Motion-Secondary: Rosenbaum, Rosenfeld & Sonnenblick, Llp, R&R Properties Llc, Computerized Diagnostic Scanning Associates, P.C. v. Excalibur Group Na, Llc, A Superior Service And Repair Co. Inc., Home Systems Engineering, Inc., Philips Healthcare, Philips Medical Systems North America Company, Philips Electronics North America Corporation, Philips Medical Systems North America, Inc., Philips Healthcare Informatics, Inc., Estate Of Merle H. Eisenstein

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                                INDEX   NO.    150083/2014
FILED:      NEW         YORK   COUNTY          CLERK          06/03/2014)
NYSCEF   DOC.     NO.   68                                                                               RECEIVED     NYSCEF          06/03/2014



                SUPREME COURT OF THE STATE OF NEW YORK
                COUNTY OF NEW YORK
                nee                                                            -X
                ROSENBAUM, ROSENFELD & SONNENBLICK, LLP                                  Index No.:    150083/2014
                R&R PROPERTIES LLC AND COMPUTERIZED
                DIAGNOSTIC SCANNING ASSOCIATES, P.C.,

                                                          Plaintiffs,                    REPLY AFFIRMATION IN
                                                                                         SUPPORT OF MOTION
                               - against -                                               TO CONSOLIDATE

                EXCALIBUR GROUP NA, LLC, A SUPERIOR
                SERVICE AND REPAIR CO. INC., HOME SYSTEMS
                ENGINEERING, INC., PHILIPS HEALTHCARE,
                PHILIPS MEDICAL SYSTEMS NORTH AMERICA
                COMPANY, PHILIPS ELECTRONICS NORTH
                AMERICA CORPORATION, PHILIPS MEDICAL
                SYSTEMS NORTH AMERICA, INC., PHILIPS
                HEALTHCARE INFORMATICS, INC. and
                ESTATE OF MERLE H. EISENSTEIN,

                                                          Defendants.
                reer eneeeERETe                                                     KX

                        DANIEL P. MEVORACH, an attorney duly licensed to practice law before the Courts

                of the State of New York, hereby affirms the following under the penalties of perjury:

                        1      I am     associated with the law firm of Gallo              Vitucci    Klar LLP,    attorneys    for

                Defendants PHILIPS HEALTHCARE,                  PHILIPS MEDICAL            SYSTEMS NORTH             AMERICA

                COMPANY,       PHILIPS        ELECTRONICS           NORTH     AMERICA           CORPORATION,           PHILIPS

                MEDICAL        SYSTEMS         NORTH           AMERICA       _INC.,       and   PHILIPS        HEALTHCARE

                INFORMATICS,          INC.   (collectively,    “Philips”).   I am        fully familiar with      the facts and

                circumstances surrounding this matter.

                        2.     I respectfully submit this affirmation in reply to the Affirmation of Yale Glazer,

                Esq., counsel for the Travelers Indemnity Company of Connecticut, the Affirmation of David D.

                Hess, Esq., counsel for Greater New            York Mutual Insurance Company,            the Memorandum          of
Law in opposition filed by Plaintiffs’ counsel, the Affirmation of Joseph Goljan, Esq., counsel

for Federal Insurance Company, the Affirmation of Julia D’Agostino, counsel for Hartford

Steam Boiler Inspection and Insurance Company, and in further support of Philips motion for an

Order:

               @       Pursuant to Civil Practice Laws and Rules (“CPLR”) Section
                       602(a), consolidating the instant action with Plaintiffs’ companion
                       action, captioned R&R Third Properties, LLC v. Greater New York
                       Mutual Insurance Company, et. al., Index No.: 651377/13, or in
                       the alternative, issuing an Order for a joint trial of both actions;
                       and

               Gi)     Granting such other and further relief as this Court deems just and
                       proper.

         3     Contrary to the position taken by the insurers, the claims asserted by the Plaintiff

as against Philips do have common factual issues with the issues of insurance coverage for

Plaintiffs at issue in the earlier action seeking damages to property and for business interruption

loss as against four insurance carriers, under the caption R&R Third Properties, LLC v. Greater

New York Mutual Ins Co., et. al., with Index No. 651377/13 (the “first action”).

         4.    Specifically, Plaintiffs allege (see Exhibit “A” to the Moving Papers at ff 76, 77,

84. 86) that as a result of representations by Philips to Plaintiff's insurers (the defendants in the

first action), those insurers have “refused to pay for the replacement of the machine and refused

to pay for business interruption loss beyond the date when Philips claims the Scanner was

operational for use,” and that “based upon the representations by Philips... the insurers have

objected to removal and replacement of the Scanner.” These allegations form the basis for an

inartfully pled (to be kind) negligent misrepresentation cause of action against Philips, alleging

that Philips representations have negatively affected Plaintiff's insurance recovery.
5       Philips will seek discovery and trial testimony from Plaintiff's insurers regarding

the effect (if any) of Philips’ representations on their insurance coverage determinations in order

to defend Plaintiff's claims and the issue of insurance coverage will therefore be squarely before

the jury. Because the negligence alleged against Philips by the Plaintiffs is in connection with

statements made    to Plaintiffs’   insurers, the rationale for dismissal urged by Travelers, that

insurance claims should not be tried alongside general negligence claims to avoid prejudicing the

jury, is inapposite. Here, the allegations of negligence expressly include that statements made by

Philips affected insurance coverage, and there is a key common fact question posed as to whether

the insurers’ “refusal to pay for the replacement of the machine and refusal to pay for business

interruption loss beyond the date when Philips claims the Scanner was operational for use” was,

in fact, justified, and what information their refusal was based on.

       6       Another factual issue common to both cases is the condition of the PET/CAT scan

system after Philips’ post-water damage repair of that machinery. It appears that Philips repaired

the system, and it was functional. After subsequent construction work at the site, Philips returned

to the site and the system was no longer working. The insurer defendants are arguing that the

system was repaired to functional status and subsequently put out of service by events unrelated

to the initial water loss, and therefore, they have no obligation to pay for any damages that

occurred after Philips initially repaired the system. Plaintiffs’ claims against Philips stem from

these very same transactions and occurrences, and involve the same general damages, and

therefore, a joint trial in these cases is necessary to avoid inconsistent verdicts.
7
               CPLR§     602(a)   permits the consolidation of actions which involve common

questions of fact; and generally vests discretion with the trial judge to determine whether to order

consolidation. "Consolidation is appropriate where it will avoid unnecessary duplication of trials,

save unnecessary costs and expense and prevent the injustice which would result from divergent

decisions based on the same facts...." (Chinatown Apts. Inc. v. New York City Tr. Auth., 100

A.D.2d 824 [1st Dept. 1984]). Indeed, joint trials are favored in that they will foster judicial

economy, quicken the disposition of cases (Matter of City of Rochester v. Levin, 57 A.D.2d 700

[4th Dept.   1977]), and potentially encourage      settlements (Jn Re New      York City Asbestos

Litigation, 188 A.D.2d 214 [1st Dept. 1993], lv granted 81 N.Y.2d 707 [1993]).

       8        “[I]t is well settled that there is a preference for consolidation in the interest of

judicial economy where there are common questions of law and fact, unless the party opposing

the motion demonstrates that consolidation will prejudice a substantial right.” Geneva Temps,

Inc. v. New World Communities, Inc., 24 AD 3d 332, 334 [1st Dept. 2005]). Here, there are

common questions of law and fact, specifically, whether the insurers > «, refusal to pay for the

replacement of the machine and refusal to pay for business interruption loss beyond the date

when Philips claims the Scanner was operational for use” was, in fact, justified.

       9.      The insurers’ rights are not prejudiced by the joint trial of the negligence and

insurance issues because they are first-party property and business interruption insurers to the

Plaintiffs. (see Exhibit “C” to the Moving Papers at {{ 10, 38-43). Because a jury will not be

hearing negligence claims against their insureds and also ruling on their coverage obligations to

those insureds, there is no prejudice to the insurers.
10.     The   cases   Travelers   and   Federal   cite all involve   situations   where   alleged

tortfeasor’s liability insurers are joined as third-party defendants. In that situation, there is

potential prejudice to the insurers because the same jurors are asked to determine questions of

liability for negligence and also to determine whether insurance coverage exists to pay for such

liability. For example, in Kelly v. Yannotti, 4 N.Y.2d 603 (1958), the defendant, who allegedly

caused an explosion, impled its insurer, who had disclaimed coverage on the basis that the

explosion was not covered, as a third-party defendant. The Court found prejudice because “the

issues in both the main and third-party actions will be passed upon by the same jury.” Jd. at 607.

Here, there is no risk of prejudice, because Travelers’ involvement in the “earlier action” is as a

first-party property and business interruption insurer the Plaintiffs, and has nothing to do with the

liability insurance coverage for the defendants in this case. The jury in a consolidated trial in this

case would not be determining questions of negligence against a defendant where there are also

questions about liability insurance that would pay for that defendant’s negligence. Travelers’

opposition to Philips’ motion to consolidate is based on a red herring- it is only inherently

prejudicial to try insurance coverage and negligence issues jointly if the defendants and their

liability insurers are parties, which is not the case here.

        ll.     Federal’s opposition to joint trial also cites to Transamerica Ins. Co. v. Tolis Inn,

Inc., 129 A.D.2d 512 (1st Dept. 1987), where the court held that consolidation of a subrogation

action with a first party property action was improper because it would bring before the

subrogation jury the “the specific knowledge of the dispute over insurance coverage [which]

would of necessity temper the thinking of the jury and unduly influence their verdict.” Id. at 513.

This concern is not present here, because the jury in both these actions will necessarily have to

be aware of the knowledge of the dispute over insurance coverage because the allegations against
Philips by Plaintiffs allude to and rest upon the insurance coverage dispute between Plaintiffs

and the insurer defendants. In addition, it is unclear how Federal could possibly be prejudiced by

a jury hearing its insurance coverage dispute also being aware of negligence claims against

Philips, et. al.          The prejudice in the Transamerica matter was obviously to the subrogation

defendants, who were having insurance issues injected into their negligence action, and not to the

first-party property insurers.

            12.         In point of fact, the matter involving Philips, which Philips seeks to join to the

insurance coverage action, is not the “underlying action.” The underlying actions concerning

liability         and   subrogation   are   presently   pending   before   Justice   Coin   under   Index   No.
150153/2011.            That Philips has not been made a party to the underlying liability action by any of

the insurers who are seeking subrogation in that case underscores that the negligence allegations

against Philips by Plaintiffs are not viable and will be subject to dismissal in a subsequent

motion.       Therefore, it is extremely unlikely that a jury in this case will even hear any negligence

claims as against Philips, obviating the objections of the insurers.

            13.         Responding to Plaintiff's Memorandum         of Law, Plaintiffs’ only objection to

joinder is based on the inapposite Kelly rule. But that rule has no application to Plaintiffs

themselves, as they are not insurers, and potential prejudice to other parties is insufficient to

deny a motion to consolidate. (American Home Mtge. Servicing, Inc. v. Sharrocks, 92 A.D.3d

620, 622 [2d Dept. 2012]) (“Where common questions of law or fact exist, consolidation is

warranted unless the opposing party demonstrates prejudice to a substantial right.”).

            14.         Plaintiffs’ real motivation for opposing this motion is to have two bites at the

apple, by having two trials of the same factual issues. One of the key issues in this case is

whether or not Plaintiffs have been made whole by the insurer defendants for damages to the
PECt/CAT scan system as a result of a water leak. If they were, in, fact, paid what they were

owed under the insurance policies, then there are no additional sums of money Plaintiffs can

recover from Philips based on its alleged representations to the insurers. Related to this damages

issue are issues relating to the operability of the PET/CAT scan system that Philips manufacture

and repaired.   These damages issues are common to both cases, and Plaintiffs are transparently

attempting to “double dip” by trying the same issues twice in two separate cases.

          15.    With respect to Greater New York’s opposition to this motion, on the basis that

they have settled out with Plaintiffs, it is not clear what basis that provides to deny this motion in

whole or in part. Furthermore, to be technically correct a stipulation of discontinuance must be

signed by all parties, CPLR 3217(a)(2), and this one appears not to have been signed by any

parties other than Greater New       York and Plaintiffs. Since Plaintiffs’ claims against Philips

include    an allegation   that Philips   was   responsible   for   shortfalls   in insurance   recovery,

presumably including from Greater New York, and it is certainly plausible that Plaintiffs are

asserting a claim that Philips’ negligence caused them a reduced recovery from Greater New

York, Philips may seek to assert claims and/or take discovery from Greater New York and is not

waiving that right, but that is not really an issue germane to this motion to consolidate.

          WHEREFORE, Philips respectfully requests that this Court issue an Order: (i) pursuant

to CPLR §602(a), consolidating the instant action with Plaintiffs’ companion action, captioned

R&R Third Properties, LLC v. Greater New York Mutual Insurance Company, et. al., Index No.:

651377/13, or in the alternative, issuing an Order for a joint trial of both matters; and (ii)

granting such other and further relief as this Court deems just and proper.

Dated: New York, New York
       June 3, 2014

                                                        DAWEL P. MEVORACH
AFFIDAVIT OF SERVICE BY MAIL AND NYSCE

 STATE OF NEW YORK                     )
                                       )    SS.
 COUNTY OF NEW YORK                    )
          Claudette Garraud being duly sworn, deposes and says: I am not a party to the action, am over 18
 years of age and reside in Kings County. That on the 3" day of June, 2014, I served the within REPLY
 AFFIRMATION IN SUPPORT OF MOTION TO CONSOLIDATE upon:

 LIPSIUS-BENHAIM LAW, LLP                            GAMBESKI & FRUM
 Attorneys for Plaintiffs                            Attorneys for Defendant
 80-02 Kew Gardens Road, Suite 1030                  EXCALIBUR GROUP NA LLC
 Kew Gardens, New York 11415                         565 Taxter Road, Suite 220
 (212) 981-8440                                      Elmsford, New York 10523
                                                     (914) 347-5522
 HOME SYSTEMS ENGINEERING, INC.                      A SUPERIOR SERVICE AND REPAIR CO. INC.
 229 Emerson Lane                                    393 Elvin Street
 Berkeley Heights, New Jersey 07922                  Staten Island, New York 10314

 FEDERAL INSURANCE COMPANY                           GREATER NEW YORK MUTUAL INSURANCE
 15 Mountain View Road                               COMPANY
 P.O. Box 1615                                       200 Madison Avenue
 Warren, New Jersey 07061                            New York, New York 10016

 TRAVELERS INSURANCE COMPANY                         FEDERAL INSURANCE COMPANY
 Travelers Indemnity Company of Connecticut          251 North Illinois, Suite 1100
 One Tower Square                                    Indianapolis, Indiana 46204
 Hartford, Connecticut 06183-1051

                                                     THE HARTFORD STEAM BOILER INSPECTION
                                                     AND INSURANCE COMPANY
                                                     One State Street
                                                     P.O. Box 5024
                                                     Hartford, Connecticut 06102-5024

 those being the addresses designated by said attorneys for that purpose, 'y depositing a true copy of same
 enclosed in a post-paid properly addressed wrapper in an official depository under the exclusive care and
 custody of the     ited Stat   Post Office Department and by New               ‘até Courts,  lectronic Filing
 (NYSC.        ste

                                                                                   dette Garraud
 Sworn to         fore me this
 3" day of        ie, 201,



            Not       Public

         SAI        L, ARUT
 Notary Publ       State of New York
         No. 01AR6190681
     Qualified in Kings County
My Commission Expires July 28, 2016
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK                                      INDEX NO.:   150083/2014

ROSENBAUM, ROSENFELD & SONNENBLICK, LLP
R&R PROPERTIES LLC AND COMPUTERIZED
DIAGNOSTIC SCANNING ASSOCIATES, P.C.,

                            Plaintiffs,

          - against -

EXCALIBUR GROUP NA, LLC,
A SUPERIOR SERVICE AND REPAIR CO. INC.,
HOME SYSTEMS ENGINEERING, INC., PHILIPS HEALTHCARE,
PHILIPS MEDICAL SYSTEMS NORTH AMERICA COMPANY,
PHILIPS ELECTRONICS NORTH AMERICA CORPORATION,
PHILIPS MEDICAL SYSTEMS NORTH AMERICA, INC.,
PHILIPS HEALTHCARE INFORMATICS, INC. and
ESTATE OF MERLE H. EISENSTEIN,

                            Defendants.




           REPLY AFFIRMATION IN SUPPORT OF MOTION TO CONSOLIDATE




                         GALLO VITUCCI KLAR LLP
                           Attorneys for Defendants
                            PHILIPS HEALTHCARE,
            PHILIPS MEDICAL SYSTEMS NORTH AMERICA COMPANY,
            PHILIPS ELECTRONICS NORTH AMERICA CORPORATION,
               PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC.
                 and PHILIPS HEALTHCARE INFORMATICS, INC.
                           90 Broad Street, 3"? Floor
                          New York, New York 10004
                            Phone: (212) 683-7100
                              Fax: (212) 683-5555
                            File No.: PHG-2014-1
                                 DPM/TDV/cg