Defendant homeowner-insurance brokers were not liable for failing to increase homeowners’ insurance coverage after homeowners renovated their home.

Defendant insurance brokers’ motion for summary judgment in a breach-of-contract/negligence action by the insureds was properly granted. The Insureds alleged they had an agreement with defendant broker to increase the insurance coverage on the insureds’ home which was destroyed by fire after renovations, and that there was a special relationship between the brokers and the insureds, but the Third Department ruled that the insureds’ evidence failed to support either theory.  Hefty v Paul Seymour Ins. Agency, 2018 NY Slip Op 05547, Third Dept 7-26-18

The insureds purchased their home in 2010 for $33,000 intending to renovate it and retire there.  The insureds took out a homeowner’s policy through defendant brokers that had a replacement cost limit of $92,000.  After a $200,000 renovation, the house was destroyed in 2013.  Insureds commenced the instant action alleging that defendant brokers were negligent in failing to secure higher coverage limits for the property after its renovation.

Defendant brokers successfully moved for summary judgment, which the Third Department affirmed.

To set forth a negligence or breach-of-contract action against an insurance broker, plaintiff must establish that plaintiff made a specific request to the broker for coverage that was not provided in the policy.  A broker will be liable for failing to do what he is asked, but the broker has no continuing duty to monitor the insured’s needs and advise the client to obtain additional coverage.

Both plaintiffs testified that after renovating the property, they had informed defendant brokers about the improvements and had requested that someone come over to reassess the property’s value, but the insureds acknowledged that neither of them ever specifically requested an increase in coverage.

The Third Department held that at best, these insureds expressed a general interest in increasing coverage on the property but did not specifically request a certain type of coverage.

Neither did the insureds establish that a special relationship exists between them and the brokers.  Even in the absence of a specific request to increase coverage, an insurance broker may be liable for failing to advise or direct the client to obtain additional coverage where a special relationship has developed between the broker and the client, but special relationships in the insurance brokerage context are the exception rather than the norm.  Special relationships may arise in three exceptional situations, none which these insureds satisfied:

  • The insureds did not pay the brokers any compensation apart from the payment of premiums.
  • There was no evidence that the insureds relied on the agent’s expertise. Although the insureds claimed they repeatedly requested a reassessment of the property, defendants never undertook to perform one.  Moreover, the insureds’ own submission confirmed that they did not rely on the brokers’ expertise in assessing the insureds’ needs.  Instead, the insureds demonstrated that they were sophisticated consumers of insurance who directly managed their insurance coverages.  The insureds owned 10 properties and secured coverages for the properties as they deemed fit, sometimes rejecting defendants’ advice and internationally procuring insurance in an amount less than the amount that defendants recommended.   On the subject property, for example, the insureds insured it for only 80% of the recommended coverage based on their belief that defendants’ recommendation was too high.  The insureds also disputed whether flood insurance was necessary and eventually cancelled that insurance and obtained a refund of premium.

There was no course of dealing over an extended period of time that would have put an objectively reasonable insurance agent on notice that his advice was being sought and specially relied on.  Defendants handled nearly all of the insureds’ insurance needs for more than a decade, but this fact was insufficient to raise a question of fact as to a special relationship especially given the insureds’ history of rejecting defendant’s recommendation and managing the specifics of their own insurance policy.  There was nothing on this record that evinced anything more than the standard consumer-insurance broker relationship.

Defendant snow-tubing adventure park (represented by TICL member Gary Cusano) met its burden of proving plaintiff’s primary assumption of risk but plaintiff (represented by TICL member Jim Kelly) raised a question of fact.

While snow tubing at defendant adventure park, plaintiff was injured when her snow tube, which was linked to the snow tubes of her two daughters, slipped up and over the outer barrier of her snow tubing lane and collided with a padded metal pole some 30 to 70 feet away.

At the conclusion of discovery, defendant moved for summary judgment on the basis of plaintiff’s primary assumption of risk.  The Third Department held that although defendant met its burden of proof on its motion, plaintiff raised questions of act, so defendant’s motion was properly denied.

The Third Department cited the black-letter law that under the doctrine of primary assumption of the risk, a voluntary participant in a recreational activity such as snow tubing consents to those commonly appreciated risks that are inherent in and arise out of the nature of the sport generally and flow from such participation, but the participant does assume the risks of reckless or intentional conduct or concealed or unreasonably increased risks.  Awareness of the risk of engaging in a particular activity is to be assessed against the background of the skill and experience of the particular plaintiff, and application of the doctrine generally presents a question of fact for a jury to resolve.

Defendant met its burden of proof on its motion for summary judgment that plaintiff assumed the inherent risk that her snow tube would go over the top of the snow berm and collide with one of the nearby padded polls.  Defendant’s evidence consisted of photographs of the snow tubing hill and the deposition testimony of Windham’s project manager, of plaintiff, and of one of plaintiff’s companions on the day in question, and more specifically:

  • The project manager testified that
    • On any given day, there could be between six and ten snow tubing lanes open at defendant adventure park and the lanes were separated by manufactured snow berms, which could range in height from one and one half feet to two and one half feet.
    • The height of the berms could decrease over the course of a day as a result of melting or tubes wearing them down and that, although tubers generally should not be able to go over the top of the berms, he had occasionally seen that happen.
    • At the time of plaintiff’s injury, there was no policy prohibiting lane attendants from spinning patrons prior to their descent.
    • The number of tubes, if any, that could be linked together was determined by lane safety attendants at the bottom of the hill based on their observations and assessments of the weather and resulting lane conditions.
  • The photographs and the testimony of the project manager and plaintiff’s companion demonstrated the existence of several padded poles, which were situated between 30 and 70 feet away from plaintiff’s lane and were readily observable from both the hill and the lift line to the top of the hill.
  • Plaintiff testified that
    • She had some experience with snow tubing before her accident, having snow-tubed three years earlier and completed several prior runs that day without incident.
    • Regarding the injury-producing run, which occurred around 3:00 p.m., plaintiff and her daughters had decided to ride tandem and that, when asked if they wanted to be spun, she had said yes.

Plaintiff therefore assumed the inherent risk that her snow tube would spin out of control, go over the top of the snow berm and collide with one of the nearby padded poles, so the burden shifted to plaintiff to demonstrate that defendant concealed or unreasonably enhanced the danger or created conditions which were unique or above those inherent in the activity

Plaintiff succeeded in doing so by the deposition testimony of her companion and the project manager, which raised questions of fact that the weather and the condition of the lanes and snow berms on the day in question were such that spinning and in-tandem tubing were contraindicated and should not have been allowed:

  • Plaintiff’s companion testified that she walked from plaintiff’s lane to the pole with which plaintiff had collided and found the terrain to be “icy” and “hard.”
  • The project manager testified that
    • Based on his examination of the glare and shadows in the photographs taken on the day of the accident.
    • The lanes and snow berms appeared “icy” and that the lanes were “probably getting a bit frozen over” and “fast.”
    • When the lanes “iced up” and became too fast, the lane safety attendants at the bottom of the hill were supposed to either cut down the number of tubers that were permitted to ride together or prohibit tandem riding altogether.
    • He had previously observed snow tubers leave their lanes as a result of being spun.

Plaintiff therefore raised a factual issue as to whether the risk of injury was unreasonably increased by the actions of the lane attendants by allowing plaintiff and her daughters to ride tandem and spinning their tubes prior to their descent under the particular weather and terrain conditions at the time of plaintiff’s injury.   The order was therefore affirmed with costs.

Thompson v Windham Mtn. Partners, LLC, 2018 NY Slip Op 03415 (3d Dep’t May 10, 2018).

The tale of two U-turns: one innocent-driver defendant obtained summary judgment via the emergency doctrine defense; the other did not.

The First Department granted defendant Innocent Driver summary judgment under the emergency doctrine because Innocent Driver faced “egregious circumstances” when Tortfeasor Driver made a U-turn from the outside lane of a four-lane road crossing the inside lane where Innocent Driver was traveling, giving Innocent Driver only a “couple of seconds” to react.  Morales v. Chuquillanqui, 2018 NY Slip Op. 02139 (1st Dep’t March 27, 2018) .

In Morales, plaintiff was a passenger in defendant Tortfeasor Driver’s car.   Both vehicles were traveling the same direction on a four-lane road, with Tortfeasor Driver in the outside lane and Innocent Driver in the inside lane “some distance” behind Tortfeasor Driver.  Tortfeasor Driver made a U-turn from the outside lane across the inside lane in front of Innocent Driver, giving Innocent Driver  only a couple of seconds to react.  Innocent Driver attempted to steer to the left to avoid the collision but collided with Tortfeasor Driver’s car.  Because of these “egregious circumstances”, Innocent Driver was entitled to summary judgment under the emergency doctrine as a matter of law and plaintiff failed to raise a question of fact as to whether Innocent Driver’s reaction was reasonable.

On slightly different facts, however, the Second Department reversed summary judgment in favor of a plaintiff-passenger against an Innocent Driver and affirmed the denial of Innocent Driver’s motion for summary judgment to dismiss plaintiff’s complaint and all cross claims.  Vuksanaj v Abbott, 2018 NY Slip Op 02199 (2d Dep’t 2018)

In Vuksanaj, plaintiff was a rear-seat passenger in Tortfeasor Driver’s car which was travelling eastbound on Route 17K in Newburgh.  [Google Maps shows that Route 17K in and around Newburgh is a two-lane road with a speed limit of 30 mph in and around Newburgh.]  Innocent Driver was traveling behind Tortfeasor Driver.  When Tortfeasor Driver made a U-turn, Innocent Driver collided with Tortfeasor Driver’s car.  The two drivers gave conflicting deposition testimony as to how the accident happened.

Plaintiff’s motion for summary judgment against Innocent Driver was reversed because plaintiff relied on the deposition testimony of herself and Tortfeasor Driver in which they both testified that they had been drinking alcohol at a fraternity party before the accident.  Because plaintiff had to prove not only that Innocent Driver was negligent but that plaintiff herself was free from comparative negligent, the Second Department held that plaintiff failed to disprove her comparative negligence because the question of fact as to whether she knew of Tortfeasor Driver’s possible intoxication created a question of fact as to her comparative negligence.

Regarding Innocent Defendant’s motion for summary judgment, Innocent Defendant likewise had to prove his own absence of negligence.  Innocent Defendant submitted Tortfeasor Driver’s testimony which raised a question of fact as to whether Innocent Driver was following too closely.  Because Innocent Driver failed to establish his prima facie entitlement to judgment as a matter of law, his cross motion was properly denied without regard to the sufficiency of the opposition’s papers.

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)

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