AutoOne Ins. Co. v. Hutchinson ----N.Y.S.2d ----, 2010 WL 1078467 N.Y.A.D. 2 Dept., decided by the Appellate Division, Second Department on March 23 2010 in the context of an SUM dispute stands for the often quoted proposition that a hearing is required to determine the propriety of a disclaimer of coverage where the disclaimer is based on lack of cooperation. Here the insured sought SUM benefits from AutoOne Insurance Company after Nationwide disclaimed coverage to the injured party based on lack of cooperation from its insured in investigating the accident. The petitioner, AutoOne Insurance Company, made a prima facie showing that the offending vehicle was insured by Nationwide Mutual Fire Insurance Company through the submission of a police accident report containing the vehicle's insurance code (Matter of Continental Ins. Co. v. Biondo, 50 A.D.3d 1034, 857 N.Y.S.2d 588; Matter of State Farm Mut. Auto. Ins. Co. v. Mazyck, 48 A.D.3d 580, 581, 849 N.Y.S.2d 906;).

In opposition to the petition, Nationwide submitted evidence that it had disclaimed coverage for the offending vehicle based upon its insured's failure to cooperate in the investigation of the subject accident. The Appellate Division remanded this case back to lower Court, indicating, " since a disclaimer based upon lack of cooperation penalizes the injured party for the actions of the insured and "frustrates the policy of this State that innocent victims of motor vehicle accidents be recompensed for the injuries inflicted upon them," an insurer seeking to disclaim for noncooperation has a heavy burden of proof (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 168, 278 N.Y.S.2d 793, 225 N.E.2d 503; see Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 450, 871 N.Y.S.2d 607, 900 N.E.2d 144). 

To sustain its burden of establishing lack of cooperation, the insurer must demonstrate that "it acted diligently in seeking to bring about the insured's cooperation ... that the efforts employed by the insurer were reasonably calculated to obtain the insure[d]'s cooperation ... and that the attitude of the insured, after his cooperation was sought, was one of 'willful and avowed obstruction' " (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d at 168, 278 N.Y.S.2d 793, 225 N.E.2d 503, quoting Coleman v. New Amsterdam Cas. Co., 247 N.Y. 271, 276, 160 N.E. 367; see Matter of State Farm Indem. Co. v. Moore, 58 A.D.3d 429, 430, 872 N.Y.S.2d 82; Matter of State Farm Mut. Auto. Ins. Co. v. Campbell, 44 A.D.3d 1059, 845 N.Y.S.2d 88; Matter of Eveready Ins. Co. v. Mack, 15 A.D.3d 400, 400, 790 N.Y.S.2d 48). 

Here, while Nationwide's disclaimer letter and evidential proof that its insured failed to attend an examination under oath were sufficient to raise an issue of fact warranting a hearing, these submissions were insufficient to establish the validity of the disclaimer as a matter of law (see Matter of Mercury Ins. Group. v. Ocana, 46 AD3d 562, 563; Matter of Allstate Ins. Co. v. Anderson, 303 A.D.2d 496, 497, 755 N.Y.S.2d 724; Matter of New York Cent. Mut. Ins. Co. v. Davalos, 39 A.D.3d 654, 656, 835 N.Y.S.2d 247; Matter of Lumbermens Mut. Cas. Co. v. Beliard, 256 A.D.2d 579, 580, 682 N.Y.S.2d 430). 

A further problem for Nationwide here was highlighted by the Appellate Court, Nationwide's letters demanding that its insured appear at an examination under oath made reference to his purported status as a claimant for no-fault benefits, and warned him that the failure to appear could result in the denial of such benefits, despite the fact that there is no indication that the insured was injured in the accident and sought no-fault benefits

Majawalla v. Utica First Ins. Co. --- N.Y.S.2d ----, 2010 WL 1078486, decided by the Appellate Division, Second Department, on March 23, 2010 is a good primer on the mine field of coverage disclaimers and a discussion of "incidental contracts. On January 14, 2004, Janet Mangerino allegedly fell in the parking lot of the store at 65-00 Myrtle Avenue in Glendale, sustaining injuries. Yashi Associates owned the store and leased it to Glendale Convenience Store, Inc. A provision of the lease between Yashi Associates, as lessor, and Glendale Convenience, as lessee, required the lessee to maintain an insurance policy in connection with the leased premises, and to name the lessor as an additional insured under the policy. However, the policy obtained by the lessee did not name Yashi Associates or the individual plaintiffs as additional insureds.

When the plaintiffs demanded that the defendant defend and indemnify them in the underlying action, Utica First Ins. Co. disclaimed coverage. Utica First Ins. Co. established that the plaintiffs were not entitled to coverage as additional insureds under the subject policy as they were not named as insureds or additional insureds. In an effort to find coverage the plaintiffs argued the policy provided that the defendant would not pay for bodily injury or property damage liability assumed under a contract. However, this section further stated that this exclusion "does not apply to an incidental contract." The policy's definition of an "incidental contract" included, inter alia, leases of premises, but the policy did not expressly state that the defendant was obligated to provide coverage pursuant to terms of an "incidental contract" The ambiguity sufficiently raised a triable issue of fact as to whether the Utica Insurance Company was obligated to defend and indemnify the plaintiffs by operation of the subject insurance policy and the lease provisions.

Further complicating the fact pattern the Court held: "A triable issue of fact also exists as to whether the defendant would be obligated to defend and indemnify the plaintiffs based on where the accident occurred and whether the location constituted the "demised premises," whether it constituted an area "in or about the demised premises or any part thereof" as referred to in the provision of the rider to the lease pertaining to insurance, or whether it was not part of the demised premises and, thus, not subject to coverage by the defendant. Further, we note that a motion for summary judgment by Glendale Convenience, the named insured, was granted by the Supreme Court, Queens County, in an order dated April 20, 2007.

If the defendant is found to be obligated to defend and indemnify the plaintiffs by operation of the insurance policy and lease, a triable issue of fact exists as to whether the defendant would be released from that obligation because Glendale Convenience has been absolved of all liability in the underlying action. In this regard, the term "additional insured" is typically understood to mean " 'an entity enjoying the same protection as the named insured' " (Kassis v. Ohio Cas. Ins. Co., 12 N.Y.3d at 599-600, 885 N.Y.S.2d 241, 913 N.E.2d 933, quoting Pecker Iron Works of N.Y. v. Traveler's Ins. Co., 99 N.Y.2d 391, 393, 756 N.Y.S.2d 822, 786 N.E.2d 863 [internal quotation marks omitted]). " The lesson for the policy drafter here is to take out the phrase "does not apply to an incidental contract", unless an exhaustive definition of "incidental contract" is included.

The latest New York storm has brought more questions from friends and relations about falling trees than any inquiry into our health or well being. We therefore have tried to explain New York rules with respect to falling trees.  When a landowner's tree or a tree branch falls onto the property of a neighbor, the owner is not liable for any injuries caused unless he or she had actual or constructive notice of a defective condition in the tree making the fall foreseeable. Ivancic v. Olmstead 66 N.Y.2d 349 (Court of Appeals 1985). A tree that is dead or decaying is likely to create injury. Constructive notice exists only where a defect in the tree is "readily observable" to an ordinary landowner upon reasonable inspection.

The rule with respect to municipalities indicates: "A municipality has a duty to maintain its roadways in a reasonably safe condition, and this duty extends to trees adjacent to the road which could pose a danger to travelers" (Ferrigno v. County of Suffolk, 60 AD3d 726, 727 see also, Ivancic v. Olmstead, 66 N.Y.2d 349, 351 [1985]; Harris v. Village of East Hills, 41 N.Y.2d 446, 449, 450 [1977]; Hilliard v. Town of Greenburgh, 301 A.D.2d 572, 573).  More particularly, a "village has a statutory duty to maintain and inspect the trees on village property which border county roads" while at the same time, a "county has a collateral duty to maintain its roads in a reasonably safe condition" which duty "extends to trees which overhang the road" (Harris v. Village of East Hills, supra, 41 N.Y.2d at 449-450; Michaels v. Park Shore Realty Corp., 55 AD3d 802, 803; Crawford v. Forest Hills Gardens, 34 AD3d 415, 416; Ehlers v. County of Otsego, 12 AD3d 814, 815 see also, Quog v. Town of Brookhaven, 273 A.D.2d 287; Guido v. State of New York, 248 A.D.2d 592). 

Although "[t]here is no duty to consistently and constantly check all trees for nonvisible decay" (Ivancic v. Olmstead, supra, 66 N.Y.2d at 351), constructive notice of a defect may be imputed to a landowner where a reasonable inspection would have revealed the allegedly "dangerous or defective condition of the tree" (Michaels v. Park Shore Realty Corp., supra, at 803 see, Harris v. Village of East Hills, Ferrigno v. County of Suffolk,; Crawford v. Forest Hills Gardens, supra, 34 AD3d at 416; Ehlers v. County of Otsego ; Collado v. Incorporated Town and/or Village of Freeport, 6 AD3d 378, 379; Asnip v. State, 300 A.D.2d 328 cf., Galindo v. Town of Clarkstown, 2 NY3d 633, 636-637 [2004]).  Notably, "the manifestation of decay must be readily observable in order to require a landowner to take reasonable steps to prevent harm" (see, Ivancic v. Olmstead, supra, 66 N.Y.2d at 351; Harris v. Village of East Hills; Pulgarin v. Demonteverde, 63 AD3d 1026, 1027; Simet v. Coleman Co., Inc., 42 AD3d 925, 927; Crawford v. Forest Hills Gardens, supra, 34 AD3d 415).