On June 14, 2013 Thomas Craven obtained a defense verdict on damages in a high exposure trial before Judge Woodard in Nassau County Supreme Court in the matter of Jennifer Cully v. Stacey Kapner-Learch (10208/10). The plaintiff alleged a causally related lumbar disc surgery, laminectomy and spinal fusion, as a result of a motor vehicle accident with $1,250,000 in exposure to the defendant's insurance carriers.

On June 14, 2013 Charles Mailloux obtained a $15,000 verdict in the matter of Myung Ho Yeon v. Karen Deturris (11542/11) in Queens County Supreme Court before Judge Martin Ritholtz in a Summary Jury Trial with parameters of $10,000 to $200,000. The plaintiff rejected a $40,000 offer prior to the verdict and on summation asked the jury for $450,000 in damages.

On June 19, 2013 John Danzi obatined a defense verdict, in favor of our insured, Norma Cruz, on the issue of liability before Judge Whalen in Suffolk County Supreme Court in the case of  Canahui v. Cruz  (45261/09).

On June 28, 2013, Rich Brown reached an $85,000 settlement during Trial in Kings County in the matter of Daryl Alexander v. Sergio Tardone (24198/10) before Judge Baily-Schiffman. The plaintiff accepted the $85,000 offer, reducing their demand from $450,000 after the cross examination of the plaintiff's surgeon on a knee surgery case with additional claims of lumbar and cervical pathology. The defendant's carrier had offered the $85,000 prior to trial from their $1 Million policy.

On May 6, 2013 the Appellate Term for the 2nd,11th, and 13th Judicial Districts in the matter of Kew Garden Imaging a/a/o Manuel Ortiz v. State Farm Mutual Automobile Insurance Co. (2010-3304KC) reversed a judgment for the provider and remanded the matter for a new trial on an appeal prosecuted by Albert Galatan.

When an insurance carrier fails to defend an action, in breach of the broad duty under the policy, may that carrier later claim a policy exclusion to escape the duty to indemnify under the policy?

No, says the Court of Appeals in K2 Inv. Group, LLC v American Guar. & Liability Ins. Co. (2013 NY Slip Op 04270) decided on June 11, 2013.

Judge Smith, writing for the Court notes, "when an insurer has breached its duty to defend and is called upon to indemnify its insured for a judgment entered against it, the insurer may not assert in its defense grounds that would have defeated the underlying claim against the insured (Lang v Hanover Ins. Co., 3 NY3d 350, 356 [2004])."

In Automobile Ins. Co. of Hartford v Cook (7 NY3d 131 [2006]) the Court of Appeals defined the broad duty to defend:  "It is well settled that an insurance company's duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest a reasonable possibility of coverage. If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be. The duty remains even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered . . . . Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course."

In Lang v Hanover Ins. Co., 3 NY3d 350, [2004] the court noted the perils of relying on a disclaimer without instituting a declaratory judgment action: "[A]n insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured. If it disclaims and declines to defend in the underlying lawsuit without doing so, it takes the risk that the injured party will obtain a judgment against the purported insured and then seek payment . . . Under those circumstances, having chosen not to participate in the underlying lawsuit, the insurance carrier may litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment."

The rule as espoused in K2 Inv. Group is clear:  "If the disclaimer is found bad, the insurance company must indemnify its insured for the resulting judgment, even if policy exclusions would otherwise have negated the duty to indemnify."

Read K2 Inv. Group decision here.  

What is the value of a shoulder tear with surgery in Bronx County? The facts as related by the Appellate Division, First Department in Morales v. Manhattan & Bronx Surface Transit Operating Authority (2013 NY Slip Op 03388) decided on May 9, 2013 were:  "Plaintiff, who was 24 years old at the time of the accident, suffered, among other things, a partial thickness rotator cuff tear, for which she underwent surgery and a course of physical therapy, and an injury to her lower back. Although her medical records reflected that her condition improved postoperatively and she received only limited treatment after the surgery, she continued to complain of pain and limitation at the time of trial. In addition, her expert opined that her shoulder and lower back conditions were permanent and recommended further surgery for the shoulder injury." 

In November of 2011 the Bronx jury hearing the case awarded the plaintiff $400,00 for past pain and suffering and $300,000 for future pain and suffering. The Appellate Division ruled:  "...we find that the awards for past and future pain and suffering deviate materially from what is reasonable compensation (see CPLR 5501[c]; compare Konfidan v FF Taxi, Inc., 95 AD3d 471 [1st Dept 2012], Sanchez v Morrisania II Assoc., 63 AD3d 605 [1st Dept 2009], and Elescano v Eight-19th Co., LLC, 17 AD3d 250 [1st Dept 2005])." 

The trial judge set the verdict aside and ordered a new trial on damages unless the plaintiff accepted a reduced award of $175,000 for past pain and suffering and $35,000 for future pain and suffering. 

On Appeal, the Appellate Division modified and directed a new trial unless the plaintiff would accept a decrease in the jury award for past and future pain and suffering to $300,000 and $250,000, respectively.

So the answer to the question above, what is a sustainable verdict on a shoulder tear with surgery in the Bronx is $550,000!

See the decision here.

Auqui v. Seven Thirty One Ltd. Partnership, (20 N.Y.3d 1035, (2013) decided on February 13, 2013 has sparked a fury of activity in June.

Auqui applied the doctrine of collateral estoppel against a party in a personal injury suit who had been determined by an Administrative body to no longer have a disability. "The doctrine of collateral estoppel is applicable to determinations of quasi-judicial administrative agencies such as the WCB (Workers' Compensation Board)... The determination of the WCB should be given preclusive effect as to the duration of plaintiff's disability, relevant to lost earnings and compensation for medical expenses."

On June 27, 2013 the Court of Appeals granted a rare motion to reargue the February 14, 2013 memorandum decision of the court to which Judge Pigott dissented noting, " a simple trip . . . to a Workers' Compensation Hearing will demonstrate the wisdom of the Appellate Division majority's decision."

The New York Assembly also took action by passing Assembly Bill A07757A with the new language:

"DETERMINATIONS BY THE BOARD AS TO CAUSE OF INJURY, DEGREE OF DISABILITY,  LOST  EARNINGS, NEED FOR FUTURE MEDICAL CARE, AND/OR PERMANENCY OF INJURY SHALL NOT BE GIVEN PRECLUSIVE EFFECT IN ANY OTHER FORUM, COURT OR PROCEEDING."

A reversal by the Court of Appeals may obviate the need for this new legislation. Tune in for further developments on this issue. 

Read the bill here.