Here is an interesting coverage decision.  The New York State Appellate Court Second Department held Hanover Insurance liable for an uninsured motorist's injuries.  That's the bad news.  The good news is the Court reduced the original default award of $800,000 to $25,000, the minimum under New York State law.  Here is what happened in CREINIS v HANOVER INSURANCE COMPANY 872 N.Y.S.2d 672 (N.Y.A.D. 2 Dept.), decided on   February 03, 2009.

 

This claim concerned an action to recover against Hanover Insurance Co. on a judgment that was granted after inquest in the underlying action in which Hanover failed to appear on behalf of the purported insured.

 

The injured party had filed an uninsured motorist claim against their own carrier, which resulted in an order issued permanently staying the arbitration demand under CPLR 7503(C)  where Hanover was found to be the insurer (on default) of the offending vehicle. A suit was then filed against the Hanover insureds which resulted in a default judgment of $800,000.  Hanover failed to defend the BI claim despite knowledge of the prior order declaring that they must provide coverage.  After the inquest order the judgment was served on Hanover and a suit was filed to recover on the judgment pursuant to Insurance law Section 3420(a)(2). Hanover opposed the suit claiming they never had coverage with this insured, however the Appellate Division relying on Kleynshvag v. GAN Ins. Co. (21 AD3d 999), held that Hanover was estopped from claiming coverage did not apply as the prior default order in the Petition to stay arbitration determined that Hanover was required to provide coverage. Even if Hanover could now prove that a policy was never written for this insured, they were required to provide coverage based on their default in the UM claim. What happens to the $800,000 Judgment? 

 

The Court fashioned their own remedy here and stated Hanover is only liable for $25,000 which would be the NY minimum stating, "...where an insurer can demonstrate that no coverage at all was in effect for the accident, its exposure will be limited to the statutory minimum coverage for personal injury liability, which is fixed in the sum of $25,000 pursuant to Vehicle and Traffic Law § 311(4)(a), a relatively paltry price for its default in the proceeding to stay the uninsured motorist arbitration-the very default which occasioned all of the ensuing litigation and the corresponding delay in the injured plaintiff's monetary recovery."

 

If you have any doubt as to where the Court was leaning, this sentence would dispel any uncertainty, "while the dissent expresses concern that our conclusion creates a "windfall" for the plaintiff's uninsured motorist carrier by shifting liability for the plaintiff's injuries to Hanover, we are far more concerned that the injured plaintiff have recourse to a viable avenue of recovery."  Read the decision here. 

 

New York State Drivers Can Not Invoke "Serious Injury" Threshold Defense for Out-of-State Accidents

 

New York State law is well established on this point:  New York State's "serious injury" threshold set forth in Insurance Law Sections 5104 and 5102(d) does not apply when the accident occurs in a state other than New York.  Courts in New York have consistently interpreted this statute to be expressly limited by its own terms "to personal injury actions arising out of negligence in the use or operation of a motor vehicle in [New York]." The serious injury threshold is therefore not applicable to automobile-related personal injury actions litigated in New York courts where the accident between the two parties occurs in a state other than New York. Federal Ins. Co. v. Barsky, 267 A.D.2d 275 (2d Dept. 1999), citing Morgan v Bisorni, 100 A.D.2d 956 (2d Dept. 1984). Both of these cases held that the New York legislature clearly intended for the serious injury threshold to apply only to accidents occurring within New York State, as various amendments regarding liens and motorcycles were enacted to the no-fault law in 1977 that deleted the phrase "in this state." The fact that the legislature deleted the identical "in this state" clause from some sections of the law yet included it within the "threshold" section indicates that the legislature intended to limit the "threshold" requirement to accidents that occur in this state.
 
There are numerous cases that cite Morgan as authority for the proposition that New York's threshold requirement does not apply to accidents that occur outside the state of New York, including the very recent decision of the New York Appellate Term, New York First Department, Quinones v. Martinez, 20 Misc.3d 141(A) (2008), which determined that a motor vehicle accident that occurred in Rhode Island did not invoke New York's no-fault statute. Moreover, three of the four Appellate Divisions agree that New York's threshold does not apply to accidents that occur in other states. The only reported appellate decision that is contrary to this holding is that of Thomas v Hanmer, 109 A.D.2d 89 (4th Dept. 1985), wherein New York's threshold serious injury threshold was applied to an automobile accident that occurred in Canada between all-New York parties. However, in Thomas, the Fourth Department did not recognize nor discuss the plain language of Ins. Law § 5104(a), which expressly deprives the no-fault threshold of any effect for accidents that occur outside of the territorial limits of New York.

This rear-end collision occurred on July 12, 2005 at DeKalb Avenue and Knickerbocker Avenue, Brooklyn, New York.  The issue of liability rested with the insured.  As a result of the accident, plaintiff is claiming left shoulder impingement as well as disc bulges in the neck and back.  All parties previously agreed to proceed to a Summary Jury Trial on the issue of damages only.
 
During summations, we argued that plaintiff's quality of life actually improved since the accident.  We told the jury that Mr. Nazario's admissions show that the impact was light and that plaintiff failed to present photographs showing otherwise.  Also, plaintiff's alleged inability to exercise was unsubstantiated by any proof whatsoever.  Regarding the medical records, we argued that plaintiff's submissions show that plaintiff had slight restriction insufficient to breach the "serious injury" threshold.
After twenty minutes, the jury returned a verdict in our favor.
 
Anthony E. Graziani took a Defense Verdict in Debra Delena v. John Drisco  before Judge Costello in Suffolk County (Suffolk Index No. 19419/01)

This case involved a fourteen year old boy and a friend who were riding a motorized scooter.  The infant plaintiff claimed to have been struck by a vehicle driven by a volunteer firefighter responding to an emergency fire call.  Picciano & Scahill's attorney, Anthony Graziani argued that the Plaintiff's parents were negligent in allowing their son to operate a motorized scooter in the street or on a sidewalk in violation of the law.  Defendant's further argued that the Plaintiff was not hit by the Defendant's car.  Instead, the Plaintiff hit the Defendant's car.  After deliberating the facts and law of the case, the jury found the Defendant was not liable for the accident.  
 
Thomas Craven took a Defense Verdict in the matter of Bourdierd v. Miranda before Judge Huff on January 16, 2009 in New York County (New York Index No. 106373/2004)

 

Plaintiff suffered serious injury to his finger requiring surgical reconnection of the fingertip.  Plaintiff alleged that Defendant was responsible stating the injury occurred while he was washing Defendant's car.  The trial was on issues of liability with damages stipulated at the amount of $150,000 if there was liability found against the defendant.  After two days of trial the jury found that even though the Defendant's car was at the Car Wash when Plaintiff was injured, Defendant was not negligent.  

     
Recent Appellate Decisions in Our Favor

 

In the matter of Roules v State Farm Ins. Cos  59 A.D.3d 514, 873 N.Y.S.2d 183 decided on February 10, 2009 the Appellate Division, Second Department ruled in our favor on a Declaratory Judgment action regarding a timely disclaimer.  The denial of our motion for summary judgment was reversed without costs.  Read the decision here.

Contact Frank Scahill, Managing Partner, at fscahill@psnylaw.com.