November 12, 2014

New York Law Journal / Written by: Harvey M. Stone, Peter R. Schlam

This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York.

Insurance Law: Timely Notice

In Mount Vernon Fire Insurance Co. v. Harris, 99 CV 7597 (EDNY, March 29, 2002), Judge Raymond J. Dearie, granting an insurance company's motion for summary judgment, found that the company was not required to defend and indemnify the owner of a burned building against claims by the estate of a tenant who died from the fire. The insured owner had failed to give the insurer timely notice of her claim. Rejecting the argument of the tenant's estate, the court found that the insurer's disclaimer of coverage, based on the insured's failure to provide timely notice, was itself timely given the need first to investigate the claim; and that the disclaimer was effective against decedent's estate, which did not directly notify the insurer of its own claim.

On Sept. 27, 1997, a fire occurred at a building in Jamaica, N.Y., leading to the death of a tenant. The tenant's estate sued for negligence and wrongful death in state court. The company that insured the owner of the premises brought this declaratory action to determine whether it had to defend and indemnify her in the state case.

The insurance policy required the insured to notify the insurer "as soon as practicable of an 'occurrence' or an offense which may result in a claim." On Dec. 5, 1997, the law firm representing the tenant's estate sent a letter to the insured notifying her of the estate's claim and requesting that she divulge the name of her insurer "so that [the firm] may deal directly with them." The insured gave the letter to her insurance broker, which forwarded it to the insurer's general agent, which in turn faxed it to the insurer on March 4, 1998. Upon receipt of the letter, the insurer retained an independent investigator. On March 27, the investigator gave the insurer a report, including the insured's statement that she knew about the fire and related injuries from the day it happened. By letter dated April 23, 1998, and addressed to the insured, the insurer disclaimed any obligation to defend or indemnify, citing the insured's failure to give timely notice of the incident pursuant to the policy.

Section 3420(d) of the State Insurance Law, Judge Dearie noted, provides that, to deny coverage, an insurer must "give written notice as soon as is reasonably possible" to the insured. This rule holds true even if the insured, in the first instance, gives no timely notice of the claim. Here, the delay of less than two months between the insurer's receipt of notification (March 4) and its disclaimer (April 23) was reasonable in light of the need to investigate various issues, particularly whether the insured had given timely notice of the accident - a question which turned on when she learned of the accident. Nor was it unreasonable for the insurer to take several weeks (March 27 to April 23) to evaluate the investigator's report and consider options.

As the court also observed, under New York law even if the insured did not give timely notice, a third-party claimant has an independent right to notify and seek recovery from an insurer, a right which is unaffected by the insured's delay. But the Dec. 5 letter to the owner, which eventually found its way to the insurer, does not constitute third-party notification to the insurer. Rather, it was the insured owner who notified the insurer. Thus, the rights of decedent's estate vis--vis the insurer remain derivative "such that disclaimer against the insured for untimely notice is sufficient to disclaim against the third party as well." Slip op. 10.

Eighth Amendment

In Hylton v. Federal Bureau of Prisons, 00 CV 5747 (EDNY, March 7, 2002), Judge Reena Raggi dismissed a Bivens claim by a former inmate at the Metropolitan Detention Center who alleged cruel and unusual punishment in the conditions of his confinement. Giving plaintiff 30 days to amend his claim, the court explained the objective and subjective elements necessary to state an Eighth Amendment violation.

Plaintiff, while a pre-trial detainee at the MDC, used the curtainless shower in his two-man cell. There were no floor mats to prevent inmates from slipping on the floor, which was routinely splashed with shower water. Stepping out of the shower, plaintiff slipped, hit his face against a wall and cracked a back tooth. The MDC medical staff temporarily repaired his tooth the same day. Later, at another facility, it was permanently repaired. Before the accident, plaintiff had allegedly filed an administrative complaint about the lack of shower curtains and floor mats.

Plaintiff filed a pro se Bivens action against the Bureau of Prisons, the MDC and its warden, asserting a violation of his constitutional rights in connection with the accident and his subsequent treatment.

As Judge Raggi noted, a Bivens claim can only be brought against a federal employee in his individual capacity. It cannot be maintained against the United States, its agencies or employees in their official capacities.

In allowing plaintiff time to amend his claim, the court stated that he would have to document the four-step procedure established by the Bureau of Prisons for exhaustion of administrative remedies.

Plaintiff was then cautioned that, to pursue his Bivens action, he would have to plead both the objective and subjective elements of an Eighth Amendment claim. The objective component, the court observed, is contextual. Plaintiff would have to show more than "routine discomfort." Rather, he would have to show "extreme deprivation" denying "the minimal civilized measures of life's necessities." As Judge Raggi explained, to meet this high standard, plaintiff "must plead circumstances - for example, recurring serious injuries to prisoners using MDC showers - sufficient to support an inference that the challenged conditions were so obviously hazardous as to constitute cruel and unusual punishment." Slip op. 10.

As for his complaint about delay in the permanent repair of his tooth, plaintiff must plead facts showing that his dental treatment at the MDC "was so obviously insufficient to protect him from 'death, degeneration or extreme pain' that 'a condition of urgency' existed requiring more expeditious permanent correction" of his injury. Id. (citations omitted).

Finally, to satisfy the subjective component of his claim, plaintiff must show that a named individual defendant acted with "deliberate indifference." This, Judge Raggi stated, "requires, at a minimum, that [plaintiff] plead a defendant's knowledge of the serious condition or medical problem at issue, an awareness of grave harm presented by the situation, an ability to take action to remedy the situation, and a failure to do so." Slip op. 11.

Section 1983

In T.S. Haulers, Inc. v. Town of Riverhead, 01 CV 4219 (EDNY, March 25, 2002), Judge Arthur D. Spatt denied defendants' motion to dismiss plaintiff's § 1983 equal protection and substantive due process claims arising from the Town's denial of a special permit to allow plaintiff to sand mine its property.

Plaintiff alleged that it purchased a 57-acre parcel of unimproved real property in the Town to mine sand and gravel for sale to the public. Plaintiff first applied to the Town for a special permit to operate a non-nuisance industry in 1996. In March 1997, the Town denied the application stating that it was unsure whether sand mining was permitted on property zoned "Industrial A." In August 1997, the Town Zoning Board of Appeals issued a decision finding that sand mining was permitted in an "Industrial A" zoning district.

In April 1997, the Town obtained a temporary restraining order against plaintiff in state court. Then, in November 1997, the Town sought to hold plaintiff in contempt. In February 1998, the State Department of Environmental Conservation (DEC) issued a permit allowing plaintiff to mine sand and gravel, which was followed by another state court contempt proceeding by the Town.

The Town then created a new zoning district in which sand mining was prohibited, effectively prohibiting sand mining on plaintiff's parcel. The zoning amendment was annulled in state court. The Town responded by passing a resolution prohibiting sand mining in Industrial A and B zoning districts and refused to accept plaintiff's special permit application until ordered to do so by the state court. The Town continued to deny plaintiff's permit applications and otherwise procedurally thwarted its efforts to mine sand on its property, repeatedly forcing plaintiff to sue the Town.

Meanwhile, four other entities were able to mine sand in the Town. For example, the Town told the DEC that Island Water Park would be exempt from the ban on sand mining because it was "removing sand for construction instead of the sole purpose of mining," even though it intended to sell the sand and gravel for approximately $2.5 million. Slip op. 7. The DEC issued a mining permit to the Woods at Cherry Creek to dig sand and gravel to build a golf course, and the Town subsequently approved mining on the property, which was in a more restricted zone than plaintiff's property.

The Town also approved an application by PRG for a special permit to sand mine a site located diagonally across the street from plaintiff's parcel, after advising the DEC that sand mining permits were not necessary for that site. PRG now sells the sand and gravel it is mining. Finally, the Town requested bids to mine sand at a Town landfill without seeking a special permit from the Town's Planning Board. The landfill lies in an Industrial A zone where sand mining is now prohibited.

Denying defendants' motion to dismiss plaintiff's substantive due process claim, Judge Spatt concluded that plaintiff had alleged a valid property interest in the special use permit. The complaint alleged that state and local law required sand mining operators to secure a permit from the DEC and a special permit from the Town; and that once a DEC permit has been issued, the Town may consider only traffic and reclamation issues. Based on these allegations, the court noted, the Town had very little discretion as to whether a special permit should issue. In addition, once the DEC issued a permit to sand mine, the Town had to issue its permit. The amended complaint thus described "an absence of discretion sufficient to defeat a motion to dismiss the substantive due process claim." Slip op. 14.

In Judge Spatt's view, plaintiff's allegations that the Town's denial of the special permit was arbitrary and irrational were sufficient based on allegations that the Town (1) denied plaintiff's applications because of political pressure from environmental and conservation groups; (2) amended its zoning regulations twice to make sand mining on plaintiff's parcel unlawful; and (3) permitted other mining operators to sand mine, while denying plaintiff's permit.

Equal Protection Claim

Turning to the equal protection claim, Judge Spatt found that plaintiff had adequately alleged that it was similarly situated to other entities that sought permission to sand mine their land within the Town, but was treated differently. The court pointed to the different treatment given to Island Water Park, the Woods at Cherry Creek, PRG and the Town landfill - all of which were similarly situated as entities trying to mine sand on property within the Town. Moreover, Island Water Park and PRG sold the sand and gravel they mined to the public.

The court dismissed plaintiff's § 1983 procedural due process claim because state court proceedings provided plaintiff an opportunity for a hearing at a meaningful time and in an appropriate manner. The court pointed to the two Article 78 filings plaintiff had made, one of which was still pending.

Pro Se Magistrate

In Hearn v. Zhou Ting Lin, 01 CV 8208 ( EDNY, Feb. 13, 2002), Magistrate Judge Lois Bloom denied plaintiff's request for appointment of counsel and recommended to Judge Reena Raggi that his complaint based on the Americans with Disabilities Act (ADA) and § 1983 be dismissed as frivolous or malicious and for failure to state a claim. On March 14, 2002, Judge Raggi adopted Magistrate Judge Bloom's recommendation in its entirety.

Magistrate Judge Bloom was appointed in May 2001 to oversee pro se cases in the Eastern District. In this case, Magistrate Judge Bloom reviewed plaintiff's allegations and, finding no cause of action, recommended dismissal, sparing the court the need to monitor a case that would ultimately be dismissed.

Plaintiff alleged that, by refusing to honor an option to purchase an apartment, defendants had violated the ADA and § 1983. In support of his application for appointment of counsel, plaintiff detailed a long history of his mental illness. Magistrate Judge Bloom determined that the record contained no evidence of an option to purchase an apartment, and that plaintiff and his co-tenant had a landlord-tenant action pending in state court. Finding no factual or jurisdictional basis for plaintiff's claims, Magistrate Judge Bloom recommended dismissing the complaint pursuant to 28 U.S.C. § 1915.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan.

[This article is reprinted with permission from the April 12, 2002, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]