New York CM Report of Recent Decisions (2004v4)
2004 Volume 4
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
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Articles in this report
Affirmations of Expert Witnesses in Medical Malpractice Actions
Recently, the American College of Surgeons recognized that many Fellows serve as expert witnesses in medical malpractice actions. The American College of Surgeons has recently prepared a form Affirmation for experts to sign and provide to the attorney representing the party on whose behalf the expert intends to testify. In April, 2004, the American College of Surgeons sent a letter and the referenced form to all members outlining the Affirmation and stating that it was for voluntary use by members who wish to make explicit their commitment to knowledgeable and ethical expert witness testimony. Members were told that the Affirmation can be used to examine the witness at trial and can also be used against them about their failure to do so.
An Agreement to Settle is Not Binding on the Parties Until All Closing Documents Are In Writing and Properly Executed
A settlement agreement is not binding under New York Law until all material terms of the settlement are either reduced to writing or recorded in open court, pursuant to the CPLR, as now enforced by New York’s highest court. It is important to remember to diligently follow-up on all closing documents as quickly as possible after an oral settlement agreement has been reached, regardless of whether you represent the plaintiff or defendant, to protect your client’s rights and enforce the terms of the settlement as negotiated.
CGL Coverage Denied For Defective Concrete as a "Business Risk"
In Bonded Concrete, Inc. v. Transcontinental Ins. Co., 784 N.Y.S.2d 212, the New York Appellate Division reviewed an issue that should be well settled but continues to be the subject of persistent litigation – whether the damages resulting from the poor quality work of the insured are covered under a commercial liability policy. It has long been established as a general rule that poor quality work, faulty workmanship or the poor craftsmanship of an insured are “business risks” and not risks contemplated in the insurer - insured relationship.
Court Holds That Mold as a "Loss" is Distinct from Mold as a "Cause of Loss"
The Superior Court of New Jersey, Appellate Division, recently held that a policy containing an exclusion for “loss caused by mold,” provides coverage for the repair and remediation of mold damage caused by a separate covered peril. Simonetti v. Selective Ins. Co., 859 A.2d 694, 372 N.J.Super. 421 (App.Div. 2004). The court held that “mold can be both a loss and a cause of loss,” and that, in this case, mold was the loss rather than the cause. Id. at 699.
Healthcare Insurer's Direct Action Against Tobacco Companies for Injuries Resulting from Violation of New York General Business Law Section 349 Is Too Remote
The United States Court of Appeals for the Second Circuit certified the following question for review by the New York Court of Appeals: “Are claims by a third party payer of health care costs seeking to recover costs of services provided to subscribers as a result of those subscribers being harmed by a defendant(s)’ violation of NY Gen. Bus. Law sec. 349 too remote to permit suit under that statute?” Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris USA Inc., 344 F.3d 211, 229 (2003).
A New Jersey trial court recently held in Brick v. Lexington Insurance Company, Docket #ATL-L-1285-03 (April 2, 2004), that mold and the damage caused by the mold to plaintiffs’ house were clearly and unambiguously excluded under the policy and not revived by the ensuing loss language of the policy.
New York Casualty Update: Appellate Division Allows "Second Hand Asbestos" Case to Proceed
The New York Appellate Division – Second Department has allowed a personal injury action to proceed on a theory of “second hand” asbestos exposure. In Holdampf v. A.C.&S., Inc., et al., 2004 WL 2749487, the court held that an employer has a duty to protect non-employees from “second hand” asbestos exposure where the employer knows or should know that such exposure is likely to occur.
New York Court Departs From Long Standing "No-Prejudice" Standard for Insurer to Support a Late Notice Defense
As long as most New York attorneys can remember, New York has always followed the rule of law that an insurer does not need to show “prejudice” in order to support a late notice defense. Last month, in Great Canal Realty Corp. v. Seneca Insurance Company, 2004 WL 2952794 (1st Dep’t 2004), the First Department held that a primary insurer must prove “prejudice” in order to rely upon a late notice defense. What has happened over the last few years to cause New York Courts to move away from this rule of law? Have insurance contracts become too close to an iron clad adhesion contract? Increased insurance premiums? Too much litigation? Are Judges realizing that they are insureds, too?
New York Courts Continue to Deem Industry Standard Pollution Exclusion Provisions Inapplicable to Losses Occurring as a Result of the Existence of Lead Paint in Commercial Structures
The United States District Court for the Southern District of New York recently held that a commonly utilized pollution exclusion does not operate to preclude coverage for damage caused by a release of dust that was precipitated by the removal of lead based paint from various portions of a midtown Manhattan apartment building. Herald Square Loft Corp. v. Merrimack Mutual Fire Insurance Co., 2004 WL 2580189 (S.D.N.Y.).
New York State Insurance Law § 4224(b)(2) prohibits an insurer from limiting the amount of coverage available to an individual due to a physical or mental disability unless permitted by law or empirically justified. The New York State Court of Appeals recently held that as long as an insurer offered the same policy to all insureds, it did not violate § 4224(b)(2), even though the policy offered less coverage for mental disabilities than it did for physical disabilities.
New York State Supreme Court Rules on the Issue of Electronic Discovery
The Nassau County Supreme Court recently ruled on an issue that has been notably absent from reported New York case law: electronic discovery. Despite federal precedent which has acknowledged that electronic data is indeed discoverable, see Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003); and Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050 (S.D.Cal. 1999), New York State courts have been slow to rule on the issue. In the case of Lipco Electronical Corp. v. ASG Consulting Corp., 4 Misc.3d 1019(A), 2004 WL 1949062 (N.Y.Sup.), 2004 N.Y. Slip Op. 50967(U), the trial court held that raw electronic data is indeed discoverable.
Second Circuit Holds Death by Autoerotic Asphyxiation is Not an Intentionally Self-Inflicted Injury Under Policy Governed by ERISA
The United States Court of Appeals for the Second Circuit recently held that an accidental death resulting from autoerotic asphyxiation does not constitute “intentionally self-inflicted injury” as used in an exclusion in an accidental-death-and-dismemberments insurance policy governed by the Employee Retirement Income Security Act (“ERISA”). Critchlow v. First UNUM Life Ins. Co. of America, 378 F.3d 246 (2d Cir. 2004).
