Reported in New York Official Reports at Englington Med., P.C. v Motor Veh. Acc. Indem. Corp. (2011 NY Slip Op 00176)
| Englington Med., P.C. v Motor Veh. Acc. Indem. Corp. |
| 2011 NY Slip Op 00176 [81 AD3d 223] |
| January 11, 2011 |
| Leventhal, J. |
| Appellate Division, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, April 13, 2011 |
[*1]
| Englington Medical, P.C., as Assignee of Victoria Cruz, Respondent, v Motor Vehicle Accident Indemnification Corporation, Appellant. |
Second Department, January 11, 2011
Englington Medical, P.C. v MVAIC, 21 Misc 3d 133(A), 2008 NY Slip Op 52179(U), affirmed. RESEARCH REFERENCES
Am Jur 2d, Automobile Insurance §§ 353, 523, 559, Am Jur 2d, Automobiles and Highway Traffic §§ 169, 225; Am Jur 2d, Summary Judgment §§ 17, 33, 37.
Carmody-Wait 2d, Summary Judgment §§ 39:18, 39:19, 39:100, 39:101.
Couch on Insurance (3d ed) §§ 116:18, 125:28, 125:43, 171:57.
McKinney’s, Vehicle and Traffic Law § 121\Nb.
NY Jur 2d, Automobiles and Other Vehicles §§ 19, 408; NY Jur 2d, Insurance §§ 1888, 1889, 1891, 1950; NY Jur 2d, Summary Judgment and Pretrial Motions to Dismiss §§ 12, 16, 35, 46, 60.
Siegel, NY Prac §§ 278, 281. ANNOTATION REFERENCE
See ALR Index under Automobile Insurance; Motorcycles; No\NFault Insurance; Summary Judgment. FIND SIMILAR CASES ON WESTLAW|Pr
Database: NY-ORCS
Query: no-fault /s qualified /2 person /s motorcycle & summary /2 judgment
APPEARANCES OF COUNSEL
Morris, Duffy, Alonso & Faley, New York City (Anna J. Ervolina and Andrea M. Alonso of counsel), for appellant.
Gary Tsirelman, P.C., Brooklyn (Max Valerio and Darya Klein of counsel), for respondent.
Leventhal, J.
In this action to recover no-fault medical payments, we consider the nature of proof that the defendant, Motor Vehicle Accident Indemnification Corporation (hereinafter MVAIC), must tender, on a motion for summary judgment, to support its contention that a person injured in a hit-and-run accident was not a “qualified person” under Insurance Law § 5202 (b) because, at the time of the accident, that person owned, and allegedly was operating, an uninsured motorcycle.
On July 10, 2004, in Brooklyn, then-16-year-old Victoria Cruz was riding her “mini-bike.” At the intersection of Liberty Avenue and Schenck Avenue, Cruz was struck and injured by an unidentified vehicle whose driver disregarded a red light. The unidentified vehicle then fled the scene of the accident. Cruz did not have insurance on her mini-bike to cover her resulting medical care. Following the accident, the plaintiff, Englington Medical, P.C. (hereinafter Englington), provided Cruz with medical services. Cruz, by her guardian, assigned Englington her rights to recover, from any responsible insurer or entity, first-party no-fault benefits reflecting the cost of those medical services.
On August 12, 2004, Cruz, by her guardian, submitted a notice of intention to make a claim against MVAIC. In January 2006, after MVAIC failed to provide requested reimbursements to Englington, as assignee of Cruz’s no-fault benefits, Englington commenced this action against [*2]MVAIC in the Civil Court, Kings County, to recover the cost of the medical services it rendered to Cruz, plus interest and an attorney’s fee.
In its answer, MVAIC asserted various affirmative defenses, including an allegation that Cruz was not a “qualified person” within the meaning of article 52 of the Insurance Law.{**81 AD3d at 226}
In January 2006, MVAIC moved pursuant to CPLR 3211 (a) to dismiss the complaint and, alternatively, pursuant to CPLR 3212 for summary judgment dismissing the complaint. MVAIC argued that (1) the vehicle operated by Cruz was uninsured and owned by her and, thus, she was not a qualified person entitled to recover first-party no-fault benefits or, in the alternative, (2) Cruz was driving a “motorcycle” at the time of the accident, and motorcycle riders are not entitled to recover no-fault benefits. MVAIC further contended that, as such, Englington, as Cruz’s assignee, stood in her shoes and, therefore, was similarly not entitled to recover those benefits. MVAIC also argued that it was not required to issue a timely denial of coverage because no coverage existed.
In support of its motion, MVAIC submitted, inter alia, Cruz’s notarized notice of intention to file a claim, a copy of the police accident report, and an affidavit from a MVAIC qualifications examiner.
In opposition to the motion, Englington contended that MVAIC did not meet its prima facie burden on its motion for summary judgment since it had not offered proof that Cruz was operating a motorcycle at the time of the accident. Englington argued that, even if Cruz’s mini-bike were in fact a motorcycle, it was nonetheless entitled to recover Cruz’s no-fault benefits because a mini-bike is not the type of motorcycle that requires insurance. Englington further argued that MVAIC failed to pay or deny its claim within 30 days of receipt.
In an order entered September 11, 2007, the Civil Court denied MVAIC’s motion on the ground that MVAIC failed to timely disclaim coverage within 30 days of receiving the claim for no-fault benefits. MVAIC appealed that order to the Appellate Term of the Supreme Court for the Second, Eleventh, and Thirteenth Judicial Districts (hereinafter the Appellate Term). In an order dated October 31, 2008, the Appellate Term affirmed the order of the Civil Court, but on different grounds (21 Misc 3d 133[A], 2008 NY Slip Op 52179[U] [2008]). In a separate order in a related action entitled Greater Health Through Chiropractic, P.C. v MVAIC, also dated October 31, 2008, and incorporated in the order appealed from, the Appellate Term stated:
“Although plaintiff’s assignor would be ineligible to receive first-party no-fault benefits if her injuries were sustained as a result of her use or operation of{**81 AD3d at 227} a motorcycle, MVAIC failed to submit sufficient evidence establishing that the vehicle she was using or operating at the time of the accident was a motorcycle. As a result, MVAIC’s motion for summary judgment was properly denied, albeit on other grounds” (Greater Health Through Chiropractic, P.C. v MVAIC, 21 Misc 3d 133[A], 2008 NY Slip Op 52178[U], *1-2 [App Term, 2d, 11th & 13th Jud Dists 2008] [citations omitted]).
In a decision and order on motion dated March 18, 2009, this Court granted MVAIC leave to appeal from the order of the Appellate Term that was entered in the instant action. For the reasons set forth below, we affirm.
On appeal, MVAIC maintains that it was entitled to summary judgment because it established, prima facie, that Cruz was not a “qualified person” entitled to recover no-fault benefits, as the vehicle which she was operating was owned by her and was not insured. Further, MVAIC argues that Englington is not entitled to recover no-fault benefits because Cruz was operating a “motorcycle” at the time of the accident. Finally, MVAIC contends that the ground upon which the Civil Court denied its motion—its alleged failure to timely disclaim—was improper because MVAIC does not have a duty to timely disclaim where there is a lack of coverage in the first instance.
The New York State Legislature created MVAIC to “provide no-fault benefits for qualified persons for basic economic loss arising out of the use and operation in this state of an uninsured motor vehicle” (Insurance Law § 5201). The Legislature’s purpose in establishing MVAIC was to afford injured parties the same protection that they would have had the tortfeasor involved in a motor vehicle accident been covered by insurance (see Morisi v Motor Veh. Acc. [*3]Indem. Corp., 19 AD2d 727 [1963]). This Court has held that the statutory provisions creating and regulating MVAIC should be liberally construed to serve those ends (see Matter of Dixon v Motor Veh. Acc. Indem. Corp., 56 AD2d 650, 651 [1977] [referring to Insurance Law former § 608]).
The statute requiring MVAIC to pay first-party no-fault benefits reads, in pertinent part, that MVAIC “shall . . . provide for the payment of first party benefits to a qualified person for basic economic loss arising out of the use or operation in this{**81 AD3d at 228} state of an uninsured motor vehicle” (Insurance Law § 5221 [b] [1]). In this regard, MVAIC provides insurance coverage to in-state victims of hit-and-run accidents where the culpable driver is never identified (see Insurance Law § 5201 [b] [2]). However, Insurance Law § 5221 (b) (2) stipulates that only “qualified person[s]” are entitled to MVAIC no-fault coverage (see Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 221 [1996]).
As relevant to the instant case, the term ” ‘qualified person’ ” means “a resident of this state, other than an insured or the owner of an uninsured motor vehicle and his [or her] spouse when a passenger in such vehicle, or his [or her] legal representative” (Insurance Law § 5202 [b] [i]). Thus, a person is not a qualified person if he or she is (1) an insured person, since that person would have an insurer upon which he or she could make a claim for first-party no-fault benefits, or (2) an owner of an uninsured motor vehicle, since Insurance Law article 52 is not intended to provide relief to those who fail to obtain insurance. The term “uninsured motor vehicle” is defined by reference to the term ” ‘insured motor vehicle,’ ” which means “a motor vehicle as to which there is maintained proof of financial security as defined in [Vehicle and Traffic Law § 311]” (Insurance Law § 5202 [c]). An ” ‘uninsured motor vehicle’ ” (Insurance Law § 5202 [d]) is a motor vehicle which is not an “insured motor vehicle” (id.).
Generally, motorcycle riders, whether operators or passengers, are not entitled to first-party no-fault insurance benefits from MVAIC (see Insurance Law § 5103 [a] [1], [2]; see also Quinones v Motor Veh. Acc. Indem. Corp., 6 Misc 3d 1007[A], 2004 NY Slip Op 51729[U] [2004]; 2-27 New Appleman New York Insurance Law § 27.04 [3] [2d ed] [“Occupants of a motorcycle are excluded from coverage and are never entitled to no-fault benefits”]). A motorcycle is defined in the Insurance Law as “any motorcycle, as defined in [Vehicle and Traffic Law § 123], and which is required to carry financial security pursuant to article six, eight or forty-eight-A of the vehicle and traffic law” (Insurance Law § 5102 [m] [emphasis added]). The Vehicle and Traffic Law defines a motorcycle as a “motor vehicle having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground, but excluding a tractor” (Vehicle and Traffic Law § 123). Pursuant to the Vehicle and Traffic Law, class C motorcycles, which have a maximum speed of 20 miles per hour, are not required to carry{**81 AD3d at 229} insurance (see Vehicle and Traffic Law §§ 121-b, 2265 [3]). Construing these provisions together, the operator of, or passenger on a class C motorcycle is entitled to no-fault benefits in the absence of any other statutory preclusion of benefits (see Tyler v Traveler’s Ins. Co., 110 Misc 2d 471, 473 [1981] [operators of and passengers on “class C mopeds, minibikes and go-carts are entitled to first-party benefits under no-fault”]; 2-27 New Appleman New York Insurance Law § 27.04 [3] [“Occupants of . . . limited-use class C motorcycles will not be excluded from coverage”]). Thus, not all motorcycles are required to carry insurance.
On its motion for summary judgment, MVAIC had the burden of establishing, by proof in admissible form, its prima facie entitlement to judgment as a matter of law (see CPLR 3212 [b]; Zuckerman v City of New York, 49 NY2d 557, 561 [1980]). To meet its burden, MVAIC was required to establish, prima facie, that Cruz was not a “qualified person” entitled to no-fault benefits either because she owned an uninsured vehicle despite being statutorily required to carry insurance, or because, at the time of the accident, she was operating a “motorcycle” within the meaning of Insurance Law § 5102 (m). Here, MVAIC failed to meet its burden.
The only admissible evidence proffered by MVAIC as to the type of vehicle that Cruz was operating when the accident occurred was a form completed on her behalf, setting forth her notice of an intention to make a claim for no-fault benefits (hereinafter the claim form). The claim form was signed by Priscilla Garcia—Cruz’s mother and guardian—and indicated that Cruz was the owner and operator of a vehicle designated as vehicle#1, which was described as a “2004 Mini-Bike” for which no insurance existed. Critically, the make and model of the vehicle designated as vehicle #2 is listed as “unknown.” Clearly, the term “Mini-Bike” refers to some type of [*4]motorized, two or three-wheeled vehicle (see Oxford English Dictionary Online, http://www.oed.com, mini-bike [accessed July 27, 2010] [defining “minibike” as “(a) small motorcycle with a low-power engine, designed for off-road use and sometimes having three wheels”]; Merriam-Webster Online Dictionary, http://www.Merriam-Webster.com, minibike [accessed July 27, 2010] [defining “minibike” as “a small one-passenger motorcycle with a low frame and raised handlebars”]). Nevertheless, the use of{**81 AD3d at 230} the word “Mini-Bike” in the claim form, standing alone, is insufficient to establish whether Cruz’s vehicle was or was not a class C motorcycle with a maximum speed of 20 miles per hour, because the critical factor in determining a motorcycle’s class is its maximum speed (see Vehicle and Traffic Law § 121-b). Thus, MVAIC failed to establish that the vehicle that Cruz was operating was either an uninsured motor vehicle for which she was required to carry insurance, or a motorcycle of a class which required her to carry insurance.
Since MVAIC failed to meet its prima facie burden on its motion for summary judgment, the burden never shifted to Englington to submit, in proper admissible form, evidence sufficient to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]), despite MVAIC’s contention that Englington had the burden of proving that Cruz’s vehicle was not required to carry insurance, and failed to meet that alleged burden. In its brief, MVAIC asserts that “[i]t is well settled in this Department that the party seeking benefits from MVAIC bears the burden of establishing that the injured party is a ‘qualified person’ who complied with all applicable requirements of Article 52.” However, in light of the procedural posture of this case, MVAIC misconstrues the burden applicable to the parties, which is a fundamental aspect of a motion for summary judgment. As the movant, MVAIC must first come forward with admissible evidence demonstrating, prima facie, the absence of material issues of fact and that, on those facts, it is or would be entitled to judgment as a matter of law. MVAIC’s burden on a motion for summary judgment cannot be satisfied merely by pointing out gaps in the plaintiff’s case (see e.g. Shafi v Motta, 73 AD3d 729, 730 [2010]; Gamer v Ross, 49 AD3d 598, 600 [2008]; Totten v Cumberland Farms, Inc., 57 AD3d 653, 654 [2008]; DeFalco v BJ’s Wholesale Club, Inc., 38 AD3d 824, 825 [2007]).
MVAIC further contends that the police report submitted in support of its motion established that Cruz was driving a vehicle which required insurance because the report indicated that three summonses were issued to Cruz, inter alia, for driving without insurance. We reject this contention. The mere issuance of a Vehicle and Traffic Law summons proves only that the recipient of the summons has been accused of the violations alleged therein, not that he or she has committed the alleged violations. In Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co. (44 AD3d 750 [2007]), a claimant for no-fault benefits who{**81 AD3d at 231} was the driver in a one-car accident commenced an action to recover those benefits against his no-fault insurer after it disclaimed coverage. The claimant moved for summary judgment on the complaint, and the insurer cross-moved for summary judgment dismissing the complaint. We held that the insurer’s submission of a police accident report stating that the claimant was intoxicated while operating the insured vehicle, and indicating that the claimant was issued a summons for driving while intoxicated, was admissible under the business records exception to the hearsay rule, since the report was based on the reporting officer’s personal observations and he was required by law to generate the report. We further concluded that the Supreme Court properly denied the claimant’s motion for summary judgment on the complaint, since the insurer’s submission of the report was sufficient to raise a triable issue of fact as to whether the claimant forfeited his no-fault benefits by virtue of his driving while allegedly intoxicated. We nonetheless held that the insurer was improperly awarded summary judgment dismissing the complaint, and concluded that the report was insufficient to establish the insurer’s entitlement to judgment as a matter of law with respect to the issue of the claimant’s intoxication, since the issuance of a summons for driving while intoxicated is merely an accusation. Further proof of intoxication was required, and the insurer failed to lay a foundation for the admissibility of the additional proof it sought to adduce.
The police accident report submitted by MVAIC in the case at bar described the subject accident as a hit-and-run, and indicated that the police officer at the scene issued three traffic summonses to Cruz for violations of Vehicle and Traffic Law § 509 (1) (driving a motor vehicle without a license); § 401 (1) (a) (driving an unregistered vehicle); and § 319 (1) (driving without insurance). These are simply allegations, not proof that Cruz actually violated those provisions of the Vehicle and Traffic Law, or that her vehicle was required to be registered or insured. Accordingly, the evidence that these summonses were issued was insufficient to establish, as a matter of law, that the vehicle operated by Cruz was required to be insured pursuant to the Insurance [*5]Law. Rather, we are left to speculate as to the outcome of the traffic proceedings arising from the issuance of the summonses, and whether Cruz validly defended the accusation of driving without insurance on the ground that the vehicle was a class C motorcycle which did not require insurance.{**81 AD3d at 232}
Furthermore, the cases cited by MVAIC on appeal are distinguishable from the facts of this case. For example, Matter of Sweet v Motor Veh. Acc. Indem. Corp. (287 AD2d 510 [2001]) and Matter of Troches v Motor Veh. Acc. Indem. Corp. (171 AD2d 873 [1991]) both involved proceedings where injured persons sought leave, pursuant to Insurance Law § 5218, to commence actions against MVAIC to recover for noneconomic loss arising from personal injuries they sustained in hit-and-run accidents. A party seeking to commence an action against MVAIC for noneconomic loss arising from a hit-and-run accident must first seek leave of court, by coming forward with evidence establishing, inter alia, that he or she undertook “all reasonable efforts” to identify the offending vehicle (Insurance Law § 5218 [b] [5]). Thus, in those cases, the plaintiffs had the initial burden of establishing that they should be permitted to commence actions against MVAIC. Here, in contrast, neither Cruz nor Englington, as her assignee, were required to obtain leave of court to commence this action to recover first-party no-fault benefits (compare Insurance Law § 5218 [requiring leave of court to assert a “cause of action” to recover damages “for death or personal injury”], with Insurance Law § 5221 [imposing an obligation upon MVAIC to provide first-party benefits to a “qualified person,” who is limited to the same rights possessed by a “covered person” under Insurance Law article 51, which precludes the assertion of a cause of action to recover first-party benefits from a tortfeasor in an action to recover damages for death or personal injury]). Moreover, Englington, as the opponent of MVAIC’s motion for summary judgment, did not have a burden, in the first instance, of establishing that Cruz was a “qualified person” or that it was entitled to no-fault benefits as Cruz’s assignee.
MVAIC’s reliance upon Knight v Motor Veh. Acc. Indem. Corp. (62 AD3d 665 [2009]) is also misplaced. In Knight, the plaintiff commenced an action against MVAIC to recover damages for personal injuries following a motor vehicle accident with a vehicle of a nonparty. At the time of the accident, the plaintiff was operating a motorcycle, which MVAIC contended was insured. The Supreme Court denied MVAIC’s motion to dismiss the complaint, in effect, for the plaintiff’s failure to comply with Insurance Law article 52, and granted the plaintiff’s cross motion for leave to commence the action nunc pro tunc. This Court reversed, holding, inter alia, that the plaintiff did not establish that he was a qualified person pursuant to Insurance Law article{**81 AD3d at 233} 52 because, contrary to his contention, motorcycles were not exempt from the requirement that an owner obtain an endorsement for uninsured motorist’s coverage (id. at 666). Whereas in Knight the plaintiff operated a motorcycle at the time of accident and failed to demonstrate that he was both uninsured and required to secure insurance, the evidence here demonstrated that Cruz was uninsured at the time of the accident, while MVAIC did not demonstrate that her vehicle required insurance, and the type of vehicle that Cruz was operating has not been established by any party.
In addition, MVAIC argues that the Civil Court’s order deprived it of the defense of lack of coverage, and impermissibly created coverage where coverage did not exist. However, the order of the Appellate Term, which is the order under review here, merely denied MVAIC’s motion for summary judgment and did not “create” coverage. Moreover, in light of our determination, this Court need not address this contention because there can be no coverage unless and until it is determined at trial that Cruz is a qualified person. Accordingly, the order dated October 31, 2008, is affirmed.
Covello, J.P., Angiolillo and Sgroi, JJ., concur.
Ordered that the order dated October 31, 2008, is affirmed, with costs.Greater Health Through Chiropractic, P.C. v Motor Veh. Acc. Indem. Corp. (2011 NY Slip Op 00183)
Reported in New York Official Reports at Greater Health Through Chiropractic, P.C. v Motor Veh. Acc. Indem. Corp. (2011 NY Slip Op 00183)
| Greater Health Through Chiropractic, P.C. v Motor Veh. Acc. Indem. Corp. |
| 2011 NY Slip Op 00183 [80 AD3d 561] |
| January 11, 2011 |
| Appellate Division, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| Greater Health Through Chiropractic, P.C., as Assignee of Victoria Cruz,
Respondent, v Motor Vehicle Accident Indemnification Corporation, Appellant. |
—[*1] Morris, Duffy, Alonso & Faley, New York, N.Y. (Anna J. Ervolina and Andrea M. Alonso of counsel), for appellant.
Gary Tsirelman, P.C., Brooklyn, N.Y. (Max Valerio and Darya Klein of counsel), for respondent.
In an action to recover no-fault medical payments pursuant to Insurance Law article 52, the defendant appeals, by permission, from an order of the Appellate Term of the Supreme Court for the Second, Eleventh, and Thirteen Judicial Districts, dated October 31, 2008, which affirmed an order of the Civil Court, Kings County (King, J.), entered September 11, 2007, denying that branch of its motion which was for summary judgment dismissing the complaint.
Ordered that the order dated October 31, 2008, is affirmed, with costs.
For the reasons set forth in the opinion and order in a companion appeal (see Englington Med., P.C. v Motor Veh. Acc. Indem. Corp., 81 AD3d 223 [2011] [decided herewith]), the Appellate Term of the Supreme Court for the Second, Eleventh, and Thirteenth Judicial Districts properly affirmed the order of the Civil Court, Kings County, denying that branch of the defendant’s motion which was for summary judgment dismissing the complaint. Covello, J.P., Angiolillo, Leventhal and Sgroi, JJ., concur.Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co. (2011 NY Slip Op 50033(U))
Reported in New York Official Reports at Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co. (2011 NY Slip Op 50033(U))
| Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co. |
| 2011 NY Slip Op 50033(U) [30 Misc 3d 131(A)] |
| Decided on January 10, 2011 |
| Appellate Term, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS
PRESENT: : NICOLAI, P.J., MOLIA and LaCAVA, JJ
2009-2227 N C.
against
New York Central Mutual Fire Insurance Company, Appellant.
Appeal from an order of the District Court of Nassau County, First District (Fred J. Hirsh, J.), dated August 31, 2009. The order denied defendant’s motion for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center and granted plaintiff Sound Shore Medical Center’s cross motion for summary judgment.
ORDERED that the order is reversed, without costs, defendant’s motion for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center is granted and plaintiff Sound Shore Medical Center’s cross motion for summary judgment is denied.
In this action by providers to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint insofar as asserted by plaintiff Sound Shore Medical Center (plaintiff) on the ground that the action was premature because plaintiff had failed to provide requested verification documents. Plaintiff cross-moved for summary judgment. The District Court denied defendant’s motion for summary judgment and granted plaintiff’s cross motion for summary judgment. The instant appeal by defendant ensued.
Contrary to the determination of the District Court, the affidavit of defendant’s claims [*2]examiner was sufficient to establish that defendant had timely mailed the verification request and follow-up verification request in accordance with defendant’s standard office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]). In addition, defendant’s moving papers established that plaintiff had failed to provide the requested verification.
In support of its cross motion and in opposition to defendant’s motion for summary judgment, plaintiff did not assert that it had never received the initial and follow-up verification requests nor did it assert that it had fully complied with these requests. Plaintiff’s attorney merely argued that since the affidavit of the hospital biller, taken together with the copy of the certified return receipt card, established that defendant had received the bill on December 22, 2008, defendant’s initial verification request, sent on November 26, 2008, pre-dated defendant’s receipt of the bill and was therefore a nullity. However, the record establishes that defendant’s initial verification request was sent to plaintiff after plaintiff had sent, and defendant had received, a UB-04 form, which specified the treatment rendered. The UB-04 form is the successor to the UB-92 form and the functional equivalent of the NF-5 form (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [a], [f]). Accordingly, defendant’s initial verification request was not untimely (cf. Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11 [1999]).
Since plaintiff has not rebutted defendant’s prima facie showing that defendant’s initial request and follow-up request for verification were timely and that plaintiff failed to respond to same, defendant established that its time to pay or deny the claim was tolled. Consequently, defendant’s motion for summary judgment dismissing the complaint, on the ground that the action was premature, should have been granted (see Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 130[A], 2008 NY Slip Op 52046[U] [App Term, 9th & 10th Jud Dists 2008]). Accordingly, the order is reversed, defendant’s motion is granted and plaintiff’s cross motion for summary judgment is denied.
Nicolai, P.J., Molia and LaCava, JJ., concur.
Decision Date: January 10, 2011
Reported in New York Official Reports at 62-41 Woodhaven Med., P.C. v Adirondack Ins. Exch. (2011 NY Slip Op 50026(U))
| 62-41 Woodhaven Med., P.C. v Adirondack Ins. Exch. |
| 2011 NY Slip Op 50026(U) [30 Misc 3d 131(A)] |
| Decided on January 10, 2011 |
| Appellate Term, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM: 2nd, 11th and 13th JUDICIAL DISTRICTS
PRESENT: : GOLIA, J.P., PESCE and STEINHARDT, JJ
2009-1635 Q C.
against
Adirondack Ins. Exchange c/o ONE BEACON INS. CO., Respondent.
Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A. Lebedeff, J.), entered June 11, 2009. The order, insofar as appealed from as limited by the brief, granted the branch of defendant’s cross motion seeking to compel plaintiff to produce copies of its corporate tax returns and its tax records regarding its professional employees, and provided that the complaint would be dismissed in the event plaintiff failed to produce these documents.
ORDERED that the order, insofar as appealed from, is affirmed, without costs.
In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved
for summary judgment. Defendant cross-moved, pursuant to CPLR
3126, to dismiss the complaint due to plaintiff’s failure to provide the information
requested in defendant’s interrogatories and defendant’s notice for discovery and inspection or, in
the alternative, to compel plaintiff to provide such information. Plaintiff appeals, as limited by
the brief, from so much of the Civil Court’s order as granted the branch of defendant’s cross
motion seeking to compel plaintiff to produce copies of its corporate tax returns and its tax
records regarding its professional employees, and provided that the complaint would be
dismissed in the event plaintiff failed to produce these documents.
Defendant’s cross motion papers set forth detailed and specific reasons for believing that plaintiff is ineligible to recover no-fault benefits because plaintiff fails to meet applicable state and local licensing requirements (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). As defendant’s cross motion papers were sufficient to establish that special circumstances exist which warrant [*2]disclosure of plaintiff’s corporate tax returns and its professional employees’ tax records (see CPLR 3101; One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738 [2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]; Statewide Med. Servs., P.C. v Travelers Ins. Co., 13 Misc 3d 134[A], 2006 NY Slip Op 52014[U] [App Term, 1st Dept 2006], revg 9 Misc 3d 1124[A], 2005 NY Slip Op 51773[U] [Civ Ct, Bronx County 2005]; see also Dore v Allstate Indem. Co., 264 AD2d 804 [1999]; cf. Benfeld v Fleming Props., LLC, 44 AD3d 599, 600 [2007]; Altidor v State-Wide Ins. Co., 22 AD3d 435 [2005]), the order, insofar as appealed from, is affirmed.
Golia, J.P., Pesce and Steinhardt, JJ., concur.
Reported in New York Official Reports at Lincoln Gen. Ins. Co. v Alev Med. Supply, Inc. (2011 NY Slip Op 21012)
| Lincoln Gen. Ins. Co. v Alev Med. Supply, Inc. |
| 2011 NY Slip Op 21012 [30 Misc 3d 60] |
| Accepted for Miscellaneous Reports Publication |
| AT2 |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, March 23, 2011 |
[*1]
| Lincoln General Insurance Company, Appellant, v Alev Medical Supply, Inc., Respondent. |
Supreme Court, Appellate Term, Second Department, January 10, 2011
Lincoln Gen. Ins. Co. v Alev Med. Supply Inc., 25 Misc 3d 1019, reversed.
APPEARANCES OF COUNSEL
Rivkin Radler LLP, Uniondale (Stuart M. Bodoff of counsel), for appellant.
{**30 Misc 3d at 61} OPINION OF THE COURT
Memorandum.
Ordered that the order is reversed, without costs, the complaint is reinstated, and plaintiff’s motion for leave to enter a default judgment is granted.
Plaintiff insurer commenced this action against defendant, a provider of durable medical equipment, seeking to recover, based on a theory of unjust enrichment, $2,846.18 in assigned first-party no-fault benefits which had been paid to defendant as assignee of Andrey Armstrong on December 4, 2008. Before commencing this action, plaintiff conducted an examination under oath of defendant’s assignor on December 18, 2008, in connection with the treatment rendered to him by various health care providers, and concluded that defendant’s assignor had never been supplied with the equipment for which defendant had billed and been reimbursed. After defendant failed to appear or answer the complaint, plaintiff moved, pursuant to CPLR 3215, for leave to enter a default judgment. In support of its motion, plaintiff submitted a copy of the summons and complaint; proof of service thereof on the Secretary of State, pursuant to Business Corporation Law § 306; additional proof of service in compliance with CPLR 3215 (g) (4) (i); an affirmation of counsel; an affidavit of the no-fault supervisor of plaintiff’s managing general agent, which was responsible for processing and paying no-fault claims; and numerous exhibits. There was no opposition to the motion. The District Court denied the motion based on plaintiff’s failure to have raised the fraudulent billing issue in a timely denial of claim. The instant appeal by plaintiff ensued.
With very limited exceptions, an insurer’s failure to pay or deny a claim within the 30-day claim determination period (see Insurance Law § 5106) precludes the insurer from interposing most defenses to payment of no-fault benefits, including the fact that medical services or medical [*2]equipment billed for were never actually provided (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]). If an insurer is precluded from asserting a defense due to its failure to pay or deny a claim within the 30-day claim determination period, it may not{**30 Misc 3d at 62} later seek to recover amounts it paid on the claim based on a theory of unjust enrichment (see e.g. Cornell Med., P.C. v Mercury Cas. Co., 24 Misc 3d 58 [App Term, 2d, 11th & 13th Jud Dists 2009]). However, where, as here, an insurer timely pays a claim within the 30-day claim determination period, the insurer is not foreclosed from affirmatively commencing an action to recover the amounts paid on the claim when the insurer later discovers that the claim is fraudulent (see State Farm Mut. Auto. Ins. Co. v Grafman, 655 F Supp 2d 212, 223-224 [ED NY 2009]; State Farm Mut. Auto. Ins. Co. v James M. Liguori, M.D., P.C., 589 F Supp 2d 221 [ED NY 2008]; see also Carnegie Hill Orthopedic Servs. P.C. v GEICO Ins. Co., 19 Misc 3d 1111[A], 2008 NY Slip Op 50639[U] [Sup Ct, Nassau County 2008, Austin, J.]; Progressive Northeastern Ins. Co. v Advanced Diagnostic & Treatment Med., NYLJ, Aug. 2, 2001, at 18, col 2 [Sup Ct, NY County, Gammerman, J.]). The fact that the insurer chose to pay first-party no-fault benefits within the 30-day claim determination period, at a point when the insurer had no reason to deny the claim, “cannot in any sense be taken as a concession that the claim is legitimate” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986]). Indeed, an opinion issued by the New York State Department of Insurance specifically states that the No-Fault Law “is in no way intended and should not serve as a bar to subsequent actions by an insurer for the recovery of fraudulently obtained benefits from a claimant, where such action is authorized under the auspices of any statute or under common law” (Ops Gen Counsel NY Ins Dept [Nov. 29, 2000]). The rationale behind this interpretation is that
“payment of fraudulently obtained No-Fault benefits, without available recourse, serves to undermine and damage the integrity of the No-Fault system, which was created as a social reparations system for the benefit of consumers . . . To conclude that the No-Fault statute bars the availability of other legal remedies, where the payment of benefits [was] secured through fraudulent means, renders the public as the ultimate victim of such fraud, in the form of higher premiums based upon the resultant increased costs arising from the fraudulent actions” (id.).
Moreover, “[t]here is nothing in the legislative history or case law interpretations of the statute or in Insurance Department regulations, opinions or interpretations of the statute that supports the argument that the statute bars such actions” (id.).{**30 Misc 3d at 63}
Accordingly, contrary to the conclusion of the District Court, plaintiff is not barred from bringing this action seeking recovery of the amount it paid to defendant. As plaintiff demonstrated its compliance with CPLR 3215 (f) and (g) (4) (i), the District Court should have granted plaintiff’s motion for leave to enter a default judgment.
Tanenbaum, J.P., Molia and Iannacci, JJ., concur.
Reported in New York Official Reports at Allstate Social Work & Psychological Servs., PLLC v Utica Mut. Ins. Co. (2011 NY Slip Op 21010)
| Allstate Social Work & Psychological Servs., PLLC v Utica Mut. Ins. Co. |
| 2011 NY Slip Op 21010 [30 Misc 3d 90] |
| Accepted for Miscellaneous Reports Publication |
| AT2 |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, April 13, 2011 |
[*1]
| Allstate Social Work and Psychological Services, PLLC, as Assignee of Daniel Jocelyn and Another, Appellant, v Utica Mutual Insurance Company, Respondent. |
Supreme Court, Appellate Term, Second Department, January 10, 2011
Allstate Social Work & Psychological Servs., PLLC, 22 Misc 3d 723, affirmed.
APPEARANCES OF COUNSEL
Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for respondent. Gary Tsirelman, P.C., Brooklyn, for appellant.
{**30 Misc 3d at 91} OPINION OF THE COURT
Memorandum.
Ordered that the order is affirmed, without costs.
In this action by a provider to recover assigned first-party no-fault benefits for psychological services rendered to its assignors, defendant moved for summary judgment dismissing the complaint based upon, among other things, the failure of plaintiff’s assignors to attend independent medical examinations (IMEs) by a psychologist, which were scheduled by Hudson Valley Medical Consultants (HVMC). The Civil Court granted defendant’s motion, and this appeal by plaintiff ensued.
It is uncontested that defendant established that the IME requests were timely mailed in accordance with HVMC’s standard office practices and procedures and that the assignors failed to appear for the IMEs (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). However, plaintiff contends that defendant’s insurance policy, which incorporates the language of the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), requires that IMEs of eligible injured persons (EIPs) be conducted only by physicians, to the exclusion of other health care providers, even when the health services for which first-party no-fault benefits are sought were provided by nonphysicians. In rejecting [*2]plaintiff’s contention, the Civil Court relied on an opinion of the State Insurance Department, dated March 12, 2004 (see 2004 Ops Gen Counsel NY Ins Dept No. 04-03-10). We find that the Insurance Department Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act (11 NYCRR part 65), read as a whole, in accordance with the rules of construction, and the State Insurance Department’s opinion, to which we accord great{**30 Misc 3d at 92} deference, lead to the conclusion that the requirement that an EIP submit to medical examinations, as set forth in the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), should not be limited strictly to examinations by physicians. Thus, in the instant matter, we find that the psychologist retained by defendant could properly have conducted the IMEs of plaintiff’s assignors, who had received psychological treatment (see generally Stephen Fogel Psychological, P.C., 35 AD3d at 722; Meridian Acupuncture Care v Geico Ins. Co., 31 AD3d 509 [2006]). A contrary conclusion would frustrate the core objective of the no-fault scheme by limiting the universe of health care providers who can perform IMEs to physicians, thereby delaying the processing of no-fault claims (see also Stephen Fogel Psychological, P.C., 35 AD3d at 722). Therefore, we find that defendant properly denied plaintiff’s claims based on its assignors’ failure to satisfy a condition precedent to coverage.
Accordingly, the Civil Court’s order granting defendant’s motion for summary judgment dismissing the complaint is affirmed.
Golia, J.P., Pesce and Steinhardt, JJ., concur.
Reported in New York Official Reports at South Nassau Orthopedic Surgery & Sports Medicine, P.C. v MVAIC (2011 NY Slip Op 50028(U))
[*1]| South Nassau Orthopedic Surgery & Sports Medicine, P.C. v MVAIC |
| 2011 NY Slip Op 50028(U) [30 Misc 3d 131(A)] |
| Decided on January 10, 2011 |
| Appellate Term, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
PRESENT: : GOLIA, J.P., PESCE and STEINHARDT, JJ
2009-1684 Q C.
against
MVAIC, Appellant.
Appeal from an order of the Civil Court of the City of New York, Queens County (Diane A.
Lebedeff, J.), entered July 15, 2009. The order denied defendant’s motion for summary judgment
dismissing the complaint.
ORDERED that the order is reversed, without costs, and defendant’s motion for summary judgment dismissing the complaint is granted.
In this action by a provider to recover assigned first-party no-fault benefits, defendant Motor Vehicle Accident Indemnification Corporation (sued herein as MVAIC) moved for summary judgment dismissing the complaint on the ground that there was no coverage because plaintiff’s assignor had failed to provide proof that, among other things, the vehicle in which she was a passenger was uninsured. The Civil Court denied MVAIC’s motion, and this appeal by MVAIC ensued.
Plaintiff, as assignee, is required to exhaust its remedies against the owner of the vehicle in which plaintiff’s assignor was riding before seeking relief from MVAIC (Hauswirth v American Home Assur. Co., 244 AD2d 528 [1997]; Modern Art Med., P.C. v MVAIC, 22 Misc 3d 126[A], 2008 NY Slip Op 52586[U] [App Term, 2d & 11th Jud Dists 2008]; Doctor Liliya Med., P.C. v MVAIC, 21 Misc 3d 143[A], 2008 NY Slip Op 52453[U] [App Term, 2d & 11th Jud Dists 2008]; Dr. Abakin, D.C., P.C. v MVAIC, 21 Misc 3d 134[A], 2008 NY Slip Op 52186[U] [App Term, 2d & 11th Jud Dists 2008]; Complete Med. Servs. of NY, P.C. v MVAIC, 20 Misc 3d 137[A], 2008 NY Slip Op 51541[U] [App Term, 2d & 11th Dists 2008]; see also Knight v Motor Veh. Acc. Indem. Corp., 62 AD3d 665, 666 [2009]; cf. Matter of MVAIC v Interboro Med. Care & Diagnostic PC, 73 AD3d 667 [2010]). Until plaintiff [*2]exhausts its remedies, its claim against MVAIC is premature (Complete Med. Servs. of NY, P.C. v MVAIC, 20 Misc 3d 137[A], 2008 NY Slip Op 51541[U]). Accordingly, the order is reversed and MVAIC’s motion for summary judgment dismissing the complaint is granted.
Golia, J.P., Pesce and Steinhardt, JJ., concur.
Decision Date: January 10, 2011B.Y., M.D., P.C. v GEICO Indem. Co. (2011 NY Slip Op 50036(U))
Reported in New York Official Reports at B.Y., M.D., P.C. v GEICO Indem. Co. (2011 NY Slip Op 50036(U))
[*1]| B.Y., M.D., P.C. v GEICO Indem. Co. |
| 2011 NY Slip Op 50036(U) [30 Misc 3d 132(A)] |
| Decided on January 10, 2011 |
| Appellate Term, Second Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
PRESENT: : TANENBAUM, J.P., MOLIA and IANNACCI, JJ
.
against
GEICO Indemnity Company, Respondent.
Appeal from an order of the District Court of Nassau County, Third District (Michael A.
Ciaffa, J.), dated December 21, 2009. The order denied plaintiffs’ motion to strike defendant’s
demand for a trial de novo.
ORDERED that the order is affirmed, without costs.
In this action by a provider to recover assigned first-party no-fault benefits, plaintiffs moved for summary judgment. By order dated April 7, 2009, the District Court granted plaintiffs’ motion to the extent of finding that plaintiffs’ moving papers established a prima facie case for no-fault benefits. Thereafter, the parties participated in mandatory arbitration (see Rules of the Chief Judge [22 NYCRR] part 28) and, after the arbitration hearing, the arbitrator found in favor of plaintiffs. Defendant served and filed a demand for a trial de novo (see Rules of the Chief Judge [22 NYCRR] § 28.12), and plaintiffs moved to strike defendant’s demand. In support of plaintiffs’ motion, plaintiffs’ attorney asserted that, while defendant had appeared at the arbitration by its attorney, defendant’s attorney’s participation had been minimal, and, thus, defendant should have been deemed to be in default. As a result, plaintiffs contended, defendant was not entitled to demand a trial de novo (see Rules of the Chief Judge [22 NYCRR] § 28.12 [a]). Defendant submitted opposition papers, and the District Court denied plaintiffs’ motion. The instant appeal ensued.
The Rules of the Chief Judge (22 NYCRR) § 28.12 (a) provides that a demand for a trial de novo “may be made by any party not in default.” A party’s failure to appear at an arbitration hearing constitutes a default (see Rules of the Chief Judge [22 NYCRR] § 28.7 [a]). Even where a defendant has appeared by counsel at an arbitration hearing, if such appearance is “without his client[]” and the defendant’s counsel “refus[es] to participate in the hearing,” the defendant is [*2]similarly deemed to have defaulted (Bitzko v Gamache, 168 AD2d 888, 888 [1990]; see also Finamore v Huntington Cardiac Rehabilitation Assn., 150 AD2d 426 [1989]). However, where, as here, a defendant’s attorney appears on behalf of his client at the arbitration hearing without any witnesses, but otherwise participates in the hearing by attempting to refute the plaintiff’s case, the defendant has not defaulted (see e.g. Tripp v Reitman Blacktop, 188 Misc 2d 317 [App Term, 9th & 10th Jud Dists 2001]; San-Dar Assoc. v Adams, 167 Misc 2d 727 [App Term, 1st Dept 1996]). Accordingly, the District Court properly denied plaintiffs’ motion to strike defendant’s demand for a trial de novo.
Tanenbaum, J.P., Molia and Iannacci, JJ., concur.
Decision Date: January 10, 2011Bedford Med. Care, P.C. v Encompass Ins. Co. (2011 NY Slip Op 21023)
Reported in New York Official Reports at Bedford Med. Care, P.C. v Encompass Ins. Co. (2011 NY Slip Op 21023)
| Bedford Med. Care, P.C. v Encompass Ins. Co. |
| 2011 NY Slip Op 21023 [2011 N.Y. Slip Op. 21023] |
| January 3, 2011 |
| Cohen, J. |
| Civil Court Of The City Of New York, Kings County |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, April 20, 2011 |
[*1]
| Bedford Medical Care, P.C., as Assignee of Vincent Meyers, Plaintiff, v Encompass Insurance Company, Defendant. |
Civil Court of the City of New York, Kings County, January 3, 2011
APPEARANCES OF COUNSEL
Bruno, Gerbino & Soriano, L.P., Melville, for defendant. Yelena Shlyamkovich, P.C., Brooklyn, for plaintiff.
{**2011 N.Y. Slip Op. at 1} OPINION OF THE COURT
Devin P. Cohen, J.
Defendant’s motion to dismiss pursuant to CPLR 3211 (a) (5) is decided as follows:
Procedural History
This action arises from an August 6, 2008 incident wherein plaintiff’s assignor allegedly sustained personal injuries and subsequently received treatment from plaintiff health services provider. On August 27, 2009, plaintiff commenced this action seeking to recover first-party no-fault benefits for services rendered to its assignor. Issue was joined by service of defendant’s{**2011 N.Y. Slip Op. at 2} [*2]answer on or about October 7, 2009.
Prior to the commencement of this lawsuit, defendant initiated a declaratory judgment action in Kings County Supreme Court, seeking a declaration that the incident of August 6, 2008 was a “staged or intentional incident” and therefore “not a covered event as defined by the applicable policy of insurance issued by Encompass” (plaintiff’s exhibit A). Plaintiff and its assignor, Vincent Meyers, were both named defendants in the declaratory judgment action. Neither plaintiff nor its assignor answered or appeared in the declaratory judgment action, and defendant moved for a default judgment.
On January 10, 2010 Justice Robert J. Miller granted the default judgment against plaintiff and its assignor and issued a declaratory judgment finding that defendant, “by reason of no coverage, is not required to provide a defense and/or indemnification to [plaintiff or its assignor] . . . in any current or future proceedings . . . including lawsuits seeking to recover no-fault benefits . . . arising out of the alleged incident of August 6, 2008” (defendant’s exhibit A at 3). Defendant now moves this court pursuant to CPLR 3211 (a) (5) for an order dismissing the complaint in this action, with prejudice, on the grounds of collateral estoppel based upon the order issued in the declaratory judgment action, and “for such other and further relief this court deems just and proper” (defendant’s motion to dismiss at 1).
This case raises the question of the effect of a declaratory judgment order, issued on default, with respect to collateral actions seeking to litigate the same issue. To address this question requires an analysis of the intersection of the applicable law and policies underlying declaratory judgments, collateral estoppel and default judgments.
Legal Standards
CPLR 3001 provides that “[t]he supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed.” The general purpose of the declaratory judgment is often described as “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation either as to present or prospective obligations” (James v Alderton Dock Yards, 256 NY 298, 305 [1931]). Thus, a primary goal in seeking a declaratory judgment is a decisive determination as to the rights of the parties in ongoing or future collateral actions.
The Court of Appeals in Kaufman v Eli Lilly & Co. (65 NY2d 449 [1985]) outlined the purpose of the doctrine of collateral estoppel and the circumstances under which it is applied. Generally, the doctrine “precludes a party from relitigating an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point” (id. at 455 [internal quotation marks omitted]). The doctrine stems from the principles of judicial economy and fairness (id. at 455).
In order for the doctrine of collateral estoppel to apply, two requirements must be satisfied: (1) “the identical issue necessarily must have been decided in the prior action and be decisive of the present action” (id. at 455); and (2) “the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination” (id. at 455). “The party seeking the benefit of [preclusion] has the burden of demonstrating the identity of the issues [while] the party [opposing] application [of the doctrine] has the burden of establishing the absence of a full and fair opportunity to litigate” (id. at 456).
The doctrine of collateral estoppel will only apply to matters “actually litigated and{**2011 N.Y. Slip Op. at 3} [*3]determined” in a prior action (Restatement [Second] of Judgments § 27). Without “actual litigation” there is no identity of issues (see Kaufman, 65 NY2d at 457). In general, courts have taken the position that “an issue is not actually litigated if . . . there has been a default” (Kaufman, 65 NY2d at 456-457; see Restatement [Second] of Judgments § 27, Comments d, e). More recently both in Zimmerman v Tower Ins. Co. of N.Y. (13 AD3d 137 [1st Dept 2004]) and Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co. (27 Misc 3d 67 [App Term, 2d Dept 2010]) appellate courts have reiterated their adherence to this principle and its application to declaratory judgments. Each court held that declaratory judgments issued on default would not be given preclusive effect in collateral proceedings.
The Parties’ Contentions
Defendant contends that collateral estoppel should apply and the case should be dismissed based upon the determination in the declaratory judgment action that the alleged accident was not a covered incident. Defendant contends that the decisive issue of coverage is the same in both actions. Furthermore, defendant (plaintiff in the declaratory judgment action) contends that plaintiff (a defendant in that action) had a full and fair opportunity to litigate the matter in the declaratory judgment action in that it was duly served with the summons and complaint and failed to appear or interpose an answer. Finally, defendant contends that, as a policy matter, “to not give preclusive effect to the Supreme Court judgment is to create a disincentive for a provider, or an Eligible Injured Person, to ever appear and litigate the issues of the Declaratory Judgment” (defendant’s reply at 2).
In opposition, plaintiff cites the general rule articulated above that collateral estoppel does not apply where there has been a default because the issues have not been “actually litigated” (see Zimmerman, 13 AD3d 137; Kaufman, 65 NY2d at 457). Plaintiff offers no explanation for its default in the declaratory judgment action.
Analysis
The line of appellate cases referenced above adheres to the principle that collateral estoppel does not apply where there has been a default in the prior action. It has been argued that when it first articulated this principle in Kaufman, the Court of Appeals did not intend it to be applied in such a bright-line manner, but rather intended a more case-specific evaluation of whether the issue had been “actually litigated” (see Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 153 [1988] [in analyzing the application of collateral estoppel “no rigid rules are possible, because . . . factors may vary in relative importance depending on the nature of the proceedings”]; see Kaufman, 65 NY2d at 457). In the no-fault context specifically, the argument has been made that declaratory judgments rendered on default should be given collateral estoppel effect (see Magic, 27 Misc 3d at 69-76 [Golia, J., dissenting]). That said, in light of the current appellate case law, the court is constrained from dismissing this case on the basis of collateral estoppel.
However, the fact that collateral estoppel does not apply does not mean that the instant action should proceed. The efficacy of a declaratory judgment relies on the assumption that it will be given preclusive effect in collateral actions. To allow the action to continue as though the declaratory judgment (DJ) action never occurred would create a disincentive for no-fault providers to ever appear in declaratory judgment actions and would undermine the purpose of the declaratory judgment process. While plaintiff/DJ defendant cannot, under the case law, be prejudiced by the default finding, neither should plaintiff/DJ defendant be unfairly advantaged [*4]by its own default.{**2011 N.Y. Slip Op. at 4}
In general, a default judgment is a presumptively valid judgment entitled to enforcement, unless or until reversed or set aside (All Terrain Props. v Hoy, 265 AD2d 87 [1st Dept 2000]; but see also Fleet Bus. Credit, LLC v Michael P. Costelloe, Inc., 19 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2008] [limited exception for out-of-state defaults where defendant alleges a lack of personal jurisdiction in the prior action]). To avoid enforcement of a default judgment, a defendant must move to vacate and offer both a reasonable excuse for its default and a meritorious defense to the underlying action (CPLR 317). In the court’s view, a declaratory judgment, issued on default, should be treated in the same manner. Plaintiff’s proper recourse, if it wishes to proceed with this action, is to move to vacate the default judgment in the declaratory judgment action by offering a reasonable excuse for its failure to appear and a meritorious defense to that action.
The court is empowered to stay its own proceedings “[e]xcept where otherwise prescribed by law . . . in a proper case, upon such terms as may be just” (CPLR 2201). One instance in which the staying of a given action is often deemed appropriate is when another (collateral) action is pending (see Connors, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2201:4 [discussing implied stay provision on a motion to dismiss pursuant to CPLR 3211 (a) (4)]). Since plaintiff contends that the declaratory judgment cannot be given preclusive effect because it was not “actually litigated,” this court will stay the instant matter to afford plaintiff the opportunity to move to vacate its Supreme Court default and, if granted, to “actually litigate” the coverage question in the declaratory judgment action.
Conclusion
For the foregoing reasons, the court exercises its discretion to stay this action indefinitely pending any vacatur of the default judgment in the collateral declaratory judgment action. This decision is without prejudice to defendant to remake or renew this motion in the event that plaintiff is unsuccessful in vacating the declaratory judgment.
Reported in New York Official Reports at Enko Enters. Intl., Inc. v Clarendon Natl. Ins. Co. (2010 NY Slip Op 52267(U))
| Enko Enters. Intl., Inc. v Clarendon Natl. Ins. Co. |
| 2010 NY Slip Op 52267(U) [30 Misc 3d 127(A)] |
| Decided on December 30, 2010 |
| Appellate Term, First Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT
PRESENT: McKeon, P.J., Schoenfeld, Shulman, JJ
570736/09.
against
Clarendon National Insurance Company, Defendant-Appellant.
Defendant, as limited by its brief, appeals from that portion of an order of the Civil Court of the City of New York, Bronx County (Raul Cruz, J.), entered March 18, 2009, which denied its motion for summary judgment dismissing the complaint.
Per Curiam.
Order (Raul Cruz, J.), entered March 18, 2009, insofar as appealed from, reversed, without costs, defendant’s motion for summary judgment granted, and the complaint dismissed. The Clerk is directed to enter judgment accordingly.
Defendant-insurer made a prima facie showing of entitlement to judgment as a matter of law
dismissing the complaint, which asserted claims to recover assigned first-party no-fault benefits.
Defendant demonstrated, through the affirmed peer review report of a physician, that the medical
supplies plaintiff-provider afforded to its assignor were not medically necessary (see generally CPT Medical Services, P.C. v
New York Cent. Mut. Fire Ins. Co., 18 Misc 3d 87 [2007]). In this connection, we note
that the physician opined that the medical supplies were not medically necessary because the
assignor was already receiving both physical and chiropractic therapy for his injuries, treatment
that the physician concluded was sufficient under the circumstances. In opposition, plaintiff,
which did not submit any evidence regarding the medical necessity of the supplies, failed to raise
a triable issue.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
| DECEMBER 30, 2010 | ||||||||
| SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT | ||||||||
| May 2010 Term |
Decision Date: December 30, 2010