Fall 09 Newsletter 2

FALL 2009 Volume 2 Issue 1

1000 Crossroads Building Telephone: (585) 454-2181

ARTICLES IN THIS ISSUE

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Two State Street www.trevettlaw.com

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Rochester, New York 14614 Facsimile: (585) 454-4026

THE INSURANCE DEFENSE UPDATE

Breadth Of “Additional Insured” Clause Revisited Regal Const. Corp. v. National Union Fire Ins. Co. of Pittsburgh, 64 AD3d 461 (1st Dept 2009)










BREADTH OF “ADDITIONAL INSURED” CLAUSE REVISITED CONSENT-TO-SETTLE AND SUBROGATIONPROTECTION PROVISIONS IN SUM ENDORSEMENT GOVERN ALL SETTLEMENTS BETWEEN INSURED AND OTHER TORTFEASORS 2009 LAW SCHOOL FOR CLAIMS PROFESSIONALS




THE FIRST DEPARTMENT, APPELLATE DIVISION, DEPARTS FROM COURT OF APPEALS PRECEDENT IN LABOR LAW SECTION 240(1) CASE




EXCLUSIONARY PROVISIONS IN INSURANCE POLICY DEEMED NOT APPLICABLE







CONGRATULATIONS TO TREVETT CRISTO’S FIVE SUPER LAWYERS©! COURT OF APPEALS RESOLVES APPELLATE SPLIT CONCERNING 12 NYCRR § 23-9.2(A) AND ITS ABILITY TO SUSTAIN LABOR LAW SECTION 241(6) CLAIMS

In this declaratory judgment action, the Appellate Division, First Department addressed the issue of whether The Insurance Corporation of New York (“INSCORP”) had an obligation to defend and indemnify the construction manager, URS Corporation (“URS”), hired for the Rikers Island Renovation Project (“Rikers”), for an incident allegedly arising out of work performed by its insured, the project’s prime contractor, Regal Construction Corp. (“Regal”). Regal was in the process of supervising the demolition of a bathing area at Rikers when the plaintiff, Ronald LeClair, was allegedly injured by the negligent conduct of a URS employee. When LeClair sued URS for damages, URS demanded that Regal provide its defense as an “additional insured” under the INSCORP policy. Although INSCORP eventually accepted URS’ tender, INSCORP agreed to do so "only with respect to liability arising out of [Regal's] ongoing operations performed for that [additional] insured." The question before the Court was whether INSCORP’s obligation to defend and indemnify extended only so far as this limiting contractual language provided. Although three judges at the Appellate Division determined that there was a causal connection between LeClair's injury and Regal's work as prime contractor, and hence it was determined to be a risk for which coverage should be provided, two of the judges on the panel dissented. In discussing the seminal Court of Appeals case of BP Air Conditioning, (8 NY3rd 708), the dissent observed that while it is not necessary to prove the negligence of the named insured when ascertaining whether additional insured status is awarded, there should at least be some allegation that Regal’s conduct actually led to the accident at issue. For this reason, the dissent noted that the accident arose solely out of URS' operations, not Regal's. In light of the Court’s 3-2 split, this decision is ripe for appeal.

Consent-To-Settle And Subrogation-Protection Provisions In Sum Endorsement Govern All Settlements Between Insured And Other Tortfeasors In re Arbitration between Cent. Mut. Ins. Co., 12 NY3d 648 (2009) In this case, the Court of Appeals was asked to determine whether consent-to-settle and subrogation-protection provisions in supplementary SUM endorsements are disregarded once an insured has exhausted the available policy limits of a single tortfeasor in a multi-tortfeasor accident. The plaintiff in this action, Beverly Bemiss, was involved in a multi-vehicle accident wherein she was struck by two separate drivers. Each driver that collided with her maintained a $25,000 policy limit, while Bemiss maintained a $100,000 SUM endorsement with Central Mutual Insurance Company (“Central”). Because the plaintiff’s injuries exceeded each of the individual policies, her SUM coverage was triggered, but SUM benefits are not paid until the available policy limits of a single tortfeasor is exhausted by payment or settlement. Bemiss chose to settle with each of the drivers’ insurance carriers, but for less than the full value of their policies. Moreover, when Bemiss settled her claims, she did not preserve her insurer’s subrogation rights with respect to payments that might be made under her SUM coverage. When Bemiss settled with these carriers, Central disclaimed and denied her SUM coverage on the basis that she had violated her policy conditions since she had settled for less that the full value of each policy without Central’s written consent. When Central disclaimed, Bemiss demanded arbitration, but Central successfully moved to permanently stay any such attempts. The case was eventually heard by the Court of Appeals, where it was determined that, had Bemiss simply settled against one of the negligent parties, she would have been eligible to collect up to the remaining limit of her SUM policy. However, since she chose to settle against both responsible parties for less than the full value of their policies, she was no longer free to compromise Central's subrogation rights unilaterally. The Court determined Bemiss had violated the terms of her SUM endorsement, and Central, therefore, was entitled to disclaim under the policy.

2009 Law School For Claims Professionals Trevett Cristo Salzer & Andolina P.C. is a platinum sponsor of the 2009 Law School for Claims Professionals seminar, offered in five locations across New York State in October and November. Join industry professionals and their counsel for an interactive day exploring topics on insurance and liability. New York’s most respected attorneys will provide an overview of premises liability, automobile liability, notice and subrogation issues. Also included in this year’s seminar is an afternoon workshop session which will address a variety of legal and insurance issues integrated into fictional scenarios. The workshop will allow for more detailed and in-depth discussions with the group and attorney panel regarding situations which you may encounter in your daily insurance practice.

A TT TT O OR RN N EE Y Y SS A A TT LL A AW W A

TREVETT CRISTO SALZER & ANDOLINA P.C.

Don’t miss out on this opportunity! The seminar will be offered as follows: Buffalo

Friday, October 16, 2009

Holiday Inn Amherst

New York

Friday, October 16, 2009

New York State Insurance Fund

Hauppauge

Friday, October 23, 2009

Hyatt Regency Long Island

Albany

Friday, October 30, 2009

New York State Nurse’s Association

Syracuse

Friday, November 6, 2009

Holiday Inn Carrier Circle

Please contact Lisa G. Berrittella, Esq., by phone (585) 454-2181, ext. 146, or e-mail [email protected] if you would like further information about the program or are interested in attending. We hope to see you there!

The First Department, Appellate Division, Departs From Court of Appeals Precedent in Labor Law Section 240(1) Case Cherry v. Time Warner, Inc., 2009 WL 2497974 (1st Dept 2009) Over the summer, the First Department departed from a Court of Appeals precedent concerning Labor Law Section 240(1). In this case, the plaintiff, subcontractor’s employee, was injured when he fell off a baker’s scaffold onto a concrete floor eight feet below, while securing sheet rock to a ceiling, as part of a construction project. The scaffold he was using lacked appropriate guardrails. Apparently there were scaffolds with appropriate guardrails on other floors of the work site. However, the plaintiff did not observe any other scaffolds with appropriate guardrails at the time of his accident. The plaintiff brought a motion for summary judgment and the defendant landowner brought a cross-motion for summary judgment under the scaffold law, Labor Law Section 240(1). The lower court denied the motions finding there existed triable issues of fact. The parties cross-appealed, and the First Department affirmed the lower court’s findings. The First Department held that a worker is not required to actively search for the existence of safety devices that would provide him proper protection at his worksite. It was enough that he did not observe any such devices. The First Department similarly held that the defendant landowner must show that safety devices were readily available to the injured worker. Because the record in this case did not address the issue of how readily available scaffolds with appropriate safety devices were on the day of the accident, there existed a triable issue of fact which precluded summary judgment. The decision is distinguishable from the Court of Appeals cases Robinson v. East Medical Center, 6 NY3d 550 (2006) and Montgomery v. Federal Express Corp., 4 NY3d 805 (2005), in which the Court held that if adequate safety devices are provided on a work site and a worker either does not use them or misuses them, then there exists no liability pursuant to Labor Law Section 240(1).

Please be sure to visit our website at www.trevettlaw.com for copies of this and previous insurance defense newsletters, general legal updates, as well as other information about this firm and its attorneys!

Exclusionary Provisions in Insurance Policy Deemed Not Applicable Pioneer Tower Owners Ass’n v. State Farm Fire & Casualty Co., 12 NY3d 302 (2009)

The defendant had issued an insurance policy covering plaintiff’s building, which sustained damage, in the form of cracks, separations and open joints, as the result of excavation work being performed on the adjacent property. State Farm denied any coverage for the damages, citing policy exclusions for damage caused by earth movement and for settling, cracking, shrinking, bulging or expansion. Although it agreed that the language of the exclusions literally covered the situation, the Court nonetheless found an ambiguity. It agreed with the plaintiff that it was plausible to conclude that an ordinary reader would interpret the earth movement exclusion to include only earth movement occasioned by natural forces, and not the intentional removal of earth through excavation by humans. This possible interpretation was based upon the examples listed, which although stated not be exhaustive, contained only natural forces, such as earthquake, landslide and erosion. The Court concluded that had the drafters intended the exclusion to apply to excavation, which it deemed “a very common way of moving earth”, they would have explicitly included excavation, rather than less common natural forces.

A TT TT O OR RN N EE Y Y SS A A TT LL A AW W A

TREVETT CRISTO SALZER & ANDOLINA P.C.

It is well settled that exclusionary provisions in insurance policies are to be read narrowly, with any ambiguity being resolved in favor of coverage. The Court of Appeals recently used this notion to rule that two specific policy exclusions did not bar coverage, despite recognizing “that the literal language of the exclusions describes what happened here.” Pioneer Tower Owners Ass’n v. State Farm Fire & Casualty Co., 12 NY3d 302, 307 (2009).

Without much discussion at all, the Court concluded that it would also be possible to reasonably interpret the exclusion for settling or cracking as not applying where such damages were the immediate and obvious result of some other event. Although not technically establishing any new law, the Pioneer Towner case provides an extreme example of the lengths to which the law may go to afford an insured coverage.

Congratulations to Trevett Cristo’s Five Super Lawyers©! Congratulations to partners James C. Gocker (Civil Litigation – Defense), Lawrence J. Andolina (Criminal Defense), James A. Valenti (Family Law), Louis B. Cristo (Personal Injury Defense: General) and Thomas N. Trevett (Personal Injury Defense: General) for their selection to the 2009 New York State Super Lawyers – Upstate©. Super Lawyers© is an independent publication which researches and evaluates attorneys on a wide variety of indicators of peer recognition and professional achievement. The listing is limited to a maximum of 5 percent of lawyers per jurisdiction.

Court of Appeals Resolves Appellate Split Concerning 12 NYCRR § 23-9.2(a) and Its Ability to Sustain Labor Law Section 241(6) Claims Misicki v. Caradonna, 12 NY3d 511 (2009) In order to benefit from the near strict liability potentially imposed by Labor Law § 241(6) a plaintiff must show that the defendant violated a rule and regulation of the Department of Labor which imposes sufficiently specific requirements, as opposed to general guidelines. Not surprisingly, the distinction between general and specific requirements has spawned a huge amount of litigation. In Misicki v. Caradonna, 12 NY3d 511 (2009), the Court of Appeals resolved a split among the Appellate Divisions concerning 12 NYCRR § 23-9.2(a). That rule, which applies to power-operated heavy equipment or machinery used in construction, demolition or excavation operations, provides, in part, that any discovered defect or unsafe condition in such equipment be corrected by necessary repairs or replacement. A divided court held that this portion of the regulation imposed a sufficiently specific requirement to support liability under Section 241(6). In this particular case it was claimed that a handle of an angle grinder was missing, but that plaintiff was instructed by his supervisor to continue working anyway. As the Appellate Division had held that the regulation was not sufficiently specific, the Court of Appeals remanded for a determination as to whether a violation had occurred.