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More On Lost Wages Under No-Fault

July 18, 2017
By: Frank Scahill

More On Lost Wages Under No-Fault: Consider the July 27, 2017, decision of the Appellate Division, Third Department in Freligh v. Gov't Employees Ins. Co., 152 A.D.3d 1145 (N.Y. App. Div. 2017).

On December 23, 2012, plaintiff allegedly sustained various injuries when the vehicle that he was operating was rear-ended by another vehicle. At the time of the accident, plaintiff, who had worked in the automotive parts and repair industry for a number of years, had been unemployed for approximately seven months. In January 2013, plaintiff submitted an application for no-fault benefits to GEICO. With respect to the lost wages portion of the application, plaintiff indicated that he "was due to start [a] new job" but had been unable to work since December 23, 2012, as a result of the injuries that he had sustained in the accident. Plaintiff further indicated that details regarding his position, including his salary and the employer's name and address, would be provided. Plaintiff thereafter provided the defendant with a copy of his employment application dated December 15, 2012, which reflected that plaintiff had been offered a job at VW Parts, Inc. commencing on January 1, 2013, and at a salary of $2,000 per week, with benefits. The claim for lost earnings was subsequently denied for proof of verification.

The plaintiff submitted the testimony of William Hrazanek, who was the sole shareholder of the parts business and who allegedly offered plaintiff employment. The Appellate Division noted that the testimony must be accepted as true on a summary judgment motion despite the fact that William Hrazanek admitted, among other things, that (1) he had previously pleaded guilty to the crimes of insurance fraud and offering a false instrument, (2) he had made false sworn statements in regard to the bankruptcy proceeding of a corporation, (3) he had initiated that bankruptcy proceeding as a "ruse" to forestall creditors and (4) he had paid his wife a salary from the parts business while she was a student at Columbia University for her "learning purposes."

The uncontested proof, however, was the prospective employer, VW Parts, Inc., was in financial distress and the $2,000 projected salary was incredible as a matter of law. The Court stated, "Considering the foregoing, Hrazanek's and plaintiff's subjective beliefs about the financial health of the parts business and/or their subjective beliefs about plaintiff's skills are immaterial to the resolution of whether it is reasonable to project that the parts business would have employed plaintiff at a salary of $2,000 a week. In contrast, the uncontradicted evidence that the parts business was failing, that it had not made any efforts to acquire or open an automobile repair shop, and that, even if it had, plaintiff had a demonstrated history of being unable to run a profitable automobile repair shop all bear on the reasonableness of such a projection. That material evidence established as a matter of law that the projection that plaintiff would have received $2,000 a week from the parts business is unreasonable (see Sharpe v. Allstate Ins. Co., 14 AD3d at 775; see generally Bailey v. Jamaica Buses Co., 210 A.D.2d 192, 194 [1994] ). Accordingly, defendant's motion for summary judgment dismissing the complaint should have been granted. This determination renders academic defendant's alternative argument for dismissal, that plaintiff failed to provide proper verification of his claim."

In light of the strong dissent by Judge Egan, this case may be considered by the Court of Appeals.

Read the decision here.

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