February 8, 2017

Island Life Chiropractic, P.C. v Infinity Group (2017 NY Slip Op 27040)

Headnote

The insurer failed to show that policy rescission under Pennsylvania law defeated the assignor's claim as an innocent third party. The provider sought assigned no-fault benefits, and the insurer obtained summary judgment based on rescission of the automobile policy from inception. Under 40 Pa Cons Stat §§ 991.2002, 991.2004 and Erie Ins. Exch. v Lake, Pennsylvania recognizes a common-law right of rescission but protects innocent third parties injured without fault. The insurer submitted no facts tending to show that the assignor was anything other than an innocent third party. The Appellate Term, Second Department, reversed the order and denied the insurer's motion for summary judgment dismissing the complaint.

Reported in New York Official Reports at Island Life Chiropractic, P.C. v Infinity Group (2017 NY Slip Op 27040)

Island Life Chiropractic, P.C. v Infinity Group
2017 NY Slip Op 27040 [55 Misc 3d 42]
Accepted for Miscellaneous Reports Publication
Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, May 17, 2017


[*1]
Island Life Chiropractic, P.C., as Assignee of Jack Nazaire, Appellant,
v
Infinity Group, Respondent.

Supreme Court, Appellate Term, Second Department, 2d, 11th and 13th Judicial Districts, February 8, 2017

APPEARANCES OF COUNSEL

The Rybak Firm, PLLC, Brooklyn (Damin J. Toell of counsel), for appellant.

Freiberg, Peck & Kang, LLP, Armonk (Yilo J. Kang of counsel), for respondent.

{**55 Misc 3d at 43} OPINION OF THE COURT
Memorandum.

Ordered that the order is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint is denied.

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, upon the application of Pennsylvania law, there was a lack of coverage due to the rescission, ab initio, of the automobile insurance policy in question. By order entered June 26, 2014, the Civil Court granted defendant’s motion. We note that no issue is raised on appeal regarding the applicability of Pennsylvania law.

Under Pennsylvania law, an insurer has a common-law right to rescind a policy of automobile insurance (see 40 Pa Cons Stat §§ 991.2002, 991.2004; Erie Ins. Exch. v Lake, 543 Pa 363, 375, 671 A2d 681, 687 [1996]; Klopp v Keystone Ins. Cos., 528 Pa 1, 595 A2d 1 [1991]). The Pennsylvania Supreme Court has held, however, that while an automobile insurance policy may be retroactively rescinded as to an insured who has made a material misrepresentation, the policy may not be retroactively rescinded with respect to third parties “who are innocent of trickery, and injured through no fault of their own” (see Erie Ins. Exch. v Lake, 543 Pa at 375, 671 A2d at 687). In the case at bar, the papers defendant submitted in support of its motion set forth no facts tending to demonstrate that the assignor was anything other than an innocent third party. Consequently, defendant failed to establish its prima facie entitlement to summary judgment dismissing the complaint as a matter of law.

Accordingly, the order is reversed and defendant’s motion for summary judgment dismissing the complaint is denied.

Weston, J.P., Aliotta and Elliot, JJ., concur.

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