg. Corp. v Aetna Cas. & Sur. Co., 181 AD2d 768). "[T]he vehicle itself need not be the proximate cause of the injury," but "negligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury" (Zaccari v Progressive Northwestern Ins. Co., 35 AD3d at 599; see Empire Ins. Co. v Schliessman, 306 AD2d 512, 513). "To be a cause of the injury, the use of the motor vehicle must be closely related to the injury" (Zaccari v Progressive Northwestern Ins. Co., 35 AD3d at 599).

Here, as a matter of law, Reyes's injuries did not result from the inherent nature of Kazimer's vehicle, nor did the vehicle itself produce the injuries. The injuries were caused by Kazimer's dog, and the vehicle merely contributed to the condition which produced the injury, namely, the location or situs for the injury. Allstate established that a causal relationship between the car and the incident was lacking, and Reyes failed to rebut that showing (see Empire Ins. Co. v Schliessman, 306 AD2d at 513; Eagle Ins. Co. v Butts, 269 AD2d at 559; see also Keppler v American Family Mut. Ins. Co., 588 NW2d 105; Sanchez v State Farm Mut. Auto. Ins. Co., 878 P2d 31; Alvarino by Alvarino v Allstate Ins. Co., 370 Pa Super 563; American States Ins. Co. v Allstate Ins. Co., 484 So 2d 1363). Accordingly, since coverage is lacking, the Supreme Court should have granted the petition to permanently stay arbitration.

It was the dog, not the car, that caused Reyes' injuries, so no SUM coverage.  But can someone explain to me why GEICO paid its policy limit in the first place?

Second Department Holds that SUM Limit Is To Be Reduced by Recovery from All Tortfeasors

UNDERINSURED MOTORISTS COVERAGE – OFFSET – NON-DUPLICATION PROVISION 
Weiss v. Tri-State Consumer Ins. Co.
(2nd Dept., decided 9/26/2012)

$250,000 per person/$500,000 per accident SUM limits.
Two deaths in insured vehicle.
Drunk driver and two Dram Shop defendants.
Drunk driver's auto insurer pays $100,000 limit to settle.
Dram Shop defendants and their insurers pay $255,000 to settle.
Total settlement of wrongful death action = $355,000.

Question:  What's the recoverable SUM coverage limit?
Answer:  $145,000.

Plaintiffs successfully argued to Supreme Court that the recoverable SUM limit was $400,000 because only the $100,000 settlement amount from the drunk driver's motor vehicle liability insurer was to be deducted from the $500,000 per accident SUM limit.   In REVERSING the Supreme Court's denial of summary judgment to defendant Tri-State, the Second Department reasoned:

The subject policy contained the standard SUM endorsement prescribed by the Superintendent of Insurance in Regulation No. 35-D (11 NYCRR 60-2.3[c], [f]). Two conditions in the endorsement are directly at issue in this appeal. Condition 6 provides:

6. Maximum SUM Payments. Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:

a) The SUM limits; and

b) The motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured's legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured.

The SUM limit shown on the Declarations for "Each Person" is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under "Each Accident" is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident.

Condition 11 provides:

11. Non-Duplication. This SUM coverage shall not duplicate any of the following:

(a) Benefits payable under workers' compensation or other similar laws; 

(b) Non-occupational disability benefits under article nine of the Workers' Compensation Law or other similar law;

(c) Any amounts recovered or recoverable pursuant to article fifty-one of the New York Insurance Law or any similar motor vehicle insurance payable without regard to fault;

(d) Any valid or collectible motor vehicle medical payments insurance; or

(e) Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds.

SUM coverage in New York is a converse application of the golden rule; its purpose is "to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident" (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687; see Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 608; Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 204; see generally Norman H. Dachs and Jonathan A. Dachs, SUM Insurance Dilemma Hits the Mainstream, NYLJ, Sept. 19, 2012 at 3, col 1). With this limited purpose, SUM coverage does not function as a stand-alone policy to fully compensate the insureds for their injuries (cf. Bauter v Hanover Ins. Co., 247 NJ Super 94, 96-97, 588 A2d 870, 872, cert denied 126 NJ 335, 598 A2d 893). The conditions quoted above make this clear, as do other conditions not directly at issue in this case.

Here, the maximum SUM coverage of the subject policy was $500,000 per accident. The amount payable under that coverage was reduced, under Conditions 6(a) and 6(b), by the $100,000 paid by McGibbon's insurer, inasmuch as that amount constituted a "motor vehicle bodily injury liability insurance . . . payment[ ]" that the plaintiffs received (11 NYCRR 60-2.3 [f]). Further, the Dram Shop claims were settled for a total of $255,000. The Dram Shop recovery constitutes, under Condition 11(e), an amount "recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds." Condition 11 does not allow duplicate recovery of such damages. Consequently, under the terms of the SUM endorsement, the plaintiffs' receipt of the Dram Shop recovery reduces, by that same $255,000, the amount payable under the SUM endorsement. The plaintiffs are not penalized by this reduction, since they received the maximum amount for which they are covered under the SUM endorsement: $100,000 from McGibbon's policy, $255,000 from or on behalf of the Dram Shop defendants, and $145,000 from Tri-State.