State Farm Mut. Auto. Ins. Co. v Langan

2011 NY Slip Op 02437 [16 NY3d 349]

March 29, 2011

Lippman, Ch. J.

Court of Appeals

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, May 11, 2011

[*1]

State Farm Mutual Automobile Insurance Company, Respondent-Appellant, v John Robert Langan, as Administrator of the Estate of Neil Conrad Spicehandler, Deceased, Appellant-Respondent.

Argued February 8, 2011; decided March 29, 2011

State Farm Mut. Auto. Ins. Co. v Langan, 55 AD3d 281, modified.

{**16 NY3d at 352} OPINION OF THE COURT

Chief Judge Lippman. [*2]

At issue in this appeal is whether the insured decedent, the victim of an intentional crime, was injured as the result of an accident within the meaning of the uninsured motorist endorsement and certain other provisions of the insured’s policy. Since the occurrence must be viewed from the insured’s perspective, we conclude that it was indeed an accident and that the insured is entitled to benefits under the policy provisions at issue.

Decedent, Neil Conrad Spicehandler, was struck by a vehicle at 7th Avenue and 32nd Street in Manhattan on February 12, 2002. He sustained a compound fracture of his left lower leg, requiring surgery, and died from complications shortly after the operation. Decedent was one of many who were injured when the driver, Ronald Popadich, intentionally drove his vehicle into pedestrians. Popadich later pleaded guilty to second degree murder and admitted that he intended to cause Spicehandler’s death.

Decedent was an insured under an automobile liability policy purchased by defendant Langan through plaintiff State Farm. As the administrator of decedent’s estate, Langan made a claim{**16 NY3d at 353} seeking to recover benefits under the policy’s uninsured/underinsured motorist (UM) endorsement, mandatory personal injury protection endorsement (PIP endorsement) and death, dismemberment and loss of sight endorsement (Coverage S).^[FN*] The policy’s UM endorsement provides that it

“will pay all sums that the insured or the insured’s legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, caused by an accident arising out of such uninsured motor vehicle’s ownership, maintenance or use”

subject to relevant policy exclusions. The PIP endorsement and Coverage S likewise state that they will pay benefits for injuries sustained as the result of “an accident.” These endorsements exclude coverage on several bases, but none specifically excludes coverage for an injury that results from intentional conduct. State Farm denied and disclaimed liability because it determined, as relevant here, that decedent’s death was caused not by an accident, but by the intentional conduct of the operator of the vehicle.

State Farm commenced this declaratory judgment action seeking a declaration that it was not obligated to provide benefits in connection with decedent’s death. Defendant answered and counterclaimed, requesting a declaration that State Farm was required to provide coverage under the policy. Plaintiff’s motion and defendant’s cross motion for summary judgment were denied because the parties had not, at that point, provided the court with information regarding [*3]the outcome of the criminal action against Popadich, which the court deemed “essential” to determining whether decedent’s injuries were caused by an intentional act (2004 NY Slip Op 30243[U]). The Appellate Division upheld the portion of the Supreme Court order that denied summary judgment on the issue of whether the incident was covered by the policy, finding that there was insufficient proof to determine whether decedent had been the victim of an intentional crime, but that, if he had, the incident would not be covered (18 AD3d 860, 862 [2d Dept 2005]).

After Popadich was convicted of second degree murder, State Farm renewed its motion for summary judgment, again seeking{**16 NY3d at 354} a declaration that it was not required to provide benefits under the policy. Langan opposed the motion and cross-moved for summary judgment, urging that whether the incident was an accident within the meaning of the policy must be determined from the perspective of the insured. Supreme Court granted State Farm’s motion and denied Langan’s cross motion on the basis of Popadich’s conviction (2006 NY Slip Op 30400[U]).

On appeal, a majority of the Appellate Division modified to declare that State Farm was required to provide benefits under the mandatory PIP and Coverage S endorsements and, as so modified, affirmed (55 AD3d 281 [2d Dept 2008]). The Court determined that State Farm was not required to provide UM benefits because the purpose of statutorily required uninsured motorist coverage is to provide an individual with the same level of coverage he or she would be entitled to if injured in an accident with an insured motorist covered by an applicable policy. Since a standard liability policy would not have covered Popadich for his intentional criminal conduct, the Court found that Langan’s UM coverage was not applicable under the circumstances presented here. However, the Court determined that in other contexts it was appropriate to determine whether a particular event was an accident from the insured’s point of view, that the incident was clearly unexpected from decedent’s perspective and that, as a result, State Farm was required to provide coverage under the PIP and Coverage S endorsements.

Two Justices dissented in part and would have affirmed Supreme Court’s order declaring that State Farm was not required to provide coverage. The dissent agreed that Langan was not entitled to UM benefits under current law based on Popadich’s intentional conduct, but observed that there had been a recent national trend to allow for coverage in similar circumstances and that strong public policy considerations weighed in favor of coverage. The dissent would have denied PIP and Coverage S benefits based on the law of the case and, in any event, disagreed that the same term should be interpreted differently within the same policy. Both parties appeal pursuant to leave granted by the Appellate Division, which certified for our review the question of whether its order was properly made. We modify and answer the certified question in the negative.

This appeal turns on whether decedent’s injuries were caused by an accident [*4]within the meaning of the policy. Although the endorsements at issue do not define the term “accident,” we have previously held that it is not to be “given a narrow,{**16 NY3d at 355} technical definition,” but should be interpreted according to how it would be understood by the average person (Miller v Continental Ins. Co., 40 NY2d 675, 676 [1976]). We have determined that, for purposes of automobile insurance policies, the term “accident” means an event typically involving violence or the application of external force (see Michaels v City of Buffalo, 85 NY2d 754, 758 [1995]). In order to determine whether a particular event was ” ‘accidental, it is customary to look at the casualty from the point of view of the insured, to see whether or not . . . it was unexpected, unusual and unforeseen’ ” (Miller, 40 NY2d at 677 [citation omitted]). Although we have noted that the perspective of the injured victim should not be used to determine whether an accident has occurred, ” ‘[b]ecause an injury is always fortuitous to a non-consenting victim’ ” (Michaels, 85 NY2d at 759 [citation omitted]), here we have the situation where the victim is also the insured.

It is clear that, viewed from the insured’s perspective, the occurrence was an unexpected or unintended event—and therefore an “accident”—even though Popadich admittedly intended to strike decedent with the vehicle. The language of the policy also suggests that this type of situation would be covered as it was an accident caused by the use of a motor vehicle that did not have an applicable insurance policy. Significantly, Insurance Department regulations require that an automobile owner’s liability insurance policy contain a provision specifying “that assault and battery shall be deemed an accident unless committed by or at the direction of the insured” (11 NYCRR 60-1.1 [f]). Although the provisions at issue here do not involve liability coverage, the regulation is relevant to the understanding of the extent of coverage provided by the endorsements.

The argument against requiring coverage, advanced by State Farm and relied upon by the Appellate Division, is based on the general principle that mandatory uninsured motorist benefits are meant to provide coverage that is coextensive with, and not greater than, that afforded by a standard liability policy. They rely on our statement that the purpose of mandatory UM benefits is ” ‘to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident’ ” (Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 204 [2007], quoting Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687 [1994]).

In support of its position, State Farm relies on McCarthy v Motor Veh. Acc. Indem. Corp. (16 AD2d 35 [4th Dept 1962], affd{**16 NY3d at 356} 12 NY2d 922 [1963]), a case where the plaintiff victim was injured when the insured motorist committed an intentional assault against her using his vehicle. After the insurer denied coverage because the occurrence was not an [*5]accident within the meaning of the policy, plaintiff sought to recover under the policy’s MVAIC endorsement—a statutorily required endorsement intended to afford coverage to a person injured by an uninsured or unidentified motorist, equal to that available to one injured by a motorist covered by an applicable liability policy (see McCarthy, 16 AD2d at 38). MVAIC is funded by assessments levied against all of the insurance companies licensed to conduct business in the state (see McCarthy, 16 AD2d at 39). McCarthy held that since an intentional assault committed by an insured motorist was not an accident subject to coverage under the standard liability policy, such an occurrence would likewise be excluded from coverage under the MVAIC endorsement (see 16 AD2d at 43). The Court also determined that allowing recovery under MVAIC would be inconsistent with the purpose for which the special fund had been established (see McCarthy, 16 AD2d at 44).

This case differs from McCarthy in two important respects. First, UM coverage, although required by statute, is part of the insured’s own policy—a policy that the insured selected and for which he pays premiums. Benefits received through coverage under the UM endorsement do not come out of a state fund. Second, the insured is the victim in this case, not the tortfeasor, and the public policy against providing coverage for an insured’s criminal acts is not implicated.

We hold that, consistent with the reasonable expectation of the insured under the policy and the stated purpose of the UM endorsement (to provide coverage against damage caused by uninsured motorists), the intentional assault of an innocent insured is an accident within the meaning of his or her own policy. The occurrence at issue was clearly an accident from the insured’s point of view and Langan is entitled to benefits under the UM endorsement.

This result is also in keeping with the national trend toward allowing innocent insureds to recover uninsured motorist benefits under their own policies when they have been injured through the intentional conduct of another (see e.g. American Family Mut. Ins. Co. v Petersen, 679 NW2d 571 [Iowa 2004]; Shaw v City of Jersey City, 174 NJ 567, 811 A2d 404 [2002]; Wendell v State Farm Mut. Auto. Ins. Co., 293 Mont 140, 974{**16 NY3d at 357} P2d 623 [1999]). Although the above decisions are not binding on this Court, we are persuaded that the view that has been adopted by these jurisdictions is the better one.

For many of the same reasons, Langan is entitled to coverage under the PIP endorsement and Coverage S. The average insured’s understanding of the term “accident” is unlikely to vary from endorsement to endorsement within the same policy. The occurrence, from the insured’s perspective, was certainly unexpected and unforeseen and should be considered an accident subject to coverage. Contrary to State Farm’s argument, we perceive no danger that this result will frustrate efforts to fight fraud in the no-fault insurance system. Significantly, there is [*6]no allegation whatsoever of fraud in this case and it is patent that benefits should continue to be denied to those who intentionally cause their own injuries.

The argument that Langan is entitled to attorneys’ fees was not addressed by the courts below and should be remitted to Supreme Court for its determination in the first instance.

Accordingly, the order of the Appellate Division should be modified, without costs, by granting defendant judgment declaring in accordance with this opinion and remitting to Supreme Court for further proceedings in accordance with this opinion, and, as so modified, affirmed. The certified question should be answered in the negative.

Smith, J. (dissenting). I would affirm the order of the Appellate Division.

As a general matter, it is true that whether a particular event is an “accident” should be viewed from the point of view of the insured. The insured here was Spicehandler, the event was an accident from his point of view, and his estate was therefore properly allowed to recover under the so-called PIP and Coverage S endorsements.

But uninsured/underinsured motorists (UM) coverage is different. Its purpose is to protect an insured who is injured by a tortfeasor without liability insurance—a purpose accomplished by putting the insured in the position that he would have been in if the tortfeasor had been insured. This requires a determination of whether the tortfeasor could have made a claim under a hypothetical policy of liability insurance—and the tortfeasor should thus be treated as the “insured” for purposes of analysis. Since Popadich drove his car into Spicehandler on purpose, the event was not an accident from Popadich’s point of view;{**16 NY3d at 358} Popadich could not have obtained indemnification from a liability insurer; and Spicehandler’s estate should not be permitted to recover under the UM endorsement.

This is essentially what we held when we affirmed the Appellate Division’s decision in McCarthy v Motor Veh. Acc. Indem. Corp. (16 AD2d 35 [4th Dept 1962], affd 12 NY2d 922 [1963]). The majority tries to distinguish McCarthy on what it calls two grounds, which seem really to be one—that UM coverage is “part of the insured’s own policy” and that “the insured is the victim in this case, not the tortfeasor” (majority op at 356). The distinction will not withstand analysis. The purpose of UM coverage is the same as the purpose of the MVAIC endorsement at issue in McCarthy: “to afford coverage,” as the majority puts it, “to a person injured by an uninsured or unidentified motorist, equal to that available to one injured by a motorist covered by an applicable liability policy” (majority op at 356). The essential rationale for McCarthy is that the victim of an uninsured motorist should not be in a better position than the victim of an insured one. That rationale was sound in McCarthy, and is sound here. [*7]

I see no justification for departing from McCarthy. A more serious argument might be made—though it is not made here—for a more significant change in the law: modifying, in cases involving automobile liability policies required by statute, the general rule that liability insurance cannot cover intentional torts. As McCarthy mentions, a standard automobile liability policy provides coverage only for accidents, and thus would not cover “an assault and battery committed by the insured” (16 AD2d at 41; see also e.g. Matter of Travelers Indem. Co. v Richards-Campbell, 73 AD3d 1076 [2d Dept 2010]; Matter of Aetna Cas. & Sur. Co. v Perry, 220 AD2d 497 [2d Dept 1995]). This limitation seems to be derived from the long-established rule, based on public policy, that insurance may not indemnify a tortfeasor for intentional wrongdoing (Messersmith v American Fid. Co., 232 NY 161, 165 [1921]; Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 445 [2002]). Courts in some jurisdictions have made compulsory liability insurance an exception to this rule, reasoning that the purpose of liability insurance, to the extent that it is required by law, is to protect injured victims, not tortfeasors, and that victims should be protected no less against intentional than against negligent torts (e.g. Speros v Fricke, 98 P3d 28, 36-38 [Utah 2004]; Dotts v Taressa J.A., 182 W Va 586, 390 SE2d 568 [1990]; Wheeler v{**16 NY3d at 359} O’Connell, 297 Mass 549, 9 NE2d 544 [1937]). Whether such an exception is justified, and if so whether it should be created by judges or by legislators, are questions that we should not address until we have a case that presents them.

Judges Ciparick, Graffeo, Pigott and Jones concur with Chief Judge Lippman; Judge Smith dissents and votes to affirm in a separate opinion in which Judge Read concurs.

Order modified, etc.

Footnotes

Footnote *: This action solely concerns claims made under Langan’s own policy—not the policy of either the driver or the vehicle.

Matter of New York Schools Ins. Reciprocal v Armitage

2011 NY Slip Op 02191 [82 AD3d 1628]

March 25, 2011

Appellate Division, Fourth Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, May 11, 2011

In the Matter of New York Schools Insurance Reciprocal, Appellant, v Patricia Armitage, Respondent. Alex Celniker et al., Proposed Additional Respondents.

—[*1] Baxter Smith & Shapiro, P.C., West Seneca (Lauren E. Dillon of counsel), for petitioner-appellant.

Louden Law Firm, P.C., Malta (Michelle Murphy-Louden of counsel), for respondent-respondent Patricia Armitage.

Appeal from an order of the Supreme Court, Erie County (Rose H. Sconiers, J.), entered February 10, 2010. The order denied the petition for a stay of arbitration.

It is hereby ordered that the order so appealed from is unanimously affirmed without costs.

Memorandum: Petitioner appeals from an order denying its petition seeking a permanent stay of arbitration. Respondent sought arbitration following petitioner’s denial of her claim for no-fault insurance benefits. The propriety of the denial of benefits is a “dispute involving the insurer’s liability to pay first party benefits” (Insurance Law § 5106 [b]), and we therefore conclude that Supreme Court properly refused to grant a permanent stay of arbitration (see generally Ryder Truck Lines v Maiorano, 44 NY2d 364, 368-369 [1978]). Petitioner further contends that the issue whether the offset for workers’ compensation benefits exceeds the monthly limit of first party benefits is not a matter for arbitration. We reject that contention (see Insurance Law § 5102 [a] [2]; see generally § 5106 [b]; Matter of Johnson v Buffalo & Erie County Private Indus. Council, 84 NY2d 13, 18-19 [1994]; Matter of Cady [Aetna Life & Cas. Co.], 96 AD2d 967 [1983], affd 61 NY2d 594 [1984]). Finally, we reject petitioner’s contention that, by refusing to grant a permanent stay of arbitration, the court denied petitioner its right to seek a loss-transfer claim from additional proposed respondents (see generally Matter of Liberty Mut. Ins. Co. [Hanover Ins. Co.], 307 AD2d 40, 42-43 [2003]). Present—Scudder, P.J., Fahey, Carni, Green and Gorski, JJ.

[*1] Decided on March 24, 2011

APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT

PRESENT: Shulman, J.P., Hunter, Jr., J.
570324/10

Shulman, J.P., Hunter, Jr., J.

Allstate Insurance Company,NY County Clerk’s No. Petitioner-Appellant,570324/10 -against- Alexandre DeMoura a/a/oCalendar No. 10-162 Miriam Cruceta, Respondent-Respondent. Petitioner appeals from an order of the Civil Court of the City of New York, New York County (Tanya R. Kennedy, J.), dated March 16, 2009, which denied its petition to vacate an arbitration award in favor of respondent awarding him unpaid no-fault benefits in the principal sum of $11,170.42, and granted respondent’s cross petition to confirm the arbitration award. Per Curiam. Order (Tanya R. Kennedy, J.), dated March 16, 2009, reversed, without costs, and matter remanded to Civil Court for a framed issue hearing regarding whether the $50,000 limit of the subject insurance policy was exhausted before petitioner-insurer was obligated to pay respondent’s claim. When an insurer “has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease” (Countrywide Ins. Co. v Sawh, 272 AD2d 245 [2000]). A defense that the coverage limits of the policy have been exhausted may be asserted by an insurer despite its failure to issue a denial of the claim within the 30-day period (New York & Presby. Hosp. v Allstate Ins. Co., 12 AD3d 579 [2004]), and an arbitrator’s award directing payment in excess of the $50,000 limit of a no-fault insurance policy exceeds the arbitrator’s power and constitutes grounds for vacatur of the award (see Matter of Brijmohan v State Farm Ins. Co., 92 NY2d 821, 822 [1998]; Countrywide Ins. Co. v Sawh, 272 AD2d at 245; 11 NYCRR 65-1.1). Moreover, as petitioner-insurer correctly argues, such error “will not be waived if the party relying on it asserts it . . . in opposition to an application for confirmation” (Matter of Brijmohan v State Farm Ins. Co., 92 NY2d at 822). Here, petitioner’s submissions on its motion to vacate the arbitration award and in opposition to respondent’s cross motion to confirm the award raised a triable issue of fact regarding whether the $50,000 policy limit had been exhausted before payment could be made to respondent on its claim (see 11 NYCRR 65-3.15). Therefore, we remand the matter to Civil Court for a framed issue hearing on that issue. We note that petitioner’s remaining arguments are without merit. THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT. I concurI concur Decision Date: March 24, 2011

MARCH 24, 2011
SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT
								June 2010 Term

Petitioner appeals from an order of the Civil Court of the City of New York, New York County (Tanya R. Kennedy, J.), dated March 16, 2009, which denied its petition to vacate an arbitration award in favor of respondent awarding him unpaid no-fault benefits in the principal sum of $11,170.42, and granted respondent’s cross petition to confirm the arbitration award.

Per Curiam.

Order (Tanya R. Kennedy, J.), dated March 16, 2009, reversed, without costs, and matter remanded to Civil Court for a framed issue hearing regarding whether the $50,000 limit of the subject insurance policy was exhausted before petitioner-insurer was obligated to pay respondent’s claim.

When an insurer “has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease” (Countrywide Ins. Co. v Sawh, 272 AD2d 245 [2000]). A defense that the coverage limits of the policy have been exhausted may be asserted by an insurer despite its failure to issue a denial of the claim within the 30-day period (New York & Presby. Hosp. v Allstate Ins. Co., 12 AD3d 579 [2004]), and an arbitrator’s award directing payment in excess of the $50,000 limit of a no-fault insurance policy exceeds the arbitrator’s power and constitutes grounds for vacatur of the award (see Matter of Brijmohan v State Farm Ins. Co., 92 NY2d 821, 822 [1998]; Countrywide Ins. Co. v Sawh, 272 AD2d at 245; 11 NYCRR 65-1.1). Moreover, as petitioner-insurer correctly argues, such error “will not be waived if the party relying on it asserts it . . . in opposition to an application for confirmation” (Matter of Brijmohan v State Farm Ins. Co., 92 NY2d at 822).

Here, petitioner’s submissions on its motion to vacate the arbitration award and in opposition to respondent’s cross motion to confirm the award raised a triable issue of fact regarding whether the $50,000 policy limit had been exhausted before payment could be made to respondent on its claim (see 11 NYCRR 65-3.15). Therefore, we remand the matter to Civil Court for a framed issue hearing on that issue.

We note that petitioner’s remaining arguments are without merit.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT. [*2]

I concurI concur
Decision Date: March 24, 2011

Westchester Med. Ctr. v Lincoln Gen. Ins. Co.

2011 NY Slip Op 02379 [82 AD3d 1085]

March 22, 2011

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, May 11, 2011

Westchester Medical Center, Respondent, v Lincoln General Insurance Company, Appellant.

—[*1] Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Charles W. Benton of counsel), for appellant. Joseph Henig, P.C., Bellmore, N.Y., for respondent.

In an action to recover no-fault medical benefits under an insurance contract, the defendant appeals from an order of the Supreme Court, Nassau County (Martin, J.), entered October 28, 2009, which denied its motion pursuant to CPLR 5015 (a) to modify a judgment of the same court dated April 30, 2009, which, upon an order granting the plaintiff’s motion for summary judgment on the complaint, was in favor or the plaintiff and against it in the principal sum of $416,039.42.

Ordered that the order entered October 28, 2009, is affirmed, with costs.

The plaintiff hospital, as assignee of Bartolo Reyes, was awarded judgment against the defendant in the principal sum of $416,039.42, in this action to recover no-fault medical benefits under a contract of insurance entered into between the plaintiff’s assignee and the defendant. The defendant thereafter moved to modify the judgment pursuant to CPLR 5015 (a), belatedly asserting that the judgment exceeded the coverage limit of the subject policy due, in part, to payments previously made under the policy to other health care providers. In the order appealed from, the Supreme Court properly denied the defendant’s motion to modify the judgment.

The defendant failed to specify on which of the five subdivisions of CPLR 5015 (a) its motion was based, much less establish its entitlement to relief on any of the enumerated grounds. To the extent that the defendant sought modification pursuant to CPLR 5015 (a) (2) based upon “newly-discovered evidence,” the defendant failed to demonstrate that the evidence offered in support of the motion, i.e., an affidavit of an employee setting forth the policy limits and the amount of benefits paid for alleged prior claims, “was not available at the time of the prejudgment proceedings” (Jonas v Jonas, 4 AD3d 336, 336 [2004]; see Sicurelli v Sicurelli, 73 AD3d 735 [2010]).

Moreover, although courts possess inherent discretionary power to grant relief from a judgment or order in the interest of justice, this “extraordinary relief” is not appropriate under the circumstances presented (Jakobleff v Jakobleff, 108 AD2d 725, 726-727 [1985]; see Selinger v Selinger, 250 AD2d 752 [1998]). The plaintiff previously moved for summary judgment on the complaint, seeking a certain amount of benefits, in accordance with the no-fault billing statement sent to the defendant, and [*2]this Court reversed the denial of that motion and granted the plaintiff’s motion for summary judgment on the complaint (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2009]). Only after the plaintiff obtained, upon this Court’s order, a judgment from the Clerk of the Supreme Court, Nassau County, representing, inter alia, the amount of benefits sought in the complaint, did the defendant raise the issue of exhaustion of the policy limits. Under these circumstances, modification of the judgment in the interest of justice is not warranted.

The parties’ remaining contentions are without merit. Skelos, J.P., Balkin, Austin and Sgroi, JJ., concur.

Motion by the respondent to dismiss an appeal from an order of the Supreme Court, Nassau County (Martin, J.), entered October 28, 2009, on the ground that the appeal is frivolous, and to impose a sanction upon the appellant and for an award of an attorney’s fee. By decision and order on motion of this Court dated March 19, 2010, the motion was held in abeyance and referred to the panel of Justices hearing the appeal for determination upon the argument or submission thereof.

Upon the papers filed in support of the motion, the papers filed in opposition or relation thereto, and upon the argument of the appeal, it is

Ordered that the motion is denied. Skelos, J.P., Balkin, Austin and Sgroi, JJ., concur.

[*1] Decided on March 17, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., WESTON and STEINHARDT, JJ
2009-2025 Q C.

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered August 13, 2009, deemed from a judgment of the same court entered September 11, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the August 13, 2009 order granting defendant’s motion for summary judgment, dismissed the complaint.

ORDERED that the judgment is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that plaintiff’s action was premature, inasmuch as plaintiff had failed to provide requested verification of the claim. Plaintiff opposed the motion. By ordered entered August 13, 2009, the Civil Court granted defendant’s motion for summary judgment, and this appeal by plaintiff ensued. A judgment was subsequently entered, from which this appeal is deemed to be taken (see CPLR 5501 [c]).

The affidavit of defendant’s litigation claims examiner established that defendant had timely mailed its request and follow-up request for verification to plaintiff (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [b]; § 65-3.6 [b]) in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). The mere denial by plaintiff’s medical biller of receipt of the verification requests did not overcome the presumption that proper mailing had occurred and that plaintiff had received the verification requests (see Schmiemann v State Farm Fire & Cas. Co., 13 AD3d 514 [2004]; Morales v Yaghoobian, 13 AD3d 424 [2004]; Truscello v Olympia Constr., 294 AD2d 350 [2002]). Since plaintiff did not serve responses to the verification requests prior to the commencement of the action, defendant’s motion for [*2]summary judgment dismissing the complaint was properly granted, as defendant’s time to pay or deny the claims had not begun to run (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]).

Accordingly, the judgment is affirmed. We reach no other issue.

Pesce, P.J., Weston and Steinhardt, JJ., concur.
Decision Date: March 17, 2011

Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC

2011 NY Slip Op 01948 [82 AD3d 559]

March 17, 2011

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, May 11, 2011

Unitrin Advantage Insurance Company, Respondent, v Bayshore Physical Therapy, PLLC, et al., Defendants, and Martin Bassiur, DDS, Doing Business as NY Craniofacial Pain Management, et al., Appellants.

—[*1] Israel, Israel & Purdy, LLP, Great Neck (William M. Purdy of counsel), for appellants.

Rubin, Fiorella & Friedman LLP, New York (Joseph R. Federici, Jr. of counsel), for respondent.

Order, Supreme Court, New York County (Jane S. Solomon, J.), entered March 1, 2010, which denied defendants-appellants’ motion for summary judgment dismissing the complaint, granted plaintiff’s cross motion for summary judgment on the complaint, and declared that plaintiff does not owe coverage for the no-fault claims allegedly assigned to defendants, unanimously affirmed, without costs.

The motion court properly determined that plaintiff insurer may retroactively deny claims on the basis of defendants’ assignors’ failure to appear for independent medical examinations (IMEs) requested by plaintiff, even though plaintiff initially denied the claims on the ground of lack of medical necessity (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721-722 [2006]). The failure to appear for IMEs requested by the insurer “when, and as often as, [it] may reasonably require” (Insurance Department Regulations [11 NYCRR] § 65-1.1) is a breach of a condition precedent to coverage under the no-fault policy, and therefore fits squarely within the exception to the preclusion doctrine, as set forth in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]). Accordingly, when defendants’ assignors failed to appear for the requested IMEs, plaintiff had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [c]; Stephen Fogel Psychological, 35 AD3d at 721-722).

It is of no moment that the retroactive denials premised on failure to attend IMEs were embodied in blanket denial forms, or that they were issued based on failure to attend IMEs in a different medical speciality from that which underlies the claims at issue. A denial premised on breach of a condition precedent to coverage voids the policy ab initio and, in such case, the insurer cannot be precluded from asserting a defense premised on no coverage (see Chubb, 90 NY2d at 199).

There is likewise no merit to defendants’ contention that the IME request notices were [*2]invalid. Plaintiff satisfied its prima facie burden on summary judgment of establishing that it requested IMEs in accordance with the procedures and time frames set forth in the no-fault implementing regulations, and that defendants’ assignors did not appear. In opposition, defendants failed to raise an issue of fact that the requests were unreasonable (see generally Celtic Med. P.C. v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 13, 14-15 [2007]; A.B. Med. Servs. PLLC v USAA Gen. Indem. Co., 9 Misc 3d 19, 21 [2005]).

Defendants’ argument that plaintiff was required to demonstrate that the assignors’ failure to appear for the IMEs was willful is unpreserved and, in any event, without merit. The doctrine of willfulness, as addressed in Thrasher v United States Liab. Ins. Co. (19 NY2d 159 [1967]), applies in the context of liability policies, and has no application in the no-fault context, where the eligible injured party has full control over the requirements and conditions necessary to obtain coverage (cf. id. at 168).

Defendants’ argument that all IMEs must be conducted by physicians is unavailing. Although Insurance Department Regulations (11 NYCRR) § 65-1.1 (d) states that “[t]he eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the [insurer], when, and as often as, the [insurer] may reasonably require,” the regulations permit reimbursement for medically necessary treatment services that are rendered by nonphysicians, such as chiropractors and acupuncturists, as well (see Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 22 Misc 3d 978, 979-980 [2008]). We have considered defendants’ remaining contentions and find them unavailing. Concur—Andrias, J.P., Saxe, Friedman, Moskowitz and Richter, JJ. [Prior Case History: 2010 NY Slip Op 31936(U).]

[*1] Decided on March 15, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., GOLIA and STEINHARDT, JJ
2009-2342 Q C.

Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered September 16, 2009, deemed from a judgment of the same court entered October 26, 2009 (see CPLR 5501 [c]). The judgment, entered pursuant to the September 16, 2009 order granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment dismissing the complaint, awarded plaintiff the principal sum of $2,498.75.

ORDERED that the judgment is reversed, without costs, so much of the order entered September 16, 2009 as granted plaintiff’s motion for summary judgment is vacated, and plaintiff’s motion for summary judgment is denied. In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court granted a motion by plaintiff for summary judgment and denied a cross motion by defendant for summary judgment dismissing the complaint, due to the failure of defendant’s claims examiner to explain the handwritten additions to defendant’s denial of claim forms. The instant appeal by defendant ensued. A judgment was subsequently entered, from which the appeal is deemed to be taken (see CPLR 5501 [c]).

The affidavit submitted by defendant’s claims examiner in opposition to plaintiff’s motion and in support of defendant’s cross motion was sufficient to establish that defendant’s claim denial forms, which denied plaintiff’s claims on the ground that the equipment provided was not medically necessary, were timely mailed in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). The fact that there were handwritten notations on the claim denial forms did not [*2]affect their validity, and defendant was not, under these circumstances, required to provide a further explanation.

In addition, the affirmed peer review reports submitted by defendant’s doctors were sufficient to establish a lack of medical necessity as they provided a factual basis and medical rationale for the doctors’ determinations that there was a lack of medical necessity for the medical equipment at issue (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]). Contrary to plaintiff’s assertions, the fact that the peer reviewers took into consideration medical records of other providers in formulating their opinions did not render the peer review reports inadmissible (see Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]).

Since defendant established, prima facie, a lack of medical necessity for the equipment in question, the burden shifted to plaintiff to rebut defendant’s prima facie showing (see Alur Med. Supply, Inc. v Clarendon Natl. Ins. Co., 27 Misc 3d 132[A], 2010 NY Slip Op 50700[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Pan Chiropractic, P.C. v Mercury Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51495[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). In opposition to defendant’s cross motion, plaintiff submitted an affirmation from a doctor, which was sufficient to raise a triable issue of fact as to medical necessity (see Park Slope Med. & Surgical Supply, Inc. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 141[A], 2009 NY Slip Op 50441[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; cf. A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). In view of the foregoing, plaintiff’s motion for summary judgment should have been denied, and we leave undisturbed the denial of defendant’s cross motion.

Accordingly, the judgment is reversed, so much of the order as granted plaintiff’s motion for summary judgment is vacated and plaintiff’s motion for summary judgment is denied.

Pesce, P.J., Golia and Steinhardt, JJ., concur.
Decision Date: March 15, 2011

[*1] Decided on March 15, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS

PRESENT: : PESCE, P.J., WESTON and GOLIA, JJ
2009-1991 Q C.

Appeal from an order of the Civil Court of the City of New York, Queens County (Maureen A. Healy, J.), entered July 21, 2009. The order granted defendant’s motion, in effect, to vacate a notice of levy and sale of defendant’s property.

ORDERED that the order is affirmed, without costs, and the matter is remitted to the Civil Court for the entry of a corrected judgment in accordance with the decision herein.

In this action to recover assigned first-party no-fault benefits, the Civil Court (Diccia T. Pineda-Kirwan, J.), after a nonjury trial, awarded plaintiff “the sum of $10,196 plus statutory interest and attorney’s fees.” Thereafter, plaintiff filed a proposed judgment which included, among other things, the sum of $4,259.42 in attorney’s fees.

On October 24, 2006, defendant filed a “Rejection of Proposed Judgment.” In that rejection, defendant stated, insofar as is relevant to this appeal, that the award of attorney’s fees should be limited to the sum of $850. On October 30, 2006, plaintiff received two checks from defendant, one in the amount of $27,173 (representing the principal plus interest) and one in the amount of $915 (representing attorney’s fees of $850 plus filing fees), which plaintiff deposited. On December 4, 2006, a judgment was entered in favor of plaintiff, which included, among other things, the sum of $4,259.42 in attorney’s fees. Thereafter, plaintiff submitted the judgment to the marshal’s office for collection of the balance due thereunder, and the marshal sent a notice of execution to defendant. Upon receiving the notice, defendant moved, in effect, to vacate the notice of levy and sale of its property. By order entered July 21, 2009, the Civil Court (Maureen A. Healy, J.) granted defendant’s motion. This appeal by plaintiff ensued.

A review of defendant’s moving papers indicates that defendant sought to challenge so much of the judgment as had awarded plaintiff attorney’s fees in the sum of $4,259.42. In LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co. (12 NY3d 217 [2009]), the Court of [*2]Appeals reversed an order of the Appellate Division, Third Department (46 AD3d 1290 [2007]), which had held that attorney’s fees in a no-fault action should be calculated on a per-claim, not a per-assignor, basis. Giving effect to an opinion letter of the Superintendent of Insurance (Ops General Counsel NY Ins. Dept. No. 03-10-04 [Oct. 2003]) which interpreted the Insurance Department regulation (Insurance Department Regulations [11 NYCRR] § 65-4.6) establishing the amount of statutory attorney’s fees (Insurance Law § 5106 [a]) to be awarded, the Court of Appeals held that attorney’s fees in no-fault actions are to be calculated based on the aggregate of all of the bills submitted by a provider with respect to each insured in any action, up to a maximum of $850. Since the regulation and the opinion letter of the Superintendent of Insurance fixing the proper method for calculating the amount to be awarded as attorney’s fees pursuant to the regulation were extant at the time the judgment in the case at bar was entered; the Appellate Division ruling had not yet been handed down; the issue of the proper calculation of the attorney’s fees due plaintiff had not at that time been determined by the court; and the assessment of the statutory attorney’s fees pursuant to the Insurance Department regulation was, in essence, a ministerial matter, the clerk’s mistake in entering a judgment which included attorney’s fees in the sum of $4,259.42 was properly subject to correction by the Civil Court pursuant to CPLR 5019 (see Kiker v Nassau County, 85 NY2d 879 [1995] cf. Bank of NY v Carlucci, 289 AD2d 349 [2001] [where attorney’s fees are not statutorily fixed, an award of attorney’s fees is a substantive part of a judgment not subject to correction pursuant to CPLR 5019 (a)]). Accordingly, the order is affirmed and the matter is remitted to the Civil Court for the entry of a corrected judgment awarding plaintiff attorney’s fees in the sum of $850.

Pesce, P.J., Weston and Golia, JJ., concur.
Decision Date: March 15, 2011

[*1] Decided on March 15, 2011

Civil Court of the City of New York, Kings County

Ema Acupuncture, P.C. a/a/o KEVIN ALTMAN, Plaintiff, against Progressive Insurance Company, Defendant.

161737/07

Ingrid Joseph, J.

Recitation, as required by CPLR §2219 (a), of the papers

considered in the review of this Motion

PapersNumbered

Notice of Motion Affidavits Annexed ………….1

Opposition/Answering Affidavits .. ..2

Replying Affidavits .

In this action to recover assigned first-party no-fault benefits, plaintiff filed a motion for summary judgment on or about September 16, 2009, which was returnable on October 6, 2009. The parties signed a written adjournment stipulation on the return date since the defendant failed to submit opposition. In the stipulation, the litigants agreed that the defendant would serve responsive papers upon plaintiff on or before January 29, 2010 and that any cross-motion served beyond the extended date would be denied as untimely. The defendant breached the agreement by serving the cross-motion and opposition on March 5, 2010, approximately one month after the due date. Consequently, the court rejected the defendant’s submissions when the parties appeared on March 29, 2010. The defendant now seeks an order pursuant to CPLR § 2221(e)(2) & (e)(3), granting leave to renew plaintiff’s prior motion for summary judgment and upon renewal, an order denying plaintiff’s motion and granting defendant’s cross-motion for summary judgment.

The issue before the court is whether the defendant can move for leave to renew its adversary’s motion on the basis that its cross-motion and opposition, which was rejected and not entertained, constitutes new facts?

The defendant’s untimely responsive papers, once rejected, constituted a default on the part of the defendant in opposing plaintiff’s motion (Lumbermen’s Mut. Cas. Co. v Fireman’s Fund American Ins. Co., 117 AD2d 588 [2d Dept 1986]; and see Omega Diagnostic Imaging, P.C. v MVAIC, 2011 WL 817397 [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2011]; Manhattan Medical Imaging, P.C. v Nationwide Ins. Co., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2010]; Acupuncture Healthcare Plaza, P.C. v Zurich Ins. Co., 22 [*2]Misc 3d 126(A) [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2008][the court’s grant of relief requested in an unopposed motion is considered a default judgment]). Even though the court allowed the defendant to orally address the issue of whether plaintiff met its prima facie burden, the resulting judgment in plaintiff’s favor was a default judgment. The court is cognizant that CPLR § 2221 is silent as to who may bring a motion to renew, but the Appellate Term has held that a party cannot renew a motion upon which it defaulted (Manhattan Medical Imaging, P.C., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th, 13th Jud. Dists 2010]). The appropriate procedural device for obtaining relief from a default judgment is a motion to vacate pursuant to CPLR § 5015(a)(1)(Eugene Di Lorenzo, Inc. v A.C. Dutton Lumber Co., Inc., 67 NY2d 138, 141 [1986]).

Even assuming arguendo that a motion for leave to renew was appropriate in this context or the court converted the motion into one to vacate the default judgment, the defendant has failed to meet the criteria for relief under either theory.

A motion for leave to renew, pursuant CPLR § 2221, creates an avenue for a party to provide the court with pertinent facts that it failed to include in the previous motion when such motion was before the court (8 NY Prac., Civil Appellate Practice § 5:2). The motion must be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination and shall contain reasonable justification for the failure to present such facts on the prior motion (CPLR § 2221(e)(2) & (e)(3); Rizzotto v Allstate Ins. Co., 300 AD2d 562 [2d Dept 2002]). In order to garner relief under CPLR § 5015, the defendant must show a reasonable excuse for the default and a meritorious defense.

The defendant’s cross-motion and opposition do not constitute new facts within the contemplation of CPLR § 2221, because the information contained therein is not newly discovered and would have been available when plaintiff’s motion was before the court but for the defendant’s untimeliness. Additionally, the defendant’s excuse of law office failure is untenable for purposes of CPLR §§ 2221 and 5015. Law office failure can be accepted as a reasonable excuse in the exercise of the court’s sound discretion, but the movant must submit supporting facts to explain and justify the default and mere neglect is not acceptable as a reasonable excuse (Cole-Hatchard v Grand Union, 270 AD2d 447 [2d Dept 2000] quoting Bravo v New York City Hous. Auth., 253 AD2d 510 [2d Dept 1998] and Davito v Marine Midland Bank, 100 AD2d 510 [2d Dept 1984]). The defendant’s excuse, that the task of responding to plaintiff’s motion was assigned to an attorney who left the firm, and the opposition due date had lapsed before the law office could “sort through” the former attorney’s caseload, represents nothing more than the law office’s neglect in managing its active cases. Furthermore, the defendant failed to provide details or submit any evidence in support of its explanation. Thus, the court finds that the excuse is conclusory and insufficient.

Accordingly, the defendant’s motion is denied.

This constitutes the decision and order of the court.

March 15, 2011_____________________________

HON. Ingrid Joseph

Judge, Civil Court

[*1] Decided on March 14, 2011

Civil Court of the City of New York, New York County

Devonshire Surgical Facility and Carnegie Hill Orthopedic Services, P.C. a/o/a SHONTA ROBINSON, Plaintiff, against American Transit Insurance Company, Defendant

17035/05

Soraya Campbell, Esq. of Bruno Gerbino & Soriano LLP appeared in support of the motion

Christopher McCollum, Esq. appeared in opposition to the motion

O’Shea, J.

Plaintiff, a professional corporation, instituted this action to recover first-party, no fault benefits for services rendered to its assignor, Shonta Robinson, who was injured in an automobile accident on August 4, 2002. On or about October 28, 2002, plaintiff submitted three claims for payment totaling $14,929.08. On February 1, 2008, plaintiff was awarded summary judgment on its claims.

On December 17, 2008, plaintiff served a proposed judgment in the total amount of $55,090.03, which included statutory attorney’s fees and $39,151.85 in interest, which plaintiff calculated using compounded interest at the rate of 2% per month from the date defendant was required to pay or deny the claim (November 28, 2002) to the date of the proposed judgment (December 17, 2008). Shortly thereafter, on December 30, 2008, defendant paid the underlying claims in the amount of $14,929.08, along with the statutory attorneys fees in the amount of $850.00. Defendant then moved by order to show cause two weeks later seeking, inter alia, an order vacating or staying entry and execution of the judgment on the grounds that plaintiff [*2]miscalculated the interest. On May 18, 2009, four months after judgment was entered, a decision and order was issued staying “entry of this judgment . . . until the correct interest amount is added to the judgment.”

Sixteen months later, in September, 2010, plaintiff e-mailed defendant a copy of an amended application for judgment with interest in the amount of $40,238.48, calculated from April 5, 2005, the date the complaint was filed,^[FN1] to the date of the new proposed judgment. Plaintiff again used a compounded rate of 2% per month in calculating the interest.^[FN2] Nothing more happened. There is no record that the proposed amended judgment was ever entered by the Clerk or that plaintiff or defendant took any steps to challenge or compel entry of the newly proposed judgment or to lift the stay.

Three months later, on December 21, 2010, plaintiffs commenced enforcement proceedings on the original judgment. In its Execution With Notice to Garnishee, plaintiff stated as follows:

“[J]udgment was entered on January 7, 2009, . . . in the amount of $55,090.93, including costs, of which $57,391.12, together with interest from December 21, 2010, remains due and unpaid.”

One month later, on January 18, 2011, in a reprise of its January 2009 order to show cause, defendant moved for an order: (i) vacating or modifying the judgment; (ii) staying entry of the judgment; (iii) vacating or staying the execution of judgment; and (iv) staying execution of the judgment pending a hearing and determination of the motion. Defendant claims this relief on the grounds that (a) it was improper for plaintiff to seek execution of a judgment that was stayed and never entered by the Clerk; and (b) the interest calculation remains incorrect. Plaintiff opposes the motion on the grounds, inter alia, that the stay was self-executing and lifted when he served the amended application for judgment, and his calculations of interest are correct. The order to show cause initiating the instant motion provides that “pending the hearing and determination of this application, entry of judgment . . . is hereby stayed [and] pending the hearing of this application, any attempted enforcement of or execution on the judgment is hereby stayed. . . .”

In the exercise of its control over its judgments, a court may open them upon the application of anyone for sufficient reason in the furtherance of justice. Its power to do so is [*3]inherent and does not rely on any particular statute (Woodson v. Mendon Leasing Corp., 100 NY2d 62 [2003]; Ladd v. Stevenson, 112 NY 325 [1889]). However such relief generally should be resorted to only to relieve a party from judgments taken through fraud, mistake, inadvertence, surprise or excusable neglect (McKenna v. County of Nassau, 61 NY2d 739 [1984]). Correction of a miscomputation of interest constitutes just such an error (e.g. Kiker v. Nassau County, 85 NY2d 879 [1995][a mistake in assessing the amount of interest on a judgment may be corrected even after the appeals process has been completed, where the proper rate was clearly directed by statute]; see also Gaul v. Commercial Union Ins. Co., 268 AD2d 816 [3d Dep’t 2000]; Bauman v. Bauman, 200 AD2d 380 [1st Dep’t 1994]).

In recognition of the fact that the interest calculation was incorrect, on May 18, 2009, this Court granted Defendant a stay of the entry of the judgment until “the correct amount of interest is added to the judgment.” As the correct amount of interest has still not been added to the judgment, the May 18, 2009, stay remains in full force and effect. Accordingly, defendant’s new application for a stay of entry of the judgment is denied as unnecessary (see e.g., Med. Soc’y v. Serio, 99 NY2d 608 [2003]; Matter of Peter B., 2010 NY Slip Op 3920 [2d Dep’t 2010]).

Defendant’s motion to vacate or to modify the judgment is also denied. As defendant has not identified anything wrong with the judgment aside from the improper calculation of interest (which was already addressed in the prior motion), there is no reason to either vacate or modify it. However, Defendant’s motion for an order staying enforcement is granted. Until the judgment has properly been entered, there is nothing to enforce.

As for the calculation of interest itself, Plaintiff offers authority to suggest that he is entitled to compound interest, while Defendant argues that the interest should not be compounded. The “old” regulations found at 11 NYCRR § 65.15(h)(1) provided for interest at the rate of “two percent per month, compounded.” That regulation was superseded on April 5, 2002 by Insurance Department Regulations found at 11 NYCRR § 65-3.9(a) , which provides for “interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month.”

Citing Belt Parkway Imaging, P.C. v State Wide Ins. Co., 2010 NY Slip Op 52229U [2010]). Plaintiff contends that it is up to Defendant to show that the new regulations apply, a determination made with reference to the contents of the policy in effect at the time of the accident. As Defendant has not met that alleged burden, plaintiff argues that it is entitled to interest calculated under the old regulations. In opposition, Defendant contends that the contents of the policy in effect at the time are irrelevant to this inquiry. Citing to Circular Letter No. 9, dated April 9, 2002,^[FN3] Defendant asserts that only the notice of claim and proof of claim provisions are governed by the policy endorsement in effect at the time of the submission of the claim. Everything else is dictated by whether the claim was submitted before or after April 5, 2002.

Defendant’s interpretation finds support in the Court of Appeals determination in Medical [*4]Society v. Serio, 100 NY2d 854 [2003]). Describing the various aspects of the new regulations, the Court states as follows:

“Under the revised regulations, this interest is no longer to be compounded, as before, but is instead to be calculated as simple interest (11 NYCRR 65-3.9 [a])” (emphasis added)

See also Gokey v. Blue Ridge Ins. Co., 2009 NY Slip Op 50361U [Sup. Ct. Ulster Co. 2009]). This conclusion is further reinforced by the fact that the change in the interest calculation was reflective of the change in market conditions at the time. not on anything having to do with the insurance policy per se or its endorsement (see 2001-19 NY St. Reg. 17][noting, “The Department, by regulation, required compounding at a time of double-digit interest rates. In the current interest rate environment, compounding is not reflective of the financial market]; 2000-31 NY St. Reg. 19; 1999-16 NY St. Reg. 7). Plaintiff’s reliance on the determination by the Second Department in Belt Parkway Imaging, P.C. v State Wide Ins. Co., supra, is misplaced. There is no indication in the decision that the accident in question post-dated the inception of the new regulations. Accordingly, the interest in this case shall be calculated as simple not compound interest.

As for the proper term of the interest, Plaintiff contends that the term of the interest runs from the date of the commencement of this proceeding to the present, as interest was not tolled in the order staying execution of the judgment, while defendant argues that such an interpretation provides an inappropriate windfall to plaintiff. Defendant also argues that, in any event, plaintiff should not be entitled to accrual of interest past the date of the original judgment, as defendant paid the principal amount at that time.

On the subject of interest, the insurance regulations provide as follows:

(a) All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro rata basis using a 30-day month. 11 NYCRR § 65-3.9

The interest which accrues on overdue no-fault benefits at a rate of two percent per month is a statutory penalty designed to encourage prompt adjustments of claims and inflict a punitive economic sanction on those insurers who do not comply (East Acupuncture, P.C. v. Allstate Ins. Co., 61 AD3d 202 [2d Dep’t 2009]). Claimants are also required to act promptly. Failure to act promptly after a denial of claim results in a toll of the statutory interest provisions, for to do otherwise would reward a recalcitrant plaintiff with a windfall of punitive interest payments, and would contravene the legislative goal of promptly resolving no-fault claims ( see East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202, 210 [2d Dep’t 2009]; see also LMK Psychological Services, supra, 12 NY3d at 223-224).

Ordinarily prejudgment interest runs from the accrual of the claim or the occurrence of the damages until the date that a decision or verdict is made (see e.g., CPLR § 5001). However, in a no-fault context, regulations provide that where litigation is not commenced within 30 days of denial of the claim, interest is tolled until the date of commencement of the action (see 11 NYCRR 65-3-9[c]; see also LMK Psychological, supra, 12 NY3d at 223-224; Smith v. Nationwide Mut. Ins. Co., 211 AD2d 177 [4th Dep’t 1995][Insurance Law § 5106(a) supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004]).The “closing” date for prejudgment interest ordinarily is the date of the decision rendering judgment (see CPLR § 5001[c] ). The actual entry of judgment occurs sometime later, and prejudgment interest also [*5]accrues between the rendering of judgment and the entry of judgment, and post-judgment thereafter (See CPLR §§ 5002 – 5004). In the case of Civil Court matters, CCA § 1401 requires the prevailing party to “prepare” the judgment within 30 days after the rendering of judgment by the Court, or the losing party may do so. This limitation is both short and precisely bounded so that the entry of judgment does not rely on the caprice or diligence of the prevailing party (see Henry Modell & Co. v. Minister, Elders & Deacons of the Reformed Protestant Dutch Church, 68 NY2d 456 [1986]).

Notwithstanding the requirement that judgment be prepared within 30 days of the rendering of judgment, plaintiff here waited ten months after judgment was rendered by Judge Mendez on February 1, 2008, before filing an application for judgment. Because the calculations of interest were incorrect, on May 18, 2009, the judgment was stayed to permit plaintiff the opportunity to correct the interest calculations. Two years have passed since the judgment was stayed and it has been three years since judgment was rendered. Yet, plaintiff contends that it is entitled to collect compounded interest at the rate of 2% per month throughout the entire period of its inaction, a contention with which this Court disagrees.

In February of 2010, the Second Department declined to pass on the issue of whether the accrual of interest may be tolled where it is found that there has been an unreasonable delay in the entry of judgment (SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 [App. Term Second Dep’t 2010]). While the majority noted that it shared the dissent’s concerns with regard to this issue, it declined to consider the matter as it was not raised in the court below.

Justice Golia, in his dissent, argued that permitting interest to accrue between the date of the order and the date of the actual entry of judgment “would be rewarding such delay with what amounts to essentially a windfall of punitive interest payments.” As the purpose of the no-fault regulations was to encourage the prompt resolution of no-fault claims, permitting a recalcitrant plaintiff to accrue interest after the conclusion of litigation “would be at odds with the legislative goal of promptly resolving no-fault claims.” (SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 [App. Term. 2d Dep’t 2010], Golia, J. dissenting).

No fault regulations provide for interest to accumulate throughout the course of the litigation “unless the applicant unreasonably delays the . . . court proceeding.” (11 NYCRR § 65-3.9[d]). A court proceeding ends with the entry of judgment. Judgment is to be prepared by the prevailing party within 30 days of the rendering of judgment (CCA § 1401). It follows that any delay thereafter, absent good cause, is unreasonable. Here, plaintiff waited ten months to enter the original judgment, miscalculated the interest, waited an additional 17 months after judgment was stayed correct the interest calculation, and then miscalculated it a second time. This was unreasonable. Accordingly, interest as provided by 11 NYCRR § 65-3.9 is tolled as of March 2, 2008 — 30 days after the Court initially rendered summary judgment for plaintiffand the date by which plaintiff should have prepared the judgment in the first instance.

Enter order accordingly.

Dated:March 14, 2011______________________________

Ann O’Shea, AJSC

Footnotes

Footnote 1: Plaintiff used the April 5, 2005, date in recognition of 11 NYCRR 65-3.9 and the Court of Appeals decision in LMK Psychological Services, PC v. State Farm Mutual Auto Insurance, 12 NY3d 217 (2009), which provided that the accrual of interest is tolled from 30 days after the claim is denied to the date the civil action is commenced. The regulation was adopted “to encourage claimants to swiftly seek to resolve any dispute concerning their entitlement to no fault benefits” (LMK Psychological, 12 NY3d at 223-224).

Footnote 2: Plaintiff also unilaterally increased the amount of attorney’s fees claimed from $850 to $1,700 and the costs of service of the summons and complaint from $25 to $40. In addition, plaintiff failed to credit defendant with the payment of the principal sum two years earlier.

Footnote 3:Circular Letter No. 9, dated April 9, 2002, by the Insurance Department, states that the new regulation “provides for revised endorsements with new notice provisions, [and that] these new provisions will not be applicable to claims until new policies containing the revised endorsements are issued or renewed” (see Brentwood Pain & Rehabilitation Servs., P.C. v Progressive Ins. Co., 2009 NY Slip Op 31881U [Sup. Ct. NY Co. 2009]).