IN RE: EMPIRE INSURANCE COMPANY/ALLCITY INSURANCE COMPANY (2000)

This application to stay arbitration presents an apparent novel question:  Can covered persons recover first-party benefits under no-fault automobile liability insurance when a tree fell on the motor vehicle causing the injuries? ¹

On June 24, 1998, the respondents-occupants of the motor vehicle, husband and wife, were driving on a public road when a tree fell and struck their car.   Ralph Hilliard, the driver, ultimately died from the injuries suffered in the accident.   His spouse, the passenger, was seriously injured.   She had an automobile insurance policy with petitioner.

 The respondents, Hilliard, have sought arbitration of their no-fault claims.   Petitioner has moved to stay arbitration.   While the motion to stay arbitration was made beyond the statutory twenty-day period (CPLR 7503 [c] ), it is not disputed that it is still timely if no agreement to arbitrate a particular claim exists.  Matter of Government Empls. Ins. Co. v. Hehl, 203 A.D.2d 570, 612 N.Y.S.2d 602 (2d Dep't 1994).   In short, if no coverage exists, then no agreement to arbitrate exists.

Pursuant to the Comprehensive Automobile Insurance Reparations Act (L.1973, ch. 13;  now found in Article 51 of the Insurance Law), commonly called the no-fault law, a “covered person” such as the operator and occupant of an insured motor vehicle (Insurance Law § 5102[j] ) can recover as first party benefits “basic economic loss” (i.e., medical expenses and loss of earnings up to certain monetary limits:  Insurance Law § 5102[a] ) for injuries “arising out of the use or operation of a motor vehicle” (Insurance Law § 5102[b];  5103[a] [1] ) from their automobile liability insurer.

 To recover under the standard automobile insurance policy as well as under the no-fault provisions, three rules apply:  “1. The accident must have arisen out of the inherent nature of the automobile, as such;  2. The accident must have arisen within the natural territorial limits of an automobile, and the accidental use, loading, or unloading must not have terminated;  3. The automobile must not merely contribute to cause the condition which produces the injury, but must, itself, produce the injury.”  Matter of Manhattan & Bronx Surface Transit Op. Auth. [Gholson], 71 A.D.2d 1004, 1005, 420 N.Y.S.2d 298 (2d Dep't 1979) (injury caused by knife wielding passenger on bus not subject to no-fault reparation as the motor vehicle was not the “actual instrumentality” which produced the injury);  Goetz v. General Acc. Fire and Life Assur. Corp., 47 Misc.2d 67, 69, 262 N.Y.S.2d 305 (Sup. App. Term 2d Dep't 1965) aff'd, 26 A.D.2d 635, 272 N.Y.S.2d 979 (2d Dep't 1966);  aff'd, 19 N.Y.2d 762, 279 N.Y.S.2d 521, 226 N.E.2d 310 (1967) (assault while in automobile not covered);  6B Appleman, Insurance Law & Practice, §§ 4316, 4317.

 While the “use and operation” language in the no-fault statute (Insurance Law § 5102[b];  5103[a][1] ) is similar to the standard vicarious liability language (Vehicle & Traffic Law § 388[1] ), the two statutes are not necessarily construed the same as they serve different purposes.  Argentina v. Emery World Wide Delivery Corp., 93 N.Y.2d 554, 561-63, 693 N.Y.S.2d 493, 715 N.E.2d 495 (1999);  Walton v. Lumbermens Mut. Cas. Co., 88 N.Y.2d 211, 644 N.Y.S.2d 133, 666 N.E.2d 1046 (1996);  cf.  Horney v. Tisyl Taxi Corp., 93 A.D.2d 291, 461 N.Y.S.2d 799 (1st Dep't 1983).   Generally, the language would be interpreted liberally in favor of coverage, but it appears clear in New York that the motor vehicle use or operation must be a proximate cause of the accident for no-fault purposes.   70A N.Y.Jur.2d, Insurance, §§ 1779, 1780;  8D Appleman, Insurance Law & Practice, § 5171.55;  12 Couch on Insurance 2d, § 45:61;  Weitz, The No-Fault Handbook (1991), pp. 11-16;  7A Am.Jur.2d, Automobile Insurance, § 349;  46A C.J.S., Insurance § 1603;  22 Causes of Action 111 (1990);  Insurance Policy Liability, §§ 8-9 (New York does not have a “but for” rule, p. 150);  see McGowan v. Marcus, N.Y.L.J. 11/8/93, p. 35, col.   1 (Supreme Ct. Rockland);  1A N.Y. PJI 3rd 2:249, pp. 1108-1110.²  “Hence, no-fault benefits have been denied and arbitration stayed where the accident does not arise from the intrinsic nature of the vehicle and where the vehicle is neither the proximate cause of the accident nor the actual instrumentality which produces the injury.”  Lancer Ins. Co. v. Peterson, 175 A.D.2d 239, 240, 572 N.Y.S.2d 704 (2d Dep't 1991).   Thus, no-fault benefits were denied where airborne particles entered an open window of a motor vehicle injuring the plaintiff as the use of the motor vehicle “was not the proximate cause of his eye injury.”  Sochinski v. Bankers & Shippers Ins. Co., 221 A.D.2d 889, 634 N.Y.S.2d 269 (3rd Dep't 1995).

In Walton v. Lumbermens Mut. Cas. Co., supra, 88 N.Y.2d 211, 644 N.Y.S.2d 133, 666 N.E.2d 1046 and Argentina v. Emery World Wide, supra, 93 N.Y.2d 554, 693 N.Y.S.2d 493, 715 N.E.2d 495 the Court of Appeals explained that the different purposes of the no-fault statute and the vicarious liability statute required different results in interpretation.   The no-fault statute was designed to provide an expedient method of recompense provided that the use or operation of the vehicle was a proximate cause of the accident whereas the vicarious liability statute did not provide for expedient redress, was premised on the fault of the operator and was designed to ensure recourse to the financially responsible owner of the vehicle.

 While the use or operation of the motor vehicle must be a proximate cause of the accident, that is what occurred at bar.   The Hilliards were proceeding on a public roadway when a tree struck their vehicle.   The purpose of first-party benefits under no-fault is premised on the happening of the automobile accident regardless of fault.   It is of no consequence whether the vehicle struck the tree or the tree struck the vehicle.   Here, a collision took place between a motor vehicle occupied by the respondents and a tree during the course of the use and operation of the motor vehicle.   In the case at bar, the tree struck the moving vehicle and the respondents were struck by the internal portions of the vehicle which collapsed upon them and caused the injuries.

 The underlying purpose of the no-fault statute ensures that every automobile accident victim will be compensated for substantially all of his economic loss promptly and without regard to fault.  Matter of Granger v. Urda, 44 N.Y.2d 91, 98, 404 N.Y.S.2d 319, 375 N.E.2d 380 (1978);  70A N.Y.Jur.2d, Insurance, § 1774.   The respondents are automobile accident victims and are entitled to no-fault benefits provided by petitioner Empire Mutual Company for it was the use and operation of their motor vehicle on the day of the accident that was a proximate cause of their injuries, necessitating hospital and medical treatment and expenses.

Parenthetically, it may be assumed that the decedent was not negligent or, if negligent, that the standard automobile insurance policy herein prohibits coverage for spousal injuries.   Insurance Law § 3420(g).   Nonetheless, if the accident was not caused by an Act of God, the respondents may yet have a remedy against a third-person tortfeasor if notice of a defective condition of the tree existed.  Ivancic v. Olmstead, 66 N.Y.2d 349, 497 N.Y.S.2d 326, 488 N.E.2d 72 (1985), cert. den.  476 U.S. 1117, 106 S.Ct. 1975, 90 L.Ed.2d 658 (1986);  Harris v. Vil. Of East Hills, 41 N.Y.2d 446, 393 N.Y.S.2d 691, 362 N.E.2d 243 (1977);  Newman v. City of Glens Falls, 256 A.D.2d 1012, 682 N.Y.S.2d 314 (3rd Dep't 1998);  4B Warren, Negligence in the New York Courts, Highways, § 67.09[18];  5C Warren, Negligence in the New York Courts, Trees, ch. 92;  Harper, James & Gray, The Law of Torts (2d ed.), § 27.19;  Prosser & Keeton on Torts (5th ed.), § 57, pp. 390-91;  Restatement, Torts (2d), § 363(2), comment e at p. 259;  27 Personal Injury-Actions-Defenses-Damages, Trees, §§ 1.02, 1.03;  1 N.Y.Jur.2d, Adjoining Landowners, § 54;  62A N.Y.Jur.2d, Government Tort Liability, § 104;  85 N.Y.Jur.2d, Premises Liability, §§ 69, 213;  Ann., Tree or Limb Falls onto Adjoining Private Property:  Personal Injury and Property Damage Liability, 54 A.L.R.4th 530 (1987);  Ann., Liability of Governmental Unit or Private Owner or Occupant of Land Abutting Highway for Injuries or Damage Sustained When Motorist Strikes Tree or Stump on Abutting Land, 100 A.L.R. 3rd 510 (1980);  Ann., Liability of Governmental Unit for Injuries or Damage Resulting from Tree or Limb Falling onto Highway from Abutting Land, 95 A.L.R. 3rd 778 (1979);  IA N.Y. PJI 3rd 2:110 and commentary pp. 512-13;  cf. PJI 3rd 2:85.

 Additionally, the no-fault insurer has a lien on any recovery from a third-person tortfeasor for first-party benefits paid and may even bring its own action to recover on its lien if the covered person does not.   Insurance Law § 5104(b);  70A N.Y.Jur.2d, Insurance, §§ 1813-1816.

Consequently, since the purpose of the no-fault statute will be advanced by directing arbitration as the accident occurred during use and operation of a motor vehicle and the injuries were proximately caused by such use and operation, the motion to stay arbitration is denied.   See, Ann., Automobile Liability Insurance:  What Are Accidents or Injuries “Arising Out of Ownership, Maintenance, or Use” of Insured Vehicle, 15 A.L.R.4th 10 (1982).

FOOTNOTES

1.   Research has failed to elicit a case directly in point.   In 1993, I presided at a medical malpractice action where the operator of a motor vehicle sued for injuries caused by the physicians after a tree fell on his automobile which caused the original injuries.   He was paid basic economic loss by his no-fault carrier which claimed a lien on the potential recovery at the malpractice action.   The validity of the lien was not raised or addressed.   See Fine, No Fault Insurer's Lien Against Medical Malpractice Recovery, 20 West. Bar J. 111 (Spring 1993).

2.   Presumably, coverage existed as to the property damage to respondents' vehicle if the usual comprehensive collision policy was in effect.   Woodruff, Fonseca & Squillante, Automobile Insurance & No-Fault Law, § 6:8.

JOAN B. LEFKOWITZ, J.