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Picciano & Scahill, P.C. Newsletter
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Appellate Decisions of Interest

Decisions of Note

Featured Employee

We welcome
Mat Peluso,
a May 2011 graduate from Pace University School of Law and a graduate of Loyola University of Maryland. Mat passed the 2011 July Bar Exam and is awaiting admission to the Bar. Mat spent two years as an intern with the Westchester County District Attorney's Office. We plan on using his prosecutorial skills in the Court Room upon his admission to the Bar.

Congratulations

Courtney Wallen

on his retirement from Picciano & Scahill. We thank him for his long years of dedicated service and wish him well in his retirement.

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iNews Issue: 35

January 2012

Best wishes to all for a
Healthy and Prosperous
New Year.

Appellate Decisions of Interest

Unlike an automobile insurer, a Homeowner's Insurer has a right to rescind and cancel an insurance policy from the inception date if the insured made a material misrepresentation to the carrier when the policy was procured. "To establish the right to rescind an insurance policy, an insurer must show that its insured made a material misrepresentation of fact when he or she secured the policy (see Novick v Middlesex Mut. Assur. Co., 84 AD3d 1330, 924 N.Y.S.2d 296; Varshavskaya v Metropolitan Life Ins. Co., 68 AD3d 855, 856, 890 N.Y.S.2d 643; Schirmer v Penkert, 41 AD3d 688, 690, 840 N.Y.S.2d 796; Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713, 714, 732 N.Y.S.2d 51)."

New York Insurance Law §3105, allows an insurer to void an insurance contract if the insured made a false representation of fact as an inducement to make the contract and the misrepresentation was material; see Insurance Law §3105(a)(b). Rescission of the contract is available even if the material misrepresentation was innocently or unintentionally made (Nationwide Mutual Fire Insurance Company v. Pascarella, 993F.Supp 134 (1998)).

With regard to whether a representation made is "material", New York Insurance Law §3105 provides in relevant part:

a)   A representation is a statement as to past or present fact, made to the insurer by, or by the authority of, the applicant for insurance of the prospective insured, at or before the making of the insurance contract as an inducement to the making thereof. Misrepresentation is a false representation, and the facts misrepresented are those facts which make the representation false.

b)    No misrepresentation shall avoid any contract of insurance or defeat recovery there under unless such misrepresentation was material. No misrepresentation shall be deemed material unless knowledge by the insurer of the facts misrepresented would have led to refusal by the insurer to make such contract.

c)    In determining the question of materiality, evidence of the practice of the insurer which made such contract with respect to the acceptance or rejection of similar risks shall be admissible.

d)    The question of materiality is typically one of fact for resolution at trial, but "where the evidence concerning materiality is clear and substantially uncontradictory, the matter is one of law for the court to determine. Process Plan Corp. v. Beneficial National Life Insurance Company, 53 AD.2d 214 (1976).

Interboro Ins. Co. v. Fatmir, (89 A.D.3d 993) decided by the Appellate Division, Second Department on November 23, 2011 reiterated the rule in New York which allows a carrier to rescind a policy where the homeowner noted in the application that the premises were "owner occupied". After a loss was reported the carrier determined through investigation that the premises were "not owner occupied and deemed an unacceptable risk under its underwriting guidelines".
Here the policyholder's arguments regarding the lack of a timely disclaimer in accord with Insurance Law section 3420(d) were dismissed, "a disclaimer pursuant to Insurance Law § 3420(d) was not required because the policy only provided liability coverage to the insured for premises which he and his household occupied for residential purposes and, thus, "the policy never provided coverage" for the claim at issue (Metropolitan Prop. & Cas. Ins. Co. v Pulido, 271 AD2d 57, 60, 710 N.Y.S.2d 375; see generally Zappone v Home Ins. Co., 55 NY2d 131, 138, 432 N.E.2d 783, 447 N.Y.S.2d 911)."

Read more here.
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People v. Furey is a Court of Appeals Decision from December 15, 2011 with implications for Civil actions on the issue of jury disqualification. Defendant Scott Furey was charged with committing burglary, kidnapping and other offenses against his former girlfriend.

Detective Sergeant Kevin Carter of the City of Oswego Police Department testified at the suppression hearing that this matter was assigned to him by Captain Comerford. The captain's wife subsequently reported to County Court for jury duty and was questioned as a potential juror in the case against Scot Furey. Mrs. Comerford indicated that she knew five of the officers and would view their testimony in the same manner as other witnesses. She further stated that she knew an additional witness, an assistant district attorney. In total, Mrs. Comerford was acquainted with eight of the 14 witnesses identified by the People. The defense moved to dismiss Mrs. Comerford for cause. The People objected relying on her statements that she would not give preferential treatment to the testimony of the witnesses she knew. County Court denied the for-cause challenge, explaining that Mrs. Comerford "indicated that she knows nothing about the facts and circumstances of this case and through her husband she knows who many of the People's witnesses are potentially and she would treat them the same as any other witnesses." The defendant used a preemptory challenge to excuse this prospective juror and was convicted after trial. His appeal to The Court of Appeals was successful and a new trial was orderd on the sole issue of whether the County Court Judge erred in denying the "for cause" challenge.

"A prospective juror may be challenged for cause on several grounds, one of which is a preexisting relationship with a potential witness that "is likely to preclude [the prospective juror] from rendering an impartial verdict" (CPL 270.20 [1] [c]). This is referred to colloquially as an "implied bias" (see Preiser, Practice Commentaries, McKinney's Cons Laws of NY, Book 11A, CPL 270.20, at 300) that requires automatic exclusion from jury service regardless of whether the prospective juror declares that the relationship will not affect her ability to be fair and impartial.

And such bias, whether acknowledged by the declarant or not, cannot be cured with an expurgatory oath. "[T]he risk of prejudice arising out of the close relationship . . . [is] so great that recital of an oath of impartiality could not convincingly dispel the taint" (Branch, 46 NY2d at 651) and create the perception that the accused might not receive a fair trial before an impartial finder of fact. For this reason, we have advised trial courts to exercise caution in these situations by leaning toward "disqualifying a prospective juror of dubious impartiality."

Read full decision here .
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Matter of Elrac v. Birtis Exum

Is an employee of a self insured entity, driving a vehicle in the course of his employment, entitled to claim uninsured motorist benefits or is that employee barred by the provisions of Workers' Compensation law section 11 from seeking UM benefits?

The Court of Appeals addressed this issue in Matter of Elrac v. Birtis Exum, (2011 NY Slip Op 8961) decided on December 13, 2011. Workers' Compensation Law § 11 states:"The liability of an employer [for workers' compensation benefits] . . . shall be exclusive and in place of any other liability whatsoever, to such employee, his or her personal representatives, spouse, parents, dependents, distributees, or any person otherwise entitled to recover damages, contribution or indemnity, at common law or otherwise, on account of such injury or death or liability arising therefrom."

In Matter of Allstate Ins. Co. v Shaw (52 NY2d 818, [1980]), The Court of Appeals held that a self-insurer had the same liability for uninsured motorist coverage that an insurance company would have. "Although the words "any other liability whatsoever" seem all-inclusive, there are cases - of which this is one - in which they cannot be taken literally (see Billy v Consolidated Mach. Tool Corp., 51 NY2d 152, 412 N.E.2d 934, 432 N.Y.S.2d 879 [1980]). Specifically, the statute cannot be read to bar all suits to enforce contractual liabilities. If an employer agrees, as part of a contract with an employee, to provide life insurance or medical insurance, and breaches that contract, an action to recover damages for the breach would not be barred, though the action might literally be "on account of . . . injury or death." An action against a self-insurer to enforce the liability recognized in Shaw is, in our view, essentially contractual. The situation is as though the employer had written an insurance policy to itself, including the statutorily-required provision for uninsured motorist coverage. This action is therefore not barred by Workers' Compensation Law § 11."

Read full decision here.

Decisions of Note

Judge Jose A Padilla Jr. of Bronx County Civil Court in a decision entitled Eagle Surgical Supply, Inc. V Geico, dated November 3, 2011 (2011 NY Slip Op 52142U) entered judgment in favor of the provider, precluding the defense of medical necessity, based on the failure of the insurer to provide a HIPPA authorization from the injured party, allowing for medical records to be used in the defense of the claim. It is respectfully submitted this decision is contrary to the long standing rule in New York, followed by the First and Second Departments, that a HIPPA authorization is not necessary in a no-fault claim, as the medical provider is acting as the assignee of the injured party. See Long Island Radiology, Respondent, v Allstate Insurance Company (36 A.D.3d 763 App. Div 2nd Dept., 2007); Barbara J. Cirone v Tower Insurance Company (76 A.D.3d 883 App. Div 1st Dept., 2010).

"An assignee "stands in the shoes" of an assignor (Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489, 722 NYS2d 884 [2001]) and thus acquires no greater rights than its assignor (see Dilon Medical Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927, 796 NYS2d 872 [2005]). Since the defense of lack of medical necessity may indisputably be raised by the defendants against the injured party, it is available as against medical provider who accept assignments of no-fault benefits (see Hammelburger v Foursome Inn Corp., 54 NY2d 580, 586, 431 NE2d 278, 446 NYS2d 917 [1981]; Losner v Cashline, L.P., 303 AD2d 647, 648, 757 NYS2d 91 [2003]; West Tremont Med. Diagnostic, P.C. v GEICO, 13 Misc 3d 131[A], 824 NYS2d 759 [2006]; see also Precision Diagnostic Imaging, P.C. v Travelers Ins. Co, 8 Misc 3d 435, 795 NYS2d 875 [2005]). Miller, J.P., Krausman, Fisher and Dillon, JJ., concur. [See 12 Misc 3d 1167(A), 2006 NY Slip Op 51090(U) (2006).]"

Read full decision here.

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The red light camera program in Nassau County grossed $14,936,814 for the County and municipal governments in 2010 with a net recovery of $10,485,091. The goal of the program was to reduce accidents, with ancillary benefits including the revenue to County Government. A review of the website for the program reveals many accidents highlighted on video with a clear indication who ran the red light. Travelers Insurance Co. attempted to gain access to a specific video of an accident involving one of their insureds by filing a special proceeding before Judge Jeffrey Brown of Nassau County Supreme Court. In a case of first impression, Judge Brown, denied the application on December 2, 2011, in Travelers Property Casualty Company of America, Petitioner v. Nassau County Traffic and Parking Violations Agency (10470/10), based on the specific exemption afforded to the program by the State Legislature.

"When the State authorized the County to implement a Red Light Camera Program, the state legislature amended the Public Officers Law (Freedom of Information Law or "FOIL") to add subdivision "(k)" to §87(2). Public Officers Law §87 (2) (k) lists the following exemption:
(k) photographs, microphotographs, videotape or other recorded images prepared under authority of section eleven hundred eleven-b of the vehicle and traffic law."

VTL §1111-b provides: "The owner of a vehicle shall be liable for a penalty imposed pursuant to this section if such vehicle was used or operated with the permission of the owner, express or implied, in violation of subdivision (d) of section eleven hundred eleven of this article, and such violation is evidenced by information obtained from a traffic control signal photo violation monitoring system..."

The Court concluded, "By adding subsection (k) to the FOIL statute, the legislature intended that the information contained on the photographs, microphotographs, videotape or other recorded images obtained from a traffic-control signal photo violation-monitoring system should be excluded from the information generally made available to the public."

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fall In an effort to reduce claims following slip in fall accidents in Supermarkets major chains have adopted the Gleason Inspection System and video surveillance of the store aisles. "The Gleason Inspection System which requires employees to walk around the store with a wand and conduct hourly inspections to make sure there are no slipping hazards, spills or breakages on the floor. In each aisle there is a button that must be physically touched with a hand-held wand and then, after touching the wand, there are buttons to be pressed indicating whether the aisle was clean or had a spill. A computer printout is generated documenting the inspections in an "Inspection Log." The inspection log is kept in the ordinary course of business."

Judge Robert McDonald of Queens County Supreme Court in Bailey v Key Food, (2011 NY Slip Op 52099U) decided on November 21, 2011 issued a well written decision which is a primer for the defense of slip and fall premises claims.

A defendant who moves for summary judgment in a premises liability case has the initial burden of making a prima facie showing that it neither created the hazardous condition nor had actual or constructive notice of its existence for a sufficient length of time to discover and remedy it (see Bloomfield v Jericho Union Free School Dist, 80 AD3d 637, 915 N.Y.S.2d 294 [2d Dept. 2011]). In order for a plaintiff in a "slip and fall" case to establish a prima facie case of negligence, the plaintiff must demonstrate that the defendant created the condition which caused the accident, or that the defendant had actual or constructive notice of the condition. To constitute constructive notice, "a defect must be visible and apparent and it must exist for a sufficient length of time prior to the accident to permit defendant's employees to discover and remedy it" (Gordon v American Museum of Natural History+, 67 NY2d 836, 492 N.E.2d 774, 501 N.Y.S.2d 646 [1986]). "To meet the initial burden on the issue of lack of constructive notice, [the defendants] must offer some evidence as to when the area in question was last cleaned or inspected relative to the time when the plaintiff fell."

Here the plaintiffs proof failed to establish either actual or constructive notice and the claim was dismissed.