In an insurer’s action for a declaration that it owed no duty to indemnify its insured for sums the latter paid to settle a civil-rights suit, the insurer defeated the insured’s motions to dismiss by raising questions of fact.

The Insurer insured a school district and its officials (“School District”) under a primary CGL and School-District-and-Educators-Legal-Liability policy and an umbrella CGL policy.  In the underlying action, students alleged that the School District had violated the students’ civil rights by the School District’s deliberate indifference to anti-Semitic harassment and discrimination perpetrated by other students against the students.  More specifically, the students alleged that

  • The School District deliberately ignored complaints and its own observations of student-on-student anti-Semitic harassment and discrimination, or responded in an unreasonable or inadequate manner to such complaints and observations;
  • There were repeated and frequent incidents of anti-Semitic harassment and discrimination against the students by other students, which were reported to the School District on many occasions and directly observed on other occasions, which gave rise to an inference that the School District “intended for the harassment to occur” based upon the School District’s practices, policies, and customs in dealing with reports and observations of anti-Semitic harassment and discrimination;
  • The School District “intentionally discriminated” against the students,
  • The School District’s conduct “aided and incited” unlawful discrimination; and
  • The School District’s acts and omissions were “undertaken recklessly and with the intent to engage in wrongful conduct.”

The Insurer defended the School District through the resolution of the underlying action but disclaimed any duty to indemnify the School District.  At mediation in the underlying action, the students and the School District settled the underlying action for $3,000,000 in compensatory damages and $1,480,000 for the students’ attorneys’ fees. A representative of the Insurer attended the mediation but the Insurer paid nothing toward the settlement.

Thereafter, the Insurer commenced the subject declaratory judgment action seeking a declaration that it owed the School District no indemnification for the settlement because (a) coverage for the claims in the underlying action were excluded by the Insurer’s exclusion for intentional discriminatory conduct and (b) the students’ claims were neither a covered “occurrence” nor “loss” as those terms were defined by the policies.

The School District moved to dismiss under CPLR 3211(a)(1) (defense founded on documentary evidence) and CPLR 3211(a)(7) (failure to state a cause of action) premised on the theory that intentional acts can have unintended consequences that constitute “accidents” which therefore must be covered “occurrences” or “losses” under the Insurer’s policies.

Policy exclusion for intentional discriminatory conduct exclusion.  The School District argued that because intentional acts can have unintended consequences that constitute covered “accidents”, the Insurer’s exclusions for intentional discriminatory conduct had to fail.  But the Second Department held that the insurance policies did not conclusively establish that the Insurer was obligated to indemnify the School District, and that unspecified “other evidence” submitted by the School District did not “utterly refute” the factual allegations set forth in the Insurer’s complaint.  Whether the incidents set forth in the students’ complaint were accidents was a “question of fact” that could not be determined on a motion to dismiss pursuant to CPLR 3211(a)(1) or (7)

A motion to dismiss pursuant to CPLR 3211(a)(1) (defense founded on documentary evidence) requires that the documentary evidence utterly refute plaintiff’s factual allegations, conclusively establish a defense as a matter of law, and be unambiguous and of undisputed authenticity.  Here, the insurance policies which the School District submitted as documentary evidence did not provide a complete defense to the Insurer’s claim that the Insurer owed no duty to indemnify the School District.

A motion to dismiss pursuant to CPLR 3211(a)(7) (failure to state a cause of action) requires the court to accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.   Where, as here, evidentiary material was submitted and considered on a motion pursuant to CPLR 3211(a)(7) without the motion being converted to a motion for summary judgment, the question is whether the plaintiff has a cause of action, not whether the plaintiff has stated one.  Dismissal is warranted only where defendant shows that a claimed material fact is undisputedly not a fact at all.  Here, the insurance policies failed to show that plaintiff’s claims were invalid causes of action.

Covered “occurrence” or “loss”.  The CGL policy covered bodily injury caused by an “occurrence,” which was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The School-District-and-Educators-Legal-Liability policy covered a “loss,” which excluded matters that may be deemed uninsurable under the law.

Insurance policies are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous the terms are to be taken and understood in their plain, ordinary and proper sense.   Whether an event or series of events qualifies as an accident is a question of fact, so that the issue of whether the incidents alleged by the students were accidents were “questions of fact” that could not be determined on a motion to dismiss pursuant to CPLR 3211(a)(1) or (7).

Graphic Arts Mut. Ins. Co. v Pine Bush Cent. Sch. Dist., 2018 NY Slip Op 01565

(2d Dep’t March 9, 2018)

Plaintiff store-customer was not entitled to add Security Company as a defendant in plaintiff’s action against Kmart because the proposed claim failed to state a cause of action.

Plaintiff store-customer was not entitled to add Security Company as a defendant in plaintiff’s action against Kmart because the proposed claim failed to state a cause of action.

Security Company hired by Kmart owed no duty to plaintiff, a Kmart customer who was injured in a fight with a Kmart employee inside a Kmart store.  First, plaintiff was not an intended third-party beneficiary under the contract between Kmart and Security Company because the contract contained a “No Third Party Beneficiaries” clause.

Second, plaintiff made no claim that he detrimentally relied on Security Company’s continued performance of its contract with Kmart.  Plaintiff’s affidavit said nothing about plaintiff’s knowledge of the contract or about plaintiff’s detrimental reliance on Security Company’s continued performance thereunder.

Third, Security Company did not “entirely displace” Kmart’s duty to protect its customers.  The written scope of Security Company’s services included “the protection of … customers … in the Premises,” but the deposition testimony of the loss prevention manager at the relevant Kmart store clarified that, in actual practice, Security Company’s services at that store were limited to deterring shoplifting.  In addition, Kmart retained supervisory authority over Security Company’s guards and required Security Company’s staff to complete training in accordance with Kmart’s safety policies and procedures.

Plaintiff’s motion to amend his complaint to add the Security Company hired by Kmart as a defendant was therefore denied for failure to state a cause of action.

Santiago v. K-Mart Corp., 2018 NY Slip Op 01296 (1st Dep’t Feb. 27, 2018)

Life insurer rescinded the policy – Plaintiff-widow followed with negligence cause of action against life insurance agent and agent’s employer(s).

Plaintiff-widow had negligence cause of action against life insurance agent, who was brother-in-law of decedent, and agent’s employer(s) after the life insurer rescinded the policy because of decedent’s misrepresentations on the application about his health.

Plaintiff’s husband (“Decedent”) had reached out to defendant Pontillo (“Agent”), who was Decedent’s brother-in-law and financial advisor, to obtain additional term life insurance coverage.  Agent acted as the writing agent in applying for a $5 million term life insurance policy from Life Insurer that named plaintiff as beneficiary.  Decedent completed a medical examination questionnaire as part of the application which contained misstatements of fact. The policy was issued in 2011.  Decedent died within the two-year contestable period.  Life Insurer denied plaintiff’s claim for the insurance proceeds because of Decedent’s failure to disclose his history of substance abuse treatment and cocaine use and rescinded the policy.

Plaintiff commenced this action in pertinent part against Agent and Agent’s alleged employers E-1 and E-2, alleging that Agent submitted an inaccurate insurance application to Life Insurer while representing to plaintiff that the policy issued upon it was valid. In lieu of answering, E-1 moved to dismiss for failure to state a cause of action and as being precluded by documentary evidence.  Agent and E-2 served an answer and then moved to dismiss the complaint on the same grounds as E-1’s motion.  (Plaintiff had also sued the Life Insurer whose motion to dismiss was granted and that decision was not appealed.)

E-1 argued unsuccessfully that Agent was not its employee, relying on a representative agreement in which Agent was categorized as an independent contractor.   The Third Department noted, however, that (a) such a portrayal does not settle the fact-specific question of whether an employer-employee relationship existed between E-1 and Agent and (b) plaintiff produced proof that Agent used office resources at E-1’s headquarters in contravention of the representative agreement, corresponded using E-1’s email address, and had E-1’s business cards and letterhead.

E-1 also argued equally unsuccessfully that Agent could not have sold term life insurance under its banner and supplied its membership agreement with the Financial Industry Regulatory Authority which lacked the necessary authorization to sell term life insurance.  Plaintiff responded with E-1’s brochure which expressly proclaimed that E-1 offered term life insurance products and another brochure from E-1 referencing insurance sales through its “affiliated insurance agency” E-2.  Because of the conflicting documentary proof and the unclear relationship between E-1 and E-2, E-1 failed to show it had no connection to the Life Insurer’s policy.

Agent and E-2 claimed that only the decedent had standing to recover for any negligence in applying for the policy, citing black-letter law that where an insurance agent’s negligence causes an insured to be without coverage, the agent cannot be held liable for damages sustained by an injured third party as a consequence thereof if the third party is not in privity with the agent and is not an intended beneficiary of the insurance contract.  But the Third Department, held that plaintiff was indeed the intended beneficiary of Life Insurer’s policy from the moment that decedent applied for the policy.  Moreover, plaintiff alleged that she was linked to Agent by his status as a family member and trusted financial advisor and that Agent knew not only that the policy was intended to ensure plaintiff’s financial well-being in the event of Decedent’s death, but that plaintiff would rely upon Agent’s expertise in preparing a valid application for it.

The Third Department accepted plaintiff’s allegations as true and held that they showed Agent’s affirmative assumption of a duty of care to plaintiff for a specific purpose regardless of whether there was a contractual relationship.   Furthermore, plaintiff’s reliance was the end aim of the transaction and constituted a relationship close enough to privity as to create a duty of care toward her that permitted a negligence claim against Agent and his purported employers.

Plaintiff’s claim of negligent misrepresentation and concealment of material facts and her claim of fraud, however, were properly dismissed.  Plaintiff did not assert that Agent directly vouched for the policy’s validity but only that he delivered the application and policy documents to both decedent and to plaintiff as an assurance that it had been issued upon an accurate application and was valid. The court held that the most that could reasonably be taken from the act of delivery was that an application had been submitted to Life Insurer and that Life Insurer had issued a policy. The policy explicitly contained a two-year contestability clause which plaintiff (herself an attorney) could have discovered had she read the policy.

Plaintiff’s claim for breach of fiduciary duty was timely brought.  The applicable statute of limitations for the breach-of-fiduciary-duty claim at issue was three years and accrued when all elements of the tort could be truthfully alleged including when actual damage had been sustained.  Damages arose when Life Insurer determined that the policy had never been in force and denied plaintiff’s claim.  Because plaintiff’s action was commenced days after Life Insurer’s denial of her claim, her breach-of-fiduciary-duty claim was timely.

But plaintiff’s breach-of-contract claim against Defendants was properly dismissed.   Although plaintiff was a third-party beneficiary of the policy which gave her the same rights as Decedent, Decedent’s own misrepresentations on the application imperiled his purchase of the policy.  Because Decedent could not plausibly have claimed that Defendants breached the agreement as to him, plaintiff’s breach-of-contract claim was properly dismissed.

Vestal v. Pontillo, 018 NY Slip Op 01236 (3d Dep’t 2/22/18)

In a decision limited to the facts of the case, the Court of Appeals reversed a robbery conviction because the People failed to sufficiently authenticate an internet image purportedly of defendant holding gun that was “similar” to the one he used in the robbery.

The photograph had been printed out by a police detective from the website “”.  The photograph had been posted to a profile page several months before the robbery and showed an individual holding some cash and a gun.  The detective had found the photograph by searching defendant’s surname “Price” and, after scrolling through several pages of results containing approximately 50 internet profiles whose usernames incorporated the term “Price” into them, saw a public profile that contained several photographs of defendant with the username “Price_OneofKind.”  The public profile page contained no reference to defendant’s full name.  Although the detective testified that the profile page listed the purported user’s age and hometown, the detective did not testify as to whether any of that information matched defendant’s information, and none of the pages containing this information were introduced to connect defendant to the specific user of this website.

The robbery occurred while the victim was standing outside a milk delivery truck conducting milk deliveries with the driver who was inside the truck.  The delivery truck driver testified that he noticed that someone holding a gun about a foot away from the chest of the victim and observed that the victim exchanged words with the gunman and threw a handful of cash from his pocket to the ground.  The driver then saw the gunman’s accomplice gather the money and the two robbers flee. The truck driver did not see the gunman’s face and was unable to identify defendant at trial as either of the perpetrators.

The People then made an offer of proof regarding the print-out of the photograph from the internet, to wit, that the victim thought that the gun on the photograph was similar to the gun that the robber had pointed at him and the detective thought that the individual in the photograph looked like defendant.  The trial court admitted the photograph into evidence.

The victim testified to the circumstances of the robbery, and he identified defendant as the gunman. The victim described the firearm used in the robbery as a 9-millimeter automatic with a silver rectangular feature on the top of the barrel, but the victim admitted that he had no prior familiarity with firearms. When shown the gun in the bottom portion of the internet photograph, the victim testified that the gun looked “similar” to the gun used in the robbery, but he could not identify the gun in the photograph as the one held by the robber.

The detective then testified that the individual in the photograph holding the handgun “look[ed] like” defendant. The detective explained that she had printed the photograph from the internet website, and she asserted that the printout was a true and accurate depiction of the photograph she observed on the website. But the detective did not know who took the photograph, when it was taken, where it was taken, or under what circumstances it was taken. Nor did she know whether the photograph had been altered or was a genuine depiction of that which it appeared to depict.

During summations, the People urged the jury to conclude that the photograph was taken from an internet profile page belonging to defendant, and emphasized that the victim “recognized” the gun depicted in the photograph as the one held by the gunman. Following deliberations, the jury found defendant guilty of the counts of robbery asserted against him.

Upon defendant’s appeal, the Second Department affirmed the judgment of conviction (127 AD3d 995, 996 (2d Dept 2015)), holding that the People laid a proper foundation for admission of the photograph, that the photo was relevant to the issue of the defendant’s identity as the gunman, and the photo’s probative value outweighed any prejudicial effect”. The Court of Appeals granted defendant leave to appeal.

All six judges of the Court of Appeals voted to reverse the conviction and ordered a new trial, but they split four to two on the rationale.  Judge Stein writing for the majority (which included Judges DiFiore, Fahey, and Wilson) recited black-letter-law principals of authenticating photographs as evidence and pronounced that the People had failed to authenticate the photograph, but then (in footnote 3) limited the holding to the facts of this case because the Court was not prepared to enunciate a general test of admissibility of photographs obtained from social media websites:

In our view, it is more prudent to proceed with caution in a new and unsettled area of law such as this. We prefer to allow the law to develop with input from the courts below and with a better understanding of the numerous factual variations that will undoubtedly be presented to the trial courts. Because we necessarily decide each case based on the facts presented therein, it would be premature to decide whether the People’s proffer would have been sufficient had the prosecution, hypothetically, established that the website was controlled by defendant. At this time, it is sufficient and appropriate for us to hold that, based on the proffer actually made, the photograph was not admissible.

In her concurring opinion which was joined by Judge Garcia, Judge Rivera chided the majority for failing to address head on the question of how to authenticate social media images – an evidentiary issue of growing concern given the proliferation and ubiquitousness of social media:

Contrary to the majority’s claim, when we decide an open question presented on appeal we do not act in haste (majority op at 10 n 3). Rather, we pronounce the law by which we reason an outcome. Given the pervasive use of social media, there is nothing premature about determining how law enforcement and prosecutors may use evidence obtained online

Judge Rivera states that the People had to satisfy two levels of authentication: (1) the print out was an accurate representation of the web page; and (2) that the page was defendant’s, meaning he had dominion and control over the page allowing him to post on it.  In her view, the People proved, through the detective’s testimony, that the printout was an accurate representation of the digital image viewed on the website. But the People failed to establish that the web page was defendant’s, either by direct or circumstantial evidence or with proof establishing reasonable inferential linkages that ordinarily supply foundational prerequisites.  The “tie-in effort” between the testimony relied on by the People and the purpose for which the printout was submitted was too tenuous and amorphous. In other words, the People did not submit proof by which a reasonable jury could conclude that the printout was an accurate representation of defendant’s profile page.   Judge Rivera therefore agreed with the majority’s conclusion that authentication could not be accomplished solely by proof that defendant’s surname and picture appears on the profile page.

Judge Rivera criticized the People for failing in their proffer to present the personal information posted on the web page which might have established the necessary link to defendant.  Other evidence arguably addressed the authentication of the web page, such as proof that the defendant posted or adopted the photograph, or knew of the photograph and allowed it to remain on the profile page without objection, but given the deficiency of the proof actually submitted, Judge Rivera agreed with the majority that the Court need not consider whether proof that the web page belonged to defendant could also establish that the image depicted was genuine.  Thus, since the People did not link defendant to the web page where the image was found, there was no need to consider on this appeal the requirement that there had been no tampering with the proffered evidence. And given the lack of adequate evidence connecting defendant to the web page, the Court had no reason to address the sufficiency of the victim’s identification of the gun.

People v Price, 2017 NY Slip Op 05174, CtApp 6-27-17

Queens resident had no long-arm jurisdiction in New York over a Virginia hotel for slip and fall, notwithstanding plaintiff’s having made the hotel reservation via the internet. 

A Queens, New York resident commenced suit in Queens County Supreme Court alleging that he was injured in a shower while he was a guest at a hotel in Virginia known as Homewood Suites by Hilton.  Plaintiff sued the management company Brantley Enterprises, Inc. (which did business under the assumed name of Brantley Hotel Group) and the hotel “Homewood Suites by Hilton”.  Plaintiff had made the hotel reservation via the internet, and premised jurisdiction over defendants on that fact.  The motion term judge granted defendants’ pre-answer motion to dismiss, and the Appellate Division Second Department affirmed.

In support of defendants’ motion to dismiss for lack of long-arm jurisdiction, defendants asserted that

  • Defendant Brantley Enterprises, Inc., doing business under the name of co-defendant Brantley Hotel Group, was the manager of co-defendant hotel “Homewood Suites by Hilton”.
  • The management company Brantley Enterprises, Inc., was a Virginia corporation with its principal office in Virginia; it conducted no business and maintained no offices outside Virginia; and it was not affiliated with any New York hotels.
  • The subject hotel was owned by nonparty Suite Venture Associates, LLC, which likewise was a Virginia limited liability company with its principal office in Virginia and which likewise conducted no business and maintained no offices outside Virginia and was not affiliated with any New York hotels.

Plaintiff countered that

  • There were other, separate hotels operating in New York under the licensed or franchised name Homewood Suites by Hilton, and
  • Defendants were involved in maintaining or operating a website that permitted consumers in New York to make reservations at the subject hotel in Virginia.

The Second Department held that plaintiff failed to demonstrate that defendants purposefully availed themselves of the privilege of conducting business in New York.  Plaintiff also failed to demonstrate any substantial relationship between the causes of action asserted in the complaint and any alleged transaction of business through the website that plaintiff used to make his reservation.  Plaintiff also failed to make a prima facie showing that personal jurisdiction existed based on ownership, use, or possession of any real property within New York State.

Lastly, plaintiff failed to make enough of a showing of jurisdiction to stay defendants’ motion to permit discovery on the issue of jurisdiction.  Because plaintiff alleged no facts that would support jurisdiction, plaintiff failed to show how further discovery might lead to evidence showing that personal jurisdiction existed.

NB: Plaintiff apparently did not sue the franchisor of “Homewood Suites by Hilton”.

Leuthner v Homewood Suites by Hilton, 2017 NY Slip Op 05212, 2nd Dept 6-28-17.

Plaintiff stated a valid legal-malpractice cause of action against his former plaintiff’s-attorneys where the attorneys had failed to refresh the recollection of the sole eye witness with the police accident report before the witness was deposed. After the witness’s misdescription of the hit-and-run vehicle, plaintiff lost his personal-injury action.

Plaintiff stated a valid legal-malpractice cause of action against his former plaintiff’s-attorneys where the attorneys had failed to refresh the recollection of the sole eye witness with the police accident report before the witness was deposed. After the witness’s misdescription of the hit-and-run vehicle, plaintiff lost his personal-injury action. 

Reversing Supreme Court, the First Department stated that plaintiff stated a valid cause of action for legal malpractice against his former law firm’s motion.  The law firm had formerly represented plaintiff in the latter’s personal-injury lawsuit arising out of a hit-and-run accident.  Supreme Court had granted the law firm’s motion to dismiss and the First Department reversed.

Plaintiff had been struck by a garbage truck that had fled the scene.  The defendant-driver in the underlying personal injury action had been driving a green garbage truck with a flat front and had admitted to a route that would have placed him in at the scene on the day and at the time of the accident.  The police report regarding the accident showed that the sole eye witness had called the police shortly after the accident and had described the hit-and-run vehicle as a green garbage truck with a flat front.

The eye witness was deposed two years after the accident and testified that that the garbage truck he remembered fleeing the scene had a round front, not a flat front.  Plaintiff lost his personal-injury suit.

Plaintiff alleged in the subject malpractice action that defendant law firm had failed to refresh the recollection of the sole eyewitness before the deposition about the appearance of the truck, which led to erroneous testimony by the witness and which but for that negligence had caused the loss of plaintiff’s personal-injury case.

The First Department held that these allegations were sufficient to survive a CPLR 3211(a)(1) and (7) motion to dismiss, as nothing in the record conclusively established a defense as a matter of law.

The First Department also granted plaintiff’s motion to amend his complaint stating that plaintiff’s proposed amendments (without elucidation as to what they were), stating that the amendments were not “patently devoid of merit” and would not prejudice or surprise defendants.

Caso v Miranda Sambursky Sloane Sklarin Ver Veniotis LLP, 2017 NY Slip Op 03607, 1st Dept 5-4-17.

Building owner’s status as additional insured on lessee’s policy did not entitle building owner to defense and indemnification by lessee’s insurer where slip and fall occurred in parking lot and lessee did not lease and was not required to maintain parking lot. 

The Second Department affirmed Supreme Court’s ruling that a lessee’s insurer had no duty to defend and indemnify a building owner in an underlying slip-and-fall accident that had occurred in the building’s parking lot.  In the underlying action, the underlying plaintiff was an employee of a non-party tenant L who leased part of the building from underlying-defendant Building Owner.  Tenant L’s lease stated that the parking lot was a common area and that Building Owner was responsible for its maintenance including snow removal.  Another tenant U [Tenant U] and Building Owner were owned by the same principals.  The underlying plaintiff alleged that he slipped and fell on black ice in the parking lot and sued Building Owner and Tenant U in the underlying action.

At the time of the accident, Building Owner and Tenant U had a commercial liability insurance policy in effect with Citizens Insurance [Building Owner’s Insurer], who was also a plaintiff in the DJ action.  Tenant L had a commercial liability insurance policy in effect with defendant Valley Forge Insurance [Tenant L’s Insurer].  Tenant L’s insurance policy contained an endorsement providing coverage for Building Owner as an additional insured for “liability arising out of the ownership, maintenance or use of that part of the premises leased to [Tenant L] and shown in the Schedule” (emphasis supplied). The “Schedule” stated that Tenant L had leased “Unit 2” of the building and made no reference to the parking lot.  Building Owner tendered to Tenant L’s Insurer its claim for a defense and indemnification in the underlying action as an additional insured, but Tenant L’s Insurer denied Building Owner’s tender on the ground that the potential liability did not arise out of the ownership, maintenance, or use of the part of the premises leased to Tenant L.  Tenant L’s Insurer argued that, according to the lease, the parking lot was a common area outside of the leased premises, and that Building Owner was responsible for snow and ice removal from the parking lot.  Building Owner and its insurer Citizens Insurance then commenced the subject DJ action against Tenant L’s Insurer seeking, among other things, a declaration that Tenant L’s Insurer was obligated to defend and indemnify Building Owner and Tenant U in the underlying action. Tenant L’s Insurer moved for summary judgment, which Supreme Court granted.  Building Owner and its insurer appealed.

First, the Second Department made short shrift of plaintiffs’ contention that the motion for summary judgment by Tenant L’s Insurer was premature, stating that plaintiffs failed to offer an evidentiary basis to suggest that discovery might lead to relevant evidence.

Second, moving to the merits, the Second Department cited the following points of black letter law:

  • An insurer’s duty to defend is exceedingly broad.
  • An additional insured is entitled to the same coverage as if it were a named insured.
  • The insurer is required to defend the entire action if any of the claims against an insured arguably arise from covered events.
  • “Arising out of” requires only that there be some causal relationship between the injury and the risk for which coverage is provided.
  • An insurer does not wish to be liable for losses arising from risks associated with a premises for which the insurer has not evaluated the risk and received a premium.
  • Unambiguous provisions of an insurance contract must be given their plain and ordinary meaning and the interpretation of policy language is a question of law for the courts.

The Second Department then held that Tenant L’s Insurer established its prima facie entitlement to judgment as a matter of law:

  • The additional-insured endorsement unambiguously provided that Building Owner was an additional insured for liability “arising out of” the “ownership, maintenance or use” of the “premises leased” to Tenant L.
  • Tenant L leased only a portion of the building from Building Owner, not the parking lot where the accident occurred.
  • Tenant L had no duty to maintain the parking lot.
  • There was therefore no causal relationship between the injury and the risk for which coverage was provided, so the underlying plaintiff’s injury was not a bargained-for risk.
  • In opposition, plaintiffs failed to raise a triable issue of fact as to whether Building Owner was an additional insured with regard to the accident, which occurred outside of the leased premises

The Second Department therefore remitted to Supreme Court for entry of a judgment declaring that Tenant L’s Insurer was not obligated to defend and indemnify Building Owner or Tenant U in the underlying action.

 Atlantic Ave. Sixteen AD, Inc. v Valley Forge Ins. Co., 2017 NY Slip Op 04243, 2nd Dept 5-31-17

Question of fact defeated defendant metal-concert venue’s motion for summary judgment on the ground of primary assumption of risk regarding plaintiff’s injury from moshing. 

Plaintiff was a first-time attendee at a general-admission “metal” (a/k/a heavy metal) concert at defendant’s concert hall.  Plaintiff alleged he was pushed from behind in the mosh pit and was hit in the eye as he was attempting to exit the mosh pit.

Per Wikipedia, moshing or slamdancing is a style of dance in which participants push or slam into each other typically performed to “aggressive” live music. Moshing usually happens in an area called the “pit” (sometimes called a “mosh pit”) near the stage. It is intended to be energetic and full of body contact.

Defendant’s general manager testified at his deposition that there were two state-licensed security guards on duty that evening; the show was almost sold out; and moshing would be stopped if and when it became unsafe and affected bystanders.

Defendant moved for summary judgment vis-à-vis plaintiff’s negligence causes of action, on the grounds that (a) plaintiff had assumed the risk (primary assumption of risk) or alternatively (b) that an unforeseen and sudden criminal act of an uncontrollable third party caused the incident and defendant had taken adequate security measures.

The Second Department declined to grant defendant summary judgment on the first ground (the doctrine of primary assumption of risk), finding questions of fact.  Primary assumption of risk is a complete defense and applies when a consenting participant in a qualified activity is aware of the risks, has an appreciation of the nature of the risks, and voluntarily assumes the risks.  A person who chooses to engage in such an activity consents to those commonly appreciated risks which are inherent in and arise out of the nature of the activity generally and flow from such participation,  The duty owed in these situations is a duty to exercise care to make the conditions as safe as they appear to be.  The doctrine has generally been restricted to particular athletic and recreative activities in recognition that such pursuits have enormous social value even while they may involve significantly heightened risks and are, therefore, worthy of insulation from a breach of duty claim.

[NB: Under secondary assumption of risk, assumption of the risk is merged into the comparative fault scheme, and the trier of fact, in apportioning the loss resulting from the injury, may consider the relative responsibilities of the parties.  NY PJI 2:55.]

Without reaching the question of whether attending a metal music concert where “moshing” takes place is a qualified activity under the doctrine of primary assumption of risk, the Second Department held that defendant failed to eliminate triable issues of fact as to whether it met its duty to exercise care to make the conditions at the subject venue as safe as they appeared to be and whether it unreasonably increased the usual risks inherent in the activity of concert going.  Defendant also failed to eliminate triable issues of fact as to whether the plaintiff assumed the risk of injury, whether the plaintiff’s alleged injuries were foreseeable, and whether defendant provided adequate security measures and, if not, whether its failure was a proximate cause of the plaintiff’s alleged injuries.   Nevo v Knitting Factory Brooklyn, Inc., 2017 NY Slip Op 03186, 2nd Dept 4-26-17

In no-fault loss-transfer arbitration, carrier’s failure to apply for stay waived its claim that arbitrator lacked jurisdiction to rule on carrier’s retroactive rescission of policy. 

Hereford Ins. was the subrogee of two passengers in a “for hire” vehicle” that had been rear-ended by Infinite Indemnity’s insured.   Infinity Indemnity participated in and opposed the arbitration arguing that after the accident it had retroactively rescinded the policy so that there was no coverage on the date of the accident.  The arbitrator rejected that argument and made two awards in favor of Hereford Ins.

Infinite Indemnity then brought the instant article 75 proceeding under CPLR 7511 to vacate the awards on two grounds:  (a) the retroactive rescission deprived the arbitrator of jurisdiction over the arbitration and (b) the arbitrator should have applied Pennsylvania law (where the policy was obtained) instead of New York law.  Hereford Ins. cross-petitioned to confirm the awards.  Supreme Court confirmed the awards in favor Hereford Insurance which the Second Department affirmed, holding that Infinite Indemnity’s claims were meritless.

With regard to Infinite Indemnity’s contention that its “good faith” retroactive denial of insurance coverage divested the arbitrator of jurisdiction, the Second Department stated that Insurance Law § 5105(b) provides that arbitration is the only forum in which a loss-transfer claim may be litigated and that by failing to apply for a stay of the arbitration, Infinite Indemnity waived its claim that the claim was not arbitrable.  In addition, any possible error by the arbitrator in applying New York law was no basis for vacatur.   Matter of Infinity Indem. Ins. Co. v Hereford Ins. Co., 2017 NY Slip Op 03177, 2nd Dept 4-26-17

Defendant Starwood Hotel’s motion for summary judgment was premature regarding a slip and fall that occurred at a Four Points By Sheraton hotel in Michigan which was owned by an unrelated Michigan corporation.

This case is plaintiff’s second attempt to find a defendant subject to jurisdiction in New York.  In this case, plaintiff sued Starwood Hotels and Resorts Worldwide, Inc. (Starwood) for her trip and fall on a defective walkway at the Four Points by Sheraton Ann Arbor Hotel in Michigan.  The Four Points Sheraton Ann Arbor Hotel was owned by ZLC Inc., a Michigan corporation unrelated to defendant Starwood.

By way of background, plaintiff had previously sued ZLC, Inc. unsuccessfully in New York premising long-arm jurisdiction on plaintiff’s having made her hotel reservation from her New York residence via an interactive website maintained by Starwood for Sheraton hotels.   During her stay at the Sheraton hotel in Ann Arbor, plaintiff tripped over a walkway in the hotel lobby and fractured her knee.  Defendant owner ZLC was a Michigan corporation that used the trademark name “Sheraton” pursuant to a license agreement and had no other hotels and no bank accounts, real estate, or other contacts with New York.  The First Department dismissed plaintiff’s case against ZLC because ZLC’s participation in the interactive website was too remote to support long-arm or specific jurisdiction under CPLR 302(a)(1) and there was no tortious act committed outside New York that injured plaintiff within New York under CPLR 302(1)(3).  Stern v Four Points by Sheraton Ann Arbor Hotel, 2015 NY Slip Op 08501 [133 AD3d 514] (1st Dep’t 2015)

In plaintiff’s instant suit against Starwood, the First Department stated that ZLC operated the hotel using the “Four Points by Sheraton” name pursuant to a license agreement with nonparty The Sheraton Corporation, which was identified in the agreement as “an indirect, wholly-owned subsidiary” of Starwood.

Starwood moved for summary judgment based on demonstrated proof that

  • Starwood did not own or control the hotel,
  • Under the terms of the license agreement with Sheraton, ZLC was an independent contractor and was responsible for the day-to-day operations of the hotel, and
  • Even if Starwood were a party to the license (or franchise) agreement, the mere existence of a franchise relationship provided no basis for imposing vicarious liability on Starwood for the negligence of non-party franchisee ZLC.

In opposition, plaintiff submitted evidence that Starwood’s reservations website holds the hotel out to the public as being a Starwood property and that plaintiff relied on the representations on Starwood’s website in choosing to book a room at the hotel.

The First Department held that this evidence of public representations and reliance may support a finding of apparent or ostensible agency that in turn may impose vicarious liability on Starwood. Although the license agreement required ZLC to disclose that it was an “independent legal entity operating under license” from Sheraton and to place “notices of independent ownership” on the premises, Starwood did not provide any evidence that ZLC complied with those requirements.  The First Department therefore affirmed denial of Starwood’s motion for summary judgment as being premature and granted plaintiff discovery under CPLR 3212(f) of matter exclusively within Starwood’s control about its possible agency relationship with the hotel, including its reservations system and advertising.

Stern v Starwood Hotels & Resorts Worldwide, Inc., 2017 NY Slip Op 02882 (1st Dep’t 2017)

Extrinsic evidence as to the extent of a FEMA Zone created a question of fact as to a policy exclusion that excluded coverage for specified FEMA Zones.

The First Department affirmed the denial of cross-motions by plaintiff-insured and defendant-insurer for summary judgment with regard to a flood exclusion.  Defendant-carrier provided property and casualty coverage for several of plaintiff’s brewery premises throughout New York City. The policy limited coverage for flooding, but specifically excluded “loss or damage to property located in “Flood Zones A or V as defined by the Federal Emergency Management Agency (FEMA).”  During Superstorm Sandy, plaintiff’s premises at 93 South Street sustained substantial flood damage. When plaintiff presented its claim to defendant, defendant declined coverage because the premises was located in FEMA Zone AE, which defendant asserts is a subzone of Zone A. Plaintiff challenged this interpretation, claiming that Zone AE is not a subzone or part of Zone A, but rather is separately defined under FEMA’s regulations (44 CFR § 59.1, et seq.).

The First Department recited the following black-letter principals of insurance construction:

  • The ambiguity vel non of an insurance policy term is a question of law.
  • The policy provision is to be read in light of common speech and interpreted according to the reasonable expectations and purposes of ordinary business[]people when making ordinary business contracts .
  • Exclusions must be specific and clear in order to be enforced  (and ambiguities in exclusions are to be construed  most strongly  against the insurer.
  • There are circumstances where extrinsic evidence may be admitted prior to an exclusion being strictly construed against an and where ambiguous words are to be construed in the light of extrinsic evidence or the surrounding circumstances, the meaning of such words may become a question of fact for the jury.

Here, the language of FEMA’s flood zone regulations raises an issue of fact rendering the insurance policy’s exclusion of flood coverage ambiguous.

 Heartland Brewery, Inc. v Nova Cas. Co., 2017 NY Slip Op 02908 (1st Dep’t April 13, 2017)

Defendant lessors and building manager had no duty to protect tenant psychologist from being murdered by her former patient.

Defendants provided satisfactory security and nothing more would have prevented the premediated murder.  Plaintiff’s decedent Kathryn Faughey was a psychologist in a psychiatric office who was murdered by former patient non-party David Tarloff in decedent’s office.  Decedent leased her office from defendant psychiatric office which leased its space from defendant building owner and defendant building manager.  The Appellate Division First Department affirmed dismissal of plaintiff’s complaint holding that defendants had no duty to protect decedent from the violent actions of third parties including former patients because such actions were not foreseeable given the absence of prior violent criminal activity by the patient or other third parties in the building.   Moreover, defendants had satisfied any duty to provide “minimal precautions” by providing 24/7 doorman coverage, surveillance cameras, controlled building access, and functioning locks on the doors of the office suite and of decedent’s personal office.   The First Department stated that it was pure speculation that any claimed additional security measures such as announcing visitors, installing an office intercom or buzzer, or keeping the office doors locked after hours would have prevented the former patient from killing the decedent.

The First Department also held that the door man’s alleged negligence in failing to recognize the patient’s suspicious behavior could not have been a proximate cause of decedent’s death because it was still unforeseeable that the patient was about to engage in a murderous rampage. The patient’s conduct was a superseding cause severing the causal chain. Given that the attack was targeted and premeditated, it was unlikely that any reasonable security measures would have deterred Tarloff.

Faughey v. New 56-79 IG Assoc., L.P.,  2017 NY Slip Opn 02608 (Apr. 4, 2017)


Wikipedia provides additional facts:  decedent Top of Form

Kathryn Faughey was a 56-year-old New York City psychologist who was murdered by 39-year-old David Tarloff at Dr. Faughey’s upper East Side Manhattan office on the night of February 12, 2008.  David Tarloff had exhibited disturbing behaviors for almost two decades, and was well-known to the medical and psychiatric establishment and the police force. During these years, up to the time of Dr. Faughey murder, Tarloff received a wide range of psychiatric assessments and treatments including medication and electroshock therapy by force.

On the evening of the murder, Tarloff walked past the doorman rolling a suitcase behind him (as seen on the building’s surveillance video) and saying that he was there to see Dr. Kent Schinbach (a psychiatrist in the same office). Tarloff waited in the office reception area chatting with a patient, while one of Dr. Faughey’s evening sessions was in progress. After Dr. Faughey’s session concluded and when he knew that Faughey was alone in her office, he entered the room and attacked her with a meat cleaver. Dr. Schinbach attempted to help her, but was seriously wounded by slashes in the face and neck.

Tarloff was arrested, arraigned for the murder, and ordered to undergo a psychiatric evaluation after which he was determined to be mentally competent to stand trial. There was evidence that the attack had been premeditated but that the intended victim was Schinbach.  Tarloff told police that he had planned to rob Schinbach, who he remembered as being involved in diagnosing him with schizophrenia in 1991 and arranging for his institutionalization at that time.

After two mistrials, Tarloff was convicted of first-degree murder of Dr. Faughey and first-degree assault of Dr. Schinbach.  Tarloff was sentenced for life without the possibility of parole for the murder and 25 years for the assault.

Defendants’ motion to change venue was untimely as to improper venue and was unwarranted as to the inconvenience of witnesses.

There were two grounds to defendants’ objection to the venue of the action: first, that the county was improper (“improper venue”) and second, that the witnesses were inconvenienced by the county plaintiff had chosen (“inconvenient venue”). Defendants’ motion as to the first ground (improper venue) was late and as to the second (inconvenient venue) was unwarranted.

Timing of motion re improper venue. Where defendant objects to the county in which plaintiff has commenced suit (under CPLR 510(1), defendant must serve a demand for change of venue on or before the date the answer is served. CPLR 511(a). Unless plaintiff consents to the transfer of venue within five days of defendant’s demand, defendant must move within 15 days from the date of filing his demand for change of venue to the proper county. CPLR 511(b); Alexander, Practice Commentary C511:2 Motion to Transfer Based on Improper Venue: “Demand Procedure” (Main Commentary, McKinney’s).

Here, defendants met the first deadline by electronically filing their demand for change of venue with their answer on July 14, 2015. In so doing, defendants consented to electronic filing, which thereafter required defendants to electronically file and serve all documents that were thereafter required to be filed with the court. 22 NYCRR 202.5-b(d) (1)(i).

Defendants, however, missed the second deadline by two days: seventeen days after electronically filing and serving their demand for a change of venue, defendants served by U.S. mail their motion to change venue. Defendants attempted to argue that CPLR 2103(b)(2) (which gives an extra five days for service by mail when a prescribed period of time is measured from the service of paper and service is mailed) added an extra five days to the fifteen-day time limit. The First Department rejected that argument holding that because defendants had already consented to electronic service and filing, they were bound by the time limits applicable to electronic filling and could not avail themselves of the extension of time for mailing.
Inconvenience of witnesses. CPLR 510 sets forth two additional grounds for change of venue: inability to obtain an impartial trail (CPLR 510(2)) and inconvenience of witnesses (CPLR 510(3)). These two grounds are “discretionary” grounds. Alexander, Practice Commentary C510:1 Motions for Change of Venue, In General (Main Commentary, McKinney’s). These defendants also argued that the venue was inconvenient for their witnesses.
The First Department held without elaboration that defendants failed to show that a change of venue was warranted due to the inconvenience of material witnesses because their motion papers did not address the factors enumerated in Cardona v Aggressive Heating, 180 AD2d 572 (1st Dep’t 1992). [Cardona requires that the movant provide (1) the identity of the proposed witnesses, (2) the manner in which they will be inconvenienced by a trial in the county in which the action was commenced, (3) that the witnesses have been contacted and are available and willing to testify for the movant, (4) the nature of the anticipated testimony, and (5) the manner in which the anticipated testimony is material to the issues raised in the case.]
Woodward v Millbrook Ventures LLC, 2017 NY Slip Op 02522 (1st Dep’t Mar. 30, 2017)

Res ipso loquitur did not apply in an escalator case where there was no objective evidence of malfunctioning

Res ipso loquitur did not apply in an escalator case where there was no objective evidence of malfunctioning (plaintiff misstepped onto the escalator and there was no proof of malfunction), but did apply in an elevator case where the elevator unexplainedly stopped suddenly and abruptly.

Summary judgment was affirmed to Macy’s and to its independent escalator servicing company because neither defendant had any notice of the alleged escalator defect either before or after the incident, and because the doctrine of res ipsa loquitur did not apply.

The store’s manager and the escalator company’s mechanic both testified that they received no reports of the escalator’s shaking or stopping and starting before or after the date of plaintiff’s accident.  Nor did anyone, including plaintiff, before or after her accident, observe the escalators stop and start several times in succession, as plaintiff claimed occurred when she fell.  There was evidence, however, that plaintiff fell after misstepping onto the elevator and that after her fall, she successfully rode the escalator up to the next level with no further escalator malfunction.  Moreover, defendant’s expert opined that plaintiff’s description of the alleged malfunctioning was a mechanical impossibility because it would have resulted in a catastrophic mechanical failure of the escalator that would have resulted in observable problems and would have required a significant repair, none of which occurred.

Plaintiff failed to raise a question of fact.  Her expert relied on a bare-bones print-out of prior elevator incidents that was unauthenticated and that gave no indication that the incidents were similar to the one at issue.  The print-out was therefore inadmissible as proof of prior incidents.  Also inadmissible were service calls made by Macy’s to the elevator servicing company four and five months before plaintiff’s incident.  The calls pertained to an escalator on a different level that was not running, which was a malfunction that was unrelated to the type plaintiff described.  Moreover, plaintiff’s expert’s opinion that the accident was caused by a defective step chain and a lack of proper and adequate preventative maintenance was speculative and conclusory.

Lastly, the doctrine of res ipsa loquitur, which would permit a jury to infer negligence based upon the sheer happening of the event, was inapplicable:  The escalator never operated in the manner that plaintiff described either before or after her incident, and plaintiff, after her fall, rode the escalator up to the next level without further malfunctioning.   The evidence of plaintiff’s misstepping getting onto the escalator created the possibility of plaintiff’s own negligence in causing the accident.  And res ipsa loquitur could not be applied to Macy’s because Macy’s had ceded all responsibility for the daily operation, repair and maintenance of the escalator to the servicing company via a full-service contract.

Torres-Martinez v Macy’s, Inc., 2017 NY Slip Op 00429 (1st Dep’t Jan. 24, 2017)

In contrast, however, the First Department did apply res ipsa loquitur to defeat the motion for summary judgment by defendant NYC Housing Authority in a case where plaintiff was injured when an elevator came to a unexplained sudden and abrupt stop; defendant failed to demonstrate that it lacked exclusive control over the elevator; and there was no evidence that vandalism caused the elevator’s malfunction or that plaintiff’s actions contributed to the accident.

Galante v. New York City Hous. Auth, 2017 NY Slip Opn  00430 (1st Dep’t Jan. 24, 2017)

Met Opera’s motion to dismiss a star’s negligence action against it was properly denied.

In a decision by Justice Rolando Acosta, the First Department affirmed Special Term’s denial of the Met Opera’s motion to dismiss plaintiff’s negligence action.  The Met based its motion on plaintiff’s status as the Met’s employee or special employee, which would have relegated plaintiff to the exclusive remedy of worker’s compensation per WCL §11.

By way of background, the New York Times reported on December 18, 2011 that mezzo soprano Wendy White, while singing the role of Marthe in Gounod’s “Faust” the preceding evening, fell from a platform eight feet above the stage as she made her entrance in Act III.   As she walked onto a platform from a staircase, a hinge on a piece of plywood that connected the platform to the stairway broke, and Ms. White disappeared from view.  The curtain was dropped and Ms. White was taken to the hospital.  Id.  Ms. White broke no bones but suffered nerve and muscle damage that has prevented her from singing professionally.

At issue on the Met’s motion to dismiss was Workers’ Comp. Law§ 2(4), which was enacted in 1986 to define “employee” to include those in the performing arts:

“a professional musician or a person otherwise engaged in the performing arts who performs services as such for … a theatre … or similar establishment … unless, by written contract, such musician or person is stipulated to be an employee of another employer covered by this chapter.”

WCL §2(4) (emph. supplied).

Plaintiff performed at the opera house pursuant to a “Standard Contractor’s Agreement (Per Performance”) between the Met and her corporation, Wendy White, Inc. (WW, Inc.), which defined WW, Inc. as the “Contractor”.

Notwithstanding various provisions of the Standard Contract and the collective bargaining agreement covering Ms. White, which gave the Met a certain amount of control over Ms. White in her performances, the First Department found the following factors important in denying the Met’s motion to dismiss:

  • The Standard Contractor’s Agreement was between the Met and plaintiff’s corporation and specified that plaintiff was an employee of her corporation.
  • The Standard Contractor’s Agreement did not cede total control of Ms. White’s performance to the Met, so the Met did not become her special employer.
  • Plaintiff’s corporation received only 1099’s, not W-2’s from the Met.
  • The Met paid her no employment benefits and had told her she did not qualify for the Met’s health insurance because she was not an employee.
  • The Met provided her with no training, supervision, or direction from the Met with respect to how to perform her role and did not pay for her voice lessons or coaching.
  • The legislative history behind section 2(4) stated that the section was intended to cover the vast majority of musicians and performers who are not in the star category, as opposed to star performers who are independent professionals able to negotiate the terms of their engagements.
  • Without plaintiff’s consent, the Met filed a worker’s compensation claim in New York with its worker’s compensation, which the Met’s WC carrier accepted “without prejudice”.
  • The Worker’s Compensation Board cancelled its proposed decision of accident, notice and causal relationship on the ground that claimant wanted the case to be discontinued because she had filed her own WC claim in New Jersey against her corporation-employer.
  • The Met had previously taken the opposite position in an unrelated case, Inre Metropolitan Opera Assn., Inc. and Operatic Artists of America, (327 NLRB No. 136, 327 NLRB 740, 744-745 1999 WL 112550, *9, 1999 NLRB LEXIS 113, *29-30 [NLRB 1999]).

Plaintiff’s corporation therefore met the definition of an “employer covered by this chapter,” inasmuch as it is a corporation “having one or more persons in employment” per WCL § 2(3).

Lastly, the failure of plaintiff’s corporation to have obtained a workers’ compensation policy compliant with WCL §50(2) did not mean that plaintiff was necessarily covered by the Met’s worker’s compensation policy, because the statutory consequence of failing to obtain such a policy is simply payment of a penalty.  In addition, WCL §54(6)(c) provides that a corporation such as plaintiff’s, whose sole employee is an executive officer who owns 100% of the stock, need not purchase workers’ compensation for the employee.  Moreover, plaintiff’s corporation was not seeking to invoke the benefits of the immunity provision of WCL §11 without fulfilling its corresponding obligation under the statute.

White v. Metropolitan Opera Ass’n, 2017 NY Slip Op. 00093 (Jan. 5, 2017)